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HomeMy WebLinkAbout2013-10-28 City Council Agenda PacketCITY OF PALO ALTO CITY COUNCIL Special Meeting Council Chambers October 28, 2013 6:00 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday preceding the meeting. 1 October 28, 2013 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. PUBLIC COMMENT Members of the public may speak to agendized items; up to three minutes per speaker, to be determined by the presiding officer. If you wish to address the Council on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council, but it is very helpful. TIME ESTIMATES Time estimates are provided as part of the Council's effort to manage its time at Council meetings. Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting or to adapt to the participation of the public. To ensure participation in a particular item, we suggest arriving at the beginning of the meeting and remaining until the item is called. HEARINGS REQUIRED BY LAW Applications and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and up to three minutes for concluding remarks after other members of the public have spoken. Call to Order Closed Session 6:00-7:00 PM Public Comments: Members of the public may speak to the Closed Session item(s); three minutes per speaker. 1. CONFERENCE WITH LABOR NEGOTIATORS City Designated Representatives: City Manager and his designees pursuant to Merit System Rules and (James Keene, Pamela Antil, Lalo Perez, David Ramberg, Joe Saccio, Kathryn Shen, Sandra Blanch, Dania Torres Wong, Val Fong, Marcie Scott, Brenna Rowe, Molly Stump) Employee Organization: Service Employees International Union, (SEIU) Local 521 Authority: Government Code Section 54957.6(a) 2 October 28, 2013 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Agenda Changes, Additions and Deletions HEARINGS REQUIRED BY LAW: Applications and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and put up to three minutes for concluding remarks after other members of the public have spoken. OTHER AGENDA ITEMS: Public comments or testimony on agenda items other than Oral Communications shall be limited to a maximum of three minutes per speaker. City Manager Comments 7:00-7:10 PM Council Member Questions, Comments and Announcements 7:10-7:20 PM Members of the public may not speak to the item(s) Oral Communications 7:20-7:35 PM Members of the public may speak to any item NOT on the agenda. Council reserves the right to limit the duration of Oral Communications period to 30 minutes. Minutes Approval 7:35-7:40 PM September 16, 2013 September 23, 2013 Consent Calendar 7:40-7:45 PM Items will be voted on in one motion unless removed from the calendar by three Council Members. 2. Approval of a Construction Contract to JCM Construction Inc. in the Amount Not to Exceed $358,600 to Provide Construction Services to Reconfigure the City Hall 6th and 7th Floor Public Works Engineering Services, Fire Department, and City Clerk's Office Areas 3. Adoption of Resolutions Fixing the City of Palo Alto’s Healthcare Premium Costs Under the Public Employees’ Medical and Hospital Care Act (PEMHCA) for Palo Alto’s New Bargaining Units, Palo Alto Police Management Association and Utilities Managers and Professionals Association of Palo Alto Action Items Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters. 7:45-8:45 PM 4. Update on the Infrastructure Committee’s Work to Evaluate Finance Measures to Fund Infrastructure Projects and Financing Measures 3 October 28, 2013 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. 8:45-9:45 PM 5. Policy Direction on the Development of a Digital Message Center on a City-owned Parcel Along U.S. 101 9:45- 10:45 PM 6. Technology and the Connected City Committee Recommendation to Develop Master Plan to Build Out the City’s Fiber Optic System to Provide Fiber-to-the-Premise and Develop Complementary Wireless Network Plan Adjournment AMERICANS WITH DISABILITY ACT (ADA) Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance. 4 October 28, 2013 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 Schedule of Meetings Schedule of Meetings Tentative Agenda Tentative Agenda Informational Report Notice of Vacancies on the Storm Drain Oversight Committee Public Letters to Council SET 1 SET 2 City of Palo Alto (ID # 4079) City Council Staff Report Report Type: Consent Calendar Meeting Date: 10/28/2013 City of Palo Alto Page 1 Summary Title: City Hall 6th and 7th Floor Reconfiguration Project Title: Approval of a Construction Contract to JCM Construction Inc. in the Amount Not to Exceed $358,600 to Provide Construction Services to Reconfigure the City Hall 6th and 7th Floor Public Works Engineering Services, Fire Department, and City Clerk's Office Areas 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 JCM Construction, Inc. (Attachment A) in the amount of $326,000 for the interior remodel of the 6th and 7th floors of City Hall; and 2. Authorize the City Manager or his designee to negotiate and execute one or more change orders to the contract with JCM Construction, Inc. for related, additional but unforeseen work which may develop during the project, the total value of which shall not exceed $32,600. Background Due to the recent reorganization of the Public Works Department (PWD), Public Services Division engineering staff was moved to City Hall, 6th floor to increase efficiency through better project coordination, which resulted in an overall lack of adequate office space. Similarly, office space is needed on the 6th floor for the City’s Chief Sustainability Officer who under the direction of the City Manager will collaborate with PWD and other departments on comprehensive and strategic planning for a sustainable community. City of Palo Alto Page 2 Space has become available in the Fire Department area on the 6th floor when Fire Inspection staff moved to the Development Center as result of the recent Development Center Blue Print initiative. In collaboration with Fire personnel a floor plan was developed that better served both departments, providing space for PWD staff, the Chief Sustainability Officer and key Fire personnel who are being relocated to City Hall. Along with the reconfiguration and addition of cubicles and hard walled offices, improvements will include a renovated public reception area and relocation of the existing conference room. Additionally, City Council is in need of a conference room and a work area that would allow them to complete work, meet with constituents, confer with staff and coordinate with the City Clerk on the 7th floor. A floor plan was developed reducing the number of hard walled offices from three to two and better utilizing space to include the much needed conference room and work area. Due to the similar type of work and potential cost savings staff packaged the two renovations together for bidding. Discussion The work to be performed under this contract consists of demolition of existing space and construction to build new cubicle offices, new enclosed offices, and new conference rooms on both the 6th and 7th floors. Most work will be performed after business hours so it does not disrupt staff or impede public access to City offices. Some staff will be temporarily relocated during construction. The work included in this contract includes: City Hall 6th Floor Public Works Engineering Services and Fire Department:  Demolition of existing walls of conference room, three hard-walled offices, and one partial office.  Construction of new partition walls to create a new conference room, a common work area, three new hard-walled office spaces, expansion of one hard-walled office, and one closet.  Installation/modification of plumbing, electrical, fire sprinklers, HVAC and telecom systems as necessary. City of Palo Alto Page 3 City Hall 7th Floor City Clerk’s Office:  Demolition of existing walls of three hard-walled offices.  Construction of new partition walls to create a new conference room and two new hard-walled offices.  Installation/modification of plumbing, electrical, fire sprinklers, HVAC and telecom systems as necessary. Bid Process On August 27, 2013, a notice inviting formal bids (IFB) for the 2013 City Hall 6th and 7th Floor Office Reconfiguration project was posted on the City’s public website, and was sent to 13 Builder’s Exchanges and 25 Contractors. There were 19 contracting firms in attendance for the mandatory pre-bid conference and site walk. The bid period was for 22 calendar days. Bids were received from 6 contractors on September 17, 2013, as listed on the attached Bid Summary (Attachment B). Summary of Solicitation Process Invitation For Bid (IFB) Published 8/27/2013 Mandatory Pre-Bid Site Walk 9/3/2013 Number of Company Attendees at Pre-Proposal Meeting 19 Addendum No. 1 9/5/2013 Addendum No. 2 9/12/2013 Number of Bids Received 6 Bid Opening 9/17/2013 Bid Proposal $ Range $326,000 to $418,000 The bids ranged from a high of $418,000.00 to a low bid of $326,000 and ranged from 11% above to 15% below the engineer’s estimate. Staff has reviewed all bids submitted and recommends that the base bid and allowances totaling $326,000 submitted by JCM Construction, Inc. be accepted and that JCM Construction, Inc. be declared the lowest responsible bidder. The construction contingency amount of $32,600 (which equals 10 percent City of Palo Alto Page 4 of the total contact) is requested for related, additional, but unforeseen work which may develop during the project. Staff confirmed with the Contractor’s State License Board that the contractor has an active license on file. Staff also contacted the listed references for JCM Construction , Inc. and found that they have performed satisfactorily on past construction projects for other clients. Resource Impact Funding for this project is included in the Capital Improvement Program projects Interior Finishes Improvements (PF-02022), and Civic Center Infrastructure Improvements (PF-01002). 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:  City Hall 6th & 7th Floor_BidSum_052113 (PDF)  C14151644 JCM (PDF) JOB No.PF-02022 DESCRIPTION: CITY HALL 6TH AND 7TH FLOOR REMODEL SHEET No.: 1 BID SUMMARY PREPARED BY : Jimmy Chen, Project Manager DATE : 9/19/13 IFB No.:151644 CHECKED BY : Michael Wong, Manager Maint Ops DATE : 9/19/13 BID DESCRIPTION BID JCM Construction, Inc. All Trusty Builders Kuehne Construction US Matrix B Bros Construction, Inc. Ron Paris Const. Co., Inc.Avarage Bid ITEM QTY UNIT BID BID BID BID BID BID A1 6th Floor Base Bid 1 LS $187,000 $192,000 $184,627 $251,000 $195,000 $193,717 $200,557.33 A2 MEP Allowance 1 LS $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 A3 Life Saftey Allowance 1 LS $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 A4 IT Networking Allowance 1 LS $45,000 $45,000 $45,000 $45,000 $45,000 $45,000 $45,000 A5 7th Floor Base Bid 1 LS $59,000 $96,900 $104,499 $87,000 $118,500 $96,261 $93,693 A6 Unforeseen Conditions Allowance 1 LS $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 A7 IT Networking Allowance 1 LS $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 Total $326,000 $368,900 $369,126 $418,000 $393,500 $369,978 $374,251   Invitation for Bid (IFB) Package 1                            Rev. July 2012  CONSTRUCTION CONTRACT                CONSTRUCTION CONTRACT    Contract No. C14151644        City of Palo Alto    and    JCM Construction, Inc.      PROJECT  “6th & 7th Floor Office Remodel”   Invitation for Bid (IFB) Package 2                            Rev. July 2012  CONSTRUCTION CONTRACT       CONSTRUCTION CONTRACT             TABLE OF CONTENTS      SECTION 1. INCORPORATION OF RECITALS AND DEFINITIONS……………………………….. .................... 5  1.1 Recitals ................................................................................................................  5  1.2 Definitions ...........................................................................................................  5  SECTION 2. THE PROJECT……………………………………………………………………………… .............................. 5  SECTION 3. THE CONTRACT DOCUMENTS…………………………………………………………. ......................... 5            3.1           List of Documents …………………………………………………………………………………………. ..... 5            3.2           Order of Precedence …………………………………………………………………………… ................ 6  SECTION 4. THE WORK ………………………………………………………………………………… .............................. 7  SECTION 5. PROJECT TEAM ………………………………………………………………………….. ............................. 7  SECTION 6. TIME OF COMPLETION ………………………………………………………………….. .......................... 7  6.1 Time Is of Essence ........................................................................................ ……… 7  6.2 Commencement of Work .....................................................................................  7  6.3 Contract Time .......................................................................................................  7  6.4 Liquidated Damages .............................................................................................  7  6.4.1 Entitlement…………………………………………………………………………………………….   7  6.4.2 Daily Amount………………………………………………………………………………………….   8  6.4.3 Exclusive Remedy…………………………………………………………………………………..   8  6.4.4 Other Remedies…………………………………………………………………………………...     8  6.5 Adjustments to Contract Time ........................................................................... … 8  SECTION 7. COMPENSATION TO CONTRACTOR………………………………………………………………………...  8  7.1 Contract Sum ……………………………………………………………………………………………………… 8  7.2 Full Compensation …………………………………………………………………………………………….. 9  7.3 Compensation for Extra or Deleted Work …………………………………………………………….9  7.3.1 Self Performed Work………………………………………………………………………………… 9  7.3.2 Subcontractors…………………………………………………………………………………………. 9  SECTION 8. STANDARD OF CARE ...................................................................................................  9  SECTION 9. INDEMNIFICATION ...................................................................................................... 10  9.1 Hold Harmless…………………………………………………………………………………………………….. 10  9.2 Survival………………………………………………………………………………………………………………. 10  SECTION 10. NONDISCRIMINATION .............................................................................................. 10  SECTION 11. INSURANCE AND BONDS .......................................................................................... 10    Invitation for Bid (IFB) Package 3                            Rev. July 2012  CONSTRUCTION CONTRACT  SECTION 12. PROHIBITION AGAINST TRANSFERS .......................................................................... 11  SECTION 13. NOTICES .................................................................................................................... 11  13.1 Method of Notice ………………………………………………………………………………………………..11  13.2 Notice Recipients .................................................................................................   11  13.3 Change of Address ...............................................................................................  12  14.1 Resolution of Contract Disputes ...........................................................................  12  14.2 Resolution of Other Disputes ...............................................................................  12  14.2.1 Non‐Contract Disputes ……………………………………………………………………………….12  14.2.2 Litigation, City Election ……………………………………………………...........................13    14.3 Submission of Contract Dispute …………………………………………………………………………..13  14.3.1 By Contractor …………………………………………………………………………………………. 13  14.3.2 By City ……………………………………………………………………………………………………. 13    14.4 Contract Dispute Resolution Process ............................................................... …… 13  14.4.1 Direct Negotiation………………………………………………………………………… ………….13  14.4.2 Deferral of Contract Disputes …………………………………………………………………   14  14.4.3 Mediation ………………………………………………………………………………………………….14  14.4.4 Binding Arbitration ……………………………………………………………………………………15    14.5 Non‐Waiver …………………………………………………………………………………………………………16  SECTION 15. DEFAULT ................................................................................................................... 16  15.1 Notice of Default ..................................................................................................  16  15.2 Opportunity to Cure Default ................................................................................  16  SECTION 16. CITY'S RIGHTS AND REMEDIES .................................................................................. 16  16.1 Remedies Upon Default .......................................................................................  16  16.1.1 Delete Certain Servic………………………………………………………...........................16  16.1.2 Perform and Withhold ……………………………………………………………………………. 16  16.1.3 Suspend The Construction Contract ………………………………………………………….16  16.1.4 Terminate the Construction Contract for Default ……………………………………..17  16.1.5 Invoke the Performance Bond ………………………………………………………………….17  16.1.6 Additional Provisions ……………………………………………………………………………….17    16.2 Delays by Sureties ................................................................................................  17  16.3 Damages to City ...................................................................................................  17  16.3.1 For Contractor's Default …………………………………………………………………………..17  16.3.2 Compensation for Losses ………………………………………………………………………….17    16.5 Suspension by City for Convenience .....................................................................  18  16.6 Termination Without Cause .................................................................................  18    Invitation for Bid (IFB) Package 4                            Rev. July 2012  CONSTRUCTION CONTRACT  16.6.1 Compensation ………………………………………………………………………………………….18  16.6.2 Subcontractors …………………………………………………………………………………………18    16.7 Contractor’s Duties Upon Termination .................................................................  19  SECTION 17. CONTRACTOR'S RIGHTS AND REMEDIES ................................................................... 19  17.1 Contractor’s Remedies .........................................................................................  19  17.1.1 For Work Stoppage ………………………………………………………………………………….. 19  17.1.2 For City's Non‐Payment …………………………………………………………………………… 19    17.2 Damages to Contractor ........................................................................................  19  SECTION 18. ACCOUNTING RECORDS ............................................................................................ 19  18.1 Financial Management and City Access .......................................................... ……. 19  18.2 Compliance with City Requests ........................................................................ …. 20  SECTION 19. INDEPENDENT PARTIES ............................................................................................. 20  SECTION 20. NUISANCE ................................................................................................................. 20  SECTION 21. PERMITS AND LICENSES ............................................................................................ 20  SECTION 22. WAIVER .................................................................................................................... 20  SECTION 23. GOVERNING LAW ..................................................................................................... 20  SECTION 24. COMPLETE AGREEMENT ........................................................................................... 21  SECTION 25. SURVIVAL OF CONTRACT .......................................................................................... 21  SECTION 26. PREVAILING WAGES .................................................................................................. 21  SECTION 27. NON APPROPRIATION .............................................................................................. 21  SECTION 28. GOVERNMENTAL POWERS ........................................................................................ 21  SECTION 29. ATTORNEY FEES ........................................................................................................ 21  SECTION 30. COUNTERPARTS ........................................................................................................ 21  SECTION 31. SEVERABILITY ........................................................................................................... 21            Invitation for Bid (IFB) Package    5                 Rev. July 2012  CONSTRUCTION CONTRACT    CONSTRUCTION CONTRACT    THIS CONSTRUCTION CONTRACT entered into on October 21, 2013 (“Execution Date”) by and between the  CITY OF PALO ALTO, a California chartered municipal corporation ("City"), and JCM 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 814254. Contractor represents that it is duly licensed by the State of  California and has the background, knowledge, experience and expertise to perform the obligations set  forth in this Construction Contract.    C. On August 27, 2014, City issued an Invitation for Bids (IFB) to contractors for the “6th & 7th Floor  Office Remodel” (“Project”).  In response to the IFB, Contractor submitted a bid.    D. City and Contractor desire to enter into this Construction Contract for the Project, and other  services as identified in the Bid Documents for the Project upon the following terms and conditions.    NOW THEREFORE, in consideration of the mutual promises and undertakings hereinafter set forth  and for other good and valuable consideration, the receipt and sufficiency of which are hereby  acknowledged, it is mutually agreed by and between the undersigned parties as follows:    SECTION 1 INCORPORATION OF RECITALS AND DEFINITIONS.    1.1 Recitals.    All of the recitals are incorporated herein by reference.    1.2 Definitions.    Capitalized terms shall have the meanings set forth in this Construction Contract and/or in the  General Conditions.  If there is a conflict between the definitions in this Construction Contract and  in the General Conditions, the definitions in this Construction Contract shall prevail.  SECTION 2 THE PROJECT.    The Project is the construction of the “6th & 7th Floor Office Remodel” ("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          Invitation for Bid (IFB) Package    6                 Rev. July 2012  CONSTRUCTION CONTRACT    3) Contract    4) Project Plans and Drawings    5) Technical Specifications    6) Special Provisions  7)    Notice Inviting Bids  8)    Instructions to Bidders  9)    General Conditions  10) Bidding Addenda  11) Invitation for Bids    12) Contractor's Bid/Non‐Collusion Affidavit    13)   Reports listed in the Bidding Documents    14)   Public Works Department’s Standard Drawings and Specifications dated 2007 and                updated from time to time    15) Utilities Department’s Water, Gas, Wastewater, Electric Utilities Standards dated 2005  and updated from time to time    16)  City of Palo Alto Traffic Control Requirements    17)  City of Palo Alto Truck Route Map and Regulations    18)  Notice Inviting Pre‐Qualification Statements, Pre‐Qualification Statement, and Pre‐  Qualification Checklist (if applicable)    19)  Performance and Payment Bonds    20)  Insurance Forms      3.2  Order of Precedence.    For the purposes of construing, interpreting and resolving inconsistencies between and among the  provisions of this Contract, the Contract Documents shall have the order of precedence as set forth in the  preceding section.  If a claimed inconsistency cannot be resolved through the order of precedence, the City  shall have the sole power to decide which document or provision shall govern as may be in the best  interests of the City.        Invitation for Bid (IFB) Package    7                 Rev. July 2012  CONSTRUCTION CONTRACT    SECTION 4 THE WORK.    The Work includes all labor, materials, equipment, services, permits, fees, licenses and taxes, and all other  things necessary for Contractor to perform its obligations and complete the Project, including, without  limitation, any Changes approved by City, in accordance with the Contract Documents and all Applicable  Code Requirements.    SECTION 5 PROJECT TEAM.    In addition to Contractor, City has retained, or may retain, consultants and contractors to provide  professional and technical consultation for the design and construction of the Project.  The Project requires  that Contractor operate efficiently, effectively and cooperatively with City as well as all other members of  the Project Team and other contractors retained by City to construct other portions of the Project.    SECTION 6 TIME OF COMPLETION.  6.1 Time Is of Essence.    Time is of the essence with respect to all time limits set forth in the Contract Documents.    6.2 Commencement of Work.    Contractor shall commence the Work on the date specified in City’s Notice to Proceed.       6.3 Contract Time.    Work hereunder shall begin on the date specified on the City’s Notice to Proceed and shall be  completed within One Hundred Twenty calendar days (120) after the commencement date  specified in City’s Notice to Proceed.    6.4 Liquidated Damages.    6.4.1 Entitlement.    City and Contractor acknowledge and agree that if Contractor fails to fully and  satisfactorily complete the Work within the Contract Time, City will suffer, as a result of  Contractor’s failure, substantial damages which are both extremely difficult and  impracticable to ascertain.  Such damages may include, but are not limited to:  (i) Loss of public confidence in City and its contractors and consultants.  (ii) Loss of public use of public facilities.  (iii) Extended disruption to public.          Invitation for Bid (IFB) Package    8                 Rev. July 2012  CONSTRUCTION CONTRACT    6.4.2 Daily Amount.    City and Contractor have reasonably endeavored, but failed, to ascertain the actual  damage that City will incur if Contractor fails to achieve Substantial Completion of the  entire Work within the Contract Time.  Therefore, the parties agree that in addition to all  other damages to which City may be entitled other than delay damages, in the event  Contractor shall fail to achieve Substantial Completion of the entire Work within the  Contract Time, Contractor shall pay City as liquidated damages the amount of $500 per  day for each Day occurring after the expiration of the Contract Time until Contractor  achieves Substantial Completion of the entire Work.  The liquidated damages amount is  not a penalty but considered to be a reasonable estimate of the amount of damages City  will suffer by delay in completion of the Work.    6.4.3 Exclusive Remedy.    City and Contractor acknowledge and agree that this liquidated damages provision shall  be City’s only remedy for delay damages caused by Contractor’s failure to achieve  Substantial Completion of the entire Work within the Contract Time.    6.4.4 Other Remedies.    City is entitled to any and all available legal and equitable remedies City may have where  City’s Losses are caused by any reason other than Contractor’s failure to achieve  Substantial Completion of the entire Work within the Contract Time.    6.5 Adjustments to Contract Time.    The Contract Time may only be adjusted for time extensions approved by City and agreed to by  Change Order executed by City and Contractor in accordance with the requirements of the  Contract Documents.  SECTION 7 COMPENSATION TO CONTRACTOR.    7.1 Contract Sum.    Contractor shall be compensated for satisfactory completion of the Work in compliance with the  Contract Documents the Contract Sum of Three Hundred Twenty Six Thousand Dollars  ($326,000.00).                           / /    / /          Invitation for Bid (IFB) Package    9                 Rev. July 2012  CONSTRUCTION CONTRACT    7.2 Full Compensation.    The Contract Sum shall be full compensation to Contractor for all Work provided by Contractor  and, except as otherwise expressly permitted by the terms of the Contract Documents, shall cover  all Losses arising out of the nature of the Work or from the acts of the elements or any unforeseen  difficulties or obstructions which may arise or be encountered in performance of the Work until  its Acceptance by City, all risks connected with the Work, and any and all expenses incurred due to  suspension or discontinuance of the Work.  The Contract Sum may only be adjusted for Change  Orders issued, executed and satisfactorily performed in accordance with the requirements of the  Contract Documents.    7.3 Compensation for Extra or Deleted Work.    The Contract Sum shall be adjusted (either by addition or credit) for Changes in the Work involving  Extra Work or Deleted Work based on one or more of the following methods to be selected by  City:  1. Unit prices stated in the Contract Documents or agreed upon by City and Contractor,   which unit prices shall be deemed to include Contractor Markup and   Subcontractor/Sub‐subcontractor Markups permitted by this Section.    2. A lump sum agreed upon by City and Contractor, based on the estimated Allowable   Costs and Contractor Markup and Subcontractor Markup computed in accordance   with this Section.    3. Contractor’s Allowable Costs, plus Contractor Markup and Subcontractor Markups   applicable to such Extra Work computed in accordance with this Section.    Contractor Markup and Subcontractor/Sub‐subcontractor Markups set forth herein are the full  amount of compensation to be added for Extra Work or to be subtracted for Deleted Work that is  attributable to overhead (direct and indirect) and profit of Contractor and of its Subcontractors  and Sub‐subcontractors, of every Tier.  When using this payment methodology, Contractor  Markup and Subcontractor/Sub‐subcontractor Markups, which shall not be compounded, shall be  computed as follows:    7.3.1 Markup Self‐Performed Work.    10% of the Allowable Costs for that portion of the Extra Work or Deleted Work to be  performed by Contractor with its own forces.    7.3.2 Markup for Work Performed by Subcontractors.    15% of the Allowable Costs for that portion of the Extra Work or Deleted Work to be  performed by a first Tier Subcontractor.        SECTION 8 STANDARD OF CARE.    Contractor agrees that the Work shall be performed by qualified, experienced and well‐supervised  personnel.  All services performed in connection with this Construction Contract shall be performed in a  manner consistent with the standard of care under California law applicable to those who specialize in  providing such services for projects of the type, scope and complexity of the Project.           Invitation for Bid (IFB) Package    10                 Rev. July 2012  CONSTRUCTION CONTRACT    SECTION 9 INDEMNIFICATION.    9.1 Hold Harmless.    To the fullest extent allowed by law, Contractor will defend, indemnify, and hold harmless City, its  City Council, boards and commissions, officers, agents, employees, representatives and volunteers  (hereinafter collectively referred to as "Indemnitees"), through legal counsel acceptable to City,  from and against any and all Losses arising directly or indirectly from, or in any manner relating to  any of, the following:  (i) Performance or nonperformance of the Work by Contractor or its Subcontractors or Sub‐ subcontractors, of any tier;  (ii) Performance or nonperformance by Contractor or its Subcontractors or Sub‐ subcontractors of any tier, of any of the obligations under the Contract Documents;  (iii) The construction activities of Contractor or its Subcontractors or Sub‐subcontractors, of  any tier, either on the Site or on other properties;  (iv) The payment or nonpayment by Contractor to any of its employees, Subcontractors or  Sub‐subcontractors of any tier, for Work performed on or off the Site for the Project; and  (v) Any personal injury, property damage or economic loss to third persons associated with  the performance or nonperformance by Contractor or its Subcontractors or Sub‐ subcontractors of any tier, of the Work.    However, nothing herein shall obligate Contractor to indemnify any Indemnitee for Losses  resulting from the sole or active negligence or willful misconduct of the Indemnitee.  Contractor  shall pay City for any costs City incurs to enforce this provision.  Nothing in the Contract  Documents shall be construed to give rise to any implied right of indemnity in favor of Contractor  against City or any other Indemnitee.    9.2 Survival.    The provisions of Section 9 shall survive the termination of this Construction Contract.    SECTION 10 NONDISCRIMINATION.    As set forth in Palo Alto Municipal Code section 2.30.510, Contractor certifies that in the performance of  this Agreement, it shall not discriminate in the employment of any person because of the race, skin color,  gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status,  familial status, weight or height of such person. Contractor acknowledges that it has read and understands  the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination  Requirements and the penalties for violation thereof, and will comply with all requirements of Section  2.30.510 pertaining to nondiscrimination in employment.    SECTION 11 INSURANCE AND BONDS.    On or before the Execution Date, Contractor shall provide City with evidence that it has obtained insurance  and Performance and Payment Bonds satisfying all requirements in Article 11 of the General Conditions.   Failure to do so shall be deemed a material breach of this Construction Contract.          Invitation for Bid (IFB) Package    11                 Rev. July 2012  CONSTRUCTION CONTRACT    SECTION 12 PROHIBITION AGAINST TRANSFERS.    City is entering into this Construction Contract based upon the stated experience and qualifications of the  Contractor and its subcontractors set forth in Contractor’s Bid.  Accordingly, Contractor shall not assign,  hypothecate or transfer this Construction Contract or any interest therein directly or indirectly, by  operation of law or otherwise without the prior written consent of City. Any assignment, hypothecation or  transfer without said consent shall be null and void.    The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of  Contractor or of any general partner or joint venturer or syndicate member of Contractor, if the Contractor  is a partnership or joint venture or syndicate or co‐tenancy shall result in changing the control of  Contractor, shall be construed as an assignment of this Construction Contract. Control means more than  fifty percent (50%) of the voting power of the corporation or other entity.     SECTION 13 NOTICES.    13.1 Method of Notice.    All notices, demands, requests or approvals to be given under this Construction Contract shall be given in  writing and shall be deemed served on the earlier of the following:  (i) On the date delivered if delivered personally;  (ii) On the third business day after the deposit thereof in the United States mail, postage prepaid, and   addressed as hereinafter provided;   (iii) On the date sent if sent by facsimile transmission;   (iv) On the date sent if delivered by electronic mail; or   (v) On the date it is accepted or rejected if sent by certified mail.     13.2 Notice Recipients.     All notices, demands or requests (including, without limitation, Claims) from Contractor to City   shall include the Project name and the number of this Construction Contract and shall be   addressed to City at:      To City:  City of Palo Alto     City Clerk     250 Hamilton Avenue     P.O. Box 10250     Palo Alto, CA 94303     Copy to:  City of Palo Alto     Public Works Administration     250 Hamilton Avenue     Palo Alto, CA 94301     Attn: Jimmy Chen         Or        Invitation for Bid (IFB) Package    12                 Rev. July 2012  CONSTRUCTION CONTRACT      City of Palo Alto    Utilities Engineering    250 Hamilton Avenue    Palo Alto, CA 94301    Attn:             In addition, copies of all Claims by Contractor under this Construction Contract shall be provided  to the following:    Palo Alto City Attorney’s Office  250 Hamilton Avenue  P.O. Box 10250  Palo Alto, California 94303       All Claims shall be delivered personally or sent by certified mail.    All notices, demands, requests or approvals from City to Contractor shall be addressed to:    JCM Construction, Inc.  2532 San Carlos Avenue  San Carlos, CA 94070      13.3 Change of Address.    In the event of any change of address, the moving party shall notify the other party of the change  of address in writing.  Each party may, by written notice only, add, delete or replace any  individuals to whom and addresses to which notice shall be provided.    SECTION 14 DISPUTE RESOLUTION.     14.1 Resolution of Contract Disputes.    Contract Disputes shall be resolved by the parties in accordance with the provisions of this Section  14, in lieu of any and all rights under the law that either party have its rights adjudged by a trial  court or jury.  All Contract Disputes shall be subject to the Contract Dispute Resolution Process set  forth in this Section 14, which shall be the exclusive  recourse of Contractor and City for such  Contract Disputes.    14.2 Resolution of Other Disputes.     14.2.1 Non‐Contract Disputes.    Contract Disputes shall not include any of the following:  (i) Penalties or forfeitures prescribed by statute or regulation imposed by a  governmental agency;  (ii) Third party tort claims for personal injury, property damage or death relating to  any Work performed by Contractor or its Subcontractors or Sub‐subcontractors  of any tier;  (iii) False claims liability under California Government Code Section 12650, et. seq.;  (iv) Defects in the Work first discovered by City after Final Payment by City to  Contractor;  (v) Stop notices; or  (vi) The right of City to specific performance or injunctive relief to compel  performance of any provision of the Contract Documents.          Invitation for Bid (IFB) Package    13                 Rev. July 2012  CONSTRUCTION CONTRACT    14.2.2 Litigation, City Election.    Matters that do not constitute Contract Disputes shall be resolved by way of an action  filed in the Superior Court of the State of California, County of Santa Clara, and shall not  be subject to the Contract Dispute Resolution Process. However, the City reserves the  right, in its sole and absolute discretion, to treat such disputes as Contract Disputes.  Upon written notice by City of its election as provided in the preceding sentence, such  dispute shall be submitted by the parties and finally decided pursuant to the Contract  Dispute Resolution Process in the manner as required for Contract Disputes, including,  without limitation, City’s right under Paragraph 14.4.2 to defer resolution and final  determination until after Final Completion of the Work.    14.3 Submission of Contract Dispute.    14.3.1 By Contractor.    Contractors may commence the Contract Dispute Resolution Process upon City's written  response denying all or part of a Claim pursuant to Paragraph 4.2.9 or 4.2.10 of the  General Conditions.  