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HomeMy WebLinkAboutStaff Report 4194 City of Palo Alto (ID # 4194) City Council Staff Report Report Type: Informational Report Meeting Date: 10/21/2013 City of Palo Alto Page 1 Summary Title: Background on Infrastructure Committee Recommendations Title: Background Information in Preparation for City Council's Discussion on Infrastructure Committee Recommendations at October 28, 2013 City Council Meeting From: City Manager Lead Department: City Manager This is an informational report and no City Council action is required. Background The City’s Infrastructure Committee has met eight times since its formation in February 2013. 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 its last three meetings, the Committee discussed a number of key policy questions in reviewing the survey findings and making its recommendations to the City Council on next steps. The purpose of this memorandum is to provide the City Council with background information on the Committee’s discussions and actions over the last eight meetings. The City Council will consider the Committee’s recommendations on next steps at its meeting on October 28,, 2013. Staff is making the information available in advance to provide the Council with additional time to review background information on the Committee’s extensive deliberations. Discussion At the City Council’s October 28, 2013 meeting the Council will consider the Infrastructure Committee’s recommendations to conduct additional study in six areas:  An assessment fee to finance parking garages (through a citywide or more localized Mello-Roos Community Facility District).  A 2% to 3% increase in the existing transient occupancy tax (TOT). City of Palo Alto Page 2  A general obligation bond measure to fund public safety facilities (public safety building & fire stations).  A general obligation bond measure to fund transportation infrastructure.  A one-eighth cent sales tax.  Reactions to the infrastructure measures in the context of a utility users tax (UUT) modernization measure on the same ballot. Staff will prepare a follow-up council report that will review in detail the Committee’s recommendations that the City Council will discuss at its October 28, 2013 meeting including the proposed schedule. The following provides a summary of the Committee meetings including links and attachments to meeting agendas, staff reports and minutes. The reports for each meeting have been consolidated and redundant attachments have been removed. October 1, 2013 Infrastructure Committee Meeting Agenda and Staff Report (meeting minutes to be complete and will be provided in 10/28/2013 staff report) September 3, 2013 Infrastructure Committee Meeting Agenda, Staff Report and Minutes August 6, 2013 Infrastructure Committee Meeting Agenda, Staff Report and Minutes June 6, 2013 Infrastructure Committee Meeting Agenda, Staff Report and Minutes May 7, 2013 Infrastructure Committee Meeting Agenda, Staff Report and Minutes April 16, 2013 Infrastructure Committee Meeting Agenda, Staff Report and Minutes March 28, 2013 Infrastructure Committee Meeting Agenda, Staff Report and Minutes March 7, 2013 Infrastructure Committee Meeting Agenda, Staff Report and Minutes Timeline, Resource Impact, Policy Implications, Environmental Review (If Applicable) Attachments:  Attachment 1. October 1, 2013 Agenda & Staff Report (PDF)  Attachment 2. September 3, 2013 Agenda, Staff Report & Minutes (PDF)  Attachment 3. August 6, 2013 Agenda, Staff Report & Minutes (PDF)  Attachment 4. June 6, 2013 Agenda, Staff Report & Minutes (PDF)  Attachment 5. May 7, 2013 Agenda, Staff Report & Minutes (PDF)  Attachment 6. April 16, 2013 Agenda, Staff Report & Minutes (PDF)  Attachment 7. March 28, 2013 Agenda, Staff Report & Minutes (PDF)  Attachment 8. March 7, 2013 Agenda, Staff Report & Minutes (PDF) Infrastructure Committee 1 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. Special Meeting Council Conference Room Tuesday, October 1, 2013 3:00 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday preceding the meeting. PUBLIC COMMENT Members of the public may speak to agendized items; up to five minutes per speaker, to be determined by the presiding officer. If you wish to address the Committee on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers/Council Conference Room, and deliver it to the 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 Committee, but it is very helpful. Call to Order Oral Communications Members of the public may speak to any item NOT on the agenda. 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 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. Attachment 1: 10/01/2013, Agenda and Staff Report 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. Attachment 1: 10/01/2013, Agenda and Staff Report 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. Attachment 1: 10/01/2013, Agenda and Staff Report 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. Attachment 1: 10/01/2013, Agenda and Staff Report 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. Attachment 1: 10/01/2013, Agenda and Staff 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 Attachment 1: 10/01/2013, Agenda and Staff Report 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: Attachment 1: 10/01/2013, Agenda and Staff Report 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. Attachment 1: 10/01/2013, Agenda and Staff Report 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. Attachment 1: 10/01/2013, Agenda and Staff Report 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 Attachment 1: 10/01/2013, Agenda and Staff Report 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) Attachment 1: 10/01/2013, Agenda and Staff Report WŽƚĞŶƚŝĂů/ŶĨƌĂƐƚƌƵĐƚƵƌĞWƌŽũĞĐƚ&ƵŶĚŝŶŐ^ĐĞŶĂƌŝŽηϭ (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 WŽƚĞŶƚŝĂů/ŶĨƌĂƐƚƌƵĐƚƵƌĞWƌŽũĞĐƚ&ƵŶĚŝŶŐ^ĐĞŶĂƌŝŽηϮ 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 1: 10/01/2013, Agenda and Staff Report WŽƚĞŶƚŝĂů/ŶĨƌĂƐƚƌƵĐƚƵƌĞWƌŽũĞĐƚ&ƵŶĚŝŶŐ^ĐĞŶĂƌŝŽηϯ 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 WŽƚĞŶƚŝĂů/ŶĨƌĂƐƚƌƵĐƚƵƌĞWƌŽũĞĐƚ&ƵŶĚŝŶŐ^ĐĞŶĂƌŝŽηϰ 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 1: 10/01/2013, Agenda and Staff Report &ƵŶĚŝŶŐƉƉƌŽĂĐŚ&ŽƌZĞŵĂŝŶŝŶŐWƌŽũĞĐƚƐ 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 1: 10/01/2013, Agenda and Staff Report         TO:   City of Palo Alto  FROM:  Charles Heath and Joy Tatarka, TBWB Strategies      Dave Metz and Shakari Byerly, Fairbank, Maslin, Maullin, Metz and Associates  RE:   Recommendations Regarding Potential Infrastructure Funding Measures  DATE:   September 24, 2013  ___________________________________________________________________________________      TBWB Strategies and FM3 Research have reviewed polling conducted to date and information  provided by city staff related to the development of a Transient Occupancy Tax (TOT) to fund general  infrastructure needs and a potential Mello Roos District (MRD) or general obligation bond to fund  parking garages in the Downtown and California Avenue areas and related transportation needs.   Following is our collective assessment of the potential feasibility of these measures, alternatives for  you to consider and recommended next steps.       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 this 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.  While FM3  continues to believe that focus groups would be helpful in understanding how to develop messaging  for a measure that includes funding for a public safety building and requires two‐thirds voter support,  we believe the TOT measure should first be refined by a standard ballot measure feasibility survey.      Similar to the initial baseline survey, FM3 envisions conducting a ballot measure feasibility survey  among 600 likely voters, which is associated with a margin of sampling error of +/‐4.0 percent.  The  central objective of the research will be to gauge voter attitudes toward a TOT increase of between 2  and 3 percent to fund deferred maintenance needs related to infrastructure priorities, and assess the  optimal timing of an election.      FM3 would develop the survey instrument in collaboration with the City and TBWB.  The research will  explore some of the following topics:  Attachment 1: 10/01/2013, Agenda and Staff Report 2    Gauging levels of support in response to a draft 75‐word ballot measure summary of a  potential measure;   Assessing public attitudes toward funding priorities that might be financed through the  measure;   Determining if the measure should be structured as a general tax or special tax;   Identifying project priorities and optimal project descriptions;   Assessing public sensitivity to the TOT tax rate;   Measuring sensitivity of support in the face of likely arguments from supporters and  opponents, including an argument regarding the fact that an increase in the local TOT would  bring the rate to among the highest in the state/region; and   Determining the demographic profile of the respondents to provide the necessary categories  for cross‐tabulation of the data, and to ensure that the respondents are representative of the  pool of likely voters in Palo Alto;   Provide a recommendation to the City regarding the viability of the TOT as a financing  mechanism and the specific components of a measure that will maximize the likelihood of  voter approval.    Given the City’s ongoing need to seek voter approval for an update to its existing UUT ordinance, this  survey would provide an opportunity to assess the interaction between a TOT and UUT measure,  whether it would be advisable to place these measures on the same ballot and evaluate the basic  viability of a UUT update measure.    As has been noted as part of past recommendations to the Infrastructure Committee, FM3 and TBWB  were surprised by the relatively low levels of support measured in the baseline survey for a sales tax  measure.  We suspect that the low levels of support may be have resulted from the specific language  tested or other contextual survey issues.  If deemed a priority, this survey would provide an  opportunity to further investigate the sales tax as an alternative funding mechanism that would  generate significant revenue.    FM3 is prepared to begin the proposed research immediately, at the City’s request. A proposed  timeline for conducting the research appears below:    Week of October 28, 2013   Authorization to proceed   Evaluate proposed methodology and finalize research plan   Preparation of first draft of survey questionnaire    Week of November 4, 2013   Submit draft questionnaire to City for review    Weeks of November 11‐November 18   Finalize survey questionnaire   Obtain client approval of final survey instrument   Draw sample  Attachment 1: 10/01/2013, Agenda and Staff Report 3   November 18‐22, 2013    Administer telephone survey   Generate topline and cross tabulation of survey results    November 23‐December 5, 2013   Develop presentation and reporting materials   Schedule presentation of final results to key stakeholders    Concurrent to polling on this potential TOT measure, TBWB recommends commencing targeted  outreach to Palo Alto hotel owners and managers to explain the City's planning for a potential TOT.   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.  This outreach would be conducted during  the November and early December timeframe in order to provide a summary of feedback along with  the survey results.  TBWB will work with the City to develop an outreach target list, informational  materials to facilitate these meetings and schedule for conducting the meetings and synthesizing  feedback.       It should be noted by the Committee that if this measure is designed as a general tax requiring only  simple majority voter approval, it must go to the ballot at the same time as council member elections.   The exception would be if the City declared a fiscal emergency with a unanimous vote of the Council.  Thus, if the TOT would be designed as a general tax, TBWB will develop a detailed timeline identifying  specific planning steps to prepare for the November 2014 municipal election date.  Given the limited  election date flexibility for this type of measure, the City might evaluate other election date options  (e.g. June 2014, June 2016, November 2016 or special election dates) for the other potential funding  measures under consideration.       Funding for Parking Garages and Related Transportation Needs  A review of the data from FM3’s recent survey on infrastructure needs and funding options indicates  voter support for a measure to fund parking garages in the Downtown and California Avenue areas  would fall substantially short of the two‐thirds support that would be required for approval. When  the analysis is limited to voters within the geographic areas in or near the Downtown and California  Avenue areas, support still falls well short of 66.7%.  If the boundaries were drawn broadly to spread  the cost and minimize the required tax rate, we do not believe that the project ranks as high enough  a priority for voters to generate two‐thirds support.  If the Committee is interested in a broad based  measure with a palatable tax rate to fund these needs, we believe that a citywide bond measure that  packages parking garages along with more popular transportation projects (e.g. road and sidewalk  improvements, safe routes to school, bike and pedestrian improvements, traffic relief) would be a  more viable approach.    In short, no matter how the MRD boundaries are drawn, we do not believe that a measure to fund  parking garages that requires two‐thirds support from a residential taxpayer base is likely to be  approved.  Accordingly, we offer the following alternatives and recommended next steps for securing  additional funding for parking garages:   Attachment 1: 10/01/2013, Agenda and Staff Report 4   1. MRD Focused on Non‐Residential Properties  An alternative approach would be to draw MRD boundaries tightly ringing the Downtown and  California Avenue commercial corridors to exclude all but fewer than 12 registered voters  residing within the boundaries.  Under this scenario, the MRD measure election would be  decided by a vote of property owners within the boundaries.  The City would need to develop  a convincing business case to present to the impacted property owners and conduct extensive  individual outreach among this group to gauge support.  The proposed areas are too small for  traditional public opinion research techniques and therefore would not provide reliable  results.    If the City would like to evaluate the potential feasibility of a property owner election, TBWB  will use voter mapping applications to develop possible boundary options that include fewer  than 12 registered voters and compare these boundaries against property ownership data to  develop an outreach target list.  After an analysis of how much each of these property owners  would have to pay in order to fund the projects, we would develop informational materials  and an outreach plan to measure the interest and support among the property owners.    2. Transportation Bond Measure  As was recommended to the Infrastructure Committee as part of the presentation of the  baseline infrastructure survey results, we 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, we believe that they could be packaged with other priority projects and presented as a  comprehensive solution to Palo Alto’s transportation, traffic and parking needs.        The initial survey touched on a wide array of issues and was designed to narrow the scope of  options under consideration.  It was not designed to definitively determine the feasibility of a  single ballot measure.  To further evaluate the feasibility of a transportation bond measure,  we recommend a follow up survey devoted entirely to this measure.  In this survey FM3 would  test potential ballot language, project descriptions reflecting the array of Palo Alto’s  transportation‐related needs, sensitivity to specific bond amounts and tax rates, 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, we 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 70% 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).  Attachment 1: 10/01/2013, Agenda and Staff Report 5   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. This survey could be conducted  in lieu of the TOT survey described previously and on the same timeline.  Or this survey could  be conducted subsequently.  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.  In order to provide the City  with definitive recommendations as to the viability of a funding measure in 2014, we  recommend testing the TOT or a bundled transportation measure, but not both at the same  time.  Testing both measures in a single poll will limit the depth into which support for either  measure can be investigated.     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.  TBWB and FM3 would appreciate guidance  from the Committee as to which of the two measures is a higher priority in order to refine a  research strategy and timeline.    As noted previously, the baseline infrastructure survey indicates that a bundled bond measure  focus on public safety needs appears just as potentially viable as a bundled transportation  measure.  The survey and outreach approaches outlined here for a bundled transportation  measure could be applied to refine a bundled public safety measure for the ballot.  However,  the uncertainty surrounding the proposed public‐private partnership to fund a public safety  facility makes this a difficult option to research at this time.   Accordingly, if the Infrastructure  Committee and/or City Council determine that funding public safety infrastructure needs is a  higher policy priority than transportation, we recommend conducting a survey on this topic  once the outcome of the public‐private partnership and related funding issues are more  certain.  We acknowledge that this may require looking at a 2016 election or beyond for voter  approved funding for public safety infrastructure.    We do not feel that the baseline survey data indicates sufficient voter support to justify  further research on a general infrastructure bond measure or any other measure requiring  two‐thirds support unless it is focused on transportation or public safety needs.        Attachment 1: 10/01/2013, Agenda and Staff Report El Camino Park El Camino Park Kellogg Park Scott Park Timothy Hopkins Park Lot A Lot D Lot G Lot H Lot F Lot O Lot P Lot Q Lot T Lot C Lot K Lot WC Cogswell Plaza Lot B Lot K Lot E Johnson Park Alma Parkette Welcome Timothy Hopkins Park LyttonPlaza Stanford Shopping Center Parkette El Palo Alto Park Civic CenterPlaza Channing House Dwtn Child Care Ctr Bryant / LyttonParking Garage Parking Tract No. 5447 PKG PKG Sunset Magazine AddisonElementary Palo AltoHigh School Castilleja School Whole Foods ParkingWhole Foods Market Oak CourtApartments Heritage Park El Palo Alto Park Timothy Hopkins Park Williams Park PAMF CLARK BUILDING PAMFPARKING STRUCTURE CVS Pharmacy Union Bank Miyake E-Trade Stanford Books GATE 1 GATE 15 GATE 14 GATE 2 GATE 3 GATE 4 GATE 5 GATE 6 GATE 7 GATE 8 GATE 9 GATE 10 GATE 11 GATE 12 EL CAMINO GROVE 09-575 GATE 13 MALONEY FIELD MASTERS GROVE BOYFA ARTIFICIAL TURF FIELD SUNKEN DIAMOND PAC-10PLAZA STEUBER FAMILY RUGBY FIELD WOMENS SOFTABLL D ARBORETUM GROVE EUCALYPTUS GROVE LASUEN GROVE TOYON GROVE Lot S Lot CC Lot N Lot R Quarry Road Arboretum Road Quarry Road Homer Avenue Lane 8 West Medical Foundation Way Lane 7 West Lane 7 East Embarcadero Road Encina Avenue El Camino Real Urban Lane Wells Avenue Forest Avenue High Street Emerson Street Cha n n i n g A v e n u e Alma StreetAlma Street PaloAltoA El Camino Real venue Mitchell Lane Hawthorne Avenue Everett Avenue Lytton Avenue Lane 15 E High Street Alma Street Bryant Street Lane 6 E Lane 11 W Lane 21 High Street Gilman Street Hamilton Avenue University Avenue Bryant Court Lane 30 Florence Street Kipling Street Tasso Street Cowper Street Ruthven Avenue Hawthorne Avenue Lane 33 PaloAltoAvenue Everett Avenue Poe Street Waverley Street Tasso Street Cowper Street Palo Alto Avenue Webster Street Everett Court Lytton Avenue Byron Street Fulton Street Middlefield Road Melville Avenue Kellogg Avenue Kingsley Avenue Lane A West Lane B West Lane B East Lane D West Lane 59 East Whitman Court Kellogg Avenue Embarcadero Road Kingsley Avenue Lincoln Avenue Addison Avenue Lincoln Avenue Forest Avenue Downing Lane Homer Avenue Lane D East Lane 39 Lane 56 Hamilton Avenue Webster Street Waverley Street Kipling Street Bryant Street Ramona Street Addison Avenue Scott Street Byron Street Lytton Avenue Guinda StreetPaloAltoAvenue Fulton Street Middlefield Road Forest Avenue Webster Street Kellogg Avenue Middlefield Road By Webster Street Cowper Street Tasso Street Cowper Street Addison Avenue Lincoln Avenue Boyce Avenu Homer Avenue Guinda Street Middlefield Road Channing Avenue Ad Guinda Street Lincoln Avenue Fulton Street Melville Avenue Byron Street Kingsley Avenue Melville Avenue Co Mi Webs Wilson Stree Ramona Street Addison Avenue Channing Avenue Waverley Street Paulsen Ln Lane 15 E Emerson Street Lane 20 W Lane 20 E University Avenue CalTrain ROW Emerson Street Waverley Street Kipling Street Orchard Lane Sand Hill Road Sand Hill Road Bryant Street Ramona Street Palo Road Shopping Center Way Shopping Center Way Shopping Center Way London Plane Way Plum Lane Sweet Olive Way Pear Lane Lane 12 W Lane 5 E Lasuen Street Pistache Place Everett Avenue Homer Avenue Palo Alto Avenue Community LaneHarker Avenue Parkinson Avenue Byron Street Emerson Street Churchill Mall Aboretum Road Aboretum Road Galvez Street Masters Mall Nelson Mall Nelson Road Palm Drive Alma Street Alma Street Hawthorne Avenue Lytton Avenue Sam McDonald Road Mall This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend Parcels Counted within Proposed Boundary #03 (2,798 Parcels) Proposed Boundary # 03 (2,798 Parcels) Commercial Downtown (CD) Zoning Districts Parking Assessment District Parcels City Jurisdictional Limits 0'961' Me l l o - R o o s D i s t r i c t Po t e n t i a l B o u n d a r y # 0 3 Ex e r c i s e Un i v e r s i t y A v e n u e Ar e a M a p CITY OF PALO ALTOINCORPORATED CALI FORNIA P a l o A l t oT h e C i t y o f APRIL 1 6 1894 The City of Palo Alto assumes no responsibility for any errors. ©1989 to 2013 City of Palo Alto rrivera, 2013-09-10 12:06:39Mello Roos UniversityAve 03 (\\cc-maps\gis$\gis\admin\Personal\rrivera.mdb) Attachment 1: 10/01/2013, Agenda and Staff Report ATTACHMENT D    Staff Response to Infrastructure Committee’s Questions   on forming a Mello‐Roos District  1 9/26/2013  The Infrastructure Committee directed staff to research a number of issues.      1) How long would it take to bring a vote to the public?    Response:  It would take approximately 8‐9 months to form a community facilities  district under the Mello‐Roos Act, from the first meeting to discuss the tax formula  through adoption of the final ordinance, assuming a registered voter election and a mail  ballot election that is not consolidated with another election.    If the election is consolidated with another election, then the timing may be impacted,  although it should be similar.     See Table 1 on page 3 for a typical schedule.    2) How would a Mello‐Roos (MR) District be structured in a ballot measure?    Response:  The ballot measure would approve three items: (i) the levy of the special tax  according to the Rate and Method of Apportionment of Special Tax for the purposes  specified in the Resolution of Formation (e.g., acquisition and construction of a public  parking garage at the corner of X and Y, (ii) the issuance of bonds in a maximum  amount, and (iii) an appropriations limit for the CFD. The Mello‐Roos Act allows the  three items to be consolidated in a single ballot measure    Otherwise, the general provisions of California elections law would govern the ballot  measure, and the advice of an election consultant will be useful.    3) Are there any conflicts with current assessment districts?    Response:  The special tax would be in addition to, and would not have any impact on,  existing special benefit assessments, the 1% ad valorem tax or any voter‐approved tax  overrides. It would be fair to consider the special tax to be an additional source of  revenue to build more parking garages in the City, assuming it would be described as  such in the formation proceedings.    The special tax shall be collected in the same manner as ordinary ad valorem property  taxes are collected and shall be subject to the same penalties and the same procedure,  sale, and lien priority in case of delinquency as is provided for ad valorem taxes       Attachment 1: 10/01/2013, Agenda and Staff Report ATTACHMENT D  2 9/26/2013  4) Are there exemptions from the tax?     Response:  In general, properties owned by public agencies are exempt from special  taxes under the Mello‐Roos Act.  There are some exceptions, for example where the  public agency leases its property to a taxable entity.     The MR tax formula would apportion taxes among various land uses on a reasonable  basis and could identify additional exemptions, e.g., low‐income housing, nursing  homes, et. al.      5) Describe an outreach plan and the expertise necessary to form a MR district?    Response:      Information from City’s Outreach Firm, TBWB    One of the first steps is to identify the financed facilities, identify the boundaries of the  CFD (who will pay the tax) and define the special tax formula.  Because the special tax  does not need to be apportioned on the basis of special benefit, there is no need to  employ an engineer for this purpose; the City would, instead, retain a special tax  consultant, who could be an engineer, with expertise in preparing special tax formulas  and, if possible, with public parking garages in developed CFDs.  See attachment B for  more detailed plan for outreach.    6) Are there potential public/private partnerships to build garages or are their possibilities  of long‐term leasing arrangements?    Staff believes there is potential for partnerships to build garages or for long‐term leasing  arrangements, and recommends proceeding with a request for proposals.        Attachment 1: 10/01/2013, Agenda and Staff Report ATTACHMENT D  3 9/26/2013  TABLE 1. TEMPLATE MELLO‐ROOS ELECTION SCHEDULE        Date  Responsible Party    Event  Before Day 1    City staff, special  tax consultant,  financial advisor,  bond counsel  (i) Identify CFD boundaries     (ii) Identify financed facilities and services    (iii) Define Rate and Method of Apportionment of  Special Taxes  Day 1 City Council Adopt: (1) Resolution Approving Local Goals and  Policies for Community Facilities District; (2)  Resolution of Intention to Establish Community  Facilities District; (3) Resolution of Intention to  issue Bonds  By Day 16 City Clerk Record Boundary Map (within 15 days of adoption  of Resolution of Intention) (Streets & Highways  Code §3111)  By [7 days prior to  public hearing]  City Clerk Publish Notice of Public Hearing (Gov. Code  §§53322; 6061)  No earlier than Day  31  City Council (1) Conduct a Public Hearing; (2) adopt Resolution  of Formation; (3) adopt Resolution Declaring  Necessity to Incur Bonded Indebtedness; (4) adopt  Resolution Calling Election (“ROE”)   Approx. Day 35 City Clerk Publish Notice of Argument Deadlines  No later than Day  44 (w/in 14 days of  ROE)  City Clerk Deadline for submission of direct arguments  (Elections Code §9286)  Approx. Day 44 City Attorney Submission of impartial analysis  Approx. Day 54  (Argument deadline  + 10 days)  City Clerk Deadline for submission of rebuttal arguments  (Elections Code §9285)  Approx. Days 55 – 64   City Clerk 10‐day public inspection period  (Elections Code §9295)        Attachment 1: 10/01/2013, Agenda and Staff Report Infrastructure Committee 1 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. Special Meeting Council Conference Room Tuesday, September 3, 2013 4:00 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday preceding the meeting. 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 Committee on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers/Council Conference Room, and deliver it to the 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 Committee, but it is very helpful. Call to Order Oral Communications 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 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. Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto (ID # 4055) Infrastructure Committee Staff Report Report Type: Meeting Date: 9/3/2013 City of Palo Alto Page 1 Summary Title: Infrastructure Finance Measure Title: 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 From: City Manager Lead Department: City Manager Recommendation Staff recommends that the Infrastructure Committee continue its discussion on the public opinion survey results and make recommendations to the City Council on: 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. 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. Attachment A provides the staff report for the meeting and the meeting minutes. The staff report presented the preliminary findings of the baseline survey. Supplemental information was also provided on the status of infrastructure project costs, currently available revenue sources, grant applications, potential revenue sources, and debt financing alternatives intended to support the Committee’s discussion and recommendations to the City Council about next steps. No formal action was taken at the June 6 Infrastructure Committee meeting. On August 6, 2013 the Committee continued its discussions and assessment of a potential finance measure to fund infrastructure needs. Staff provided a series of worksheets designed to assist Committee members in advanced reflection and preparation work on potential 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. The staff report also provided some key policy questions and considerations that the Committee may want to consider in their deliberations. 1 Packet Pg. 2 Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 2 Attachment B provides the staff report and meeting minutes. Duplicate attachments from the June 6 and August 6 meetings have been removed. At the conclusion of the August 6th meeting, the Committee requested staff return to the next Committee meeting with additional information on: 1. Schedule and flowchart for the annual process to develop the CIP plan. 2. Integration of the 5-year Capital Improvement Program (CIP) plan and the City’s overall infrastructure needs the Committee is evaluating, including project updates on Parks Catch- up, Building Catch-up, Surface Catch-up, Sidewalks, Civic Center and Parking Garages. 3. Updated information on finance measures and other revenue sources including a business license tax, Mello-Roos districts, Transient Occupancy Tax, and the Los Altos Treatment Plant revenue potential. Discussion 1. Schedule for Annual CIP Plan At the August 6, 2013 Infrastructure Committee meeting, the Committee requested staff return with a schedule and flowchart for the annual process to develop the CIP plan. Attachment C presents a draft schedule and flowchart for the CIP plan development process overlaid with key dates in considering an infrastructure revenue measure. Staff is currently evaluating the CIP plan process with a goal of making the process more efficient and more responsive to the recommendations of the Infrastructure Blue Ribbon Commission (IBRC). Since the completion of the IBRC’s work in December 2011, the City has used the detailed infrastructure spreadsheet developed by staff and the IBRC to guide the development of the CIP plan. The spreadsheet specifies the “keep-up” projects for each fiscal year, and identifies projects that have been deferred and are not scheduled in the 5-year CIP plan as “catch-up”. Separate worksheets are provided for Buildings, Surface, and Parks categories. The City uses the infrastructure spreadsheet to identify the keep-up projects to include in the CIP plan, and it is updated each year following adoption of the new 5-year CIP plan. The most recent update occurred recently following adoption of the FY 2014 Capital budget and 5-year plan, and the project cost changes that resulted are described in this report. Staff is currently evaluating proposals received in response to the City’s RFP for consultant support to implement an Infrastructure Management System (IMS). The anticipated scope for the consultant work will include 1) an assessment of current applications used by the city to manage its infrastructure, 2) identification of best practices for tracking relevant data about the City’s infrastructure, 3) examination of issues associated with replacement and/or integration with existing systems used by the City to manage its infrastructure, and 4) recommendations for a specific application that will best meet the City’s requirements for monitoring and reporting the condition of the city’s infrastructure and forecasting maintenance, repair and 1 Packet Pg. 3 Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 3 replacement needs that can be incorporated into future budget and capital planning processes. A consultant agreement is expected to be awarded this fall. 2. Relationship of 5-year Capital Improvement Plan to Infrastructure Projects At the August 6 Infrastructure Committee meeting, the Committee also directed staff to provide information on the integration of the 5-year Capital Improvement Program (CIP) plan and the City’s overall infrastructure needs that the Committee is evaluating. All of the information relating to the 5-year CIP plan presented in this report is with respect to the General Fund CIP only, and does not include Enterprise Funds or Internal Service Funds. Summary of FY 2014 Capital Budget and 5-year CIP Plan Attachment D presents a tabular summary of the FY 2014 Capital budget and 5-year plan, including the following for each CIP:  Project funding for each of the five years  CIP type – recurring or nonrecurring  IBRC category – Catch-up, Keep-up, or New  City infrastructure category – Streets and Sidewalks, Parks and Open Space This information is useful in reviewing the types of projects that are funded in the CIP plan and how the funding is apportioned in the plan. Attachment E presents additional information to further illustrate the CIP plan funding. These include the 5-year CIP plan according to City infrastructure categories such as Parks and Open Space, and Streets and Sidewalks; the 5-year CIP plan in terms of the IBRC categories of catch-up, keep-up, and new for each of the 5 years; and the funding sources for the CIP that include general fund transfers, gas taxes, and various grants and reimbursements. Changes to Project Costs Resulting from FY 2014 Capital Budget and 5-year Plan Based on the Infrastructure Committee’s direction, staff has reviewed the infrastructure project costs and updated the net cost figures for projects that have received new funding in the FY 2014 Capital budget and 5-year plan. In some instances, staff is recommending changes for other reasons. For example, the Ventura Community Center project cost of $3 million developed for polling is already captured by an existing CIP and the Buildings Catch-up project, and staff therefore recommends that Ventura Community Center be removed from the project list to avoid double-counting these costs. Table 1 provides a high-level summary of the recommended changes to project costs. 1 Packet Pg. 4 Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 4 Table 1: Summary of Changes to Project Costs Project Previous Cost Estimate* Updated Cost Estimate* Streets 8 0 Parks Catch-up 9.8 8.9 Bike/Pedestrian Plan 23.5 16.25 Ventura Community Center 3 0 Surface Catch-up 8.8 3.4 Buildings Catch-up 4.5 4.2 Civic Center 16 to be determined *Net cost with committed funding ($ millions) With these changes, staff believes that there are no further redundancies or double-counting between the CIP and the infrastructure project list. Attachment F provides an updated Infrastructure Project Summary Sheet, in the format reviewed previously by the Infrastructure Committee that reflects the changes recommended by staff. The changes are described in the section below for each project. Information on sidewalks and parking garages is also included, although changes to costs for these projects are not proposed. Streets The $8 million project cost for streets is an estimate of the incremental funding, in addition to the current $5.1 million per year in CIP funding, that would be required to attain the City’s Pavement Condition Index (PCI) goals by the end of 2016. The annual funding level for the Street Maintenance Program CIP was increased from $1.8 million to $3.8 million in FY 2011. The FY 2014 Capital budget and 5-year plan increases the annual funding to $5.1 million. The original PCI improvement goal established in FY 2011 was to achieve a citywide average PCI of 85, representing very good or excellent conditions, by 2021. With the annual funding level of $5.1 million included in the FY 2014 Capital budget and 5-year plan, the citywide PCI goal is now anticipated to be reached by the end of 2019. The $8 million project cost estimate for Streets was developed primarily for polling purposes. Achieving the citywide PCI goal by 2016 would require extensive and disruptive work throughout the City in a short timeframe and is likely infeasible given the need to coordinate street maintenance work with utilities projects. Current staffing would also be inadequate to oversee such an effort. For these reasons, the Committee may want to consider removing the $8 million in additional streets funding from the project list. Sidewalks The $6 million project cost for sidewalks was a figure selected to represent a substantial investment in sidewalk repairs in addition to the current funding provided in the CIP, but was 1 Packet Pg. 5 Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 5 not based on a formal assessment of sidewalk needs. In recent years, the Sidewalk Repairs CIP has been funded at $650,000 annually. IBRC identified a $3.7 million catch-up amount for sidewalks that was based on the additional funding needed to complete the original cycle of 23 sidewalk districts within the planned 30-year timeframe ending in 2016. The FY 2014 Capital budget and 5-year plan increased funding for sidewalks by $1 million annually, as well as funding a one-time project to repair damaged sidewalks on school routes. Providing an additional $6 million in sidewalks funding would allow the completion of a very significant amount of sidewalk improvements. The FY 2013 sidewalk repairs contract is currently in progress, and is expected to result in the replacement of 62,300 square feet of sidewalk at a cost of about $700,000. Assuming the same price per square foot (the actual bid price for a very large contract would likely be lower), $6 million would fund the replacement of 530,000 square feet of sidewalk, representing about 7 percent of the City’s total sidewalk surfaces. Members of the Infrastructure Committee have expressed interest in the cost of implementing a more rigorous ongoing sidewalk repair program that would have a much greater impact on the condition of sidewalks throughout the City than the current program. Staff intends to create a new CIP for FY 2015 to study in detail potential improvements to the sidewalks program and their costs. A thorough review is timely given the upcoming completion of the 30- year sidewalk district cycle. Parks Catch-Up IBRC evaluated the maintenance needs of City parks and open space facilities. The Parks Catch- up estimate includes all deferred maintenance that is not scheduled in the FY 2014 Capital budget and 5-year plan. These needs include turf, irrigation and playground replacement, pathway, tennis and basketball court resurfacing, and replacement of miscellaneous amenities such as benches, drinking fountains, lighting, signage, and trash receptacles. The Parks Catch- up project cost is reduced from $9.8 million to $8.9 million. This decrease is primarily due to the inclusion of the Baylands Interpretive Center Improvement and Boardwalk Repair project, and other previously unscheduled projects and maintenance, in the new 5-year CIP plan. The new Parks Catch-Up figure represents a reduction of $5.5 million from the $14.4 million that was identified by IBRC. Bike/Pedestrian Plan The Palo Alto Bicycle and Pedestrian Transportation Plan 2012 expands the City’s existing bicycle infrastructure and proposes to implement a network of new on-street and off-street facilities for all user levels. Key components of the plan include 52 miles of new or enhanced multi-use paths, bicycle lanes, and bicycle boulevards, and new barrier crossings at a number of locations. Barrier crossings account for about three-fourths of the total estimated cost for implementing the plan. The FY 2014 Capital budget and 5-year plan includes funding of $1.2 million per year for the Bicycle & Pedestrian Transportation Plan Implementation CIP, $250,000 for the El Camino Real & Churchill Avenue Intersection Improvements CIP, and $2.5 million for the Matadero Creek 1 Packet Pg. 6 Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 6 Trail CIP. The El Camino Real & Churchill Avenue Intersection and Matadero Creek Trail are components of the Bike/Pedestrian Plan. The overall project cost for the Bike/Pedestrian Plan is $25 million. The project funding provided in the FY 2014 capital budget and 5-year plan results in an updated unfunded amount of $16.3 million for the Bike/Pedestrian Plan. It is important to note that the $1.2 million per year for the Bicycle & Pedestrian Transportation Plan Implementation CIP was proposed by staff to come from the Stanford University Medical Center Development Agreement funds. During the budget process, Council directed that the FY 2014 funding come from the Infrastructure Reserve, with the remaining four years that are adopted in concept being funded by the Stanford University Medical Center Development Agreement funds pending policy decisions by Council on the use of the funds. The impact of this additional $4.8 million in the 5-year plan coming from either the Infrastructure Reserve or Development Agreement funds is not yet captured in the descriptions of available revenue sources being considered by the Infrastructure Committee. Ventura Community Center Ventura Community Center was placed on the project list for polling by City Council. The Ventura Community Center is a City owned and maintained facility at 3990 Ventura Court. The City leases this building to a non-profit childcare program, Palo Alto Community Child Care, Inc. The City purchased the Ventura Community Center Site from Palo Alto Unified School District (PAUSD) in 1980 under the terms of the Ventura Purchase Agreement. The Agreement allows PAUSD the right to repurchase the property for educational purposes, and specifies the methodology for determining the repurchase price, which includes the value of capital improvements, if PAUSD decides to exercise this right. The estimated project cost of $3 million developed for polling includes $690,000 in funding for the Ventura Buildings Improvement CIP (scheduled for FY 2015 and FY 2016) and additional needs for Ventura that are included in the Buildings Catch-Up project. Staff recommends removing Ventura Community Center from the project list for the purposes of assigning funding sources to projects, so that these costs are not double-counted. Surface Catch-Up IBRC evaluated the maintenance needs of City streets and sidewalks as well as other surface facilities such as parking lots and off-road trails. The Surface Catch-up project estimate includes all deferred maintenance that is not currently scheduled in the FY 2014 Capital budget and 5- year plan. The surface needs include resurfacing of parking lots, off-road trail repairs, traffic signal upgrades, intersection improvements and traffic calming improvements. The estimate does not include annual street maintenance. The Surface Catch-up project cost is reduced from $8.8 million to $3.4 million. The reduction is primarily due to the following factors:  Funding of the $3.7 million sidewalks catch-up amount in the FY 2014 Capital budget and 5-year plan 1 Packet Pg. 7 Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 7  Removal of $1.0 million in Downtown and California Avenue assessment district parking lot maintenance costs from the Surface Catch-up project list. These maintenance projects are being funded through assessment district monies.  Funding of previously unscheduled maintenance for parking lots through the City Facility Parking Lot Maintenance CIP. Funding for this CIP was doubled from $100,000 to $200,000 per year in the FY 2014 capital budget and 5-year plan to begin addressing the parking lot maintenance backlog. The new Surface Catch-Up figure represents a reduction of $6.4 million from the $9.8 million that was identified by IBRC. Buildings Catch-Up IBRC evaluated the maintenance needs of all City buildings. The Buildings Catch-up estimate includes all deferred maintenance that is not currently scheduled in the FY 2014 Capital budget and 5-year Plan, with the exception of deferred maintenance for Cubberley Community Center. Deferred maintenance requirements include roofing, HVAC, electrical and plumbing replacements, and accessibility improvements. Interior and exterior improvements such as painting and carpet replacement are also included. The Buildings Catch-up project cost is reduced from $4.5 million to $4.2 million. The reduction is due primarily to roofing replacements at the Municipal Service Center that are included in the 5-year plan. Civic Center In 2003, the City hired Ferrari Moe Architectural/Engineers to assess the Civic Center waterproofing system. Ferrari Moe submitted an Evaluation of Waterproofing Membrane report in 2004. The study concluded that it is prudent to undertake the replacement of the Civic Center waterproofing membrane that protects the Civic Center structural system to avoid costly associated structural repairs. In October 2004, a cost estimate totaling $11.7 million identified a repair plan to replace the waterproofing system in four phases that would allow the Civic Center to remain accessible to the public. That estimate has since been inflated to $16 million by staff to account for escalation of construction costs. Although the waterproofing membrane has not been replaced, the City took several immediate steps to minimize the impacts of any water leakage, including installation of metal gutters to capture water leaking from expansion joints at parking garage level A, crack sealing of the surface cracks on the Civic Center Plaza, and capping of leaking abandoned conduit pipes at garage level A. In response to the Infrastructure Committee’s discussion on August 6, 2013, staff reviewed the Ferrari Moe Report and determined that some of the report’s recommended actions warrant further review, and that the report did not determine the necessary timeframe for completing repairs to prevent structural damage to the Civic Center plaza deck. Staff recommends that a 1 Packet Pg. 8 Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 8 new CIP be created for FY 2015 to conduct a feasibility study that will provide non-destructive testing to reassess the condition of the structural system, conduct a cost benefit analysis, and make updated recommendations for short, medium and long term improvement plans. Immediate plans may include repair of concrete delamination in the garage, crack sealing of the plaza, replacing expansion joints at the garage levels, and repair of miscellaneous leaks and drainage at the planters. Long term repairs will likely include replacement of the entire waterproofing membrane and drainage system, associated replacement of landscaping, decorative plaza decking and structural repairs, if necessary. Staff recommends that the $16 million Civic Center project cost be removed from the infrastructure project list or denoted “to be determined”, pending an updated study of the waterproofing system replacement needs. While an eventual project will likely be very costly, it may be determined that short term actions can allow the full replacement to be scheduled for a future year as part of the City’s building keep-up needs. Parking Garages The downtown parking garage estimate of $21 million is based on the in lieu parking fee of $60,750 per space multiplied by 350 spaces. The California Avenue parking garage estimate of $12 million is based on the in lieu parking fee of $60,750 per space multiplied by 200 spaces. The in lieu parking fee is derived by calculating the cost per space for building the last two downtown parking garages, and then inflating that cost to current dollars. The 350 and 200 space figures are arbitrary and represent the number of spaces that might be built at some of the potential sites, but the exact number of spaces would be highly site specific. The Planning and Community Environment Department is currently studying the comparative advantages of building parking structures over certain downtown surface parking lots. The results of that study are likely to significantly change the estimate of $21 million. The results of that study and any combined land use opportunities would impact the cost of the projects. 3. Updated Information on Finance Measures and other Revenue Sources At the August meeting, the Committee requested updated information on finance measures and other revenue sources including a transient occupancy tax, business license tax, Mello-Roos districts, and revenue that could be generated from the Los Altos Treatment Plant site. In addition, based on the polling results, staff was asked to eliminate the utility users and parcel tax from further consideration, and to proceed to the full Council with recommendations on a digital readerboard. Attachment G provides an updated revenue sources sheet in the format reviewed previously by the Infrastructure Committee that reflects the changes discussed below. Transient Occupancy Tax The Committee requested that staff return with additional information on the revenue that the City would realize from a three percent increase in its Transient Occupancy Tax (TOT) versus a 1 Packet Pg. 9 Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 9 two percent increase, and to calculate the effect of the percentage change on “new hotel” revenue. The City’s current TOT rate is 12 percent. Staff previously reported that 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 two percent increase yields another $0.4 million while a three percent hike would result in $0.6 million. Thus, the combination of a two percent rate increase and new hotel revenues would provide $4.6 million in additional revenue while a three 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 Table three below displays the TOT rate for a range of other California cities in comparison to Palo Alto. Table 3. TOT for Other California Cities City TOT Rate City TOT Rate San Francisco 14% Mountain View 10% Oakland 14% Sunnyvale 9.5% Menlo Park 12% Santa Clara 9.5% East Palo Alto 12% Redwood City 12% Palo Alto 12% Santa Barbara 12% San Jose 10% Anaheim 15% As discussed in previous reports, to issue Certificates of Participation (COPs) to debt finance projects, the City must identify existing, increased, or new revenue streams. Based on several assumptions, staff estimates that for each $1.0 million in resources, $14.0 million in project funds can be generated. Hence, a 2 percent increase in the TOT combined with new hotel revenues results in $4.6 million in new revenue that, in turn, translate into $64.4 million in project funds; a 3 percent increase results in $5.7 million that generates $79.8 million in project funds. 