Contractor shall submit a written Statement of Contract Dispute (as  set forth below) to City within seven (7) Days after City rejects all or a portion of  Contractor's Claim.  Failure by Contractor to submit its Statement of Contract Dispute in a  timely manner shall result in City’s decision by City on the Claim becoming final and  binding.  Contractor’s Statement of Contract Dispute shall be signed under penalty of  perjury and shall state with specificity the events or circumstances giving rise to the  Contract Dispute, the dates of their occurrence and the asserted effect on the Contract  Sum and the Contract Time.  The Statement of Contract Dispute shall include adequate  supporting data to substantiate the disputed Claim.  Adequate supporting data for a  Contract Dispute relating to an adjustment of the Contract Time shall include both of the  following:  (i) All of the scheduling data required to be submitted by Contractor under the  Contract Documents to obtain extensions of time and adjustments to the  Contract Time and  (ii) A detailed, event‐by‐event description of the impact of each event on  completion of Work.  Adequate data to support a Statement of Contract Dispute  involving an adjustment of the Contract Sum must include both of the following:   (a) A detailed cost breakdown and   (b) Supporting cost data in such form and including such information and   other supporting data as required under the Contract Documents for   submission of Change Order Requests and Claims.  14.3.2 By City.    City's right to commence the Contract Dispute Resolution Process shall arise at any time  following City's actual discovery of the circumstances giving rise to the Contract Dispute.   City asserts Contract Disputes in response to a Contract Dispute asserted by Contractor.   A Statement of Contract Dispute submitted by City shall state the events or  circumstances giving rise to the Contract Dispute, the dates of their occurrence and the  damages or other relief claimed by City as a result of such events.    14.4 Contract Dispute Resolution Process.    The parties shall utilize each of the following steps in the Contract Dispute Resolution  Process in the sequence they appear below.  Each party shall participate fully and in good  faith in each step in the Contract Dispute Resolution Process, and good faith effort shall  be a condition precedent to the right of each party to proceed to the next step in the  process.    14.4.1 Direct Negotiations.    Designated representatives of City and Contractor shall meet as soon as possible (but not  later than ten (10) Days after receipt of the Statement of Contract Dispute) in a good        Invitation for Bid (IFB) Package    14                 Rev. July 2012  CONSTRUCTION CONTRACT    faith effort to negotiate a resolution to the Contract Dispute.  Each party shall be  represented in such negotiations by an authorized representative with full knowledge of  the details of the Claims or defenses being asserted by such party in the negotiations,  and with full authority to resolve such Contract Dispute then and there, subject only to  City’s obligation to obtain administrative and/or City Council approval of any agreed  settlement or resolution.  If the Contract Dispute involves the assertion of a right or claim  by a Subcontractor or Sub‐subcontractor, of any tier, against Contractor that is in turn  being asserted by Contractor against City (“Pass‐Through Claim”), then the Subcontractor  or Sub‐Subcontractor shall also have a representative attend the negotiations, with the  same authority and knowledge as described above.  Upon completion of the meeting, if  the Contract Dispute is not resolved, the parties may either continue the negotiations or  any party may declare negotiations ended.  All discussions that occur during such  negotiations and all documents prepared solely for the purpose of such negotiations shall  be confidential and privileged pursuant to California Evidence Code Sections 1119 and  1152.    14.4.2 Deferral of Contract Disputes.    Following the completion of the negotiations required by Paragraph 14.4.1, all  unresolved Contract Disputes shall be deferred pending Final Completion of the Project,  subject to City’s right, in its sole and absolute discretion, to require that the Contract  Dispute Resolution Process proceed prior to Final Completion.  All Contract Disputes that  have been deferred until Final Completion shall be consolidated within a reasonable time  after Final Completion and thereafter pursued to resolution pursuant to this Contract  Dispute Resolution Process. The parties can continue informal negotiations of Contract  Disputes; provided, however, that such informal negotiations shall not be alter the  provisions of the Agreement deferring final determination and resolution of unresolved  Contract Disputes until after Final Completion.    14.4.3 Mediation.    If the Contract Dispute remains unresolved after negotiations pursuant to Paragraph  14.4.1, the parties shall submit the Contract Dispute to non‐binding mediation before a  mutually acceptable third party mediator.    .1 Qualifications of Mediator.  The parties shall endeavor to select a mediator who  is a retired judge or an attorney with at least five (5) years of experience in  public works construction contract law and in mediating public works  construction disputes.  In addition, the mediator shall have at least twenty (20)  hours of formal training in mediation skills.    .2 Submission to Mediation and Selection of Mediator.  The party initiating  mediation of a Contract Dispute shall provide written notice to the other party  of its decision to mediate.  In the event the parties are unable to agree upon a  mediator within fifteen (15) Days after the receipt of such written notice, then  the parties shall submit the matter to the American Arbitration Association  (AAA) at its San Francisco Regional Office for selection of a mediator in  accordance with the AAA Construction Industry Mediation Rules.    .3 Mediation Process.  The location of the mediation shall be at the offices of City.   The costs of mediation shall be shared equally by both parties.  The mediator  shall provide an independent assessment on the merits of the Contract Dispute  and recommendations for resolution.  All discussions that occur during the  mediation and all documents prepared solely for the purpose of the mediation  shall be confidential and privileged pursuant to California Evidence Code  Sections 1119 and 1152.          Invitation for Bid (IFB) Package    15                 Rev. July 2012  CONSTRUCTION CONTRACT    14.4.4 Binding Arbitration.    If the Contract Dispute is not resolved by mediation, then any party may submit the  Contract Dispute for final and binding arbitration pursuant to the provisions of California  Public Contract Code Sections 10240, et seq.  The award of the arbitrator therein shall be  final and may be entered as a judgment by any court of competent jurisdiction.  Such  arbitration shall be conducted in accordance with the following:    .1 Arbitration Initiation.  The arbitration shall be initiated by filing a complaint in  arbitration in accordance with the regulations promulgated pursuant to  California Public Contract Code Section 10240.5.    .2 Qualifications of the Arbitrator.  The arbitrator shall be approved by all parties.  The arbitrator shall be a retired judge or an attorney with at least five (5) years  of experience in public works construction contract law and in arbitrating public  works construction disputes.  In addition, the arbitrator shall have at least  twenty (20) hours of formal training in arbitration skills.  In the event the parties  cannot agree upon an arbitrator, the provisions of California Public Contract  Code Section 10240.3 shall be followed in selecting an arbitrator possessing the  qualifications required herein.    .3 Hearing Days and Location.  Arbitration hearings shall be held at the offices of  City and shall, except for good cause shown to and determined by the arbitrator,  be conducted on consecutive business days, without interruption or  continuance.    .4 Hearing Delays.  Arbitration hearings shall not be delayed except upon good  cause shown.    .5 Recording Hearings.  All hearings to receive evidence shall be recorded by a  certified stenographic reporter, with the costs thereof borne equally by City and  Contractor and allocated by the arbitrator in the final award.    .6 Limitation of Depositions.  The parties may conduct discovery in accordance  with the provisions of section 10240.11 of the Public Contract Code; provided,  however, that depositions shall be limited to both of the following:    (i) Ten (10) percipient witnesses for each party and 5 expert witnesses per  party.      Upon a showing of good cause, the arbitrator may increase the number of  permitted depositions.  An individual who is both percipient and expert shall, for  purposes of applying the foregoing numerical limitation only, be deemed an  expert.  Expert reports shall be exchanged prior to receipt of evidence, in  accordance with the direction of the arbitrator, and expert reports (including  initial and rebuttal reports) not so submitted shall not be admissible as  evidence.    .7 Authority of the Arbitrator.  The arbitrator shall have the authority to hear  dispositive motions and issue interim orders and interim or executory awards.          Invitation for Bid (IFB) Package    16                 Rev. July 2012  CONSTRUCTION CONTRACT    .8 Waiver of Jury Trial.  Contractor and City each voluntarily waives its right to a  jury trial with respect to any Contract Dispute that is subject to binding  arbitration in accordance with the provisions of this Paragraph 14.4.4.   Contractor shall include this provision in its contracts with its Subcontractors  who provide any portion of the Work.    14.5 Non‐Waiver.    Participation in the Contract Dispute Resolution Process shall not waive, release or compromise  any defense of City, including, without limitation, any defense based on the assertion that the  rights or Claims of Contractor that are the basis of a Contract Dispute were previously waived by  Contractor due to Contractor’s failure to comply with the Contract Documents, including, without  limitation, Contractor’s failure to comply with any time periods for providing notice of requests  for adjustments of the Contract Sum or Contract Time or for submission of Claims or supporting  documentation of Claims.    SECTION 15 DEFAULT.    15.1 Notice of Default.    In the event that City determines, in its sole discretion, that Contractor has failed or refused to  perform any of the obligations set forth in the Contract Documents, or is in breach of any  provision of the Contract Documents, City may give written notice of default to Contractor in the  manner specified for the giving of notices in the Construction Contract.    15.2 Opportunity to Cure Default.  Except for emergencies, Contractor shall cure any default in performance of its obligations under  the Contract Documents within two (2) Days (or such shorter time as City may reasonably require)  after receipt of written notice.  However, if the breach cannot be reasonably cured within such  time, Contractor will commence to cure the breach within two (2) Days (or such shorter time as  City may reasonably require) and will diligently and continuously prosecute such cure to  completion within a reasonable time, which shall in no event be later than ten (10) Days after  receipt of such written notice.  SECTION 16 CITY'S RIGHTS AND REMEDIES.    16.1 Remedies Upon Default.    If Contractor fails to cure any default of this Construction Contract within the time period set forth  above in Section 15, then City may pursue any remedies available under law or equity, including,  without limitation, the following:    16.1.1 Delete Certain Services.    City may, without terminating the Construction Contract, delete certain portions of the Work,  reserving to itself all rights to Losses related thereto.    16.1.2 Perform and Withhold.    City may, without terminating the Construction Contract, engage others to perform the Work or  portion of the Work that has not been adequately performed by Contractor and withhold the cost  thereof to City from future payments to Contractor, reserving to itself all rights to Losses related  thereto.    16.1.3 Suspend The Construction Contract.    City may, without terminating the Construction Contract and reserving to itself all rights to Losses  related thereto, suspend all or any portion of this Construction Contract for as long a period of  time as City determines, in its sole discretion, appropriate, in which event City shall have no        Invitation for Bid (IFB) Package    17                 Rev. July 2012  CONSTRUCTION CONTRACT    obligation to adjust the Contract Sum or Contract Time, and shall have no liability to Contractor  for damages if City directs Contractor to resume Work.    16.1.4 Terminate the Construction Contract for Default.    City shall have the right to terminate this Construction Contract, in whole or in part, upon the  failure of Contractor to promptly cure any default as required by Section 15.  City’s election to  terminate the Construction Contract for default shall be communicated by giving Contractor a  written notice of termination in the manner specified for the giving of notices in the Construction  Contract.  Any notice of termination given to Contractor by City shall be effective immediately,  unless otherwise provided therein.    16.1.5 Invoke the Performance Bond.    City may, with or without terminating the Construction Contract and reserving to itself all rights to  Losses related thereto, exercise its rights under the Performance Bond.    16.1.6 Additional Provisions.    All of City’s rights and remedies under this Construction Contract are cumulative, and shall be in  addition to those rights and remedies available in law or in equity.  Designation in the Contract  Documents of certain breaches as material shall not waive the City’s authority to designate other  breaches as material nor limit City’s right to terminate the Construction Contract, or prevent the  City from terminating the Agreement for breaches that are not material.  City’s determination of  whether there has been noncompliance with the Construction Contract so as to warrant exercise  by City of its rights and remedies for default under the Construction Contract, shall be binding on  all parties.  No termination or action taken by City after such termination shall prejudice any other  rights or remedies of City provided by law or equity or by the Contract Documents upon such  termination; and City may proceed against Contractor to recover all liquidated damages and  Losses suffered by City.    16.2 Delays by Sureties.    Without limiting to any of City’s other rights or remedies, City has the right to suspend the  performance of the Work by Contractor’s sureties in the event of any of the following:  (i) The sureties’ failure to begin Work within a reasonable time in such manner as to insure  full compliance with the Construction Contract within the Contract Time;  (ii) The sureties’ abandonment of the Work;  (iii) If at any time City is of the opinion the sureties’ Work is unnecessarily or unreasonably  delaying the Work;  (iv) The sureties’ violation of any terms of the Construction Contract;  (v) The sureties’ failure to perform according to the Contract Documents; or  (vi) The sureties’ failure to follow City’s instructions for completion of the Work within the  Contract Time.    16.3 Damages to City.    16.3.1 For Contractor's Default.    City will be entitled to recovery of all Losses under law or equity in the event of  Contractor’s default under the Contract Documents.     16.3.2 Compensation for Losses.   In the event that City's Losses arise from Contractor’s default under the Contract Documents, City  shall be entitled to withhold monies otherwise payable to Contractor until Final Completion of the  Project.  If City incurs Losses due to Contractor’s default, then the amount of Losses shall be  deducted from the amounts withheld.  Should the amount withheld exceed the amount deducted,  the balance will be paid to Contractor or its designee upon Final Completion of the Project.  If the  Losses incurred by City exceed the amount withheld, Contractor shall be liable to City for the  difference and shall promptly remit same to City.        Invitation for Bid (IFB) Package    18                 Rev. July 2012  CONSTRUCTION CONTRACT    16.4 Suspension by City for Convenience.    City may, at any time and from time to time, without cause, order Contractor, in writing, to  suspend, delay, or interrupt the Work in whole or in part for such period of time, up to an  aggregate of fifty percent (50%) of the Contract Time.  The order shall be specifically identified as  a Suspension Order by City.  Upon receipt of a Suspension Order, Contractor shall, at City’s  expense, comply with the order and take all reasonable steps to minimize costs allocable to the  Work covered by the Suspension Order.  During the Suspension or extension of the Suspension, if  any, City shall either cancel the Suspension Order or, by Change Order, delete the Work covered  by the Suspension Order.  If a Suspension Order is canceled or expires, Contractor shall resume  and continue with the Work.  A Change Order will be issued to cover any adjustments of the  Contract Sum or the Contract Time necessarily caused by such suspension.    A Suspension Order  shall not be the exclusive method for City to stop the Work.    16.5 Termination Without Cause.    City may, at its sole discretion and without cause, terminate this Construction Contract in part or  in whole by giving thirty (30) Days written notice to Contractor. The compensation allowed under  this Paragraph 16.5 shall be the Contractor’s sole and exclusive compensation for such  termination and Contractor waives any claim for other compensation or Losses, including, but not  limited to, loss of anticipated profits, loss of revenue, lost opportunity, or other consequential,  direct, indirect or incidental damages of any kind resulting from termination without cause.      16.5.1 Compensation.    Following such termination and within forty‐five (45) Days after receipt of a billing from  Contractor seeking payment of sums authorized by this Paragraph 16.5, City shall pay the  following to Contractor as Contractor’s sole compensation for performance of the Work :    .1 For Work Performed.  The amount of the Contract Sum allocable to the portion  of the Work properly performed by Contractor as of the date of termination,  less sums previously paid to Contractor.    .2 For Close‐out Costs.  Reasonable costs of Contractor and its Subcontractors and  Sub‐subcontractors for:  (i) Demobilizing and  (ii) Administering the close‐out of its participation in the Project (including,  without limitation, all billing and accounting functions, not including  attorney or expert fees) for a period of no longer than thirty (30) Days  after receipt of the notice of termination.    .3 For Fabricated Items.  Previously unpaid cost of any items delivered to the  Project Site which were fabricated for subsequent incorporation in the Work.    16.5.2 Subcontractors.      Contractor shall include provisions in all of its subcontracts, purchase orders and other contracts  permitting termination for convenience by Contractor on terms that are consistent with this  Construction Contract and that afford no greater rights of recovery against Contractor than are  afforded to Contractor against City under this Section.          Invitation for Bid (IFB) Package    19                 Rev. July 2012  CONSTRUCTION CONTRACT    16.6 Contractor’s Duties Upon Termination.    Upon receipt of a notice of termination for default or for convenience, Contractor shall, unless the  notice directs otherwise, do the following:  (i) Immediately discontinue the Work to the extent specified in the notice;  (ii) Place no further orders or subcontracts for materials, equipment, services or facilities,  except as may be necessary for completion of such portion of the Work that is not  discontinued;  (iii) Provide to City a description, in writing no later than fifteen (15) days after receipt of the  notice of termination, of all subcontracts, purchase orders and contracts that are  outstanding, including, without limitation, the terms of the original price, any changes,  payments, balance owing, the status of the portion of the Work covered and a copy of  the subcontract, purchase order or contract and any written changes, amendments or  modifications thereto, together with such other information as City may determine  necessary in order to decide whether to accept assignment of or request Contractor to  terminate the subcontract, purchase order or contract;  (iv) Promptly assign to City those subcontracts, purchase orders or contracts, or portions  thereof, that City elects to accept by assignment and cancel, on the most favorable terms  reasonably possible, all subcontracts, purchase orders or contracts, or portions thereof,  that City does not elect to accept by assignment; and  (v) Thereafter do only such Work as may be necessary to preserve and protect Work already   in progress and to protect materials, plants, and equipment on the Project Site or in   transit thereto.  SECTION 17 CONTRACTOR'S RIGHTS AND REMEDIES.    17.1 Contractor’s Remedies.    Contractor may terminate this Construction Contract only upon the occurrence of one of the  following:    17.1.1 For Work Stoppage.    The Work is stopped for sixty (60) consecutive Days, through no act or fault of Contractor, any  Subcontractor, or any employee or agent of Contractor or any Subcontractor, due to issuance of  an order of a court or other public authority other than City having jurisdiction or due to an act of  government, such as a declaration of a national emergency making material unavailable.  This  provision shall not apply to any work stoppage resulting from the City’s issuance of a suspension  notice issued either for cause or for convenience.    17.1.2 For City's Non‐Payment.    If City does not make pay Contractor undisputed sums within ninety (90) Days after receipt of  notice from Contractor, Contractor may terminate the Construction Contract (30) days following a  second notice to City of Contractor’s intention to terminate the Construction Contract.    17.2 Damages to Contractor.   In the event of termination for cause by Contractor, City shall pay Contractor the sums provided  for in Paragraph 16.5.1 above.  Contractor agrees to accept such sums as its sole and exclusive  compensation and agrees to waive any claim for other compensation or Losses, including, but not  limited to, loss of anticipated profits, loss of revenue, lost opportunity, or other consequential,  direct, indirect and incidental damages, of any kind.  SECTION 18 ACCOUNTING RECORDS.    18.1 Financial Management and City Access.    Contractor shall keep full and detailed accounts and exercise such controls as may be necessary  for proper financial management under this Construction Contract in accordance with generally        Invitation for Bid (IFB) Package    20                 Rev. July 2012  CONSTRUCTION CONTRACT    accepted accounting principles and practices. City and City's accountants  during normal business  hours, may  inspect, audit and copy Contractor's records, books, estimates, take‐offs, cost reports,  ledgers, schedules, correspondence, instructions, drawings, receipts, subcontracts, purchase  orders, vouchers, memoranda and other data relating to this Project. Contractor shall retain these  documents for a period of three (3) years after the later of (i) final payment or (ii) final resolution  of all Contract Disputes and other disputes, or (iii) for such longer period as may be required by  law.    18.2 Compliance with City Requests.    Contractor's compliance with any request by City pursuant to this Section 18 shall be a condition  precedent to filing or maintenance of any legal action or proceeding by Contractor against City  and to Contractor's right to receive further payments under the Contract Documents.  City many  enforce Contractor’s obligation to provide access to City of its business and other records referred  to in Section 18.1 for inspection or copying by  issuance of a writ or a provisional or permanent  mandatory injunction by a court of competent jurisdiction based on affidavits submitted to such  court, without the necessity of oral testimony.    SECTION 19 INDEPENDENT PARTIES.    Each party is acting in its independent capacity and not as agents, employees, partners, or joint ventures’  of the other party.  City, its officers or employees shall have no control over the conduct of Contractor or  its respective agents, employees, subconsultants, or subcontractors, except as herein set forth.  SECTION 20 NUISANCE.    Contractor shall not maintain, commit, nor permit the maintenance or commission of any nuisance in  connection in the performance of services under this Construction Contract.  SECTION 21 PERMITS AND LICENSES.    Except as otherwise provided in the Special Provisions and Technical Specifications, The Contractor shall  provide, procure and pay for all licenses, permits, and fees, required by the City or other government  jurisdictions or agencies necessary to carry out and complete the Work.  Payment of all costs and expenses  for such licenses, permits, and fees shall be included in one or more Bid items. No other compensation  shall be paid to the Contractor for these items or for delays caused by non‐City inspectors or conditions set  forth in the licenses or permits issued by other agencies.  SECTION 22 WAIVER.    A waiver by either party of any breach of any term, covenant, or condition contained herein shall not be  deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or condition  contained herein, whether of the same or a different character.  SECTION 23 GOVERNING LAW.    This Construction Contract shall be construed in accordance with and governed by the laws of the State of  California.          Invitation for Bid (IFB) Package    21                 Rev. July 2012  CONSTRUCTION CONTRACT    SECTION 24 COMPLETE AGREEMENT.    This Agreement represents the entire and integrated agreement between the parties and supersedes all  prior negotiations, representations, and contracts, either written or oral. This Agreement may be amended  only by a written instrument, which is signed by the parties.  SECTION 25 SURVIVAL OF CONTRACT.    The provisions of the Construction Contract which by their nature survive termination of the Construction  Contract or Final Completion, including, without limitation, all warranties, indemnities, payment  obligations, and City’s right to audit Contractor’s books and records, shall remain in full force and effect  after Final Completion or any termination of the Construction Contract.  SECTION 26 PREVAILING WAGES.         This Project is not subject to prevailing wages. The Contractor is not required to pay prevailing wages in the  performance and implementation of the Project, because the City, pursuant to its authority as a chartered  city, has adopted Resolution No. 5981 exempting the City from prevailing wages.  The City invokes the  exemption from the state prevailing wage requirement for this Project and declares that the Project is  funded one hundred percent (100%) by the City of Palo Alto.  SECTION 27 NON APPROPRIATION.    This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto  Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the  event that the City does not appropriate funds for the following fiscal year for this event, or (b) at any time  within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds  for this Construction Contract are no longer available.  This section shall take precedence in the event of a  conflict with any other covenant, term, condition, or provision of this Agreement.   SECTION 28 AUTHORITY.    The individuals executing this Agreement represent and warrant that they have the legal capacity and  authority to do so on behalf of their respective legal entities.  SECTION 29 ATTORNEY FEES.    Each Party shall bear its own costs, including attorney’s fees through the completion of mediation. If the  claim or dispute is not resolved through mediation and in any dispute described in Paragraph 14.2, the prevailing party in any action brought to enforce the provision of this Agreement may recover its  reasonable costs and attorney’s fees expended in connection with that action.  The prevailing party shall be  entitled to recover an amount equal to the fair market value of legal services provided by attorneys  employed by it as well as any attorney’s’ fees paid to third parties.  SECTION 30 COUNTERPARTS  This Agreement may be signed in multiple counterparts, which shall, when executed by all the parties,  constitute a single binding agreement.  SECTION 31 SEVERABILITY.    In case a provision of this Construction Contract is held to be invalid, illegal or unenforceable, the validity,  legality and enforceability of the remaining provisions shall not be affected.          Invitation for Bid (IFB) Package    22                 Rev. July 2012  CONSTRUCTION CONTRACT        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      JCM CONSTRUCTION, INC.    By:___________________________    Name:_________________________    Title:________________________        City of Palo Alto (ID # 4154) City Council Staff Report Report Type: Consent Calendar Meeting Date: 10/28/2013 City of Palo Alto Page 1 Summary Title: Fixing Healthcare Premium Costs for UMPAPA & PMA Title: Adoption of Resolutions Fixing the City of Palo Alto’s Healthcare Premium Costs Under the Public Employees’ Medical and Hospital Care Act (PEMHCA) for Palo Alto’s New Bargaining Units, Palo Alto Police Management Association and Utilities Managers and Professionals Association of Palo Alto From: City Manager Lead Department: Human Resources RECOMMENDATION Staff recommends that Council adopt the attached resolutions fixing the City of Palo Alto’s healthcare premium costs under the Public Employees’ Medical and Hospital Care Act (PEMHCA) for Palo Alto’s new bargaining units, Palo Alto Police Management Association and Utilities Managers and Professionals Association of Palo Alto. BACKGROUND The City of Palo Alto contracts with CalPERS to provide its employees with active and retiree healthcare. On June 24, 2013, Council implemented terms for the Palo Alto Police Management Association (PAPMA) and Utilities Managers and Professionals Association of Palo Alto (UMPAPA). The PAPMA unit currently has seven (7) budgeted full-time employees and UMPAPA includes 24 budgeted positions and 43 members. DISCUSSION Under the provisions of the terms implemented on July 23, 2012 for active Police managers in PAPMA (CMR ID #3034), members started contributing 10% toward medical premiums with the City picking up the remaining 90% of the total premium cost. For active Utilities managers in UMPAPA, members contributing 10% toward medical premiums became effective under terms implemented on June 24, 2013 (CMR ID#3939). City of Palo Alto Page 2 The CalPERS contract amendment process requires Council to approve the attached resolutions as an administrative formality to acknowledge that these management employees are now in a bargaining group and no longer in the non-represented Management and Professional unit. In the past two years, CalPERS has treated active and retiree medical contributions in both these employee groups as if the employees were still included in the non-represented Management and Professional group. Adoption of these resolutions will allow CalPERS to properly administer these benefits and implement any changes in the future. RESOURCE IMPACT The active employee contribution of 10% toward medical for Police Managers effective in July 2012, 2012 was estimated to provide $11,000 in savings for FY 13. The active employee contribution of 10% toward medical for Utilities Managers is estimated to provide $95,000 in savings for FY 14. The FY 14 Adopted Budget does not require adjustment to accommodate this contract amendment. Adoption of these resolutions will not have any fiscal impact. POLICY IMPLICATIONS This recommendation is consistent with City Council direction to achieve structural changes in employee compensation for short-term and long-term savings. ENVIRONMENTAL REVIEW This is not a project under the California Environmental Quality Act (CEQA). Attachments:  Reso Fixing PEMHCA Healthcare Costs (Equal) for UMPAPA (DOCX)  Reso Fixing PEMHCA Healthcare Costs for 22893 for UMPAPA (DOCX)  Reso for Fixing PEMHCA Healthcare Cost for 22893 for PAPMA (DOCX)  Reso for Fixing PEMHCA Healthcare Costs (Equal) PAPMA (DOCX)  June 24, 2013 City Council Minutes Excerpt 13 and 14 (DOC) NEW PERS BY GROUP EQUAL 1 FIXED Revision November 2012 NOT YET APPOVED RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO ELECTING TO BE SUBJECT TO THE PUBLIC EMPLOYEES’ MEDICAL AND HOSPITAL CARE ACT WITH RESPECT TO MEMBERS OF UTILITIES MANAGEMENT AND PROFESSIONAL ASSOCIATION AND FIXING THE EMPLOYER’S CONTRIBUTION AT AN AMOUNT EQUAL TO OR GREATER THAN THAT PRESCRIBED BY GOVERNMENT CODE SECTION 22892(b) WHEREAS, (1) Government Code Section 22922(a) provides the benefits of the Public Employees' Medical and Hospital Care Act to employees and annuitants of local agencies contracting with the Public Employees' Retirement System on proper application by a local agency; and WHEREAS, (2) Section 22892(a) of the Act provides that a local contracting agency shall fix the amount of the employer's contribution; and WHEREAS, (3) City of Palo Alto hereinafter referred to as Public Agency, is a local agency contracting with the Public Employees' Retirement System; and WHEREAS, (4) The Public Agency desires to obtain for the members of Utilities Management and Professional Association of Palo Alto who are employees and annuitants of the agency, the benefit of the Act and to accept the liabilities and obligations of an employer under the Act and Regulations; now, therefore, be it RESOLVED, (a) That the Public Agency elects, and it does hereby elect, to be subject to the provisions of the Act; and be it further RESOLVED, (b) That the employer's contribution for each employee or annuitant shall be the amount necessary to pay the full cost of his/her enrollment, including the enrollment of family members, in a health benefits plan or plans up to a maximum of the minimum employer contributions per month as prescribed in Section 22892(b)(1) of the Government Code dollars per month, plus administrative fees and Contingency Reserve Fund assessments; and be it further RESOLVED, (c) That City of Palo Alto has fully complied with any and all applicable provisions of Government Code Section 7507 in electing the benefits set forth above; and be it further RESOLVED, (d) That the participation of the employees and annuitants of City of Palo Alto shall be subject to determination of its status as an “agency or instrumentality of the state or political subdivision of a State” that is eligible to participate in a governmental plan within the meaning of Section 414(d) of the Internal Revenue Code, upon publication of final Regulations pursuant to such Section. If it is determined that City of Palo Alto would not qualify as an agency or instrumentality of the state or political subdivision of a State under such final Regulations, CalPERS may be NEW PERS BY GROUP EQUAL 1 FIXED Revision November 2012 obligated, and reserves the right to terminate the health coverage of all participants of the employer. RESOLVED, (e) That the executive body appoint and direct, and it does hereby appoint and direct, the People Strategy and Operations Department Assistant Director to file with the Board of Administration of the Public Employees' Retirement System a verified copy of this Resolution, and to perform on behalf of said Public Agency all functions required of it under the Act and Regulations of the Board of Administration; and be it further RESOLVED, (f) That coverage under the Act be effective on December 1, 2013. ___________________. Adopted at a regular/special meeting of the ________________________ at ____________________ this _________ day of __________________ 20__. Signed: _________________________________ (President, Chairman, etc.) Attest: _________________________________ (Secretary or appropriate officer) NEW PERS BY GROUP EQUAL 1 FIXED Revision July 2009 INSTRUCTIONS This resolution form is the approved form designated by the Public Employees' Retirement System. It should be used by a Public Agency to assure proper filing with the Public Employees' Retirement System for the combined purpose of: 1. Contracting for coverage under the Public Employees' Medical and Hospital Care Act (PEMHCA), and 2. Fixing the employer's contribution toward employees' health insurance at an amount equal to or greater than that prescribed in GC 22892(b) If the resolution (RESOLVED) is filed on or before the tenth day of any month, it will be effective on the first of the following month (date stamped as received in the office of the Board of Administration, Public Employee's Retirement System, 400 Q Street, P.O. Box 942714, Sacramento, CA 94229-2714) WHEREAS, (3) should be completed with full name of the contracting agency. WHEREAS, (4) should be completed with full name of the recognized employee organization. RESOLVED, (b) should be completed to specify the amount of the employer's (agency or district) contribution toward the cost of enrollment for active employees and annuitants. The amount specified by this Resolution would be an amount equal to or greater than that specified in Section 22892(b) as authorized by Section 22892(a) of the Government Code. Minimum employer contributions as prescribed in Section 22892(b). Commencing January 1, 2009, the employer contribution shall be adjusted annually by the Board to reflect any change in the medical component of the Consumer Price Index, and shall be rounded to the nearest dollar. RESOLVED, (c) should be completed with full name of the contracting agency. RESOLVED, (d) should be completed with full name of the contracting agency. RESOLVED, (e) requests the position title of the individual who handles the Public Employees' Medical and Hospital Care Act contract for the Public Agency. RESOLVED, (f) should be completed with the date the coverage is to become effective. Because resolutions serve as our legal contract, we require the original resolution, certified copy with original signatures, or a copy of the resolution with the agency’s raised seal. For resolution processing, deliver to the following: Overnight Mail Service Regular Mail California Public Employees’ Retirement System CASD, Contract & Membership Services Section 400 Q Street Sacramento, CA 95811-6210 California Public Employees’ Retirement System CASD, Contract & Membership Services Section PO BOX 942714 Sacramento, CA 94229-2714 The certification shown following the resolution is to be completed by those individuals authorized to sign for the Public Agency in legal actions and is to include the name of the executive body; i.e. Board