1 Packet Pg. 10 Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 10 There is a caveat to consider in using economically sensitive tax revenues to leverage COP debt. Sources such as a TOT are susceptible to volatile swings or steep drops during a recession. The credit for a COP is typically a physical asset, but the City also is pledging its general revenues to pay bondholders. Should a specific revenue source such as TOT not perform as expected, the City likely would be forced to forego an asset or identify other resources (e.g. cost reductions) to meet its debt obligations. Another consideration is the current status of the bond market for local jurisdiction COPs. Because of recent local government bankruptcies as well as local pension and medical liabilities, the bond market has become leery of COP debt. Both Standard and Poor’s and Moody’s are considering lowering their ratings on COPs by two “notches” or grades. The argument for this action is that pledged assets may not easily be used or converted to repay bondholders and that there are extreme pressures on General Fund resources to deliver services and cover liabilities. The effect of these concerns may result in higher interest rates and lower project funds than projected even with the City’s stellar Triple A credit rating. Business License Tax As is well known, the City does not have a Business License Tax (BLT). BLT proposals have been made on several occasions in the City’s history and have generated considerable debate and concern. From staff’s original proposal in March 2009 through the proposed ballot measure in November 2009, this tax went through numerous iterations and changes with substantial input from the business community and Council. Ultimately, it was rejected by voters for a variety of reasons, chief among which was the complexity of its application. A BLT can be complicated given legal exemptions, the variety of business enterprises, equity issues, and various types of formulas for allocating the tax. The final proposal sent to the voters was expected to raise around $3.0 million net of administrative expenses. The question posed at the last Infrastructure Committee meeting was whether a higher tax could be levied on commercial businesses and businesses with a large number of employees compared to smaller business. The answer to this question is yes. Moreover, it is possible to allocate a relatively higher tax on businesses that are not contributing to General Fund resources via sales tax generation through retail sales or transient occupancy taxes via hotels – two major sources of revenue to support City services. Based on data collected in FY 2006-07, small businesses that are defined as having 49 employees or less, constituted 97.5 percent of businesses identified. There were only 168 businesses with 50 or more employees. Small businesses accounted for 28,000 or 37.4 percent of the estimated 75,000 employees working in the City while the larger businesses accounted for the remaining 47,000 employees. Assuming that the small businesses would have a low or low flat tax, the general thrust of this data indicates that large businesses (those with employees greater than 50) would bear a significantly high cost/proportion of a $3.0 million goal. Similarly, and based on prior analysis, if the City were to tax businesses based on a gross receipts methodology, it would be the large businesses that that would incur the highest burden of a BLT. 1 Packet Pg. 11 Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 11 Should Council wish to pursue a BLT considerable lead time would be needed to collect and analyze data, develop proposals, and work with the business community. Mello-Roos District for Building Parking Garages During the last Committee meeting, staff was asked to return with additional information on using a Mello-Roos (MRD) or Communities Facilities District (CFD) (These terms/acronyms are interchangeable) to fund new parking garages in the University and California Avenue business districts. Currently, the City has $1.2 million in parking in-lieu fees for a downtown garage. Unlike the Assessment District formed under Proposition 218 that was used to fund the High Street (Lot R) and Bryant Street (Lots S/L) garages, an MRD has less stringent requirements. Typically used in new developments to build schools, streets and other infrastructure, local jurisdictions have been using MRDs to fund a variety of projects in built out jurisdictions. In San Francisco, for example, a number of CFDs have been or are planning to be used. These have included: 1. The Rincon Point/South Beach area has a CFD used for street improvements, underground infrastructure, and other capital investments 2. The Mission Bay area south of market has two CFDs that were used for a full array of capital improvements related to the rebuilding of the area. 3. The Port of San Francisco is planning to use a series of CFDs along the waterfront for development projects, including garages Some key considerations on formation of a MRD are as follows: 1. The City has broad discretion in drawing the boundaries of a MRD. The boundaries could be citywide or they could be drawn to capture certain portions of the City 2. 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 3. Unlike Proposition 218 which requires a special benefit per property, a CFD 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." 4. 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. 1 Packet Pg. 12 Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 12  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. Based on the above information, the Infrastructure Committee can further discuss the use of a MRD to finance the building of new garages in the City. Los Altos Treatment Plant Revenue (LATP) Potential rental revenue from the LATP site has been revised downward from $3.0 million to a range of $1.3 to $2.0 million. The former estimate was predicated on the City building a site for use and on a change in zoning from public facility to commercial use. At this time, staff believes that a tenant might prefer to build on this site. Annual rent could range from $1.3 million with public facility zoning to $2.0 million with commercial zoning. Other Revenue Staff has identified $1 million additional surplus from higher than anticipated revenues. Based on the results of tax revenue performance (e.g. sales and documentary transfer taxes) in the past several years, staff believes that an additional and ongoing $1.0 million can be devoted to infrastructure work. Since the last Committee meeting, staff has also identified an additional option for a source of revenue to fund infrastructure needs. There are two City owned properties located on Middlefield Road that were used as well sites and can now be sold for residential housing. Each property is valued at around $1.1 million so the City could elect to sell the properties and use the $2.2 million to fund infrastructure needs. Attachments:  -: Att A - June 6, 2013 Staff Report & Meeting Mintues (PDF)  -: Att B - August 6, 2013 Staff Report & Meeting Minutes (PDF)  -: Att C - Annual CIP Process (PDF)  -: Att D - Tabular Listing of CIP (PDF)  -: Att E - CIP Plan, Graphs and Source of Funds (PDF)  -: Att F - Revised Project Summary Sheet (XLSX)  -: Att G - Revised Revenue Sources (PDF) 1 Packet Pg. 13 Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto (ID # 3875) Committee for Potential Infrastructure Finance Measure Staff Report Report Type: Meeting Date: 6/6/2013 City of Palo Alto Page 1 Summary Title: Infrastructure Finance Measure Title: Review Baseline Survey Results and Make Recommendations to the City Council on Next Steps in Considering an Infrastructure Finance Measure From: City Manager Lead Department: City Manager Recommendation Staff recommends that the Infrastructure Committee review the preliminary public opinion survey results and make recommendations to the City Council on next steps in considering a potential infrastructure revenue measure. Background On September 18, 2012, the Council adopted a high level plan and timeline for consideration of an infrastructure revenue measure in the November 2014 election to fund infrastructure needs. Since last September, the City retained assistance of outside experts in two areas: 1) public opinion research and 2) public communications and educational outreach. In December 2012, the City hired the public opinion research firm, Fairbank, Maslin, Mauling, Metz and Associates (FM3) to assist the City with its opinion research. In February 2013, the City retained the communications firm, TBWB Strategies (TBWB) to help evaluate the feasibility of a finance measure and develop communications, messaging, and community engagement strategies. FM3 recommended a series of research efforts to assess public attitudes towards funding the City’s infrastructure needs, including: 1) initial baseline survey in the spring of 2013, 2) series of follow-up focus groups in the summer of 2013 if the initial baseline survey points to voter support for revenue increases to support infrastructure investments, 3) a potential tracking survey in the Fall of 2013, and; 4) a final feasibility survey in the Spring of 2014. The culmination of the research will be a series of recommendations to the City Council about whether and how to proceed with an infrastructure finance measure or measures. 1.a Packet Pg. 14 -: A t t A - J u n e 6 , 2 0 1 3 S t a f f R e p o r t & M e e t i n g M i n t u e s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 2 In the first of a series of research efforts to access public attitudes, a baseline public opinion survey was conducted in late April and early May 2013 of approximately 600 residents in Palo Alto. The objectives of the survey were to: 1. Track public attitudes (compared to prior years’ surveys) on core measures like feelings about the City’s quality of life; the City Council’s management of civic affairs and finances; the condition of the local economy; and the need for additional revenue to fund various local services; 2. Gauge overall perceptions of the condition of the City’s infrastructure, and the specific areas that may be in greatest need of approval; 3. Test public support for the following 14 potential infrastructure improvement projects as directed by Council, given basic information about their substance and cost.  Public Safety Building  Parks Catch-up  Bicycle/Pedestrian Plan  Animal Services Center  Bike Bridge  Playing Fields (golf course)  Fire Stations  Ventura Community Center  Accelerate Street Resurfacing  Downtown Parking Garage  Charleston/Arastradero Improvements  California Avenue Parking Garage  Sidewalks (surface catch-up)  History Museum 4. Evaluate public support for several potential ballot measure packages that might combine several of the improvement projects in cohesive packages; 5. Evaluate types of funding mechanisms and levels of tax threshold the community is willing to support; 6. Determine the demographic profile of the respondents to provide the necessary categories for cross-tabulation of the data, and to ensure that the respondents are representative of the pool of likely November 2014 voters in Palo Alto. Discussion This staff report presents the preliminary findings of the baseline survey. Supplemental information is provided on the status of infrastructure project costs, currently available funding sources, grant applications, potential revenue sources, and debt financing alternatives to support the Committee’s discussion and recommendations to the City Council about next steps. In addition, the staff report provides information on two areas that drew public support as measured in the survey, potential ballot measure packages that combine multiple projects, and a potential general tax measure used to fund infrastructure projects. 1.a Packet Pg. 15 -: A t t A - J u n e 6 , 2 0 1 3 S t a f f R e p o r t & M e e t i n g M i n t u e s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 3 The following provides some key policy questions and considerations that the Committee may want to consider in reviewing the survey findings and supplemental material and making its recommendations to the Council. 1. Removing projects that do not have strong support? 2. Focusing continued efforts around specific projects such as public safety and transportation (including bike and pedestrian) improvements? 3. Proceeding with further study on a bundled measure that combines multiple projects? 4. Proceeding with further study on funding for a public safety building individually or bundled with other projects? 5. Proceeding with further study on specific finance mechanisms that received more than simple majority support including a General Obligation Bond, Transient Occupancy Tax, business license tax, or real estate transfer tax and considering multiple measures? 6. Evaluating further the issuance of Certificates of Participation to fund infrastructure needs? 7. Designating current funding to infrastructure projects (that did not have strong support) that could be allocated at the Council’s discretion such as the Stanford Mitigation Funds? Preliminary Survey Findings and Conclusions FM3 conducted the initial baseline public opinion survey from April 28 – May 5, 2013. A telephone survey was conducted of 603 randomly-selected Palo Alto voters likely to cast a ballot in the November 2014 election. The margin of sampling error is +/-4.0 percent at the 95 percent confidence level; margins of error for population subgroups will be higher. For example, the split sampled questions (sampling 300) have margins of error of +/- 5.7%. Selected findings were compared to the results of prior City voter surveys in 2007 and 2008. FM3’s preliminary conclusions of the baseline survey are: 1. Voters express striking confidence in City government and its financial management. 2. The central challenge is that voters do not attach much urgency to infrastructure issues; they believe the City is handling them well and not much additional funding is required. 3. At the same time, 66% of voters are supportive of a ballot measure to finance infrastructure improvements – though most only tentatively. 4. A ballot measure to fully fund a public safety building is unlikely to receive two-thirds support; however, the public share of a public-private partnership could likely win approval as part of a broader package. 5. Chances for a measure’s success will likely be maximized by:  Focusing ballot measures around public safety and transportation (including bike and pedestrian) improvements, subject areas which consistently draw the most support.  Placing projects together in packages, which pair projects that draw enthusiastic public reaction with others that are more lukewarm.  Using general obligation bonds as the financing mechanism to the extent possible at the two-thirds level; several other taxes could be feasible with a simple majority vote.  Keeping costs close to the level of voters’ expressed willingness to pay, which seems to peak at $125 per year (for two-thirds support) and $200 per year (for majority support). 1.a Packet Pg. 16 -: A t t A - J u n e 6 , 2 0 1 3 S t a f f R e p o r t & M e e t i n g M i n t u e s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 4 A full report of the survey findings and conclusions is included in Attachment A. Attachment B provides the survey questionnaire and the topline results. Status of Infrastructure Project Costs Attachment C provides an updated list of infrastructure projects and cost estimates, committed funding, potential funding, and the net cost that requires funding for each project. Committed funding includes awarded grants and project funding already appropriated through the capital budget, while potential funding consists of outstanding grant applications and the Jay Paul proposal for construction of a public safety building. The list of projects differs from past project cost summaries provided to the Infrastructure Committee and Council as follows:  The Cubberley Replace/Expand and Municipal Services Center projects are not included since they are dependent on future studies and Council decisions  The following projects will be funded from a variety of sources such as rates, user fees, lease revenues, expense reductions, and partner contributions and are not included. These include: Energy/Compost Facility, Golf Course, Airport, Post Office and Regional Water Quality Control Plant Master Plan  The Los Altos Treatment Plant project is not included because it is proposed to be funded in the FY 2014 capital budget  The cost estimates for the Streets and the Sidewalks projects have been increased to allow for accelerated work intended to significantly improve sidewalks and to achieve a citywide average Pavement Condition Index of 85 in 2016 (five years earlier than the initial goal of 2021).  The History Museum at the Roth Building, Downtown and California Avenue parking garage projects have been added to the project list for public opinion feasibility polling and are included with the initial cost estimates that have been used in the polling. The current estimate of total project costs is $231.5 million. The net cost after committed funding is $219.3 million and the final net cost if outstanding grant applications are successful and if the Jay Paul proposal moves forward, is $171 million. If projects are excluded that were added to the list for polling purposes (History Museum at the Roth Building, Downtown and California Avenue parking garages, Ventura) the total project cost is $192.5 million. The net cost after committed funding is $180.3 million and the final net cost if outstanding grant applications are successful and if the Jay Paul proposal moves forward, is $132 million. Attachment C also provides the public opinion survey results for each specific project tested in the survey, presented as the percentage of the survey respondents that strongly support or somewhat support the projects. More than 2/3 of the survey respondents supported Fire Stations, Streets, Sidewalks, and Parks Catch-up Projects, while the Bike/Pedestrian Plan, Bike Bridge, Ventura Community Center, Public Safety Building, and Charleston/Arastradero Projects have support levels at or above a majority. The remaining projects received less than majority support. Bundling Infrastructure Projects 1.a Packet Pg. 17 -: A t t A - J u n e 6 , 2 0 1 3 S t a f f R e p o r t & M e e t i n g M i n t u e s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 5 The survey also 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. The survey results for these potential measures are useful for understanding the public response to a combination of projects that surround a given theme. Four measures were found to have support levels greater than two-thirds: 1. Traffic Congestion Relief and Safe Streets, Sidewalks and Trails Measure (74%) 2. Palo Alto Vital Facilities and Services Protection Measure (72%) 3. Palo Alto Children and Families First Measure (71%) 4. Fire, Paramedic, Police, Seismic Safety and Emergency Response Measure (68%) Attachment D presents the language tested for each measure and identifies the projects and project costs that might coincide with the language of each measure. The language of the Palo Alto Vital Facilities and Services Protection Measure, which received 72% support in the survey, was structured as a general tax measure that could be passed by simple majority vote and therefore does not specify projects and project costs that it may fund. The City may express its intent to use a general tax to fund a specific list of projects, though it would not be obliged by law to do so. To accomplish this, the City could put a general tax before the voters together with a Council-approved expenditure plan – which could either be approved legislatively or referred to the ballot for an advisory public vote accompanying the tax measure. It is a common practice for cities to adopt an expenditure plan associated with general tax measures when outlays are known. As described above, the survey found that the community has a high level of trust in the City government. Sixty-eight percent of residents surveyed stated that the City does an excellent or good job in providing services, 75 percent approved of the City’s work in maintaining city infrastructure, and 63 percent approved of the City’s efficiency in utilizing local tax dollars. The combination of the voters’ positive response to the language of a potential general infrastructure measure and overall approval for the City’s management of infrastructure and local tax revenues suggests that a general tax measure requiring only majority support may be a viable means of funding a portion of the City’s infrastructure needs. If the City decides to proceed with a general tax, a determination on the type of tax will need to be made, e.g. hotel stays (TOT), sales, real estate transfers, business licenses (BLT), utility use (UUT). As noted above, the survey findings indicated 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 could likely win approval as part of a broader package. Currently, 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), along with associated parking. The applicant has estimated the value of the construction of the public safety building (including land) and 1.a Packet Pg. 18 -: A t t A - J u n e 6 , 2 0 1 3 S t a f f R e p o r t & M e e t i n g M i n t u e s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 6 associated parking at $49.3 million. (There are additional costs—approximately $8 million-- to provide turn- key occupation of the completed building). Attachment E provides an update on the Public Safety Building associated with Jay Paul Company’s proposed development at 395 Page Mill Road. If Council proceeds with planning for a potential measure that combines multiple infrastructure projects, it is anticipated that Council will have the information needed to inform Council’s final decisions about placing an infrastructure finance measure on the ballot in the spring of 2014. The design review schedule assumes Council will consider Jay Paul Company’s development proposal and the feasibility of the EIR in March 2014. The City will be conducting its final feasibility poll in the spring of 2014 to inform Council’s final decisions about an infrastructure measure or measures. If the development proceeds it is anticipated that the City will need up to $8 million to complete the build out. If the development does not proceed and an alternate new location is needed for the public safety building, the City will 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. Grants, Currently Available Funding Sources, Other Potential Revenue Sources, and Financing Alternatives The following section provides an update on grants, currently available funding sources that Council could earmark for infrastructure, other potential/projected revenue sources, and revenue that could be generated from various finance mechanisms. Status of Grant Applications The City has applied for grant funding for the Bike Bridge and Charleston/Arastradero Corridor projects. The status of these grant requests is provided in Table 1. The Vehicle Emissions Reduction Based at Schools Grant request of $1 million to support the Charleston/Arastradero Corridor Project has been approved by the VTA Board of Directors. The VTA Technical Advisory Committee (TAC) recommended that the $4 million OBAG grant request for the Bike Bridge Project be approved, but did not recommend approval of the $5.5 million request for the Charleston/Arastradero Corridor Project. The TAC’s recommendations are scheduled to be considered by the VTA Board of Directors on June 4, 2013. Staff continues to monitor opportunities to leverage grant funding toward the cost of infrastructure projects. Table 1: Status of Infrastructure Project Grant Requests Bike Bridge Project Grant Request Request Amount Expected Timeline for Award Other Project Funding Total Project Cost 1.a Packet Pg. 19 -: A t t A - J u n e 6 , 2 0 1 3 S t a f f R e p o r t & M e e t i n g M i n t u e s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 7 One Bay Area Grant for Bike Bridge $4 million1 June 2013 $5.35 million $10 million Charleston/Arastradero Corridor Project Grant Request Request Amount Expected Timeline for Award Other Project Funding Total Project Cost Environmental Enhancement and Mitigation Grant $0.35 million September 2013 $1.27 million $9.75 million One Bay Area Grant $5.5 million not recommended for award Vehicle Emissions Reduction Based at Schools Grant $1 million awarded 1 Recommended for approval by VTA Board of Directors Other Potential Funding Sources To further evaluate resource needs to fund infrastructure improvements, staff identified currently available funding sources that could be allocated to infrastructure projects at Council’s discretion. These funding sources are described below and include the Stanford Medical Center Development Agreement Funds, the Infrastructure Reserve, Impact Fees and Parking In-Lieu Fee Funds. Attachment F provides a summary of the funds that are available under “Currently Available Revenue Sources.” It is estimated that $44-$48 million could be available from current funding sources should the Council choose to allocate the revenue to infrastructure. Stanford Medical Center Development Agreement Funds $34.4M On May 6, 2013, staff provided Council a review of the status and balances of the six distinct Stanford University Medical Center Mitigation Funds. The two funds most applicable to the City’s infrastructure projects are the Infrastructure, Sustainable Neighborhoods and Affordable Housing Fund and the Sustainability Programs Fund. The former could be allocated to any of the City’s infrastructure projects. The latter could be allocated to projects addressing climate change and sustainability such as the Bike/Pedestrian Plan and the Bike Bridge, and potentially to other projects as well. It is estimated that upon receipt of the third payment from Stanford University anticipated in 2016-2017; repayment of short-term loans for affordable housing; and no use of funds to 1.a Packet Pg. 20 -: A t t A - J u n e 6 , 2 0 1 3 S t a f f R e p o r t & M e e t i n g M i n t u e s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 8 provide local matches for successful grant requests through the One Bay Area Grant program, the following, future balances will be available: Stanford Infrastructure/Housing $22.1 million Stanford Sustainability 12.3 million Total $34.4 million The above represent one-time funding sources and Council decisions will be necessary for any drawdowns from these funds. For example, if the City uses Stanford funds for grant matches or forgives housing loans, fund availability will be reduced. The Finance Committee will be making a recommendation on using Stanford Funds for the Bike Bridge Project in May 2013. Infrastructure Reserve (IR) $6-10 Million The IR is drawn upon annually to fund infrastructure projects in the five-year Capital Improvement Program. It is replenished when the General Fund has an operating surplus and monies in the Budget Stabilization Reserve exceed 18.5 percent of budgeted operating expenses. Based on an expected surplus at the end of FY 2013 and funding for the proposed Capital Budget for Fiscal Year 2014 through FY 2018, the IR is estimated to have available $6 to $10 million to fund infrastructure projects. This availability is subject to use of the IR to purchase the Post Office and for higher than anticipated costs for library and community center projects. Use of IR monies for the Post Office is temporary in that debt will be issued eventually to replenish the IR. Impact Fees Other sources of funding, which have been and can be used for capital work include Impact and Parking In-Lieu fees. Impact fee revenue must be used for new projects or expanded facilities to accommodate new growth. They are dependent upon the number and timing of projects so it is difficult to estimate available resources. Staff expects to have more information available on impact fee balances at the Committee’s meeting. The current estimated balances less expected drawdowns for upcoming projects are as follows: Parks $1.0 million Community Centers $1.4 million Citywide Transportation $TBD Charleston-Arastradero $TBD Total $2.4 million Downtown Parking In-Lieu Fees $1.2M Downtown Parking In-Lieu fees are targeted for the construction of new or expanded parking garage spaces. They are one-time resources that would be used to offset the principal required for construction. Currently, a developer has proposed building a garage on Lot P. The 1.a Packet Pg. 21 -: A t t A - J u n e 6 , 2 0 1 3 S t a f f R e p o r t & M e e t i n g M i n t u e s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 9 Developer’s proposal includes a City contribution from the In-Lieu fund of $1.0 million for construction. In addition, $0.5 million in in-lieu funds will be used to cover estimated permit and other fees. Between the $2.1 million available from the Lytton project and a current balance of $0.6 million, staff estimates that $1.2 million will be available for constructing a downtown garage. It is important to note that the City is currently conducting an Impact Fee study to determine the appropriate level for current fees and the potential for new fees. In June, staff will present to the Finance Committee a list of potential projects and infrastructure needs that can be funded via Impact Fees. As with the Stanford Development funds, it will be important to determine the level of drawdown on fee balances and commitments made in the CIP. Potential New Revenue Sources There are also a number of new sources that could provide revenue to fund infrastructure needs. The use of these potential funding sources for infrastructure projects is at the Council’s discretion and many of the sources are dependent on future policy and land use decisions. The potential sources are described below and include new hotel revenue, digital readerboard revenue, sales tax from an auto dealership at MSC, lease revenue from renting the current police building (after expenses associated with renovating the facility), and lease of the Los Altos Treatment Plant site. Attachment F also provides a summary of the potential and projected revenue increases discussed below. It is estimated that these new potential revenue sources collectively could yield $117.6 million to fund infrastructure needs. New Hotel Revenue $2.4M Annually In the near future, a number of new hotels are expected to open in the City. These include, for example, the Hilton Garden Inn, the Hilton Homewood Suites, and Casa Olga. The idea of earmarking revenues from these hotels for infrastructure work has emerged in Council discussions. This annual income stream could be allocated to debt service for large projects and/or for pay-as-you-go work. The IBRC, for example, identified $42 million in “catch-up” needs. The Commission recommended that the City spend $4.2 million per year over a ten year period to eliminate this backlog. At this time, it appears three new hotels will open sometime in 2014. Two other hotels have either not filed an application or indicated a construction date. An estimate of potential annual revenues is provided although opening dates are not known. Annual revenue from hotels expected to open in 2014 $1.7 million Annual revenue from hotels expected to open post 2014 $0.7 million Total expected revenue $2.4 million Other Potential New Sources of Revenue Over the past few years, staff has been exploring the potential for placing a digital message center along highway 101 and re-tooling a portion of the Municipal Services Center for lease to an auto dealer or other revenue generating user. These options have not been discussed with 1.a Packet Pg. 22 -: A t t A - J u n e 6 , 2 0 1 3 S t a f f R e p o r t & M e e t i n g M i n t u e s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 10 Council. Staff roughly estimates that revenue streams of between $0.7 and $1.0 million could be generated annually from these two initiatives. In addition, should the Police Department (PD) be completely relocated to a new public safety building, the current building could be leased to an office tenant and create an estimated revenue stream of $1.4 million annually. If the costs for preparing the current PD space for office occupancy are financed with debt, part of the eventual rental income will be used for debt service. At this time, staff does not have an estimate for renovation expenses, but it is reasonable to assume costs of $1-$3 million to provide a space suitable for lessee tenant improvements to proceed. A cost of service study is being conducted and a preview of the methodology was presented to the Finance Committee. A capital component will be included in the proposed fees and, if approved by Council, could be used to fund future renovation and replacement costs. At this time, staff does not have an estimate of potential funding that could be available should updated fees based on the study be approved. The study is expected to be presented to the Finance Committee this summer. Finance Measure Results, Revenue Potential and Election Timing and Considerations The survey also tested a variety of financing mechanisms and levels of funding support for infrastructure related improvements. When respondents were asked about their willingness to pay additional taxes to fund infrastructure projects, the level of support peaked at $125 per year (for two-thirds support) and $200 per year (for majority support). Support for Household Additional Taxes for Infrastructure Annual Amount Polling Support (strongly and somewhat support) $100 75% $150 64% $200 53% $250 48% Attachment F also provides a summary of the funding mechanisms tested, level of support, potential revenue that could be generated by each type, and voter support needed for successful passage. The four financing mechanisms that received more than a majority support include the following. Other proposals such as increasing the sales or utilities users’ tax rate or creating a parcel tax received low approval ratings. 1. Issuing Bonds 64% 2. Transient Occupancy Tax 62% 3. Business License Tax 51% 1.a Packet Pg. 23 -: A t t A - J u n e 6 , 2 0 1 3 S t a f f R e p o r t & M e e t i n g M i n t u e s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 11 4. Real Estate Transfer Tax 51% Based on the survey results it appears Palo Altans are willing to support the idea of issuing debt to finance infrastructure improvements. It also appears there is willingness to increase a tax that does not bear directly on Palo Altans themselves and to a lesser extent a tax on businesses and real estate transactions. For sizeable projects such as a public safety building, fire station replacements, and parking garages, it is more than likely that the City will need to issue debt. To support new, annual debt service payments, the City will need to increase, create, or earmark a revenue source. There are a variety of options for Council to consider. Increased or new taxes would be subject to approval by voters. Attachment F summarizes the potential funding available from these sources. Attachment G identifies potential funding mechanisms and their election requirements. The four funding mechanisms that received more than a majority support are discussed further below. Certificates of Participation (COPs), a financing vehicle that does not require voter approval, are also discussed. General Obligation Bonds General Obligation Bonds can be viewed as a new source of revenue to the City since a self- imposed assessment is approved by voters. These bonds require two-thirds approval by the voters and were used for Measure N library and community center improvements. Attachment F also displays the impact of varying levels of General Obligation bonds on the median assessed value of single family residences. In alignment with the survey results on willingness to pay, it is estimated that a 30 year general obligation bond at an annual tax of $125 would yield $72 million and a $200 a year assessment would yield $114 million. Transient Occupancy Tax 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 accounts for 11.5 percent of the City's total general fund revenue. Based on current revenue levels, a one percent increase in the City’s transient occupancy tax can be expected to result in ongoing, annual revenues of $0.9 million which could be available to the City for any general capital improvements. Palo Alto’s transient occupancy tax rate was raised from 10% to 12% percent by the voters in the 2007 November General Election. Eighty- one percent of the electorate voted for the increase. Hotel tax rates vary from city to city. Across California, tax rates range from a low of 9.5% to a high of 15%. Attachment F provides a list of the TOT for surrounding communities. This type of tax can be structured either as a general tax requiring a simple majority vote or a special tax (for a special purpose) requiring 2/3 approval. TOT can also be part general tax and part special tax. Business License Tax 1.a Packet Pg. 24 -: A t t A - J u n e 6 , 2 0 1 3 S t a f f R e p o r t & M e e t i n g M i n t u e s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 12 The City could consider new taxes to support debt or pay as you go financing. Palo Alto does not have a Business License Tax (BLT) which most municipalities levy. A Business License is an annual tax businesses pay each year for doing business in the City of Palo Alto. In the last analysis performed and taken to the voters in 2009, it was projected that a BLT would raise $3.3 million annually. The BLT, however, can be constructed to generate less or more than this amount. Like TOT, this type of tax can be structured as a general tax requiring a simple majority vote, a special tax requiring 2/3rds approval, or both. Staff would recommend beginning work immediately with the business community if Council proceeds with further study on a potential business license tax. Real Estate Transfer Tax A real estate transfer tax, commonly known as a “document transfer tax,” is a tax imposed on each recorded document in which real property is sold. The tax is paid at the time of recording a document transferring real property. Either the buyer or the seller pays the tax upon mutual agreement. In the City of Palo Alto it is traditional for the buyer and seller to equally share this tax. If a house is sold in Palo Alto for $1.5 million the current tax would equal $4,950. By increasing the tax by $1.10 per thousand dollars or by 33.3 percent, the incremental tax on this transaction would equal $1,650 for a total tax of $6,600. If the City were to increase its real estate transfer tax by $1.10, it would yield approximately $1.8 million annually. This tax is sensitive to the volume and mix (residential and commercial) of property transactions and can vary significantly from year-to-year. This type of tax can be a general tax requiring a simple majority vote, a special tax requiring 2/3rd approval, or both. Leveraging Revenues for Debt Financing: Certificates of Participation 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). The City has used this instrument previously for Golf Course and Civic Center improvements. Attachment F shows the estimated amount of principal 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. Ballot Measure Costs and Voting The cost of placing a measure on the ballot is dependent on the type of election that is being held. The Registrar of Voters estimates that the cost to place a measure on the November 2013 ballot would be approximately $350,000. The cost for November 2014, a general municipal election, is estimated at $175,000. The cost for a special election held at any time other than the annual November election, is estimated at $500,000. The election year in which a measure is included on the ballot also influences the use of the revenue and the proportion of the vote needed for passage of the measure. If the revenue from the measure is to be available for use 1.a Packet Pg. 25 -: A t t A - J u n e 6 , 2 0 1 3 S t a f f R e p o r t & M e e t i n g M i n t u e s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 13 for any purpose, it must be on the ballot for a general municipal election (even years) and requires a majority vote of the electorate. If the revenue is to be restricted to a specific use such as infrastructure, the measure may be on any ballot, but requires a two-thirds vote of the electorate. Timeline It is anticipated that the Infrastructure Committee will review the preliminary survey findings and supplemental information contained in this staff report and make recommendations to the City Council on the next steps in planning for an infrastructure measure. Based on Council’s direction and refinement of infrastructure priorities, staff anticipates conducting focus groups over the summer, developing and implementing a communications plan, and conducting a tracking survey in the fall of 2013. Resource Impact There is no immediate resource impact from this report. Future impacts are dependent upon Council action and election results. Attachments:  Attachment A. Preliminary Survey Results (PDF)  Attachment B. Questionnaire_Topline Results (PDF)  Attachment C. Infrastructure Project Costs (PDF)  Attachment D. Potential Bundled Infrastructure Measures (PDF)  Attachment E. Public Safety Building Update (PDF)  Attachment F. Potential New Revenue Sources (PDF)  Attachment G. Funding Mechanisms and Election Requirements (PDF) 1.a Packet Pg. 26 -: A t t A - J u n e 6 , 2 0 1 3 S t a f f R e p o r t & M e e t i n g M i n t u e s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes WORKING MINUTES    Page 22 of 22 Special Infrastructure Committee Meeting Working Minutes: August 6, 2013 Chair Klein indicated similar clean-up measures of the UUT around the State were approved. Charles Heath, TBW Strategies did not believe the poll results reflected the chances of the clean-up measure. Vice Mayor Shepherd asked if other ballot measures were standalone. Ms. Byerly believed there were standalone measures as well as measures to broaden and reduce the tax. Mr. Saccio explained the tax was reduced by 1/2 percent to increase the popularity of broadening the tax. Mr. Heath reported in some instances the rate was increased to fund specific projects. Mr. Saccio recalled the UUT in Palo Alto passed narrowly when it was implemented. Chair Klein requested Staff remove the UUT and Parcel Tax from the list of possible revenue sources. The next Committee meeting was scheduled for September 3, 2013 at 4:00 P.M. ADJOURNMENT: The meeting was adjourned at 6:10 P.M. 1.b Packet Pg. 141 -: A t t B - A u g u s t 6 , 2 0 1 3 S t a f f R e p o r t & M e e t i n g M i n u t e s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes Attachment C. Draft FY 2015-2019 Capital Budget Process FY 2015-2019 Capital Budget Process (Draft) Sep 2013 Jun 2014 Oct 2013 Nov 2013 Dec 2013 Jan 2014 Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 May 2014 Finance Committee review Proposed CIP Apr 2014 PTC review for Comprehensive Plan consistency Sep 2013 Departments begin internal planning for CIP Mar 2014 PTC Infrastructure Subcommittee meeting Nov 2013 Review & ranking of proposed CIP Oct 2013 Kick‐off meeting Dec 2013 Rough book distributed for review Nov 2013 Departments enter proposed CIP Jan 2014 Revisions based on CIP reviews Feb 2014 City Manager internal hearing Budget Process Infrastructure Revenue Ballot Measure Apr 2014 Proposed budget released to City Council Feb 2014 ‐Apr 2014 Final Survey Oct 2013 ‐Nov 2013 Focus Group Jun 2014 City Council adoption Policy Decision to Place Measure on Ballot June 30 Nov 2013 ‐Jan 2014 Potential Tracking Survey 1.c Pa c k e t P g . 1 4 2 -: Att C - Annual CIP Process (4055 : Infrastructure Finance Measure) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes All Proposed Projects Note: The IBRC New category refers to projects that were not identified as being part of keep-up or catch-up by IBRC. City of Palo Alto Adopted Capital Improvement Program 2014-2018 General Fund Project No.Name Page No.Status IBRC Category FY 2014 (1)FY 2015 FY 2016 FY 2017 FY 2018 PF-14004 California Avenue Parking District Parking Improvements 0 Annual Recurring Catch-up Buildings and Facilities 186,400 0 0 0 222,800 PF-14003 University Avenue Parking District Parking Improvements 0 Annual Recurring Catch-up Buildings and Facilities 340,900 234,800 122,900 93,900 117,600 PF-93009 Americans with Disabilities Act Compliance 3 Annual Recurring Catch-up Buildings and Facilities 138,277 100,000 100,000 100,000 100,000 PF-07002 Baylands Interpretive Center Improvement 7 Nonrecurring Catch-up Buildings and Facilities 0 0 0 0 0 PE-15005 Cubberley Mechanical and Electrical Upgrades 17 Nonrecurring Catch-up Buildings and Facilities 0 150,000 1,300,000 0 0 PF-14000 Cubberley Roof Replacements 19 Nonrecurring Catch-up Buildings and Facilities 453,931 385,000 465,000 50,000 150,000 PF-05002 Municipal Service Center Improvements 32 Nonrecurring Catch-up Buildings and Facilities 0 341,000 550,000 0 0 PF-15000 Rinconada Pool Locker Room 34 Nonrecurring Catch-up Buildings and Facilities 0 400,000 0 0 0 PE-15011 Ventura Buildings Improvements 38 Nonrecurring Catch-up Buildings and Facilities 0 90,000 600,000 0 0 PG-14002 Cameron Park Improvements 49 Nonrecurring Catch-up Parks and Open Space 0 0 0 0 124,000 PG-14001 Peers Park Improvements 68 Nonrecurring Catch-up Parks and Open Space 0 0 0 0 205,000 PG-14000 Ramos Park Improvements 69 Nonrecurring Catch-up Parks and Open Space 0 175,000 0 0 0 PE-13017 El Camino Median Landscape Improvements 81 Nonrecurring Catch-up Streets and Sidewalks 46,445 230,000 50,000 776,000 0 PE-14018 Baylands Interpretive Center Improvements and Boardwalk Repair 8 Nonrecurring Keep-up Buildings and Facilities 66,445 215,000 2,100,000 0 0 PF-01003 Building Systems Improvements 11 Annual Recurring Keep-up Buildings and Facilities 112,440 100,000 100,000 100,000 100,000 PE-09003 City Facility Parking Lot Maintenance 13 Annual Recurring Keep-up Buildings and Facilities 265,422 200,000 200,000 200,000 200,000 PF-02022 Facility Interior Finishes Replacement 20 Annual Recurring Keep-up Buildings and Facilities 407,440 105,000 105,000 105,000 105,000 PE-14012 Junior Museum & Zoo Improvements 27 Nonrecurring Keep-up Buildings and Facilities 0 0 1,175,000 0 0 PE-14015 Lucie Stern Buildings Mechanical/Electrical Upgrades 29 Nonrecurring Keep-up Buildings and Facilities 2,791,964 0 0 0 0 PF-17000 MSC Building A, B, & C Roofing Replacement 31 Nonrecurring Keep-up Buildings and Facilities 0 0 0 1,100,000 0 PF-00006 Roofing Replacement 36 Annual Recurring Keep-up Buildings and Facilities 38,111 45,000 40,000 100,000 0 AC-86017 Art in Public Places 41 Annual Recurring Keep-up Parks and Open Space 50,000 50,000 50,000 50,000 50,000 PG-06003 Benches, Signage, Fencing, Walkways, and Perimeter Landscaping 43 Annual Recurring Keep-up Parks and Open Space 150,000 150,000 150,000 150,000 150,000 PE-13008 Bowden Park Improvements 45 Nonrecurring Keep-up Parks and Open Space 199,041 0 0 0 0 PE-13005 City Hall/King Plaza Landscape 50 Nonrecurring Keep-up Parks and Open Space 124,041 0 0 0 0 PG-18000 Golf Course Driving Range Net and Artificial Turf Replacement 52 Nonrecurring Keep-up Parks and Open Space 0 0 0 0 770,000 PE-18012 Hoover Park Improvements 55 Nonrecurring Keep-up Parks and Open Space 0 0 0 0 490,000 PE-18010 Mitchell Park Improvements 59 Nonrecurring Keep-up Parks and Open Space 0 0 0 0 386,000 OS-09001 Off-Road Pathway Resurfacing and Repair 60 Annual Recurring Keep-up Parks and Open Space 100,000 100,000 100,000 100,000 100,000 OS-00001 Open Space Trails and Amenities 62 Annual Recurring Keep-up Parks and Open Space 164,000 175,000 175,000 175,000 175,000 PG-09002 Park and Open Space Emergency Repairs 64 Annual Recurring Keep-up Parks and Open Space 75,000 75,000 75,000 75,000 75,000 PE-13003 Parks Master Plan 66 Nonrecurring Keep-up Parks and Open Space 155,677 0 0 0 0 PE-18015 Robles Park Improvements 72 Nonrecurring Keep-up Parks and Open Space 0 0 0 0 325,000 (1) For FY 2014, salaries and benefits have been included in certain CIP projects where appropriate and possible. Unallocated salaries and benefits are included in CIP AS-10000. 1.d Packet Pg. 143 -: A t t D - T a b u l a r L i s t i n g o f C I P ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes All Proposed Projects Note: The IBRC New category refers to projects that were not identified as being part of keep-up or catch-up by IBRC. City of Palo Alto Adopted Capital Improvement Program 2014-2018 General Fund Project No.Name Page No.Status IBRC Category FY 2014 (1)FY 2015 FY 2016 FY 2017 FY 2018 PG-14003 Seale Park Improvements 73 Nonrecurring Keep-up Parks and Open Space 0 0 0 0 121,000 PG-13001 Stanford/Palo Alto Soccer Turf Replacement 74 Nonrecurring Keep-up Parks and Open Space 625,000 0 770,000 0 0 PG-06001 Tennis and Basketball Court Resurfacing 76 Annual Recurring Keep-up Parks and Open Space 215,000 215,000 215,000 215,000 215,000 PO-12001 Curb and Gutter Repairs 79 Annual Recurring Keep-up Streets and Sidewalks 361,929 250,000 100,000 100,000 100,000 PO-89003 Sidewalk Repairs 85 Annual Recurring Keep-up Streets and Sidewalks 2,429,895 1,715,781 1,709,877 2,065,000 2,065,000 PO-11000 Sign Reflectivity Upgrade 87 Annual Recurring Keep-up Streets and Sidewalks 91,385 50,000 50,000 50,000 50,000 PO-05054 Street Lights Improvements 89 Annual Recurring Keep-up Streets and Sidewalks 140,000 290,000 300,000 300,000 150,000 PE-86070 Street Maintenance 91 Annual Recurring Keep-up Streets and Sidewalks 5,724,016 5,437,622 5,437,622 5,119,386 4,753,635 PE-13012 Structural Assessment of City Bridges 95 Nonrecurring Keep-up Streets and Sidewalks 185,394 0 0 0 0 PO-11001 Thermoplastic Marking and Striping 97 Annual Recurring Keep-up Streets and Sidewalks 121,509 75,000 75,000 75,000 75,000 PL-00026 Safe Routes to School 106 Annual Recurring Keep-up Traffic and Transportation 169,536 100,000 100,000 100,000 100,000 PL-05030 Traffic Signal and ITS Upgrades 108 Annual Recurring Keep-up Traffic and Transportation 665,589 210,000 215,000 220,000 225,000 PL-12000 Transportation and Parking Improvements 110 Annual Recurring Keep-up Traffic and Transportation 373,205 225,000 225,000 225,000 225,000 AC-14000 Art Center Auditorium Audio, Visual, and Furnishings 5 Nonrecurring New Buildings and Facilities 0 150,000 0 0 0 AC-14001 Baylands Nature Interpretive Center Exhibit Improvements 10 Nonrecurring New Buildings and Facilities 0 0 0 56,000 0 PE-12017 City Hall First Floor Renovations 15 Nonrecurring New Buildings and Facilities 900,000 0 0 0 0 FD-14002 Fire Ringdown System Replacement 22 Nonrecurring New Buildings and Facilities 157,500 0 0 0 0 PF-14002 Fire Station 1 Improvements 24 Nonrecurring New Buildings and Facilities 280,377 0 0 0 0 PD-14000 Internal Alarm System Replacement 26 Nonrecurring New Buildings and Facilities 78,000 0 0 0 0 PE-13020 Byxbee Park Trails 47 Nonrecurring New Parks and Open Space 89,233 0 0 0 0 PG-13003 Golf Course Reconfiguration and Baylands Athletic Center Improvements 53 Nonrecurring New Parks and Open Space 8,045,505 0 0 0 0 PE-14010 LATP Site Development Preparation and Security Improvements 57 Nonrecurring New Parks and Open Space 1,668,782 0 0 0 0 PE-08001 Rinconada Park Improvements 70 Nonrecurring New Parks and Open Space 189,233 1,150,000 0 0 2,785,000 PE-12011 Newell Road/San Francisquito Creek Bridge Replacement 83 Nonrecurring New Streets and Sidewalks 0 2,500,000 0 0 0 PE-13014 Streetlight Condition Assessment 93 Nonrecurring New Streets and Sidewalks 220,078 0 0 0 0 PL-04010 Bicycle & Pedestrian Transportation Plan - Implementation Project 99 Annual Recurring New Traffic and Transportation 1,318,009 1,200,000 1,200,000 1,200,000 1,200,000 PL-14000 El Camino Real & Churchill Avenue Intersection Improvements - Design 101 Nonrecurring New Traffic and Transportation 283,651 0 0 0 0 PE-11011 Highway 101 Pedestrian/Bicycle Overpass Project (formerly PL-11000)103 Nonrecurring New Traffic and Transportation 1,396,168 8,190,000 0 0 0 PL-14001 Matadero Creek Trail 104 Nonrecurring New Traffic and Transportation 383,651 2,000,000 150,000 0 0 AS-10000 Salaries and Benefits - General Fund CIP Projects (unallocated)113 Annual Recurring Salaries Salaries 1,976,191 4,001,526 4,116,321 4,292,233 4,475,923 Sum: 33,954,370 31,080,729 22,121,720 17,192,519 20,385,958 (1) For FY 2014, salaries and benefits have been included in certain CIP projects where appropriate and possible. Unallocated salaries and benefits are included in CIP AS-10000. 