of Directors, Board of Trustees, etc., the location and the date of signing. VESTING NEW PERS BY GROUP 100/90 Revision November 2012 Revision July 2009 NOT YET APPROVED RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO ELECTING TO BE SUBJECT TO SECTION 22893 OF THE PUBLIC EMPLOYEES’ MEDICAL AND HOSPITAL CARE ACT WITH RESPECT TO MEMBERS OF UTILITIES MANAGEMENT AND PROFESSIONAL ASSOCIATION TO ESTABLISH A HEALTH BENEFIT VESTING REQUIREMENT FOR FUTURE ANNUITANTS WHEREAS, (1) Government Code 22893 provides that a local agency contracting under the Public Employees’ Medical and Hospital Care Act may amend its resolution to provide a post retirement vesting requirement to employees who retire for service, and WHEREAS, (2) City of Palo Alto is a local agency contracting under the Act for participation by members of the Utilities Management and Professional Association of Palo Alto WHEREAS, (3) City of Palo Alto certifies, certain employees are represented by a bargaining unit and subject to a memorandum of understanding, and WHEREAS, (4) The credited service for purposes of determining the percentage of employer contributions shall mean service as defined in Section 20069, except that not less than five years of that service shall be performed entirely with the City of Palo Alto and WHEREAS, (5) The contribution for active employees cannot be less then what is defined in Section 22892(b); now, therefore be it RESOLVED, (a) That the employer’s contribution for each annuitant first hired on or after the effective date of this resolution shall be the amount necessary to pay the full cost of his/her enrollment, including the enrollment of family members, in a health benefits plan or plans up to a maximum of 100 percent of the weighted average of the health benefits plan premiums for employees or annuitants enrolled for self alone plus 90 percent of the weighted average of the additional premiums required for enrollment of family members in the four health benefits plans that have the largest number of enrollments during the fiscal year to which the formula applied, plus Administrative fees and Contingency Reserve Fund, and be it further RESOLVED, (b) That the percentage of employer contribution payable for post retirement health benefits for each annuitant shall be based on the employee’s completed years of credited service based upon Government Code Section 22893; and be it further RESOLVED, (c) That City of Palo Alto has fully complied with any and all applicable provisions of Government Code Section 7507 in electing the benefits set forth above; and be it further RESOLVED, (d) That coverage under the Act be effective on December 1, 2013. ___________________. VESTING NEW PERS BY GROUP 100/90 Revision November 2012 Revision July 2009 Adopted at a regular/special meeting of the________________________ at ____________________ this _________ day of__________________ 20__. Signed: _________________________________ (President, Chairman, etc.) Attest: _________________________________ (Secretary or appropriate officer) VESTING NEW PERS BY GROUP 100/90 Revision November 2012 Revision July 2009 INSTRUCTIONS This resolution is the approved form designated by the Public Employees' Retirement System. It should be used by a Public Agency which is contracting for coverage under the Public Employees' Medical and Hospital Care Act when the agency desires to provide a post retirement vesting requirement to future annuitants as authorized by Section 22893 of the Government Code. If the resolution (RESOLVED) is filed on or before the tenth day of any month, it will be effective on the first of the following month (date stamped as received in the office of the Board of Administration, Public Employee's Retirement System, 400 Q Street, P.O. Box 942714, Sacramento, CA 94229-2714) Persons retired prior to this effective date are not affected by this vesting agreement. Please submit a copy of the appropriate agreement or MOU(s) with the vesting resolution. WHEREAS, (2) should be completed with full name of the contracting agency and recognized employee organization. WHEREAS, (3) (choose the appropriate paragraph) WHEREAS, (3) should be completed with full name of the contracting agency. WHEREAS, (4) should be completed with full name of the contracting agency. RESOLVED, (c) should be completed with full name of the contracting agency. RESOLVED, (d) should be completed with the date the coverage is to become effective. Because resolutions serve as our legal contract, we require the original resolution, certified copy with original signatures, or a copy of the resolution with the agency’s raised seal. For resolution processing, deliver to the following: Overnight Mail Service Regular Mail California Public Employees’ Retirement System CASD, Contract & Membership Services Section 400 Q Street Sacramento, CA 95811-6210 California Public Employees’ Retirement System CASD, Contract & Membership Services Section PO BOX 942714 Sacramento, CA 94229-2714 The certification shown following the resolution is to be completed by those individuals authorized to sign for the Public Agency in legal actions and is to include the name of the executive body; i.e. Board of Directors, Board of Trustees, etc., the location and the date of signing. VESTING NEW PERS BY GROUP 100/90 Revision November 2012 Revision July 2009 NOT YET APPROVED RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO ELECTING TO BE SUBJECT TO SECTION 22893 OF THE PUBLIC EMPLOYEES’ MEDICAL AND HOSPITAL CARE ACT WITH RESPECT TO MEMBERS OF PALO ALTO POLICE MANAGEMENT ASSOCIATION TO ESTABLISH A HEALTH BENEFIT VESTING REQUIREMENT FOR FUTURE ANNUITANTS WHEREAS, (1) Government Code 22893 provides that a local agency contracting under the Public Employees’ Medical and Hospital Care Act may amend its resolution to provide a post retirement vesting requirement to employees who retire for service, and WHEREAS, (2) City of Palo Alto is a local agency contracting under the Act for participation by members of the Palo Alto Police Management Association and WHEREAS, (3) City of Palo Alto certifies, certain employees are represented by a bargaining unit and subject to a memorandum of understanding, and WHEREAS, (4) The credited service for purposes of determining the percentage of employer contributions shall mean service as defined in Section 20069, except that not less than five years of that service shall be performed entirely with the City of Palo Alto and WHEREAS, (5) The contribution for active employees cannot be less then what is defined in Section 22892(b); now, therefore be it RESOLVED, (a) That the employer’s contribution for each annuitant first hired on or after the effective date of this resolution shall be the amount necessary to pay the full cost of his/her enrollment, including the enrollment of family members, in a health benefits plan or plans up to a maximum of 100 percent of the weighted average of the health benefits plan premiums for employees or annuitants enrolled for self alone plus 90 percent of the weighted average of the additional premiums required for enrollment of family members in the four health benefits plans that have the largest number of enrollments during the fiscal year to which the formula applied, plus Administrative fees and Contingency Reserve Fund, and be it further RESOLVED, (b) That the percentage of employer contribution payable for post retirement health benefits for each annuitant shall be based on the employee’s completed years of credited service based upon Government Code Section 22893; and be it further RESOLVED, (c) That City of Palo Alto has fully complied with any and all applicable provisions of Government Code Section 7507 in electing the benefits set forth above; and be it further RESOLVED, (d) That coverage under the Act be effective on December 1. 2013.. VESTING NEW PERS BY GROUP 100/90 Revision November 2012 Revision July 2009 Adopted at a regular/special meeting of the________________________ at ____________________ this _________ day of__________________ 20__. Signed: _________________________________ (President, Chairman, etc.) Attest: _________________________________ (Secretary or appropriate officer) VESTING NEW PERS BY GROUP 100/90 Revision November 2012 Revision July 2009 INSTRUCTIONS This resolution is the approved form designated by the Public Employees' Retirement System. It should be used by a Public Agency which is contracting for coverage under the Public Employees' Medical and Hospital Care Act when the agency desires to provide a post retirement vesting requirement to future annuitants as authorized by Section 22893 of the Government Code. If the resolution (RESOLVED) is filed on or before the tenth day of any month, it will be effective on the first of the following month (date stamped as received in the office of the Board of Administration, Public Employee's Retirement System, 400 Q Street, P.O. Box 942714, Sacramento, CA 94229-2714) Persons retired prior to this effective date are not affected by this vesting agreement. Please submit a copy of the appropriate agreement or MOU(s) with the vesting resolution. WHEREAS, (2) should be completed with full name of the contracting agency and recognized employee organization. WHEREAS, (3) (choose the appropriate paragraph) WHEREAS, (3) should be completed with full name of the contracting agency. WHEREAS, (4) should be completed with full name of the contracting agency. RESOLVED, (c) should be completed with full name of the contracting agency. RESOLVED, (d) should be completed with the date the coverage is to become effective. Because resolutions serve as our legal contract, we require the original resolution, certified copy with original signatures, or a copy of the resolution with the agency’s raised seal. For resolution processing, deliver to the following: Overnight Mail Service Regular Mail California Public Employees’ Retirement System CASD, Contract & Membership Services Section 400 Q Street Sacramento, CA 95811-6210 California Public Employees’ Retirement System CASD, Contract & Membership Services Section PO BOX 942714 Sacramento, CA 94229-2714 The certification shown following the resolution is to be completed by those individuals authorized to sign for the Public Agency in legal actions and is to include the name of the executive body; i.e. Board of Directors, Board of Trustees, etc., the location and the date of signing. NEW PERS BY GROUP EQUAL 1 FIXED Revision November 2012 NOT YET APPROVED RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO ELECTING TO BE SUBJECT TO THE PUBLIC EMPLOYEES’ MEDICAL AND HOSPITAL CARE ACT WITH RESPECT TO MEMBERS OF PALO ALTO POLICE MANAGEMENT ASSOCIATION AND FIXING THE EMPLOYER’S CONTRIBUTION AT AN AMOUNT EQUAL TO OR GREATER THAN THAT PRESCRIBED BY GOVERNMENT CODE SECTION 22892(b) WHEREAS, (1) Government Code Section 22922(a) provides the benefits of the Public Employees' Medical and Hospital Care Act to employees and annuitants of local agencies contracting with the Public Employees' Retirement System on proper application by a local agency; and WHEREAS, (2) Section 22892(a) of the Act provides that a local contracting agency shall fix the amount of the employer's contribution; and WHEREAS, (3) City of Palo Alto hereinafter referred to as Public Agency, is a local agency contracting with the Public Employees' Retirement System; and WHEREAS, (4) The Public Agency desires to obtain for the members of Palo Alto Police Management Association who are employees and annuitants of the agency, the benefit of the Act and to accept the liabilities and obligations of an employer under the Act and Regulations; now, therefore, be it RESOLVED, (a) That the Public Agency elects, and it does hereby elect, to be subject to the provisions of the Act; and be it further RESOLVED, (b) That the employer's contribution for each employee or annuitant shall be the amount necessary to pay the full cost of his/her enrollment, including the enrollment of family members, in a health benefits plan or plans up to a maximum of the minimum employer contributions per month as prescribed in Section 22892(b)(1) of the Government Code dollars per month, plus administrative fees and Contingency Reserve Fund assessments; and be it further RESOLVED, (c) That City of Palo Alto has fully complied with any and all applicable provisions of Government Code Section 7507 in electing the benefits set forth above; and be it further RESOLVED, (d) That the participation of the employees and annuitants of City of Palo Alto shall be subject to determination of its status as an “agency or instrumentality of the state or political subdivision of a State” that is eligible to participate in a governmental plan within the meaning of Section 414(d) of the Internal Revenue Code, upon publication of final Regulations pursuant to such Section. If it is determined that City of Palo Alto would not qualify as an agency or instrumentality of the state or political subdivision of a State under such final Regulations, CalPERS may be obligated, and reserves the right to terminate the health coverage of all participants of the employer. NEW PERS BY GROUP EQUAL 1 FIXED Revision November 2012 RESOLVED, (e) That the executive body appoint and direct, and it does hereby appoint and direct, the People Strategy and Operations Department Assistant Director to file with the Board of Administration of the Public Employees' Retirement System a verified copy of this Resolution, and to perform on behalf of said Public Agency all functions required of it under the Act and Regulations of the Board of Administration; and be it further RESOLVED, (f) That coverage under the Act be effective on December 1, 2013. Adopted at a regular/special meeting of the ________________________ at ____________________ this _________ day of __________________ 20__. Signed: _________________________________ (President, Chairman, etc.) Attest: _________________________________ (Secretary or appropriate officer) NEW PERS BY GROUP EQUAL 1 FIXED Revision July 2009 INSTRUCTIONS This resolution form is the approved form designated by the Public Employees' Retirement System. It should be used by a Public Agency to assure proper filing with the Public Employees' Retirement System for the combined purpose of: 1. Contracting for coverage under the Public Employees' Medical and Hospital Care Act (PEMHCA), and 2. Fixing the employer's contribution toward employees' health insurance at an amount equal to or greater than that prescribed in GC 22892(b) If the resolution (RESOLVED) is filed on or before the tenth day of any month, it will be effective on the first of the following month (date stamped as received in the office of the Board of Administration, Public Employee's Retirement System, 400 Q Street, P.O. Box 942714, Sacramento, CA 94229-2714) WHEREAS, (3) should be completed with full name of the contracting agency. WHEREAS, (4) should be completed with full name of the recognized employee organization. RESOLVED, (b) should be completed to specify the amount of the employer's (agency or district) contribution toward the cost of enrollment for active employees and annuitants. The amount specified by this Resolution would be an amount equal to or greater than that specified in Section 22892(b) as authorized by Section 22892(a) of the Government Code. Minimum employer contributions as prescribed in Section 22892(b). Commencing January 1, 2009, the employer contribution shall be adjusted annually by the Board to reflect any change in the medical component of the Consumer Price Index, and shall be rounded to the nearest dollar. RESOLVED, (c) should be completed with full name of the contracting agency. RESOLVED, (d) should be completed with full name of the contracting agency. RESOLVED, (e) requests the position title of the individual who handles the Public Employees' Medical and Hospital Care Act contract for the Public Agency. RESOLVED, (f) should be completed with the date the coverage is to become effective. Because resolutions serve as our legal contract, we require the original resolution, certified copy with original signatures, or a copy of the resolution with the agency’s raised seal. For resolution processing, deliver to the following: Overnight Mail Service Regular Mail California Public Employees’ Retirement System CASD, Contract & Membership Services Section 400 Q Street Sacramento, CA 95811-6210 California Public Employees’ Retirement System CASD, Contract & Membership Services Section PO BOX 942714 Sacramento, CA 94229-2714 The certification shown following the resolution is to be completed by those individuals authorized to sign for the Public Agency in legal actions and is to include the name of the executive body; i.e. Board of Directors, Board of Trustees, etc., the location and the date of signing. CITY OF PALO ALTO CITY COUNCIL EXCERPT MINUTES Page 1 of 2 Special Meeting June 24, 2013 13. Resolution 9359 entitled “Resolution of the City of Palo Implementing Terms for Utilities Managers and Professionals Association of Palo Alto Pursuant to California Government Code Section 3505 (continued from June 17, 2013)”. Sandra Blanch, Assistant Director of Human Resources, reported the City negotiated with the Utilities Managers and Professionals Association of Palo Alto (UMPAPA) for two years. On April 30, 2013 UMPAPA declared an impasse and requested that the City's last best offer be presented to the Council for implementation. Key terms for implementation were similar to terms included in the Management and Professional Group Compensation Plan. UMPAPA employees would pay the full employee retirement contribution and would receive a 3 percent pension offset and additional salary increases. Medical cost sharing would be consistent with other bargaining units. New division managers and assistant department directors would be at will employees upon hire. Director Valerie Fong was the only Utilities Manager not subject to UMPAPA. The benefit for professional development would decrease from $1,500 to $500 per year. Government Code Section 3505 required the City to bargain with UMPAPA prior to the end of the fiscal year. James Keene, City Manager, understood the main concerns were compensation, placement of employees within the marketplace, and the risk of losing key employees. The proposal was unusual for an imposed contract in that the City advocated for significant pay adjustments. Concessions were similar to concessions granted by other bargaining units. It was important for the Utilities Managers to be competitive in the marketplace. MOTION: Council Member Klein moved, seconded by Vice Mayor Shepherd to approve a Resolution (Attachment A) implementing the changes described in the City’s Last, Best, and Final Offer to employees in the Utilities Managers and Professionals Association of Palo Alto (UMPAPA). Vice Mayor Shepherd believed Utilities Staff were dedicated and hard working, and hoped the dialog would continue. EXCERPT MINUTES Page 2 of 2 City Council Special Meeting Excerpt Minutes: 6/24/13 Council Member Burt stated the City lost key employees in the Utilities Department because of market changes. The terms granted significant salary increases in order for the City to retain skilled employees. MOTION PASSED: 7-0, Holman, Scharff absent 14. Adoption of a Resolution 9360 entitled “Resolution of the City of Palo Approving Terms for Palo Alto Police Managers' Association (continued from June 17, 2013)”. Kathy Shen, Chief People Officer, reported Palo Alto Police Managers' Association (PAPMA) agreed to pay the full 9 percent retirement contribution with a 3 percent offset. Marcie Scott, Employee Relations Manager, indicated PAPMA was comprised of seven employees in two classifications. The agreement would align PAPMA with other manager groups in terms of overall benefit concessions. Salary ranges for Police Captain and Police Lieutenant would be consistent with the market survey. Employees would pay the full retirement contribution with a 3 percent salary offset. The City contribution for professional development would be eliminated. The annual net savings totaled approximately $81,000. Palo Alto Free Press suggested the Council review the Federal Labor Standard Act of 1938. Police Officers should be exempt employees in order to eliminate overtime costs and should be paid based upon performance. MOTION: Council Member Schmid moved, seconded by Council Member Price to 1) approve a Resolution (Attachment A) approving employee concessions and changes to benefit levels and pay for the Palo Alto Police Managers' Association (PAPMA), 2) approve and direct staff to sign the Letter of Agreement confirming that Palo Alto Police Managers' Association members pay the full CalPERS 9% member pension contribution and receive 3% salary offset as soon as administratively possible, 3) approve tentative agreement eliminating the annual Professional Development contribution of $1,500 per member effective July 1, 2013, and 4) approve tentative agreement to modify the PAPMA salary ranges pursuant to the City's Compensation Market Study, decreasing Police Lieutenant pay range by 2.11% and increasing Police Captain pay range by 10.5%. MOTION PASSED: 7-0 Holman, Scharff absent City of Palo Alto (ID # 4207) City Council Staff Report Report Type: Action Items Meeting Date: 10/28/2013 City of Palo Alto Page 1 Summary Title: Update on Infrastructure Committee Work Title: Update on the Infrastructure Committee’s Work to Evaluate Finance Measures to Fund Infrastructure Projects and Financing Measures From: City Manager Lead Department: City Manager Recommendation Accept the staff report providing an update on the Infrastructure Committee’s work to evaluate infrastructure projects and their financing. Executive Summary The Infrastructure Committee has held eight meetings since formed in February 2013. A public opinion survey was conducted in the spring of 2013 to measure public attitudes towards 14 potential infrastructure projects. This staff report provides a status of infrastructure project costs, currently available funding sources & other potential funding sources, areas of additional opinion research that could yield additional revenues to fund infrastructure needs, and schedule and next steps. The infrastructure project costs are currently estimated at $200 million including the full cost of the public safety building. Attachment A provides the current summary of project costs, committed funding, potential funding and unfunded costs, as well as the community support as polled for each of the projects. To fully understand the resource needs to fund infrastructure improvements, staff also identified available one-time funding sources that could be allocated to infrastructure projects at Council’s discretion. Attachment B provides a summary of the funds that are available under “Available One-Time Resources.” It is estimated that $57 million could be available from these funding sources should the Council choose to allocate all the revenue to infrastructure. There are also a number of new sources that could provide revenue to fund infrastructure needs (included in Attachment B). These funding sources are less certain and dependent on future policy and land use decisions. It is estimated that these new potential revenue sources collectively could yield up to $104 million to fund infrastructure needs. City of Palo Alto Page 2 The Committee has focused its discussions in several policy areas and considerations and is proceeding with further opinion research in five areas: 1. A 2% to 3% increase in the existing transient occupancy tax (TOT). 2. A special tax fee to finance parking garages (through a citywide or more localized Mello- Roos Community Facilities District). 3. A general obligation bond measure to fund transportation infrastructure. 4. A general obligation bond measure to fund public safety facilities (public safety building & fire stations). 5. A 1/8 cent sales tax increase. In addition, staff recommends evaluating the interaction of a Utility Users Tax modernization measure with other measures on the same ballot. Background The City’s Infrastructure Committee has met eight times since its formation in February 2013. Staff issued an information memorandum with the October 21, 2013 City Council Agenda packet providing the staff reports and minutes from these meetings (with the exception of the October 3 meeting). Attachment D provides the staff report and the action minutes from the October 3 meeting. An initial baseline survey was conducted in late April and early May 2013 to measure public attitudes and overall perceptions of the condition of the City’s infrastructure; test public support for 14 potential infrastructure improvement projects and several potential ballot measure packages that might combine several of the improvement projects; and evaluate types of funding mechanisms and levels of tax threshold the community is willing to support. The results of the survey were presented to the City Council at its study session on June 24, 2013. Over the Committee’s last several meetings and in its review of the survey findings, the Committee focused its discussions on key policy questions and considerations including: 1. Refining the City’s Infrastructure project costs. 2. Reconciling project costs and the Capital Improvement Program. 3. Evaluating current one-time revenue that may be applied to infrastructure at the Council’s discretion. 4. Evaluating the issuance of Certificates of Participation to fund infrastructure needs. 5. Focusing continued efforts around further study on specific projects with wide community support such as public safety and transportation. 6. Evaluating further study on bundled measures that combine multiple projects. 7. Evaluating further study on specific finance mechanisms that received more than simple majority support, as well as, Mello-Roos Community Facility Districts. The Committee is proceeding with opinion research in five areas. This staff report provides a status of infrastructure project costs, available one-time funding sources and other potential funding sources, reviews the five areas of additional research that the Committee is continuing City of Palo Alto Page 3 to explore that may yield new revenue to fund infrastructure needs, and the timeline and schedule forward. Discussion I. Status of Infrastructure Project Costs At the City Council meeting on March 18, 2013, the Council approved a list of 14 projects for public opinion polling. Those projects and several others that were not selected for polling were considered by the Infrastructure Committee in its subsequent meetings as the Committee reviewed public opinion survey results and formulated potential approaches for funding the various projects. Attachment A provides the current summary of project costs, committed funding, potential funding and unfunded costs, as well as community support for each project polled. The estimated project costs total $200 million. Funding committed to the projects through either the Five-Year Capital Improvement Program Plan (CIP Plan) or through grants received by the City totals $19 million, leaving the net unfunded cost of the projects at $180 million. The unfunded cost figure of $180 million does not include potential funding of $48 million for a Public Safety Building if the Jay Paul Company proposal is approved. The list of infrastructure projects, their estimated costs, and the committed funding for the projects have evolved over the course of the Infrastructure Committee’s eight meetings. In initial meetings and as described in the March 18, 2013 City Council staff report, the Cubberley Replace/Expand project was removed because the ultimate decisions about uses and funding mechanisms for the Cubberley site have not been made. Committed funding for the Bike Bridge and Charleston/Arastradero projects was increased by a total of $5 million due to grants received by the City in the Spring of 2013. Following the adoption of the FY 2014 Capital Budget, the Infrastructure Committee reviewed the interaction between the CIP Plan and the project list. A reconciliation of the project costs and the CIP Plan resulted in updates to the unfunded costs of the Parks, Surface and Buildings Catch-up projects and the removal of the Ventura and Streets projects. Additionally, a new emphasis on addressing parking needs for Downtown and California Avenue resulted in the development of a $35 million estimate for the construction of three new parking garages. Although these changes to the project list and costs were made through a series of meetings of the Infrastructure Committee, descriptions of most of the changes can be found in the June 6, 2013 and September 3, 2013 Infrastructure Committee staff reports. The basis for the parking garage cost estimates is described in the October 1, 2013 staff report (Attachment D). I. Currently Available Funding Sources & Other Potential Funding Sources To fully understand the resource needs to fund infrastructure improvements, staff identified available one-time funding sources that could be allocated to infrastructure projects at Council’s discretion. These funding sources include the Stanford Medical Center Development Agreement Funds, the Infrastructure Reserve, fees from the Impact and Parking In-Lieu Funds, City of Palo Alto Page 4 and the FY 2013 surplus. Attachment B provides a summary of one-time funds that are available. It is estimated that $57 million could be available from these funding sources should the Council choose to allocate all the resources to infrastructure. There are also a number of new sources that could provide revenue to fund infrastructure needs also summarized in Attachment B. The use of these potential funding sources for infrastructure projects is at the Council’s discretion and many of the sources are not certain and are dependent on future policy and land use decisions. The potential sources include: new hotel revenue, digital readerboard revenue, sales tax from an auto dealership at Municipal Service Center, lease revenue from renting the current police building (expenses associated with renovating the facility would be deducted from rental income), and lease of the Los Altos Treatment Plant site. Existing, increased or new revenue sources can be used to fund infrastructure on a pay-as-you- go basis or by using debt financing. The primary financing vehicle that does not require voter approval is Certificates of Participation (COPs). Attachment B also shows the estimated amount that could be generated by issuing COPs for infrastructure work. Based on a number of assumptions (e.g. 4.5% to 5.5% interest rate and 30 amortization period), it is estimated that for each $1 million of annual debt service through Certificates of Participation, $13-$15 million of principal can be generated. By leveraging potential new revenues for debt financing by issuing COPs, it is estimated that these new potential revenue sources collectively could yield up to $104 million to fund infrastructure needs. The August 6, 2013 Infrastructure Committee report provides additional detail on current and other potential new funding sources that may be allocated to infrastructure at the Council’s discretion. II. Areas of Additional Research The Committee is proceeding with further study in five areas: A 2% to 3% increase in the existing transient occupancy tax (TOT). A special tax to finance parking garages (through a citywide or more localized Mello- Roos Community Facilities District). A general obligation bond measure to fund transportation infrastructure. A general obligation bond measure to fund public safety facilities (public safety building & fire stations). A 1/8 cent sales tax increase. Attachment B summarizes expected revenue from each of the options and the polling support (if tested). Attachment A of the October 1, 2013 staff report (Attachment D) also provides example project funding scenarios that include options for using a TOT increase or General Obligation bonds, as well as a Mello-Roos Community Facilities District to provide funding for infrastructure projects. City of Palo Alto Page 5 Transient Occupancy Tax The Committee recommends further evaluating community support for a 2 percent or 3 percent increase in the City’s Transient Occupancy Tax (TOT) which is currently 12 percent. A Transient Occupancy Tax, commonly known as the "hotel tax," is charged by the City to guests at hotels located in Palo Alto. The tax is computed by multiplying the rent charged by the hotel operator by the tax rate percentage. Hotel tax revenue currently accounts for 11.5 percent of the City's total general fund revenue. Data from the baseline survey on infrastructure projects and funding mechanisms indicates a potential to pass a TOT increase to fund a variety of general infrastructure needs, especially those needs related to public safety and transportation. Sixty two (62) percent of voters supported a general TOT increase although specific increases such as 2 percent were not tested. Such a measure could be structured as a general tax requiring a simple majority approval from voters. Only a small portion of the initial survey was devoted to a potential TOT measure. To provide a definitive recommendation on the viability of this option, a follow-up survey will test this specific funding mechanism at both a 2 and 3 percent increase. An increase in the TOT rate from 12 to 14 percent on base revenue would yield an additional $1.8 million annually. A three percent rate increase to 15% would raise another $0.9 million to total $2.7 million. New hotels coming on line in the next few years are anticipated to yield $2.4 million at the 12 percent rate. The effect of a 2 percent increase yields another $0.4 million while a 3 percent hike would result in $0.6 million. Thus, the combination of a 2 percent rate increase and new hotel revenues would provide $4.6 million in additional revenue while a 3 percent increase would yield $5.7 million. Table 2 below illustrates these results: Table 2. TOT Increases 2% TOT Increase 3% TOT Increase Increase 2% 14% Increase 3% 15% Current base $1.8M Current Base $2.7M New Hotels $2.8M New Hotel $3.0M $4.6M $5.7M As illustrated in Attachment B, staff estimates at this time that for each $1.0 million in resources, $14.0 million in project funds can be generated by issuing Certificates of Participation (COPs). Hence, a 2 percent increase in the TOT combined with new hotel revenues results in $4.6 million in new revenue that, in turn, translates into $64.4 million in project funds; a 3 percent increase results in $5.7 million that generates $79.8 million in project funds. City of Palo Alto Page 6 Mello-Roos Community Facilities District The Committee is proceeding with additional polling to evaluate community support for a Mello-Roos Community Facilities District (CFD). A CFD is a legal entity in which voters agree to tax themselves to finance new capital improvements and/or new operating costs. The special tax, as envisioned for the type of district described below, would require approval by two-thirds (2/3) of registered voters within the district. The taxes are secured by a continuing lien and are levied annually against property within the district. The October 1, 2013 Committee meeting staff report (Attachment D) and the September 3, 2013 Committee meeting staff report provide additional detail on the formation of a CFD including basic requirements, key considerations, and exploration of two hypothetical districts. The examples provide cost estimates for building garages, a hypothetical tax allocation methodology, and a range of hypothetical financial impacts on parcels within the assumed districts. The basic premise underlying the examples provided is that those parcels generating the most intensive use of garages would bear a greater burden of cost to construct the garages than those having limited use. One of the two examples provided would create a citywide CFD for which three (3) new garages would be built at a cost of $35 million. Two garages would be located downtown and one in the California Avenue area. These garages would provide a total of 575 new or incremental spaces. A professional analysis must be conducted to determine each parcel’s share of the garages’ costs, but a rudimentary estimate by staff indicates a rough range of $9 to $24 per residential parcel and a higher range for commercial properties. Again, all assumptions and financial impacts in the examples provided are for illustration purposes only and will change. If the Council and public indicate a willingness to move forward with a CFD, the next step is to hire a consultant who will develop a rigorous and thorough preliminary rate and tax allocation methodology and to facilitate the CFD election process with the City. Consultant costs are roughly estimated at $20 to $35 thousand. The City’s baseline survey did not test community support for a CFD since staff raised the idea after the poll was conducted. The baseline survey did examine general support for funding parking garages and the idea received low ratings: 44 percent for Downtown and 46 percent for California Avenue. The City’s opinion research consultants have advised, given this low level of general support and no matter how the CFD boundaries are drawn, that a measure to fund parking garages requiring two-thirds support from residents is not likely to be approved. The baseline survey, however, did not specify what tax levels residents could tolerate. The Committee is proceeding with further polling to test support for a citywide or more localized CFD. Given the keen awareness and need for comprehensive traffic and parking solutions, the Committee believes a fresh look at a CFD as one part of the solutions is warranted. City of Palo Alto Page 7 General Obligation Bond Measure to Fund Transportation Infrastructure The City’s baseline survey tested the level of public support for five different potential bond or tax measures that represent combinations of individual projects, with the wording of each potential measure structured as it might appear in an actual ballot measure – minus a funding mechanism and dollar figure. Four measures were found to have support levels greater than two-thirds. A bundled transportation measure (A Traffic Congestion Relief and Safe Streets, Sidewalks and Trails Measure) to fund repairs and improvements to streets, sidewalks, and nine miles of off-road trails elicited support from 74% of voters. The Infrastructure Committee is proceeding with further study on the potential to pass a bond measure to fund a portion of the identified funding needs if the projects included in a measure were bundled to focus on one of the two high priority issues of concern to voters: public safety and transportation. Accordingly, one approach to funding garages to relieve parking, traffic and related transportation concerns, would be to include these projects as part of a larger bundled transportation bond measure, which would require two-thirds approval by voters. While parking garages did not rank among the top priority projects in the voter survey, they could be packaged with other priority projects and presented as part of a comprehensive solution to Palo Alto’s transportation, traffic, and parking needs. As illustrated in Attachment B, a $66.4 million bond could fund the remaining amount for the Bike/Pedestrian Plan, Bike Bridge, Charleston/Arastradero, California Avenue Parking Garage, Downtown Parking Garages, and additional sidewalk spending. A $66.4 million transportation bond is estimated to impact the property taxes for the median assessed value single family home by $116 per year. General Obligation Bond Measure to Fund Public Safety (Fire Stations & Public Safety Building) The baseline survey indicated that a ballot measure to fully fund a public safety building is unlikely to receive two-thirds support; however, according to FM3, the public share of a public- private partnership or the full cost of a public safety building could win approval as part of a broader package. A bundled public safety measure (Fire, Paramedic, Police, Seismic Safety and Emergency Response Measure) to fund fire stations and the public safety building elicited support from 68% of voters. Over the past year, the Jay Paul Company proposal for a Planned Community (PC) zone change at 395 Page Mill and 3045 Park Blvd has been the subject of extensive staff review and multiple public hearings. Jay Paul Company is proposing a Planned Community (PC) zone change at 395 Page Mill and 3045 Park Blvd. that, if approved, would allow construction of office buildings at 395 Page Mill Road, and a three-story approximately 44,500 square foot public safety building (as the primary proposed public benefit). The City’s share of the cost for the Public Safety Building under the proposal is estimated to be $9 million. City of Palo Alto Page 8 The project was formally initiated by the Planning and Transportation Committee at its May 29, 2013 meeting and received a preliminary review by the Architectural Review Board on September 19, 2013. On September 16, 2013 the Council reviewed and commented on a preliminary Public Benefit economic analysis that concluded that the current proposed public benefit is reasonable from a financial perspective and would allow the developer to obtain a return on investment consistent with market standards. The City was also planning to present the preliminary traffic study in September 2013, but staff was concerned about a number of assumptions made in the traffic report, and therefore did not believe it accurately described potential impacts; an updated traffic study is currently scheduled to be reviewed by Council in a Study Session on December 9. Staff anticipates that Council will be able to fully consider the project and its traffic and environmental impacts, and to make a final decision on project approval, in 2014. However, staff believes that sufficient information on the project will be available in spring of 2014 for Council to decide whether or not to include funding for a Public Safety Building in any potential 2014 infrastructure revenue measure. If the development does not proceed and an alternate new location is needed for the public safety building, the City may not be prepared to proceed with a finance measure that addresses funding for a public safety building until 2016 to allow time for the acquisition of the property, and the plan/design/EIR review process. The Infrastructure Committee is proceeding with further study on the potential to pass a bond measure to fund a portion of the public safety needs or the full cost of the fire stations and public safety building. As illustrated in Attachment B, a $71.2 million general obligation bond for public safety (funding the fire stations and public safety building) is estimated to impact property taxes for the median assessed value single family home by $124 per year. A general obligation bond to fund the fire stations and the City share of the public safety building under the Jay Paul proposal is $23.2 million, and is estimated to impact property taxes for the median assessed value single family home by $40 per year. Sales Tax While polling support for a sales tax increase was significantly lower than typically observed at 38%, FM3 highly recommended that the City conduct additional polling on a sales tax measure. The unusually low support may have resulted from the phrasing of the question and not specifying a rate. The Committee is proceeding with further study on community support for a 1/8 cent sales tax increase to fund infrastructure improvements, as well as, testing other increments. As illustrated in Attachment B, the City’s current sales tax is 1%. An increase to 1.125% or 1/8 cent would yield $2.6 million in additional revenue, which could be leveraged to generate $36.4 million using COPs. Utilities Users Tax Modernization Given the City’s ongoing need to seek voter approval for an update to its existing Utility Users Tax (UUT) ordinance, additional surveying may also provide an opportunity to assess the interaction between other finance measures and a UUT measure. This information could help City of Palo Alto Page 9 to determine whether it would be advisable to place these measures on the same ballot and to evaluate the basic viability of a UUT update measure. Staff also recommends evaluating reactions to the infrastructure measures in the context of a UUT modernization measure. Staff has identified two areas where the UUT, which was adopted in 1987, requires modernization. The first area is the telephone user tax. Since 1987, communication technology has expanded and usage patterns have shifted. Many cities have "refreshed" their UUT's to take into account these changes. Staff also recommends that the modernization include a provision for new technologies that may develop in the future. In addition, the overall UUT structure provides a discount for large volume commercial users. This applies to the following utilities: gas, water and electric. This discount can be viewed as contrary to current city goals of energy conservation. Council may want to consider eliminating this discount or even increasing the tax rate for large volume users. Timeline Given the Committee’s direction and subsequent consultation with staff, FM3 and TBWB recommend next steps as follows: A second poll, to be conducted in November, which will test the basic feasibility of all five concepts – testing 75-word ballot language for all five; gauging support for key structural elements of each measure; and testing single comprehensive pro and con arguments on each. Staff will return to the Committee and Council with the results and request further guidance from the Committee and Council. If the City narrows options and proceeds with further study, a third poll will be recommended to explore support for one or two favored options in more detail (with a much more robust test of project elements and pro and con messages, and also in the context of a potential UUT modernization measure). The survey would be conducted in lieu of conducting focus groups to refine communication messages. As previously approved by Council, a final tracking survey would also be conducted in April 2014 before any final decision to place a measure on the November 2014 ballot. The recommended approach and detailed timeline is provided in a memorandum from FM3 included as Attachment C. Resource Impact No changes to the budget are requested. The additional surveying may be completed within the current budget. An additional telephone survey will be completed in lieu of focus groups. Attachments: Attachment A. Infrastructure Project Summary Sheet (PDF) Attachment B. Funding Sources (PDF) Attachment C. Proposed Phase II Opinion Research and Schedule (PDF) City of Palo Alto Page 10 Attachment D. October 1, 2013 Infrastructure Committee Staff Report & Action Minutes (PDF) In f r a s t r u c t u r e P r o j e c t S u m m a r y S h e e t (a l l c o s t s / r e v e n u e s i n m i l l i o n s o f d o l l a r s ) Oc t o b e r 2 8 , 2 0 1 3 Th e p r o j e c t i n f o r m a t i o n a n d c o s t e s t i m a te i n f o r m a t i o n o n t h i s s h e e t r e p r e s en t s t a f f ’ s b e s t i n f o r m a t i o n a t t h i s t i m e . S t a f f w i l l c o n t i n u e t o r e f i n e t h e i n f o r m a t i o n a s n e w a n d m o r e p r e c i s e i n f o r m a t i o n b e c o m e s a v a i l a b l e . Pr o j e c t s c o s t s a n d p r o j e c t - s p e c i f i c f u n d i n g Po l l i n g S u p p o r t ( s u m o f s t r o n g l y an d s o m e w h a t s u p p o r t i v e ) P r o j e c t P o l l i n g C o s t CI P T o t a l Fu n d i n g Es t i m a t e d Co s t Co m m i t t e d Fu n d i n g Ne t C o s t w i t h Co m m i t t e d Po t e n t i a l Fu n d i n g Ne t C o s t w i t h Co m m i t t e d an d P o t e n t i a l 72 % Fi r e S t a t i o n s 1 4 0 1 4 . 2 0 1 4 . 2 0 1 4 . 2 67 % Sidewalks 6 8 . 5 6 0 6 0 6 67 % Pa r k s C a t c h U p 10 6 . 5 8 . 9 0 8 . 9 0 8 . 9 65 % Bi k e / P e d e s t r i a n P l a n 2 5 8 . 7 5 2 5 8 . 7 5 1 6 . 2 5 0 1 6 . 2 5 61 % Bi k e B r i d g e 6 9 . 8 6 1 0 8 . 3 5 1 . 6 5 0 1 . 6 5 52 % Public S a f e t y B u i l d i n g 5 7 0 5 7 0 5 7 4 8 9 52 % Ch a r l e s t o n / A r a s t r a d e r o 8 0 . 2 5 9 . 7 5 2 . 2 7 7 . 4 8 0 . 3 5 7 . 1 3 47 % An i m a l S e r v i c e s C e n t e r 7 0 6 . 9 0 6 . 9 0 6 . 9 46 % Playing F i e l d s ( a t G o l f C o u r s e ) 6 0 6 0 6 0 6 46 % Ca l . A v e n u e P a r k i n g G a r a g e 1 2 0 1 6 . 5 0 1 6 . 5 0 1 6 . 5 44 % Do w n t o w n P a r k i n g G a r a g e 2 1 0 1 8 . 4 0 1 8 . 4 0 1 8 . 4 38 % History M u s e u m a t R o t h B u i l d i n g 3 0 3 0 3 0 3 no t p o l l e d By x b e e P a r k na 0 3 . 6 0 3 . 6 0 3 . 6 no t p o l l e d Su r f a c e C a t c h U p n a 4 . 5 3 . 4 0 3 . 4 0 3 . 4 no t p o l l e d Bu i l d i n g s C a t c h U p n a 0 . 3 4 . 2 0 4 . 2 0 4 . 2 no t p o l l e d Cu b b e r l e y D e f e r r e d M a i n t e n a n c e n a 0 6 . 9 0 6 . 9 0 6 . 9 no t p o l l e d Ci v i c C e n t e r n a 0 t b d 0 t b d 0 t b d Su b t o t a l s : 1 9 9 . 8 1 9 . 4 1 8 0 . 4 4 8 . 4 1 3 2 . 0 two-thirds support less than majority support majority support AttachmentB.RevenueSources (allrevenuesinmillionsofdollars)AvailableOneTimeResources StanfordDAforInfrastructure/Housing 22.1 StanfordDAforSustainability 12.3 Parks 1.0 CommunityCenters 1.4 DowntownInLieuParkin g 1.2 InfrastructureReserve(610million) 8.0 TwoParcelsonMiddlefieldRoad* 2.2 FY2013Surplus 8.5 Subtotal 56.7 *futureCouncilactionwould beneededforsal e ExpectedOngoingRevenues NewHotels 2.4Estimatedtogenerate$33.6millioninCOPs Subtotal 2.4 PotentialOngoingRentalRevenues AutoDealershipatMSC Leaserevenue 0.8Estimatedtogenerate$11.2millioninCOPs PoliceBuilding LeaseRevenue 1.4Estimatedtogenerate$19.6millioninCOPs (Doesnotincluderenovationcosts) DigitalReaderboard 0.8Estimatedtogenerate$11.2millioninCOPs LATPRentalRevenue 1.32 Estimatedtogenerate$18.2to$28.0millioninCOPs Subtotal 4.35 PotentialRevenueFromFinanceMeasures PollingSupport TOTIncrease(includesnewhotels) From12%to14%(2%increase) 2.2 Estimatedtogenerate$30.8millioninCOPs From12%to15%(3%increase) 3.3 Estimatedtogenerate$46.2millioninCOPs CitywideMelloRoosCommunityFacilitiesDistricttobuildgarages Downtowngarages(2) 18.4 Commercialandresidentialassessmentswouldbe na CaliforniaAvenuegarage(1) 16.5 calculatedas partofafuturestudy na GOBonds GOBondsforPublicSafetyat$71.2million (includesfullcostofpublicsafetybuilding) 71.268% GOBondsforPublicSafetyat$23.2million (includesCityshareofpublicsafetybuilding underJayPaulproposal) 23.268% GOBondsforTransportation@66.4million 66.4 74% SalesTaxIncrease From1.0%to1.125%or1/8cent 2.6 Estimatedtogenerate$36.4millioninCOPs 38% Estimatedtoimpactmediansinglefamilyhome assessedvalueby$124peryear Estimatedtoimpactmediansinglefamilyhome assessedvalueby$40peryear Estimatedtoimpactmediansinglefamilyhome assessedvalueby $116peryear 62% AttachmentC.ProposedPhaseIIOpinionResearchandSchedule 2425 Colorado Avenue, Suite 180 Santa Monica, CA 90404 Phone: (310) 828-1183 Fax: (310) 453-6562 1999 Harrison Street, Suite 1290 Oakland, CA 94612 Phone: (510) 451-9521 Fax: (510) 451-0384 TO: City of Palo Alto FROM: David Metz and Shakari Byerly Fairbank, Maslin, Maullin, Metz & Associates RE: Proposed Structure for Phase II Opinion Research for Palo Alto Infrastructure Financing DATE: October 22, 2013 Following the Infrastructure Committee’s meeting earlier this month and subsequent consultation with City staff and TBWB, FM3 is recommending a revised program of opinion research for Phase II of our study of local voter support for various infrastructure finance options. We are not recommending any changes to the number of surveys we had originally suggested (still two to be conducted in the near term, plus a final tracking survey to be conducted before potential Council action next year), nor are we recommending any changes to the project budget. We recommend conducting two surveys in sequence: the first would assess broad relative levels of support for all five measures (testing specific ballot language and structural elements that were not explored in this spring’s survey), and the second survey – based on learnings from the first – would offer a more in-depth exploration of messaging and structural elements for up to two of those measures that the City designates as its preferred options for a 2014 ballot. The balance of this memo presents a proposed structure for each survey, and lays out a timetable for the research and associated communications work. First Survey The first survey will be a 20-minute survey of 600 Palo Alto voters, with a margin of sampling error of +/- 4.0%. Page 2 FM3 will develop the survey instrument in collaboration with the City and TBWB. The research will explore some of the following topics: Gauging levels of support in response to a draft 75-word ballot measure summary for all five potential measures; Testing critical structural elements of each measure, such as the TOT rate; the key project elements for a bond measure; and the scope, structure and cost of a CFD; Assessing shifts in support in reaction to single, comprehensive pro and con messages on each measure; and Comprehensive demographic characteristics. Upon completion of this research, we will make recommendations to the Council and staff about which ballot measure concepts have the greatest potential for success. The results will be presented to the City Council on December 16th (and to the Infrastructure Committee before Thanksgiving) at which point we will receive direction for the content of the second survey. Second Survey Based on direction from the Infrastructure Committee in November upon receipt of the first survey, FM3 will begin to design the second survey. Final Council direction in December will confirm which potential measures (if any) the Council wishes to focus on, and FM3 will finalize the second survey around those concepts. Again, FM3 will develop the second survey instrument in collaboration with the City and TBWB, but we envision that it will explore some of the following topics: Support for refined 75-word ballot labels for each potential measure; Exploration of any structural elements of either measure that still need to be evaluated, based on the findings of the first survey; Assessment of the impact a UUT modernization measure might have on support for the ballot measure concepts under consideration; Detailed assessment of pro and con messages, and their impact on support for each measure; and Comprehensive demographic characteristics. We envision that the poll will take place right after the New Year. Concurrent with this second round of polling, and based on direction from the Council in December, TBWB will commence with developing a program of public outreach around the two final measures being explored in the final survey, with the nature and content of those plans finalized once the survey is out of the field in mid-January. Survey results will be ready for reporting to the Infrastructure Committee and City Council in late January or early February. After that Council meeting, TBWB will have authorization to begin outreach in earnest. Page 3 Timeline The following timeline describes key steps to be taking on research and outreach between now and next year’s elections. October Authorization to proceed with first Phase II survey Evaluate proposed methodology and finalize research plan Preparation of first draft of survey questionnaire Finalization of questionnaire November Obtain client approval of final survey instrument Administer telephone survey Generate topline and cross tabulation of survey results Presentation of first Phase II survey results to Infrastructure Committee Begin to draft second Phase II survey based on Committee direction, pending Council meeting December Presentation of first Phase II survey results to City Council Obtain Council direction on content of second Phase II survey Develop outreach plan based on Council direction Develop list of key community members for proposed outreach Review community materials for outreach January Obtain client approval of second Phase II survey instrument Administer telephone survey Generate topline and cross tabulation of survey results Presentation of second Phase II survey results to Infrastructure Committee Based on Survey results, refine outreach plan Begin outreach February Presentation of second Phase II survey results to City Council Continue outreach to key leaders March Preparation of first draft of tracking survey questionnaire Broaden informational outreach to all voters Page 4 April Authorization to proceed with tracking survey Evaluate proposed methodology and finalize research plan Obtain client approval of final tracking survey instrument Administer telephone survey Generate topline and cross tabulation of tracking survey results Continue outreach to key leaders and all voters Community Meeting re: Proposed Measure (1 of 2) May Develop presentation and reporting materials Schedule presentation of final results to key stakeholders Begin building coalition of leaders who support proposed measure Community Meeting re: Proposed Measure (2 of 2) June Council to make Decision to Place Measure on Ballot Continue outreach as needed July Adopt Resolution of Necessity August City Clerk Files Ordinance Transition to Independent Campaign Committee September - November Independent Campaign Committee works to pass proposed measure Of course, we will be happy to modify this timeline and proposed approach to the research at your request. Please let us know if you have any questions. City of Palo Alto (ID # 4135) Infrastructure Committee Staff Report Report Type: Meeting Date: 10/1/2013 City of Palo Alto Page 1 Summary Title: Infrastructure Finance Measure Title: Continue Discussion from September 3, 2013 Infrastructure Committee Meeting and Make Recommendations to the City Council on Next Steps in Considering a Potential Infrastructure Finance Measure From: City Manager Lead Department: City Manager Recommendation Staff recommends that the Infrastructure Committee continue discussion from the September 3, 2013 Infrastructure Committee meeting and make recommendations to the City Council on next steps in considering a potential infrastructure finance measure. Executive Summary At the September 3, 2013 Infrastructure Committee meeting, the Committee directed staff to return to the Committee with a draft plan, staff recommendation and options for a potential 2014 ballot measure, including using a Mello-Roos District (MR District) to fund parking garages. The Committee also encouraged staff to provide input on next steps, where appropriate, in light of comments received from Committee members. Staff evaluated further the use of a MR District as a solution to building additional parking garages and has provided a plan for proceeding should the Committee and Council elect to continue further study on formation of a MR District. There are a number of factors that the Committee should consider in determining whether to move forward at this time. Based on experience in other cities, the City’s research consultant does not believe that a measure to fund parking garages that requires two-thirds support from a residential taxpayer base is likely to be approved. While that may be the experience in other cities, register voters in Palo Alto may understand the particular parking issues in Palo Alto and provide a different outcome. The Committee also asked staff to evaluate potential public/private partnerships to build parking garages. Staff recommends proceeding with a request for proposals (RFP) to solicit public-private partnerships to build mixed-used parking on downtown, city-owned lots. City of Palo Alto Page 2 Staff recommends that the Committee consider whether to proceed with further opinion research on one or more of the following potential finance measures: 1. MR District to build parking garages. 2. Transient Occupancy Tax (TOT) increase to fund infrastructure needs. 3. Bundled general bond transportation measure that combines multiple projects. 4. Bundled public safety bond measure that combines the fire stations and public safety building. Concurrent to polling on any priority measures, the City’s communications consultant, recommends that the City reach out to key stakeholders for input and to help build consensus around a ballot measure proposal. For example, if the Council is considering increasing the TOT, the City should consult with Palo Alto hotel owners and managers. If the Council is considering a bundled transportation or public safety measure, the City should consult with key transportation-related or public safety-related stakeholders. Background On June 6, 2013, the City’s Infrastructure Committee reviewed the preliminary findings of a baseline survey assessing the community’s opinions about a potential finance measure to fund infrastructure needs. On August 6, 2013 and September 3, 2013, the Committee continued its discussions and assessment of a potential finance measure to fund infrastructure needs and recommendations that the Committee may make to the full Council about: 1) areas of further study for opinion research, 2) uses of current or potential new revenue sources to fund infrastructure projects, or 3) other next steps. At the September 3, 2013 Infrastructure Committee meeting, the Committee directed staff to return to the Committee with a draft plan, staff recommendation and options for a potential 2014 ballot measure, including using a MR District to fund parking garages. The Committee also encouraged staff to provide input on next steps, where appropriate, in light of comments received from Committee members. The minutes for the September 3 Infrastructure Committee meeting are included as Attachment E. Discussion Based on the baseline survey results, consultant recommendations, and Committee discussion and input over the last several meetings, staff recommends that the Committee consider whether to proceed with further opinion research on one or more of the following potential finance measures: 1. MR District to build parking garages. 2. Transient Occupancy Tax (TOT) increase to fund infrastructure needs. 3. Bundled general bond transportation measure that combines multiple projects. 4. Bundled public safety bond measure that combines the fire stations and public safety building. City of Palo Alto Page 3 An overview of each measure is described below along with an outline of next steps. At the September 3, 2013 Infrastructure Committee meeting, staff reviewed with the Committee a sample project funding scenario that included options for using a TOT increase or General Obligation bonds, as well as MR Districts or assessment districts, to provide funding for infrastructure projects. Based on feedback from the Committee and consultant recommendations, staff updated the project funding scenario information to provide four distinct funding scenarios (Scenarios #1 through #4), that are provided in Attachment A. Each of the four scenarios utilizes one infrastructure revenue measure – TOT increase, MR District, bundled transportation GO bond, or bundled public safety GO bond – to fund certain projects, with funding for other high priority projects provided by existing or projected revenue sources. All four of the scenarios would use an identical approach for the remaining projects (Surface Catch-up, Buildings Catch-up, Animal Services Center, Playing Fields, History Museum, and Cubberley Deferred Maintenance), as outlined in Attachment A. The following changes to project costs and available revenue sources are also incorporated in the funding scenarios: 1. The estimated and unaudited general fund surplus for FY 2013 is $8.5 million, and based on the Council approved reserve policy the funds are expected to be transferred to the Infrastructure Reserve. These funds are designated in the scenarios as “FY 2013 surplus.” 2. The Downtown Parking Garage estimate of $21 million has been reduced to $18.4 million. This change is due to the development of a new estimate of 303 additional spaces that could be built in garages on existing surface lots D (Hamilton Avenue & Waverly Street and P (High Street between University Avenue and Hamilton Avenue), as further described below. Other downtown lots can be considered for garage construction as well, but further funding would need to be identified. 3. The California Avenue Parking Garage estimate of $12 million has been increased to $16.5 million. This change is due to the development of a new estimate for a 391 space parking garage on Lot 8 located on Sherman Avenue between El Camino Real and Ash Street; this lot would provide an increase of 272 parking spaces over the existing 119 space surface lot as further described below. The City’s opinion research and communications consultants’ (Fairbank, Maslin, Maullin, and Metz and TBWB) recommendations on next steps are summarized below and included in Attachment B. 1. Set aside further study on a MR District. 2. Proceed with a finance measure survey with a primary focus on the TOT, and sales tax as a secondary concern. The interaction of a UUT update on the same ballot may also be measured. City of Palo Alto Page 4 3. Proceed with a bundled transportation bond measure survey. 4. Sequence further study as needed on a bundled public safety bond measure in 2014 as related funding issues are more certain. Formation of a Mello-Roos District to Build Parking Garages At the September 3, 2013 Infrastructure Committee meeting, staff outlined the basic requirements of a MR District and how it could be used to fund new parking garages. The Committee requested additional information on potential district boundaries, the number of new garages, and the potential financial impact on property owners. Before providing a preliminary and conceptual outline of a district, some of the key requirements of a MR District bear repeating: 1. If there are fewer than 12 registered voters within the district then election involves a landowner vote; if there are 12 or more registered voters in district, then election involves a registered voter election. Approval requirement is two-thirds (2/3) of voters 2. A MR District requires a “reasonable” basis for its special tax. State code defines “reasonable” as “based on a benefit received by parcels of real property, the cost of making facilities or authorized services available to each parcel, or some other reasonable basis as determined by the legislative body." 3. The special tax is levied pursuant to a rate and method of apportionment (called the "RMA" or "tax formula"), which can assign tax rates on a variety of criteria or one or more of the following factors: Land use: the RMA could assign different tax rates to single family residential, multifamily residential, commercial, retail, etc. Intensity of land use: the RMA could assign different tax rates based on square footage. Proximity to a facility: the RMA could establish tax zones whereby those properties closest to the facility would pay more. Expected burden on a garage: the RMA could assign a tax rate based on the number of car trips expected at different properties or even sales transactions. Requirements 2 and 3 above have not been fully explored and vetted. If the Committee and Council decide to move forward with a MR District, staff would hire a consultant and outside legal counsel to further evaluate the MR requirements and advise the Council on potential measures that meet these conditions. To assist the Committee, staff has delineated two potential districts, estimated costs for new garages, and developed a strictly hypothetical method of apportionment. These are provided for illustration purposes only. All assumptions and financial impacts illustrated below will change if a MR District proposal moves forward and information is refined. Again, neither a “reasonable” basis nor a final “method of apportionment” is determined in this report. City of Palo Alto Page 5 The following illustration is for building two garages in the downtown business district at Lot D (Hamilton Avenue & Waverly Street) and Lot P (High Street between University Avenue and Hamilton Avenue). Each of these sites is currently being studied along with Lots E & G (Gilman Street) and each represent potential garage sites either located in the high-demand parking areas of the downtown (Lot P) or centrally located in the Downtown (Lot D or E/G). Garages that could be built on surface lots D and P would yield 303 incremental or new spaces. The cost of both garages is estimated at $18.4 million. The rough boundaries of a potential district are El Camino to slightly east of Middlefield and from San Francisquito Creek to Melville/Embarcadero Road. Attachment C shows the hypothetical boundaries. Within this area there are 2,798 parcels which include 900 estimated commercial properties and 1,898 residential parcels. Based on a 30 year amortization period and an interest cost of 5.7 percent (tax exempt), the annual debt service for these garages is around $1.3 million. The table below shows a hypothetical method of apportionment that may or may not meet the standard outlined in requirement three above. Three scenarios are assumed whereby commercial properties bear increasingly higher costs based upon an assumed intensity of use of the garages. While residential properties would benefit from new downtown garages in that cars would be removed from surrounding neighborhoods, the assumption here is that businesses generating rising trips by employees and visitors are increasingly responsible for the use and cost for new garages. Columns A through C show rising “intensity of use” (from 5 times to 15 times higher use) and a consequent rising share of debt service allocated to commercial properties compared to residential properties. Commercial and Residential Property Share of Annual Debt Service Per Parcel for Downtown Garages Column A Column B Column C Number of Parcels 5X Scenario 10X Scenario 15X Scenario Residential 1,898 $116 per parcel $63 per parcel $43 per parcel Commercial 900 $1,221 per parcel $1,311 per parcel $1,374 per parcel This example shows that if commercial properties were found to have 15 times the responsibility for garage construction costs compared to residential landowners, they would pay $1,374 annually and residential parcels would pay $43. At 10 times the “intensity of use” residents would pay $63 annually versus $1,311 for commercial properties. Let’s suppose the City wishes to propose a citywide MR District that would support the building of two garages downtown and one in the California Avenue Business District. Assuming that City of Palo Alto Page 6 272 spaces could be added incrementally in the Cal Ave area (Lot 8 located on Sherman Avenue between El Camino Real and Ash Street), the cost to construct a garage is estimated at $16.5 million. Amortized over 30 years at an interest cost of 5.7 percent, the annual debt service for this garage is around $1.2 million. The boundaries assumed are current City boundaries excluding the Stanford Shopping Center and open space parcels. The number of parcels used in this analysis is 17,384 residential and 1,811 commercial. This excludes planned community and public facility parcels. Commercial and Residential Property Share of Annual Debt Service Per Parcel for Downtown and California Avenue Garages Column A Column B Column C Number of Parcels 5X Scenario 10X Scenario 15X Scenario Residential 17,384 $24 per parcel $13 per parcel $9 per parcel Commercial 1,811 $1,152 per parcel $1,256 per parcel $1,296 per parcel Using the same “intensity of use” assumption, this citywide example shows that if commercial properties were found to have 15 times the responsibility for garage construction costs compared to residential landowners, they would pay $1,296 annually and residential parcels would pay $9. At 10 times the “intensity of use” residents would pay $13 annually versus $1,256 for commercial properties. Each of the examples above is to provide the Committee with cost estimates for building garages, an understanding of the MR District tax allocation, and a range of financial impacts on parcels within the hypothetical districts. The information provided is meant to provide a sense of the magnitude of potential impacts on property owners given certain boundaries and assumptions. Further refinement of costs, parcel information, district boundaries, and an allocation methodology is necessary. As we move toward a citywide boundary with parcels distant from the locales of garages, policy and allocation questions will arise. Finally, there are variables e.g., interest rates and construction costs that will affect impacts cited in this report. Although staff raised the idea of investigating a MR District, the City’s research and communications consultants (FM3 and TBWB) have advised no matter how the MR District boundaries are drawn that a measure to fund parking garages that requires two-thirds support from a residential taxpayer base is not likely to be approved. There are a number of other factors for the Council to consider that suggest not moving forward with a MR District at this time. The factors are: City of Palo Alto Page 7 1. Parking garages received low ratings in the recent infrastructure survey: 44 percent for Downtown and 46 percent for California Avenue. 2. In light of an emerging and potentially widespread Residential Parking Program, will residential voters support even a nominal tax in the examples above ranging from $9 to $116 per year? 3. The assessed cost is high relative to the number of additional parking spaces created to relieve parking congestion. 4. As with current assessment districts, there is no guarantee to commercial property owners that they will have exclusive use of a space and this may generate significant opposition. The Infrastructure Committee directed staff to research a number of additional issues. These include: 1. How would a MR District be structured in a ballot measure? 2. What are the election requirements? 3. How long would it take to bring a vote to the public? 4. Are there any conflicts with current assessment districts; are there exemptions; conflicts with existing codes? 5. Are there potential public/private partnerships to build garages or are there possibilities of long-term leasing arrangements? 