1.d Packet Pg. 144 -: A t t D - T a b u l a r L i s t i n g o f C I P ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes Buildings and Facilities $18,491,207 15% Parks and Open Space $22,211,512 18% Streets and Sidewalks $43,270,574 35% Traffic and Transportation $21,899,809 17% Salaries and Benefits- unallocated $18,862,194 15% Adopted FY2014-18 General Fund CIP Total by Category Buildings and Facilities Parks and Open Space Streets and Sidewalks Traffic and Transportation Salaries and Benefits- unallocated 1.e Packet Pg. 145 -: A t t E - C I P P l a n , G r a p h s a n d S o u r c e o f F u n d s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes Adopted FY2014-2018 CIP by IBRC Recommendation $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 FY2014 FY2015 FY2016 FY2017 FY2018 Buildings and Facilities New- IR Funded Keep-up Catch-up $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 FY2014 FY2015 FY2016 FY2017 FY2018 Parks and Open Space New- Outside Funded New- IR Funded Keep-up Catch-up $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 FY2014 FY2015 FY2016 FY2017 FY2018 Streets and Sidewalks New- Outside Funded New- IR Funded Keep-up Catch-up $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 FY2014 FY2015 FY2016 FY2017 FY2018 Traffic and Transportation New- Outside Funded New- IR Funded Keep-up Catch-up 1.e Packet Pg. 146 -: A t t E - C I P P l a n , G r a p h s a n d S o u r c e o f F u n d s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Total SOURCES General Fund Annual Capital Transfer 13,226,485 13,627,465 14,047,123 14,509,006 15,001,285 70,411,364 Interest Income 1,075,000 1,075,000 1,075,000 1,075,000 1,075,000 5,375,000 Project Reimbursements: Gas Tax Fund (PE-86070 -Street Maintenance)1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 6,500,000 Gas Tax Fund (PL-00026 - Safe Routes To School)100,000 100,000 100,000 100,000 100,000 500,000 Gas Tax Fund (PL-12000 Transportation and Parking Improvements)225,000 225,000 225,000 225,000 225,000 1,125,000 OBAG Nondiscretionary Funding (PE-86070 - Street Maintenance)477,353 477,353 954,706 Vehicle License Fee Street Funding (PE-86070 - Street Maintenance)365,751 365,751 365,751 365,751 365,751 1,828,755 Stanford (FD-14002 Fire Ringdown System Replacement)24,000 24,000 Grant from Caltrans Highway Bridge Program (PE-12011 Newell Road Bridge/SF Creek) 2,213,250 2,213,250 Bonds (PG-13003 - Golf Reconfiguration and Baylands Athletic Center)5,045,505 5,045,505 SF Creek JPA (PG-13003 - Golf Reconfiguration and Baylands Athletic Center) 3,000,000 3,000,000 Stanford Univ Medical Center agreement (PL- 04010 Bicycle and Ped. Transp. Plan)1,200,000 1,200,000 1,200,000 1,200,000 4,800,000 Grant (PE-11011 Highway 101 Pedestrian/Bicycle Overpass Project)1,396,168 8,190,000 9,586,168 Grant (PL-14001 Matadero Creek Trail)2,000,000 2,000,000 Univ Ave Parking Permit Fees (PF-14003 Univ Ave Parking Improvements)340,900 234,800 122,900 93,900 117,600 910,100 Cal Ave Parking Permit Fees (PF-14004 Cal Ave Parking Improvements)186,400 222,800 409,200 TOTAL SOURCES $26,762,562 $31,008,619 $18,435,774 $18,868,657 $19,607,436 $114,683,048 City of Palo Alto- Capital Fund- Sources of Funds FIVE-YEAR PLAN 1.e Packet Pg. 147 -: A t t E - C I P P l a n , G r a p h s a n d S o u r c e o f F u n d s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes Attachment F. Revised Infrastructure Project Summary Sheet (all costs/revenues in millions of dollars) September 3, 2013 Projects costs and project-specific funding Polling Support (sum of strongly and somewhat supportive)Project Polling Cost CIP Total Funding Estimated Cost Committed Funding Net Cost with Committed Potential Funding Net Cost with Committed and Potential 72%Fire Stations 14 0 14.2 0 14.2 0 14.2 69%Streets 8 25.5 0 0 0 0 0 67%Sidewalks 6 8.5 6 0 6 0 6 67%Parks Catch Up 10 6.5 8.9 0 8.9 0 8.9 65%Bike/Pedestrian Plan 25 8.75 25 8.75 16.25 0 16.25 61%Bike Bridge 6 9.86 10 8.35 1.65 0 1.65 57%Ventura Community Center 3 0.69 0 0 0 0 0 52%Public Safety Building 57 0 57 0 57 48 9 52%Charleston/Arastradero 8 0.25 9.75 2.27 7.48 0.35 7.13 47%Animal Services Center 7 0 6.9 0 6.9 0 6.9 46%Playing Fields (at Golf Course)6 0 6 0 6 0 6 46%Cal. Avenue Parking Garage 12 0 12 0 12 0 12 44%Downtown Parking Garage 21 0 21 0 21 0 21 38%History Museum at Roth Building 3 0 3 0 3 0 3 not polled Byxbee Park na 0 3.6 0 3.6 0 3.6 not polled Surface Catch Up na 4.5 3.4 0 3.4 0 3.4 not polled Buildings Catch Up na 0.3 4.2 0 4.2 0 4.2 not polled Cubberley Deferred Maintenance na 0 6.9 0 6.9 0 6.9 not polled Civic Center na 0 tbd 0 tbd 0 tbd Subtotals:197.9 19.4 178.5 48.4 130.1 shaded cells are those which have been updated since the Infrastructure Committee's meeting on August 6, 2013 two - t h i r d s sup p o r t ma j o r i t y sup p o r t less t h a n m a j o r i t y sup p o r t The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. 1.f Packet Pg. 148 -: A t t F - R e v i s e d P r o j e c t S u m m a r y S h e e t ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes Attachment G. Revised Revenue Sources SOURCES USED IN SCENARIO SPREADSHEET Currently Available Resources In Millions Stanford DA for Infrastructure/Housing 22.1        Stanford DA for Sustainability 12.3        Parks 1.0           Community Centers 1.4           Downtown In‐Lieu 1.2           Infrastructure Reserve (6‐10 million)8.0           Two Parcels on Middlefield Road 2.2           Additional Surplus from Higher Revenues  (ongoing) 1.0           Subtotal 49.2        Projected Revenue Increases Expected Based on Current Projections New Hotels 2.4          Estimated to generate $33.6 million in COPs Potential Future Pending Council Decisions GO Bonds 38.0        64% TOT Increase (includes new hotels) From 12% to 14%  (2% increase)2.2          Estimated to generate $30.8 million in COPs From 12% to 15%  (3% increase)3.3          Estimated to generate $46.2 million in COPs Business License Tax  New tax 3.3          Estimated to generate $46.2 million in COPs 51% Documentary Transfer Tax   Increase from $3.30 to $4.40 per thousand 1.8          Estimated to generate $25.2 million in COPs 51%  of sale value Sales Tax Increase  From 1.0% to 1.125% or 1/8 cent 2.6          Estimated to generate $36.4 million in COPs 38% Auto Dealership at MSC  Lease revenue 0.8          Estimated to generate $11.2 million in COPs Police Building  Lease Revenue 1.4          Estimated to generate $19.6 million in COPs (Does not include renovation costs) Digital Readerboard 0.8          Estimated to generate $11.2 million in COPs LATP Rental Revenue 1.3‐2 Estimated to generate $18.2 to $28.0 million in COPs 62% POLLING SUPPORT Estimated to impact median single family home  assessed value by $65 per year 1.g Packet Pg. 149 -: A t t G - R e v i s e d R e v e n u e S o u r c e s ( 4 0 5 5 : I n f r a s t r u c t u r e F i n a n c e M e a s u r e ) Attachment 2: 09/03/2013, Agenda, Staff Report and Minutes 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 2: 09/03/2013, Agenda, Staff Report and Minutes 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 2: 09/03/2013, Agenda, Staff Report and Minutes 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 2: 09/03/2013, Agenda, Staff Report and Minutes 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 2: 09/03/2013, Agenda, Staff Report and Minutes 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 2: 09/03/2013, Agenda, Staff Report and Minutes 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 2: 09/03/2013, Agenda, Staff Report and Minutes 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 2: 09/03/2013, Agenda, Staff Report and Minutes 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 2: 09/03/2013, Agenda, Staff Report and Minutes 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 2: 09/03/2013, Agenda, Staff Report and Minutes 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 2: 09/03/2013, Agenda, Staff Report and Minutes 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 2: 09/03/2013, Agenda, Staff Report and Minutes 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 2: 09/03/2013, Agenda, Staff Report and Minutes 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 2: 09/03/2013, Agenda, Staff Report and Minutes Infrastructure Committee 1 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. 4:00 PM Special Meeting Tuesday, August 6, 2013 Council Conference Room ROLL CALL ORAL COMMUNICATIONS ACTION ITEMS 1. Continue Discussion on Baseline Survey Results and Make Recommendations to the City Council on Next Steps in Considering an Infrastructure Finance Measure ADJOURNMENT PUBLIC COMMENT Members of the Public are entitled to directly address the City Council/Committee concerning any item that is described in the notice of this meeting, before or during consideration of that item. If you wish to address the Council/Committee on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers or by the City Clerk, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council/Committee, but it is very helpful. 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. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes City of Palo Alto (ID # 3992) Committee for Potential Infrastructure Finance Measure Staff Report Report Type: Meeting Date: 8/6/2013 City of Palo Alto Page 1 Summary Title: Infrastructure Finance Measure Title: Continue Discussion on Baseline Survey Results and Make Recommendations to the City Council on Next Steps in Considering an Infrastructure Finance Measure From: City Manager Lead Department: City Manager Recommendation Staff recommends that the Infrastructure Committee continue its discussion on the public opinion survey results and make recommendations to the City Council on: 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. 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. Attachment A provides the staff report for the meeting and the meeting minutes. The staff report presented the preliminary findings of the baseline survey. Supplemental information was also provided on the status of infrastructure project costs, currently available revenue sources, grant applications, potential revenue sources, and debt financing alternatives intended to support the Committee’s discussion and recommendations to the City Council about next steps. No formal action was taken at the June 6 Infrastructure Committee meeting regarding recommendations to the City Council on next steps. Given the volume and complexity of the information, the Committee decided to continue its discussion after the Council recess, in early August. At the meeting, the Committee underscored the importance of Council determining in the near term whether to dedicate currently available and potential new revenue sources to infrastructure as a factor in making decisions about whether to pursue a finance measure. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 2 At the June 6 meeting the Committee provided some direction to staff on repackaging information for the next meeting in early August 2013. Committee members were also asked to give further thought over the July recess to projects and funding mechanisms that the Committee may recommend eliminating for further study and projects that may be bundled into ballot measure packages for further study, based on the survey results. Committee members were asked to return at the August meeting with a rank order list of infrastructure projects and to identify potential funding mechanisms. In addition, on June 24th, a study session was held to share the survey findings with the full Council prior to the July recess. No action was taken at the study session. Discussion In preparation for the Committee meeting, staff prepared a series of worksheets designed to assist Committee members in the preparation work on potential 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. The work sheets are included as Attachment B. This spreadsheet is designed to help Committee members prioritize infrastructure projects and to match the cost of those projects with potential funding mechanisms and levels. Instructions on how to use the worksheet are provided in the first tab. Staff also met with Committee members the week of July 29 to review the worksheets, how to use them, and to answer any questions on using this tool. The following also provides some key policy questions and considerations that staff included in the June 6 staff report that the Committee may want to consider in reviewing the survey findings and supplemental material and making its recommendations to the Council. 1. Removing projects that do not have strong support? 2. Focusing continued efforts around specific projects such as public safety and transportation (including bike and pedestrian) improvements? 3. Proceeding with further study on a bundled measure that combines multiple projects? 4. Proceeding with further study on funding for a public safety building individually or bundled with other projects? 5. Proceeding with further study on specific finance mechanisms that received more than simple majority support including a General Obligation Bond, Transient Occupancy Tax, business license tax, or real estate transfer tax and considering multiple measures? 6. Evaluating further the issuance of Certificates of Participation to fund infrastructure needs? 7. Designating current funding to infrastructure projects (that did not have strong support) that could be allocated at the Council’s discretion such as the Stanford Mitigation Funds? Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 3 Timeline The Committee will bring forward their recommendations to the Council in late August, 2013. If areas are recommended for further study for opinion research, staff will develop a revised plan and schedule for proceeding with the research. Attachments:  Attachment A. June 6, 2013 Staff Report & Meeting Minutes (PDF)  Attachment B. Infrastructure Worksheets (PDF) Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes   Instructions    This spreadsheet is designed to assist Infrastructure Committee members in some advance  reflection and prep work on potential 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 to fund infrastructure projects, 3) or other next steps.     Step 1:  Prioritize Projects The objective of the exercise is to prioritize infrastructure projects and to match the cost of those  projects with potential funding mechanisms and levels.   A  scale (in increments of $7 million) is  provided in Column K  to monitor total costs as projects and funding sources are dragged into or  populate Columns L and M.     The first step is to "drag" boxes in Column O (projects and their costs) into Column L.  Place your  highest priority project at the top of Column L (starting at cell L4) and then other projects in  descending each boxes is priority order below the highest priority.   The height of   of the     roughly  proportional to the dollar ($) amount cited in each box and to the scale in Column K.  Again, highest  priority project at top; lowest at the bottom.     Step 2: Prioritize Funding Sources The second step is to "drag" a box (see below on how to "drag") from Columns Q and R (funding  sources) into Column M.   Place the "ideal" or most favored source  (e.g. currently available funding  source) at the top of Column M (starting at cell M4).   Then, place other sources in descending  priority order below the highest priority in Column M.  At the end of the exercise, Columns L and M  should have projects/costs and funding sources that are roughly equal and that fit between 0 to  171 on the scale or between 0 to 220.  Two boxes are provided in Column K for the Public Safety  Building (PSB):  one at 9.0 million and one at $57.0 million.  The latter is supplied in the event the  City fully funds the PSB.  If this option is seclected, then the scale increases from $171 million to  Note that four of the sources ‐ all with thick borders $220 million.  ‐ are dedicated to specific uses  such as downtown parking in‐lieu fees which can only be used to expand or build garages.   A   "General Obligation" box in green is shown toward the bottom of Column R.  This box can be sized  to need should this funding option be selected.     If Committee members want to create an alternative or second scenario (or priority and funding  order), an additional worksheet ("Alternate Worksheet") is provided in the third tab.  Repeat the  process described above to create a second scenario. At the bottom and left of the worksheet  (B36), space is provided to type in your assumptions, notes etc.   To "drag" a box "click" on it.  You should see it surrounded by squares and circles.  Go to the top,  middle rectangular box and place your cursor just to the right of it and on the dotted line.  Arrows  looking like a plus sign should appear.  Click on this sign and this will allow you to drag a box into  the appropriate column.  You need to gently drag the box when at the top or bottom of the screen  to be able to make the spreadsheet move up or down or to move a box into a column.     For the Committee's information a list of funding sources is provided in the 4th tab and a list of  "bundled" projects with voter support % is provided in the 5th tab.  It's highly recommended to  print these instructions first and then use when looking at the spreadsheet. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes Uses:  Infrastructure Projects in Millions Sources for Infrastructure Funding ‐ Scenario I Polling  Support (sum  of strongly &  somewhat  support) Project Est.  Cost Commit.  Funding Net Cost  with  Commit. Potential  Fund. Net Cost  with  Commit.  and  Potential Scale in  Millns Projects/Uses ‐  Scenario I Sources ‐ Scenario I Projects and Costs for Scenario I Sources of Funding for Scenario I Sources of Funding for Scenario I X /Currently Available Funds Currently Available X 72%Fire Stations 14.2 0.0 14.2 0.0 14.2 1‐7 X /X 69%Streets 8.0 0.0 8.0 0.0 8.0 14         X /X 67%Sidewalks 6.0 0.0 6.0 0.0 6.0 21         X /X 67%Parks Catch Up 9.8 0.0 9.8 0.0 9.8 28         X /X Subtotal 38.0 35         X /X 65%Bike/Pedestrian Plan 25.0 1.5 23.5 0.0 23.5          42         X /X 61%Bike Bridge 10.0 8.4 1.7 0.0 1.7 49         X /New & Potential Revenues for COPs New & Potential Revenues for COPs X 57%Ventura Community Ctr.3.0 0.0 3.0 0.0 3.0 56         X /X 52%Public Safety Building 57.0 0.0 57.0 48.0 9.0 63         X /X 52%Charleston/Arastradero 9.8 2.3 7.5 0.4 7.1 70         X /X Subtotal 44.3 77         X /X 47%Animal Services Center 6.9 0.0 6.9 0.0 6.9 84         X /X 46%Playing Fields (Golf Crse)6.0 0.0 6.0 0.0 6.0 91         X /X 46%Cal. Avenue Parking Gar.12.0 0.0 12.0 0.0 12.0 98         X /X 44%Downtown Parking Gar.21.0 0.0 21.0 0.0 21.0 105       X /X 38%History Mus.‐Roth Bldg 3.0 0.0 3.0 0.0 3.0 112       X /X Subtotal 48.9 119       X /X not polled Byxbee Park 3.6 0.0 3.6 0.0 3.6 126       X /X not polled Surface Catch Up 8.8 0.0 8.8 0.0 8.8 133       X /X not polled Buildings Catch Up 4.5 0.0 4.5 0.0 4.5 140       X /X not polled Cubberley Defer. Maint.6.9 0.0 6.9 0.0 6.9 147       X /X not polled Civic Center 16.0 0.0 16.0 0.0 16.0 154       X /X Subtotal 39.8 161       X /X Total 231.5 12.1 219.3 48.4 171.0 171       X /X 178       X /X Assume Public Safety Building is fully funded by City 48.0 185       X /X 192       X /X Total 219.0 199       X /X 206       X /X 213       X /Potential Excess Annual Surplus General Obligation Bonds X 220       X /X X /X NOTES ON ASSUMPTIONS USED FOR EXERCISE X /X les s  tha n  ma j o r i t y   tw o ‐thi r d s ma j o r i t y 22.1 m. in Stanford DA  Infra/Housing 12.3 m. in Stanford DA/Sustainability 8.0 m. Infrastructure Res. 33.6 m. in COPs from New  Hotels @2.4 m. annually 25.2 m. in COPs from TOT  increase of 2% @1.8 m.  annually   62% support 25.2 m. In COPs from Doc.  Trans. Tax increase by $1.10 per  $1,000 value @ 1.8 m. annually 51% support 46.2 m. in COPs for Business  License Tax at $3.3 m. annually 51% support 11.2 m. in COPs for Digital  Readerboard @0.8 m. annually 11.2 m. in COPs from Auto Deal. @  MSC @0.8 m. annually 19.6 m. from Police Bldg.  rental @1.4 m. annually  after renovation costs  36.4 m. in COPs for Sales Tax increase of 1/8 cent @2.6 m.  annually 38% support 42.0 m. in COPs from LATP  rental revenue @3.0 m.  annually Fire Stations  = 14.2 m.  72%  support Streets = 8.0 m. 69%  support Sidewalks = 6.0 m. 67% Parks Catch UP = 9.8  m. 67%  Bike/Pedestrian Plan = 23.5  m.  65% support Bike Bridge = 1.7 m. 61% support Ventura CC = 3.0 m.  57% support Public Safety Bldg = 9.0 m.  52%  support Charleston/Arastr. 7.1 m.  52%  Animal Svces. = 6.9 m.  47% support Playing Fields = 6.0 m.  46% support Cal Ave Garage = 12.0 m. 46%  support Downtown Garage = 21.0 m.   44% support History Mus. = 3.0 m.  38% support Byxbee Park = 3.6 m.  NP Surface Catch Up = 8.8  m.  NP Bldgs Catch Up = 4.5 m.  NP Cubberley Def. Maint = 6.9 m.   Civic Center = 16.0 m.  NP Estimated 1.0 m. tax surplus for pay‐ as‐you‐go‐projects 28.0 m. in COPs for $100  annual Parcel Tax 41% support 38.0 m. for projects receiving  2/3 survey support.  GO  bonds can be sized  differently for this exercise 30.8 m. in COPs from UUT  increase of 1% @2.2 m.  annually 29% support 1.0 m in Park Impact Fees 1.4 m in Commun. Ctr. Impact Fees 1.2 m. in Downtown Parking  In‐Lieu  Public Safety Building = $57  million  52% support Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes Uses:  Infrastructure Projects in Millions Sources for Infrastructure Funding ‐ Scenario II Polling  Support (sum  of strongly &  somewhat  support) Project Est.  Cost Commit.  Funding Net Cost  with  Commit. Potential  Fund. Net Cost  with  Commit.  and  Potential Scale in  Millns Projects/Uses ‐  Scenario II Sources ‐ Scenario  II Projects and Costs for Scenario I Sources of Funding for Scenario I Sources of Funding for Scenario I X /Currently Available Funds Currently Available X 72%Fire Stations 14.2 0.0 14.2 0.0 14.2 1‐7 X /X 69%Streets 8.0 0.0 8.0 0.0 8.0 14         X /X 67%Sidewalks 6.0 0.0 6.0 0.0 6.0 21         X /X 67%Parks Catch Up 9.8 0.0 9.8 0.0 9.8 28         X /X Subtotal 38.0 35         X /X 65%Bike/Pedestrian Plan 25.0 1.5 23.5 0.0 23.5          42         X /X 61%Bike Bridge 10.0 8.4 1.7 0.0 1.7 49         X /New & Potential Revenues for COPs New & Potential Revenues for COPs X 57%Ventura Community Ctr.3.0 0.0 3.0 0.0 3.0 56         X /X 52%Public Safety Building 57.0 0.0 57.0 48.0 9.0 63         X /X 52%Charleston/Arastradero 9.8 2.3 7.5 0.4 7.1 70         X /X Subtotal 44.3 77         X /X 47%Animal Services Center 6.9 0.0 6.9 0.0 6.9 84         X /X 46%Playing Fields (Golf Crse)6.0 0.0 6.0 0.0 6.0 91         X /X 46%Cal. Avenue Parking Gar.12.0 0.0 12.0 0.0 12.0 98         X /X 44%Downtown Parking Gar.21.0 0.0 21.0 0.0 21.0 105       X /X 38%History Mus.‐Roth Bldg 3.0 0.0 3.0 0.0 3.0 112       X /X Subtotal 48.9 119       X /X not polled Byxbee Park 3.6 0.0 3.6 0.0 3.6 126       X /X not polled Surface Catch Up 8.8 0.0 8.8 0.0 8.8 133       X /X not polled Buildings Catch Up 4.5 0.0 4.5 0.0 4.5 140       X /X not polled Cubberley Defer. Maint.6.9 0.0 6.9 0.0 6.9 147       X /X not polled Civic Center 16.0 0.0 16.0 0.0 16.0 154       X /X Subtotal 39.8 161       X /X Total 231.5 12.1 219.3 48.4 171.0 171       X /X 178       X /X Assume Public Safety Building is fully funded by City 48.0 185       X /X 192       X /X Total 219.0 199       X /X 206       X /X 213       X /Potential Excess Annual Surplus General Obligation Bonds X 220       X /X X /X NOTES ON ASSUMPTIONS USED FOR EXERCISE X /X tw o ‐thi r d s ma j o r i t y les s  tha n  ma j o r i t y   22.1 m. in Stanford DA  Infra/Housing 12.3 m. in Stanford DA/Sustainability 8.0 m. Infrastructure Res. 33.6 m. in COPs from New  Hotels @2.4 m. annually 25.2 m. in COPs from TOT  increase of 2% @1.8 m.  annually   62% support 25.2 m. In COPs from Doc.  Trans. Tax increase by $1.10 per  $1,000 value @ 1.8 m. annually 51% support 46.2 m. in COPs for Business  License Tax at $3.3 m. annually 51% support 11.2 m. in COPs for Digital  Readerboard @0.8 m. annually 11.2 m. in COPs from Auto Deal. @  MSC @0.8 m. annually 19.6 m. from Police Bldg.  rental @1.4 m. annually  after renovation costs  36.4 m. in COPs for Sales Tax increase of 1/8 cent @2.6 m.  annually 38% support 42.0 m. in COPs from LATP  rental revenue @3.0 m.  annually Fire Stations  = 14.2 m.  72%  support Streets = 8.0 m. 69%  support Sidewalks = 6.0 m. 67% Parks Catch UP = 9.8  m. 67%  Bike/Pedestrian Plan = 23.5  m.  65% support Bike Bridge = 1.7 m. 61% Ventura CC = 3.0 m.  57% Public Safety Bldg = 9.0 m.  52%  support Charleston/Arastr. 7.1 m.  52%  Animal Svces. = 6.9 m.  47% support Playing Fields = 6.0 m.   46% Cal Ave Garage = 12.0 m. 46%  support Downtown Garage = 21.0 m.   44% support History Museum = 3.0 m.  38% Byxbee Park = 3.6 m.  NP Surface Catch Up = 8.8  m.  NP Bldgs Catch Up = 4.5 m.  NP Cubberley Def. Maint = 6.9 m.  NP Civic Center = 16.0 m.  NP Estimated 1.0 m. tax surplus for  pay‐as‐you‐go‐projects 28.0 m. in COPs for $100  annual Parcel Tax 41% support 38.0 m. for projects receiving  2/3 survey support.  GO  bonds can be sized  differently for this exercise 30.8 m. in COPs from UUT  increase of 1% @2.2 m.  annually 29% support 1.0 m in Park Impact Fees 1.4 m in Commun. Ctr. Impact Fees 1.2 m. in Downtown Parking  In‐Lieu  Public Safety Building = $57  million  52% support Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes SOURCES USED IN SCENARIO SPREADSHEET POLLING SUPPORT Currently Available Resources In Millions Stanford DA for Infrastructure/Housing 22.1        Stanford DA for Sustainability 12.3        Parks 1.0          Community Centers 1.4          Downtown In‐Lieu 1.2          Infrastructure Reserve (6‐10 million)8.0          Subtotal 46.0        Projected Revenue Increases New Hotels 2.4         Estimated to generate $33.6 million in COPs TOT Increase of 2% From 12% to 14% 1.8         Estimated to generate $25.2 million in COPs 62% Sales Tax Increase  From 1.0% to 1.125% or 1/8 cent 2.6         Estimated to generate $36.4 million in COPs 38% GO Bonds 38.0        64% Digital Readerboard 0.8         Estimated to generate $11.2 million in COPs LATP Rental Revenue 3.0         Estimated to generate $42.0 million in COPs Business License Tax  New tax 3.3         Estimated to generate $46.2 million in COPs 51% Documentary Transfer Tax   Increase from $3.30 to $4.40 per thousand 1.8         Estimated to generate $25.2 million in COPs 51%  of sale value Utility Users Tax   Increase from 5% to 6% 2.2         Estimated to generate $30.8million in COPs 29% Parcel Tax  New tax at $200 per parcel 4.0         Estimated to generate $56.0million in COPs 41% Auto Dealership at MSC  Lease revenue 0.8         Estimated to generate $11.2 million in COPs Police Building  Lease Revenue 1.4         Estimated to generate $19.6 million in COPs (Does not include renovation costs) Estimated to impact median single family home  assessed value by $65 per year Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes Potential Bundled Infrastructure Measures Survey Bundled Project description Potential Projects Estimated  Cost Committed  Funding Net Cost  with  Committe Potential  Funding Net Cost with  Committed  and Potential Streets 8.00            ‐               8.00          ‐           8.00                   Sidewalks 6.00            ‐               6.00          ‐           6.00                   Bike/Pedestrian Plan 25.00         1.50             23.50       ‐           23.50                 Bike Bridge 10.00         8.35             1.65          ‐           1.65                   Charleston/Arastradero 9.75            2.27             7.48         0.35         7.13                   Cal. Avenue Parking Garage 12.00         ‐               12.00       ‐           12.00                 Downtown Parking Garage 21.00         ‐               21.00       ‐           21.00                 Subtotals:91.75         12.12           79.63      0.35         79.28                 Ventura Community Center 3.00            ‐               3.00          ‐           3.00                   Bike/Pedestrian Plan 25.00         1.50             23.50        ‐           23.50                 Parks Catch Up 9.80            ‐               9.80          ‐           9.80                   Charleston/Arastradero 9.75            2.27             7.48         0.35         7.13                   Streets 8.00            ‐               8.00          ‐           8.00                   Sidewalks 6.00            ‐               6.00          ‐           6.00                   Subtotals:61.55         3.77             57.78      0.35         57.43                 Public Safety Building 57.00         ‐               57.00       48.00       9.00                   Fire Stations 14.20         ‐               14.20       ‐           14.20                 Subtotals 71.2 0.0 71.2 48.0 23.2 71% 68% A Traffic Congestion Relief and Safe Streets, Sidewalks  and Trails Measure to fund repair and improvements to  streets, sidewalks, and nine miles of 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. A Palo Alto Children and Families First Measure that  would fund improved facilities for preschool and  childcare programs, safe routes to school, pedestrian  and bike safety improvements, park and playground  improvements and neighborhood traffic calming  measures. A Fire, Paramedic, Police, Seismic Safety and  Emergency Response Measure to fund improvements  to keep Palo Alto safe, including construction of a new  earthquake‐safe public safety building and emergency  response command center, replacing two obsolete fire  stations with modern earthquake‐safe buildings, and  improving communication systems to ensure rapid 9‐1‐ 1 response to fires, accidents and other emergencies. 74% Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes INFRASTRUCTURE COMMITTEE MINUTES Page 1 of 22 Special Meeting Tuesday, August 6, 2013 The Infrastructure Committee met on this date in the Council Conference Room at 4:03 P.M. Present: Berman, Klein (Chair), Scharff, Shepherd Absent: ORAL COMMUNICATIONS None ACTION ITEMS 1. Continue Discussion on Baseline Survey Results and Make Recommendations to the City Council on Next Steps in Considering an Infrastructure Finance Measure. Chair Klein suggested the Infrastructure Committee (Committee) discuss projects they wished to see eliminated and to discuss projects that needed to be funded through regular Infrastructure Funds. The Committee planned on integrating regular infrastructure projects with special infrastructure projects because Staff was going to prepare for the Capital Improvement Program (CIP) Budget for Fiscal Year (FY) 2015. He inquired when Staff begins preparing the CIP Budget. Mike Sartor, Director of Public Works, reported Staff usually began CIP budgeting in August of each year. Mayor Scharff felt the Public Safety Building (PSB) should be considered separately and he requested an update regarding the Jay Paul Project. Brad Eggleston, Assistant Director of Public Works, reported scheduling for the Jay Paul Project was not set. He noted that the preliminary traffic studies could be presented to the Council in early 2014. Mayor Scharff inquired whether the Jay Paul Project was following the previous timeline. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 2 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Mr. Sartor understood the schedule for the project changed because of the complexity of the traffic study. He relayed that Aaron Aknin, Acting Planning Director said the consultant recommended the Traffic Study needed to include traffic impacts from Stanford University. He expected that the Economic Benefit Study would be presented to Council in early 2014. Mayor Scharff asked when the Council could make a decision on the Project. Mr. Sartor needed to consult with the Planning Department to determine that. Chair Klein understood all aspects of the Jay Paul Project were delayed. If the Committee waited for a decision on PSB, then they needed to delay all decisions for six months to a year. Mayor Scharff suggested a separate Bond Measure for PSB. Sheila Tucker, Executive Assistant to the City Manager, reminded the Committee that PSB did not poll well. It was unlikely that the City would proceed with a Finance Measure for PSB. Staff was looking for other revenue to fund PSB. Chair Klein felt it was too early to make a determination regarding the PSB. He suggested the Committee proceed with the assumption that the Jay Paul Project would not be approved. Mayor Scharff asked if the Committee wanted to recommend reserving funds for a future PSB, assuming the Jay Paul Project was not approved. Chair Klein agreed funds could be set aside for PSB and questioned the amount needed to be set aside. Aaron Aknin, Acting Planning Director, mentioned that the Planning and Transportation Commission (P&TC) reported on two scoping meetings that were related to the Jay Paul Project Environmental Impact Report (EIR) because they wanted more citizen input. The scoping period ended, and Staff received a number of comments. The preliminary Traffic Report and Public Benefits Analysis were scheduled for presentation in late August or September of 2013; Staff was finalizing the public benefits analysis. Additional analysis for the Traffic Study was required and a preliminary analysis needed to be presented in September 2013. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 3 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Chair Klein inquired whether the information would be presented to the Council in September 2013. Mr. Aknin replied yes and said a preliminary Traffic Analysis would focus on key intersections and roadway segments. Mayor Scharff asked when Staff expected the project to be presented to the Council for a decision. Mr. Aknin indicated the decision process could start in the spring and decision making could begin in the summer of 2014. Chair Klein inquired whether the Project was on the P&TC's agenda for the week prior. Mr. Aknin stated that the meeting being referred to was the second EIR scoping session. Chair Klein asked if there was anything to report from the P&TC meeting. Mr. Aknin reported there were significant concerns in adjacent neighborhoods regarding parking and traffic; a secondary concern dealt with massing issues, related to the building itself. Vice Mayor Shepherd wanted the Committee to consider holding a referendum regarding the PSB. She thought the Council needed to know the community's interest in having a PSB that functioned for emergency purposes. She suggested a referendum or advisory vote in June 2014 regarding the Jay Paul Project or an Infrastructure Committee vote in November 2014. Chair Klein indicated that a referendum was not part of the Committee's agenda. Vice Mayor Shepherd requested the topic be agendized for a future meeting. She did not want to prioritize projects without some resolution of the PSB issue. Mayor Scharff mentioned that he could advocate for funds to purchase land for a PSB with a plan for a future PSB. He thought it was premature to hold a referendum. Council Member Berman suggested the Committee analyze funding for a PSB at a more appropriate time. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 4 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Chair Klein noted the net cost of the PSB was $56 million, minus $19 million from revenues that came from leasing the current Police Department building. He requested Staff comment on the rental income of $42 million from the Los Altos Treatment Plant (LATP) property. Mr. Eggleston explained that the figure of $42 million was based on issuing Certificates of Participation (COP) to obtain funds from a rental stream of $3 million a year. Staff was in the process of determining an acceptable remediation plan that would also delineate the amount of land the City would have for development. Chair Klein inquired about possible tenants. Mr. Eggleston did not consider tenants because the $3 million amount was based on discussions with the real estate manager regarding the likely rental stream per acre. Chair Klein believed remediation of the LATP land had not progressed. Mr. Eggleston could not speak to the status of the project. Recently, Staff provided funding for remediation in the CIP Budget. Mr. Sartor reported Staff spoke with the State about Area C, which was cleared for development and resulted in approximately 2.1 acres. Staff was working to obtain approval of wetlands mitigation for the remaining property. He guessed Area B could provide an additional 4-6 acres. Chair Klein inquired about a possible date for a tenant to take possession of the property. Mr. Eggleston indicated the approval process could be completed in February or March 2014. The next step was development and of construction plans. He estimated nine months to a year for completion of work once approvals were obtained. Chair Klein inquired whether the land could be available for lease in middle to the late part of 2015. Mr. Eggleston responded yes, in approximately two years. Council Member Berman inquired about projects other than the Bicycle and Pedestrian Transportation Plan for which the Stanford University Medical Center (SUMC) Development Agreement Sustainability Funds could be used. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 5 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 James Keene, City Manager, felt both Sustainability Funds and Infrastructure Funds were flexible. The question was which fund the Council felt was appropriate to use. Council Member Berman inquired about community center impact fees. Joe Saccio, Assistant Director Administrative Services reported community center impact fees were collected from redevelopment projects. They were used for expansion of facility capacity or renovation of facilities to increase capacity. The funds were to be used for community centers only. Council Member Berman inquired whether COPs based on rental income from the current PSB could be used to fund a new PSB. Mr. Saccio reported issuance of COPs would have to pay for renovations to the existing building as well as construction of a new building. Staff projected an ongoing revenue stream from rental of that area. He inquired about estimated costs for renovating the existing building. Mr. Sartor did not recall the amount. Mr. Saccio indicated some of the rental income stream could be utilized for debt service on a new PSB, in addition to the cost of renovation of the existing building. Council Member Berman inquired whether COPs could be issued while the existing building remained in use. Mr. Saccio stated COPs could be issued to pay for both. Ms. Tucker inquired whether Staff assumed $1-3 million for renovations. Mr. Eggleston believed that was the amount included in the report. Chair Klein inquired whether the Infrastructure Reserve Fund balance of $8 million included the surplus from FY 2013. Mr. Saccio indicated Staff had not closed the books for FY 2013. He thought there would be a surplus from FY 2013, but the amount was unknown. Mr. Keene believed the surplus would be more than $1 million. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 6 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Chair Klein estimated the surplus would be $2 million, based on preliminary reports. Mr. Saccio indicated $2 million was possible. Mr. Keene noted that outstanding liabilities needed to be booked before the surplus could be determined. Mr. Saccio reported the table included $1 million, which was money that Staff believed could result from current tax revenue streams. Mr. Keene reported the ten-year plan to resurface streets was accelerated to eight years, due to the additional funding. He suggested having Council approve additional funds in order to reach a five-year plan. Mayor Scharff inquired whether Staff could resurface streets any faster than the current rate. Mr. Sartor indicated the primary constraint to resurfacing streets was the Utility Undergrounding Program. Mayor Scharff asked if it was logical to provide additional funding for street resurfacing if the rate of resurfacing could not be increased. Mr. Sartor stated the current funding level in the five-year CIP for each year was approximately $5 million. Mayor Scharff understood $8 million was listed in addition to CIP funding. Mr. Keene explained that $8 million was the gap identified in the original Infrastructure Blue Ribbon Commission (IBRC) analysis. Chair Klein noted a separate item on the list for sidewalks. Mr. Eggleston reported $8 million was a theoretical number used in a questionnaire to poll the public's interest in streets. Staff was working to accomplish goals faster, regardless of the level of funding. Mayor Scharff requested that Staff address sidewalks, now that progress on streets was highly visible. He inquired whether $6 million for sidewalks would provide the same level of improvements as $8 million did for street improvement. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 7 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Mr. Eggleston did not know but said the five-year CIP plan doubled the sidewalks budget by adding $1 million per year. The goal was to return to the original 30-year plan for sidewalk districts. He knew that the CIP amount would not repair all problems, it would just complete the cycle through sidewalk districts. The $6 million amount in the Infrastructure Project List allowed Staff to repair some of the worst areas of sidewalks. Mayor Scharff inquired whether Staff needed more money to continue street resurfacing because if the $8 million was not needed to resurface streets, then the funds could be moved to sidewalks. He requested more Staff input regarding prioritization of projects to ensure the Committee considered all possible projects. Chair Klein agreed with Mayor Scharff. He did not want to ignore the baseline poll results, but wanted to be practical as well. He asked when the Committee could review the CIP plan for FY 2015. Mr. Keene inquired whether the intention was to reprogram the amount of money set aside. Mr. Sartor reported Staff typically started CIP planning in August of each year, then Staff returned to the Committee in October to begin preliminary discussions of CIP projects. CIP projects were based on projects included in the FY 2014 CIP. Chair Klein wanted to ensure projects were integrated between the CIP list and the Infrastructure Project List. Mr. Keene noted Staff attempted to respond to the P&TC's desire to correlate the CIP with the Comprehensive Plan. He suggested Staff work with the Committee prior to the P&TC meeting. Chair Klein suggested the meetings be simultaneous. Mr. Sartor indicated the Committee was reviewing catch-up and keep-up needs and funding sources, which the CIP also did. Mr. Keene believed the Committee was considering all funding streams and wanted to ensure the CIP funding stream was programmed correctly. He suggested that Staff provide a schedule for the CIP at the Committee's meeting in September 2013. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 8 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Vice Mayor Shepherd felt the Committee was looking for anything in the CIP that substantially changed from the adopted FY 2014 CIP, to revenues from FY 2015 Chair Klein did not want to make changes to the CIP, but wanted to compare CIP projects with infrastructure projects. Mayor Scharff suggested that some CIP projects could need funding at the current time. Infrastructure projects were traditionally not on the CIP list. He thought it could be more important to accelerate some of the CIP projects. Mr. Saccio noted every year some projects were removed from the five-year CIP; however, Staff had to ask each department about new projects and new priorities. Mr. Eggleston reported the CIP project list showed a surface catch-up amount of $8.8 million, of which $3.7 million was sidewalk catch-up. Staff was working to update the catch-up amounts included in the adopted five- year plan. Chair Klein requested Staff review the 19 infrastructure projects and determine whether the amounts were accurate, such as the Civic Center amount. Mr. Sartor explained $16 million for the Civic Center was a rough estimate that was prepared for removing the plaza deck and redoing the steel tensioning cables. It did not concern the tower renovations. Chair Klein asked if that work still needed to be performed. Mr. Sartor did not know. He suggested that Staff could ask a consultant to review the status of the waterproofing membrane to determine if it needed replacing. The study was performed approximately 10 years ago. Mayor Scharff stated the roof did not leak. Mr. Sartor indicated that the garage leaked, but Staff took steps to correct that. The question was whether the membrane and the tensioning cables were at risk. Mayor Scharff understood that the City needed to perform the work within a certain number of years. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 9 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Mr. Sartor reported that a consultant recommended the work be done and estimated the cost at $16 million, but did not provide a timeline for the work. Mayor Scharff believed the issue was important. The impact was expected to be tremendous if the parking structure was not to be used. He thought the work should be done before it became a crisis. Mr. Sartor indicated the next step was to review the study and determine a timeline for the work. Mr. Keene said Staff would review the issue. Chair Klein noted parks catch-up work was ongoing over several years, and inquired whether $9.8 million was still needed. Mr. Keene was curious about the interface between the Parks Master Plan and park improvements. Mr. Sartor indicated Greg Betts, Director of Community Services would report on that. Mayor Scharff stated the City prepared Master Plans, but did not implement them. He inquired whether the City had other Master Plans that should be included on the infrastructure Project List. Mr. Sartor reported the Storm Drain Master Plan was part of the Enterprise Fund, and not relevant to the current discussion. Chair Klein inquired about $8.8 million for surface catch-up. Council Member Berman noted the amount was now $5.1 million. Mr. Eggleston explained the $8.8 million amount included $3.7 million for sidewalk catch-up. Chair Klein noted the list contained $8 million for streets, $6 million for sidewalks, and $8.8 million for surface catch-up. Mr. Eggleston stated the $8.8 million amount did include sidewalks. The catch-up numbers needed to be updated to reflect amounts included in the FY 2014 Budget. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 10 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Chair Klein inquired about the difference between sidewalks and surface catch-up. Mr. Eggleston indicated they were the same. Mayor Scharff felt the categories were combined because of the baseline poll. Chair Klein noted the list contained three different items for streets and sidewalks: streets, sidewalks, and surface catch-up. Mr. Eggleston agreed the sidewalks amount was included twice and the surface catch-up needed to be updated. The remaining surface catch-up was not the same as streets. It involved resurfacing parking lots at City facilities, resurfacing trails, and upgrading traffic signals. Council Member Berman inquired about the status of the Infrastructure Management System. Mr. Sartor reported the Information Technology (IT) Department issued a Request for Proposal (RFP). Proposals were due the following week. He did not anticipate having a functioning infrastructure management system prior to the FY 2016 CIP. Council Member Berman wanted the Infrastructure Management System to remain a priority Mr. Sartor stated it was a high priority project. Chair Klein asked if projects should be removed from the list. Vice Mayor Shepherd did not believe projects should be removed, rather he thought they should be delayed to identify funding sources. Critical categories were streets, sidewalks, surface catch-up, and the Roth Building. The City needed a strategic funding plan for a PSB, fire stations, Bicycle and Pedestrian Transportation Plan, the Bike Bridge, and the parks catch-up, which included Byxbee Park. Mr. Sartor noted the Bike Bridge was funded. Mayor Scharff understood the City needed $1.6 million to fully fund the Bike Bridge. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 11 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Mr. Sartor explained the design could lower the cost, such that the Bike Bridge would be fully funded. Vice Mayor Shepherd stated SUMC Development Agreement funds were utilized to fund the Bike Bridge. Mr. Sartor added the City received $4 million from the One Bay Area Grant (OBAG). Vice Mayor Shepherd inquired whether the Bike Bridge was included in the $23 million amount for the Bicycle and Pedestrian Transportation Plan. Chair Klein responded no. Mr. Eggleston explained the original amount for the Bicycle and Pedestrian Transportation Plan was $35 million; therefore, the Bike Bridge was not included. Vice Mayor Shepherd was interested in developing funding strategies for garages in California Avenue and Downtown. Building catch-up at Cubberley Community Center and the Civic Center needed to be considered as well. Council Member Berman prioritized fire stations, PSB’s, streets, and sidewalks. Identifying resources to catch-up streets, sidewalks, and parks was important. The Bicycle, the Pedestrian Transportation Plan, and a Downtown garage were also important. Other projects were not high priority, such as the California Avenue garage. He wanted to better understand surface catch-up. Mayor Scharff wanted a new PSB potentially funded through COPs. Fire stations were the highest priority, followed by Downtown and California Avenue garages, and the Bicycle and Pedestrian Transportation Plan. Most of streets, sidewalks, and surface catch-up were probably included in CIP. He was interested in accelerating repair of sidewalks. He needed more information about many of the remaining projects before assigning a priority. The Council needed to address the Roth Building and the History Museum. Vice Mayor Shepherd inquired whether the City could sell the Roth Building. Chair Klein reported that the City owned the building and the City had a lease option with the History Museum. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 12 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Mayor Scharff suggested the Bike Bridge be removed from the list because it would be built. The remaining projects were small and difficult to prioritize. The Council needed to resolve the issues around the Cubberley Community Center before deciding whether to prioritize improvements at Cubberley Community Center. The Council needed to make a policy decision regarding the Animal Services site before the Committee decided to fund improvements to the building. Mr. Sartor related that the Animal Services building was renovated to make it functional. Mayor Scharff believed there was sufficient funding for all projects and requested the City Attorney be present to discuss funding mechanisms. Vice Mayor Shepherd felt the lack of funding mechanisms made prioritizing projects difficult. Chair Klein wanted to give the Bike Bridge highest priority because it was funded. Mr. Sartor noted the Committee set aside $9 million in funding. Chair Klein suggested the funding be moved to another category because funds from the SUMC Development Agreement could be utilized instead. Vice Mayor Shepherd indicated the SUMC Development Agreement funds were included in the amounts. Chair Klein indicated the next priority was a PSB. He agreed with Mayor Scharff's suggestion to issue COPs as a funding source. Mr. Sartor stated Staff was proceeding with the LATP project. Chair Klein noted ten projects were identified as being funded potentially through COPs. He wanted to see the PSB funded through COPs if the Jay Paul Project was not approved. Next in priority were fire stations and a Downtown garage. Vice Mayor Shepherd inquired whether a Downtown district could be created to fund two parking garages. Molly Stump, City Attorney asked if Vice Mayor Shepherd was referring to Assessment Districts. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 13 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Mr. Saccio reported the last Assessment District required a concerted effort by the City and major developers to adopt. A financial advisor said Assessment Districts were no longer utilized because of Proposition 218 a Proposition amending the California Constitution (Articles XIIIC and XIIID) which requires the local government to have a vote of the affected property owners for any proposed new or increased assessment before it could be levied. Redevelopment Agencies (RDA) and COPs were common ways to finance garages. Another alternative was a private entity. Vice Mayor Shepherd inquired whether the private entity would build a garage and charge for parking. Mr. Saccio replied yes. Mayor Scharff asked if the Council could impose a Documentary Transfer Tax on commercial buildings to fund construction of garages. He suggested a tax of $0.20 per square foot on all commercial space Downtown. He noted that property owners would not agree to another Assessment District, and remarked that he opposed the restrictions of an Assessment District. Ms. Stump indicated a series of court decisions interpreting Proposition 218 made it difficult to create Assessment Districts. Mayor Scharff was suggesting a tax applied to commercial space in a particular part of town but that some areas needed to be voted on by all residents. Mayor Scharff suggested that the tax could apply to all commercial space in Palo Alto, with the revenue divided among locations. Chair Klein added the basic question was whether the City could impose a different property tax. Ms. Stump said she would research structuring a tax in such a way. Many taxes were developed such that the burden of paying them fell on some and not others. Mayor Scharff believed the commercial space generated the parking need; therefore, he thought it should pay for the parking garage. Ms. Stump noted the Assessment District model was not illegal but the requirements were difficult to meet. Mayor Scharff inquired whether a tax on commercial space was discussed when the Business License Tax was proposed. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 14 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Vice Mayor Shepherd indicated a Graduated License Tax was discussed. She inquired about a tax under a property tax concept for all property over 50 feet in height. Ms. Stump suggested some type of Business Tax that would reach the types of businesses with physical space Downtown, but would not impact smaller businesses with no employees or businesses that operated from a residence. Chair Klein reported that would be a Graduated Business License Tax rather than a Real Property Tax, which would be subject to Proposition 13, a Proposition that decreased property taxes by assessing property values at their 1975 value and restricted annual increases of assessed value of real property to an inflation factor, not to exceed 2 percent per year. Mr. Saccio explained that private developers utilized Mello-Roos Districts (an Act that enabled "Community Facilities Districts" (CFDs) to be established by local government agencies as a means of obtaining community funding) to carve out districts within a city. This was voted on more by residents, rather than businesses. He was not able to remember whether approval required a two-thirds or majority vote; Staff was going to explore the possibility further. Chair Klein believed a Business License Tax would be straightforward, with the Council utilizing a companion Measure to pledge use of the funds for parking garages. Ms. Stump noted a companion measure would carry a great deal of weight with subsequent policymakers. Vice Mayor Shepherd inquired whether this was a Business License Tax or a Registry. Mr. Saccio stated it was a Tax. The measure was based on the receipts from businesses, and the maximum tax would be $30,000 for all categories, except retail; the maximum annual cap for retail was $20,000. There was a small Business Exemption recommended, with a minimum tax of $75. It was slightly complex and applied to all businesses. He noted that the amount could be tailored depending on how much the Council wanted to present to the voters. Chair Klein requested comments regarding funding sources. Mayor Scharff wished to utilize the Transient Occupancy Tax (TOT), and asked if it required a majority vote. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 15 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Ms. Stump reported increasing the TOT required a simple majority vote in a General Municipal Election for general governmental purposes. She thought it was possible for the Council to include a companion Measure. Mayor Scharff recommended increasing the TOT from 12 percent to 15 percent in order to raise approximately $37 million through COPs. Council Member Berman noted that polling indicated 62 percent of respondents supported a two percent increase. Mayor Scharff did not believe there would be a difference between two percent and three percent with regard to support. He inquired whether the $37 million included revenue from hotels under construction. Mr. Saccio answered no. Mayor Scharff suggested the second funding source could be COPs, which would be based on revenue from new hotels to raise $33.6 million. With SUMC Development Agreement Funds, the total amount reached was $100 million. This was the easiest method for funding the Infrastructure Projects. He suggested having the LATP income stream be held in reserve and believed the Committee should make a policy decision recommendation to the Council on the reader board. Council Member Berman asked where Palo Alto ranked in comparison to surrounding cities with respect to the amount of TOT levied. Mr. Saccio indicated Palo Alto was higher than surrounding cities. Mayor Scharff stated cities comparable to Palo Alto charged 14 percent. Ms. Stump added Anaheim charged 15 percent. Mayor Scharff inquired about the amount of TOT San Francisco levied. Mr. Saccio reported San Francisco and Oakland charged 14 percent; Menlo Park, East Palo Alto, Santa Barbara, and Redwood City charged 12 percent; and Anaheim charged 15 percent. Palo Alto currently charged 12 percent, which was adopted five or six years ago. Chair Klein explained Palo Alto was a leader when it increased the TOT to 12 percent. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 16 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Council Member Berman preferred not to utilize COPs in order to reserve the increased funding sources for future needs. He thought the Council should consider a bond to fund projects supported by the community. He suggested the bond be $48 million for: fire stations, streets, sidewalks, parks catch-up, and half the Bicycle and Pedestrian Transportation Plan. SUMC Development Agreement funds covered the remaining funds for the Bicycle and Pedestrian Transportation Plan. COPs and SUMC Development Agreement funds were eligible to support $33 million for a PSB. He wanted to retain some SUMC Development Agreement funds as unallocated. The Infrastructure Reserve Fund, COPs on a digital reader board, and Downtown parking in-lieu fees were potential funding sources for a Downtown garage. Vice Mayor Shepherd wanted to present a digital reader board and auto dealerships at the Municipal Service Center (MSC) site to the Council for a policy decision. She did not believe auto dealerships were viable at the MSC site. Chair Klein explained the Committee did not have a proposal to present to the Council regarding either a digital reader board or an automobile dealership. Council Member Berman asked why those funding sources were listed if there were no proposals. Chair Klein explained they were listed as possible funding sources. Concrete proposals were presented to the Council. Vice Mayor Shepherd supported Mayor Scharff's statement. Mayor Scharff wanted the Committee to develop a concrete proposal for presentation to the Council. Chair Klein reported that the Council already made a policy decision to pursue an automobile dealership at the MSC site. Vice Mayor Shepherd relayed that she had not previously heard of a policy decision. Chair Klein confirmed the City was pursuing an automobile dealership for the MSC site. Vice Mayor Shepherd stated some Council Members opposed an automobile dealership. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 17 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Chair Klein inquired whether Vice Mayor Shepherd was opposed to an automobile dealership. Vice Mayor Shepherd replied yes. Mayor Scharff inquired about other uses of the property that would generate revenue for the City. Restaurants, retail shops, and recreational facilities were possibilities. Chair Klein related there was a history of negotiations with automobile dealerships. Vice Mayor Shepherd prioritized funding sources as: the General Obligation Bond for public safety projects, a COP based on the LATP revenue stream, SUMC Development Agreement Funds, Police Building Rental Funds, and lastly a Business License Tax for a parking structure. Mayor Scharff felt the community wanted a PSB, but did not want to pay for it. Vice Mayor Shepherd agreed. Mayor Scharff believed residents would not approve a bond for a PSB. Chair Klein agreed with Mayor Scharff's approach. Approximately $47 million was available to fund projects. Issuing COPs based on increasing the TOT to 14 percent produced $60 million, totaling approximately $107 million, enough to cover all projects except the PSB. He mentioned COPs based on a Business License Tax could be issued to fund the PSB if the Jay Paul Project failed. He preferred a Ballot Measure requiring only a majority vote; a Bond Measure required a two-thirds vote. Polling indicated a majority of Palo Alto citizens favored a new PSB and were willing to pay for it; however, a majority vote was not sufficient to approve a Bond Measure. Each of the taxes proposed to fund COPs had the potential of having Advisory Measures. Council Member Berman asked what source Chair Klein proposed to use to fund a PSB. Chair Klein replied that a Business License Tax was a possibility. Council Member Berman noted that in the past, the community was not in support of a Business License Tax. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 18 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Chair Klein said there were other funding sources. Council Member Berman was concerned that utilizing COPs tied up revenue that could be used for other expenses. He wanted to discuss why the Committee was hesitant to take advantage of community support on other projects. Chair Klein felt that was a topic worth discussing. The only potentially unmanageable expenditures for the City were healthcare and pension costs, and the community was not in support of a tax increase to pay for those costs. Council Member Berman preferred to utilize a Bond for projects that the community supported and to reserve annual revenue sources for health and pension costs. Mayor Scharff felt only one tax measure should be presented on the ballot in 2014. Council Member Berman asked which tax measure Mayor Scharff would include on the ballot. Mayor Scharff answered an increase in the TOT. Council Member Berman inquired about revenue from the new hotels. Mayor Scharff explained revenue from new hotels was the basis for issuing a COP, and a COP was not placed on the ballot. Council Member Berman preferred utilizing a bond rather than a TOT increase. Mayor Scharff believed only one tax measure would be placed on the ballot, and inquired whether Council Member Berman recommended a $70 million bond. Council Member Berman proposed a bond in the amount of $48.2 million with remaining funds coming from SUMC Development Agreement funds and revenue from the Police Building. Mayor Scharff proposed a TOT increase to provide $40 million while Council Member Berman proposed a General Obligation Bond in the amount of $48 million. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 19 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Council Member Berman disagreed with using COPs as a funding source. Chair Klein felt bonds were not democratic, and obtaining a two-thirds vote was difficult. Ms. Tucker reported the $38 million amount was based on the four projects that received more than two-thirds support in the poll. Respondents indicated they were willing to pay $72 million. Council Member Berman explained his proposal of a $48 million bond was conservative in order to obtain community support. Vice Mayor Shepherd noted the tax-free status of General Obligation Bonds could end as part of the proposed Federal tax plan. If the cost of General Obligation Bonds increased, then she preferred a different funding source. Council Member Berman needed time to consider the different funding sources as discussed, and inquired whether the Committee needed to make a decision at the current time. Chair Klein was not ready for a decision. Mayor Scharff added Staff needed to provide accurate cost estimates. Chair Klein requested that Staff revise the lists of projects and funding sources. Ms. Tucker suggested the next Committee meeting be held as soon as Staff provided the requested information. Chair Klein inquired whether Staff could be ready by the first Tuesday in September, September 3, 2013. Mr. Saccio said that would give him time to return with accurate cost estimates for the projects and a comparison of infrastructure projects with CIP projects. He noted that Staff would not have CIP input from City departments prior to the September 3, 2013 meeting. Mr. Eggleston added Staff would need to provide a flow chart and schedule the CIP planning process. Vice Mayor Shepherd recalled the Telephone User Tax would be placed on the ballot for clean-up, and inquired whether that was too many measures for one ballot. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 20 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Chair Klein explained Mayor Scharff suggested one tax measure as a practical matter, that it was not a rule for ballot measures. Mr. Saccio inquired whether the Committee wished to remove any revenue sources from the list. Vice Mayor Shepherd suggested the Committee not consider a sales tax. Council Member Berman recommended removing revenue streams that polled badly. Ms. Tucker noted the sales tax results were an anomaly. The consultant recommended the Council not eliminate the possibility of a sales tax pending further study. Council Member Berman agreed that further polling was needed regarding increasing a sales tax. The Utility User Tax (UUT) and Parcel Tax were able to be removed from the list. Chair Klein asked if the Committee wanted to remove the sales tax from the list. Mayor Scharff noted there was an issue regarding sales tax. Council Member Berman wanted to poll further for a sales tax. Mayor Scharff advocated for a sales tax increase; however, there was a limit on the amount that could be increased. Ms. Stump reported local authorities could impose a specific amount of sales tax. Mr. Saccio believed 0.75 percent remained available for local authorities to impose. Ms. Tucker reported sales tax did not poll well because of the lack of context in the poll questions. Chair Klein wanted to retain sales tax as a possible funding source with better polling questions. Mr. Saccio inquired whether the Committee wished to remove the parcel tax and UUT. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 21 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Chair Klein did not prefer a parcel tax. Mayor Scharff wanted to remove the parcel tax and UUT. Council Member Berman concurred. Vice Mayor Shepherd inquired whether the poll should include the Telephone User Tax. Ms. Stump reported the City had a larger interest in cleaning up the Telephone User Tax, but it could be combined with a rate increase. Chair Klein suggested that the increase of the Telephone User Tax be presented to a different Council Committee. Ms. Tucker felt the Committee should consider the interaction of taxes placed on the same ballot. Chair Klein requested Staff eliminate the Parcel Tax from the list of possible funding sources. Council Member Berman added that the UUT needed to be removed. Chair Klein was not sure the UUT should be eliminated. Council Member Berman noted it received only 29 percent support from respondents. Vice Mayor Shepherd suggested the Finance Committee could request inclusion of the UUT in the next poll. Shakari Byerly, Fairbank, Maslin, Maullin, Metz & Associates (FM3), reported a UUT was one of the more difficult funding mechanisms to pass, and was not surprised it did not poll well. Mr. Saccio stated clean-up of the UUT was very important, and clean-up needed to be considered before changing the rate. Chair Klein indicated similar clean-up measures of the UUT around the State were approved. Charles Heath, TBW Strategies did not believe the poll results reflected the chances of the clean-up measure. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes MINUTES Page 22 of 22 Special Infrastructure Committee Meeting Minutes: August 6, 2013 Vice Mayor Shepherd asked if other ballot measures were standalone. Ms. Byerly believed there were standalone measures as well as measures to broaden and reduce the tax. Mr. Saccio explained the tax was reduced by 1/2 percent to increase the popularity of broadening the tax. Mr. Heath reported in some instances the rate was increased to fund specific projects. Mr. Saccio recalled the UUT in Palo Alto passed narrowly when it was implemented. Chair Klein requested Staff remove the UUT and Parcel Tax from the list of possible revenue sources. The next Committee meeting was scheduled for September 3, 2013 at 4:00 P.M. ADJOURNMENT: The meeting was adjourned at 6:10 P.M. Attachment 3: 08/06/2013, Agenda, Staff Report and Minutes Infrastructure Committee 1 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. 5:00 PM Special Meeting Thursday, June 6, 2013 Council Conference Room Call to Order Oral Communications Action Items 1. Review Baseline Survey Results and Make Recommendations to the City Council on Next Steps in Considering an Infrastructure Finance Measure Adjournment PUBLIC COMMENT Members of the Public are entitled to directly address the City Council/Committee concerning any item that is described in the notice of this meeting, before or during consideration of that item. If you wish to address the Council/Committee on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers or by the City Clerk, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council/Committee, but it is very helpful. 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. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes City of Palo Alto (ID # 3875) Committee for Potential Infrastructure Finance Measure Staff Report Report Type: Meeting Date: 6/6/2013 City of Palo Alto Page 1 Summary Title: Infrastructure Finance Measure Title: Review Baseline Survey Results and Make Recommendations to the City Council on Next Steps in Considering an Infrastructure Finance Measure From: City Manager Lead Department: City Manager Recommendation Staff recommends that the Infrastructure Committee review the preliminary public opinion survey results and make recommendations to the City Council on next steps in considering a potential infrastructure revenue measure. Background On September 18, 2012, the Council adopted a high level plan and timeline for consideration of an infrastructure revenue measure in the November 2014 election to fund infrastructure needs. Since last September, the City retained assistance of outside experts in two areas: 1) public opinion research and 2) public communications and educational outreach. In December 2012, the City hired the public opinion research firm, Fairbank, Maslin, Mauling, Metz and Associates (FM3) to assist the City with its opinion research. In February 2013, the City retained the communications firm, TBWB Strategies (TBWB) to help evaluate the feasibility of a finance measure and develop communications, messaging, and community engagement strategies. FM3 recommended a series of research efforts to assess public attitudes towards funding the City’s infrastructure needs, including: 1) initial baseline survey in the spring of 2013, 2) series of follow-up focus groups in the summer of 2013 if the initial baseline survey points to voter support for revenue increases to support infrastructure investments, 3) a potential tracking survey in the Fall of 2013, and; 4) a final feasibility survey in the Spring of 2014. The culmination of the research will be a series of recommendations to the City Council about whether and how to proceed with an infrastructure finance measure or measures. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 2 In the first of a series of research efforts to access public attitudes, a baseline public opinion survey was conducted in late April and early May 2013 of approximately 600 residents in Palo Alto. The objectives of the survey were to: 1. Track public attitudes (compared to prior years’ surveys) on core measures like feelings about the City’s quality of life; the City Council’s management of civic affairs and finances; the condition of the local economy; and the need for additional revenue to fund various local services; 2. Gauge overall perceptions of the condition of the City’s infrastructure, and the specific areas that may be in greatest need of approval; 3. Test public support for the following 14 potential infrastructure improvement projects as directed by Council, given basic information about their substance and cost.  Public Safety Building  Parks Catch-up  Bicycle/Pedestrian Plan  Animal Services Center  Bike Bridge  Playing Fields (golf course)  Fire Stations  Ventura Community Center  Accelerate Street Resurfacing  Downtown Parking Garage  Charleston/Arastradero Improvements  California Avenue Parking Garage  Sidewalks (surface catch-up)  History Museum 4. Evaluate public support for several potential ballot measure packages that might combine several of the improvement projects in cohesive packages; 5. Evaluate types of funding mechanisms and levels of tax threshold the community is willing to support; 6. Determine the demographic profile of the respondents to provide the necessary categories for cross-tabulation of the data, and to ensure that the respondents are representative of the pool of likely November 2014 voters in Palo Alto. Discussion This staff report presents the preliminary findings of the baseline survey. Supplemental information is provided on the status of infrastructure project costs, currently available funding sources, grant applications, potential revenue sources, and debt financing alternatives to support the Committee’s discussion and recommendations to the City Council about next steps. In addition, the staff report provides information on two areas that drew public support as measured in the survey, potential ballot measure packages that combine multiple projects, and a potential general tax measure used to fund infrastructure projects. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 3 The following provides some key policy questions and considerations that the Committee may want to consider in reviewing the survey findings and supplemental material and making its recommendations to the Council. 1. Removing projects that do not have strong support? 2. Focusing continued efforts around specific projects such as public safety and transportation (including bike and pedestrian) improvements? 3. Proceeding with further study on a bundled measure that combines multiple projects? 4. Proceeding with further study on funding for a public safety building individually or bundled with other projects? 5. Proceeding with further study on specific finance mechanisms that received more than simple majority support including a General Obligation Bond, Transient Occupancy Tax, business license tax, or real estate transfer tax and considering multiple measures? 6. Evaluating further the issuance of Certificates of Participation to fund infrastructure needs? 7. Designating current funding to infrastructure projects (that did not have strong support) that could be allocated at the Council’s discretion such as the Stanford Mitigation Funds? Preliminary Survey Findings and Conclusions FM3 conducted the initial baseline public opinion survey from April 28 – May 5, 2013. A telephone survey was conducted of 603 randomly-selected Palo Alto voters likely to cast a ballot in the November 2014 election. The margin of sampling error is +/-4.0 percent at the 95 percent confidence level; margins of error for population subgroups will be higher. For example, the split sampled questions (sampling 300) have margins of error of +/- 5.7%. Selected findings were compared to the results of prior City voter surveys in 2007 and 2008. FM3’s preliminary conclusions of the baseline survey are: 1. Voters express striking confidence in City government and its financial management. 2. The central challenge is that voters do not attach much urgency to infrastructure issues; they believe the City is handling them well and not much additional funding is required. 3. At the same time, 66% of voters are supportive of a ballot measure to finance infrastructure improvements – though most only tentatively. 4. A ballot measure to fully fund a public safety building is unlikely to receive two-thirds support; however, the public share of a public-private partnership could likely win approval as part of a broader package. 5. Chances for a measure’s success will likely be maximized by:  Focusing ballot measures around public safety and transportation (including bike and pedestrian) improvements, subject areas which consistently draw the most support.  Placing projects together in packages, which pair projects that draw enthusiastic public reaction with others that are more lukewarm.  Using general obligation bonds as the financing mechanism to the extent possible at the two-thirds level; several other taxes could be feasible with a simple majority vote.  Keeping costs close to the level of voters’ expressed willingness to pay, which seems to peak at $125 per year (for two-thirds support) and $200 per year (for majority support). Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 4 A full report of the survey findings and conclusions is included in Attachment A. Attachment B provides the survey questionnaire and the topline results. Status of Infrastructure Project Costs Attachment C provides an updated list of infrastructure projects and cost estimates, committed funding, potential funding, and the net cost that requires funding for each project. Committed funding includes awarded grants and project funding already appropriated through the capital budget, while potential funding consists of outstanding grant applications and the Jay Paul proposal for construction of a public safety building. The list of projects differs from past project cost summaries provided to the Infrastructure Committee and Council as follows:  The Cubberley Replace/Expand and Municipal Services Center projects are not included since they are dependent on future studies and Council decisions  The following projects will be funded from a variety of sources such as rates, user fees, lease revenues, expense reductions, and partner contributions and are not included. These include: Energy/Compost Facility, Golf Course, Airport, Post Office and Regional Water Quality Control Plant Master Plan  The Los Altos Treatment Plant project is not included because it is proposed to be funded in the FY 2014 capital budget  The cost estimates for the Streets and the Sidewalks projects have been increased to allow for accelerated work intended to significantly improve sidewalks and to achieve a citywide average Pavement Condition Index of 85 in 2016 (five years earlier than the initial goal of 2021).  The History Museum at the Roth Building, Downtown and California Avenue parking garage projects have been added to the project list for public opinion feasibility polling and are included with the initial cost estimates that have been used in the polling. The current estimate of total project costs is $231.5 million. The net cost after committed funding is $219.3 million and the final net cost if outstanding grant applications are successful and if the Jay Paul proposal moves forward, is $171 million. If projects are excluded that were added to the list for polling purposes (History Museum at the Roth Building, Downtown and California Avenue parking garages, Ventura) the total project cost is $192.5 million. The net cost after committed funding is $180.3 million and the final net cost if outstanding grant applications are successful and if the Jay Paul proposal moves forward, is $132 million. Attachment C also provides the public opinion survey results for each specific project tested in the survey, presented as the percentage of the survey respondents that strongly support or somewhat support the projects. More than 2/3 of the survey respondents supported Fire Stations, Streets, Sidewalks, and Parks Catch-up Projects, while the Bike/Pedestrian Plan, Bike Bridge, Ventura Community Center, Public Safety Building, and Charleston/Arastradero Projects have support levels at or above a majority. The remaining projects received less than majority support. Bundling Infrastructure Projects Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 5 The survey also 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. The survey results for these potential measures are useful for understanding the public response to a combination of projects that surround a given theme. Four measures were found to have support levels greater than two-thirds: 1. Traffic Congestion Relief and Safe Streets, Sidewalks and Trails Measure (74%) 2. Palo Alto Vital Facilities and Services Protection Measure (72%) 3. Palo Alto Children and Families First Measure (71%) 4. Fire, Paramedic, Police, Seismic Safety and Emergency Response Measure (68%) Attachment D presents the language tested for each measure and identifies the projects and project costs that might coincide with the language of each measure. The language of the Palo Alto Vital Facilities and Services Protection Measure, which received 72% support in the survey, was structured as a general tax measure that could be passed by simple majority vote and therefore does not specify projects and project costs that it may fund. The City may express its intent to use a general tax to fund a specific list of projects, though it would not be obliged by law to do so. To accomplish this, the City could put a general tax before the voters together with a Council-approved expenditure plan – which could either be approved legislatively or referred to the ballot for an advisory public vote accompanying the tax measure. It is a common practice for cities to adopt an expenditure plan associated with general tax measures when outlays are known. As described above, the survey found that the community has a high level of trust in the City government. Sixty-eight percent of residents surveyed stated that the City does an excellent or good job in providing services, 75 percent approved of the City’s work in maintaining city infrastructure, and 63 percent approved of the City’s efficiency in utilizing local tax dollars. The combination of the voters’ positive response to the language of a potential general infrastructure measure and overall approval for the City’s management of infrastructure and local tax revenues suggests that a general tax measure requiring only majority support may be a viable means of funding a portion of the City’s infrastructure needs. If the City decides to proceed with a general tax, a determination on the type of tax will need to be made, e.g. hotel stays (TOT), sales, real estate transfers, business licenses (BLT), utility use (UUT). As noted above, the survey findings indicated 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 could likely win approval as part of a broader package. Currently, 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), along with associated parking. The applicant has estimated the value of the construction of the public safety building (including land) and Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 6 associated parking at $49.3 million. (There are additional costs—approximately $8 million-- to provide turn- key occupation of the completed building). Attachment E provides an update on the Public Safety Building associated with Jay Paul Company’s proposed development at 395 Page Mill Road. If Council proceeds with planning for a potential measure that combines multiple infrastructure projects, it is anticipated that Council will have the information needed to inform Council’s final decisions about placing an infrastructure finance measure on the ballot in the spring of 2014. The design review schedule assumes Council will consider Jay Paul Company’s development proposal and the feasibility of the EIR in March 2014. The City will be conducting its final feasibility poll in the spring of 2014 to inform Council’s final decisions about an infrastructure measure or measures. If the development proceeds it is anticipated that the City will need up to $8 million to complete the build out. If the development does not proceed and an alternate new location is needed for the public safety building, the City will 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. Grants, Currently Available Funding Sources, Other Potential Revenue Sources, and Financing Alternatives The following section provides an update on grants, currently available funding sources that Council could earmark for infrastructure, other potential/projected revenue sources, and revenue that could be generated from various finance mechanisms. Status of Grant Applications The City has applied for grant funding for the Bike Bridge and Charleston/Arastradero Corridor projects. The status of these grant requests is provided in Table 1. The Vehicle Emissions Reduction Based at Schools Grant request of $1 million to support the Charleston/Arastradero Corridor Project has been approved by the VTA Board of Directors. The VTA Technical Advisory Committee (TAC) recommended that the $4 million OBAG grant request for the Bike Bridge Project be approved, but did not recommend approval of the $5.5 million request for the Charleston/Arastradero Corridor Project. The TAC’s recommendations are scheduled to be considered by the VTA Board of Directors on June 4, 2013. Staff continues to monitor opportunities to leverage grant funding toward the cost of infrastructure projects. Table 1: Status of Infrastructure Project Grant Requests Bike Bridge Project Grant Request Request Amount Expected Timeline for Award Other Project Funding Total Project Cost Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 7 One Bay Area Grant for Bike Bridge $4 million1 June 2013 $5.35 million $10 million Charleston/Arastradero Corridor Project Grant Request Request Amount Expected Timeline for Award Other Project Funding Total Project Cost Environmental Enhancement and Mitigation Grant $0.35 million September 2013 $1.27 million $9.75 million One Bay Area Grant $5.5 million not recommended for award Vehicle Emissions Reduction Based at Schools Grant $1 million awarded 1 Recommended for approval by VTA Board of Directors Other Potential Funding Sources To further evaluate resource needs to fund infrastructure improvements, staff identified currently available funding sources that could be allocated to infrastructure projects at Council’s discretion. These funding sources are described below and include the Stanford Medical Center Development Agreement Funds, the Infrastructure Reserve, Impact Fees and Parking In-Lieu Fee Funds. Attachment F provides a summary of the funds that are available under “Currently Available Revenue Sources.” It is estimated that $44-$48 million could be available from current funding sources should the Council choose to allocate the revenue to infrastructure. Stanford Medical Center Development Agreement Funds $34.4M On May 6, 2013, staff provided Council a review of the status and balances of the six distinct Stanford University Medical Center Mitigation Funds. The two funds most applicable to the City’s infrastructure projects are the Infrastructure, Sustainable Neighborhoods and Affordable Housing Fund and the Sustainability Programs Fund. The former could be allocated to any of the City’s infrastructure projects. The latter could be allocated to projects addressing climate change and sustainability such as the Bike/Pedestrian Plan and the Bike Bridge, and potentially to other projects as well. It is estimated that upon receipt of the third payment from Stanford University anticipated in 2016-2017; repayment of short-term loans for affordable housing; and no use of funds to Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 8 provide local matches for successful grant requests through the One Bay Area Grant program, the following, future balances will be available: Stanford Infrastructure/Housing $22.1 million Stanford Sustainability 12.3 million Total $34.4 million The above represent one-time funding sources and Council decisions will be necessary for any drawdowns from these funds. For example, if the City uses Stanford funds for grant matches or forgives housing loans, fund availability will be reduced. The Finance Committee will be making a recommendation on using Stanford Funds for the Bike Bridge Project in May 2013. Infrastructure Reserve (IR) $6-10 Million The IR is drawn upon annually to fund infrastructure projects in the five-year Capital Improvement Program. It is replenished when the General Fund has an operating surplus and monies in the Budget Stabilization Reserve exceed 18.5 percent of budgeted operating expenses. Based on an expected surplus at the end of FY 2013 and funding for the proposed Capital Budget for Fiscal Year 2014 through FY 2018, the IR is estimated to have available $6 to $10 million to fund infrastructure projects. This availability is subject to use of the IR to purchase the Post Office and for higher than anticipated costs for library and community center projects. Use of IR monies for the Post Office is temporary in that debt will be issued eventually to replenish the IR. Impact Fees Other sources of funding, which have been and can be used for capital work include Impact and Parking In-Lieu fees. Impact fee revenue must be used for new projects or expanded facilities to accommodate new growth. They are dependent upon the number and timing of projects so it is difficult to estimate available resources. Staff expects to have more information available on impact fee balances at the Committee’s meeting. The current estimated balances less expected drawdowns for upcoming projects are as follows: Parks $1.0 million Community Centers $1.4 million Citywide Transportation $TBD Charleston-Arastradero $TBD Total $2.4 million Downtown Parking In-Lieu Fees $1.2M Downtown Parking In-Lieu fees are targeted for the construction of new or expanded parking garage spaces. They are one-time resources that would be used to offset the principal required for construction. Currently, a developer has proposed building a garage on Lot P. The Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 9 Developer’s proposal includes a City contribution from the In-Lieu fund of $1.0 million for construction. In addition, $0.5 million in in-lieu funds will be used to cover estimated permit and other fees. Between the $2.1 million available from the Lytton project and a current balance of $0.6 million, staff estimates that $1.2 million will be available for constructing a downtown garage. It is important to note that the City is currently conducting an Impact Fee study to determine the appropriate level for current fees and the potential for new fees. In June, staff will present to the Finance Committee a list of potential projects and infrastructure needs that can be funded via Impact Fees. As with the Stanford Development funds, it will be important to determine the level of drawdown on fee balances and commitments made in the CIP. Potential New Revenue Sources There are also a number of new sources that could provide revenue to fund infrastructure needs. The use of these potential funding sources for infrastructure projects is at the Council’s discretion and many of the sources are dependent on future policy and land use decisions. The potential sources are described below and include new hotel revenue, digital readerboard revenue, sales tax from an auto dealership at MSC, lease revenue from renting the current police building (after expenses associated with renovating the facility), and lease of the Los Altos Treatment Plant site. Attachment F also provides a summary of the potential and projected revenue increases discussed below. It is estimated that these new potential revenue sources collectively could yield $117.6 million to fund infrastructure needs. New Hotel Revenue $2.4M Annually In the near future, a number of new hotels are expected to open in the City. These include, for example, the Hilton Garden Inn, the Hilton Homewood Suites, and Casa Olga. The idea of earmarking revenues from these hotels for infrastructure work has emerged in Council discussions. This annual income stream could be allocated to debt service for large projects and/or for pay-as-you-go work. The IBRC, for example, identified $42 million in “catch-up” needs. The Commission recommended that the City spend $4.2 million per year over a ten year period to eliminate this backlog. At this time, it appears three new hotels will open sometime in 2014. Two other hotels have either not filed an application or indicated a construction date. An estimate of potential annual revenues is provided although opening dates are not known. Annual revenue from hotels expected to open in 2014 $1.7 million Annual revenue from hotels expected to open post 2014 $0.7 million Total expected revenue $2.4 million Other Potential New Sources of Revenue Over the past few years, staff has been exploring the potential for placing a digital message center along highway 101 and re-tooling a portion of the Municipal Services Center for lease to an auto dealer or other revenue generating user. These options have not been discussed with Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 10 Council. Staff roughly estimates that revenue streams of between $0.7 and $1.0 million could be generated annually from these two initiatives. In addition, should the Police Department (PD) be completely relocated to a new public safety building, the current building could be leased to an office tenant and create an estimated revenue stream of $1.4 million annually. If the costs for preparing the current PD space for office occupancy are financed with debt, part of the eventual rental income will be used for debt service. At this time, staff does not have an estimate for renovation expenses, but it is reasonable to assume costs of $1-$3 million to provide a space suitable for lessee tenant improvements to proceed. A cost of service study is being conducted and a preview of the methodology was presented to the Finance Committee. A capital component will be included in the proposed fees and, if approved by Council, could be used to fund future renovation and replacement costs. At this time, staff does not have an estimate of potential funding that could be available should updated fees based on the study be approved. The study is expected to be presented to the Finance Committee this summer. Finance Measure Results, Revenue Potential and Election Timing and Considerations The survey also tested a variety of financing mechanisms and levels of funding support for infrastructure related improvements. When respondents were asked about their willingness to pay additional taxes to fund infrastructure projects, the level of support peaked at $125 per year (for two-thirds support) and $200 per year (for majority support). Support for Household Additional Taxes for Infrastructure Annual Amount Polling Support (strongly and somewhat support) $100 75% $150 64% $200 53% $250 48% Attachment F also provides a summary of the funding mechanisms tested, level of support, potential revenue that could be generated by each type, and voter support needed for successful passage. The four financing mechanisms that received more than a majority support include the following. Other proposals such as increasing the sales or utilities users’ tax rate or creating a parcel tax received low approval ratings. 1. Issuing Bonds 64% 2. Transient Occupancy Tax 62% 3. Business License Tax 51% Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 11 4. Real Estate Transfer Tax 51% Based on the survey results it appears Palo Altans are willing to support the idea of issuing debt to finance infrastructure improvements. It also appears there is willingness to increase a tax that does not bear directly on Palo Altans themselves and to a lesser extent a tax on businesses and real estate transactions. For sizeable projects such as a public safety building, fire station replacements, and parking garages, it is more than likely that the City will need to issue debt. To support new, annual debt service payments, the City will need to increase, create, or earmark a revenue source. There are a variety of options for Council to consider. Increased or new taxes would be subject to approval by voters. Attachment F summarizes the potential funding available from these sources. Attachment G identifies potential funding mechanisms and their election requirements. The four funding mechanisms that received more than a majority support are discussed further below. Certificates of Participation (COPs), a financing vehicle that does not require voter approval, are also discussed. General Obligation Bonds General Obligation Bonds can be viewed as a new source of revenue to the City since a self- imposed assessment is approved by voters. These bonds require two-thirds approval by the voters and were used for Measure N library and community center improvements. Attachment F also displays the impact of varying levels of General Obligation bonds on the median assessed value of single family residences. In alignment with the survey results on willingness to pay, it is estimated that a 30 year general obligation bond at an annual tax of $125 would yield $72 million and a $200 a year assessment would yield $114 million. Transient Occupancy Tax 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 accounts for 11.5 percent of the City's total general fund revenue. Based on current revenue levels, a one percent increase in the City’s transient occupancy tax can be expected to result in ongoing, annual revenues of $0.9 million which could be available to the City for any general capital improvements. Palo Alto’s transient occupancy tax rate was raised from 10% to 12% percent by the voters in the 2007 November General Election. Eighty- one percent of the electorate voted for the increase. Hotel tax rates vary from city to city. Across California, tax rates range from a low of 9.5% to a high of 15%. Attachment F provides a list of the TOT for surrounding communities. This type of tax can be structured either as a general tax requiring a simple majority vote or a special tax (for a special purpose) requiring 2/3 approval. TOT can also be part general tax and part special tax. Business License Tax Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 12 The City could consider new taxes to support debt or pay as you go financing. Palo Alto does not have a Business License Tax (BLT) which most municipalities levy. A Business License is an annual tax businesses pay each year for doing business in the City of Palo Alto. In the last analysis performed and taken to the voters in 2009, it was projected that a BLT would raise $3.3 million annually. The BLT, however, can be constructed to generate less or more than this amount. Like TOT, this type of tax can be structured as a general tax requiring a simple majority vote, a special tax requiring 2/3rds approval, or both. Staff would recommend beginning work immediately with the business community if Council proceeds with further study on a potential business license tax. Real Estate Transfer Tax A real estate transfer tax, commonly known as a “document transfer tax,” is a tax imposed on each recorded document in which real property is sold. The tax is paid at the time of recording a document transferring real property. Either the buyer or the seller pays the tax upon mutual agreement. In the City of Palo Alto it is traditional for the buyer and seller to equally share this tax. If a house is sold in Palo Alto for $1.5 million the current tax would equal $4,950. By increasing the tax by $1.10 per thousand dollars or by 33.3 percent, the incremental tax on this transaction would equal $1,650 for a total tax of $6,600. If the City were to increase its real estate transfer tax by $1.10, it would yield approximately $1.8 million annually. This tax is sensitive to the volume and mix (residential and commercial) of property transactions and can vary significantly from year-to-year. This type of tax can be a general tax requiring a simple majority vote, a special tax requiring 2/3rd approval, or both. Leveraging Revenues for Debt Financing: Certificates of Participation 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). The City has used this instrument previously for Golf Course and Civic Center improvements. Attachment F shows the estimated amount of principal 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. Ballot Measure Costs and Voting The cost of placing a measure on the ballot is dependent on the type of election that is being held. The Registrar of Voters estimates that the cost to place a measure on the November 2013 ballot would be approximately $350,000. The cost for November 2014, a general municipal election, is estimated at $175,000. The cost for a special election held at any time other than the annual November election, is estimated at $500,000. The election year in which a measure is included on the ballot also influences the use of the revenue and the proportion of the vote needed for passage of the measure. If the revenue from the measure is to be available for use Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes City of Palo Alto Page 13 for any purpose, it must be on the ballot for a general municipal election (even years) and requires a majority vote of the electorate. If the revenue is to be restricted to a specific use such as infrastructure, the measure may be on any ballot, but requires a two-thirds vote of the electorate. Timeline It is anticipated that the Infrastructure Committee will review the preliminary survey findings and supplemental information contained in this staff report and make recommendations to the City Council on the next steps in planning for an infrastructure measure. Based on Council’s direction and refinement of infrastructure priorities, staff anticipates conducting focus groups over the summer, developing and implementing a communications plan, and conducting a tracking survey in the fall of 2013. Resource Impact There is no immediate resource impact from this report. Future impacts are dependent upon Council action and election results. Attachments:  Attachment A. Preliminary Survey Results (PDF)  Attachment B. Questionnaire_Topline Results (PDF)  Attachment C. Infrastructure Project Costs (PDF)  Attachment D. Potential Bundled Infrastructure Measures (PDF)  Attachment E. Public Safety Building Update (PDF)  Attachment F. Potential New Revenue Sources (PDF)  Attachment G. Funding Mechanisms and Election Requirements (PDF) Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 220-3577 Key Findings From a Citywide Survey Conducted April 28 – May 5, 2013 Infrastructure Finance Survey DRAFTAttachment A Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 1 DRAFT Methodology Telephone survey of 603 randomly-selected Palo Alto voters likely to cast a ballot in the November 2014 election Interviews were conducted via landline and cell phones Survey was conducted April 28 – May 5, 2013 The margin of sampling error is +/-4.0 percent at the 95 percent confidence level; margins of error for population subgroups willbe higher Some percentages do not sum to 100% due to rounding Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 2 DRAFT Palo Alto voters are very pleased with the performance of City government,bothgenerally and in specificpolicy areas. Only about half of voters see even “some need” for additional infrastructurefunding. At the same time, about two-thirds of voters support hypothetical ballot measures to provide funding for public safety and transportation infrastructure. Just over half of voters support investing in the construction of a new public safety building; using a public-private partnership to reduce costs yields only slightly higher support. In the abstract, two-thirds of voters say they would vote for a ballot measure tofinance infrastructureimprovements. More than three in five voters back the use of bond measures or a transient occupancy tax increase to finance infrastructure improvements; othermechanisms receiveless support. Key Findings Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 3 Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 4 DRAFT Q3. Residents have generally favorable impressions of Palo Alto’s City government. 