6. Describe an outreach plan and schedule Staff was asked to evaluate the feasibility of potential public/private partnerships to build garages or other possibilities of long-term leasing arrangements. Staff believes that there is a high likelihood of interest and recommends proceeding with a request for proposals (RFP) to solicit public-private partnerships to build mixed-used parking projects on downtown city owned lots. The Planning and Community Environment Department is currently studying the comparative advantages of building parking structures over certain downtown surface parking lots. Staff recommends proceeding directly to Council at the conclusion of the study along with the scope of work for the RFP. In the interest of brevity, the staff responses to the remaining questions are included in Attachment D. In summary, pursuing a MR district may be feasible, but will likely lead to opposition. This financial tool must be viewed in the context of bringing forward other taxes, such as a TOT increase, or a bundled transportation or public safety bond measure for voter approval, as well as a more comprehensive look at area and citywide traffic issues. The City is currently exploring the development of Residential Permit Parking (RPP) Districts around the City including Downtown. The implementation of a Downtown RPP Program may prioritize the need to build additional parking supply for Downtown customers, visitors and employees. Within the California Avenue Business District limited permit supply for employees has resulted in delays to parking permit distribution, so an additional garage in that district should also be considered if initiatives to help fund parking garage construction move forward. City of Palo Alto Page 8 Building additional parking supply, however, may increase citywide traffic concerns as it promotes the use of single-occupant vehicle trips instead of alternative transportation modes such as public/private transit, car sharing/ride sharing, or bicycling. Any parking garage construction should include considerations for a citywide Transportation Management Authority (TMA) to help reduce single-occupant vehicle trip use and encourage private sector participation in reducing vehicle trips while supporting the well-being of employees and the community. Transient Occupancy Tax Data from the baseline survey on infrastructure projects and funding mechanisms indicates a potential to pass a TOT to fund a variety of general infrastructure needs, especially those needs related to public safety and transportation. Such a measure could be structured as a general tax requiring simple majority approval from voters or as a special tax with funds earmarked for specific purposes and would require two-thirds voter approval. Only a small portion of the initial survey was devoted to a potential TOT measure. To provide a definitive recommendation as to the viability of this option, FM3 recommends a follow-up survey to test this specific funding mechanism and how to best package a measure for success. Attachment B provides additional information on the scope and schedule of the recommended survey. The survey would sample 600 likely voters, with a margin of sampling error of +/-4.0 percent. FM3 and TBWB also recommend that the survey further investigate the sales tax as an alternative funding mechanism that would generate significant revenue. Given the City’s ongoing need to seek voter approval for an update to its existing UUT ordinance, this survey may also provide an opportunity to assess the interaction between a TOT and UUT measure, determine whether it would be advisable to place these measures on the same ballot and evaluate the basic viability of a UUT update measure. If further study on a potential TOT increase is pursued, concurrent to polling on the measure, TBWB recommends commencing targeted outreach to Palo Alto hotel owners and managers to explain the City's planning for a potential TOT increase. This will allow the City to identify questions or concerns and collect feedback from impacted businesses. Similar outreach to other business leaders who might be impacted indirectly by this measure should be conducted during the same timeframe. Bundled Transportation Measure The City’s baseline survey tested the level of public support for five different potential bond or tax measures that represent combinations of individual projects, with the wording of each potential measure structured as it might appear in an actual ballot measure – minus a funding mechanism and dollar figure. Four measures were found to have support levels greater than two-thirds. City of Palo Alto Page 9 As was recommended to the Infrastructure Committee as part of the presentation of the baseline infrastructure survey results, FM3 and TBWB believe that the City has the potential to pass a bond measure to fund a portion of the identified funding needs if the projects included in a measure were bundled to focus on one of the two high priority issues of concern to voters: public safety and transportation. Accordingly, one approach to funding garages to relieve parking, traffic and related transportation concerns, would be to include these projects as part of a larger bundled transportation bond measure, which would require two-thirds approval by voters. While parking garages did not rank among the top priority projects in the voter survey, they could be packaged with other priority projects and presented as part of a comprehensive solution to Palo Alto’s transportation, traffic, and parking needs. To further evaluate the feasibility of a transportation bond measure, FM3 recommends a follow up survey devoted entirely to this measure. In this survey FM3 would test potential ballot language and project descriptions reflecting the array of Palo Alto’s transportation-related needs, sensitivity to specific bond amounts and tax rates, and the impact of supporting and opposing statements and assess the optimal timing of a transportation bond measure. As a starting point for structuring this survey, FM3 would rely on key findings from the prior survey such as voters’ expressed willingness to pay (which seems to peak at $125 per year for a measure requiring two-thirds support) and the bundled proposal that elicited support from 74% of voters (A Traffic Congestion Relief and Safe Streets, Sidewalks and Trails Measure to fund repair and improvements to streets, sidewalks, and nine miles off-road trails. This measure would provide safe routes to school for children, improve accessibility for people with disabilities, provide a network of safe bike paths and pedestrian walkways, increase the availability of parking, and upgrade traffic signals and intersections to reduce congestion and improve safety). Similar to what was described previously for evaluating a potential TOT measure, FM3 would recommend conducting a ballot measure feasibility survey among 600 likely voters, which is associated with a margin of sampling error of +/-4.0 percent. The findings of the survey will be used to inform a recommendation to the City regarding the viability of a transportation focused bond measure, recommended election dates, total bond amount and tax rates. If the City continues to be interested in pursuing a transportation bond measure, TBWB recommends building a coalition of key transportation-related constituencies and stakeholders to participate in outreach and help build consensus around a ballot measure proposal. TBWB will help identify these interested parties, organize a process to enable their participation and provide messaging and materials to allow stakeholders to communicate within their respective networks of influence. Bundled Public Safety Measure As noted previously, the baseline infrastructure survey indicates that a bundled bond measure focused on public safety needs, while polling lower than a bundled transportation measure at 68% support, also appears to be potentially viable. Accordingly, if the Infrastructure Committee and City Council wish to proceed with further study on funding public safety infrastructure City of Palo Alto Page 10 needs, the survey and outreach approaches outlined here could be applied to refine a bundled public safety measure for the ballot. This may require looking at a 2016 election or beyond for voter approved funding to allow the City to acquire land and conduct the necessary environmental review for a new public safety building. Timeline Given the current schedule, in order to provide the City with definitive recommendations as to the viability of a funding measure in 2014, it is timely for the Committee and Council to prioritize any areas for study and to initiate ballot measure polling in the immediate near term. The schedule for conducting additional surveys is included as Attachment B. Attachments: Attachment A. Funding Scenarios (PDF) Attachment B. FM3 and TBWB Recommendations (PDF) Attachment C. Mello-Roos Hypothetical Boundaries (PDF) Attachment D. Mello-Roos Response to Committee Questions (PDF) Attachment E. September 3, 2013 Infrastructure Committee Minutes (PDF) Note: Funding from Mello Roos district, GO bonds, and COPs is for construction only and does not include financing costs Potential Infrastructure Project Funding Scenario #1 (2% or 3% TOT increase) Polling Support Project Cost Funding Source Funding Amount 52% Public Safety Building and land 57 City Hall Police area lease - COPs 19.6 52% Charleston/Arastradero 7.5 TOT increase 3% - COPs 46.2 61% Bike Bridge 1.7 New hotels - COPs 33.6 na Byxbee Park 3.6 Stanford Funds 33.4 72% Fire Stations (2) 14.2 Infrastructure Reserve 8 67% Sidewalks additional spending 6 FY 2013 surplus 8.5 65% Bike/Pedestrian Plan 16.25 Sum: 149.3 67% Parks Catch-up 8.9 46% Cal Avenue Garage 16.5 44% Downtown Parking Garages (2) 18.4 Sum: 150.05 OR Funding Source Funding Amount City Hall Police area lease - COPs 19.6 TOT increase 2% - COPs 30.8 New hotels - COPs 33.6 Stanford Funds 33.4 Infrastructure Reserve 8 FY 2013 surplus 8.5 5 years annual surplus ($1M per year)5 Digital Readerboard - COPs 11.2 Sum: 150.1 Potential Infrastructure Project Funding Scenario #2 Mello Roos Parking Garage Measure Polling Support Bundled Projects Cost Funding Source Funding Amount 46% Cal. Avenue Parking Garage 16.5 44% Downtown Parking Garages (2) 18.4 Sum: 34.9 Polling Support Project Cost Funding Source Funding Amount 52% Public Safety Building and land 57 City Hall Police area lease - COPs 19.6 72% Fire Stations (2) 14.2 New hotels - COPs 33.6 67% Sidewalks additional spending 6 Stanford Funds 33.4 na Byxbee Park 3.6 Infrastructure Reserve 8 67% Parks Catch-up 8.9 FY 2013 surplus 8.5 65% Bike/Pedestrian Plan 16.25 Digital Readerboard - COPs 11.2 61% Bike Bridge 1.7 Sum: 114.3 52% Charleston/Arastradero 7.5 Sum: 115.15 Mello Roos districts (citywide or localized) 34.9 Attachment A. Potential Funding Scenarios Note: Funding from Mello Roos district, GO bonds, and COPs is for construction only and does not include financing costs Potential Infrastructure Project Funding Scenario #3 Bundled Transportation GO Bond Measure Polling Support Bundled Projects Cost Funding Source Funding Amount Streets additional spending 8 GO Bonds 74.35 Sidewalks additional spending 6 Bike/Pedestrian Plan 16.25 Bike Bridge 1.7 Charleston/Arastradero 7.5 Cal. Avenue Parking Garage 16.5 Downtown Parking Garages (2) 18.4 Sum: 74.35 Polling Support Project Cost Funding Source Funding Amount 72% Fire Stations (2) 14.2 City Hall Police area lease - COPs 19.6 52% Public Safety Building and land 57 Stanford Funds 33.4 na Byxbee Park 3.6 Infrastructure Reserve 8 67% Parks Catch-up 8.9 FY 2013 surplus 8.5 5 years new hotels ($2.4M per year)12 Sum: 83.7 Sum: 81.5 Potential Infrastructure Project Funding Scenario #4 Bundled Public Safety GO Bond Measure Polling Support Bundled Projects Cost Funding Source Funding Amount Public Safety Building and land 57 GO Bonds 71.2 Fire Stations (2) 14.2 Sum: 71.2 Polling Support Project Cost Funding Source Funding Amount 67% Sidewalks additional spending 6 City Hall Police area lease - COPs 19.6 na Byxbee Park 3.6 Stanford Funds 33.4 67% Parks Catch-up 8.9 Infrastructure Reserve 8 65% Bike/Pedestrian Plan 16.25 FY 2013 surplus 8.5 61% Bike Bridge 1.7 4 years new hotels 9.6 52% Charleston/Arastradero 7.5 Sum: 79.1 46% Cal. Avenue Parking Garage 16.5 44% Downtown Parking Garages (2) 18.4 Sum: 78.85 74% 68% Attachment A. Potential Funding Scenarios Funding Approach For Remaining Projects Polling Support Project Cost Funding Source Funding Amount na Surface Catch-up 3.4 na Buildings Catch-up 4.2 Sum: 7.6 Polling Support Project Cost Funding Source Funding Amount 47% Animal Services Center 6.9 46% Playing Fields at Golf (3) 6 38% History Museum 3 na Cubberley Deferred Maintenance 6.9 Sum: 22.8 Fund gradually through CIP planning process utilizing CIP funds, ongoing surpluses, and development impact fees Defer planning for potential funding or remove from project list Attachment A. Potential Funding Scenarios TO: CityofPaloAlto FROM: CharlesHeathandJoyTatarka,TBWBStrategies DaveMetzandShakariByerly,Fairbank,Maslin,Maullin,MetzandAssociates RE: RecommendationsRegardingPotentialInfrastructureFundingMeasures DATE: September24,2013 ___________________________________________________________________________________ TBWBStrategiesandFM3Researchhavereviewed pollingconductedtodateandinformation providedbycitystaffrelatedtothedevelopmentofa TransientOccupancyTax(TOT)tofundgeneral infrastructureneedsandapotentialMelloRoosDistrict(MRD)orgeneralobligationbondtofund parkinggaragesintheDowntownandCaliforniaAvenueareasandrelatedtransportationneeds. Followingisourcollectiveassessmentofthepotential feasibilityofthesemeasures,alternativesfor youtoconsiderandrecommendednextsteps. TransientOccupancyTax Datafromthebaselinesurveyoninfrastructureprojectsandfundingmechanismsindicatesa potentialtopassaTOTtofundavariety ofgeneralinfrastructureneeds,especiallythoseneeds relatedtopublicsafetyandtransportation.Sucha measurecouldbestructuredasageneraltax requiringsimplemajorityapprovalfromvotersorasa specialtaxwithfundsearmarkedforspecific purposesandwouldrequiretwothirdsvoterapproval. Onlyasmallportionoftheinitialsurveywas devotedtothisapotentialTOTmeasure.Toprovidea definitiverecommendationastotheviabilityofthisoption,FM3recommendsafollowupsurveyto testthisspecificfundingmechanismandhowtobest packageameasureforsuccess.WhileFM3 continuestobelievethatfocusgroupswouldbe helpfulinunderstandinghowtodevelopmessaging forameasurethatincludesfundingforapublic safetybuildingandrequirestwothirdsvotersupport, webelievetheTOTmeasureshouldfirstberefin edbyastandardballotmeasurefeasibilitysurvey. Similartotheinitialbaselinesurvey,FM3 envisionsconductingaballotmeasurefeasibilitysurvey among600likelyvoters,whichisassociatedwitha marginofsamplingerrorof+/4.0percent.The centralobjectiveoftheresearchwillbetogauge voterattitudestowardaTOTincreaseofbetween2 and3percenttofunddeferredmaintenanceneedsrelatedtoinfrastructurepriorities,andassessthe optimaltimingofanelection. FM3woulddevelopthesurveyinstrumentincollaboration withtheCityandTBWB.Theresearchwill exploresomeofthefollowingtopics: Attachment B 2 Gauginglevelsofsupportinresponsetoadraft75wordballotmeasuresummaryofa potentialmeasure; Assessingpublicattitudestowardfundingprioritiesthatmightbefinancedthroughthe measure; Determiningifthemeasureshouldbestructuredasageneraltaxorspecialtax; Identifyingprojectprioritiesandoptimalprojectdescriptions; AssessingpublicsensitivitytotheTOTtaxrate; Measuringsensitivityofsupportinthefaceoflikelyargumentsfromsupportersand opponents,includinganargumentregardingthefactthat anincreaseinthelocalTOTwould bringtheratetoamongthehighestinthestate/region;and Determiningthedemographicprofileoftherespondents toprovidethenecessarycategories forcrosstabulationofthedata,andto ensurethattherespondentsarerepresentativeofthe pooloflikelyvotersinPaloAlto; ProvidearecommendationtotheCityregardingtheviabilityoftheTOTasafinancing mechanismandthespecificcomponentsofameasurethatwillmaximizethelikelihoodof voterapproval. GiventheCity’songoingneedtoseekvoterapprovalforanupdatetoitsexistingUUTordinance,this surveywouldprovideanopportunitytoassessthe interactionbetweenaTOTandUUTmeasure, whetheritwouldbeadvisabletoplacethesemeasures onthesameballotandevaluatethebasic viabilityofaUUTupdatemeasure. Ashasbeennotedaspartofpast recommendationstotheInfrastructureCommittee,FM3andTBWB weresurprisedbytherelativelylowlevelsofsupport measuredinthebaselinesurveyforasalestax measure.Wesuspectthatthelowlevelsofsupportmay behaveresultedfromthespecificlanguage testedorothercontextualsurveyissues.Ifdeemed apriority,thissurveywouldprovidean opportunitytofurtherinvestigatethesalestaxasanalternativefundingmechanismthatwould generatesignificantrevenue. FM3ispreparedtobegintheproposedresearch immediately,attheCity’srequest.Aproposed timelineforconductingtheresearchappearsbelow: WeekofOctober28,2013 Authorizationtoproceed Evaluateproposedmethodologyandfinalizeresearchplan Preparationoffirstdraftofsurveyquestionnaire WeekofNovember4,2013 SubmitdraftquestionnairetoCityforreview WeeksofNovember11November18 Finalizesurveyquestionnaire Obtainclientapprovaloffinalsurveyinstrument Drawsample Attachment B 3 November1822,2013 Administertelephonesurvey Generatetoplineandcrosstabulationofsurveyresults November23December5,2013 Developpresentationandreportingmaterials Schedulepresentationoffinalresultstokeystakeholders Concurrenttopollingonthispotential TOTmeasure,TBWBrecommendscommencingtargeted outreachtoPaloAltohotelownersandmanagersto explaintheCity'splanningforapotentialTOT. ThiswillallowtheCitytoidentifyquestionso rconcernsandcollectfeedbackfromimpacted businesses.Similaroutreachtootherbusinessleaderswhomightbeimpactedindirectlybythis measureshouldbeconductedduringthesame timeframe.Thisoutreachwouldbeconductedduring theNovemberandearlyDecembertimeframeinorder toprovideasummaryoffeedbackalongwith thesurveyresults.TBWBwillworkwiththe Citytodevelopanoutreachtargetlist,informational materialstofacilitatethesemeetingsandscheduleforconductingthemeetingsandsynthesizing feedback. ItshouldbenotedbytheCommitteethatifthismeasureisdesignedasageneraltaxrequiringonly simplemajorityvoterapproval,itmustgotothe ballotatthesametimeascouncilmemberelections. TheexceptionwouldbeiftheCitydeclareda fiscalemergencywithaunanimousvoteoftheCouncil. Thus,iftheTOTwouldbedesignedasageneraltax,TBWBwilldevelopadetailedtimelineidentifying specificplanningstepstopreparefortheNovember2014 municipalelectiondate.Giventhelimited electiondateflexibilityforthistypeofmeasure,the Citymightevaluateotherelectiondateoptions (e.g.June2014,June2016,November2016orsp ecialelectiondates)fortheotherpotentialfunding measuresunderconsideration. FundingforParkingGaragesandRelatedTransportationNeeds AreviewofthedatafromFM3’srecentsurveyo ninfrastructureneedsandfundingoptionsindicates votersupportforameasuretofundparking garagesintheDowntownandCaliforniaAvenueareas wouldfallsubstantiallyshortofthetwothirdssupportthatwouldberequiredforapproval.When theanalysisislimitedtovoterswithinthegeographic areasinorneartheDowntownandCalifornia Avenueareas,supportstillfallswellshortof66.7%.Iftheboundariesweredrawnbroadlytospread thecostandminimizetherequiredtaxrate,wedonot believethattheprojectranksashighenough apriorityforvoterstogeneratetwothirdssupport .IftheCommitteeisinterestedinabroadbased measurewithapalatabletaxrateto fundtheseneeds,webelievethatacitywidebondmeasurethat packagesparkinggaragesalongwithmorepopulartransportationprojects(e.g.roadandsidewalk improvements,saferoutestoschool,bikeandpedestrianimprovements,trafficrelief)wouldbea moreviableapproach. Inshort,nomatterhowtheMRDboundariesaredrawn,wedonotbelievethatameasuretofund parkinggaragesthatrequirestwothirdssupportfrom aresidentialtaxpayerbaseislikelytobe approved.Accordingly,weofferthefollowingalternativesandrecommendednextstepsforsecuring additionalfundingforparkinggarages: Attachment B 4 1. MRDFocusedonNonResidentialProperties Analternativeapproachwouldbetodraw MRDboundariestightlyringingtheDowntownand CaliforniaAvenuecommercialcorridorstoexclude allbutfewerthan12registeredvoters residingwithintheboundaries.Underthisscenario,theMRDmeasureelectionwouldbe decidedbyavoteofpropertyownerswithintheboundaries.TheCitywouldneedtodevelop aconvincingbusinesscasetopresenttotheimpactedpropertyownersandconductextensive individualoutreachamongthisgrouptogaugesupport.Theproposedareasaretoosmallfor traditionalpublicopinionresearchtechniquesand thereforewouldnotprovidereliable results. IftheCitywouldliketoevaluatethe potentialfeasibilityofapropertyownerelection,TBWB willusevotermappingapplicationstodeveloppossibleboundaryoptionsthatincludefewer than12registeredvotersandcomparetheseboundariesagainstpropertyownershipdatato developanoutreachtargetlist.Afterananalysisof howmucheachofthesepropertyowners wouldhavetopayinordertofund theprojects,wewoulddevelopinformationalmaterials andanoutreachplantomeasuretheinterest andsupportamongthepropertyowners. 2. TransportationBondMeasure AswasrecommendedtotheInfrastructure Committeeaspartofthepresentationofthe baselineinfrastructuresurveyresults,webelievethattheCityhasthepotentialtopassa bondmeasuretofundaportionoftheidentifiedfundingneedsiftheprojectsincludedina measurewerebundledtofocusononeofthetwohighpriorityissuesofconcerntovoters: publicsafetyandtransportation.Accordingly,oneapproachtofundinggaragestorelieve parking,trafficandrelatedtransportationconcerns,wouldbetoincludetheseprojectsaspart ofalargerbundledtransportationbondmeasure,whichwouldrequiretwothirdsapprovalby voters.Whileparkinggaragesdidnotrankamong thetoppriorityprojectsinthevoter survey,webelievethattheycouldbepackagedwithotherpriorityprojectsandpresentedasa comprehensivesolutiontoPaloAlto’stransportation,trafficandparkingneeds. Theinitialsurveytouchedonawidearrayof issuesandwasdesignedtonarrowthescopeof optionsunderconsideration.Itwasnotdesignedtodefinitivelydeterminethefeasibilityofa singleballotmeasure.Tofurtherevaluatethe feasibilityofatransportationbondmeasure, werecommendafollowupsurveydevotedentirely tothismeasure.InthissurveyFM3would testpotentialballotlanguage,projectdescriptionsreflectingthearrayofPaloAlto’s transportationrelatedneeds,sensitivitytospecificbondamountsandtaxrates,theimpactof supportingandopposingstatementsandassesstheoptimaltimingofatransportationbond measure.Asastartingpointforstructuringthis survey,wewouldrelyonkeyfindingsfrom thepriorsurveysuchasvoters’expressedwillingness topay(whichseemstopeakat$125per yearforameasurerequiringtwothirdssupport)andthebundledproposalthatelicited supportfrom70%ofvoters (ATrafficCongestionReliefandSafeStreets,SidewalksandTrails Measuretofundrepairandimprovementstostreets,sidewalks,andninemilesoffroadtrails. Thismeasurewouldprovidesaferoutes toschoolforchildren,improveaccessibilityforpeople withdisabilities,provideanetworkofsafebike pathsandpedestrianwalkways,increasethe availabilityofparking,andupgradetrafficsignalsandintersectionstoreducecongestionand improvesafety). Attachment B 5 SimilartowhatwasdescribedpreviouslyforevaluatingapotentialTOTmeasure,FM3would recommendconductingaballotmeasurefeasibilitysurvey among600likelyvoters,whichis associatedwithamarginofsamplingerrorof+/4.0percent.Thissurveycouldbeconducted inlieuoftheTOTsurveydescribedpreviouslyandon thesametimeline.Orthissurveycould beconductedsubsequently.Thefindingsofthesurveywillbeusedtoinforma recommendationtotheCityregarding theviabilityofatransportationfocusedbondmeasure, recommendedelectiondates,totalbondamountand taxrates.InordertoprovidetheCity withdefinitiverecommendationsastotheviabilityofafundingmeasurein2014,we recommendtestingtheTOTorabundledtransportation measure,butnotbothatthesame time.Testingbothmeasuresinasinglepollwill limitthedepthintowhichsupportforeither measurecanbeinvestigated. IftheCitycontinuestobeinterestedinpursuingatransportationbondmeasure,TBWB recommendsbuildingacoalitionofkeytransportationrelatedconstituenciesand stakeholderstoparticipateinoutreachandhelpbuildconsensusaroundaballotmeasure proposal.TBWBwillhelpidentifytheseinterested parties,organizeaprocesstoenabletheir participationandprovidemessagingandmaterialstoallowstakeholderstocommunicate withintheirrespectivenetworksofinfluence.TBWBandFM3wouldappreciateguidance fromtheCommitteeastowhichofthetwo measuresisahigherpriorityinordertorefinea researchstrategyandtimeline. Asnotedpreviously,thebaselineinfrastructuresurveyindicatesthatabundledbondmeasure focusonpublicsafetyneedsappearsjusta spotentiallyviableasabundledtransportation measure.Thesurveyandoutreachapproaches outlinedhereforabundledtransportation measurecouldbeappliedtorefineabundledpublicsafetymeasurefortheballot.However, theuncertaintysurroundingtheproposedpublicprivatepartnershiptofundapublicsafety facilitymakesthisadifficultoptiontoresearch atthistime.Accordingly,iftheInfrastructure Committeeand/orCityCouncildeterminethatfundingpublicsafetyinfrastructureneedsisa higherpolicyprioritythantransportation,werecommendconductingasurveyonthistopic oncetheoutcomeofthepublicprivatepartnershipandrelatedfundingissuesaremore certain.Weacknowledgethatthismayrequirelooking ata2016electionorbeyondforvoter approvedfundingforpublicsafetyinfrastructure. Wedonotfeelthatthebaselinesurveydataindicatessufficientvotersupporttojustify furtherresearchonageneralinfrastructure bondmeasureoranyothermeasurerequiring twothirdssupportunlessitisfocusedontransportationorpublicsafetyneeds. Attachment B ElCaminoPark ElCaminoPark KelloggPark ScottPark TimothyHopkinsPark LotA Lot D Lot G Lot H LotF LotO LotP LotQ LotT LotC LotK LotWC CogswellPlaza LotB LotK LotE JohnsonPark AlmaParkette Welcome TimothyHopkinsPark LyttonPlaza StanfordShoppingCenter Parkette El Palo A l t o P a r k CivicCenter Plaza ChanningHouse DwtnChildCareCtr Bryant / L y t t o n Parkin g G a r a g e Parking Tract No. 5447 PKG PKG SunsetMagazine AddisonElementary PaloAlto HighSchool CastillejaSchool WholeFoods Parking WholeFoods Market Oak C o u r t Apartm e n t s HeritagePark El Palo Alto ParkTimothyHopkinsPark WilliamsPark PAMFCLARK BUILDING PAMFPARKINGSTRUCTURE CVS Ph a r m a c y Union B a n k Miyake E-Tra d e Stanf o r d B o o k s GATE1 GATE15GATE14 GATE2 GATE3 GATE4 GATE5 GATE6 GATE7 GATE8GATE9 GATE10 GATE11 GATE12 ELCAMINOGROVE 09-575 GATE13 MALONEYFIELD MASTERSGROVE BOYFA ARTIFICIALTURF FIELD SUNKENDIAMOND PAC-10PLAZA STEUBERFAMILY RUGBYFIELD WOMENSSOFTABLLD ARBORETUMGROVE EUCALYPTUSGROVE LASUENGROVE TOYONGROVE Lot S Lot CC Lot N Lot R QuarryRoad Arboretum RoadQuarryRoad HomerAvenue Lane8 West MedicalFoundation Way Lane7 West Lane7 East EmbarcaderoRoad EncinaAvenue ElCaminoReal UrbanLane WellsAvenue ForestAvenue HighStreet EmersonStreet Channing Avenue Alm aStreet AlmaStreet PaloAltoA ElCaminoReal venue MitchellLane HawthorneAvenue EverettAvenue LyttonAvenue Lane15E HighStreet Alm a S t r e e t BryantStreet Lane6 E Lane11 W Lane21 HighStreet GilmanStreet HamiltonAvenue UniversityAvenue BryantCourt Lane30 FlorenceStreet KiplingStreet TassoStreet CowperStreet RuthvenAvenue HawthorneAvenue Lane33 PaloAltoAvenue EverettAvenue PoeStreet WaverleyStreet TassoStreet CowperStreet PaloAltoAvenue WebsterStreet EverettCourt LyttonAvenue ByronStreet FultonStreet MiddlefieldRoad MelvilleAvenue KelloggAvenue KingsleyAvenue LaneA West LaneB West LaneB East LaneD West Lane 59 East WhitmanCourt KelloggAvenue EmbarcaderoRoad KingsleyAvenue LincolnAvenue AddisonAvenue LincolnAvenue ForestAvenue DowningLane HomerAvenue LaneD East Lane39 Lane56 HamiltonAvenue WebsterStreet WaverleyStreet Kip l i n g S t r e e t BryantStreet RamonaStreet AddisonAvenue Sc o t t S t r e e t ByronStreet LyttonAvenue GuindaStreet Palo AltoAvenue FultonStreet MiddlefieldRoad ForestAvenue WebsterStreet KelloggAvenue MiddlefieldRoad By WebsterStreet CowperStreet TassoStreet CowperStreet AddisonAvenue LincolnAvenue BoyceAvenu HomerAvenue GuindaStreet MiddlefieldRoad ChanningAvenue Ad GuindaStreet LincolnAvenue FultonStreet MelvilleAvenue ByronStreet KingsleyAvenue MelvilleAvenue CoMi We b s Wilso n Stree Ra m o n a S t r e e t AddisonAvenue ChanningAvenue Wa v e r l e y S t r e e t PaulsenLn La n e 1 5 E Em e r s o n S t r e e t Lane 20 WLane20E UniversityAvenue Ca l T r a i n R O W Em e r s o n S t r e e t Wa v e r l e y S t r e e t Kip l i n g S t r e e t OrchardLane SandHillRoad SandHillRoad Br y a n t S t r e e t Ra m o n a S t r e e t PaloRoad Shopp ingCenterWay S hop ping C enterW ay ShoppingCenterWay LondonPlaneWay Plu m La ne SweetOliveWay Pea rLane Lane12W La n e 5 E LasuenStreet PistachePlace EverettAvenue HomerAvenue PaloAltoAvenue Co mm unity La n e H arker Av e nu e Parkinso n Av en u e ByronStreet EmersonStreet ChurchillMall AboretumRoad AboretumRoad GalvezStreet Masters Mall NelsonMall Nelson Road PalmDrive AlmaStreet Alma Street HawthorneAvenue LyttonAvenue SamMcDonaldRoad Mall Th i s m a p i s a p r o d u c t o f t h e Ci t y o f P a l o A l t o G I S Th i s d o c u m e n t i s a g r a p h i c r e p r e s e n t a t i o n o n l y o f b e s t a v a i l a b l e s o u r c e s . Le g e n d Pa r c e l s C o u n t e d w i t h i n P r o p o s e d B o u n d a r y # 0 3 ( 2 , 7 9 8 P a r c e l s ) Pr o p o s e d B o u n d a r y # 0 3 ( 2 , 7 9 8 P a r c e l s ) Co m m e r c i a l D o w n t o w n ( C D ) Z o n i n g D i s t r i c t s Pa r k i n g A s s e s s m e n t D i s t r i c t P a r c e l s Ci t y J u r i s d i c t i o n a l L i m i t s 0' 9 6 1 ' Mello-Roos District Potential Boundary # 03 Exercise University Avenue Area Map CITY O F PALO A L TO I N C O R PO RAT E D C ALIFOR N I A P a l o A l t o T h e C i t y o f A P R IL 16 1 894 Th e C i t y o f P a l o A l t o a s s u m e s n o r e s p o n s i b i l i t y f o r a n y e r r o r s . © 1 9 8 9 t o 2 0 1 3 C i t y o f P a l o A l t o rri v e r a , 2 0 1 3 - 0 9 - 1 0 1 2 : 0 6 : 3 9 Me l l o R o o s U n i v e r s i t y A v e 0 3 ( \ \ c c - m a p s \ g i s $ \ g i s \ a d m i n \ P e r s o n a l \ r r i v e r a . m d b ) At t a c h m e n t C . H y p o t h e t i c a l M e l l o - R o o s B o u n d a r i e s ATTACHMENTD StaffResponsetoInfrastructureCommittee’sQuestions onformingaMelloRoosDistrict 1 9/26/2013 TheInfrastructureCommitteedirectedstafftoresearchanumberofissues. 1) Howlongwouldittaketobringavotetothepublic? Response:Itwouldtakeapproximately89monthstoformacommunityfacilities districtundertheMelloRoosAct,fromthefirstmeetingtodiscussthetaxformula throughadoptionofthefinalordinance,assuminga registeredvoterelectionandamail ballotelectionthatisnotconsolidatedwithanotherelection. Iftheelectionisconsolidatedwithanotherelection,thenthetimingmaybeimpacted, althoughitshouldbesimilar. SeeTable1onpage3foratypicalschedule. 2) HowwouldaMelloRoos(MR)Districtbestructuredinaballotmeasure? Response:Theballotmeasurewouldapprovethreeitems:(i)thelevyofthespecialtax accordingtotheRateandMethodofApportionmentofSpecialTaxforthepurposes specifiedintheResolutionofFormation (e.g.,acquisitionandconstructionofapublic parkinggarageatthecornerofXandY ,(ii)theissuanceofbondsinamaximum amount,and(iii)anappropriationslimitfortheCFD.TheMelloRoosActallowsthe threeitemstobeconsolidatedinasingleballotmeasure Otherwise,thegeneralprovisionsofCaliforniael ectionslawwouldgoverntheballot measure,andtheadviceofanelectionconsultantwillbeuseful. 3) Arethereanyconflictswithcurrentassessmentdistricts? Response:Thespecialtaxwouldbeinadditionto,andwouldnothaveanyimpacton, existingspecialbenefitassessments,the1%advaloremtaxoranyvoterapprovedtax overrides.Itwouldbefairtoconsiderthespecial taxtobeanadditionalsourceof revenuetobuildmoreparkinggaragesintheCity,assumingitwouldbedescribedas suchintheformationproceedings. Thespecialtaxshallbecollectedinthesamemannerasordinaryadvaloremproperty taxesarecollectedandshallbesubjecttothesamepenaltiesandthesameprocedure, sale,andlienpriorityincaseofdelinquencyasisprovidedforadvaloremtaxes ATTACHMENTD 2 9/26/2013 4) Arethereexemptionsfromthetax? Response:Ingeneral,propertiesownedbypublic agenciesareexemptfromspecial taxesundertheMelloRoosAct.Therea resomeexceptions,forexamplewherethe publicagencyleasesitspropertytoataxableentity. TheMRtaxformulawouldapportiontaxesamongvariouslandusesonareasonable basisandcouldidentifyadditionalexemptions,e.g.,lowincomehousing,nursing homes,et.al. 5) DescribeanoutreachplanandtheexpertisenecessarytoformaMRdistrict? Response: InformationfromCity’sOutreachFirm,TBWB Oneofthefirststepsistoidentifythe financedfacilities,identifytheboundariesofthe CFD(whowillpaythetax)anddefine thespecialtaxformula.Becausethespecialtax doesnotneedtobeapportionedonthebasisofspecialbenefit,thereisnoneedto employanengineerforthispurpose;the Citywould,instead,retainaspecialtax consultant,whocouldbeanengineer,withexpertiseinpreparingspecialtaxformulas and,ifpossible,withpublicparkinggarages indevelopedCFDs.SeeattachmentBfor moredetailedplanforoutreach. 6) Aretherepotentialpublic/privatepartnershipstobuildgaragesoraretheirpossibilities oflongtermleasingarrangements? Staffbelievesthereispotentialforpartnershipstobuildgaragesorforlongtermleasing arrangements,andrecommendsproceeding witharequestforproposals. ATTACHMENTD 3 9/26/2013 TABLE1.TEMPLATEMELLOROOSELECTIONSCHEDULE Date ResponsibleParty Event BeforeDay1 Citystaff,special taxconsultant, financialadvisor, bondcounsel (i)IdentifyCFDboundaries (ii)Identifyfinancedfacilitiesandservices (iii)DefineRateandMethodofApportionmentof SpecialTaxes Day1 CityCouncil Adopt:(1)ResolutionApprovingLocalGoalsand PoliciesforCommunityFacilitiesDistrict;(2) ResolutionofIntentiontoEstablishCommunity FacilitiesDistrict;(3)ResolutionofIntentionto issueBonds ByDay16 CityClerk RecordBoundaryMap(within15daysofadoption ofResolutionofIntention)(Streets&Highways Code§3111) By[7dayspriorto publichearing] CityClerk PublishNoticeofPublicHearing(Gov.Code §§53322;6061) NoearlierthanDay 31 CityCouncil (1)ConductaPublic Hearing;(2)adoptResolution ofFormation;(3)adoptResolutionDeclaring NecessitytoIncurBondedIndebtedness;(4)adopt ResolutionCallingElection(“ROE”) Approx.Day35 CityClerk Publish NoticeofArgumentDeadlines NolaterthanDay 44(w/in14daysof ROE) CityClerk Deadlineforsubmissionofdirectarguments (ElectionsCode§9286) Approx.Day44 CityAttorney Submissionofimpartialanalysis Approx.Day54 (Argumentdeadline +10days) CityClerk Deadlineforsubmissionofrebuttalarguments (ElectionsCode§9285) Approx.Days55– 64 CityClerk 10daypublicinspectionperiod (ElectionsCode§9295) INFRASTRUCTURE COMMITTEE FINAL MINUTES Page 1 of 13 Special Meeting September 3, 2013 The Infrastructure Committee met on this date in the Council Conference Room at 4:00 P.M. Present: Berman, Klein (Chair), Scharff, Shepherd Absent: ORAL COMMUNICATIONS None ACTION ITEMS 1. Continue Discussion from August 6, 2013 Infrastructure Committee Meeting on Baseline Survey Results and Recommendations to the City Council on Next Steps in Considering an Infrastructure Finance Measure. Herb Borock suggested the Utility Users Tax (UUT) be increased to 5 percent for everyone. This increase would generate approximately the same amount of funds as other taxes without the need to designate a tax for a specific purpose, which would require approval by two-thirds of voters. Sheila Tucker, Assistant to the City Manager, noted the Infrastructure Committee (Committee) requested Staff return with additional information related to the Capital Improvement Program (CIP), costs and scope of projects, and revenue options. Brad Eggleston, Assistant Director Public Works, presented a draft schedule for preparing the CIP Budget and the Five Year CIP Plan. Staff reviewed and updated costs of projects and determined if projects were included in both the CIP Budget and project costs. Staff recommended removing projects from the list or reducing costs for projects because of new funding, discretionary funding, or the need for further study. Jim Keene, City Manager, was unsure whether project costs were actually reduced. For example, the Bicycle and Pedestrian Transportation Plan Attachment E FINAL MINUTES Page 2 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 decreased from $23.5 million to $16.25 due to funding in the Five Year CIP Plan. However, only the first year was funded through the Capital Budget. There could be issues with respect to future annual funding of $1.2 million for the Bicycle and Pedestrian Transportation Plan. The Committee should remember the tradeoff between priority and funding of projects. Mr. Eggleston believed the information was incorrectly titled. A more suitable title would be "Changes to Unfunded Project Costs." Staff was not indicating that implementation of the Bicycle and Pedestrian Transportation Plan no longer cost $25 million, but that more funding was available through the Five Year CIP Plan. The remaining portion of the cost for the Bicycle and Pedestrian Transportation Plan, for which funding was needed, had decreased. Chair Klein indicated actual costs for some projects could be reduced. He inquired about the increase in funding for the Ventura Community Center. Mr. Eggleston stated that was a typographical error. A portion of funding for the Ventura Community Center was included in the Five Year CIP Plan and another portion was included in the buildings catch-up category. The project was counted twice. Vice Mayor Shepherd noted the worksheet showed the cost as $0. Chair Klein inquired whether the Ventura Community Center was included in the $41 million amount shown on the slide. Ms. Tucker answered yes. That amount should also be reduced. Mr. Keene noted the net amount was $32.75 million. Mr. Eggleston reported the project summary sheet provided the actual cost and amount of funding for projects. With the proposed changes, the amount reduced was approximately $40 million. Because the Committee discussed integration of the CIP Budget with the project list, Staff indicated the Five Year CIP funding for projects with CIP funding and the project cost as stated in polling. Joe Saccio, Assistant Director of Administrative Services, noted a 2 percent increase in the Transient Occupancy Tax (TOT) would generate $1.8 million and could be utilized to finance $25.2 million in Certificates of Participation (COP). Staff utilized the formula of $1 million in revenue to raise $14 million in project funds to calculate the amount of funds resulting from COPs. Applying a 2 percent TOT increase to new hotel revenue generated $2.2 million. A 3 percent TOT increase would generate $3.3 million including new hotels. The original assumption for the Los Altos Treatment Plant (LATP) Attachment E FINAL MINUTES Page 3 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 revenue included building out the site. Staff revised the assumption to renting the site under current zoning without building it out and determined approximately $1.3 million annually could be generated. If the zoning changed to commercial, the upper limit for potential revenue was $2 million. Two former well sites on Middlefield Road could be made available for residential use. Staff estimated sale of the two sites could generate $2.2 million. Given the recent increase in revenues, Staff believed an additional $1 million in surplus funds could be provided for infrastructure improvements. Staff removed parcel tax and UUT from further consideration in accordance with the Committee's direction. The Mello-Roos District was mentioned with regard to financing Downtown and California Avenue parking garages. The consultant was present to discuss that if the Committee wished. Mr. Keene inquired whether the Committee discussed possible changes with respect to COPs. Mr. Saccio noted potential changes were discussed in the Staff Report. Standard and Poor's and Moody's apparently were considering downgrading COPs generally. Due to municipal bankruptcies, the market was wary of municipal debt. There was general talk of degrading COPs from a credit perspective. Ms. Tucker requested the Committee provide direction regarding other areas for additional opinion research and recommendations to the Council regarding current or new revenue sources for funding infrastructure projects. Mr. Keene expressed concern about the competition of projects and scheduling issues. He wished to provide alternate methods for the Committee to consider projects and funding sources. The projects that received positive polling totaled $88.3 million. New hotel revenue and a 3 percent TOT increase along with Infrastructure Reserve funds would total approximately $88.3 million without the need to issue bonds. The Bicycle and Pedestrian Transportation Plan and the Bike Bridge could receive funding from Stanford University Medical Center (SUMC) Development Agreement funds. Parking garages did not poll well; however, the community was concerned about parking issues. Perhaps a Mello-Roos District or an assessment district strategy was viable. Staff identified projects that could be handled better through the CIP Budget or ongoing surpluses. Staff could return with more definition of the proposals. He noted the Committee's concern with the Jay Paul Company project. Staff could not guarantee the progress of that project in relation to the Committee's planning. Without utilizing a finance measure, approximately $90 million could be available for infrastructure projects. The City had more than one option to consider for funding a Public Safety Building. Attachment E FINAL MINUTES Page 4 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 Chair Klein felt the problem was the many options. Council Member Berman inquired whether voters would have to approve a 3 percent TOT increase. Mr. Keene answered yes. Council Member Berman asked if interest rates and debt service costs for General Obligation (GO) bonds remained 15-20 percent higher than costs for COPs. Bob Gamble, Public Financial Management, expected the marginal difference to be substantially less than 15-20 percent, more in the range of 5 percent. The difference varied based on relative credit perceptions. Council Member Berman inquired whether the 12 percent TOT for new hotels had been factored into future budgets. Mr. Saccio felt it was new revenue. Staff budgeted approximately $400,000 in the Fiscal Year (FY) 2013-2014 Budget for Casa Olga. The $2.4 million amount was over and above the Casa Olga projected revenue. Council Member Berman asked when plans could proceed in relation to the LATP site. Mr. Eggleston reported a contract for the design consultant was in place. He estimated the earliest time was fall 2015 if Staff received regulatory clearances. Council Member Berman felt a conservative estimate for use of the LATP site was 2016 or 2017. Lalo Perez, Director of Administrative Services, noted the site was jointly owned by the Refuse Fund. Allocation of net revenue would have to be considered. Council Member Berman inquired about the purposes for issuing past COPs. Mr. Saccio reported COPs were issued in 1983 for civic center improvements; in 1992 for additional improvements to the civic center and for refinancing; in 1998 for improvements to the Golf Course; and in 2002 for the building next to the Bryant Street Garage and for refinancing. Council Member Berman asked which revenue sources paid for the COPs. Attachment E FINAL MINUTES Page 5 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 Mr. Saccio indicated the revenue streams from the Golf Course paid for that COP. Rent on the Bryant Street Garage was used to pay for that COP. The civic center COP was paid through General Fund revenue. Mayor Scharff inquired whether a two-thirds vote of the entire city was needed to approve a Mello-Roos District. Mr. Saccio replied yes. Mayor Scharff noted the Council could determine how many parking garages it needed before requesting community approval; and asked if the properties within the District would be required to pay the tax. Mr. Saccio responded yes. Mayor Scharff felt a Mello-Roos District was similar to an assessment district. The main difference was that all citizens voted on a Mello-Roos District. Mr. Saccio understood the City had to strictly ascribe the benefit from a property to the tax. Mayor Scharff asked if one vote could be held to create two Mello-Roos Districts. Molly Stump, City Attorney, answered yes. Mayor Scharff indicated assessments could vary depending on the number of garages built in Downtown and in California Avenue. He asked if an election was required to be held in an even year. He suggested the Council determine the number of garages needed, and then place a measure on the 2014 ballot. He inquired about the actions needed to begin the process. Mr. Keene requested the Committee direct Staff to return with more detailed information regarding a Mello-Roos District. Staff could present information expeditiously. Mr. Saccio agreed. Mayor Scharff asked when the Jay Paul Company project might be presented to the Council for a vote. The Committee needed some idea of that timeframe to determine whether there was sufficient time to place a GO bond for a Public Safety Building on the ballot. Aaron Aknin, Interim Planning Director, was doubtful the Council would vote on the project in April or May 2014, because of the time required for Attachment E FINAL MINUTES Page 6 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 environmental review, the Planning and Transportation Commission process and the Council process. Mayor Scharff believed Staff would need at least two years to compile a Public Safety Building project if the Council did not approve the Jay Paul Company project. Therefore, it was not logical to consider funding for a Public Safety Building in the 2014 election cycle. If the Council did not approve the Jay Paul Company project, then it could consider a Public Safety Building in 2016. Chair Klein noted the same conversation was held previously. Mr. Keene stated the Council did not have to specify the use of an increase in the TOT. It would be difficult to gain approval of a bond without specifying its use. 2016 was the appropriate timeframe for a GO bond and still practically better for the TOT issue. The Council could have a successful measure in 2014. Mayor Scharff was unsure why a TOT increase would not be perfect for 2014. The Council would not want a GO bond and a TOT increase on the same ballot in 2016. Mr. Keene believed the Council could pursue a TOT increase in 2014 even if it was considering use of the TOT increase for a Public Safety Building. Vice Mayor Shepherd inquired whether the Committee was responsible for forwarding the UUT ballot item to the Council. Ms. Stump reported the Committee had discretion to forward that item to the Council. She understood the Committee verbally directed her to present it to the Council as an administrative measure. Vice Mayor Shepherd wanted to ensure the item was placed on the ballot. She inquired whether GOs were threatened with the loss of tax-exempt status. Mr. Gamble explained that consideration would apply to any tax-exempt bond including GOs, Mello-Roos Districts and COPs. Vice Mayor Shepherd inquired whether the City would have more expense in issuing those types of bonds. Mr. Gamble replied yes, depending on terms in the legislation. Vice Mayor Shepherd noted the Council considered a land swap regarding the Municipal Services Center (MSC), and inquired whether the Committee Attachment E FINAL MINUTES Page 7 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 should discuss swapping the MSC site for a site to build the Public Safety Building. Mr. Eggleston reported Staff was finalizing the scope of a Request for Proposal (RFP) to study MSC uses. Swapping the MSC site for another site suitable for a Public Safety Building could be considered. Vice Mayor Shepherd wanted to find a way to initiate that conversation. The Staff Report provided a method for the Committee to match taxes, revenues and project costs. Chair Klein recalled the Committee discussed a possible surplus of funds as an available source of revenue, and inquired about the amount of the surplus. Mr. Perez indicated the surplus would be significantly more than $8 million, because sales tax and TOT were trending higher than expected. Staff would have a specific amount shortly. Mr. Keene asked when Staff projected having the exact amount. Mr. Perez believed within the next two weeks Staff would know the amount. Chair Klein assumed the surplus would be closer to $12 million than $8 million. Mr. Keene stated Staff would not have to perform due diligence if the amount were not significantly higher. Chair Klein understood a report on the Jay Paul Company project was coming up in September. Mr. Keene reported Staff was attempting to report to the Council in September 2013 regarding traffic and public benefits. Chair Klein felt the Council could disapprove the project if the traffic report indicated the traffic impact would be great. Mr. Keene commented that Staff had issues with the performance of the initial traffic study. Therefore, the traffic study would need to be reviewed closely. Mr. Aknin indicated the information was a preliminary traffic report, a first draft. The report provided an idea of potential traffic impacts. Staff would want to review it closely and study impacts to additional intersections. Attachment E FINAL MINUTES Page 8 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 Chair Klein inquired whether the preliminary nature of the report would provide the Council with sufficient information to understand potential impacts. Mr. Aknin felt the report would provide a picture of potential impacts; however, Staff would want additional detail and additional intersections studied. Chair Klein noted that Staff proposed using approximately half the SUMC Development Agreement funds, and requested Mr. Keene comment. Mr. Keene reported Staff was not comfortable proposing uses for the SUMC Development Agreement funds. Because the Bicycle and Pedestrian Transportation Plan appeared to meet the criteria the Council discussed for projects, Staff proposed utilization of funds for that project. A follow-up session with the Council on SUMC Development Agreement funds was scheduled within the month. Chair Klein indicated the Policy and Services Committee recommendation regarding SUMC Development Agreement funds would be presented to the Council in September 2013. He asked if there were any issues with the Committee proposing use of remaining funds for a Public Safety Building, for example. Mr. Keene stated Staff had not precluded that possibility. Council Member Berman referenced the $1 million increased funding amount included in the FY 2014 Capital Budget and Five Year Plan for sidewalks, and asked if that increased amount would accomplish the goal of completing the sidewalk 30-year cycle in 30 years. Mr. Eggleston believed the increased amount would accomplish the goal. The $6 million amount was utilized in polling and would be additional funding to complete the original sidewalk cycle. The $6 million represented the amount needed to replace approximately 7 percent of the total amount of sidewalks in the City. Council Member Berman inquired whether Staff felt there was a need for that amount of sidewalk repair. Mr. Eggleston reported in some districts, where work was performed many years ago, a great deal of work was needed. Staff did not have a good assessment of the actual amount of work needed; therefore, Staff suggested funding a study of sidewalks in the FY 2015 Budget. The study could consider options for the cost of implementing a 10-year, 15-year or 20-year cycle and other ways to organize the program. Attachment E FINAL MINUTES Page 9 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 Council Member Berman concurred with considering a Mello-Roos District. He suggested COPs based upon the revenue stream from renting the current Public Safety Building be issued to fund a new Public Safety Building. The digital reader board was another potential source of revenue. Because an increase in the TOT required a 50 percent approval vote, he felt that revenue stream should fund the least popular infrastructure items, namely a new Public Safety Building. Fire stations, the Bicycle and Pedestrian Transportation Plan, parks catch-up and sidewalks all polled very well and were better suited for a GO bond election. He preferred to increase the TOT rate first, and then utilize revenue from the new hotels for future projects and needs. The civic center and Cubberley Community Center would need major improvements at some point. He did not want to use COPs on the TOT as a first option. The Council needed to impress on the public that all these projects were catch-up items, not ongoing maintenance. Mayor Scharff felt Staff needed to provide details regarding a Mello-Roos District including the boundaries of districts, the number of garages and spaces needed, and impacts on businesses. MOTION: Mayor Scharff moved, seconded by Vice Mayor Shepherd to direct Staff to come back with a plan for a 2014 ballot measure using a Mello-Roos District. Mayor Scharff noted the Committee's concerns that an assessment district was no longer a viable funding mechanism. A Mello-Roos District would provide a solution to the parking problem, and the people who created the problem would pay for the solution. Vice Mayor Shepherd indicated the Committee needed to have sufficient information to determine whether a Mello-Roos District was viable. The public needed to know a Mello-Roos District was a possibility and provide comment on the topic. Chair Klein understood Vice Mayor Shepherd wanted information while Mayor Scharff wanted to include a Mello-Roos District on the 2014 ballot. Mayor Scharff clarified that Staff should present a detailed plan, including options and recommendations, for possibly placing a Mello-Roos District on the 2014 ballot. Chair Klein reiterated that Vice Mayor Shepherd was interested in general information, while Mayor Scharff was interested in details of actual garages and spaces. Attachment E FINAL MINUTES Page 10 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 Mayor Scharff inquired whether Vice Mayor Shepherd would agree with Staff providing information about actual Mello-Roos Districts in Downtown and California Avenue. Vice Mayor Shepherd believed detailed information was necessary for the Committee to make a decision. The discussion of Mello-Roos Districts could be iterative as the Committee requested specific details. She assumed the public would comment once they learned the Committee was considering a Mello-Roos District. She inquired whether Mayor Scharff wanted the discussion to be iterative or Staff to provide clearly-defined plans. Mayor Scharff indicated the process could be iterative; however, he wanted a timeline to place a Mello-Roos District on the 2014 ballot. The Committee could make a decision more quickly if the initial presentation was detailed. The Committee and Downtown property owners needed to know the broad impacts of a Mello-Roos District. Chair Klein would support the Motion if it was clear that the Committee was not committed to placing a Mello-Roos District on the ballot in 2014. Vice Mayor Shepherd added that the discussion would be held with the consideration that it could be placed on a 2014 ballot. Chair Klein also wanted Staff to reach out to affected neighborhoods and property owners early to provide sufficient time for public comment. Mr. Keene understood the discussion would be iterative. The question was the level of detail the Committee wanted in the initial presentation. Staff could provide a gross analysis and share information with the public. The public would also be interested in the scale of parking provided by a Mello- Roos District. In six weeks, Staff could provide a schedule for providing a first iteration. He believed the Committee would have sufficient time to discuss the information and inform the public. Vice Mayor Shepherd requested Staff indicate whether any Ordinances conflicted with a Mello-Roos District or whether a Downtown Parking District would be exempt. Mr. Keene indicated the initial presentation would not capture all information. The process would need to be iterative in order to consider many different impacts. The important point was for Staff to return as quickly as possible with as much meaningful information as possible. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to have Staff investigate a public/private Attachment E FINAL MINUTES Page 11 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 partnership with the possibility of selling to or having a long-term lease with a developer for one of the surface parking lots. Vice Mayor Shepherd also requested information regarding possible overlap with the Transportation Demand Management (TDM) Program. Mr. Keene stated the Vice Mayor was acknowledging the fact that parking and traffic issues would not be addressed solely by building additional parking. The Council requested Staff review an intensive expansion of the TDM Program and standards. Mr. Saccio reported a consultant could be needed to determine how best to develop a tax. Chair Klein believed the Motion was simply requesting information. Work needed to begin soon. MOTION PASSED:4-0 Mayor Scharff inquired whether Staff needed a Motion on the UUT. Ms. Stump did not believe a Motion was necessary. She would provide the needed information. Mayor Scharff felt the Committee needed to provide more details regarding a TOT increase and GO bonds. The Committee should not provide the Council with an open-ended discussion. The Committee needed more information before recommending a TOT increase or a GO bond. He wanted Staff to provide a Staff Report considering the relationship between funding sources and the Jay Paul Company project. The Committee could discuss revenue sources again in October 2013 after reviewing the preliminary traffic analysis for the Jay Paul Company project. He requested Staff comment on his suggestions. Mr. Keene agreed that the Committee should provide the Council with recommendations and clarity regarding a funding source approach soon. If the Committee chose a COP strategy, the real discussion was the use of those funds and the relationship to a back-up option. The Committee needed to tell Staff if it needed specific follow-up information regarding funding sources. If additional information was not needed, then Staff could work on the schedule and interface between funding options and the Jay Paul Company project. He advocated for the Committee choosing a lead funding source sooner rather than later, because other concerns would then fall in line for the Committee and the Council. Attachment E FINAL MINUTES Page 12 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 Mayor Scharff suggested the Committee place a TOT increase on the ballot for 2014 with the opportunity to place GO bonds on a 2016 ballot. He was unsure whether the Committee should decide which projects the revenue would fund in terms of which items were popular in the poll. Because there were many projects to fund, the Committee should maintain flexibility. MOTION: Mayor Scharff moved, seconded by Council Member XXX to direct Staff to return to the Committee with possible scenarios for a Transient Occupancy Tax Measure for the 2014 election, being sensitive to the flexible use of the funds. MOTION FAILED DUE TO LACK OF SECOND Chair Klein felt the Committee had enough information regarding a TOT increase. He wanted the TOT to total 14 percent, rather than 15 percent. He also wanted to utilize more SUMC Development Agreement funds. The Council reached consensus that those funds should be used for items with a large impact. Projects on the infrastructure list did provide large impacts. The Bicycle and Pedestrian Transportation Plan, a Public Safety Building, parks catch-up and Byxbee Park met the requirements for use of SUMC Development Agreement funds. The Committee should recommend a plan or plans for Council consideration. Vice Mayor Shepherd asked if there was a reason for Staff not linking funds in the infrastructure/housing category with funds in the sustainability category. Mr. Keene explained that listing the funds in that manner was easier. The Committee could obviously break it up. MOTION: Chair Klein moved, seconded by Mayor Scharff to continue the discussion and encourage Staff to provide input in line with the discussion in order to allow the Committee to do their homework. Mayor Scharff inquired whether the Committee needed to include a study of sidewalks in the Motion. Mr. Eggleston reported Staff discussed proposing a study as part of the CIP Budget for the following fiscal year. Mayor Scharff asked if Staff needed authority to perform that study. Mr. Eggleston replied no. Staff would propose a study as part of the upcoming CIP process. Attachment E FINAL MINUTES Page 13 of 13 Infrastructure Committee Special Meeting Final Minutes: September 3, 2013 Chair Klein inquired whether the preliminary traffic analysis for the Jay Paul Company project would be presented to the Council in September 2013. Mr. Aknin reported Staff could include it on the September 16, 2013 Agenda. Chair Klein wanted to ensure the Committee had that information prior to the next meeting. Vice Mayor Shepherd inquired whether the Motion could include uses for the MSC site. Mr. Eggleston indicated that information would take time to compile. Vice Mayor Shepherd asked about uses for the LATP site. Mr. Eggleston knew the land uses for which the site was zoned, but the zoning could be changed. Staff did not know the number of acres of usable land the site would provide. Vice Mayor Shepherd asked when that information could be provided. Mr. Eggleston hoped to have the information in spring of 2014. MOTION PASSED:4-0 Chair Klein inquired about possible meeting dates in October 2013. Ms. Tucker indicated October 1, 2013. Mayor Scharff noted a conflict with 4:00 P.M. on October 1. He suggested the meeting begin at 2:00 or 3:00 P.M. Chair Klein announced the next meeting would be held on October 1, 2013 at 3:00 P.M. ADJOURNMENT: The meeting was adjourned at 5:28 P.M. Attachment E INFRASTRUCTURE COMMITTEE DRAFT MINUTES Page 1 of 18 Special Meeting October 1, 2013 The Infrastructure Committee met on this date in the Council Conference Room at 3:03 P.M. Present: Berman, Klein (Chair), Scharff, Shepherd Absent: ACTION ITEMS 1. Continue Discussion From September 3, 2013 Infrastructure Committee Meeting and Make Recommendations to the City Council on Next Steps in Considering a Potential Infrastructure Finance Measure. Sheila Tucker, Assistant to the City Manager, reported the Infrastructure Committee (Committee) needed to decide the priorities for infrastructure projects. From those priorities, the Committee could determine the means to fund projects, whether to invest in additional study of a finance measure or a combination of both. Staff provided four recommendations regarding: 1) a Mello-Roos District; 2) an increased transient occupancy tax (TAT); 3) a bundled General Obligation (GO) bond transportation measure; and 4) a bundled GO bond public safety measure. Attachment A outlined a funding scenario for each recommendation. Staff increased the Infrastructure Reserve Fund amount to $8.5 million and adjusted the cost of parking garages. Chair Klein suggested the Committee begin the discussion with the Mello- Roos District. Ms. Tucker indicated the Committee directed Staff to present a plan and analysis for implementing a Mello-Roos District to fund parking garages. Constructing parking garages was a small component of the larger City-wide strategy to address parking and traffic issues. No matter how boundaries were drawn, Staff did not believe a Mello-Roos District was a viable option. Public-private partnerships were one option for constructing parking garages. Chair Klein was unsure whether the Committee would agree that a Mello- Roos District was not viable. DRAFT MINUTES Page 2 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Ms. Tucker encouraged the Council to review that option more closely. Mayor Scharff asked which option Ms. Tucker suggested the Committee review. Ms. Tucker clarified proceeding with a Request for Proposal (RFP) to consider private interests in building garages in the California Avenue area. James Keene, City Manager, asked if the Committee had sufficient background information regarding the Mello-Roos analysis and options. Chair Klein understood Staff indicated a Mello-Roos District was not viable, and requested more information regarding jurisdictions where a Mello-Roos District did not succeed and the circumstances. Mr. Keene inquired whether the Staff Report contained practical issues related to a Mello-Roos District. Joe Saccio, Assistant Director Administrative Services, believed the Staff Report outlined information about Mello-Roos Districts. It contained a few examples of potential districts utilizing hypothetical numbers with respect to the amount a parcel would be taxed under two different scenarios. He asked if the Committee felt the report included sufficient information. Mayor Scharff replied no. The Report did not consider a district where residents paid an assessment of $1 or $2 and commercial entities paid more. There was no explanation as to how the boundaries were drawn. The drawing of the boundaries would determine whether or not a district was politically feasible. Mr. Saccio noted two methods for drawing a Mello-Roos District in terms of voting. The first consideration was whether the District contained 12 or fewer residents or more than 12 residents voting. Through a study, Staff would determine a tax formula for allocating the tax to different properties. Bond counsel opined that there were various factors the City could use for the allocation of the tax; proximity to the garage, car trips generated, square footage, etc. The amount of impact on the resident could be reduced; however, he did not wish to present the information as a rational study. As more of the assessment obligation was allocated to commercial properties, less was allocated to residential properties. Mayor Scharff expressed concern that Staff assigned too high of an assessment to residential properties. He believed voters would support a minimal assessment, and wanted to poll on that. DRAFT MINUTES Page 3 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Chair Klein explained that the Council would have to provide a rational basis for the assessment. Mayor Scharff inquired whether Staff considered on a rational basis the lowest assessment that could be placed on a residential parcel. He wished to have a study on that and then poll about it. That would provide the information as to whether a Mello-Roos District was feasible. Mr. Saccio agreed that a rational formula was necessary. The City would need to hire a consultant to establish a rational process, because the process could not be arbitrary. The two examples in the Staff Report were meant to demonstrate that with more residential properties in a district, theoretically the lower the cost to a resident would be. The Council needed a rationale for allocating more of the tax to the entities that would generate the traffic and car trips. Mayor Scharff inquired whether a rational basis standard was applicable. Molly Stump, City Attorney, understood bond counsel to advise that the legal standard was a reasonable basis, which was probably a slightly higher standard than the rational basis test. Staff would need to work through the process with an engineer and with bond counsel. Mayor Scharff asked why Staff opposed a Mello-Roos District. Mr. Saccio reported the concern was the need for a two-thirds majority approval. The consultant felt that was a high hurdle, given other factors that could oppose a Mello-Roos District. Mr. Keene noted an additional concern was providing detailed methodologies and different alternatives in a limited amount of time. The Committee also needed to consider the extent that any single measure could provide a solution to parking and traffic issues. Chair Klein inquired about Staff's use of $3 million in the report. Mr. Saccio explained that the total debt service associated with construction of three garages in the second scenario was approximately $3 million a year. The table on page 6 indicated tentative scenarios, according to intensity of use, for the amount of the allocation per parcel per resident. Mayor Scharff felt the Committee did not have sufficient information. He assumed a study was needed to determine the amount of parking needed. The parking problem seemed to be created by the people owning the office DRAFT MINUTES Page 4 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 buildings and retail. The Staff Report did not contain a rational basis with respect to the numbers. Chair Klein believed the City needed an impartial consultant to perform a study. All traffic studies showed a significant part of the parking problem was residents. If the numbers in the report were realistic, they would not be a huge hurdle to obtaining a two-thirds vote. Council Member Berman noted in the Downtown District hypothetical, Staff would have to identify a rational basis that the Downtown businesses created 693 times more traffic than residents. He expressed concern regarding confusing voters by proposing a Mello-Roos District, a TOT increase and a Residential Parking Permit (RPP) Program in the same measure. Vice Mayor Shepherd inquired about areas where Mello-Roos Districts were successful and unsuccessful. Shakari Byerly, Fairbanks, Maslin, Maullin, Mertz and Associates, reported no one particular ZIP code or region received 50 plus 1 support. Chair Klein stated a Mello-Roos District was not contained in the poll. Ms. Byerly clarified that parking garages did not receive that level of support. The polling questions were not associated with a particular tax level. Both of the proposals received approximately 52-53 percent overall. By geographic area, one district received 52 percent support. If there was not significant public support in concept for a project with an assessment of $25-$30, the it would be a challenge to receive two-thirds approval. Polling a specific geographic area would be the best method to determine support in specific neighborhoods. She recommended public outreach work, because obtaining a significant number of interviews in such a small area would be difficult. Joy Tartarka, TBWB Strategies, agreed obtaining support in any one region would be difficult. The City could perform extensive outreach and consider different dollar amounts. She could test to determine whether those issues changed some of the variables. Recommendations from the report included shrinking the size of a district to less than 12 voters and creating a business district alone. Again, the City would need to perform extensive outreach to the affected business owners. Mr. Keene added that the City would need to obtain two-thirds support of business owners. DRAFT MINUTES Page 5 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Council Member Berman questioned how to create a Downtown district. Vice Mayor Shepherd was interested in exploring all the types of business cooperatives. In 2009, support for the business license tax reached the 51 percent level for a revenue stream; however, she was unsure how that would match to a revenue stream for parking garages. If businesses did not support a Mello-Roos District, it might not reach a two-thirds majority. The Council should reach out to the business community to determine what they might support. She was unsure if the Committee should direct Staff to provide additional information, unless there was an example of a successful Mello-Roos District. Mayor Scharff noted the consultant was concerned that parking garages polled between 48 and 52 percent depending on the district. He inquired whether support was 48 percent City-wide. Ms. Byerly reported support was 52 percent for California Avenue and 53 percent for Downtown. Mayor Scharff indicated the concern was how to obtain a two-thirds majority. The TOT increase polled well because residents would not be paying the increase. He asked if the structure of a measure would affect the level of support. Ms. Byerly commented that another consideration was the time horizon. Six months to a year was needed to build public consensus around a structure. Her concern was reaching two-thirds approval and educating the voter. Chair Klein felt the community was more concerned about parking since the poll was conducted. He was willing to poll again to determine the current level of support. He requested examples of Mello-Roos Districts in other communities and information regarding their success or failure. Ms. Tartarka could look into it. She could only speak anecdotally with respect to polling falling short of the goal. Chair Klein stated apparently the consultants did not have recent experiences from other cities. Ms. Byerly could look into that. She was not prepared for that question and did not bring specific examples. DRAFT MINUTES Page 6 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Vice Mayor Shepherd stated the topical point was the two-thirds vote. She proposed Staff provide experiences from other cities to facilitate an explanation to the full Council. MOTION: Vice Mayor Shepherd moved, seconded by Council Member XXXX to put in the parking lot to direct Staff to obtain from the consultant past Mello-Roos District election information and experiences from other cities. MOTION FAILED DUE TO LACK OF A SECOND Mayor Scharff wanted additional information on the connection between polling. Parking was a high profile issue. He believed residents would support a measure if the amount they paid was nominal. He suggested the Committee test some sort of nominal amount that was rationally justifiable. If support did not reach two-thirds, then the Committee should abandon the concept of a Mello-Roos District. If support reached two-thirds, then a Mello-Roos District was probably a more viable option to build parking garages than some of the other options. MOTION: Mayor Scharff moved, seconded by Council Member Klein to put in the parking lot to direct Staff to: 1) work with the consultant to poll the public on a nominal cost of a parcel tax that is rationally justifiable by the numbers for parking garages, with numbers provided by Staff, 2) some offset of payments that people would be paying for other parking garages. Council Member Berman believed the Committee should focus on other possible options; however, it was difficult to make a decision without discussing the other options. Including Mello-Roos questions in a poll could complicate matters. He did not understand why the Committee would want to perform one poll on a Mello-Roos District to raise $34 million as the Committee had identified other options to raise money to build parking garages. Chair Klein agreed that the Committee's later decisions could impact the first one. He agreed with moving the Motion to a parking lot. Vice Mayor Shepherd wanted to understand the positive and negative aspects of the previous campaign for a business license tax. She would not want to be taxed under a Mello-Roos scenario and pay for an RPP. Perhaps the Committee could consider a universal RPP for parking anywhere in Palo Alto. Chair Klein indicated that topic was beyond the Committee's jurisdiction. DRAFT MINUTES Page 7 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Vice Mayor Shepherd was attempting to integrate that type of question. Chair Klein stated the full Council might have that responsibility at some point. Vice Mayor Shepherd inquired whether the Committee could only direct Staff to poll regarding the specifics of parking garages. A broader question was needed. Mr. Keene suggested effective polling would need a number of different aspects to be worthwhile, including possible opposition. Staff assumed RPP Programs would be implemented in conjunction with building parking garages, and the community would be asked to pay for both. It would be important to test that. He did not believe the Committee was holding a real discussion about establishing a City-wide RPP Program. Mr. Saccio reported a Mello-Roos District was flexible in that operating expenses and capital expenses could be included in it. An RPP Program could be folded into a Mello-Roos District. It would add a layer of complexity, but it was a possibility. Mayor Scharff agreed with Vice Mayor Shepherd. An RPP Program was an important component of a potential Mello-Roos District. He requested Staff consider different variations, poll on it and include it in the process. Chair Klein inquired whether the Committee on its own could authorize a second poll. Ms. Tucker believed the previous Council authority assumed a poll in the fall. Vice Mayor Shepherd inquired about the Committee's check-ins with the Council. Chair Klein felt the Committee should report to the Council very soon. Mr. Keene inquired whether a report to Council would impact the schedule for the Committee's work. A check-in could trigger issues other than just infrastructure, such as parking issues and RPP policies. The Council might want to authorize the shaping of those issues. Chair Klein preferred not to include Vice Mayor Shepherd's suggestion regarding an RPP Program. Vice Mayor Shepherd asked if he preferred to check-in with the Council first. DRAFT MINUTES Page 8 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Chair Klein believed that would add a month's delay to the process. Vice Mayor Shepherd noted the Committee held several meetings without updating the Council. She asked that the Motion be restated. Chair Klein reported the Motion contained several items; to poll on parking garages; to provide a rationally justifiable cost per residential parcel with an explanation that businesses would pay more than residents; and to determine the community's position regarding some offset for payments for other parking programs Council Member Berman inquired whether the poll would address only parking garages or other issues as well. Ms. Byerly would need information regarding the scenario the Committee would propose. Whether the Committee placed three measures before voters would determine how she structured the questionnaire. To provide robust data, voters needed to understand the context in which they would be asked to pay for each of the mechanisms. Ms. Tartarka recommended polling along with outreach to the particular community, in this case the affected business communities. That feedback could be incorporated into survey data. Chair Klein supported outreach as long as it could be accomplished in a timely manner for a November 2014 ballot. Mr. Keene stated the Committee did not have an explicit definition of the topic for a poll. He inquired whether the Committee expected to review poll questions prior to polling or grant Staff the authority to proceed. Chair Klein understood that neither the Committee nor the Council would review the questions. Vice Mayor Shepherd requested background information concerning a Mello- Roos District as part of a larger strategy for addressing City-wide parking issues. She inquired about the broad uses of a Mello-Roos District. Mr. Keene noted Berkeley implemented a Mello-Roos Street Light Assessment District. Vice Mayor Shepherd wondered whether the proposed toll in San Francisco would have been a Mello-Roos District. DRAFT MINUTES Page 9 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Mr. Saccio indicated a prior Staff Report provided three examples of successful Mello-Roos Districts in San Francisco. Vice Mayor Shepherd asked if the question could be broadened. Chair Klein reported that a Motion was on the floor directing three areas for polling. Vice Mayor Shepherd's suggestion should be addressed in future discussion. A substantial portion of Staff's and the consultant's recommendation against a Mello-Roos District concerned the fact that parking garages did not poll well at all. The results of polling would determine whether the Committee considered the details Vice Mayor Shepherd requested. Vice Mayor Shepherd felt the poll response would be different if questions included other costs associated with residential parking issues. Mayor Scharff understood one of those questions would be included in the poll. Vice Mayor Shepherd asked if a question could be included without resolving the RPP problem. Chair Klein requested clarification of the question to include as there was a variety of RPP forms. Mayor Scharff indicated the question address residents receiving an offset. Vice Mayor Shepherd requested clarification of an offset. Chair Klein explained residents would receive an offset if they paid for any other form of parking. Vice Mayor Shepherd did not realize the Motion included that point. MOTION PASSED: 3-1 Berman no Ms. Tucker reported that the baseline survey indicated a number of other approaches would be more successful for financing parking garages. The TOT increased polled well at 62 percent. Staff recommended a survey addressing a TOT increase specifically. A second recommendation was to consider a sales tax increase in association with the TOT increase. This would also be a good opportunity to test the interaction of upgrading the Utility Users Tax (UUT). In addition a poll could test reaction to a 2 percent DRAFT MINUTES Page 10 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 and a-3 percent increase. Staff suggested beginning outreach simultaneously with a survey. Council Member Berman suggested Staff include in the survey current revenue sources as noted in the spreadsheet. Mr. Keene asked the consultant to comment on the need to define the use of a TOT increase. That could have some impact on perception of the tax. Ms. Byerly noted the recommendation for additional polling was based on a general purpose measure. Many cities often suggested the types of general purposes for which the tax could be used. She recommended that infrastructure projects be prominently featured in outreach. A high level of risk was associated with a two-thirds measure given an initial vote at 62 percent. Mayor Scharff did not believe the Committee would move to a two-thirds. Ms. Byerly clarified that she was responding to the question regarding specifying uses of tax funds. Mayor Scharff assumed Mr. Keene meant there would be a companion measure. Vice Mayor Shepherd inquired if Staff wanted to test for a 2 percent and 3 percent increase in the TOT. Ms. Tucker recommended that based on Committee input. Vice Mayor Shepherd asked if the prior poll tested for a percentage. Ms. Byerly answered no. The prior poll tested a general concept. Vice Mayor Shepherd agreed with polling for a 2 percent and 3 percent increase. Because the UUT increase would be included on the ballot; therefore, she preferred to determine how it should be placed on the ballot. Ms. Byerly clarified that