15% 53% 23% 6% 3% 0%20%40%60% Excellent Good Only fair Poor job Don't know Total Only Fair/ Poor Job 29% Total Excellent/ Good 68% How would you rate the overall job being done by Palo Alto city government in providing services to the City’s residents? Would you say the City is doing an…? Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 5 DRAFT Q3. Perceptions of the City’s performance have remained consistently positive. 16% 56% 22% 4% 2% 0% 20% 40% 60% 80% Excellent Good Only fair Poor job Don't know Total Only Fair/ Poor Job 26% Total Excellent/ Good 72% How would you rate the overall job being done by Palo Alto city government in providing services to the City’s residents? Would you say the City is doing an…? 15% 53% 23% 6% 3% 0% 20% 40% 60% 80% Total Only Fair/ Poor Job 29% Total Excellent/ Good 68% 2008 2013 Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 6 DRAFT 28% 16% 14% 47% 46% 49% 14% 15% 19% 8% 8% 6% 14% 12% 0%20%40%60%80%100% Maintaining the City’s infrastructure Managing the City’s budget and finances Efficiently utilizing local tax dollars Strng. App.Smwt. App.Smwt. Disapp.Strng. Disapp.DK/NA Total Approve Total Disapprove 75%23% 62%23% 63%26% 4. I am going to read you a list of specific aspects of the City of Palo Alto’s work in managing City government. Please tell me whether you generally approve or disapprove of the job the City is doing in that area. Residents are particularly supportive of the City’s performance maintaining infrastructure. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 7 DRAFT Q5. A slim majority of residents say the City has “little” or “no need” for additional funding; only five percent say there is a “great need.” 5% 35% 19% 31% 11% 0%20%40%60% Great need Some need Little need No need Don't know Total Little/No Need 50% Total Great/Some Need 40% How would you rate the City of Palo Alto’s need for additional funding? Is there a great need for additional funding, some need, a little need or no real need for additional funding? Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 8 DRAFT Q6/7. Being specific about infrastructure projects only slightly enhances perceptions of need. 10% 36% 22% 23% 9% 0% 20% 40% 60% 80% Great need Some need Little need No need Don't know 11% 43% 19% 22% 5% 0% 20% 40% 60% 80% More specifically, how would you rate the City of Palo Alto’s need for additional funding to maintain and improve infrastructure: is there a great need for additional funding, some need, a little need or no real need for additional funding? Total Little/No Need 45% Total Great/Some Need 46% More specifically, how would you rate the City of Palo Alto’s need for additional funding to maintain and improve public parks, streets, sidewalks and vital facilities like police and fire stations: is there a great need for additional funding, some need, a little need or no real need for additional funding? Total Little/No Need 41% Total Great/Some Need 54% Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 9 Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 10 DRAFT 34% 31% 19% 27% 25% 22% 24% 47% 44% 55% 44% 42% 44% 40% 18% 20% 24% 25% 28% 30% 31% 5% 6% 6% 0% 20% 40% 60% 80% 100% Ext. Imp.Very Imp.Smwt. Imp.Not Imp./DK/NA Total Ext./Very Important 81% 75% 74% 70% 67% 66% 63% 8. I’m going to read you some of the objectives of the infrastructure projects identified through this process. Please tell me how important each objective is to you as a resident of Palo Alto: extremely important, very important, somewhat important, or not important. ^Not part of Split Sample Residents’ top infrastructure priorities relate to public safety and road maintenance. Ensuring a modern and stable 911 emergency communications network Providing safe routes to school for students Maintaining City streets and roads Ensuring vital City facilities like fire and police stations and the emergency command center are earthquake safe Providing safe routes for bicyclists and pedestrians Fixing potholes and paving City streets Ensuring all City facilities are earthquake safe Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 11 DRAFT 18% 20% 17% 18% 14% 20% 14% 13% 45% 40% 42% 39% 43% 37% 38% 37% 32% 33% 36% 39% 30% 29% 44% 42% 5% 7% 5% 12% 14% 5% 9% 0% 20% 40% 60% 80% 100% Ext. Imp.Very Imp.Smwt. Imp.Not Imp./DK/NA Total Ext./Very Important 63% 60% 59% 58% 58% 56% 51% 50% 8. I’m going to read you some of the objectives of the infrastructure projects identified through this process. Please tell me how important each objective is to you as a resident of Palo Alto: extremely important, very important, somewhat important, or not important. ^Not part of Split Sample Majorities also prioritize maintenance of parks and community centers. Providing safe sidewalks, paths and bridges for pedestrians Providing police officers with the facilities and resources needed to investigate and prosecute crimes commited in our community Maintaining community centers that serve Palo Alto children, families and seniors Maintaining City parks and recreation facilities ^Maintaining the City’s core infrastructure Reducing traffic congestion Repairing and maintaining City sidewalks Upgrading pipes, irrigation and landscaping to conserve water and save money Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 12 DRAFT 15% 15% 15% 13% 10% 10% 8% 33% 33% 33% 30% 28% 28% 21% 15% 39% 41% 42% 41% 44% 49% 50% 61% 12% 11% 10% 17% 17% 13% 21% 23% 0% 20% 40% 60% 80% 100% Ext. Imp.Very Imp.Smwt. Imp.Not Imp./DK/NA Total Ext./Very Important 49% 48% 48% 42% 38% 37% 29% 17% 8. I’m going to read you some of the objectives of the infrastructure projects identified through this process. Please tell me how important each objective is to you as a resident of Palo Alto: extremely important, very important, somewhat important, or not important. ^Not part of Split Sample Voters are less enthusiastic about support for community service organizations or historic restoration. Improving the energy efficiency and environmental sustainability of City buildings and land Making sidewalks, city buildings and parks accessible for people with disabilities Improving heating, ventilation, lighting and electrical systems to conserve energy and save money Providing adequate parking Investing in facilities that encourage economic growth and generate revenue for City programs and services Improving parks, playgrounds and playfields for youth and adult recreation Providing facilities to support Palo Alto’s community service organizations and non-profits Restoring Palo Alto’s historic buildings Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 13 DRAFT The survey tested several ballot measure concepts – without price tags or funding mechanisms. 10. I am going to read you a list of different types of bond or tax measures that might be placed on the Palo Alto ballot to fund improvements to different aspects of the City’s infrastructure. Please tell me if you would support or oppose increasing taxes to fund that particular set of improvements. ^Not part of Split Sample A Palo Alto Vital Facilities and Services Protection Measure that would provide a stable source of locally- controlled funding to address local needs. These funds could not be taken away by the State and would be used to support general City services and facilities, including fire, paramedics, police, streets, sidewalks, parks, recreation, libraries and community centers. A Fire, Paramedic, Police, Seismic Safety and Emergency Response Measure to fund improvements to keep Palo Alto safe, including construction of a new earthquake-safe public safety building and emergency response command center, replacing two obsolete fire stations with modern earthquake-safe buildings, and improving communication systems to ensure rapid 9-1-1 response to fires, accidents and other emergencies. A Traffic Congestion Relief and Safe Streets, Sidewalks and Trails Measure to fund repair and improvements to streets, sidewalks, and nine miles of 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. A Parks, Open Space and Sustainability Measure that would fund improvements and investments to Palo Alto’s parks and open space, including repairing unsafe playground equipment, creating new playfields, improving walking and biking paths and trails, and improving irrigation systems to conserve water. It would also include funds to the restore the historic Roth Building and repair the Ventura Community Center A Palo Alto Children and Families First Measure that would fund improved facilities for preschool and childcare programs, safe routes to school, pedestrian and bike safety improvements, park and playground improvements and neighborhood traffic calming measures. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 14 DRAFT 39% 33% 32% 39% 24% 34% 39% 38% 29% 41% 16% 13% 17% 17% 17% 8% 11% 10% 12% 15% 0% 20% 40% 60% 80% 100% Streets, Sidewalk Trails Measure ^Vital Facilities Measure Children & Families Measure Public Safety Measure Parks Open Space Measure Strng. Sup.Smwt. Sup.Smwt. Opp.Strng. Opp.DK/NA Total Support Total Oppose 74%24% 72%24% 71%27% 68%30% 65%32% 10. I am going to read you a list of different types of bond or tax measures that might be placed on the Palo Alto ballot to fund improvements to different aspects of the City’s infrastructure. Please tell me if you would support or oppose increasing taxes to fund that particular set of improvements. ^Not part of Split Sample Support for each of these ballot measure concepts hovers between two-thirds and three-quarters. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 15 DRAFT 13. Out of all of the potential improvements to buildings, facilities, and other infrastructure that we have discussed, which do you think should be the highest priority for City government? When forced to choose, a plurality of residents list street repair and related issues as their top priority. 32% 22% 12% 11% 8% 8% 6% 18% 0%10%20%30%40% Street repair/Sidewalk repair/Infrastructure/ Pedestrian safety Police and fire/Public safety Bike lanes Emergency services-earthquakes Parking Parks and playgrounds/Recreation/Children Schools/Childcare Other/DK/Nothing/Refused (Grouped responses shown; 6% and above) Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 16 DRAFT 33% 23% 25% 23% 31% 40% 45% 42% 43% 34% 15% 19% 20% 20% 16% 10% 9% 11% 11% 15% 0% 20% 40% 60% 80% 100% $14 million for Fire Department modernization $8 million for street improvement and repair $6 million for sidewalk improvement and repair $10 million for park improvement and repair $25 million for bike lanes and pedestrian paths Strng. Sup.Smwt. Sup.Smwt. Opp.Strng. Opp.Undecided Total Support Total Oppose 72%25% 69%28% 67%31% 67%31% 65%31% 12. I am going to read you a list of specific infrastructure improvements projects that might be placed before Palo Alto voters, along with their estimated costs. Keep in mind that these costs are just rough estimates, and would be carefully refined before any measure was placed before local voters. Please tell me whether you think you would vote to support or oppose that project. *Split Sample When presented with specifics, voters’ priorities remain public safety and streets. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 17 DRAFT 27% 19% 20% 21% 19% 34% 39% 35% 32% 33% 17% 23% 21% 21% 23% 20% 13% 19% 24% 22% 7% 0% 20% 40% 60% 80% 100% $6 million for Highway 101 pedestrian/bike bridge $3 million to renovate and upgrade the Ventura Community Center *$8 million for a new public safety and emergency response command center $8 million for improving the Charleston-Arastradero Corridor *$57 million to buy land and build a new public safety and emergency response command center Strng. Sup.Smwt. Sup.Smwt. Opp.Strng. Opp.Undecided Total Support Total Oppose 61%37% 57%35% 55%40% 52%45% 52%45% 12. I am going to read you a list of specific infrastructure improvements projects that might be placed before Palo Alto voters, along with their estimated costs. Keep in mind that these costs are just rough estimates, and would be carefully refined before any measure was placed before local voters. Please tell me whether you think you would vote to support or oppose that project. *Split Sample The public safety building is middle-tier. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 18 DRAFT Total Support Total Oppose 47%48% 46%52% 46%50% 44%53% 38%57% 15% 17% 15% 17% 9% 32% 29% 31% 27% 30% 29% 28% 29% 27% 34% 19% 24% 21% 26% 23% 5% 0% 20% 40% 60% 80% 100% $7 million for a new Animal Services Center $12 million for a new California Avenue parking garage $6 million for new playing fields and recreational facilities $21 million for a new downtown parking garage $3 million to restore the Roth building and house the Palo Alto History Museum there Strng. Sup.Smwt. Sup.Smwt. Opp.Strng. Opp.Undecided 12. I am going to read you a list of specific infrastructure improvements projects that might be placed before Palo Alto voters, along with their estimated costs. Keep in mind that these costs are just rough estimates, and would be carefully refined before any measure was placed before local voters. Please tell me whether you think you would vote to support or oppose that project. *Split Sample Parking and historic restoration get less support. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 19 DRAFT 12. I am going to read you a list of specific infrastructure improvements projects that might be placed before Palo Alto voters, along with their estimated costs. Keep in mind that these costs are just rough estimates, and would be carefully refined before any measure was placed before local voters. Please tell me whether you think you would vote to support or oppose that project. *Split Sample Streets, parks, and public safety reach two- thirds support. 72% 69% 67% 67% 65% 61% 57% 55% 52% 52% 47% 46% 46% 44% 38% 25% 28% 31% 31% 31% 37% 35% 40% 45% 45% 48% 52% 50% 53% 57% 60%45%30%15%0%15%30%45%60%75% Total Support Total Oppose Difference +47% +41% +36% +36% +34% +24% +22% +15% +7% +7% -1% -6% -4% -9% -19% $14 million for Fire Department modernization $8 million for street improvement and repair $6 million for sidewalk improvement and repair $6 million for park improvement and repair $25 million for bike lanes and pedestrian paths $6 million for Highway 101 pedestrian/bike bridge $3 million to renovate and upgrade the Ventura Community Center *$8 million for a new public safety and emergency response command center $8 million for improving the Charleston-Arastradero Corridor *$57 million to buy land and build a new public safety and emergency response command center $7 million for a new Animal Services Center $12 million for a new California Avenue parking garage $6 million for new playing fields and recreational facilities $21 million for a new downtown parking garage $3 million to restore the Roth building and house the Palo Alto History Museum there Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 20 Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 21 DRAFT Two versions of the public safety building concept were tested. City-Funded Public-Private Partnership A $57 million project to purchase land and construct a new earthquake-safe public safety and emergency response command center, with upgraded dispatch technology for police, fire and paramedic service as well as more safe and secure space for interviewing crime victims and storing and analyzing crime evidence. $8 million of city investment to construct a new earthquake-safe public safety and emergency response command center, with upgraded dispatch technology for police, fire and paramedic service as well as more safe and secure space for interviewing crime victims and storing and analyzing crime evidence. $49million in additional funding for the project would come from a private developer in exchange for rights to build new commercial offices near Page Mill Road and El Camino. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 22 DRAFT 12n/o. I am going to read you a list of specific infrastructure improvements projects that might be placed before Palo Alto voters, along with their estimated costs. Keep in mind that these costs are just rough estimates, and would be carefully refined before any measure was placed before local voters. Please tell me whether you think you would vote to support or oppose that project. Split Sample A public-private partnership draws only slightly higher support. 19% 33% 23% 22% 3% 0% 20% 40% 60% 80% Strong support Somewhat support Somewhat oppose Strong oppose Undecided Total Oppose 45% Total Support 52% 20% 35% 21% 19% 5% 0% 20% 40% 60% 80% Total Oppose 40% Total Support 55% $57 million to buy landand build a new public safety and emergency response command center $8 millionfor a new public safety and emergency response command center Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 23 DRAFT 27% 20% 10% 5% 11% 16% 10% 0% 20% 40% 60% 80% Definitely yes Probably yes Undecided, lean yes Undecided, lean no Probably no Definitely no Undecided 12n/o combined. I am going to read you a list of specific infrastructure improvements projects that might be placed before Palo Alto voters, along with their estimated costs. Keep in mind that these costs are just rough estimates, and would be carefully refined before any measure was placed before local voters. Please tell me whether you think you would vote to support or oppose that project. Split Sample Taken together, support for either approach to the public safety building is no higher than in 2008. 20% 34% 22% 20% 4% 0% 20% 40% 60% 80% Strong support Somewhat support Somewhat oppose Strong oppose Undecided Total Oppose 43% Total Support 53% Conceptual Support for a $50M+ Public Safety Bond by Year 2008 2013 Total No 32% Total Yes 57% Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 24 Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 25 DRAFT Q9. Close to 2/3 of residents say they would support a bond or tax measure to fund infrastructure maintenance and improvement after hearing a list of needed projects. 21% 44% 13% 14% 8% 0%20%40%60% Strong support Somewhat support Somewhat oppose Strong oppose Undecided Total Oppose 27% Total Support 65% Many of these projects and improvements are beyond the scope of the City’s existing budget and may require additional funding through a local voter- approved bond or tax measure. Based on what you’ve heard, do you think you would support or oppose a bond or tax measure to fund some group of these projects to maintain and improve Palo Alto’s infrastructure? Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 26 DRAFT 45% 35% 25% 20% 30% 30% 28% 29% 8% 14% 19% 19% 13% 18% 24% 29% 0%20%40%60%80%100% $100 per year $150 per year $200 per year $250 per year Very Will.Smwt. Will.Smwt. Unwill.Very Unwill.DK/NA Total Willing Total Unwilling 75%21% 64%33% 53%43% 48%48% 11. Regardless of how the measure was structured, would your household be willing to pay ______ in additional taxes if it were dedicated to the types of Palo Alto infrastructure repairs and improvements we have been discussing? Predictably, voters are more willing to pay smaller amounts for an infrastructure measure. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 27 DRAFT 25% 24% 18% 39% 38% 33% 16% 21% 22% 18% 12% 24% 0% 20% 40% 60% 80% 100% Strng. Sup.Smwt. Sup.Smwt. Opp.Strng. Opp.Undecided Total Support Total Oppose 64%35% 62%33% 51%46% 14. I am going to read you a list of several methods that might be used to raise money to fund the types of infrastructure repairs and improvements we have been discussing. Please tell me if you would support or oppose using that particular way of raising new revenue for these purposes. Voters are more supportive of issuing bonds or increasing the transient occupancy tax than of other funding mechanisms. Issuing bonds, allowing the City to borrow money to complete the projects and pay it back over time with money from local property taxes Increasing the transient occupancy tax, charged to hotel and motel guests Increasing the real estate transfer tax rate – paid when a property is bought or sold Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 28 DRAFT 17% 8% 10% 6% 34% 33% 28% 24% 23% 20% 27% 28% 23% 34% 34% 41% 0% 20% 40% 60% 80% 100% Strng. Sup.Smwt. Sup.Smwt. Opp.Strng. Opp.Undecided Total Support Total Oppose 51%46% 41%54% 38%61% 29%69% 14. I am going to read you a list of several methods that might be used to raise money to fund the types of infrastructure repairs and improvements we have been discussing. Please tell me if you would support or oppose using that particular way of raising new revenue for these purposes. A parcel tax, sales tax, and UUT get less support. Establishing a business license tax to be paid by any business operating in Palo Alto Establishing a flat tax on every parcel of property in Palo Alto Increasing the local sales tax rate paid by anyone who shops in Palo Alto Increasing the utility users tax, which is added to electricity, gas, water and phone bills Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 29 DRAFT 14. I am going to read you a list of several methods that might be used to raise money to fund the types of infrastructure repairs and improvements we have been discussing. Please tell me if you would support or oppose using that particular way of raising new revenue for these purposes. None of the funding concepts reaches a two- thirds super-majority. 64% 62% 51% 51% 41% 38% 29% 35% 33% 46% 46% 54% 61% 69% 75%60%45%30%15%0%15%30%45%60%75% Total Support Total Oppose Difference +29% +29% +5% +5% -13% -23% -40% Issuing bonds, allowing the City to borrow money to complete the projects and pay it back over time with money from local property taxes Increasing the transient occupancy tax, charged to hotel and motel guests Increasing the real estate transfer tax rate – paid when a property is bought or sold Establishing a business license tax to be paid by any business operating in Palo Alto Establishing a flat tax on every parcel of property in Palo Alto Increasing the local sales tax rate paid by anyone who shops in Palo Alto Increasing the utility users tax, which is added to electricity, gas, water and phone bills Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 30 Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 31 DRAFT Voters express striking confidence in City government and its financial management. The central challenge is that voters do not attach much urgency to infrastructure issues; they believe the City is handling them well and not much additional fundingisrequired. At the same time, 66% of voters are supportive of a ballot measure to finance infrastructureimprovements–thoughmostonlytentatively. A ballot measure to fully fund a public safety building is unlikely to receive two- thirds support; however, the public share of a public-private partnership could likelywinapprovalaspartofabroaderpackage. Chancesforameasure’ssuccesswilllikelybemaximizedby: –Focusing ballot measures around public safety and transportation (including bike and pedestrian) improvements, subjectareas whichconsistentlydraw the most support. –Placing projects together in packages, which pair projects that draw enthusiastic public reaction withothers that are more lukewarm. –Using general obligation bonds as the financing mechanism to the extent possible at the two-thirds level;severalother taxes couldbefeasiblewitha simplemajority vote. –Keeping costs close to the level of voters’expressed willingness to pay, which seems to peak at $125 per year (for two-thirds support) and $200 per year (for majority support.) Conclusions Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes For more information, contact: 1999 Harrison St., Suite 1290 Oakland, CA 94612 Phone (510) 451-9521 Fax (510) 451-0384 Dave@FM3research.com Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes APRIL28,30,MAY1-5,2013 CITYOFPALOALTOINFRASTRUCTUREISSUES SURVEY 220-3577-WT N=603 MARGINOF SAMPLINGERROR±4.0%(95%CONFIDENCEINTERVAL) DRAFTTOPLINERESULTS Hello, I'm ___________ from F-M-Three, a public opinion research company. We are conducting an opinion survey about some important issues that concern residents of Palo Alto. I am definitely not trying to sell you anything, we are only interested in your opinions. May I speak to______________? (YOU MUST SPEAK TO THE VOTER LISTED. VERIFY THAT THE VOTER LIVES AT THE ADDRESS LISTED, OTHERWISETERMINATE). 1. Before we begin, I need to know if I have reached you on a cell phone, and if so, are you in place whereyoucantalksafelywithoutendangeringyourselforothers? Yes,cellandinsafeplace----------------------------------33% Yes,cellnotinsafeplace---------------------TERMINATE No,notoncell-----------------------------------------------67% (DON’T READ)DK/NA/REFUSED ------TERMINATE 2. First,Iamgoingtodescribeseveraldifferenttypesofelections. After I describeeachone, pleasetell meif youvoteinevery electionofthattype,mostofthem,some,a few orifyounevervoteinthat typeofelection. Here isthefirstone…(READLIST;DONOTROTATE) EVERY MOST SOME FEW NONE (DK/NA) []a. StatewideNovembergeneral electionsforGovernor, Congressandthestate legislature---------------------------------------------77%-----16%------7% --TERM.--TERM.-TERM. []b. StatewideJuneprimary elections forGovernor,Congressandthe statelegislature--------------------------------------57%-----20%-----12%-----3%--------9%-------0% []c. Specialelectionsforlocalballot measures----------------------------------------------47%-----20%-----18%-----6%--------7%-------1% Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes FAIRBANK, MASLIN,MAULLIN,METZ&ASSOCIATES 220-3577-WT PAGE2 3. (T) And how would you rate the overall job being done by Palo Alto city government in providing services to the City’s residents? Would you say the City is doing an…?(READ RESPONSES AND RECORD) EXCELLENT/GOOD-------------------68% Excellent------------------------------------15% Good-----------------------------------------53% FAIR/POOR-------------------------------29% Onlyfair,or--------------------------------23% Poorjob---------------------------------------6% (DON'T READ)Don'tknow-------------3% 4. Next,Iamgoingtoread youalistofspecificaspectsoftheCityof Palo Alto’sworkinmanaging Citygovernment. After Iread eachone, pleasetellmewhetheryougenerallyapproveordisapprove ofthejobtheCityisdoinginthatarea.(IFAPPROVE/DISAPPROVE,ASK:Isthatstrongly APPROVE/DISAPPROVE orjustsomewhat?) (RANDOMIZE) (DON’T STR. SW SW STR. READ)TOTAL TOTAL APP. APP. DISAPP. DISAPP. DK/NA APP. DISAPP. []a. Maintainingthe City’sinfrastructure-------------------------28%-----47%-----14%-----8%-------3%75% 23% []b. ManagingtheCity’sbudgetand finances----------------------------------------16%-----46%-----15%-----8%------14%62% 23% []c. Efficientlyutilizinglocaltaxdollars------14%-----49%-----19%-----6%------12%63% 26% (RESUME ASKINGALLRESPONDENTS) 5. How would you rate the City of Palo Alto’s need for additional funding? Is there a great need for additional funding, some need, a little need or no real need for additional funding?(READ RESPONSESAND RECORD) GREAT/SOMENEED------------------40% Greatneed------------------------------------5% Someneed----------------------------------35% LITTLE/NO NEED----------------------50% Littleneed,or------------------------------19% Noneed -------------------------------------31% (DON'T READ)Don'tknow-----------11% Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes FAIRBANK, MASLIN,MAULLIN,METZ&ASSOCIATES 220-3577-WT PAGE3 (SPLIT SAMPLE A ONLY) 6. More specifically, how would you rate the City of Palo Alto’s need for additional funding to maintain and improve infrastructure: is there a great need for additional funding, some need, a little need or no realneedfor additionalfunding?(READRESPONSES ANDRECORD) GREAT/SOMENEED------------------46% Greatneed----------------------------------10% Someneed----------------------------------36% LITTLE/NO NEED----------------------45% Littleneed,or------------------------------22% Noneed -------------------------------------23% (DON'T READ)Don'tknow-------------9% (SPLIT SAMPLE B ONLY) 7. More specifically, how would you rate the City of Palo Alto’s need for additional funding to maintain and improve public parks, streets, sidewalks and vital facilities like police and fire stations: is there a great need for additional funding, some need, a little need or no real need for additional funding? (READRESPONSES ANDRECORD) GREAT/SOMENEED------------------54% Greatneed----------------------------------11% Someneed----------------------------------43% LITTLE/NO NEED----------------------41% Littleneed,or------------------------------19% Noneed -------------------------------------22% (DON'T READ)Don'tknow-------------5% Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes FAIRBANK, MASLIN,MAULLIN,METZ&ASSOCIATES 220-3577-WT PAGE4 (RESUME ASKINGALLRESPONDENTS) NEXT I WOULD LIKE TO GIVE YOU SOME INFORMATION ABOUT ISSUES RELATED TO IMPROVING AND MAINTAINING PUBLIC BUILDINGS AND FACILITIES, AS WELL AS STREETS, SIDEWALKS,PARKSAND OTHERINFRASTRUCTUREINPALOALTO. AS YOU MAY KNOW, IN 2010, THE CITY COUNCIL APPOINTED A BLUE RIBBON CITIZENS’ ADVISORY COMMISSION TO EVALUATE THE CONDITION OF THE CITY’S STREETS, SIDEWALKS, PARKS, PUBLIC FACILITIES AND OTHER BASIC INFRASTRUCTURE. AS A RESULT THE COMMISSION IDENTIFIED APPROXIMATELY 300 MILLION DOLLARS IN NEEDED IMPROVEMENTS. 8. Now I’m going to read you some of the objectives of the infrastructure projects identified through this process. Please tell me how important each objective is to you as a resident of Palo Alto: extremely important,veryimportant,somewhatimportant,ornotimportant.(RANDOMIZE) (DON’T TOTAL EXT. VERY SMWT NOT READ)EXT/ IMP. IMP. IMP. IMP. DK/NA VERY []a. MaintainingtheCity’scoreinfrastructure-----------14%-----43%---- 30%------4%------8%58% (SPLIT SAMPLE A ONLY) []b. MaintainingCitystreetsandroads--------------------19%-----55%---- 24%------3%------0%74% []c. Reducingtrafficcongestion----------------------------20%-----37%---- 29%-----13% -----1%56% []d. Providingsafesidewalks,pathsandbridgesfor pedestrians-------------------------------------------------18%-----45%---- 32%------5%------0%63% []e. Providingadequateparking----------------------------13%-----30%---- 41%-----16% -----1%42% []f. Improvingtheenergyefficiencyand environmentalsustainabilityofCitybuildings andland----------------------------------------------------15%-----33%---- 39%-----11% -----1%49% []g. Improvingparks,playgroundsandplayfields foryouthandadultrecreation--------------------------10%-----28%---- 49%-----13% -----0%37% []h. EnsuringvitalCityfacilitieslikefireandpolice stationsandtheemergencycommandcenter areearthquakesafe---------------------------------------27%-----44%---- 25%------4%------0%70% []i. ProvidingfacilitiestosupportPaloAlto’s communityserviceorganizationsandnon- profits-------------------------------------------------------8%-----21%---- 50%-----20% -----1%29% Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes FAIRBANK, MASLIN,MAULLIN,METZ&ASSOCIATES 220-3577-WT PAGE5 (DON’T TOTAL EXT. VERY SMWT NOT READ)EXT/ IMP. IMP. IMP. IMP. DK/NA VERY (SPLIT SAMPLE A ONLYCONT.) []j. Providingpoliceofficerswiththefacilitiesand resourcesneededtoinvestigateandprosecute crimescommitedinourcommunity------------------20%-----40%---- 33%------7%------0%60% []k. Makingsidewalks,citybuildingsandparks accessibleforpeoplewithdisabilities----------------15%-----33%---- 41%-----10% -----1%48% []l. Upgradingpipes,irrigationandlandscapingto conservewaterandsave money-----------------------13%-----37%---- 42%------7%------2%50% (SPLIT SAMPLE B ONLY) []m. Investinginfacilitiesthatencourageeconomic growthandgeneraterevenueforCityprograms andservices-----------------------------------------------10%-----28%---- 44%-----14% -----3%38% []n. Ensuringamodernandstable9-1-1emergency communicationsnetwork -------------------------------34%-----47%---- 18%------0%------1%81% []o. Providingsaferoutesforbicyclistsand pedestrians-------------------------------------------------25%-----42%---- 28%------5%------1%67% []p. Providingsaferoutestoschoolfor students ----------------------------------------------------31%-----44%---- 20%------3%------2%75% []q. RestoringPaloAlto’shistoricbuildings---------------2%-----15%---- 61%-----22% -----1%17% []r. FixingpotholesandpavingCitystreets--------------22%-----44%---- 30%------4%------0%66% []s. RepairingandmaintainingCitysidewalks-----------14%-----38%---- 44%------5%------0%51% []t. Improvingheating,ventilation,lightingand electricalsystemstoconserveenergyandsave money------------------------------------------------------15%-----33%---- 42%------8%------2%48% []u. MaintainingCityparksandrecreationfacilities----18%-----39%---- 39%------3%------0%58% []v. EnsuringallCityfacilitiesare earthquakesafe-----24%-----40%---- 31%------5%------1%63% []w. MaintainingcommunitycentersthatservePalo Altochildren,familiesandseniors--------------------17%-----42%---- 36%------4%------1%59% (RESUME ASKINGALLRESPONDENTS) 9. Next, many of these projects and improvements are beyond the scope of the City’s existing budgetand may require additional funding through a local voter-approved bond or tax measure. Based on what you’ve heard, do you think youwouldsupportoroppose abondor tax measure to fundsome group of these projects to maintain and improve Palo Alto’s infrastructure?(IF SUPPORT/OPPOSE, ASK: “Isthatstronglyorjustsomewhat?”) TOTALSUPPORT----------------------65% Stronglysupport---------------------------21% Somewhatsupport-------------------------44% TOTAL OPPOSE------------------------27% Somewhatoppose--------------------------13% Stronglyoppose----------------------------14% (DON'T READ)Don'tknow-------------8% Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes FAIRBANK, MASLIN,MAULLIN,METZ&ASSOCIATES 220-3577-WT PAGE6 10. NextIam goingtoread youalistofdifferenttypesofbondortaxmeasuresthatmightbeplacedon thePaloAltoballottofundimprovementstodifferentaspectsoftheCity’sinfrastructure. Afteryou heareach one,please tellmeif youwouldsupportoropposeincreasingtaxestofundthatparticular setofimprovements.Hereisthefirstone…((IF SUPPORT/OPPOSE, ASK:“Isthatstronglyor justsomewhat?”)RANDOMIZE) (DON’T STRG. S.W. S.W. STRG. READ)TOTAL TOTAL SUPP. SUPP. OPP. OPP. DK/NA SUPP. OPP. (ALWAYSASK a. FIRST) []a. APaloAltoVitalFacilitiesand ServicesProtectionMeasurethat wouldprovideastablesourceof locally-controlledfundingtoaddress localneeds. Thesefundscouldnot betakenawayby theStateand wouldbeusedtosupportgeneral Cityservicesandfacilities, includingfire,paramedics,police, streets,sidewalks,parks,recreation, librariesandcommunitycenters.----------33%-----39%-----13%---- 11%------4%72% 24% (RANDOMIZE) (SPLIT SAMPLE A ONLY) []b. AFire,Paramedic, Police, Seismic SafetyandEmergency Response Measuretofundimprovementsto keepPaloAltosafe, including constructionofanewearthquake- safepublicsafetybuildingand emergencyresponsecommand center,replacingtwoobsoletefire stationswithmodernearthquake- safebuildings,andimproving communicationsystemstoensure rapid9-1-1responsetofires, accidentsandotheremergencies.----------39%-----29%-----17%---- 12%------3%68% 30% Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes FAIRBANK, MASLIN,MAULLIN,METZ&ASSOCIATES 220-3577-WT PAGE7 (DON’T STRG. S.W. S.W. STRG. READ)TOTAL TOTAL SUPP. SUPP. OPP. OPP. DK/NA SUPP. OPP. (SPLIT SAMPLE B ONLY) []c. ATrafficCongestionReliefand Safe Streets, SidewalksandTrails Measuretofundrepairand improvementstostreets,sidewalks, andninemilesofoff-roadtrails. Thismeasurewouldprovidesafe routestoschoolforchildren, improveaccessibilityforpeople withdisabilities,provideanetwork ofsafebikepathsandpedestrian walkways,increasetheavailability ofparking,andupgrade traffic signalsandintersectionstoreduce congestionandimprovesafety.------------39%-----34%-----16%-----8%-------2%74% 24% (SPLIT SAMPLE A ONLY) []d. AParks,Open Space and SustainabilityMeasurethatwould fundimprovementsandinvestments toPaloAlto’sparksandopenspace, includingrepairingunsafe playgroundequipment,creatingnew playfields,improvingwalkingand bikingpathsandtrails,and improvingirrigationsystemsto conservewater.Itwouldalso includefundstotherestorethe historicRothBuildingandrepairthe VenturaCommunityCenter----------------24%-----41%-----17%---- 15%------3%65% 32% (SPLIT SAMPLE B ONLY) []e. APaloAltoChildrenandFamilies FirstMeasurethatwouldfund improvedfacilitiesforpreschool and childcareprograms, saferoutes toschool,pedestrianandbikesafety improvements,parkand playground improvementsandneighborhood trafficcalmingmeasures.-------------------32%-----38%-----17%---- 10%------2%71% 27% Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes FAIRBANK, MASLIN,MAULLIN,METZ&ASSOCIATES 220-3577-WT PAGE8 (RESUME ASKINGALLRESPONDENTS) 11. Regardless of how the measure was structured, would your household be willing to pay ______ in additional taxes if it were dedicated to the types of Palo Alto infrastructure repairs and improvements wehavebeendiscussing?(IF WILLING/UNWILLING, ASK:)“Would that be very WILLING/UNWILLING,to pay that amount, or just somewhat? (SPLIT SAMPLE A READ TOP TO BOTTOM, SPLIT SAMPLE BREADBOTTOM TO TOP) (DON’T VERY SMWT SMWT. VERY READ)TOTAL TOTAL WILL. WILL. UNWL. UNWL. DK/NA WILL. UNWL. []a. 250dollarsperyear--------------------------20%-----29%-----19%---- 29%------4%48% 48% []b. 200dollarsperyear--------------------------25%-----28%-----19%---- 24%------4%53% 43% []c. 150dollarsperyear--------------------------35%-----30%-----14%---- 18%------3%64% 33% []d. 100dollarsperyear--------------------------45%-----30%------8%----- 13%------3%75% 21% NOWIWOULD LIKE TO ASKYOU ABOUTSOME MORE SPECIFICAPPROACHES TO IMPROVINGTHECITY’SINFRASTRUCTURE. 12. Iam goingtoreadyoua listofspecificinfrastructureimprovementsprojectsthatmightbeplaced beforePaloAltovoters,alongwiththeirestimatedcosts. Keepin mindthatthesecostsarejustrough estimates,andwouldbe carefullyrefinedbefore anymeasurewasplaced beforelocalvoters. After youheareach one,pleasetellme whetheryouthinkyouwouldvotetosupportoropposethatproject. Hereisthefirstone…(IFSUPPORT/OPPOSE, ASK:“Isthatstronglyorjustsomewhat?”) (RANDOMIZE) (DON’T STRG. S.W. S.W. STRG. READ)TOTAL TOTAL SUPP. SUPP. OPP. OPP. DK/NA SUPP. OPP. []a. A14milliondollarprojectto replaceand modernizetwo seismically-unsafelocalfire stations,bringthemuptocode standardsandincreasetheFire Department’scapacitytorespondto firesandotheremergencies----------------33%-----40%-----15%---- 10%------2%72% 25% []b. A25milliondollarprojecttocreate anewnetworkofon andoff-street bikelanes,pathsandpedestrian walkwaystohelpensurethat children,commutersand recreationalusershavesaferoutes towork,schoolandother destinations------------------------------------31%-----34%-----16%---- 15%------3%65% 31% Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes FAIRBANK, MASLIN,MAULLIN,METZ&ASSOCIATES 220-3577-WT PAGE9 (DON’T STRG. S.W. S.W. STRG. READ)TOTAL TOTAL SUPP. SUPP. OPP. OPP. DK/NA SUPP. OPP. []c. Asixmilliondollarprojectto completethefundingforayear- roundpedestrianandbicyclebridge overHighway1-0-1atAdobeCreek toconnectSouthPaloAlto neighborhoodswiththeBaylands Naturepreserveandrecreational andemploymentopportunities-------------27%-----34%-----17%---- 20%------2%61% 37% []d. Aneightmilliondollarprojectthat wouldaugmentexistingfundingto repairandimprovestreets, enhancingsafetyandaccelerating thegoalofensuringthatPaloAlto hasexcellentstreets throughouttheCity--------------------------23%-----45%-----19%-----9%-------3%69% 28% []e. Asixmilliondollarprojectthat wouldaugmentexistingfundingto repairandimprovesidewalks throughouttheCitytoimprove pedestriansafety------------------------------25%-----42%-----20%---- 11%------2%67% 31% []f. Atenmilliondollarprojecttorepair andimproveparksandopenspace facilities,includingreplacingunsafe playgroundequipment;upgrading pipesandirrigationsystemsto conservewater;repairingand maintainingpathways,ballfields, andtenniscourts;improving lighting;andreplacingworn benches,drinkingfountainsand otherparkinfrastructure--------------------23%-----43%-----20%---- 11%------2%67% 31% []g. Eightmilliondollarstocompletethe fundingforaprojecttoimprove landscaping,lighting,trafficsignals andsignagealongtheCharleston- ArastraderoCorridor,including bikelanesonbothsidesofthe street;reductionfromfourlanesof traffictothree;crosswalk improvementstoincreasesafety; andimprovementstoreducetraffic speedandcongestion—especially aroundschoolpickupanddrop-off pointsforchildren----------------------------21%-----32%-----21%---- 24%------2%52% 45% Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes FAIRBANK, MASLIN,MAULLIN,METZ&ASSOCIATES 220-3577-WT PAGE10 (DON’T STRG. S.W. S.W. STRG. READ)TOTAL TOTAL SUPP. SUPP. OPP. OPP. DK/NA SUPP. OPP. []h. Asixmilliondollarprojecttofund newplayingfieldsandrecreational facilitiesforlocalresidentsand youthathleticgroups,locatedonten acresofland atthegolf course------------15%-----31%-----29%---- 21%------4%46% 50% []i. A21milliondollarprojectto increaseparkingavailabilityby constructinganewdowntown parkinggaragewithapproximately 350additionalspaces------------------------17%-----27%-----27%---- 26%------3%44% 53% []j. A12milliondollarprojectto increaseparkingavailabilityby constructinganewCalifornia Avenueparkinggarage with approximately200additionalspaces------17%-----29%-----28%---- 24%------2%46% 52% []k. Asevenmilliondollarprojectto fundtheconstructionofanewand relocatedAnimalServicesCenter---------15%-----32%-----29%---- 19%------5%47% 48% []l. Athreemilliondollarprojectto helpfundtherestorationofthe historicRothBuildingandtohouse thePaloAltoHistoryMuseumthere ------9%------30%-----34%---- 23%------4%38% 57% []m. Athreemilliondollarprojectto renovateandupgradetheVentura CommunityCentertoimprovethe qualityofchildcareservicesfor infants,toddlersandpreschoolers offeredthere ----------------------------------19%-----39%-----23%---- 13%------7%57% 35% (SPLIT SAMPLE A ONLY) []n. A57milliondollarprojectto purchaselandandconstructanew earthquake-safepublicsafetyand emergencyresponsecommand center,withupgradeddispatch technologyforpolice,fireand paramedicservice aswellasmore safeandsecure space for interviewingcrimevictimsand storingandanalyzingcrime evidence----------------------------------------19%-----33%-----23%---- 22%------3%52% 45% Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes FAIRBANK, MASLIN,MAULLIN,METZ&ASSOCIATES 220-3577-WT PAGE11 (DON’T STRG. S.W. S.W. STRG. READ)TOTAL TOTAL SUPP. SUPP. OPP. OPP. DK/NA SUPP. OPP. (SPLIT SAMPLE B ONLY) []o. Eightmilliondollarsofcity investmenttoconstructanew earthquake-safepublicsafetyand emergencyresponsecommand center,withupgradeddispatch technologyforpolice,fireand paramedicservice aswellasmore safeandsecure space for interviewingcrimevictimsand storingandanalyzingcrime evidence.Forty-ninemilliondollars inadditionalfundingfortheproject wouldcomefrom aprivate developerinexchangeforrightsto buildnewcommercialofficesnear PageMillRoad andEl Camino------------20%-----35%-----21%---- 19%------5%55% 40% (RESUME ASKINGALLRESPONDENTS) 13. Next,outofallofthepotentialimprovementstobuildings,facilities,andotherinfrastructurethatwe havediscussed,whichdoyouthinkshouldbethehighestpriorityforCitygovernment?(OPEN-END; RECORDVERBATIM RESPONSE) Streetrepair/sidewalkrepair/infrastructure/pedestriansafety-------------------32% Policeandfire/publicsafety-----------------------------------------------------------22% Bikelanes---------------------------------------------------------------------------------12% Emergencyservices-earthquakes-----------------------------------------------------11% Parking--------------------------------------------------------------------------------------8% Parksandplaygrounds/recreation/children-------------------------------------------8% Schools/childcare--------------------------------------------------------------------------6% Needtomanage themoneytheyalreadyhave---------------------------------------4% Animalservices ---------------------------------------------------------------------------3% Traffic---------------------------------------------------------------------------------------3% Other----------------------------------------------------------------------------------------5% Idon’tknow-------------------------------------------------------------------------------6% Nothing-------------------------------------------------------------------------------------2% Refused-------------------------------------------------------------------------------------5% Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes FAIRBANK, MASLIN,MAULLIN,METZ&ASSOCIATES 220-3577-WT PAGE12 14. Finally, I am going to read you a list of severalmethods that might be used to raise money to fund the types of infrastructure repairs and improvements we have been discussing. After you hear each one, please tell me if you would support or oppose using that particular way of raising new revenue for these purposes.FIRST/NEXT, would you support or oppose_____(RANDOMIZE)(IF SUPPORT/OPPOSE, ASK:)“Isthatstrongly SUPPORT/OPPOSE orjustsomewhat? (DON’T STRG. S.W. S.W. STRG. READ)TOTAL TOTAL SUPP. SUPP. OPP. OPP. DK/NA SUPP. OPP. []a. Issuingbonds,allowingtheCityto borrowmoneytocompletethe projectsandpayitback overtime withmoneyfromlocalproperty taxes--------------------------------------------25%-----39%-----16%---- 18%------2%64% 35% []b. Increasingthetransientoccupancy tax,chargedtohotelandmotel guests-------------------------------------------24%-----38%-----21%---- 12%------5%62% 33% []c. Increasingtheutilityuserstax, whichisaddedtoelectricity,gas, waterandphonebills-------------------------6%------24%-----28%---- 41%------2%29% 69% []d. Establishingabusinesslicensetaxto bepaidbyanybusinessoperatingin PaloAlto---------------------------------------17%-----34%-----23%---- 23%------3%51% 46% []e. Increasingtherealestatetransfer taxrate–paidwhena propertyis boughtorsold---------------------------------18%-----33%-----22%---- 24%------4%51% 46% []f. Increasingthelocalsalestaxrate paidbyanyonewhoshopsinPalo Alto---------------------------------------------10%-----28%-----27%---- 34%------2%38% 61% []g. Establishingaflattaxonevery parcelofpropertyinPaloAlto-------------8%------33%-----20%---- 34%------5%41% 54% HERE ARE MYLAST QUESTIONS,AND THEYAREFOR STATISTICALPURPOSES ONLY. 15. (T)Doyou ...(READ LIST), Ownasinglefamilyhome---------------59% Ownacondominium------------------------7% Rentanapartmentorhome--------------30% (DON'T READ)Refused------------------5% Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes FAIRBANK, MASLIN,MAULLIN,METZ&ASSOCIATES 220-3577-WT PAGE13 (ASK Q16IFCODE1 OR2IN Q15) 16. (T)Didyoubuyyourhomebefore 1978orin1978orafter? Before1978---------------------------------27% In1978orafter----------------------------72% (DON'T READ)Refused------------------1% (RESUME ASKINGALLRESPONDENTS) 17. (T)What wasthelastlevelofschoolyoucompleted? Grades1-8------------------------------------0% Grades9-12-----------------------------------0% Highschoolgraduate------------------------4% Some college/vocationalschool---------10% Collegegraduate(4years)---------------33% Postgraduatework/professionalschool52% (DON'T READ)Refused------------------1% 18. (T) Withwhichracialorethnicgroupdoyouidentifyyourself:LatinoorHispanic,African AmericanorBlack, CaucasianorWhite,South Asian,someotherAsianorPacific Islandergroupor someotherethnicorracialbackground?(READ CHOICES BELOW) Hispanic/Latino------------------------------2% Black/AfricanAmerican--------------------2% Anglo/White--------------------------------71% SouthAsian-----------------------------------6% SomeotherAsian/PacificIslandergroup9% Other(SPECIFY_____) -------------------0% (DON’T READ) MIXED -----------------1% (DON'T KNOW/REFUSED)------------8% 19. (T) Idon’tneedtoknow theexact amount,butI’mgoingtoreadyousomecategoriesforhousehold income. Wouldyoupleasestopmewhen Ihave readthe categoryindicatingthetotalcombined incomeforallthepeople inyourhouseholdbeforetaxesin2012? $50,000orless-------------------------------8% $50,001-$100,000-----------------------17% $100,001-$150,000----------------------20% $150,001–$200,000---------------------12% Morethan$200,000-----------------------26% (DON'T KNOW/REFUSED)----------17% Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes FAIRBANK, MASLIN,MAULLIN,METZ&ASSOCIATES 220-3577-WT PAGE14 THANK ANDTERMINATE GENDER (BY OBSERVATION):Male------------------------------------------48% Female---------------------------------------52% PARTYREGISTRATION:Democrat------------------------------------53% Republican----------------------------------16% NoPartyPreference-----------------------28% Other-------------------------------------------3% FLAGS P08------------------------------------------- 49% G08------------------------------------------ 75% P10------------------------------------------- 55% G10------------------------------------------ 75% P12------------------------------------------- 56% G12------------------------------------------ 94% Blank------------------------------------------2% VOTE BY MAIL 1---------------------------------------------- 14% 2---------------------------------------------- 11% 3+------------------------------------------- 56% Blank---------------------------------------- 19% AGE 18-29---------------------------------------- 15% 30-39---------------------------------------- 12% 40-49---------------------------------------- 18% 50-64---------------------------------------- 28% 65-74---------------------------------------- 13% 75+------------------------------------------ 14% PERMANENTABSENTEE Yes-------------------------------------------74% No--------------------------------------------26% HOUSEHOLDPARTY TYPE Dem1---------------------------------------28% Dem2+-------------------------------------18% Rep1 ------------------------------------------9% Rep2+----------------------------------------5% Ind1+---------------------------------------26% Mix-------------------------------------------15% Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes Attachment C. Infrastructure Project Costs (all costs/revenues in millions of dollars) May 29, 2013 Projects costs and project‐specific funding Polling Support (sum of strongly  & somewhat support) Project Estimated  Cost Committed  Funding Net Cost with  Committed Potential  Funding Net Cost with  Committed  and Potential 72%Fire Stations 14.2 0 14.2 0 14.2 69%Streets 8 0 8 0 8 67%Sidewalks 6 0 6 0 6 67%Parks Catch Up 9.8 0 9.8 0 9.8 Subtotal 38 0 38 0 38 65%Bike/Pedestrian Plan 25 1.5 23.5 0 23.5 61%Bike Bridge 10 8.35 1.65 0 1.65 57%Ventura Community Center 3 0 3 0 3 52%Public Safety Building 57 0 57 48 9 52%Charleston/Arastradero 9.75 2.27 7.48 0.35 7.13 Subtotal 104.75 12.12 92.63 48.35 44.28 47%Animal Services Center 6.9 0 6.9 0 6.9 46%Playing Fields (at Golf Course)6 0 6 0 6 46%Cal. Avenue Parking Garage 12 0 12 0 12 44%Downtown Parking Garage 21 0 21 0 21 38%History Museum at Roth Building 3 0 3 0 3 Subtotal 48.9 0 48.9 0 48.9 not polled Byxbee Park 3.6 0 3.6 0 3.6 not polled Surface Catch Up 8.8 0 8.8 0 8.8 not polled Buildings Catch Up 4.5 0 4.5 0 4.5 not polled Cubberley Deferred Maintenance 6.9 0 6.9 0 6.9 not polled Civic Center 16 0 16 0 16 Subtotal 39.8 0 39.8 0 39.8 Total 231.5 12.1 219.3 48.4 171.0 Total (excluding parking garages, History Museum, Ventura) 192.5 12.1 180.3 48.4 132.0 les s  tha n  ma j o r i t y   tw o ‐thi r d s ma j o r i t y The project information and cost estimate information on this sheet represent staff’s best information at this  time. Staff will continue to refine the information as new and more precise information becomes available.   Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes Attachment D. Potential Bundled Infrastructure Measures Potential Bundled Infrastructure Measures Survey Bundled Project description Polling Support            (sum of strongly and  somewhat supportive) Potential Projects Estimated  Cost Committed  Funding Net Cost with  Committed Potential  Funding Net Cost with  Committed  and Potential Streets 8 0 8 0 8 Sidewalks 6 0 6 0 6 Bike/Pedestrian Plan 25 1.5 23.5 0 23.5 Bike Bridge 10 8.35 1.65 0 1.65 Charleston/Arastradero 9.75 2.27 7.48 0.35 7.13 Cal. Avenue Parking Garage 12 0 12 0 12 Downtown Parking Garage 21 0 21 0 21 Totals:91.75 12.12 79.63 0.35 79.28 72% A Palo Alto Vital Facilities and Services Protection Measure that would provide a stable source of locally-controlled funding to address local needs. Th Ventura Community Center 3 0 3 0 3 Bike/Pedestrian Plan 25 1.5 23.5 0 23.5 Parks Catch Up 9.8 0 9.8 0 9.8 Charleston/Arastradero 9.75 2.27 7.48 0.35 7.13 Streets 8 0 8 0 8 Sidewalks 6 0 6 0 6 Totals:61.55 3.77 57.78 0.35 57.43 Public Safety Building 57 0 57 48 9 Fire Stations 14.2 0 14.2 0 14.2 Totals: 71.2 0.0 71.2 48.0 23.2 74% 71% A Traffic Congestion Relief and Safe Streets, Sidewalks  and Trails Measure to fund repair and improvements to  streets, sidewalks, and nine miles of 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. A Palo Alto Children and Families First Measure that  would fund improved facilities for preschool and  childcare programs, safe routes to school, pedestrian and  bike safety improvements, park and playground  improvements and neighborhood traffic calming  measures. A Fire, Paramedic, Police, Seismic Safety and Emergency  Response Measure to fund improvements to keep Palo  Alto safe, including construction of a new earthquake‐ safe public safety building and emergency response  command center, replacing two obsolete fire stations  with modern earthquake‐safe buildings, and improving  communication systems to ensure rapid 9‐1‐1 response  to fires, accidents and other emergencies. A Palo Alto Vital Facilities and Services Protection  Measure that would provide a stable source of locally‐ controlled funding to address local needs.  These funds  could not be taken away by the State and would be used  to support general City services and facilities, including  fire, paramedics, police, streets, sidewalks, parks,  recreation, libraries and community centers. 68% Information on potential projects is not provided for this measure, as it is structured as a general  measure whose revenues would not be dedicated to specific uses. The project information and cost estimate information on this sheet represent staff’s best information at this  time. Staff will continue to refine the information as new and more precise information becomes available.   Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 1 5/29/2013    Attachment E:  Public Safety Building Update  The Planned Community (PC) zone change at 395 Page Mill and 3045 Park Blvd., if approved,  would allow construction of two four‐story office buildings, totaling 311,000 square feet at 395  Page Mill Road, and a three‐story approximately 44,500 square foot public safety building (as  the primary proposed public benefit), along with associated parking. The applicant has  estimated the value of the construction of the public safety building (including land) and  associated parking at $49.3 million. The project at this value also assumes that the applicant  would build the public safety building and parking garage (at a presumably lower cost than the  City could.)   At the May 7, 2013 meeting of the Infrastructure Committee, staff reported that the City’s  architect, Michael Ross of RossDrulisCusenberry Architecture Inc. (RDC), is working in an  advisory role to the applicant’s architect, DES Architects and Engineers (DES), to address the key  criteria for a successful public safety building.  Since the May 7, 2013 meeting, Michael Ross has  continued to work with City staff and DES to refine the building configuration and layout for the  “Operational Basement” approach that is preferred by the Police Department.    The proposed public safety building, along with the proposed office buildings at 395 Page Mill  Road, is scheduled to be considered for initiation by the Planning and Transportation  Commission at its May 29, 2013 meeting.  The staff report to the PTC recommends initiation of  the project, and describes the recent improvements to the public safety building proposal as  follows:   Construction of an approximately 44,500 square foot Public Safety Building with 191  dedicated parking spaces. The Public Safety Building would be located on the southern  portion of the site with 191 parking spaces in two below grade levels.     The below grade parking levels will be for the exclusive use of the Public Safety Building.   Office parking of 388 spaces will be accommodated in the above grade portion of the  parking garage.   The PSB will have a 20 foot stand‐off (setback) from all property lines and a 45 foot  stand‐off from the proposed parking garage.   The building separation will allow for  parking for a media truck and emergency vehicle.    The additional front setback allows for improved security, and provides space for  mature landscaping and a pedestrian plaza at the front of the building.   The PSB frontage has been modified to provide 100 percent publicly accessible functions  along the ground floor.  This will help to enliven the street during the day and create a  “lantern effect” at night along Park Blvd.   The project now proposes a series of landscaped bulb‐outs that will visually narrow the  streetscape while providing sufficient space for bicycle lanes.   The proposed four (4) driveway ramps have been reduced to three (3) ramps, and will  reduce conflicts with pedestrian and vehicular traffic.   The FAR for this site has been reduced from 3.40 to 2.80 with the relocation of 51  parking spaces and further refinement of the parking garage design.  Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes 2 5/29/2013    Both Michael Ross and Police Department staff agree that the proposed public safety building  site is workable, and that the proposed building with the recent improvements to the design is  a strong public benefit that would be highly valuable to the community if approved.    As reported to the Infrastructure Committee on May 7, 2013, Staff believes that enough  progress can be made in the project’s review process to effectively inform decisions about the  need for an infrastructure measure in December 2013 and is committed to work to that  schedule.  The project review process is currently proceeding according to the schedule that  was provided on April 7, and which is also attached.  It is anticipated that Council will be able to  consider the project and the feasibility of the EIR in March 2014.        Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes Attachment F. Potential Revenue Sources  May 29, 2013 Potential Revenue Sources to Fund Infrastructure Projects Currently Available Revenue Sources (in millions)Potential Revenue Ballot Measure Types Infrastructure/Housing $22.1 Sustainability 12.3 Parks 1.0                  Community Centers 1.4 Citywide Traffic TBD GO Bonds ($100 per year)57 GO Bonds ($150 per year)86 GO Bonds ($200 per year)114 Available 3.6 GO Bonds ($250 per year)143 Projected FY2013 End 6‐10 Total:$44.0 ‐ $48.0 Business License Tax 51%3.3 46.2 Parcel Tax ($200 per parcel) 41%4 56 Sales Tax 1/8 cent increase 38%2.6 36.4 Potential or Projected Revenue Increases Soure of New Revenue New Hotels (2014)1.7 23.8 New Hotels (after 2014)0.7 9.8 Cities TOT Rates Digital Readerboard 0.8 11.2 San Francisco 14.0% Auto Dealership at MSC 0.8 11.2 San Jose 10.0% Amount Oakland 14.0%$100 75% Menlo Park 12.0%$150 64% Lease LATP site 3 42 East Palo Alto 12.0%$200 53% Mountain View 10.0%$250 48% Total:8.4 117.6 Sunnyvale 9.5% Santa Clara 9.5% Redwood City 12.0% Santa Barbara 12.0% Anaheim 15.0% Potential Funding from New Tax Measures New tax measure Annual Revenue Sales tax increase of 1/8 cent 2.6 Transient Occupancy Tax increase of 1 percent 0.9 Documentary Transfer Tax increase of $1.10 per $100,000 of value 1.8 Utility User's Tax increase of 1 percent 2.2 Business License Tax (2009 analysis)3.3 Parcel Tax of $200 per parcel 4.0 46.2 56 One‐time  Funding   36.4 12.6 25.2 30.8 Lease Current Police  Building 1.4 19.6 One‐Time  Revenue (30‐ year COPs) Support for  Additional Taxes Estimated Annual  Revenue 1 Note that polling support is with respect to the revenue measure  type, not the amount of the tax or bond One‐Time  Revenue     (GO Bond,  Annual  Revenue Polling Support1  (sum of strongly  and somewhat  supportive) Type of Revenue Measure  or Tax Increase Utility Users Tax 1% Increase 29%2.2 30.8 Transient Occupancy Tax 1%  Increase 1.8 25.2 64% 62%0.9 12.6 Documentary Transfer Tax  $1.1 per $100,000 increase 51% Stanford Medical  Center Mitigation  Downtown In‐Lieu  Parking 1.2 Development Impact  and In‐Lieu Fees Infrastructure Reserve Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes Attachment G. Finance Mechanisms and Election Requirements  Updated May 29, 2013   *General taxes can be coupled with an advisory measure expressing voters’ preference that tax be used for particular purpose. If the ballot  language itself expressly restricts use of tax proceeds to infrastructure or other specific uses, it becomes a Special Tax.   Special taxes require a 2/3 vote,  but need not be placed on a General Election ballot.   Funding Type    Description    General Election  Required  (Even years only)  Vote  Requirement  Comments  Taxes  General Obligation (GO)  Bond  Property Tax based on %  of assessed value  No 2/3    Parcel Tax Property tax based on  flat rate per parcel  No 2/3      Sales Tax    Tax on goods Yes, if structured as a  general tax*  Majority Can be increased in 1/8  increments up  to 1% maximum  Utility Users Tax    Tax on utility charges Yes, if structured as a  general tax*  Majority    Documentary Transfer  Tax    Tax on real property  deeds  Yes, if structured as a  general tax*  Majority    Transient Occupancy  Tax (Hotel Tax)    Tax on hotel rates Yes, if structured as a  general tax*  Majority    Business License Tax    Tax on businesses Yes, if structured as a  general tax*  Majority City doesn’t currently have  Other Funding Mechanisms  Certificates of  Participation (COPs)    Financing lease that   allows issuance of tax  exempt debt  N/A N/A Must have identified revenue stream for  repayment.    Utility Revenue Bonds Bonds secured by utility  rates  N/A N/A Must have identified revenue stream for  repayment. Utility bonds cannot be  used to fund General Fund operations.    TRIP COP’s  COP’s secured by City  portion of gas tax  N/A N/A California Communities sponsored  program to leverage gas tax revenues.  Can only be used for certain street  improvements.  Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes INFRASTRUCTURE COMMITTEE MINUTES Page 1 of 16 Special Meeting Thursday, June 6, 2013 The Infrastructure Committee met on this date in the Council Conference Room at 5:04 P.M. Present: Berman, Klein (Chair), Scharff, Shepherd Absent: Chair Klein announced that the meeting would end at 6:30 P.M., and an additional meeting regarding the baseline survey results would be scheduled the first week of August 2013. ACTION ITEMS 1. Review Baseline Survey Results and Make Recommendations to the City Council on Next Steps in Considering an Infrastructure Finance Measure. Sheila Tucker, Executive Assistant to the City Manager, noted the Staff Report included supplemental information regarding revenue sources that could be dedicated to infrastructure projects. James Keene, City Manager, inquired whether the full meeting time would be devoted to survey results. Chair Klein did not believe the survey results would require the full time. Ms. Tucker reported Staff was prepared to discuss details of the survey results if the Infrastructure Committee (Committee) wished. Mr. Keene requested the order of topics be reversed. Chair Klein wanted to cover the survey results, and requested Staff present the information in 15-20 minutes. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes MINUTES Page 2 of 16 Infrastructure Committee Special Meeting Final Minutes: June 6, 2013 Dave Metz, Fairbank, Maslin, Maullin, Metz, and Associates, reported demographic information for each question would not be covered in the presentation; however, the information was available. For each survey question, he separated the responses by demographic, geographic and attitudinal subgroups of the Palo Alto electorate. The presentation provided information regarding the essential recommendations. The survey covered a randomly selected sample of 603 voters in Palo Alto who, based on past voting behavior, were considered likely to vote in the November 2014 election. The survey was conducted at the end of April and beginning of May 2013. In a number of places in the data, he would draw comparisons with prior surveys he performed for the City for the Library Bond. Broadly, local voters remained overwhelming pleased with the performance of City government. This was different from other communities where many voters were unhappy with local government performance. One side effect of the happiness was that the community did not see a critical need for additional funding for infrastructure. Approximately half of local voters saw some need for funding for infrastructure projects. When voters were asked about a series of potential ballot measures that pulled together packages of infrastructure improvements under various subject headings, many packages received support from approximately two-thirds of voters. Those questions did not assign a specific funding mechanism or cost to those improvements. A majority, but not a super majority, of voters indicated they would support a Public Safety Building (PSB) fully funded by the City. Support was slightly higher for a public-private partnership for a PSB. In the abstract, approximately two-thirds of voters would be willing to vote for a ballot measure that would provide additional funds for infrastructure improvements. Specific funding mechanisms that generally received the strongest support were General Obligation (GO) bond measures or an increase in the transient occupancy tax (TOT), both of which received support from more than 3 in 5 voters. A variety of other mechanisms received less support. One of the first questions in the survey asked respondents how they would rate the overall job being done by City government as excellent, good, fair, or poor. More than two-thirds rated the City's performance as either excellent or good. Relatively few responses were in the excellent category; however, that was consistent with other communities. Approximately 1 in 20 voters believed the City was doing a poor job. Those numbers were comparable to the numbers generated in 2008. Another question asked voters how they felt about the City's performance in a variety of specific subject areas, with a response of approve or disapprove. By margins greater than 2 to 1, voters approved the City's performance. In the area of maintaining infrastructure, 75 percent of respondents felt the City was doing a good job, and 28 percent strongly approved. This was the first indicator in the data that voters did not see an infrastructure crisis. More broadly, voters did not see a need for additional Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes MINUTES Page 3 of 16 Infrastructure Committee Special Meeting Final Minutes: June 6, 2013 funding for City services in the larger sense. Respondents were asked how they would rate the City of Palo Alto's need for additional funding broadly. Only 40 percent of voters perceived some need for additional funding for the City; 50 percent saw little or no need; and almost one-third saw no need for additional funding. In most cities, respondents were less satisfied with City government, did not believe they received the services they wanted, and perceived a need for more resources. Vice Mayor Shepherd inquired whether satisfaction with City government typically paired with the low need for additional funding. Mr. Metz indicated there was a logical connection between the two. Dissatisfaction with City government usually occurred because of service reductions, and voters tied service reductions to a lack of revenue. Additional questions asked more specifically about whether the public saw a great need or some need for funding to maintain and improve infrastructure. The sample was divided into groups, each of which was randomly selected. One half was asked about maintaining and improving infrastructure as a generic category. The second half was asked about specific categories. In neither formulation did two-thirds of voters perceive a need for more infrastructure funding. The more specific the question, the greater the constituency favored providing additional funding. In either formulation of the question, only 1 in 10 respondents indicated a great need for infrastructure funding. Again, the perception was that the City did a good job of handling these issues. It might seem as though respondents were not willing to provide funding for infrastructure. As respondents went through the remaining questions and heard specific ideas it became apparent that was not the case. The public did see some areas where improvements were needed and where they would be willing to fund them. He developed a series of questions moving from general to specific to try to understand how voters would rank a variety of potential infrastructure priorities. The first and most general question mentioned the Infrastructure Blue Ribbon Commission (IBRC) process and the City's most pressing infrastructure needs, and then provided respondents with a list of different categories of need that had been identified. Respondents were asked whether they thought each category was an extremely important, very important, somewhat important, or not important priority. Two-thirds or more of voters rated a number of items as either extremely important or very important, which was significant for a finance measure requiring a super majority vote. The two categories with the most support were public safety and transportation. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes MINUTES Page 4 of 16 Infrastructure Committee Special Meeting Final Minutes: June 6, 2013 Council Member Berman inquired about the difference between fixing potholes and paving City streets and maintaining streets and roads. Mr. Metz explained that language was used in a split-sample question describing the same types of projects in different ways to determine if the result was meaningfully different. Maintaining City streets and roads received slightly higher support, but the intensity of support was essentially the same. Approximately one-third of voters rated the top-ranked items as extremely important. Lesser ranked items were rated as extremely important by one-quarter of voters. Voters did not necessarily perceive many problems with the City's infrastructure; therefore, they were supportive but not with a lot of strength behind those sentiments. The second tier was comprised of items that at least half, but less than two- thirds, of voters said were very important priorities. Generally, park related issues tended to be in the tier behind public safety and transportation as public priorities. Less than half of voters rated the items lowest on the list as very important priorities. Mr. Keene suggested the Committee would want the data regarding geographic variances. Chair Scharff requested copies of the data for the Committee. Ms. Tucker had the information. Chair Klein felt asking questions and having Mr. Metz extract the information would be more productive than reading the data. Mr. Metz could do that. One question attempted to combine various infrastructure priorities into five items for ballot measures. One item was framed as being a general tax to support City services and facilities generally and requiring a simple majority approval. The other four items were framed around categories of services: public safety; traffic congestion and transportation; parks, open space, and sustainability; and services for children. He did this in order to understand the overall level of public support for collections of infrastructure projects and to determine any distinctions between them. He did not assign a cost or specify a funding mechanism, because those factors could reduce support. Almost all of the categories were within the range of receiving two-thirds support. Parks and open space did not receive two-thirds support, but was within the margin of error. The two categories with the most intense support were a Streets, Sidewalk, and Trails measure and a Public Safety measure. In terms of aggregate support, they all were close in support. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes MINUTES Page 5 of 16 Infrastructure Committee Special Meeting Final Minutes: June 6, 2013 Council Member Berman asked if the 6 percent increase in strong support was worth more than the 4 percent increase in total support when comparing a vital facilities measure to a public safety measure. Mr. Metz reported strong support was a critical indicator. The intensity of support for an early question was the most important indicator. At the end of the survey, respondents were asked to state of all the potential infrastructure improvements discussed, which ones stood out as the highest priority. A majority of respondents mentioned something related to streets, sidewalks, pedestrian safety improvements or police and fire and public safety improvements. The final survey question provided respondents with the list of potential improvements specified by the Committee along with a cost for each project. When asked if they would support or oppose spending the specific dollar amounts on each of the priorities, respondents answered within the same set of issues. Two-thirds of voters indicated they would support fire department modernization; street improvement and repair; sidewalk improvement and repair; and bike lanes and pedestrian paths. Interestingly, park improvement and repair was roughly equivalent to the others in support. The most intense support was for the Fire Department spending and bike lanes and pedestrian paths, with both exceeding 30 percent. Both PSB questions received a majority but not two-thirds support. Less than half of voters were willing to support parking, Animal Services, playing fields and recreational facilities, and the Roth Building; and a plurality would oppose funding for these projects. A split sample was utilized to test the response to a PSB fully funded by the City at $57 million; and to a PSB funded by the City at $8 million and by a private developer with $49 million in exchange for the right to build new commercial offices near Page Mill Road and El Camino Real. The difference in responses was within the survey's margin of error. In each case, a majority but less than two-thirds of respondents expressed support. Council Member Berman asked if the response was not accurate because of the lack of detail for the public-private partnership. Mr. Metz could have performed an entire survey on the PSB subject alone. Talking through detail would potentially impact people's support. The question was designed to state only the most salient points. Some voters could be hesitating to support a PSB project, because they wanted more details. He did not believe the City had public support for a two-thirds vote on the PSB alone. Survey results were a bit lower but close to the results of the 2007 survey. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes MINUTES Page 6 of 16 Infrastructure Committee Special Meeting Final Minutes: June 6, 2013 Vice Mayor Shepherd felt public support would not reach the two-thirds level no matter what the Council did. Mr. Metz agreed it would be difficult. The 2008 survey was not entirely equivalent to the 2013 survey; however, the general patterns were consistent over time. Support for a PSB did not appear to be close to the two-thirds level needed for a ballot measure. Council Member Berman asked if adding context to the questions would change support. Mr. Metz reported that based on survey results in 2007 and 2008, the level of support could increase; however, he was not confident it would reach a stable two-thirds percentage. One question generally asked the voters to indicate whether they supported a voter approved bond or tax measure to fund some group of infrastructure projects described in the survey. By a 65 to 27 margin, voters responded yes. The strong support was only 21 percent, but the question omitted many details. He was encouraged by this response, because earlier questions did not indicate a pressing need for additional infrastructure funds. Voters' willingness to spend money to support specific projects was relatively high and encouraging. Chair Klein noted a strong support of 21 percent and a somewhat support of 44 percent, which added up to 65 percent. The undecided group of 8 percent were people who would likely vote. Undecided voters generally split their vote with one-third supporting and two-thirds opposing. One-third of 8 percent added to 65 percent equaled 67.7 percent, slightly more than a two- thirds majority. There were other ways to view the numbers to receive a more positive result. Mr. Metz did not dispute that. The undecided category would vote one way or the other. Additional factors were the 4 percent margin of error and the lack of project details. Vice Mayor Shepherd inquired whether the next survey would have a directed focus. Mr. Metz replied yes. The point of this survey was to assess voters' reactions to all the building blocks that could be assembled into a measure. Reaction to the buildings blocks in this survey would provide a direction for the next survey and a more precise analysis. Another question asked respondents to indicate the amount they would be willing to pay in order to Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes MINUTES Page 7 of 16 Infrastructure Committee Special Meeting Final Minutes: June 6, 2013 support infrastructure improvements regardless of the funding mechanism. Two-thirds of respondents would support paying $100 per year, and a simple majority would support paying $200 per year. Mayor Scharff inquired whether that question would apply to a bond measure or parcel tax. Mr. Metz explained any finance measure would have some fiscal impact which could be estimated for individual households. The ballot language for a parcel tax stated exactly how much each household would pay. Language for other funding mechanisms did not state a specific amount. Mayor Scharff asked if the results indicated a parcel tax in the amount of $100 per year per parcel would likely receive 75 percent support. Mr. Metz answered roughly yes. Mayor Scharff felt a bond was more difficult, because it varied by property value. Mr. Metz could review the geographic data, determine a rough estimate of the amount respondents would pay, and then match that amount to the amount they stated they were willing to pay. Mayor Scharff noted each homeowner paid a different amount due to Proposition 13. Mr. Metz could estimate the amount. Chair Klein recalled the Library Bond measure provided a great deal of detail for voters to understand the amount the average household would pay. Mayor Scharff requested the amount individual homeowners would pay under the Library Bond. Chair Klein answered approximately $120. Mayor Scharff stated some households paid $600-$800. Council Member Berman explained the amount depended on the assessed value of the home. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes MINUTES Page 8 of 16 Infrastructure Committee Special Meeting Final Minutes: June 6, 2013 Mr. Metz added the amount was usually expressed per $100,000 of assessed value. Mayor Scharff inquired whether the Committee would receive that information. Mr. Keene indicated Staff knew the distribution of the value of houses. Mayor Scharff asked if support for a bond measure was more nuanced than for a parcel tax. Mr. Metz replied yes. In the next round of research, questions would contain specific proposals, and follow-up questions would allow the respondent to calculate the amount he would pay and state how that affected his willingness to support the proposal. Chair Klein noted the Library Bond measure was in the amount of $76 million, which cost homeowners approximately $125 per year. Joe Saccio, Assistant Director of Administrative Services, could provide some examples for the median assessed value. Mr. Metz reported one question asked the respondents whether they would support or oppose each funding mechanism in the abstract. The question provided a relative sense of which types of funding mechanisms seemed to be most palatable to voters. Bonds were at the top of the list. The TOT, real estate transfer tax and business license tax scored relatively well. Mayor Scharff inquired whether 52 percent support and a margin of error of 4 percent was really a majority. Mr. Metz stated the TOT, real estate transfer tax and business license tax were definitely in a second tier. The lower tier included parcel tax, sales tax, and utility users tax. Council Member Berman asked if a bond received more support because of the aspect of paying it later. Mr. Metz felt that was one factor. Another factor was the concept of borrowing money to invest in a long-lasting resource. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes MINUTES Page 9 of 16 Infrastructure Committee Special Meeting Final Minutes: June 6, 2013 Mayor Scharff noted earlier in the discussion a parcel tax of $100 received strong support. This question indicated weak support for a parcel tax. He asked how those two points should be interpreted. Mr. Metz explained the $100 mentioned earlier was not specifically for a parcel tax. In this question, the parcel tax was less popular relative to the other funding mechanisms. If the City decided to have a parcel tax, then placing the amount at approximately $100 would increase the level of success. Support for a sales tax was significantly lower than typical, which may have resulted from the phrasing of the question and not specifying a rate. He urged the Committee not to discard a sales tax increase based on this data. A bond measure might be the way to proceed, because most voters expressed a willingness to support it. Based on the polling data, voters expressed high confidence in City government and its financial management paired with a low sense of urgency for infrastructure issues. That did not deter voters from being willing to support the idea of increasing their taxes to fund infrastructure improvements; however, the support was not intense. The burden would be on the City to educate the public regarding the necessity for improvements and the necessity for a tax increase. For the PSB, the idea of a public-private partnership packaged with other public safety improvements might be more likely to reach two- thirds support. Four things would significantly enhance the potential for success of a measure: focusing on public safety and transportation; combining projects in packages to the greatest extent possible; focusing on GO bonds as a funding mechanism to obtain two-thirds support; and remembering the levels of rough willingness to pay. Council Member Berman inquired whether a voter would be likely to support a package containing improvements the voter did and did not support. Mr. Metz reported in general packaging improvements with strong support with improvements not highly opposed would be the best combination. Future research could empirically test package combinations. Mayor Scharff stated the more intense the opposition to an improvement, the less likely it should be included in a package. Mr. Metz agreed that intense opposition for an improvement was problematic for obtaining a two-thirds majority support. Mayor Scharff indicated a bond measure required a two-thirds vote, while increasing the TOT required a simple majority vote, Support for a bond Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes MINUTES Page 10 of 16 Infrastructure Committee Special Meeting Final Minutes: June 6, 2013 measure was 64 percent, and support for increasing the TOT was 62 percent. Increasing the TOT was more likely to pass than a bond measure. Mr. Metz reported inclusion of the word tax generally had more impact than inclusion of the word bond. Vice Mayor Shepherd felt a new PSB was a fiduciary responsibility; yet, the public seemed ambivalent. She wanted to better understand how to interpret the public response. Mr. Metz explained that one question attempted to define implicitly the deficiencies in the public safety infrastructure and to place the PSB in the context of a system of public safety facilities. Respondents supported that with 68 percent total support and 39 percent strong support. However, the dollar amount and the funding mechanism were missing from the question. He believed the two-thirds support would remain when respondents received the full context. This type of concept could be tested in the future research. The whole could be greater than the sum of the parts. Vice Mayor Shepherd asked if the Committee should communicate better or focus on more polling to assist the communication process. Mr. Metz recalled in 2007 and 2008, the public had no idea of the deficiencies of the PSB. When the public received that type of information in focus groups, they were concerned. The City should create a communication program to communicate the need to the public. In terms of obtaining funding for improvements, the survey provided helpful information in terms of public safety. The net sum of all results seemed to indicate that a PSB was possible. Vice Mayor Shepherd preferred to have community support for full City funding of a PSB. She liked the idea of implementing a business license tax, because it could also fund economic needs. Chair Klein suggested comments were outside of Mr. Metz's area of expertise. Council Member Berman noted the majority of residents supported a PSB; however, the support did not reach the two-thirds level. Mr. Keene stated polling on packages and different messaging that could change support would be performed. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes MINUTES Page 11 of 16 Infrastructure Committee Special Meeting Final Minutes: June 6, 2013 Mayor Scharff agreed there was strong support for a PSB, but it was not at the two-thirds level. Mr. Metz noted support for a PSB was consistent from 2008 forward. Mayor Scharff felt the community wanted a PSB; however, the challenge was funding a PSB. He asked if more polling should be conducted on the amount the public was willing to pay. Mr. Metz suggested the Committee should assess the amount of money resulting from various funding mechanisms. Even if the public favored one funding mechanism, it might not yield enough money to fund the number of projects needed. He could test that information if the Committee wished. Mayor Scharff felt that was true for a real estate transfer tax. Chair Klein noted the public supported an increase in the TOT by 81 percent in a previous election; however, the current survey indicated 62 percent support for an increase in the TOT. He asked if Mr. Metz could explain that disparity. Mr. Metz explained the current survey asked respondents to support a tax mechanism without indicating how the tax would be used. Chair Klein understood the City did not state how the funds would be used when campaigning for an increase in the TOT. Lalo Perez, Administrative Services Director, Chief Financial Officer, asked if the survey question indicated the percentage of tax increase. Mr. Metz answered no. Mr. Perez felt the difference may result from the previous measure stating the percentage of increase. Mayor Scharff felt the City stated the uses for the funds generated by the tax increase. Mr. Keene reported the campaign and the materials indicated the uses. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes MINUTES Page 12 of 16 Infrastructure Committee Special Meeting Final Minutes: June 6, 2013 Chair Klein indicated a 2 percent increase in the TOT would generate slightly less than $2 million annually. Mr. Saccio added that amount did not include the new hotels. Chair Klein requested Mr. Metz comment on survey results which differed from other cities' results. Mr. Metz noted the largest difference was the initial juxtaposition of favorable attitudes toward City government with less perception of financial need. A number of other communities had higher support for investments in public safety, but generally those communities had much higher crime rates. Lack of support for a sales tax was the most counterintuitive result. Council Member Berman inquired whether the demographics of the survey aligned with the demographics of residents likely to vote. Mr. Metz reported it was exactly in line with likely voters. Ms. Tucker reported the Staff Report reviewed the costs for the 14 infrastructure projects. Attachment C indicated the level of support for the 14 infrastructure projects in terms of super majority, majority, or less than majority, and the costs. Staff included the Jay Paul Company proposal and receipt of outstanding grants when calculating the costs. The total project costs excluded the two parking garages, the History Museum and Ventura. Because bundled projects polled well, Staff reviewed packages that received a super majority vote and which projects could fit into that type of theme and the total cost. The four categories of revenue were existing revenue that could be earmarked for infrastructure; potential new revenue sources; the amount of funding resulting from the four types of funding mechanisms; and Certificates of Participation (COP). At the beginning of the Staff Report, Staff provided questions for the Committee to consider in determining which projects would be placed on a ballot measure. Chair Klein requested Staff combine Attachments C and F. Ms. Tucker would do so. Chair Klein suggested the Committee begin eliminating projects without strong support and compiling project bundles. Mr. Saccio reviewed the potential revenue sources found on Attachment F. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes MINUTES Page 13 of 16 Infrastructure Committee Special Meeting Final Minutes: June 6, 2013 Vice Mayor Shepherd inquired whether Staff could isolate revenue from new hotels and earmark that as a revenue source for repaying a COP. Mr. Saccio reported Staff had information regarding the amount of tax each hotel generated. Vice Mayor Shepherd did not feel hotel revenue was a new revenue source in the traditional sense. Council Member Berman asked what would happen if a new hotel filed for bankruptcy in 2025. Mr. Saccio indicated the General Fund would be responsible for replacing that lost revenue. Chair Klein asked if Staff meant GO bond or COP in the far right column under Potential Revenue Ballot Measure Types. Brad Eggleston, Assistant Director of Public Works, stated the types were shown in the order of the amount of support received in the poll. Chair Klein did not understand the right-hand column. Mr. Eggleston indicated the title of the right column should state GO Bond, COP. Council Member Berman requested Staff review the table. Mr. Eggleston reiterated that polling questions related only to the type of tax or bond measure, not the percent of the increase. A $200 per parcel tax resulted in one-time funding of $56 million; whereas a $200 per year GO bond resulted in $114 million. Mr. Saccio noted the document transfer tax was based on $1.10 per $1,000 of value, not $100,000 of value. Chair Klein asked if the State imposed a limit on the amount of increase for the real estate transfer tax. Mr. Saccio was not aware of such a limit. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes MINUTES Page 14 of 16 Infrastructure Committee Special Meeting Final Minutes: June 6, 2013 Mr. Perez reported the best method to receive the best rating from the rating agencies was to pledge full General Fund revenues as alternate revenues for COPs. Vice Mayor Scharff inquired about the total infrastructure dollar amount. Council Member Berman responded $132 million excluding the parking garages, History Museum and Ventura. Mr. Eggleston added that amount assumed the Jay Paul Company proposal was approved. Mayor Scharff requested the amount if the proposal was not approved. Mr. Eggleston replied $219 million with the parking garages, History Museum and Ventura. Without those items and the Jay Paul Company proposal, the total was $180 million. Chair Klein indicated the information was contained in Attachment C. Vice Mayor Shepherd felt it was unwise to deduct the cost for the PSB, because that appeared to indicate the Council would approve the proposal. Chair Klein stated the amount was not deducted. Mr. Saccio reported funding all $132 million in projects would result in each residential property owner paying approximately $226 based on a median average assessed valuation of $654,000. Mayor Scharff believed a bond would affect young families disproportionately. Mayor Scharff asked if the total infrastructure cost included $35 million for the Bicycle and Pedestrian Transportation Plan. Mr. Keene answered yes. Mr. Eggleston added the total included $25 million for the Bicycle and Pedestrian Transportation Plan. The Bike Bridge was originally a part of the $25 million. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes MINUTES Page 15 of 16 Infrastructure Committee Special Meeting Final Minutes: June 6, 2013 Chair Klein requested Committee Members consider removing infrastructure projects and rank ordering the remaining projects. Attachment F indicated available resources totaled $44-$48 million and new revenue sources not requiring a vote totaled $70 million, for a grand total of $117 million. Because all those revenues sources might not occur, Committee Members should consider projects totaling $100 million. Mayor Scharff suggested Staff present information on potential revenue sources to allow the Committee to make recommendations to the Council. Chair Klein explained that was the reason he suggested projects total $100 million. Mayor Scharff felt the Committee needed that information in order to make choices. Chair Klein noted the Staff Report indicated Staff would present information regarding the reader board to the Finance Committee. Mr. Keene indicated Staff discussed presenting the information directly to the Council. He requested direction regarding presentation of reader board information. Chair Klein suggested Staff present the same information to the Committee and the Finance Committee. Mr. Perez added that the Policy and Services Committee was reviewing use of Stanford funds. Staff made recommendations to fund a portion of the Bicycle and Pedestrian Transportation Plan with Stanford funds. Chair Klein felt Committee Member's ranking of projects would shape the final recommendations to the Council. Vice Mayor Shepherd would apply rankings to new revenue sources as well. Chair Klein agreed ranking would work for projects and revenue sources. Mr. Perez read the language in Ballot M for an increase of the TOT. Chair Klein indicated the next meeting would be in August 2013, and he preferred to begin the meeting at 3:00 P.M. or 4:00 P.M. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes MINUTES Page 16 of 16 Infrastructure Committee Special Meeting Final Minutes: June 6, 2013 Mayor Scharff preferred 3:00 P.M. ADJOURNMENT: The meeting was adjourned at 6:40 P.M. Attachment 4: 06/06/2013, Agenda, Staff Report and Minutes Infrastructure Committee 1 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. 4:00 PM Special Meeting Tuesday, May 7, 2013 Council Conference Room Call to Order Oral Communications Action Items 1. Update on the Preliminary Design of the Public Safety Building Associated with Jay Paul Company’s Proposed Development at 395 Page Mill Road Adjournment PUBLIC COMMENT Members of the Public are entitled to directly address the City Council/Committee concerning any item that is described in the notice of this meeting, before or during consideration of that item. If you wish to address the Council/Committee on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers or by the City Clerk, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council/Committee, but it is very helpful. 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. Attachment 5: 05/07/2013, Agenda, Staff Report & Minutes City of Palo Alto (ID # 3783) Committee for Potential Infrastructure Finance Measure Staff Report Report Type: Meeting Date: 5/7/2013 City of Palo Alto Page 1 Summary Title: Update on Preliminary Design Review of Proposed Public Safety Building Title: Update on the Preliminary Design of the Public Safety Building Associated with Jay Paul Company’s Proposed Development at 395 Page Mill Road From: City Manager Lead Department: City Manager Recommendation Staff recommends that the Infrastructure Committee accept this report on the status of the preliminary design of the public safety building (proposed public benefit) associated with Jay Paul Company’s proposed development at 395 Page Mill Road. Background The Planned Community (PC) zone change at 395 Page Mill and 3045 Park Blvd., if approved, would allow construction of two four-story office buildings, totaling 311,000 square feet at 395 Page Mill Road, and a three-story approximately 44,500 square foot public safety building (as the primary proposed public benefit), along with associated parking. The applicant has estimated the value of the construction of the public safety building (including land) and associated parking at $49.3 million. The project at this value also assumes that the applicant would build the public safety building and parking garage (at a presumably lower cost than the City could.) The Council’s Infrastructure Committee, at its March 28, 2013 meeting, directed staff to bring back an accelerated schedule for reviewing the proposed development with a target Council hearing date for potential project approval in December 2013. During the Committee’s discussion on the accelerated schedule on April 16, Police Chief Burns expressed concerns about the preliminary design of the building and the ability of the site to meet the City’s operational needs. The Committee requested that staff return on May 7 with the City’s public safety building architect, RossDrulisCusenberry Architecture Inc. (RDC) with a INFRASTRUCTURE # 1Attachment 5: 05/07/2013, Agenda, Staff Report & Minutes City of Palo Alto Page 2 discussion and analysis of the viability of the site for the City’s future public safety building, and any potential barriers that staff anticipates. Discussion Staff has been working closely with the applicant to address issues related to the design of the proposed public safety building. The City has identified five core building design priorities to ensure the proposed project’s provision of a public safety building as a public benefit is viable. In focused meetings since the April 16 Committee meeting, the City’s architect (RDC) and the applicant (Jay Paul Company) have agreed that the proposed site can meet these criteria: 1. An essential facility, complete with a Communications Center and Emergency Operations Center (EOC), that is designed and constructed to meet essential services standards for seismic resiliency and allow for "immediate occupancy" in the event of a major earthquake or other catastrophic event. Immediate occupancy is essential for the Police Department to respond in an emergency. 2. A public safety building design that maximizes police, fire and public safety operational efficiencies in order to best serve the community and staff, concentrating on police patrol operations, a community room, lobby interactions, prisoner processing, evidence storage, the emergency operations center (EOC), and E-911 communication functions - and offers the appropriate levels of redundancy and survivability to support these functions. 3. A defensible building that is both inviting and attractive to the public and provides modern day security and threat/hazard vulnerability risk mitigation measures, including but not limited to: building setbacks, optimal space planning and building layout configuration, appropriate structural and building envelope design, ballistic shielding, site mounted vehicle barriers, electronic security systems and other building, site and perimeter security measures. 4. An approximately 44,500 square foot essential services public safety facility that includes the entirety of the program. 