her recommendation was not that the UUT would not be used to fund infrastructure projects. If the City was interested in a TOT increase, it would be important to know the effect of another revenue neutral measure on the TOT measure. Vice Mayor Shepherd reiterated that the idea was to determine if the two would poll well together. DRAFT MINUTES Page 11 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Chair Klein noted that the UUT measure was not a renewal. If the UUT measure failed, the tax would remain in effect. Ms. Byerly reported that the goal in developing the research instrument was to model the climate in which voters made decisions. If there was a measure related to the UUT, she wanted to incorporate information concerning the UUT into polling on the TOT measure. Vice Mayor Shepherd did not support polling on sales tax. Mayor Scharff inquired about polling results for sales tax. Mr. Keene suggested the support level was approximately 36 percent. Ms. Byerly explained that a good read on a sales tax measure required context for the tax be provided to voters. When sales tax was explored in depth, often the support level increased. Mayor Scharff believed the issue was whether a sales tax should be explored in more depth as part of the TOT. Chair Klein stated the sales should be considered not as part of the TOT but in addition to the TOT. Mayor Scharff asked if sales tax was included in the bundle. Chair Klein noted sales tax was simply one of the suggestions. MOTION: Vice Mayor Shepherd moved, seconded by Mayor Scharff to put in the parking lot to direct Staff and the consultant to conduct another poll for a 2 percent and 3 percent Transient Occupancy Tax to include the Utilities User Tax (UUT) to clean up the UUT measure and include a 1/8 cent sales tax. Vice Mayor Shepherd wished to understand how the sales tax would be incorporated. Mayor Scharff explained the consultant would poll on a sales tax increase to provide information. Vice Mayor Shepherd questioned the number items that should be included in a poll. DRAFT MINUTES Page 12 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Ms. Byerly recommended two separate polls. One survey would explore a bond measure. Mr. Keene noted that the participants would be different for each survey. Vice Mayor Shepherd inquired whether the Mello-Roos District questions would be part of the survey concerning a TOT increase. Ms. Byerly responded yes. Vice Mayor Shepherd asked about the appropriate number of questions in a survey. Ms. Byerly explained the number of questions would be based on the length of the survey. It was possible to test two robust measures and potentially a third measure in less detail. MOTION PASSED: 4-0 Ms. Tucker reported that the GO bond bundle would package highly supported projects with lower supported projects. The baseline survey reviewed five measures that bundled different products. The traffic congestion relief, streets, sidewalks and trails bundle polled the highest at 74 percent. If the Committee was interested in funding parking garages, a bundle of projects could be successful. It would require a two-thirds vote. Staff recommended a survey devoted to a bundled measure. Council Member Berman recalled that the Committee determined previously that polling on streets was not necessary, even though streets were popular. Approximately two-thirds of the funding needed was comprised of parking garages and the Charleston-Arastradero project, neither of which polled well. He inquired about possible survey results when two-thirds of the projects in the bundle were unpopular. Ms. Byerly felt it should be tested. The survey would include messaging to make the case to voters in order to determine their reaction. Mayor Scharff agreed streets should not be included in a poll if it was not necessary, because the Committee did not plan on funding streets from a bond measure. Chair Klein did not support performing a poll, because it would be a separate poll and the Jay Paul Company Project was uncertain. DRAFT MINUTES Page 13 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Mayor Scharff suggested discussing the topics together. Chair Klein did not believe it was logical to perform a poll until the Council had more certainty regarding the Jay Paul Company Project. Ms. Byerly recalled the Committee discussed in a prior meeting a GO bond in 2016. The Committee should discuss the combination and sequence of measures it would put forward. Mayor Scharff wanted the TOT increase and possibly the Mello-Roos District on a ballot in 2014 with bond measures on a ballot in 2016. If the Jay Paul Company Project did not materialize, then he would support the second bond measure. If the Jay Paul Company Project was successful, then he might consider the bundled transportation measure in 2016. He did not support a bundled GO bond measure if a funding was needed for a Public Safety Building (PSB). Chair Klein indicated funding for a PSB would not be needed if the Jay Paul Company Project was approved. If the Jay Paul Company Project was unsuccessful, then a bond measure would be needed to finance a PSB. That would take precedence over other aspects included in the transportation measure. Council Member Berman believed the discussion was different at the prior meeting, because the Committee separated funding into three clean categories. The PSB was an aspect of the TOT increase. A successful TOT measure would eliminate the need for a bond measure in 2016, because it provided the funding needed. Chair Klein disagreed. On the funding source side, there were a number of variables. Council Member Berman considered the categories of projects identified under the different scenarios. Chair Klein indicated a TOT increase would not necessarily fund all projects. Council Member Berman agreed. Chair Klein reiterated that the focus was on subjects for polling. Council Member Berman felt it was logical to poll for a potential transportation GO bond measure. The Committee needed as much information as possible to compare the options. He inquired about the cost DRAFT MINUTES Page 14 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 of an additional poll. The cost should not be extraordinary, and now was the right time to obtain information from the public. Ms. Byerly reported that timing was a concern. If there was a scenario under which the Committee would proceed with a GO bond in 2014, she recommended polling now. Otherwise, she recommended polling be delayed on the transportation measure and the focus moving to the measure of most of interest for November 2014. Council Member Berman had difficulty reaching a decision without results from the polling on the TOT. Vice Mayor Shepherd believed support might have changed because of publicity around the Jay Paul Company Project and densification. The Council needed direction from the community on how the PSB would be financed. She supported a poll. Mr. Keene asked if Vice Mayor Shepherd supported a poll under a GO bond scenario in addition to polling on the transportation bond. Vice Mayor Shepherd responded no. Mayor Scharff noted the Committee's reluctance to poll on both measures with a strong desire to poll on a public safety measure. He inquired about the cost to perform a second poll. Ms. Byerly felt a poll on both would be valuable if the Committee was considering a separate bond measure survey. MOTION: Mayor Scharff moved, seconded by Council Member Klein to put in the parking lot to direct Staff to poll for bundled General Obligation Bond measure and Transportation measure. MOTION PASSED: 4-0 Chair Klein inquired about the timing of the polls and when results could be provided to the Committee. Ms. Byerly anticipated finalizing questions in mid-November and reporting in late November or early December. She hoped to complete the initial research phrase prior to the end of 2013. Ms. Tucker noted a check-in with the Council was tentatively scheduled for late October, possibly the October 28, 2013 Council meeting. DRAFT MINUTES Page 15 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Mr. Keene inquired whether the Committee removed streets from the transportation polling item. Mayor Scharff agreed streets were removed unless Staff provided a rationale for needing financing for streets. Mr. Keene inquired whether the name should be transportation measure or transportation/parking measure. The public could question the lack of streets in a transportation measure. Mayor Scharff explained that the Committee was providing Staff with discretion. Chair Klein reiterated that streets was removed, because funding was not needed for streets. He requested the consultant's recommendation with regard to the name. Mr. Byerly would work with Staff on all issues. Ms. Tucker inquired whether the Committee wished to discuss an RFP on a public-private partnership with respect to parking garages. Chair Klein answered yes. Jaime Rodriguez, Chief Transportation Officer, reported that Staff reviewed the needs for constructing parking garages on existing lots. Staff discussed the best long-term use for parking sites. Developers approached Staff with proposals for partnerships. The Council would need to set parameters regarding projects on the sites. Staff believed the development community was interested in partnerships with the City. Public-private partnerships would allow garages to be built quickly and outside existing assessment districts. Staff could provide a proposed RFP for the next Committee meeting. Mr. Keene noted that the discussion of public-private partnerships was part of the larger parking issue, which the Council should consider. Chair Klein agreed that the topic should be presented to the Council. Council Member Berman felt the Council should determine which parking lots were candidates for garages before issuing an RFP. Mayor Scharff inquired with assessment district permits should be provided to all who paid for them. DRAFT MINUTES Page 16 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Mr. Rodriguez indicated Staff requested a meeting with bond counsel to address that question. Mr. Keene stated Staff would provide that information to the Council. Mayor Scharff recommended Staff demonstrate the advantages of the various types of partnerships in its information to the Council. Mr. Keene believed a public-private partnership to build a garage was a narrow focus. Development visions for Downtown could include different mixed-use issues, which were broader than the public-private partnership strategy. The discussion should encompass planning and land use rather than solely building a parking garage. Mayor Scharff understood Mr. Keenan built more parking on his project site and paid the in-lieu fee after the Council denied the project. That may have been more beneficial for the City than building the garage in partnership with Mr. Keenan. That type of information should be included in the Staff Report. Chair Klein asked if there was a definitive date for the Committee's check-in with the Council. Ms. Tucker reported it was tentatively scheduled for October 28, 2013. Chair Klein inquired whether the Committee should have another meeting prior to October 28. Ms. Tucker suggested Staff return quickly to the Committee to outline research objectives. Mayor Scharff asked if Staff recommended a Committee meeting on that topic. Ms. Tucker replied yes. Staff would outline the survey topics and ensure the Committee's feedback was correctly represented in the surveys. Mr. Keene asked if that meeting would occur after October 28. Ms. Tucker indicated Staff could return to the Committee in early November with the plan. Chair Klein requested clarification regarding the Committee's review of survey questions. DRAFT MINUTES Page 17 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 Ms. Tucker reported Staff provided the Committee with a high-level overview of the objectives and the topics to be tested in the baseline survey. Staff did not provide the questionnaire or the specific questions to the Committee for review. Mr. Keene did not believe Staff should return to the Committee prior to the Council meeting on October 28, 2013. Polling would not be completed prior to October 28. He inquired about a possible date for polling to be completed. Ms. Byerly believed results would be available in early December 2013. Chair Klein understood Ms. Byerly to indicate earlier that polling would be completed in November. Ms. Byerly explained polling would likely be conducted in mid-November. An analysis of the results could be presented in the first week of December. Chair Klein asked if there was a need for the Committee to meet prior to receiving the results from polling. Ms. Tucker replied no. Ms. Byerly would begin work immediately. Chair Klein announced the Committee would not prior to the October 28, 2013 check-in with the Council. He and Ms. Tucker would confer with respect to a presentation to the Council. Council Member Berman inquired whether a TOT increase, a Mello-Roos District and a UUT could be contained in one poll. Ms. Byerly responded yes. Ms. Tucker added that sales tax would be included. Ms. Byerly felt the UUT issue was not a separate measure. MOTION: Mayor Scharff moved, seconded by Council Member Berman to direct Staff to work with the consultant to conduct a poll for the Transient Occupancy Tax, a Mello-Roos Tax, sales tax, and the contrast of the UUT Tax in one poll. MOTION PASSED: 4-0 DRAFT MINUTES Page 18 of 18 Infrastructure Committee Special Meeting Draft Minutes: 10/1/13 ADJOURNMENT: The meeting was adjourned at 4:42 P.M. City of Palo Alto (ID # 4197) City Council Staff Report Report Type: Action Items Meeting Date: 10/28/2013 City of Palo Alto Page 1 Summary Title: Digital Message Center Title: Policy Direction on the Development of a Digital Message Center on a City-owned parcel along US 101 From: City Manager Lead Department: City Manager Recommendation Staff recommends that Council provide policy direction on the development of a Digital Message Center on a City-owned parcel along US 101 in the embankment near the end of Colorado Avenue. Background In an effort to support the City’s economic development, especially to fund needed City infrastructure, the City has been considering many options for generating new revenue streams. As recently as the September Infrastructure Committee, the concept of a digital message center) (also known as a digital billboard or readerboard) on city-owned land along US Highway 101 was discussed as a potential for providing a significant new revenue stream for the City. Such an ongoing revenue stream could finance certificates of participation (COPs), which could fund a substantial portion of the City’s infrastructure. Over the past several years, staff has explored several sites as potential locations for a digital message center. One particular opportunity along US 101 near the termination of Colorado Ave, which is a City-owned property (Assessor Parcel Number: 127-01-105) has been identified as the most desirable location for this purpose. (Attachment 1). Based on the site’s location and its apparent eligablility for development of a “billboard” under the California Department of Transportation (CalTrans) rules, staff approached several outdoor advertising experts to gauge interest and explore potential deal structures. As a result, staff can confirmthat it is indeed a very desirable location and could generate premium advertising revenues. City of Palo Alto Page 2 Several firms exist that could partner with the City, not only on the development of a digital billboard project (including all permits, stakeholder engagement, and construction), but also with the ongoing procurement of advertisers to generate advertising revenues. At this stage, it appears this method of operation could yield the maximum revenue return) for the City of Palo Alto, while maintaining City control of the number of advertising spots the City could keep for City messaging for events of community interest, etc. Discussion Staff is seeking the Council’s general direction as to whether (and how) to move forward with this concept. Further, staff is looking for Council direction on how to strike the balance between the potential for City revenues and promotion/support for local merchants and the visual and other impacts of the sign. Although these concepts will ultimately be explored in detail for any proposed digital message center, it would be useful for Council to provide staff with some preliminary feedback prior to drafting the necessary RFP to solicit specific proposals for consideration. This particular location is incredibly valuable from an outdoor advertising perspective. Given an estimated 325,000 views (impressions) per day and the demographics of this market, the prospect of placing a digital message center in this location is considered very desirable to advertisers. Many public agencies such as the County of Alameda and cities of Oakland, San Jose, Sacramento, and East Palo Alto have either already developed or are developing digital message centers. It is expected that any firm chosen as the City’s partner on a potential project would work with the City to develop a community engagement plan to seek involvement/ participation from community members and stakeholders. Staff is recommending limiting the scope of this outdoor advertising project to this specific project and not pursue other types of outdoor advertising. Given the unique location of this site along the 101 corridor, staff believes specific changes can be made to sign ordinance that would not allow any other digital reader boards in the city. Limiting visual impacts to the corridor and surrounding area,will be an important consideration. Staff recommends that the Council provide policy direction regarding the development and operation of a digital message center. If there is enough interest that would lead to development of an RFP, that RFP for sign developers could be reviewed at the committee-level prior to approval by the Council and distribution to firms that specialize in the development of City of Palo Alto Page 3 such signage. If an RFP were issued and a proposal accepted, staff would return to the Council for further review and consideration of a project, including a detailed analysis of potential revenues, necessary code/ ordinance changes, and a subsequent implementation plan including community/ stakeholder involvement, and environmental review. Timeline If the Council approves the concept, staff would bring an RFP to the Council for approval in early 2014. Upon the release of such an RFP, staff intends to return to Council with the award of contract to a qualifying firm, including our recommendations for deal structure and a refined estimate of financial and other benefits thereafter. Given the intended high level of community engagement, staff anticipates that a project could be conceptualized and return for Council consideration within six months, with implementation to occur within one-to two years. Resource Impact Staff estimates that the potential annual revenue from a DMC could be in the range of $700,000 to $1M. This range of figures is entirely dependant on the numberand size of outdoor ads, and other factors. The City could negotiate a compensation agreement with a firm including but not limited to a guaranteed minimum payment, a percentage of total revenue, and advertising spots (flips) for City purposes (i.e. City-Sponsored Events or Programming). In order to evaluate the proposals, and to provide context, background, and assistance with community meetings to the firm awarded with the contract, staff time would need to be devoted to this effort from the following departments: City Manager’s Office, City Attorney’s Office, Administrative Services, Planning & Community Environment, Development Services, Public Works, and Utilities. Policy Implications In order to facilitate a digital message center at this location, the City would need to adopt several narrow changes to the Sign Ordinance. A zoning change may also required. It is expected that the qualifying firm would work with the appropriate City/ Regional/ State authorities for approvals, and engage the community for input during the development process. City of Palo Alto Page 4 Environmental Review Any necessary environmental reviews would be brought forward as part of any proposed project. Attachments:  Attachment 1: Potential Site for DMC (PDF) Matadero Creek Co m mu nity B uildin g Colorado Substation B Fueling Station A C ColoradoPump Station STO CKTO MORRIS DRIVE GREER ROAD M A D D U X D RIV E GREER R B A Y S H E A S T B A Y S H O R E R O A D B A YS H O R E F R E E W A Y W E S T B A Y S H O R E R O A D MADD U X DRIVE E A S T B A Y S H O R E R O A D W E S T B A Y S H O R E R O A DCOLORADO A V E NUE OTTERSON COURT GENEVIEVE C O URT M A D D U X D RIV E HI G GINS PLACE GREER ROAD COL OR A DO A V E NUE E A S T B A Y S H O R E R O A D B A Y S H O R E F R E E W A Y W E S T B A Y S H O R E R O A D SIM KIN S C O U R T WE ST BA YS HORE ROA D GREER ROAD L A WR E N C E L A N E C O L O R A D O A V E N U E CLARA DRIVE SANDRA PLACE C LA R A D RIV E CL A R A D RIVE ER ROAD AMARILLO AVENUE MADDUX DRIV TANLAND DRIVE E A S T B A Y S H O R E R O A D W E S T B A Y S H O R B AY S H O R E F R E E W A Y B A Y S H O R E F R E E W A Y B A Y S H O R E F R E E W A Y B A Y S H O R E F R E E W A Y M E TRO C I R C LE M O F FET T C I RCLE COLO RADO PLACE C O LO R A D O A V EN U E Fallen Leaf Street B erryessa Stre et B oron da La n e Tahoe Lane L ake A v enue D onner L ane Alm a nor La n e 907 925 921 931 927 912 918 924 942 936 930 954 931 2984937 947 919 913 943 948 3124 938 930 3108 3116 3113 3119 25 3132 31093101 7 3142 3134 3141 3149 31333125 3126 3117 31183110 3149 3125 3131 3137 3143 3185 31583150 166 3167 3198 3202 3173 3192 3179 3191 3197 201 32 31843176 3210 3218 3226 3209 3219 3229 3239 3249 3259 3269 3279 9 3250 3258 3242 3234 978 982 2882 957 965 9 71 97 9 973 9 93 983 962 958 57 963 969 930 936 2924 2944 2914 968 1098 1095 1021 1075 1071 1049 1012 1016 2755 10621072 1076 2809 2767 27912779 2792 2808 994 2826 990 986 2842 2862 2964 3024 3032 3040 3048 3056 3064297929632947 972 966 960 29722950 29652945 2925 957 965 956 946 978 1013 1023 3095 937 941 951 961 971 3094 3102 960 2928 2970 2960 991 988 982 9 85 981 975 2993 1003 1001 29752965 970 3016 2931 968 3023 3039 3055 3068 3052 3020 3036 3017 3029 3041 3053 3065 3077 3084 3089 30711010 1020 1030 990 978 3160 3136 3124 3112 1044 1032 31133107 1088 1066 3113 3125 3137 3149 3161 316831603152 31443136 3128 3112 3120 3148 3155 3119 3189 31813173 31653157 31493141 313331253117 10931083 3109 3101 1073 1063 1053 10431033 1034-1036 1040 1042 1044 1046 1048 1050 1052 1054 1056 1058 1060 1062 1064 1066 1068 10701072107410761078 1014 1010 103 11005 1083 1079 1073 1047 1026 1022 1052 1056 1046 1042 1036 1032 10241020 1064 1060 1070 1074 1084 1080 1090 1094 2873 285 7 2841 2963 2955 2960 2956 2905 2889 1031- 1 045 1030 1040 1034 1050 1044 1054 1011 297829722968 29 01 290 3 29 072905 2909 2911 291 3 2915 29 17 2919 2850 1125- 1139 1068 1074 2800 1066 1093 1072 1094 3 281 2995 2 891 32012925 1082 3241 1047- 1061 1 0 63 - 10 7 5 1077- 1091 1095- 110 7 11 09- 112 3 1 143- 11 51 2999 2860 1098 1181 1183 1185 1189 1199 1180 1182 1186 1188 1190 1192 1198 329832923290328832823280327832723198319231903188318231803178 1111 1113 1115 1119 1100 1102 1106 1110 3180 3182 3186 3188 3190 3192 3198 1112 1116 1118 1120 1122 1126 1128 1130 1151 1153 1155 1159 1150 1152 1156 1158 1160 1161 1163 1165 3280 3282 3286 3288 3290 3181 3189 3281 3289 3291 3270 3120 1199 0 3199 1080 2800 1105 2870 11 2 9 1179 1178 3292 3178 1167 1132 3285 3299 Gre er P ark Sterling C anal F u el Stora g e A re a E mily R e n z el W et la n d s MunicipalServiceCenter Greer Park This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend 1000 ft radius from Project Site Project Site 0'400' 10 0 0 F o o t R a d i u s CITY O F PALO A L TO I N C O R P O R ATE D C ALIFOR N IA P a l o A l t oT h e C i t y o f A P RIL 16 1894 The City of Palo Alto assumes no responsibility for any errors. ©1989 to 2012 City of Palo Alto rrivera, 2012-10-03 11:49:30sign map coloradoave tt (\\cc-maps\gis$\gis\admin\Personal\rrivera.mdb) City of Palo Alto (ID # 4203) City Council Staff Report Report Type: Action Items Meeting Date: 10/28/2013 City of Palo Alto Page 1 Summary Title: Fiber-to-Premise and Wireless Network Plans Title: Technology and the Connected City Committee Recommendation to Develop Master Plan to Build Out the City’s Fiber Optic System to Provide Fiber-to-the-Premise and Develop Complementary Wireless Network Plan From: City Manager Lead Department: City Manager Recommendation The Technology and the Connected City Committee recommends that the City Council direct staff to: 1. Develop a Fiber-to-the-Premise Master Plan and conduct a request for proposals to build out the existing dark fiber optic backbone system in Palo Alto. 2. Develop a Wireless Network Plan with a near-term focus on WiFi, and a long-term consideration of other wireless technologies. Background The Technology and the Connected City Committee (Committee) held its first meeting on May 14, 2013. Staff provided an overview of the history of the fiber system and the attempts to expand the system for citywide use. Attachment A provides a summary of the City’s dark fiber optic backbone system expansion. The Committee recommended the development of a work plan to evaluate the feasibility of building out a citywide Fiber-to-the-Premise (FTTP) Network in Palo Alto and appointment of a Citizen Advisory Committee to assist in the evaluation. Staff also provided an update on the City’s upcoming technology initiatives. On June 24, 2013, the Council approved the Committee’s recommendations to direct staff to develop a work plan and requested the City Manager to appoint a Citizen Advisory Committee. On September 17, 2013, the Committee met to review staff’s recommendation that the City proactively develop a Master Plan and conduct a RFP to build out the fiber system for FTTP, in City of Palo Alto Page 2 addition to developing a complementary Wireless Network1 Plan in a sequence that addresses both near term and long term objectives. The Committee approved by unanimous vote to forward the recommendations in the staff report to the City Council for approval. Attachment B provides the staff report and meeting minutes from the September 17, 2013 Committee meeting. Discussion Fiber-to-the-Premise Master Plan and RFPs To develop the Fiber-to-the-Premise (FTTP) Master Plan, staff recommends conducting an RFP (RFP #1) to retain a consulting firm with expertise in developing plans and RFPs for government agencies contemplating building broadband networks. Once the Master Plan is developed an RFP (RFP #2) would be issued for a third party telecommunications service provider to build and operate the network. The estimated cost to develop the Master Plan and conduct the RFPs is approximately $150,000 - $350,000 (depending largely on the level of required environmental review) and will include facilitating an engineering study to develop a network design and cost estimate to build the FTTP Network, evaluate legal and regulatory issues, and complete the environmental review. The estimated timeframe to develop the Master Plan and conduct RFP #1 and RFP #2 is nine months and will require the time of approximately 1.75 FTEs over the nine month period. This accelerated timeline is an estimate based on City-managed processes being prioritized over other work and for vendor capability to meet the expedited timeline. In addition, unknown at this time is an accurate timeline to complete the CEQA requirements. Attachment C provides both a high level and a detailed schedule to develop the Master Plan and conduct the RFP process. Wireless Network Plan and RFP In addition to developing a Master Plan and conducting an RFP for FTTP, wireless solutions should also be evaluated. Staff recommends conducting an RFP (RFP #3) to retain professional services from a wireless communications consulting firm with experience working with local governments to develop the options and plans to build a wireless network. Staff estimates the cost will be up to $100,000 and will take six to nine months to complete the Wireless Network Plan. As with the FTTP work, this accelerated timeline is an estimate based on City-managed processes being prioritized over other work and for vendor capability to meet the expedited timeline. Attachment C provides both a high level and a detailed schedule to develop the Wireless Network Plan. 1 The term “wireless” includes a large set of technologies that support cellular, radio and WiFi. WiFi is a single specific technology. City of Palo Alto Page 3 Upon completion of the Wireless Network Plan, the findings and recommendations will be submitted to the Committee and the Council to assist the Council members with formulating a final vision and direction for the deployment of a wireless network. Staff estimates the cost to build a citywide wireless network to be in the range of $3 to $5 million. The projected ongoing support and maintenance cost to operate the network will also be addressed in the Wireless Network Plan. Citizen Advisory Committee Formation An Advisory Committee will be appointed by the City Manager to provide objective advice, from a citizen perspective, to the City Manager and the Technology Committee. The primary role of the advisors is to work with the Committee, City Manager and City staff to develop the Master Plan and support the work necessary to develop recommendations for FTTP and wireless deployments to the Committee and City Council. To date, eight members of the community have expressed interest in sitting on an Advisory Committee. The City Manager will select candidates based on their knowledge of the telecommunications industry and applicable technologies; familiarity with municipal broadband initiatives in Palo Alto and other communities; understanding of the various business models for deploying fiber and wireless networks, and an interest in the public policy issues affecting government owned and operated broadband networks. Resource Impact Licensing dark fiber is a financially successful enterprise for the City and generates a steady revenue stream that can support the City’s goal of becoming a “leading digital city.” The Fiber Optics Fund Rate Stabilization Reserve had a balance of $15.3 million as of the end of fiscal year 2013. There is also a $1.0 million Emergency Plant Replacement Reserve for the fiber system to cover the liability insurance deductible amount if there is an unforeseen emergency requiring equipment to be repaired or replaced. Staff recommends leveraging the Fiber Optics Fund Rate Stabilization Reserve to develop the FTTP Master Plan and the Wireless Network Plan. The City Attorney has indicated that the Fiber Optics Fund Rate Stabilization Reserve can be used for fiber and wireless communication services, including developing a FTTP Master Plan, as well as planning for building and operating wireless network services. Cost estimates are as follows: FTTP Master Plan $150,000-$350,000 (depending on required environmental review) Wireless Network Plan $100,000 (up to) Total $250,000-$450,000 Following the requests for proposals, staff will return with a budget amendment ordinance to allocate funding from the Fiber Optics Fund Rate Stabilization Reserve for the associated consultant agreements. Policy Implications City of Palo Alto Page 4 This recommendation is consistent with the Telecommunications Policy adopted by the Council in 1997, to facilitate advanced telecommunications services in Palo Alto in an environmentally sound manner. Reference CMR: 369:97 Proposed Telecommunications Policy Statements. Environmental Review The development of an FTTP Master Plan and a Wireless Network Plan are not projects under the California Environmental Quality Act (CEQA) as feasibility and planning studies are exempt under CEQA Guidelines Section 15262. The City plans on conducting a full CEQA review as soon as the project is defined enough to permit a sufficient review. Attachments: Attachment A. Summary of Dark Fiber Optic Backbone System Expansion (DOC) Attachment B. 9-17-2013 Staff Report (PDF) Attachment C. Schedule (PDF) Attachment A: Summary of Dark Fiber Optic Backbone System Expansion 1 Summary of Dark Fiber Optic Backbone System Expansion In 1999, the City issued a Request for Proposal (RFP) for the “High-Speed Universal Telecommunications Project.” No viable bids were received. From 2000 to 2005, a Fiber-to-the-Home (FTTH) trial was conducted at sixty-six (66) homes in the Community Center neighborhood. The trial proved technical feasibility. From 2002 to 2004, staff and a consulting firm developed a FTTH business plan. The plan demonstrated that a FTTH utility could be “economically viable” over a 20-yearconstruction bond period, assuming the Electric Fund would issue the revenue bonds. However, upon further legal analysis by the City Attorney, the Electric Utility could not continue to fund the FTTH project. If bonds were issued to build a citywide FTTH network, they could not be backed by revenues from City of Palo Alto Utilities (CPAU). In 2006, the City issued a Request for Proposal (RFP) for the construction and operation of a “City-wide Ultra-High Speed Bandwidth System.” The RFP process resulted in negotiations with a “Consortium” of three firms to build a citywide FTTP network. Ultimately the City was unwilling to raise the amount of capital that the Consortium wanted from the City to participate. Additionally, with the economic downturn in 2008, the Consortium’s ability to obtain their own financing was severely impacted and they withdrew from participation in early 2009. In 2009 and early 2010, at Council’s direction, staff worked to evaluate the feasibility of submitting a federal stimulus grant application for FTTP under the National Telecommunication and Information Administration’s (NTIA) Broadband Technology Opportunities Program (BTOP). Once the NTIA issued its project funding criteria, staff concluded that a municipal FTTP project would not qualify for a grant since Palo Alto did not meet the definition of a community “unserved” or “underserved” by broadband service providers. In February 2010, Council directed staff to submit a response to Google’s Fiber for Communities Request for Information (RFI) to build and test “ultra-high speed broadband networks.” In 2011, Google selected Kansas City, Kansas, and Kansas City, Missouri for their first network deployments and have since announced plans to expand their network into the surrounding suburbs of each city. In April 2013, Google announced plans to deploy a network in Austin, Texas and also announced the purchase of an existing municipal FTTP network in Provo, Utah. In 2011, staff and a consulting firm developed a two phase “conceptual plan” which proposed using the Fiber Optics Fund reserve to construct broadband telecommunications hub sites at the City’s nine (9) electric substations (Phase 1), and expanding network access from these hub sites to eighty-eight (88) neighborhood access points or “nodes” (Phase 2). The plan was proposed to establish an economic incentive for a private FTTP firm to Attachment A: Summary of Dark Fiber Optic Backbone System Expansion 2 construct the “last mile” of the network to serve residential and commercial premises. The plan was reviewed by the Utilities Advisory Commission (UAC) on June 1, 2011 and the Finance Committee on November 15, 2011. In 2012, staff and two consultants evaluated a “user-financed” FTTP business model, which relied on homeowners to pay on a voluntary basis for some or all of the cost to build out the existing dark fiber network into residential neighborhoods. Based on the findings of a community survey and a financial analysis, it was determined that a fully user-financed citywide FTTP system is not possible to achieve. An opt-in FTTP network could be built using a combination of upfront user fees and City financing; however, there is a low probability of the debt being repaid by operating revenues. Ongoing subsidies would be required, very likely in excess of surpluses in the Fiber Optics Fund reserve from licensing dark fiber for commercial purposes. The findings of the user-financed FTTP business model were reviewed by the UAC on June 6, 2012. On June 6, 2012, Utilities staff recommended to the UAC to: (1) continue the current business model for licensing dark fiber service connections to commercial customer, (2) discontinue efforts to evaluate and implement phased initiatives top build out the fiber system for residential Fiber-to-the-Premise using the fiber fund reserve, and (3) initiate an evaluation to determine if the City should use the fiber fund reserve to finance the construction and operation of a wireless network which leverages and augments the City’s fiber system. The UAC voted 4-3 to accept staff’s recommendations. City of Palo Alto (ID # 4080) Technology Committee Staff Report Report Type: Meeting Date: 9/17/2013 City of Palo Alto Page 1 Summary Title: Master Plan to Provide Fiber-to-the Premise and Wireless Network Plan Title: Develop Master Plan to Build Out the City's Dark Fiber Optic System to Provide Fiber-to-the-Premise and Develop Complmentary Wireless Network Plan From: City Manager Lead Department: City Manager Recommendation Staff recommends that the Technology and Connected City Committee recommend Council direct staff to: 1. Develop a Fiber-to-the-Premise Master Plan and conduct a request for proposals to build out the existing dark fiber optic system in Palo Alto. 2. Develop a Wireless Network Plan with a near-term focus on WiFi, and a long-term consideration of other wireless technologies. Executive Summary Progressive cities want to ensure their residents, businesses and anchor institutions have access to ubiquitous and reliable ultra high-speed1 broadband connectivity. With this goal in mind, and in response to Council’s directive, staff is recommending that the City proactively develop a Fiber-to-the-Premise (FTTP) Master Plan and a Request for Proposals (RFP) to build out the dark fiber optic system (fiber system) in Palo Alto. Staff also recommends developing a complmentary Wireless Network 2 Plan in a sequence that addresses both near term and long term objectives. The FTTP Master Plan will identify the design and specifications of the network. The City will 1 “Ultra high-speed” broadband connectivity refers to a telecommunications network that would provide speeds in excess of 100 megabits per second (Mbps). 