5. Site capability that includes appropriate ingress/egress, setbacks, efficient operational flow for patrol vehicles within the site, nearby parking for media and fire engines, EOC activations and public parking. In order to expedite our progress on an accelerated schedule, the City has put a process in place for the City’s architect, Michael Ross (RDC) to work in an advisory role to the applicant’s architect, DES Architects and Engineers, to address these priorities. RDC brings extensive experience in the design of public safety buildings. Jay Paul Company is in full support with moving forward and believes the firm’s architect can align and collaborate with the City’s architect to address design and operational needs, and has agreed to fund the work of the City’s architect. Time is of the essence for the applicant too, and the Jay Paul Company has asked that the City and RDC provide concept plan design input by the end of May to promptly allow the Attachment 5: 05/07/2013, Agenda, Staff Report & Minutes City of Palo Alto Page 3 Architectural Review Board and Planning and Transportation Commission to begin their work on the Planned Community zoning proposal. This first tier of design review will focus on the five major operational components mentioned above. A core working team has been established led by Public Works Director Mike Sartor with staff from Planning, Transportation, Public Works, Police, Fire, Office of Emergency Services, and the City Manager’s Office. The team is meeting regularly with RDC and DES on the preliminary design review to ensure coordination and continued work flow. RDC developed two site test fit, operational studies, both of which confirmed the suitability of the site to accommodate the program and integrate the intensive automobile operations of the police department. These studies were reviewed with the Police Department and Developer team. All parties agree that the proposed site, while somewhat constrained, is workable, and staff, the applicant, and the architects are working collectively to design a public safety facility that meets operational needs to best serve the City. There will be an ongoing series of design review and decisions by the staff/applicant planning team that will be needed over the coming months but staff believes we can manage to the schedule outlined. (Staff is working to achieve the next design threshold by the end of May to allow the PTC review to proceed). The Committee requested that staff evaluate key issues related to the proposed development that may challenge or delay the schedule. The following provides a summary of issues that have been raised during the prescreening hearing or the first initiation hearing that will be considered as a part of the Planned Community (PC) Zone process: Value of Public Benefit – While it is believed that the Public Safety Building is a significant public benefit, the City is committed to ensuring that it makes clear the proper ratio of public benefits to increased development intensity allowed under the PC. The City is currently working with a third party economic consultant, Applied Development Economics, to develop an economic analysis of the value of the PC zoning request. A draft of the study is anticipated to be completed in June 2013. Environmental Review – Staff is currently in the final stages of initiating a contract for consulting services to prepare an Environmental Impact Report (EIR). Given the potential traffic associated with the proposed Floor Area Ratio (FAR) and the project’s location above the California-Olive-Emerson (COE) plume, this environmental assessment will contain several alternatives and technical reports including a traffic report, air quality and greenhouse gas analysis, soils and hazardous materials report, water supply assessment, arborist report, and noise report prepared in compliance with the California Environmental Quality Act (CEQA) guidelines, prior to the ARB’s and PTC’s review of the PC zone request. Coordination with City’s Comprehensive Plan and the proposed California Avenue Concept Plan – While the development may meet the City’s desire for additional development near transit, both sites would need Council approval of a Comprehensive Plan Amendment in order Attachment 5: 05/07/2013, Agenda, Staff Report & Minutes City of Palo Alto Page 4 to accommodate the proposed mix of uses and densities. The proposed FAR is not currently anticipated in these plans. Floor Area Ratio – The proposed Floor Area Ratio (FAR) increase is the applicant’s primary reason for requesting a Planned Community Rezoning. The proposal is in excess of three times the maximum allowed FAR. The requested FAR for the project is an average of 1.51:1, whereas the maximum floor area ratio in this zone district is 0.4:1. Height – The PC Zone Ordinance contains a maximum height limit of 35 feet for development within 150 feet of any R-1 and residential PC zoned property, and an overall maximum height limit of 50 feet. The height of the two proposed buildings located at 395 Page Mill Road would be 58 feet above grade. The maximum height proposed for the public safety building at 3045 Park Blvd would be 47 feet and adjacent parking structure would be 57 feet above grade. Given proposed buildings are over 50 feet in height, height exceptions would be requested as part of the PC process. Massing – The proposed development is a four story office building against the backdrop of two-story homes. Appropriate setbacks and landscaping will be important considerations in the review and in minimizing neighbor objections. Attachment A provides a revised schedule with critical milestones for considering Jay Paul’s development proposal and public safety building (proposed public benefit). The schedule also overlays decision points for determining whether/when the City may proceed with an infrastructure ballot measure to potentially fund a public safety building. The good news is that staff can report that the public safety building can work on this site and the design process could lead to the development of a public safety building that would meet the City’s requirements. However, given the complexity of the project and anticipated public participation, staff does not believe a December 2013 City Council hearing date for the project and certification of the environmental impact report (EIR) is feasible. Staff does believe that enough progress can be made in the review process to effectively inform decisions about the need for an infrastructure measure by the December 2013 date and is committed to work to that schedule. It is anticipated that Council will be able to consider the project and the feasibility of the EIR in March 2014. The City will be conducting its final feasibility poll in the spring of 2014 to inform Council’s final decisions about placing an infrastructure finance measure on the ballot. That said, the land use decision on the zoning change will have its own tests to meet beyond the public benefit question. Attachments:  Attachment A. Schedule (PDF) Attachment 5: 05/07/2013, Agenda, Staff Report & Minutes Sep May Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2012 2014 Sep Council Prescreening Dec-12 Applicant Submits Revised Plans Feb PTC Initiation 1st Hearing May Infrastructure Committee May Initiate EIR Jun Circulate NOP Jul PTC EIR Scoping Aug ARB Preliminary Hearing Sep Admin Draft EIR Nov Circulate EIR Dec PTC EIR Hearing Mar CC Hearing Feb PTC Hearing Jan ARB Hearing Jul-Aug Focus Groups Feb-Apr Final Survey Sep-Nov Potential Tracking Survey Apr-Jun Baseline Survey Attachment A. Schedule 395 Page Mill Road and 3045 Park Blvd. Planned Community Zone Change & EIR Schedule and Public Opinion Research for Potential Infrastructure Finance Measure May 2, 2013 May PTC Initiation 2nd Hearing 395 Page Mill Road and 3045 Park Blvd. Planned Community Zone Change & EIR Schedule Public Opinion Research for Potential Infrastructure Finance Measure Attachment 5: 05/07/2013, Agenda, Staff Report & Minutes INFRASTRUCTURE COMMITTEE MINUTES Page 1 of 7 Special Meeting May 7, 2013 The Infrastructure Committee met on this date in the Council Conference Room at 4:01 P.M. Present: Berman, Klein (Chair), Scharff, Shepherd Absent: ACTION ITEMS 1. Update on the Preliminary Design of the Public Safety Building Associated with Jay Paul Company’s Proposed Development at Page Mill Road. James Keene, City Manager, noted at the end of the prior meeting, the Infrastructure Committee (Committee) asked Staff to return with more detail on the Public Safety Building (PSB). Staff worked with the City's architect consultant to refine the concepts for a PSB and determined that a PSB located on the site included in the Jay Paul Company proposal could meet the highest criteria. Staff would continue to refine details in order to meet a deadline of the end of May 2013, when the 395 Page Mill Road Project (Project) would return to the Planning and Transportation Commission (P&TC). Dennis Burns, Police Chief, expressed concerns at the prior meeting about the proposed PSB. Since that meeting Staff worked on the proposed PSB and made significant progress. The proposed PSB should meet the operational needs of the City for several decades. He reviewed the five priorities Staff identified for the PSB and acknowledged the Applicant's willingness to address the priorities. The City's architect and the Applicant's architect worked collaboratively to address the needs for the PSB and both were confident they could design a PSB that would meet the five priorities. Michael Ross, RossDrulisCusenbery Architect, worked collaboratively with DES Architects over the prior two weeks to perform an in-depth analysis of the site. The Park Boulevard area was vetted previously through a number of studies. It was a good location for patrol operations and response times; it was located on the appropriate side of the freeway; and it was not Attachment 5: 05/07/2013, Agenda, Staff Report & Minutes MINUTES Page 2 of 7 Infrastructure Committee Special Meeting Final Minutes: May 7, 2013 geologically subject to liquefaction. It became apparent early on that the 44,500 square foot (sf) program would fit on the site; however, the site needed a better interface for patrol vehicles. The architects developed a stacking of parking that allowed patrol vehicles to access key operational areas in the basement. They wanted to establish a 20-foot minimum security setback around the building. Everything that was necessary for first responder operation should be located within the essential shell. They wanted the site to provide a floor plate geometry and configuration to optimize departmental adjacencies; therefore, they developed two options. With further development in preparation for the May 29, 2013 P&TC meeting, the scheme would deliver a good PSB and a functional site. Mr. Keene was prepared to discuss zoning issues; however, that was not strictly in the Committee's purview. The offer of the PSB as a public benefit would proceed on a separate track from the Planned Community (PC) zoning proposal. Vice Mayor Shepherd stated the Committee was attempting to determine if the PSB as a public benefit was a viable option. This was the first public benefit of this type. A complementary densification was occurring across the street from the Project. She inquired about the process for bringing the public benefit aspect to the Council. Mr. Keene explained the Jay Paul Company submitted a development application, which was in the purview of the P&TC. As part of the application they proposed a PSB as a public benefit associated with the Project. The Council added a new step in the PC review process: contracting with an independent economic analytical firm to determine the value of PC zoning and of a proposed public benefit. Discussion of the relationship between the zoning intensification and the level of the public benefit would occur outside the Committee. On June 6, 2013, Staff would present the results from the initial baseline survey and a detailed schedule of Committee and Council work relating to the Project. Within the next six weeks Staff should receive the initial economic analysis report and initial traffic study report for the Project. The goal was to present the information to the Council in August 2013. The decision on the application itself would not be made until March or April 2014. Vice Mayor Shepherd requested Staff analyze whether the Committee's recommendations coincided with the Infrastructure Blue Ribbon Commission's recommendations. Attachment 5: 05/07/2013, Agenda, Staff Report & Minutes MINUTES Page 3 of 7 Infrastructure Committee Special Meeting Final Minutes: May 7, 2013 Mr. Keene reported the survey results would include initial public reaction to survey questions regarding the City fully funding a PSB and the City partially funding a PSB through a public-private partnership. Council Member Berman felt the discussions allowed the Committee to be comfortable with the site and design of the PSB. He asked if the site would include Public Safety and public parking. C. Thomas Gilman, DES Architects, indicated secure parking would be located directly below the PSB. Parking for the office building was a separate structure. Council Member Berman inquired whether the two garages were separate structures or separated by a common wall. Mr. Gilman replied they were separate structures. Council Member Berman asked the City Manager to elaborate on his comments that the Committee would have sufficient information by November or December 2013 to make a decision on a PSB. Mr. Keene explained the Committee would have a better sense of the potential scale of an infrastructure ballot measure after receiving public polling information. That would be part of the Committee's consideration of the efficacy of a PSB. Curtis Williams, Director of Planning and Community Environment, reported the schedule for presentation of information was heavily driven by statutory requirements and the level of detail needed for a thorough discussion. The schedule contained all the necessary Architectural Review Board (ARB) and P&TC meetings. Some preliminary traffic data and resulting constraints and opportunities could be presented to the Council before the information was bound into the Environmental Impact Report (EIR). The draft EIR should be prepared and circulated for review in the November-December timeframe. That information would determine whether the Project's environmental impacts could be mitigated. The final step was to present to the P&TC and Council in the January, February or March 2014 time period. Council Member Berman stated that discussion of the PSB did not indicate any acceptance of the Project. He wanted the opportunity to convince the public that they should fund a PSB. A new PSB was vitally important to the safety of the City. Attachment 5: 05/07/2013, Agenda, Staff Report & Minutes MINUTES Page 4 of 7 Infrastructure Committee Special Meeting Final Minutes: May 7, 2013 Mayor Scharff felt all outstanding issues regarding the PSB were resolved and was pleased Staff determined a realistic schedule for the overall picture. The PSB was the linchpin of the entire infrastructure discussion. Chair Klein stated the Committee's charter was to determine whether a revenue measure would be placed on the ballot in November 2014. He noted Jay Paul Company's proposal was for the City to fund $4-$8 million of the PSB and inquired whether that amount would be bondable. Joe Saccio, Assistant Director of Administrative Services, explained General Obligation (GO) bonds could not be used to fund furniture, fixtures, or equipment. Certificates of Participation (COPs) could be used to fund furniture, fixtures and equipment for a building. Mayor Scharff asked if the City's contribution could be structured such that GO bonds could be used. Molly Stump, City Attorney, reported Staff would review the issue and determine impacts on the various rights and responsibilities of the parties. City procedures would apply to a City capital Project. Chair Klein inquired whether the economic analysis would be available in late June or early July 2013. Mr. Williams reported Staff would have the report as early as mid-June 2013, but would need to review it prior to presenting it to the Committee. Staff requested the consultant provide a context report of actions by other cities in terms of value recapture analysis. Chair Klein offered a hypothetical scenario of the Council deciding to reduce the size of the Project and the Applicant in turn reducing the size of the public benefit, i.e., the size of the PSB. He inquired whether Staff had considered that scenario and prepared an alternative plan for a PSB. Mr. Keene stated Staff did not have an alternative plan because of the number of possible outcomes. Consideration of the Project was a negotiation between the City and the Applicant. The Applicant and the City would each determine whether the economic analysis was acceptable. The Applicant seemed to be experienced and direct and they would not propose a Project not in their best interest. Staff's responsibility was to retain options for the Council and the community. At any point the Applicant could Attachment 5: 05/07/2013, Agenda, Staff Report & Minutes MINUTES Page 5 of 7 Infrastructure Committee Special Meeting Final Minutes: May 7, 2013 withdraw their application or the City could determine the Project was not feasible. Chair Klein believed the economic report and the traffic study were time sensitive. If the Project was withdrawn or rejected, then the Committee could not develop an alternative plan for a PSB in time to place a revenue measure on the ballot in November 2014. Mr. Keene indicated there would not be time to develop a plan in the sense of a location and design for a PSB that could be presented in some meaningful way to the public. Chair Klein felt a November 2014 revenue measure might not be needed. Without a PSB Project, the City had sufficient revenue sources to fund all infrastructure Projects that the Committee was likely to find feasible or desirable. Mr. Keene reported a revenue measure was a function of the total cost of Projects, the amount of available funding, and the timeframe for funding Projects. Chair Klein believed a revenue measure could not be placed on the ballot before November 2016 if the Committee had to develop an alternative plan for the PSB. Sheila Tucker, Assistant to the City Manager, noted one of the objectives of the survey was to consider various packages. The Council would decide whether to proceed with outreach and educating the community about various packages. The Committee should have sufficient information regarding the Project in order to proceed with the final public survey in the spring of 2014. Chair Klein believed a PSB Project without a design and location would not be marketable to the public. Mr. Keene reiterated that Staff was not drafting an alternative plan, given the amount of conjecture involved in the process. The City would not be ready for a revenue measure in 2014 if the Project did not materialize. Mayor Scharff agreed a ballot measure would not be feasible prior to 2016 if the Project was not approved. He asked when Staff could provide the box score for the various infrastructure Projects. Attachment 5: 05/07/2013, Agenda, Staff Report & Minutes MINUTES Page 6 of 7 Infrastructure Committee Special Meeting Final Minutes: May 7, 2013 Ms. Tucker replied June 6, 2013. Mayor Scharff suggested a bond would not be needed, but was unsure about a revenue measure. Other types of revenue measures could fund the gap. Vice Mayor Shepherd felt the Committee should ask hard questions in order to develop an alternative plan if necessary. Mr. Keene stated if the Council determined at some point in the process that the Project was not viable, they should halt the process and move on to other issues. Chair Klein thanked the developer for acting honorably and forthrightly. He also had an economic position to be concerned about. Mr. Keene indicated the Jay Paul Company had been straightforward with the City and the City had a responsibility to be equally direct. Ms. Tucker announced the next meeting would be held on June 6, 2013 at 5:00 P.M. Agenda items were the box score, the preliminary findings and recommendations from the survey. She noted the polling consultants would have a presentation. Committee recommendations were tentatively scheduled to be presented to the Council on June 17, 2013. Chair Klein asked what would be presented to the Council on June 17th. Ms. Tucker responded the Committee's recommendations regarding the survey. Chair Klein requested the June 6th Agenda include a listing of infrastructure Projects so the Committee could consider priorities. Ms. Tucker reported the box score item listed each Project, cost, current grant funding, outstanding grant requests, all funding that could be allocated for infrastructure and new revenue sources. Chair Klein added another category of potential rent. Ms. Tucker included a category for other funds from different areas. Chair Klein explained the other category could include revenue from the potential leasing of the Police Station site. Attachment 5: 05/07/2013, Agenda, Staff Report & Minutes MINUTES Page 7 of 7 Infrastructure Committee Special Meeting Final Minutes: May 7, 2013 Vice Mayor Shepherd suggested including revenue from reduced lease costs. ADJOURNMENT: The meeting was adjourned at 5:04 P.M. Attachment 5: 05/07/2013, Agenda, Staff Report & Minutes Infrastructure Committee 1 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. 4:00 PM Special Meeting Tuesday, April 16, 2013 Council Conference Room Call to Order Oral Communications Action Items 1. Accelerated Schedule for Jay Paul Development at 395 Page Mill Road 2. Update on the Status of Grants That May Offset the Cost of Infrastructure Projects Adjournment PUBLIC COMMENT Members of the Public are entitled to directly address the City Council/Committee concerning any item that is described in the notice of this meeting, before or during consideration of that item. If you wish to address the Council/Committee on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers or by the City Clerk, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council/Committee, but it is very helpful. 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. Attachment 6: 04/16/2013, Agenda, Staff Reports and Minutes City of Palo Alto (ID # 3725) Committee for Potential Infrastructure Finance Measure Staff Report Report Type: Action Items Meeting Date: 4/16/2013 City of Palo Alto Page 1 Summary Title: Grant Status Update for Infrastructure Projects Title: Update on the Status of Grants That May Offset the Cost of Infrastructure Projects From: City Manager Lead Department: Public Works Recommendation Staff recommends that the Infrastructure Committee accept this update on the status of grants that may offset the cost of infrastructure projects. Discussion At the Infrastructure Committee (Committee) meeting on March 28, 2013, the Committee directed that updating the status of grant requests for funding infrastructure projects become a standing agenda item for meetings of the Committee. The City has applied for grant funding for the Bike Bridge and Charleston/Arastradero Corridor projects. The status of these grant requests is provided in Table 1. Since the Infrastructure Committee meeting on March 28, 2013, staff has learned that the Vehicle Emissions Reduction Based at Schools Grant request of $1 million to support the Charleston/Arastradero Corridor Project has been recommended for approval by Valley Transportation Authority (VTA) staff. The recommendation is scheduled to be considered by the VTA Board of Directors on May 2, 2013. Staff continues to monitor opportunities to leverage grant funding toward the cost of infrastructure projects. Attachment 6: 04/16/2013, Agenda, Staff Reports and Minutes City of Palo Alto Page 2 Table 1: Status of Infrastructure Project Grant Requests Bike Bridge Project Grant Request Request Amount Expected Timeline for Award Other Project Funding Total Project Cost One Bay Area Grant for Bike Bridge $4 million April or May 2013 $5.35 million $10 million Charleston/Arastradero Corridor Project Grant Request Request Amount Expected Timeline for Award Other Project Funding Total Project Cost Environmental Enhancement and Mitigation Grant $0.35 million September 2013 $1.27 million $9.75 million One Bay Area Grant $5.5 million April or May 2013 Vehicle Emissions Reduction Based at Schools Grant $1 million1 May 2013 1 Recommended for approval by VTA Board of Directors Attachment 6: 04/16/2013, Agenda, Staff Reports and Minutes City of Palo Alto (ID # 3728) Committee for Potential Infrastructure Finance Measure Staff Report Report Type: Action Items Meeting Date: 4/16/2013 City of Palo Alto Page 1 Summary Title: 395 Page Mill Revised Schedule Title: Accelerated Schedule for Jay Paul Development at 395 Page Mill Road From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that the Infrastructure Committee accept the attached updated schedule for the consideration of the Jay Paul Planned Community zone change proposal. Background The Planned Community (PC) zone change at 395 Page Mill and 3045 Park Blvd., if approved, would allow construction of two four-story Office Buildings, totaling 311,000 square feet at 395 Page Mill Road, and a three-story 44,450 square foot Public Safety Building (as the primary proposed public benefit), along with associated parking. The Council’s Infrastructure Committee, at its March 28, 2013 meeting, directed staff to bring back a schedule for the subject project with a target Council hearing date for potential project approval in December 2013. Discussion The attached schedule shows the critical milestones for the PC Zone project to meet an “expedited” schedule, culminating in a December 2013 City Council hearing date for the project and certification of the environmental impact report (EIR). The schedule would allow for identification and evaluation of community needs, particularly the Public Safety Building, as quickly as possible, and will provide momentum to keep the project in the public spotlight. The schedule does, however, assume limited numbers of review opportunities by the relevant boards and commissions in order to achieve the final action in 2013. It also assumes rapid but substantive responses by the applicant to questions and issues posed by the boards and commissions, staff and the public. The schedule does not include a meeting with Council until the final review. If Council desires a “mid-point” check-in to discuss public benefits or other Attachment 6: 04/16/2013, Agenda, Staff Reports and Minutes City of Palo Alto Page 2 project elements, the most appropriate time would be at the same time as the Planning and Transportation Commission review of the Draft EIR (September). That review could occur within the proposed timeline. Staff notes, however, that such an interim review would it interrupt the review process (PTC to ARB to PTC to Council) outlined in the code. Staff also notes the following immediate efforts to move forward quickly on the project:  The Planning and Transportation Commission’s initiation of the project has been moved up from May 8 to April 24;  EIR request for proposals were issued with an abbreviated response deadline, and submittals were received by April 11, which is expected to allow staff to issue a notice to proceed to the selected consultant in the next two weeks;  Staff has coordinated with the applicant to initiate the traffic study, which is underway and will be peer reviewed by the EIR consultant; and  Staff kicked off the economic review by Applied Development Economics (ADE) last week, and expects its report quantifying the benefits from the rezoning in approximately 45 days. Staff will bring the methodology and approach forward to a meeting with Council before finalizing the report. Staff believes that the revised schedule (Attachment A) provides an appropriate, though ambitious, timeline for the project review. Attachments:  Attachment A: Revised Hearing Schedule for PC Zone Change (PDF) Attachment 6: 04/16/2013, Agenda, Staff Reports and Minutes Milestone / Task Responsibility Target Schedule Actual Date Council Prescreening Planner/Applicant 09/10/12 Submit revised plans Applicant 12/13/12 Initiation by PTC 1st hearing Planner/Applicant 02/06/13 Initiation by PTC 2nd hearing Planner/Applicant 04/24/13 Initiate EIR contract Planner/ EIR Consultant late April Circulate NOP (Cal Ave & 395) Planner May EIR Scoping Meeting at PTC Planner/Applicant June ARB Prelim Hearing Planner/Applicant June Admin Draft EIR Planner/EIR Consultant July Circulate EIR (Cal Ave & 395) Planner August EIR Hearing at PTC Planner/Applicant September ARB Hearing Planner/Applicant October PTC Hearing Planner/Applicant November CC Hearing Planner/Applicant December 395 Page Mill Road and 3045 Park Blvd Planned Community Zone Change w/ EIR Target Schedule Attachment AAttachment 6: 04/16/2013, Agenda, Staff Reports and Minutes INFRASTRUCTURE COMMITTEE MINUTES Page 1 of 9 Special Meeting Tuesday, April 16, 2013 The Infrastructure Committee met on this date in the Council Conference Room at 4:02 P.M. Present: Berman, Klein (Chair), Scharff (arrived at 4:04 P.M.), Shepherd Absent: Action Items 1. Accelerated Schedule for Jay Paul Development at 395 Page Mill Road. Aaron Aknin, Assistant Director of Planning and Community Environment reported Staff reviewed possible methods to expedite the process for the Jay Paul Development Project in order to reach a December 2013 timeframe. Jodie Gerhardt, Senior Planner indicated the first initiation hearing with the Planning and Transportation Commission (PTC) was held in February 2013. The PTC requested the item be continued and for Staff to return to the PTC on April 24, 2013. Staff was working with consultants to perform the environmental review of the project. In the revised schedule, Staff removed secondary PTC and Architectural Review Board (ARB) hearings as part of the formal review. Staff assumed PTC, ARB, and Council hearings were scheduled consecutively in order to meet the December 2013 timeframe. Mr. Aknin noted the expedited schedule assumed a faster response time from the applicant. Chair Klein inquired whether Staff talked with the applicant regarding the need for rapid responses. Mr. Aknin answered yes. The schedule was aggressive, but possible. The Environmental Impact Report (EIR) schedule was also expedited and the schedule for hiring a consultant needed to be accomplished within the next week. Implementing a Phase Two analysis was key to expediting the schedule. Staff advanced the PTC hearing from May to April. The applicant hired a transportation consultant to perform a traffic analysis; Staff Attachment 6: 04/16/2013, Agenda, Staff Reports and Minutes MINUTES Page 2 of 9 Special Infrastructure Committee Meeting Minutes: 4/16/13 recommended the applicant begin the Phase Two analysis. Staff performed a peer review of the consultant's traffic analysis and Phase Two analysis as part of the EIR process. Vice Mayor Shepherd wished to understand how the project's public benefits were quantified in this Project. Mr. Aknin said he would talk with the City Manager and Director of Planning and Community Environment regarding advancing the Council's discussion of public benefits, if the discussion was limited to one issue. Vice Mayor Shepherd expressed concerns about building design given the rapid schedule for review of the project. If the Council provided the PTC with a philosophy or methodology for approving public benefits for this particular project, then the process was able to proceed more smoothly and to meet the timeline. Ms. Gerhardt reported Staff originally considered bringing the EIR to the Council during the circulation period; however, that discussion focused on the EIR itself, not the project or its public benefits. Vice Mayor Shepherd noted problems identified in the EIR prevented the project from receiving approval. The only way to meet the deadline was for the Council to review the EIR along with the PTC, or to separate the public benefits discussion. Mr. Aknin agreed that extracting the public benefits component from the project for Council discussion was one method, but he wanted to discuss the project with the City Manager. The project had three distinct components: public benefits, the Public Safety Building, and the project itself. Mayor Scharff believed the public benefit discussion needed to be presented to the Council because the Council was required to make a policy decision regarding public benefits. He asked when Staff proposed presenting public benefits to the Council for discussion. Mr. Aknin answered September 2013. Mayor Scharff inquired whether the public benefits discussion was held after the EIR hearing. Mr. Aknin replied yes. The September discussion was a review of the entire project, including the EIR and the public benefits. He thought a public benefits discussion could be advanced within the schedule because Staff hired a consultant to quantify the public benefits; the mentioned that some results were going to be available prior to September 2013. Attachment 6: 04/16/2013, Agenda, Staff Reports and Minutes MINUTES Page 3 of 9 Special Infrastructure Committee Meeting Minutes: 4/16/13 Mayor Scharff believed the size of the project was contingent on the traffic analysis; he asked when Staff anticipated completion of the traffic analysis. Ms. Gerhardt reported the traffic analysis was underway. Once Staff hired an environmental consultant, they needed to perform a peer review of the traffic report. Mayor Scharff felt it was logical to complete the traffic analysis prior to discussing public benefits. He questioned whether the Council needed the full EIR or some components of the EIR, such as the traffic analysis, prior to holding the public benefits discussion. If the Council discussed public benefits in September 2013, then they also needed to discuss the EIR. Vice Mayor Shepherd asked if Mayor Scharff recommended that the Council discussion be held in September. Mayor Scharff thought the date was dependent on whether the EIR revealed impacts that reduced the size of the project. Ms. Gerhardt noted that hazardous materials could be an impact. Mayor Scharff indicated that the Council needed to know anything that was going to impact the size of the project because the amount of public benefits was contingent on the size of the project. He asked when Staff could return with that information. Mr. Aknin thought Staff could begin review of the transportation analysis in late May or June. Ms. Gerhardt reported Staff would have the administrative EIR in July. Mr. Aknin said August was the earliest that Staff could provide information to the Council. Chair Klein remarked that Staff needed to determine impacts to the cost of the project in order for Council to analyze the benefit aspect of things. Ms. Gerhardt added Staff had technical reports as part of the administrative draft of the EIR. Chair Klein made no assumptions regarding approval of the project. Council Member Berman noted the review process was being accelerated; however, the quality of the review process remained the same. He expressed concern about Council analyzing public benefits prior to knowing factors affecting the size of the project. Attachment 6: 04/16/2013, Agenda, Staff Reports and Minutes MINUTES Page 4 of 9 Special Infrastructure Committee Meeting Minutes: 4/16/13 Vice Mayor Shepherd believed the Council needed to know any factors that prohibited the approval of the project as soon as possible. Knowing those factors was also helpful to the applicant. Chair Klein asked if Staff had any preliminary information regarding traffic. Mr. Aknin replied no. Ms. Gerhardt did not think the developer would proceed with the project if he did not feel mitigations were possible. However, Staff had no report to support that statement. Chair Klein was concerned about the entry to Oregon Expressway and asked if Staff had any possible solutions for the possibility of the intersection being a "Z." Mr. Aknin did not but said Staff would work with transportation consultants and Mr. Rodriguez to determine solutions. Chair Klein requested that Dennis Burns, Police Chief provide information regarding the Public Safety Building. Dennis Burns, Police Chief reported there were issues that needed to be resolved, and he wished to continue to study the project. He did not think the design of the Public Safety Building was ideal. He suggested a possible alternative was for the developer to build the Public Safety Building at another site. Mayor Scharff inquired whether Mr. Burns would inform the Council that the Public Safety Building was either appropriate or not appropriate. Mr. Burns answered yes. Mayor Scharff indicated Mr. Burns needed to inform the Council as soon as possible if he was not interested in pursuing the Public Safety Building. Mr. Burns was interested in a Public Safety Building; however, it needed to be operational and to mesh with the neighborhood. Mayor Scharff asked when Mr. Burns would know whether or not he wanted to proceed. Mr. Burns reported the concern was designing the building to fit the site. Attachment 6: 04/16/2013, Agenda, Staff Reports and Minutes MINUTES Page 5 of 9 Special Infrastructure Committee Meeting Minutes: 4/16/13 Mayor Scharff inquired whether Mr. Burns was suggesting an alternative approach, such as the developer paying into a fund earmarked for a Public Safety Building. Mr. Burns was interested in the developer financing and building a Public Safety Building at another, more suitable location. Chair Klein recalled the Infrastructure Committee (Committee) had directed Staff to accelerate the review process for the project in order to meet deadlines for a potential revenue measure. For the same reason, the Committee needed information from Mr. Burns as soon as possible. Mr. Burns felt Staff tried to make the project work, but the solution did not appear to be functional. Chair Klein thought if the City's architect determined the proposed building was functional, then the Council could consider other options. Mr. Burns reported the City's architect did not believe the proposed Public Safety Building was operational. Chair Klein was surprised by that statement and asked if Mr. Burns could provide a definitive answer by the Committee's next meeting. Mr. Burns responded yes. Mayor Scharff suggested Staff be blunt with the developer if the proposed Public Safety Building was not going to be operational. Mr. Burns agreed. Chair Klein was unsure whether another site in Palo Alto could be found. He asked if the problem was the size of the site or the proposed square footage of the building. Mr. Burns understood the problem was the size and the way the building was configured. He wanted a building that allowed operations to fit within the structure. Chair Klein felt the architect's concerns were persuasive. Mr. Burns noted the architect was experienced with Public Safety projects. Chair Klein inquired about the experience of the applicant's architect. Attachment 6: 04/16/2013, Agenda, Staff Reports and Minutes MINUTES Page 6 of 9 Special Infrastructure Committee Meeting Minutes: 4/16/13 Mr. Burns did not know if the applicant's architect was involved with Public Safety projects but he understood the architect was involved with a Public Safety Building in Sunnyvale. Chair Klein asked if Mr. Burns spoke with his counterpart in Sunnyvale. Mr. Burns replied no, because he recently learned that information. Vice Mayor Shepherd suggested the City's architect present information to the Committee. She assumed the Council would walk away from the project, or attempt to obtain cash in lieu of public benefits, if constructing the Public Safety Building was not possible. Chair Klein reported the process was for the applicant to determine the next action if the Council was not interested in a Public Safety Building. If the applicant wished to proceed with the project and propose other public benefits, the Council needed to respond to that proposal. Vice Mayor Shepherd recalled the Council's prescreening of the project included discussion of a Public Safety Building. Chair Klein reiterated that the applicant determine the next action. He thought the Committee should not meet with the architect if the architect determined the Public Safety Building was not appropriate for the site. Mayor Scharff requested Mr. Burns and the architect meet with the Committee to explain why the architect determined the site was inappropriate, if the architect made that decision. Chair Klein questioned the need for meeting with the architect if the architect determined the site was not large enough for a Public Safety Building. Mayor Scharff assumed the problem was more complex than the site not being large enough. He wanted to understand the challenges to constructing a Public Safety Building on the site because that information was useful if the City needed to locate another site. Council Member Berman agreed with Mayor Scharff's comments and assumed the problems were not going to be simple. Chair Klein requested Staff determine when the architect was available to meet with the Committee. Mr. Aknin reported Staff would maintain the revised schedule and work on an interim date for Council to review the project. Attachment 6: 04/16/2013, Agenda, Staff Reports and Minutes MINUTES Page 7 of 9 Special Infrastructure Committee Meeting Minutes: 4/16/13 2. Update on the Status of Grants That May Offset the Cost of Infrastructure Projects. Brad Eggleston, Assistant Director of Public Works reported the City had outstanding grant applications for the Bike Bridge and Charleston- Arastradero Corridor Projects. The Valley Transportation Authority (VTA), Technical Advisory Committee, and Policy Advisory Committee recommended a $1 million grant for the Charleston-Arastradero Corridor Project be awarded under the Vehicle Emissions Reductions Based at Schools (VERBS) Program. He said the VTA Board would vote on approval of the Staff recommendation at the May 2, 2013 meeting. Staff expected to learn about the One Bay Area Grant (OBAG) applications for both Projects in April or May 2013. Mayor Scharff inquired whether the VTA grant amount was $1.27 million or $1 million. Mr. Eggleston answered $1 million. Mayor Scharff asked if VTA Staff recommended approval and whether the VTA Board voted on it. Mr. Eggleston explained the City's Project scored the highest of all projects submitted. The scoring committee recommended the City's grant be funded. The Technical Advisory Committee and Policy Advisory Committee both recommended approval of the grant. He noted that the VTA Board would have the final vote. Mayor Scharff inquired whether the VTA Board approval was a consent item or if it was open to discussion. Mr. Eggleston was not sure of the Board process. Mayor Scharff asked if the Board chose from competing projects or was there only one project that was recommended. Mr. Eggleston noted VTA Staff provided the Board with one set of recommendations. He said most of the projects submitted or most of the dollar amounts requested were funded. The recommendation appeared to be an approval of a block of projects. Mayor Scharff inquired whether Staff discussed the grant process with Council Member Price because she was a member of the Policy Advisory Committee. Mr. Eggleston answered no. Attachment 6: 04/16/2013, Agenda, Staff Reports and Minutes MINUTES Page 8 of 9 Special Infrastructure Committee Meeting Minutes: 4/16/13 Vice Mayor Shepherd asked if the VERBS grant applications were scored differently from OBAG grant applications. Mr. Eggleston understood the grant scoring processes were different. Vice Mayor Shepherd asked if a high score from VERBS correlated with the high score from OBAG. Mr. Eggleston reported scoring for the projects had different considerations. Chair Klein requested Staff provide a chart of infrastructure projects and potential funding sources. Mike Sartor, Director of Public Works agreed to develop the chart. Chair Klein suggested Lalo Perez, Director of Administrative Services (ASD) provide updates to the funding sources. If the Jay Paul Project was approved and it funded a Public Safety Building, then a revenue measure might not be needed. The chart included a placeholder for Stanford Development funds as well. Mayor Scharff noted the Stanford Development funds had different categories. Funds in the sustainability category were used for bike bridges and paths. Mr. Sartor indicated the chart could provide information on available funds and the categories of funds. He understood approximately $20 million was set aside for infrastructure and sustainability. Mr. Eggleston stated there were two primary funds for infrastructure and sustainability, and several smaller funds for specific transit projects. Mayor Scharff felt those funds could be applied to infrastructure needs, depending on the needs. Mr. Eggleston said Staff had compiled some infrastructure funding information and said development impact fee funds were available for projects such as the Charleston-Arastradero Corridor Project. Chair Klein understood development impact fee funds for the Charleston- Arastradero Corridor Project were relatively small. Mr. Eggleston thought the total amount of the funds was slightly less than $1 million, while the total cost of the Project was approximately $10 million. Attachment 6: 04/16/2013, Agenda, Staff Reports and Minutes MINUTES Page 9 of 9 Special Infrastructure Committee Meeting Minutes: 4/16/13 Mayor Scharff requested an Agenda item regarding increasing the Transient Occupancy Tax (TOT) and said he wanted to discuss setting aside those funds for infrastructure. Mr. Sartor suggested Mr. Perez and Joe Saccio, Assistant Director of Administrative Services participate in that discussion. Chair Klein reported the City's architect was available on April 30, 2013 and May 7, 2013. The City Council needed to discuss Stanford funds on May 6, 2013. He requested input on May 7, 2013 for the next meeting date. Mr. Sartor noted the Finance Committee would begin Budget discussions on May 7, 2013. Mayor Scharff said he could attend on May 7, 2013 at 4:00 P.M. Vice Mayor Shepherd was interested in discussing a Business License Tax for a ballot measure. Sheila Tucker, Assistant to the City Manager reported Staff was close to finalizing the survey questionnaire, and anticipated beginning the survey in late April 2013. If a Committee meeting was scheduled in late May, she mentioned that Staff could have preliminary results from the survey. Chair Klein announced the May 7, 2013 meeting included an update of discussions with Jay Paul, a discussion of Stanford funding, and an update regarding grant applications. Adjournment: The meeting was adjourned at 4:53 P.M. Attachment 6: 04/16/2013, Agenda, Staff Reports and Minutes Infrastructure Committee 1 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. 4:00 PM Special Meeting Thursday, March 28, 2013 Council Conference Room Call to Order Oral Communications Action Items 1. Accept Report Summarizing Objectives for the 2013 Baseline Infrastructure Survey 2. Accept Report on Interim Infrastructure Communication Plan and Messaging Concepts 3. Update on the status of various projects and Grant Applications That May Offset the Cost of Infrastructure Projects Adjournment PUBLIC COMMENT Members of the Public are entitled to directly address the City Council/Committee concerning any item that is described in the notice of this meeting, before or during consideration of that item. If you wish to address the Council/Committee on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers or by the City Clerk, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council/Committee, but it is very helpful. 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. INFORMATIONAL REPORT Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes City of Palo Alto (ID # 3646) Committee for Potential Infrastructure Finance Measure Staff Report Report Type: Meeting Date: 3/28/2013 City of Palo Alto Page 1 Summary Title: Objectives for 2013 Baseline Infrastructure Survey Title: Accept Report Summarizing Objectives for the 2013 Baseline Infrastructure Survey From: City Manager Lead Department: City Manager Recommendation Accept report summarizing objectives for a baseline infrastructure survey (Attachment A). Discussion The City has contracted with Fairbank, Maslin, Maullin, Metz & Associates (FM3) to conduct opinion research to determine whether and if so, how to proceed with an infrastructure finance measure or measures. FM3 Research has recommended a series of research efforts to assess public attitudes toward infrastructure projects, beginning with an initial baseline survey. Attachment A provides a high level overview of the objectives of the baseline survey. FM3 is also working closely with staff and the City’s communications firm, TBWB Strategies, to conduct a detailed review of projects and potential funding mechanisms to develop concepts and messages to be tested in the public opinion survey. On March 18, 2013, the City Council considered the Infrastructure Committee’s recommendations to modify the initial list of projects approved by Council for opinion research. The following is the list of projects that will be evaluated in the baseline opinion survey: 1. Public Safety Building 2. Bicycle/Pedestrian Plan 3. Bike Bridge 4. Fire Stations 5. Accelerate street resurfacing 6. Charleston/Arastradero improvements Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes City of Palo Alto Page 2 7. Sidewalks (surface catch-up) 8. Parks catch-up 9. Animal Services Center 10. Playing Fields (golf course) 11. Ventura Community Center 12. Downtown Parking Garage 13. California Avenue Parking Garage 14. History Museum The survey will be developed and data collection will begin in mid to late April 2013. The survey findings and recommendations will be presented to the Infrastructure Committee in May 2013 and to the full Council in early June 2013. Attachments:  Attachment A. Objectives for Baseline Survey (PDF) Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes   TO: Sheila Tucker The City of Palo Alto FROM: Dave Metz and Shakari Byerly Fairbank, Maslin, Maullin, Metz & Associates RE: Summary of Objectives for the 2013 Baseline Infrastructure Survey DATE: March 15, 2013 Fairbank, Maslin, Maullin, Metz & Associates (FM3) is currently preparing a baseline survey to assess public support for ways in which to fund a variety of infrastructure needs in the City of Palo Alto, as identified by the City’s Infrastructure Blue Ribbon Commission. FM3 has recommended a series of research efforts to assess public attitudes toward the projects, including an initial baseline survey; a series of follow-up focus groups if the initial baseline survey points to voter support for revenue increases to support infrastructure investments; and a final feasibility survey. We envision conducting the initial baseline survey among 600 likely voters, which is associated with a margin of sampling error of +/-4.0 percent. The culmination of the research will be a series of recommendations to the City Council about whether and how to proceed with an infrastructure finance measure or measures. As the first stage in this research process, the objectives of the baseline survey will be the following:  To track public attitudes (compared to prior years’ surveys) on core measures like feelings about the City’s quality of life; the City Council’s management of civic affairs and finances; the condition of the local economy; and the need for additional revenue to fund various local services;  To gauge overall perceptions of the condition of the City’s infrastructure, and the specific areas that may be in greatest need of improvement;  To test public support for a list of 13 potential infrastructure improvement projects identified by the City Council’s infrastructure committee, given basic information about their substance and cost;  To assess public attitudes toward a variety of mechanisms that might be employed to fund infrastructure improvements (e.g. general obligation bonds, sales tax increase, transient occupancy tax rate increase, etc.) Attachment A. Summary of Objectives for Baseline Infrastructure Survey Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes    To com ele  To arg  To cat rep The findin projects in support; an and the ca the results of ambigu the final su appear mo evaluate p mbine sever ection timing measure se guments from carefully de tegories for presentative o ngs of the b nto three bro nd those who ampaign wag of the basel ity in the ba urvey next s ost likely to r public supp ral of the im g for the plac ensitivity of m supporters etermine the cross-tabu of the pool o aseline surv oad categorie ose support ged around i line survey, aseline surve pring, which receive publi ort for sev mprovement cement of po f support fo s and oppone e demograph lation of th of likely vote vey will be u es: those wit falls into a g it would like subsequent ey findings, a h will more t ic support. veral potenti t projects in otential meas or infrastruc ents; and hic profile of he data, an ers in Palo A used to sort th very solid gray area, wh ely determin focus group and the resu thoroughly t ial ballot m n cohesive p sures; cture improv f the respon nd to ensu Alto. t the potenti d public sup here the spec ne its succes p research w ults of both r test a ballot measure pac packages, a vements in dents to pro ure that the ial infrastruc pport; those w cific constru ss or failure. will delve dee research proj measure opt ckages that as well as o the face of ovide the nec e responden cture improv with only m uction of a m . Contingen eper into any jects will fe tion or optio Page 2   might optimal f likely cessary nts are vement minimal measure nt upon y areas ed into ons that Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes City of Palo Alto (ID # 3647) Committee for Potential Infrastructure Finance Measure Staff Report Report Type: Meeting Date: 3/28/2013 City of Palo Alto Page 1 Summary Title: Interim Infrastructure Communication Plan and Messaging Concepts Title: Accept Report on Interim Infrastructure Communication Plan and Messaging Concepts From: City Manager Lead Department: City Manager Recommendation Accept report on interim infrastructure communication plan and messaging concepts (Attachment A). Discussion The City has contracted with TBWB Strategies (TBWB) to assist the City to evaluate the feasibility of an infrastructure finance measure and develop communications, messaging and community engagement strategies. In the coming weeks, staff and the City’s consultants will be working to design and execute a baseline public opinion survey to gauge the feasibility of a finance measure to fund some portion of the City’s infrastructure needs. The baseline public opinion survey data will not be available until May, 2013. Pending the results of the survey, a public information and outreach plan will be ready to launch in June, 2013. As a result, TBWB has proposed an interim communication strategy to bridge the span of time from now until the potential launch of the poll-informed outreach plan. Attachment A provides TBWB’s recommendations for an interim communication plan and messaging concepts for the Committee’s feedback. Attachments:  Attachment A. Interim Communicaton Plan (PDF) Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes Attachment A. Interim Infrastructure Communication Plan and Messaging Concepts      TO:   City of Palo Alto  FROM: Charles Heath and Joy Tatarka, TBWB Strategies  RE:   Interim Infrastructure Communication Plan and Messaging Concepts  DATE:  March 15, 2013  _________________________________________________________________________    Meeting Objective: To obtain feedback from the Committee on the proposed interim  communication plan and messaging.     