2 The term “wireless” includes a large set of technologies that support cellular, radio and “WiFi.” WiFi is a single specific technology. Attachment B. 9-17-2013 Staff Report & Meeting Minutes City of Palo Alto Page 2 also conduct any environmental review that may be needed in preparation for a subsequent competitive process to attract a third party telecommunications provider to build and operate the network. The Wireless Network Plan will provide a city-wide needs assessment, evaluate how the existing fiber system and other City-owned infrastructure can be fully leveraged to support a citywide multifunctional wireless network, recommend a network design that would best support the City, and provide a business plan with capital and operational cost estimates. This staff report also provides an update on the creation of a Citizen Advisory Committee. Background The Technology and Connected City Committee held its first meeting on May 14, 2013. Attachment provides meeting minutes. The Committee recommended that staff develop a work plan to evaluate the feasibility of building a citywide high-speed broadband FTTP network in Palo Alto, and create a Citizen Advisory Committee to assist in the evaluation. The City Council approved the Committee’s recommendations on June 24, 2013. Discussion Fiber-to-the-Premise Master Plan and RFP Since the late 1990s, the City has worked to develop a viable business plan to expand the fiber system for residential use. From 2001 to 2005, these efforts included a FTTP trial to prove technical feasibility. The trial was successful in terms of proving technical feasibility, but when initial investment and overhead expenditures were included in the calculation for the business case, it did not appear that a citywide build-out would be economically viable. As a result, from 2002 to 2004, City of Palo Alto Utilities (CPAU) staff worked with a telecommunications consultant to develop a FTTP business case and business plan. The final business plan demonstrated that a FTTP utility could be “economically viable” over a 20-year construction bond period, assuming the Electric Fund would issue revenue bonds. However, upon further legal analysis by the City Attorney, it was determined that the Electric Utility could not continue to fund the FTTP Project. Additionally, no Electric or other Enterprise Utility Revenue Bonds could be issued, and financing costs would be greater than those assumed in the plan. In 2006, the City issued a Request for Proposal (RFP) for the construction and operation of a “City-wide ultra-high speed bandwidth system.” The RFP process resulted in negotiations with a “Consortium” of three firms to build a citywide FTTP network. Ultimately the City was unwilling to raise the amount of capital that the Consortium wanted from the City to participate. Additionally, with the economic downturn in 2008, the Consortium’s ability to obtain their own financing was severely impacted and they withdrew from participation in early 2009. At Council’s direction, in 2009 and early 2010 staff worked to evaluate the feasibility of submitting a federal stimulus grant application for FTTP under the National Telecommunication and Information Administration’s (NTIA) Broadband Technology Opportunities Program (BTOP). Once the NTIA issued its project funding criteria, staff concluded that a municipal FTTP project Attachment B. 9-17-2013 Staff Report & Meeting Minutes City of Palo Alto Page 3 would not qualify for a grant since Palo Alto did not meet the definition of a community “unserved” or “underserved” by broadband service providers. In February 2010, Council directed staff to submit a response to Google’s Fiber for Communities Request for Information (RFI) to build and test “ultra-high speed broadband networks.” In 2011, Google selected Kansas City, Kansas, and Kansas City, Missouri for their first network deployments and have since announced plans to expand their network into the surrounding suburbs of each city. In April 2013, Google announced plans to deploy a network in Austin, Texas and also announced the purchase of an existing municipal FTTP network in Provo, Utah. Citywide Ultra High-Speed Broadband System Project After the negotiations with the Consortium ended, Council directed staff to explore the use of the fiber fund reserve to independently proceed with a phased build-out of the existing fiber system. In response, staff developed a two-phased “conceptual plan” for the Citywide Ultra High-Speed Broadband System Project. The plan was reviewed by the UAC on June 1, 2011 and the Finance Committee on November 15, 2011. User-Financed FTTP In 2012, staff conducted a study of an alternative FTTP business model that relies on homeowners to voluntarily pay for some or all of the cost to build out the fiber system into residential neighborhoods with an “open access,” broadband-only service.3 To analyze the feasibility of the user-financed FTTP model, market research was developed based on a community survey conducted by RKS Research and Consulting, in addition to a financial assessment prepared by Tellus Venture Associates (TVA). The RKS survey results affirmed that residents view CPAU as a respected and competent provider of core utility services. A measureable number of homeowners are interested in adding telecom to the list of services they can purchase from CPAU, but a commitment to invest in a fiber connection is very limited. TVA’s report concluded that a fully user-financed citywide FTTP network is not possible. An opt-in FTTP network can be built using a combination of upfront user fees and City financing, but there is very little probability of the debt incurred being repaid through operations. Ongoing subsidies would be required, almost certainly in excess of the surpluses generated by the licensing of dark fiber for commercial purposes. Based on the market research and financial analysis prepared for the conceptual plan and the assessment of the user-financed FTTP business model, staff concluded there was no reasonable fiscal basis to pursue either approach. On June 6, 2012, by a vote of 4 to 3, the Utilities Advisory Commission (UAC) accepted staff’s recommendations to 1) continue the current business model for licensing dark fiber service connections to commercial customers, 2) discontinue efforts to evaluate and implement 3 In an open access, broadband-only service model the network owner treats the network as a common carrier (like public roads). The network owner invites multiple independent broadband service providers onto the network to compete for customers on the basis of service, price and quality. The network owner generates revenues by collecting network transport fees paid by the independent service providers to use the network for the delivery of voice, video and data services. Attachment B. 9-17-2013 Staff Report & Meeting Minutes City of Palo Alto Page 4 phased initiatives to build out the dark optical fiber backbone network, and 3) retain a wireless communications consultant to study the feasibility of using the fiber fund reserve to build a municipal wireless network. FTTP Master Plan and RFP The City has evaluated viable business plans/models to expand the fiber system for residential use since the late 1990s. Given the upturn in the economy, the City believes that there is a renewed interest from telecommunications service providers in building an advanced competitive broadband network in Palo Alto. Staff believes the best way to attract these providers is to develop a broadband Master Plan, including proactively designing the FTTP network, defining appropriate network specifications and conducting any necessary environmental review under the California Environmental Quality Act (CEQA) in preparation for an RFP. To develop the Master Plan, staff recommends retaining a consulting firm with an expertise in developing plans and RFPs for government agencies contemplating building FTTP and wireless networks. Once the Master Plan is developed, the objective is to issue an RFP for a third party telecommunications service provider to build and operate the network. The estimated cost to develop the Master Plan and conduct the RFP is approximately $150,000 - $350,000 (depending largely on the level of required environmental review) and will include facilitating an engineering study to develop the infrastructure plan and estimate the cost to build the FTTP network, evaluate legal and regulatory issues, and complete environmental review. The estimated timeframe to develop the Plan and conduct the RFP is nine months and will require the time of approximately 1.75 FTEs over the nine month period. Wireless Network Plan and RFP In addition to developing a Master Plan and RFP for bring FTTP, wireless solutions should also be employed. The term “wireless” as defined here includes a large set of technologies that support cellular, radio and “WiFi.” The City’s fiber system has enough coverage and capacity to support an overlay of a multifunctional wireless network. Moreover, cities with fiber systems have an inherent advantage in deploying wireless networks since fiber provides essential Attachment B. 9-17-2013 Staff Report & Meeting Minutes City of Palo Alto Page 5 “backhaul”4 transmission links to support high data rates over wireless networks. With appropriate design and sufficient budget, municipal wireless networks can support remote and mobile broadband needs for public safety personnel and other field-based staff, in addition to potentially offering WiFi Internet access for the general public. Furthermore, specialized uses such as a wireless communications system for smart grid applications can also be accommodated by a multifunctional wireless network with the proper design and technology. Staff recommends issuing a Request for Proposal (RFP) to retain professional services from a wireless communications firm with experience working with local governments to develop the options and plans to build a wireless network. Staff estimates the cost will be $100,000 and will take six to nine months to complete the Wireless Network Plan. The general scope of work for the Plan includes, but is not limited to, the following tasks and deliverables: Define the City’s wireless broadband goals and objectives based on conducting a “user group” needs assessment among all City departments, including public safety. This task would also include an assessment of the type of wireless communication system required to support future deployment of Smart Grid applications. Provide an assessment of how the general public and City could use the network for WiFi access to the Internet in the near term. Provide an analysis of using wireless data services from the commercial carriers as opposed to building a dedicated municipal network for a variety of wireless applications to support City services. Evaluate how the existing fiber system and other City-owned infrastructure and properties can be fully leveraged to support a citywide multifunctional wireless network. Assess the various technologies used to build municipal wireless networks and recommend which technologies and network design would best support end-user needs and the City’s present and future goals and objectives for wireless services. Prepare a preliminary business plan with capital and operational cost estimates. Upon completion of the Wireless Network Plan, the findings and recommendations will be submitted to the Technology Committee and the Council to assist the Council members with formulating a final vision and direction for the deployment of a wireless network. Staff estimates the cost to build a citywide wireless network to be in the range of $3 to $5 million. The projected ongoing support and maintenance cost to operate the network will also be addressed in the Wireless Plan. 4 “Backhaul” is a term used to describe the transmission of customer usage data from a collection point in a wireless network back to a central point or network backbone. If a fiber network is in place, it can put wireless access points anywhere and offer each a dedicated amount of bandwidth in excess of what would be possible with a purely wireless network known as the “all radio approach.” Attachment B. 9-17-2013 Staff Report & Meeting Minutes City of Palo Alto Page 6 Other Potential Near-term WiFi Actions Understanding the time that will be needed to develop both the Fiber Master Plan and WiFi Plan, in the interim, staff recommends evaluating and implementing where practical, near term solutions that are impactful to the community and municipal services. For example, expanding WiFi capabilities in additional parks, plazas, University and/or Cal Avenues, and/or identifying the most troubling dead zones in Palo Alto and deploying WiFi, etc. Citizen Advisory Committee Update An Advisory Committee will be appointed by the City Manager to provide objective advice, from a citizen perspective, to the City Manager and the Technology Committee. The primary role of the advisors is to work with the Technology Committee, City Manager and City staff to develop the Fiber Master Plan and support the work necessary to develop recommendations for FTTP and wireless deployments to the Technology Committee and City Council. To date, eight members of the community have expressed interest in sitting on a Committee. The City Manager will select candidates based on their knowledge of the telecommunications industry and applicable technologies; familiarity with municipal broadband initiatives in Palo Alto and other communities; understanding of the various business models for deploying fiber and wireless networks; and interest in the public policy issues affecting government owned and operated broadband networks. Resource Impact Licensing dark fiber is a financially successful enterprise for the City and generates a steady revenue stream that can support the City’s goal of becoming a “leading digital city.” The fiber fund reserve is $15.3 million as of the end of fiscal year 2013. There is also a $1.0 million Emergency Plant Replacement Fund for the fiber system. The City Attorney has provided CPAU staff with an opinion that the fiber fund reserve can be used for fiber and wireless communication services, including developing a Fiber Master Plan, as well as planning for, building and operating wireless network services. Staff recommends leveraging the fiber reserve to develop the FTTP Master Plan and the Wireless Network Plan. Cost estimates are as follows: FTTP Master Plan $150,000-$350,000 (depending on required environmental review) Wireless Network Plan $100,000 (up to) Total $250,000-$450,000 Policy Implications This recommendation is consistent with the Telecommunications Policy adopted by the Council in 1997, to facilitate advanced telecommunications services in Palo Alto in an environmentally sound manner. Reference CMR: 369:97 Proposed Telecommunications Policy Statements. Attachment B. 9-17-2013 Staff Report & Meeting Minutes City of Palo Alto Page 7 Environmental Review The development of an FTTP Master Plan and a wireless services plan are not projects under the California Environmental Quality Act (CEQA) as feasibility and planning studies are exempt under CEQA Guidelines Section 15262. The City plans on conducting a full CEQA review as soon as the project is defined enough to permit a sufficient review. Attachments: Attachment A. May 14, 2013 Committee Meeting Minutes (PDF) Attachment B. 9-17-2013 Staff Report & Meeting Minutes TECHNOLOGY AND THE CONNECTED CITY MINUTES Page 1 of 10 Special Meeting September 17, 2013 Chairperson Kniss called the meeting to order at 4:03 P.M. in the Council Conference Room, 250 Hamilton Avenue, Palo Alto, California. Present: Klein, Kniss (Chair), Scharff, Shepherd Absent: AGENDA ITEMS 1. Update on Broadband Conference: “Bringing Together 21st Century Cities,” New York City, September 10, 2013. Chair Kniss announced she and Vice Mayor Shepherd attended the conference held in Kansas City, Missouri. Jim Fleming, Management Specialist for the Utilities Department reported the Fiber to the Home Council Conference was held at the end of May 2013 in Kansas City, Missouri. Key factors to building a broadband network were: 1) community and local government leadership and support; 2) the review and approval requirements by permitting and defining expeditious processes; 3) use of existing infrastructure; 4) proactive improvement of infrastructure; and 5) use of building codes and community development plans to drive fiber deployment. He reviewed the various individual meetings held at the conference and much information was available through individual conversations, including think tanks and vendors. Vice Mayor Shepherd indicated municipality participants were unusual at the conference. Google's project was having typical utility-municipality issues. Chair Kniss understood an important feature of broadband was content. Mr. Fleming attended the Broadband Conference in New York with Council Member Berman. The conference's purpose was to bring together leaders from cities to develop a variety of approaches to broadband deployment as well as those who were seeking gigabyte ultra-high speed connectivity. The Attachment B. 9-17-2013 Staff Report & Meeting Minutes MINUTES Page 2 of 10 Technology and the Connected City Special Meeting Final Minutes 9/17/13 agenda for the meeting focused on 1) how cities were able to lead high speed communities; 2) why cities faced challenging landscapes; 3) strategies that led to success; and 4) how cities were able to collaborate. He reviewed the main topics of the conference and shared comments made by conference speakers. The most significant challenge to building a fiber network was competition. Chair Kniss inquired whether Austin, Texas government officials were present at that conference. Mr. Fleming replied no... Chair Kniss asked which of the cities present at the conference were successful in building a fiber network. Mr. Fleming thought the latest projects were being constructed in Lafayette, Louisiana and Chattanooga, Tennessee. Those projects were successful in part because of community support for the projects. Council Member Klein inquired about the number of people present at the New York conference. Mr. Fleming reported 14 cities were represented, and perhaps 30-40 individuals were present. Council Member Klein inquired whether the conference would be held annually. Mr. Fleming said conference leaders would return with a method for participants to collaborate. Council Member Klein asked if Provo, Utah was represented at the conference. Mr. Fleming replied no. Council Member Klein inquired whether Staff conferred with the three central coast counties. Mr. Fleming answered no. Much of the area in those counties did not have access to broadband. The 395 Project in eastern California received a significant amount of funds to build the network. Those communities were underserved. Attachment B. 9-17-2013 Staff Report & Meeting Minutes MINUTES Page 3 of 10 Technology and the Connected City Special Meeting Final Minutes 9/17/13 Council Member Klein noted it was not unusual for residents of Santa Cruz to work in Palo Alto. He felt broadband had not been in the news since the Technology and the Connected City Committee (Committee) met last time. Mr. Fleming believed communities were once again interested in broadband opportunities. Several municipalities were present at the Kansas City conference to learn about broadband. It was important for facilities and infrastructure to be ready to accommodate broadband. Council Member Klein inquired whether the Kansas City conference would be an annual event. Mr. Fleming replied yes. The Fiber to the Home Council held meetings throughout the year. Chair Kniss explained that the Fiber to the Home Council was a trade group. Mr. Fleming added that members were municipalities, smaller telecommunication companies, and vendors. Vice Mayor Shepherd indicated the Google broadband project continued in the research and development stage. Google was having difficulty enrolling a sufficient number of residents to make the project viable in all neighborhoods. Mr. Fleming understood Google's strategy for those neighborhoods was to offer a low-level tier of service. Vice Mayor Shepherd added that some neighborhoods would not receive broadband service in the near future. Mr. Fleming explained that Google needed a certain level of aggregate demand in fiberhood to build the network. NO ACTION TAKEN 2. Develop Master Plan to Build Out the City's Dark Fiber Optic System to Provide Fiber-to-the-Premise and Develop Complimentary Wireless Network Plan. James Keene, City Manager reported Staff's focus for the master plan was to be fiber-friendly and to prepare the way for fiber. Concurrently, Staff resurrected work prepared a few years ago on the issue of wireless connectivity. He mentioned that Staff would clarify the idea of non-wired Attachment B. 9-17-2013 Staff Report & Meeting Minutes MINUTES Page 4 of 10 Technology and the Connected City Special Meeting Final Minutes 9/17/13 connectivity and how that included both Wi-Fi and longer-term wireless considerations. Staff was concerned about adequate service in the community and did not wish to limit the community to only fiber services. Staff needed the Council's direction with regard to a Citizen Advisory Committee. Jim Fleming, Management Specialist in the Utilities Department stated the overarching goal of the master plan was to ensure that residents, businesses, and anchor institutions receive access to ever-present and reliable high speed broadband connectivity. Staff believed telecommunication service providers were interested in building a network in Palo Alto. To attract providers, he thought the master plan should include an engineering study which created a design for the fiber-to-the-premise (FTTP) networking and that it should have defined appropriate network specifications for which it could be conducted in any necessary environmental review under the California Environmental Quality Act (CEQA). The master plan included estimating the total cost to build a network and evaluate legal and regulatory issues. Once the master plan was completed, Staff was able to develop a Request for Proposal (RFP) to facilitate a competitive process to attract third-party telecommunication service provider’s to build and operate the network. Council Member Klein did not think Staff should assume the RFP would be issued to attract a telecommunication service provider’s, he suggested the City operate the network. Mr. Fleming proposed that the Council review business models as part of developing the master plan. Three types of business models were: 1) closed access (the City would build and operate the system); 2) open access (the City would build the system and Internet Service Providers (ISP) operated the system); or 3) a partner or private party could build system. The master plan needed to focus on attracting outside parties. Council Member Klein wanted the Council to discuss all business models, rather than just the master plan because he did not want to assume the use of just one model. Mr. Keene indicated the network design within the environmental review process could allow Staff to provide recommendations to the Council. The environmental review enabled the City to operate the network and to certify it for a third-party use. Council Member Klein needed to examine the various models utilized in other cities first. Attachment B. 9-17-2013 Staff Report & Meeting Minutes MINUTES Page 5 of 10 Technology and the Connected City Special Meeting Final Minutes 9/17/13 Mr. Keene inquired whether the plan design restricted the Council's review of models. Mr. Fleming answered no. Staff recommended retaining a consulting firm to develop a master plan with respect to building broadband networks. The estimated cost to develop the master plan and to conduct the RFP process was $150,000-$300,000, depending on the level of required environmental review. If the environmental review resulted in a mitigated negative declaration, the cost for review was $20,000-$50,000. If a full Environmental Impact Report (EIR) was required, the cost changed to $200,000-$250,000. The estimated timeline to develop a master plan and conduct the RFP was nine months, and required the time of approximately 1.75 Full-Time Employees (FTE). Vice Mayor Shepherd noted the City developed a business plan and technical analysis for dark fiber. Mr. Fleming added RKS performed the market research survey. Vice Mayor Shepherd asked if Staff was repeating work previously performed. Mr. Fleming explained the core component of the master plan was an engineering study to determine cost and network specifications. Vice Mayor Shepherd inquired whether the engineering study provided technical information rather than determine the model of the system. Mr. Fleming responded yes. The City did not have a full engineering study to determine the various components and needs for building the system. Vice Mayor Shepherd inquired about the motivation for building an FTTP network. Mr. Fleming said the engineering study determined the type of network that could be built and the differences among services already in place. The study also provided exact costs for the community. Vice Mayor Shepherd thought the engineering study was useful in determining the motivation for building a network. Mr. Fleming added that the engineering study would also determine the assets the City had. Attachment B. 9-17-2013 Staff Report & Meeting Minutes MINUTES Page 6 of 10 Technology and the Connected City Special Meeting Final Minutes 9/17/13 Mayor Scharff asked if the next step was discussion of wireless. Chair Kniss indicated that was the next part of the presentation. Mr. Keene requested specific direction related to both fiber and wireless. James Cook, Utilities Advisory Commission (UAC) explained that the UAC did not have guidance from the Council to pursue FTTP. Some of the Commissioners were skeptical of the costs estimated earlier. He asked if the City reviewed an EIR. Chair Kniss responded yes. Jeff Hoel recommended the method for choosing a consultant for the next study should be different. He suggested that the first step be to count the number of premises for each type, prior to hiring a consultant. Next, an auditor needed to review the previous studies to determine inaccuracies. He said the Council delayed consideration of wireless until a plan for fiber was ready, and he reminded the audience that a wireless network was implemented using the fiber infrastructure. Andy Poggio felt it was premature to say in the master plan that a third party would build, operate, and own the FTTP network. He suggested reviewing the cost of building a FTTP network, then matching costs against dark fiber revenues, and then reviewing plans. Implementation of wireless technology needed to move slowly because a wireless overlay was easy and inexpensive once fiber was deployed. The next question was whether the FTTP network should supply video. Herb Borock indicated that any RFP should be developed and approved by the Council. Previous City Attorneys showed the City should not own the optronics but could own the dark fiber. The City needed to allow citizens to design the network. He thought they could utilize the dark fiber fund to build the fiber plant, and then they could determine the network operator. Chair Kniss was comfortable with Staff's recommendation for next steps. Mayor Scharff supported Staff's recommendation with the exception of an outside party operating the network. Staff needed to perform the scope of work, retain the telecommunication consulting firm, and to conduct the environmental review. Attachment B. 9-17-2013 Staff Report & Meeting Minutes MINUTES Page 7 of 10 Technology and the Connected City Special Meeting Final Minutes 9/17/13 Mr. Keene reported Staff would perform the basic work with consultant assistance. He explained that Staff would return to the Technology and the Connected City Committee (Committee) with a foundation for the network design, the scale, and the results of the environmental review. MOTION: Mayor Scharff moved, seconded by Council Member Klein to recommend the City Council direct Staff to develop a Fiber-to-the-Premise Master Plan and conduct a request for proposals to build out the existing dark fiber optic system in Palo Alto. Council Member Klein expressed concern about the timeline for initiating the RFP process. Mr. Keene explained that Staff's estimate of nine months included environmental review and approval. Council Member Klein hoped the City would not need an EIR for the project. He asked if the timeline could be reduced to six months, if a reduced negative declaration was possible. Mr. Fleming responded yes. Mr. Keene reported the timeline would be dependent on the scale of the environmental review. Council Member Klein was concerned the City would be considering out-of- date technology because of the speed at which technology grew had changed. Chair Kniss inquired whether Council Member Klein could accept six to nine months. Council Member Klein noted the Motion did not contain a timeline. Mr. Cook wanted to form a Citizen Advisory Committee; however, Staff was waiting for direction on that aspect. Mr. Keene noted Staff was waiting for direction regarding a Citizen Advisory Committee and for the wireless subject to be discussed. Chair Kniss indicated the wireless aspect was scheduled for discussion towards the end of the meeting. Attachment B. 9-17-2013 Staff Report & Meeting Minutes MINUTES Page 8 of 10 Technology and the Connected City Special Meeting Final Minutes 9/17/13 Mayor Scharff wanted clarification on Staff's timeline for proceeding in six months with a reduced negative declaration and in nine months with a full environmental review. Mr. Fleming stated the timeline was a guesstimate. Mayor Scharff requested Staff provide updates. Chair Kniss explained that the community would be aware of progress through the Committee's meetings. Vice Mayor Shepherd believed an engineering study would provide technical information and costs regarding a network. The RFP process was outlined at the Kansas City Conference, and Staff appeared to be following that outline. MOTION PASSED: 4-0 Mr. Keene indicated Staff was not opposed to fiber. Jonathan Reichental, Chief Information Officer agreed with public comment regarding the evolving state of wireless technology. He believed that wireless and fiber should not be codependent because wireless was a series of technologies ranging from cellular to radio to Wi-Fi, and other emerging technologies. Staff was studying the diversity of wireless solutions and segregating near-term and long-term solutions. A fiber background provided a better quality of connectivity for wireless technology. He concluded that the scope of the proposed RFP ensured that Staff properly assessed the potential uses and costs of each solution because wireless technology was utilized to improve communication among Public Safety teams and in the event of a major catastrophe. Staff wanted to explore smart grid options and Wi-Fi as a public utility. He said the consultant would quantify uses and costs for the community and provide timelines for implementation. Mr. Keene agreed the technical connection between fiber and Wi-Fi technology was key. He suggested that the existing dark fiber ring could be expanded to support wireless initiatives. Mayor Scharff inquired about available wireless speeds. Mr. Reichental established that Wi-Fi speeds were often slow or unavailable but that Wi-Fi should be high speed for both upload and download. Mayor Scharff wanted connectivity speed to be better than cellular speeds. Attachment B. 9-17-2013 Staff Report & Meeting Minutes MINUTES Page 9 of 10 Technology and the Connected City Special Meeting Final Minutes 9/17/13 Mr. Keene agreed that public Wi-Fi was often too slow for practical use. Council Member Klein recalled the City of Mountain View's experience with Wi-Fi did not work out, and requested comments. Mr. Reichental noted the free municipal Wi-Fi in Mountain View was not good enough to be used reliably. Mr. Keene agreed the experiment did not work out well. Mayor Scharff noted Santa Clara also had a Wi-Fi network operated from the utility network. Mr. Fleming explained that the network began as a private venture, and the City bought the assets to use for smart grid communications. Mayor Scharff inquired whether $3-5 million provided a Wi-Fi network that operated more efficiently than cellular service. Mr. Reichental indicated that $3-5 million was an educated guess and included blended wireless solutions. To reach the best experience, the City needed to provide more funds to build out the fiber network and to cover more devices. Vice Mayor Shepherd supported moving forward with wireless. She understood the main metric for wireless and fiber was broadband speed and asked how improved wireless benefited the quality of life in Palo Alto. Mr. Reichental reported Wi-Fi could be beneficial to areas with a high number of people using smart phones and tablets. Vice Mayor Shepherd wanted to understand how implementing fiber and wireless technology provided a savings to the City as a whole. Mr. Reichental believed that more information could be provided by the study that was being done to determine the demand. He guessed the community would probably be interested in wireless availability in parks and plazas. Public Safety departments were able to utilize other wireless solutions for communications. The Utilities Department was able to explore smart grid solutions through fiber and wireless technology. Vice Mayor Shepherd felt the purpose of the project was to build emergency preparedness and convenience. Attachment B. 9-17-2013 Staff Report & Meeting Minutes MINUTES Page 10 of 10 Technology and the Connected City Special Meeting Final Minutes 9/17/13 Mr. Reichental reported that the Emergency Services Director explored a number of proposals that would potentially available to the City if disaster happened. Council Member Klein understood the Purchasing Department was often responsible for delays in releasing proposals and information. Mr. Keene explained that complexity in review and procurement requirements resulted in proposals being returned to departments. Staff's ability to provide accurate timelines was affected by that delay. Andy Poggio reported three factors affected wireless speed: fundamental technology, signal strength, and the number of people sharing an access point. Wireless speed improved by utilizing the latest hardware and providing more access points. Mayor Scharff inquired whether an infinite number of access points could be utilized with fiber. Mr. Poggio explained the number of frequencies limited the number of access points. MOTION: Council Member Klein moved, seconded by Vice Mayor Shepherd to request that Staff develop a Wireless Network Plan with a near-term focus on Wi-Fi, and a long-term consideration of other wireless technologies. Vice Mayor Shepherd felt the tension point would be Wi-Fi as a utility. She understood the fiber fund could be utilized for wireless technology. MOTION PASSED: 4-0 Mr. Keene suggested Staff return to the Committee in early November 2013 with an update. At that time, he planned on appointing a Citizen Advisory Committee. Chair Kniss requested the City Manager proceed with the Citizen Advisory Committee. Mr. Keene reported six to eight citizens expressed interest in serving on the Citizen Advisory Committee. He was not bound to place all citizens who volunteered on the Advisory Committee. ADJOURNMENT: Meeting adjourned at 5:43 P.M. Attachment B. 9-17-2013 Staff Report & Meeting Minutes At RF P t o FT T P N Ma s t e Ma n a g e m e n RF P t o Wi r Ne t w otta c h m e n t C . Pr e p a r e Net w o r k erP l a n ntDe v e l o p rel e s s ork P l a n Hi g h L e v e l P l FT T P M Co m m i t t e e & Co u n c i l A c t i o n RF De v e l oan a n d S c h e d &W i r e l e Pr o j e c t M a n Mas t e r P l a n FPt o B u i l d F T T P opW i r e l e s s N e dul e t o D e v e l o ess N e t w o r k nag e m e n t W Co m m i t t Co u n c i l A PNe t w o r k tw o r k P l a n opF i b e r t o t h Pl a n Im p l e m Bu i l d / Bu i l d / Wir e l e s s N e t w o tee & Act i o n he P r e m i s e M en t a t i o n /Op e r a t e F T T P /Op e r a t e W i r e l or k P l a n Mas t e r P l a n Ne t w o r k les s N e t w o r k Im p le m e n t a t i o n ScheduletoDevelopFibertothePremiseMasterPlan 1. Milestones for conducting Request for Proposal (RFP #1) to retain consulting firm to developMasterPlananddevelopRequestforProposal(RFP#2)tobuildouttheCity’sfiber systemtoprovideFibertothePremise; 2. MilestonestoconductRFP#2toselectvendortobuildandoperateaFTTPNetwork; Milestones October28,2013 ReceiveCouncilapprovaltoactontherecommendation fromtheCouncilTechnologyandthe Connected City Committee to develop a FibertothePremise Master Plan and conduct a RequestforProposaltobuildouttheexistingdarkfiberopticsystem. November30,2013 ConductRequestforProposal (RFP#1)toretainconsultingfirmt oprepareMasterPlan forFTTP Network.Note:thepurposeoftheMasterPlanistodevelopanengineeringstudyandcost modelforaFTTPNetwork.BasedonthefindingsandrecommendationsintheMasterPlan,the consultingfirmwilldevelopaRequestforProposal(RFP#2)forthepurposeofattractingathird partytelecommunicationsserviceprovidertobuild andoperateaFTTPNetworkinPaloAlto.1 January15,2014 Vendorresponsesdue.Formpaneltoreviewvendorresponsesandconductinterviews February1,2014 Conductvendorinterviews. February15,2014 SelectvendortodevelopMasterPlanandRFP#2andmakerecommendationtotheCouncilto awardacontract. March1,2014 Awardcontracttovendor. March15,2014 Vendorworkcommences. June1,2014 VendorcompletesworkandsubmitsMasterPlanReportandRFP#2tostaffforreviewand comments. June15,2014 PlanningandEnvironmentalServicesDepartmentreviewMasterPlananddetermineifthe proposed FTTP Network warrants a mitigated negative declaration or a full Environmental ImpactReport(EIR). 1The FTTP engineering study and network design will be sufficient to meet review requirements under the CaliforniaEnvironmentalQualityAct(CEQA). ScheduletoDevelopFibertothePremiseMasterPlan 2 July15,2014 Contingentonthelevelofenvironmentalreviewrequired,conductRFP#2.ThepurposeofRFP #2istoselectathirdpartytelecommunications serviceprovidertobuildaFTTPNetwork.Note: thismilestonemaybeaffectedbytheamountoftimerequiredtoconducttheenvironmental review. October1,2014 ApprovalofCEQAdocumentation(longerifEnvironmentalImpactReportrequired) September1,2014 Vendorresponsesdue.Formpaneltoreviewresponses. September15,2014 Conductvendorinterviews. October15,2014 SelectvendortobuildandoperateFTTPNetwork. November15,2014 RecommendvendorcontractawardtoCouncil. ScheduletoDevelopWirelessNetworkPlan 3 Milestones October28,2013 ReceiveCouncilapprovaltoactonrecommendationfromtheTechnologyandtheConnected CityCommitteetodevelopaWirelessNetworkPlanwithaneartermfocusonWiFi,andalong termconsiderationofotherwirelesstechnologies. November30,2013 IssueRequestforProposal(RFP)toretain consultingfirmtoprepareWirelessNetworkPlan. January15,2014 Vendorresponsesdue.Formpaneltoreviewvendorresponsesandconductinterviews. February1,2013 Conductvendorinterviews. February15,2013 SelectvendortodevelopWirelessNetworkPlan. March1,2014 Awardcontracttovendor. March31,2014 Vendorbeginswork. July15,2014 VendorsubmitsreportforWirelessNetworkPlan. August1,2014 BasedonWirelessNetworkPlan,staffrecommendationtotheTechnologyandtheConnected CityCommittee.ReviewandapprovaloftherecommendationmayalsoberequiredbyUtilities AdvisoryCommissionandCouncilFinanceCommittee. September2014 CommitteerecommendationtotheCouncil. October2014 BasedonCouncilapprovaloftherecommendationand direction,staffdevelopsactionplan. November2014 BasedonCouncildirection,issueRequestforProposaltoretainvendortobuildandoperate wirelessnetwork. Late2015 Wirelessnetworkactivated.