Background: In the coming weeks, city staff and consultants will be working to design and execute  a baseline public opinion survey aiming to gauge the feasibility of a ballot measure to fund some  portion of the City’s infrastructure needs. This survey will evaluate the viability of various funding  sources, rank community priorities for the use of funds and help identify the optimal timing and  strategic approach to a ballot measure. If a finance measure for infrastructure proves feasible, the  resulting data will be used to shape the key components of a measure to ensure that it closely  aligns with the community’s priorities and sensitivities. Furthermore, the data will be essential for  framing the public information and outreach effort to raise awareness of infrastructure needs and  build community consensus around a plan to meet those needs.    Given that baseline public opinion survey data will not be available until May and a public  information and outreach plan will not be ready to launch until June, TBWB has developed a  proposed interim communication strategy to bridge the span of time from now to the launch of  the poll‐informed outreach plan.    Messaging Objectives: Up to this point, the process of identifying and prioritizing facility, road,  sidewalk, park and other city needs has been captured and branded under the term  “infrastructure.” While a useful term for the early scoping and planning stages given its breadth  and flexibility, we are concerned that the term lacks the urgency and relevance needed as we seek  to call the community to action to enact a solution. In a strictly technical sense, “infrastructure”  does capture the police and fire stations, streets and sidewalks, and parks and community centers  that are the focus of this process. However, from an emotional perspective, the term on its own  fails to capture the powerful idea that we’re referring to the most basic and vital underpinnings of  the City that allow the community to thrive and prosper.     Accordingly, we recommend utilizing this interim communication period as a pivot point to  transition away from the generic use of the term “infrastructure” and assign a clearer definition to  the vital projects that are at the heart of the process. We must remember that this interim  communication period is designed to keep the process moving while opinion data is collected to  further narrow the scope and focus. In our efforts to add clearer definition to the projects, we  must be careful to preserve future opportunities by not precluding compelling project themes that  may emerge from the opinion research.      Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes Attachment A. Interim Infrastructure Communication Plan and Messaging Concepts    To ensure that this messaging is easily digestible for busy Palo Altans, we recommend using simple  graphics and succinct descriptors to define the key projects and convey how they are immediately  important and relevant to all residents. In addition, we will want to use graphics and language that  link the projects to a strong sense of community and Palo Alto’s unifying values.    Example Message Concepts:     Connecting the Dots to Move Palo Alto Forward  Palo Alto is known as a progressive community on the leading edge of many trends. We feel that  we can achieve our strategic communication objectives for the interim period by drawing a  connection between this key element of the community’s identity and the underlying  infrastructure that allows Palo Alto to function. To execute this concept we would graphically  depict a connected web of icons representing the key projects that could be funded by an  infrastructure measure. Brief project descriptors would make clear that the icons refer to essential  elements of the community about which all residents care: Fire, Police and Emergency; Streets  and Parking; Sidewalks and Safe Routes to School; Parks and Open Space; Child Care Centers and  After School Programs; Community Centers and Playing Fields; Bike Paths. The concept would be  brought to fruition with copy: “The infrastructure that holds Palo Alto together is aging. Help us  connect the dots for a plan that moves Palo Alto forward.” Readers would be directed to  dedicated website with more detailed information and an opportunity to engage in the process.     A Strong Foundation for Palo Alto  Using El Palo Alto as the inspiration, this concept would feature a sketch of the iconic redwood  tree with a deep root system comprised of the network of key infrastructure projects. Again, we  would represent the projects with simple icons and project descriptions to quickly convey the  importance and relevance of the projects. The copy would help bring the concept together for the  reader: “The infrastructure that holds Palo Alto together is aging. Help us develop a plan to ensure  a strong foundation for Palo Alto.” As with the concept above, readers would be directed to  dedicated website with more detailed information and an opportunity to engage in the process.     Message Dissemination: The selected concept would be designed and presented as an infographic  that could be used in electronic and paper form. Used as a handout, the infographic could be  available at city facilities and other locations where public information may be posted. In  electronic form, the graphic and copy could be integrated into various newsletters, email blasts,  social network posts and relevant websites. In each case, the graphic would be hyperlinked to a  microsite, which would provide more detailed information on each of the projects and links to key  studies and reports compiled as part of this process. Importantly, the microsite would invite  residents to engage in the planning process by signing up to receive regular updates or follow the  process through popular social networking sites, including Facebook and Twitter. This will allow  for easy information dissemination to an interested audience as the process evolves.      Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes INFRASTRUCTURE COMMITTEE MINUTES Page 1 of 16 Special Meeting Thursday, March 28, 2013 The Infrastructure Committee met on this date in the Council Conference Room at 4:01 P.M. Present: Berman, Klein (Chair), Scharff, Shepherd Absent: Action Items Chair Klein agreed with Staff's request to begin with Agenda Item Number 3 because they thought discussion of Item Number 3 influenced discussion of the remaining items. 3. Update on the Status of Various Projects and Grant Applications That May Offset the Cost of Infrastructure Projects. Brad Eggleston, Assistant Director of Public Works reported the previous day J. Paul Company submitted a new proposal for cost sharing of a Public Safety Building. The new proposal provided everything but furniture, fixtures, equipment, and cabling. The City's cost was estimated to be $2.5 to $5 million under the latest proposal and under the prior proposal was estimated to be $20 million. Staff initiated third-party contracts for architectural and public benefits reviews. The public benefits review allowed Staff to accurately compare the value of proposed public benefits with the value of zoning changes at 395 Page Mill Road. Chair Klein inquired whether the J. Paul Company changed the size of its project. Mr. Eggleston did not believe so. Sheila Tucker, Executive Assistant to the City Manager noted Curtis Williams, Planning and Community Environment Director was going to be present shortly. Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes MINUTES Page 2 of 16 Special Infrastructure Committee Meeting Minutes: 3/28/13 Mr. Eggleston recalled the Infrastructure Committee's (Committee) prior discussion regarding a schedule for a potential Council decision on the J. Paul Company project. He noted that with the change in proposal, the schedule for Council discussion was set for April 2014. Chair Klein reported the new schedule did not allow the Committee much time to consider the project because the Committee had to make a decision regarding a ballot measure in May 2014. He inquired whether the J. Paul Company made any changes to its building proposal. Curtis Williams, Planning and Community Environment Director reported Staff had not received the J. Paul Company's revised building proposal and did not believe the square footage for the project changed. The J. Paul Company probably modified parking on the structure with the Public Safety Building in order to decrease it. The J. Paul Company provided a revised floor plan design for the Police and Public Works Departments to review. He believed the J. Paul Company previously reconfigured the Public Safety Building. Vice Mayor Shepherd inquired whether the approval process could be interrupted so that the Council could review, discuss, and possibly approve public benefits prior to presentation to the Planning and Transportation Commission (P&TC). She thought delaying approval of the project could interfere with the Committee's ability to act efficiently. The latest proposal contained new public benefits. Mr. Williams anticipated presenting the project to the Council for discussion once the Environmental Impact Report (EIR) was available, rather than waiting until the end of the process. Vice Mayor Shepherd indicated the Council would not interfere with the P&TC process, but wanted to discuss the public benefit component only. Molly Stump, City Attorney inquired whether an application was filed. Mr. Williams reported an application was filed, heard by the P&TC once, and scheduled to return to the P&TC on May 8, 2013. He noted that the EIR process required a great deal of work and said there was some question as to whether the Council made a decision without the EIR. Vice Mayor Shepherd thought the EIR provided mitigations and wondered if the project would struggle with P&TC, since the proposed public benefits were new. Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes MINUTES Page 3 of 16 Special Infrastructure Committee Meeting Minutes: 3/28/13 Ms. Stump suggested Staff consider methods to handle the process in order to accomplish that goal. Mayor Scharff inquired whether Staff and the J. Paul Company could expedite the schedule so that the project was presented to Council by December 2013, rather than April 2014. The project needed to continue normally through the review process; however, if the P&TC did not initiate the process, then the project needed to be presented to the Council at its next meeting. Mr. Williams stated Staff would move the project through the process as quickly as possible, with the caveat that Staff had to comply with statutory timeframes. He thought the J. Paul Company should be willing to provide background studies; however, the City's consultant needed to peer-review the studies. Staff wanted to use December 2013 as the target date for presentation to the Council. Chair Klein agreed with Mayor Scharff's comments. The J. Paul Company project was the main item that benefitted infrastructure. He was not able to conceive of presenting a ballot measure to the public without first making a decision on the project and he was disconcerted that the project was not on the P&TC Agenda until May 2013. Mr. Williams explained Staff did not have the project plans. Chair Klein requested Staff accelerate the process as much as possible. If Staff did not believe presentation to the Council was possible by December 2013 or January 2014, the Committee needed to know that. Mayor Scharff suggested Staff begin a Traffic Study for the project as soon as possible. Staff needed to impress upon the J. Paul Company the importance of providing plans as soon as possible to allow for P&TC to review them by April 2013. Vice Mayor Shepherd inquired about the P&TC's perception of the project. Mr. Williams stated the P&TC understood the importance of the Public Safety Building; however, they were concerned that the Police and Public Works Departments would not be satisfied with the layout of the Public Safety Building, with the major issues such as traffic impact and potential neighborhood impact, and with the economic valuation of square footage, versus public benefits. The P&TC understood they would not have the valuation information prior to initiating the project. Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes MINUTES Page 4 of 16 Special Infrastructure Committee Meeting Minutes: 3/28/13 Chair Klein inquired about the timeframe for the economic valuation. Mr. Williams answered approximately 60 days from now. Vice Mayor Shepherd noted the third-party valuation was going to be presented to the P&TC prior to presentation to the Council. Mr. Williams knew the City Manager wanted a session with the Council to discuss the valuation process in general. Staff had specific valuation information for the J. Paul Company project at the time of the general discussion. Chair Klein felt 60 days was a long time for the study to be performed. Mr. Williams clarified that the consultant could perform the study within 60 days; however, drafting the report for presentation to the P&TC required some time. Mayor Scharff suggested Staff draft a schedule and present it to the Committee for review. The issue was making a decision on the project before making a decision on a ballot measure. Council Member Berman reiterated the urgency of reviewing the project. Mr. Eggleston reported the Golf Course reconfiguration project was in the site and design process. It was scheduled for presentation to the P&TC in April 2013. The EIR included up to five athletic fields, a gymnasium, lighting, and parking. Chair Klein did not recall Council discussing a gymnasium. Mr. Eggleston understood a gymnasium was included because it was the most intensive use for that area. Plans were not being developed for construction of a gymnasium on the site. If a decision was made to pursue a gymnasium in the future, then the current EIR covered it. Chair Klein was discomfited by having a gymnasium listed in the review process, when neither the Council nor the public had considered it. Rob De Geus, Recreation Services Manager indicated Staff did not have a design or plan for the 10.5 acres; however, they wanted to include a gymnasium in the EIR in case an opportunity arose to build one. Five athletic fields were squeezed onto the property, but that was not realistic. Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes MINUTES Page 5 of 16 Special Infrastructure Committee Meeting Minutes: 3/28/13 Sufficient public outreach was not obtained to determine whether the community agreed to have a gymnasium on the site. Mr. Eggleston noted no design for facilities occurred. The design for the Golf Course project included design for the Golf Course and setting aside 10.5 acres. The target date for construction of the Golf Course was April 2014 because of the EIR process and coordination with the San Francisquito Creek Levee Project. Staff continued to look for grant and partnership opportunities. Chair Klein reported 2015 was a more reasonable target than 2014. Mr. De Geus mentioned that the Golf Course reconfiguration project could move ahead of the Levee Project. Mr. Eggleston stated Staff was looking for grants for the Bike Bridge project and the Charleston-Arastradero Corridor project. For the Bike Bridge project, the City had $4 million in grant monies from the County, $1 million in Development Impact Fees, and $350,000 in Capital Improvement Program (CIP) funding. He thought Staff should hear within the next month whether the City received any of the $4 million One Bay Area Grant (OBAG) funding. If the City received the OBAG grant, then $1 million of the $10 million estimated cost remained unfunded. Staff designated $10 million toward the upper limit for the Bike Bridge project's cost. Planning level estimates ranged between $6 million and $10 million, which allowed the Bike Bridge project to be fully funded. The project was included in the polling to evaluate the public's interest in the project. The Charleston-Arastradero Corridor project had a total cost of $9.75 million. $1.27 million was available from a Safe Routes to School grant. Three grant requests totaling $6.85 million were outstanding and Staff needed a determination on the grants within the next month. Chair Klein suggested a status update be included on every Agenda. Mayor Scharff recalled discussion regarding placing a sign on Highway 101, and receiving slightly more than $1 million in revenue from the sign. He suggested the Committee consider that as a source of infrastructure funding. Thomas Fehrenbach, Economic Development Manager reported Staff analyzed that issue and wanted to present a strategy to the Council in May 2013. He remarked that the City was able to maximize the amount of revenue from the sign because of industry changes. Mayor Scharff asked about the possible amount of revenue. Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes MINUTES Page 6 of 16 Special Infrastructure Committee Meeting Minutes: 3/28/13 Mr. Fehrenbach thought it was premature to state a number; however, he thought the range for revenue could be $750,000 to $1.5 million. Chair Klein asked if negotiations with the Honda dealership were continuing. Mr. Fehrenbach answered yes. The Municipal Services Center (MSC) had the potential for significant revenue enhancements. A study was scheduled to be complete, in terms of scoping work, and presented to the Council prior to the end of the fiscal year. In the short term, Staff was working to free up a possible parcel of approximately two to three acres. He said Staff could present some information to Council regarding that proposal between the May to June 2013. Council Member Berman inquired whether the parcel would front the freeway. Mr. Fehrenbach relied yes and said an auto dealership may be interested in the parcel. Council Member Berman asked if the study would take three to five years, or was it something that could be implemented in five years. Mr. Fehrenbach clarified that it was something that could be implemented in five years. The study considered methods to provide services, efficiencies for the site, relocation of activities from the site, and a potential land swap. Implementation of any recommendations required three to five years. Council Member Berman asked how long it would take to complete the study. Mr. Fehrenbach answered 18 months. Council Member Berman asked if appraisal of the auto dealership sites was included in the study. Mr. Fehrenbach did not know but said he would follow up. Mayor Scharff asked how many acres were contained in the MSC site. Mr. Fehrenbach replied 16.1 acres. Mayor Scharff inquired whether Staff was working to free up a parcel of 3.5 acres from the 16.1 acres. Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes MINUTES Page 7 of 16 Special Infrastructure Committee Meeting Minutes: 3/28/13 Mr. Fehrenbach clarified that it was two to three acres. Mayor Scharff asked if Staff was considering relocating the MSC and freeing up the entire site. Mr. Fehrenbach reported the study reviewed all services residing at the MSC and whether some or all services could be relocated. The economic development goal was to free up as much of the highway frontage as possible. That part of the site was valuable for potential revenue generation. Mayor Scharff inquired whether the 16 acre parcel backed up to the Bay. Mr. Fehrenbach responded yes. Mayor Scharff felt restaurant and recreational facilities were needed by the Bay and said those needed to be part of the options when considering the MSC. Mr. Fehrenbach did not think those options would not be difficult to incorporate into the study. Council Member Berman recalled the Infrastructure Blue Ribbon Commission (IBRC) discussed adding those types of facilities to the MSC or Golf Course along the Bay. Vice Mayor Shepherd concurred with the Mayor's comments and preferred options of an automobile dealership. She was interested in relocating the MSC to a more accessible location and inquired whether athletic fields were feasible for the MSC site. Chair Klein inquired whether the Los Altos Treatment Plant (LATP) site and the adjacent Animal Shelter site were the properties subject to negotiations with regard to the Honda dealership. Mr. Fehrenbach reported Staff talked with automobile dealerships about the possibility of the LATP site as a place to store cars. Chair Klein recalled the plan was to build a new Animal Shelter on the LATP site and to negotiate with automobile dealerships for them to take the present Animal Shelter site. Vice Mayor Shepherd recalled Animal Services was considering the LATP site. Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes MINUTES Page 8 of 16 Special Infrastructure Committee Meeting Minutes: 3/28/13 Mr. Eggleston indicated the estimate for constructing a new Animal Shelter was based on locating the Animal Shelter at the LATP site. Staff was proceeding with the remediation of the LATP site. Chair Klein inquired whether Staff was negotiating with any automobile dealerships for the current Animal Shelter site. Mr. Fehrenbach understood that scenario was long term because of the relocation of the Animal Shelter. In the short term, a 2 to 3 acre parcel was more suitable. Chair Klein disagreed. Negotiations for the Animal Shelter site did not require reconfiguring all other services at the MSC. Mr. Fehrenbach reported the Honda dealership and other dealerships were extremely interested in freeway visibility anywhere on the site. Mayor Scharff inquired whether the City could purchase land in another city and relocate City buildings and services to that property. Ms. Stump stated the City could certainly lease property, and Staff would review other appropriate means to acquire property. Many municipal organizations held land outside their cities. 1. Accept Report Summarizing Objectives for the 2013 Baseline Infrastructure Survey. Sheila Tucker, Executive Assistant to the City Manager reported Staff expected to poll in April 2013, return to the Infrastructure Committee (Committee) in May, and present polling results and recommendations to the Council in June. The baseline poll proceeded with the list of projects approved by the Council on March 18, 2013. Dave Metz, FM3 Research Firm explained the baseline poll was the first step in a series of public opinion research projects. The objectives for the first steps were focused on the broad sweep of projects. The list was narrowed into three categories: 1) highly popular with a high chance of approval; 2) deeply unpopular with a low chance of approval; and, 3) some degree of support but a questionable chance of approval. Objectives for the initial survey included measuring attitudes in the political and economic context, determining the overall perceptions of the City's infrastructure today, understanding support for infrastructure projects, and exploring funding mechanisms. He thought if time ran short, arguments for and against Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes MINUTES Page 9 of 16 Special Infrastructure Committee Meeting Minutes: 3/28/13 infrastructure improvements probably would not be tested. The survey included a series of demographic questions. Interviews were scheduled to be completed in mid to late April; results for the Committee were expected in May and to the full Council in June. Chair Klein inquired whether the Committee needed to delay the poll, given the earlier discussion of the J. Paul Company project. Mr. Metz planned to approach the issue of funding for the Public Safety Building in the survey by asking a question that assumed no public/private partnership or full public funding, and asking a second version of the question that assumed some contribution through a public/private partnership. A third scenario, which he had not planned for, was full funding through a public/private partnership. He thought the public would likely support the third scenario and said he could adjust the timeline by a couple of weeks and proceed with developing the survey as the Committee received information. Chair Klein inquired whether polling data obtained in 2013 to 2014 was stale or useless if the City postponed a ballot measure to 2016. Mr. Metz asked if Council considered a ballot measure in 2014 that excluded the Public Safety Building from the projects. Chair Klein answered yes. Mr. Metz said continuing with the baseline survey provided data points that helped to inform the Committee in its decisions for 2014. Asking some questions about the Public Safety Building was logical in order to have data points. Data obtained in 2013 was helpful but not determinative for decisions in 2015 to 2016. Chair Klein did not believe there was a scenario such that a Public Safety Building was needed but not included in a revenue measure. Vice Mayor Shepherd inquired whether questions regarding a Public Safety Building noted the possibility of a public/private partnership. Mr. Metz reported the sample would be split into two parts: the first was half of the sample had questions that referenced full public financing; the second half of the sample had questions that referenced a public/private partnership that would cost half as much. Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes MINUTES Page 10 of 16 Special Infrastructure Committee Meeting Minutes: 3/28/13 Vice Mayor Shepherd noted densification was the tradeoff for the Public Safety Building. Mr. Metz did not include that element in the description, but said it could be added. Mayor Scharff was not in support of that densification questioning. He said polling could not determine the square footage of the building; that was the Council's responsibility. Mr. Metz did not recommend questions be precise regarding density and square footage. He said he could possibly formulate a question regarding the developer's benefit from financing the project. A question indicated different structures of the building without being precise about the size of the building. He said the questionnaire could be modified to capture that distinction. Council Member Berman stated the poll needed to ask whether the public supported spending public funds for a Public Safety Building. Ms. Tucker believed the Committee wanted to know whether a public benefit from a public/private partnership impacted the public's willingness to support a Public Safety Building. The survey measured other aspects of a public/private partnership as well. Chair Klein felt the poll should measure two items: 1) a publicly funded Public Safety Building; and 2) a 50/50 split of funding from a public/private partnership. If the City accepted the proposal and paid only $5 million for a Public Safety Building, then the Public Safety Building was probably not part of a revenue measure. Council Member Berman did not want the survey to cover the details of the J. Paul Company project. Mr. Metz did not want to design the survey to ask which of the two alternatives the public preferred. Half of the sample questioned one alternative while the second half questioned the second alternative. Chair Klein requested comments regarding timing of polling. Vice Mayor Scharff felt polling should proceed as originally planned. Council Member Berman agreed. Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes MINUTES Page 11 of 16 Special Infrastructure Committee Meeting Minutes: 3/28/13 Mr. Metz reiterated he would continue developing questions over the next few weeks and obtain input from the Committee and Staff. Mayor Scharff inquired whether the Committee would review polling questions. Ms. Tucker answered no, in order to protect the integrity of the survey. Council Member Berman asked if the Committee could delay polling at different times in the future if additional information regarding the public/private partnership warranted it. Mr. Metz answered yes. The plan was to begin with the initial survey, and then convene focus groups based on data from the initial survey. Data from the focus groups was used to design another survey to test a concrete and specific ballot measure concept. There were many places within that timeline that delayed or changed content and structure. Ms. Tucker noted Staff allowed for a potential check-in survey, should additional information be needed. MOTION: Mayor Scharff moved, seconded by Council Member Berman to accept the report. Vice Mayor Shepherd wanted to know the community's thoughts. MOTION PASSED: 4-0 2. Accept Report on Interim Infrastructure Communication Plan and Messaging Concepts. Sheila Tucker, Executive Assistant to the City Manager explained the proposed plan was not intended to be a long-term communication plan. When Staff returned with polling results, they also presented a communication plan and strategy. This was a means to begin educating the community about infrastructure needs in general and to help residents understand their relationship to infrastructure. Charles Heath, TBWB Strategies emphasized this was not a long-term communication plan. Surveys helped inform the conversation with the public regarding infrastructure. The interim period was used to define infrastructure for the community, and to describe the types of projects related to public safety, streets and roads, and parks and open space. That information made the process urgent and relevant to the community. The Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes MINUTES Page 12 of 16 Special Infrastructure Committee Meeting Minutes: 3/28/13 first concept was connecting the dots to move Palo Alto forward. A set of icons represented the different projects comprising infrastructure needs. Communications showed a process was underway to identify the most efficient way to address those needs. Next the public was invited to participate in the process. The community was directed to the City's website and social media sources to tie them into a network to push out updates and information about the projects. That concept was meant to be forward- looking and progressive. The second concept was to stress the importance of these projects by using the iconic redwood tree to show that infrastructure projects were part of the deep root system of a great community. Icons were used to tie infrastructure to concrete concepts. Once the Committee chose a concept, an information graphic in paper form was distributed at City facilities and an electronic form distributed by email and posted on websites. For the interim period, he used existing communication channels and built a website containing information; each icon represented the various projects comprised in the infrastructure plan. Ms. Tucker requested Mr. Heath comment on internal outreach. Mr. Heath proposed development of a set of talking points to be distributed internally. Those talking points allowed Staff to describe the process to the public. Mayor Scharff inquired whether the two concepts were different. Mr. Heath explained the two concepts were variations of one theme. The key communication objective was to create a clear definition of infrastructure. Mayor Scharff asked if Staff wanted Committee input on the two concepts. Ms. Tucker requested the Committee's feedback on the communications concepts. Mayor Scharff inquired about other aspects for the Committee to comment on. Mr. Heath wished to present the concepts and ensure the Committee was agreeable with the direction. Interim communications needed to be implemented while the survey occurred. Mayor Scharff inquired about Mr. Heath's preference between the two concepts. Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes MINUTES Page 13 of 16 Special Infrastructure Committee Meeting Minutes: 3/28/13 Mr. Heath preferred the strong foundation because it drew on the Palo Alto legacy. Council Member Berman liked the idea of a strong foundation and moving forward. He agreed with moving away from the term infrastructure. Vice Mayor Shepherd agreed with Council Member Berman's comments. Palo Alto was innovative and creative, and thought making residents proud was important. Chair Klein liked the use of a tree as it was familiar to the community. He was concerned that the term infrastructure was familiar to the community. He noted the report did not offer an alternative to the term infrastructure, and inquired if there was a recommended alternative. Mr. Heath did not want to omit the term infrastructure from interim materials. The purpose of the interim period was to build a bridge between the term infrastructure and a clear definition of infrastructure. It was better to have the survey data before choosing an alternative term because the survey data uncovered themes that should be the centerpiece of new branding. He recommended waiting for survey data before branding infrastructure. Ms. Tucker added that the term infrastructure would not be lost. Chair Klein felt vocabulary used in 2013 carried through the campaign. He liked use of the tree, and suggested root projects. Mr. Heath agreed that was the theme. He wanted to return in June with recommendations based on the survey data, including a detailed communication plan. Vice Mayor Shepherd stated the oak tree, roots, and acorns were compelling icons. Ms. Tucker requested the Committee give input regarding the process of moving forward and the Committee's level of involvement. Staff wanted to develop the concepts quickly as the timeframe was short. Mayor Scharff felt the Committee supported use of the tree and a strong foundation to move Palo Alto forward. Those items were incorporated in a Motion. He asked when Staff would return to the Committee. Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes MINUTES Page 14 of 16 Special Infrastructure Committee Meeting Minutes: 3/28/13 Ms. Tucker reported if Staff had discretion, they wanted to develop the concept and inform the Council before going public. MOTION: Mayor Scharff moved, seconded by Council Member Berman that Staff proceed at their discretion to develop a communication concept incorporating the tree and a strong foundation to move Palo Alto forward. Chair Klein stated Staff could use a redwood or oak tree, but not a palm tree. Vice Mayor Shepherd inquired whether Staff requested permission to prepare informational material without Committee review. Ms. Tucker answered yes. Council Member Berman noted Staff would proceed only for the interim communication plan. Vice Mayor Shepherd asked if the Committee would have input before all material was released to the public. Ms. Tucker reported the intent was not to print materials, but to use the City's website and social media sites. Staff was able to work with a Sub- Committee if they were interested in reviewing materials. Vice Mayor Shepherd wanted to review materials because it was difficult to retract information once it was made public. INCORPORATED INTO THE MOTION: Staff to present materials to the Committee as an Informational Item unless one Committee Member requested the Chair place it on an Agenda. Mayor Scharff was agreeable with an information item if it did not cause problems for Staff with respect to timing. Ms. Tucker inquired about the process for providing the informational item offline. Mayor Scharff explained Staff could email information to each Committee Member. Ms. Tucker suggested the Committee also provide feedback via email. Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes MINUTES Page 15 of 16 Special Infrastructure Committee Meeting Minutes: 3/28/13 Mayor Scharff did not wish to create problems with Staff moving expeditiously. Mr. Heath wished to avoid a four-week timeline and thus possibly miss the window of opportunity to present interim information to the public. Vice Mayor Shepherd wanted the Council to know the information being presented to the public. Chair Klein asked what information would be provided to the public. Mr. Heath reported the information would be a one-page document that included the concept and a website with the graphic and the backup details. This was not an aggressive communication program. Chair Klein suggested Staff email Committee Members. Unless a Committee Member had a significant complaint, the communications plan was going to proceed. MOTION PASSED: 4-0 Chair Klein inquired whether the next meeting would be held in two or four weeks. Mayor Scharff inquired about potential Agenda Items. Ms. Tucker was tracking the accelerated schedule for the Public Safety Building and a status update of grants. Mayor Scharff preferred a meeting in two weeks in order to discuss the schedule for the Public Safety Building. Chair Klein was unsure if two weeks was feasible. Ms. Tucker suggested a meeting the week of April 15, 2013. Neither the City Manager nor she was available the week of April 8, 2013. Chair Klein suggested three weeks, on April 18. Mayor Scharff was not available on April 18. Vice Mayor Shepherd suggested Tuesday, April 16. Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes MINUTES Page 16 of 16 Special Infrastructure Committee Meeting Minutes: 3/28/13 Chair Klein announced the next meeting would be held on April 16, 2013, from 4:00 P.M. to 6:00 P.M. Adjournment: The meeting was adjourned at 5:33 P.M. Attachment 7: 03/28/2013, Agenda, Staff Reports and Minutes Committee for Potential Infrastructure Finance Measure 1 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. 4:00 PM Special Meeting Thursday, March 7, 2013 Council Conference Room Call to Order Oral Communications Action Items 1. Update on the Infrastructure Projects to be Evaluated in the City’s Baseline Public Opinion Survey and Consideration of any Committee Recommendations to the City Council on the Project List 2. Update on the Schedule for Conducting a Baseline Public Opinion Survey to Evaluate the Community’s Support for a Potential Finance Measure to Fund Infrastructure Needs, and Making Decisions about Next Steps, Including Recommendations for Preliminary Community Outreach Adjournment PUBLIC COMMENT Members of the Public are entitled to directly address the City Council/Committee concerning any item that is described in the notice of this meeting, before or during consideration of that item. If you wish to address the Council/Committee on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers or by the City Clerk, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council/Committee, but it is very helpful. 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. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes City of Palo Alto (ID # 3589) Committee for Potential Infrastructure Finance Measure Staff Report Report Type: Meeting Date: 3/7/2013 City of Palo Alto Page 1 Summary Title: Infrastructure Projects Update Title: Update on the Infrastructure Projects to be Evaluated in the City’s Baseline Public Opinion Survey and Consideration of any Committee Recommendations to the City Council on the Project List From: City Manager Lead Department: Public Works Recommendation and Draft Motion: Draft Motion: I move that the Committee: Accept the list of projects approved by Council on September 18, 2012 for the public opinion research firm to use in development of polling questions on a potential ballot measure to fund infrastructure needs. or Accept the list of projects approved by Council on September 18, 2012 for the public opinion research firm to use in development of polling questions on a potential ballot measure to fund infrastructure needs, amended as follows, and forward to the full Council for consideration: Background On September 18, 2012, staff presented to the Council a summary of infrastructure project status and potential funding sources. Staff also presented a subset of the full list of infrastructure projects, with a recommendation that these projects be the basis for the public opinion research firm to use in development of polling questions on a potential ballot measure to fund infrastructure. The Council approved the list, with the addition of three projects: acquisition of the Post Office, improvements to Ventura Community Center, and improvements to the twelve childcare centers located at Palo Alto elementary schools. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes City of Palo Alto Page 2 As approved by Council on September 18, 2012, the project list for public opinion research is as follows: 1.Public Safety Building 2.Bicycle/Pedestrian Transportation Plan 3.Bike Bridge 4.Byxbee Park 5.Fire Stations 6.Streets (accelerate resurfacing and Charleston/Arastradero) 7.Sidewalks (surface catch-up) 8.Cubberley (replace/expand) 9.Parks catch-up 10.Animal Services Center 11.Playing Fields 12.Post Office 13.Ventura Community Center 14.School Childcare Sites Discussion There are a number of variables and factors at play that may offset the costs of the projects and the need for a finance measure. Staff is providing an update on the projects and potential funding sources to facilitate the Committee discussion on the final list of projects to be evaluated in the City’s baseline public opinion survey. Project Summary Sheets An updated set of project sheets is provided as Attachment A. The document is provided in same format as the information provided to Council at its September 18th meeting. Each project sheet includes a project description; estimated cost and basis for the cost estimate; identified and potential funding sources to offset the project cost; and other variables or consideration that may impact timing, cost, or viability. Note that the Ventura Community Center and School Childcare Sites projects, which were added by Council, do not yet have sheets as staff is working to develop project scopes and costs. A one-page summary of the projects and costs is also provided (Attachment B) in the format requested by Council on September 18, 2012. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes City of Palo Alto Page 3 Project Cost Estimate Refinement Staff has contracted with Siegfried Engineering, Inc. to assist staff in reviewing and refining the project cost estimates for the projects that have been identified for public opinion polling. The scope of this work includes the following: ·Standardize the methodology used for each estimate. ·Create a base unit cost based in 2014 dollars. ·Create a set of assumptions for cost escalation over time specifically to the midpoint of construction or designated point in time. ·Set a consistent design contingency percentage as a factor of construction costs. ·Set a consistent construction contingency percentage as a factor of construction costs. ·Set a consistent construction management, inspection, testing, and construction administration percentage as a factor of construction costs. ·Set a consistent set of guidelines and a percentage for the involvement of public art elements as a factor of construction costs. Siegfried is also working with staff to develop new project cost estimates for the Ventura Community Center and School Childcare Sites. This work is expected to be completed by the end of March 2013 and the Project Summary Sheets will be updated accordingly at that time. Potential Funding Sources Table 1 provides an updated list of potential funding sources that could be used for infrastructure projects that are in addition to the funding sources listed on the project summary sheets. Table 1. Potential Funding Sources Funding Source Description Amount Stanford Medical Center Development Agreement: Infrastructure The Stanford Medical Center Development Agreement provides payment of $23.2M for use in connection with infrastructure, sustainable neighborhoods and communities, and affordable housing.Two payments of $7.7M have been received, and the third is estimated to be received in January 2018. $23.2M Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes City of Palo Alto Page 4 Funding Source Description Amount Stanford Medical Center Development Agreement: Sustainability The Stanford Medical Center Development Agreement provides payment of $12M for use in projects and programs for a sustainable community.Two payments of $4M have been received, and the third is estimated to be received in January 2018. $12.0M Infrastructure Reserve The Infrastructure Reserve was created as a mechanism to accumulate funding for infrastructure projects, and is funded each year by a transfer from the General Fund to the Capital Projects Fund.The Infrastructure Reserve balance at the end of FY2013 is projected to be $14.0M. Staff recommends that $1.5M to $2M be kept in reserves for unanticipated capital expenses. $14.0M Community Centers Development Impact Fee These fees are intended to fund development and improvements to community centers, art centers, nature centers, civic theatres or other facilities that can host classes, studios and educational exhibits for public enjoyment, recreation and education.The fund currently contains $1.7M that is not committed to specific projects. $1.7M Parks Development Impact Fee These fees are intended to be used to fund acquisition of land for new or expanded parks and for improvements for neighborhood and district parks in order to expand the recreational capacity of the park or provide new sports and recreation facilities.The intent of the fee is to mitigate for the expansion of the population by new development with the creation of new recreational facilities.The fund currently contains $0.8M that is not committed to specific projects. $0.8M Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes City of Palo Alto Page 5 Funding Source Description Amount One Bay Area Grant (OBAG) Nondiscretionary Funds OBAG is a new program administered by VTA that will fund local road reconstruction and rehabilitation, bicycle, pedestrian, streetscape, and Safe-Routes-to-School projects that are eligible for Federal Surface Transportation Program (STP), Congestion Mitigation Air Quality (CMAQ) or Transportation.Palo Alto’s automatic allocation share of the funds is expected to be a total of $1.0M to be used over the next four years and other funds will be available on a competitive basis. $1.0M Vehicle Registration Fee Guarantee Fund The new $10 addition to vehicle license fees passed by voters will be used to fund local road improvements and repairs.Palo Alto is expected to receive $0.36M per year (with no sunset date)resulting in funding of $1.8M over the course of the FY13-17 Capital Improvement Program Project (CIP)Plan. $1.8M These potential funding sources total $54.5 million. Staff has not proposed allocating the funds to specific projects at this time pending the results of the public opinion polling to be conducted in Spring 2013. Administrative Services Department is scheduled to bring a staff report to Council in April detailing the status of the Stanford University Medical Center (SUMC) Mitigation Funds and the recommended policies and process for considering allocation of those funds. In summary, the staff report will note that one idea for use of the SUMC funds is for One Bay Area Grant (OBAG) project matching funds pending decisions on the OBAG applications submitted by the City. Those decisions are expected in April or May 2013. It is envisioned that the Infrastructure Committee and the City’s new Sustainability Board will provide input to Council on potential allocation of funds for infrastructure projects. Development impact fees are another potential funding mechanism for certain infrastructure projects. As shown in Table 1, there are currently uncommitted Parks and Community Center development impact fees totaling $2.5 million. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes City of Palo Alto Page 6 However, these funds may be needed for completion of the El Camino Park project and for Furniture, Fixtures, and Equipment (FFE) for the Mitchell Park Library and Community Center and Main Library Renovation projects. Staff is working on an update to the City’s development impact fees that will focus future fees to meet unfunded infrastructure project needs. It is also noteworthy that the projected Infrastructure Reserve balance for the end of FY 2013 is $14.0 million, as compared to the projected $5.9 million that was reported on September 18, 2012. The increase is primarily the result of the transfer of $7.6 million from the General Fund at the close of FY 2012. Timeline Public opinion polling is tentatively planned for April 2013. In the event that the Infrastructure Committee recommends any changes to the list of projects for public opinion polling, staff would take the recommendation to Council for its approval. Such action is not anticiated to delay opinion polling. Attachments: ·A -Infrastructure Project Sheets (PDF) ·B -Project Summary Sheet (PDF) Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Public Safety Building (revised 2/26/2013) Construction of a new public safety building approximately 44,420 SF with 147 secured parking spaces and 44 unsecured parking spaces. The building and parking area is comparable to the program verification study prepared by Ross Druilis Cusenberry Architecture in May 2012 which includes Fire Administration. The IBRC 2011 Report found that the current facility failed to meet essential building codes and OSHA requirements, had insufficient space, inadequate and difficult to use EOC. Funding Source: This worksheet displays the project costs included in the Jay Paul public/private partnership proposal that was presented to Council on 9/10/12 and would only be applicable if a public/private partnership is pursued. If pursued, City costs for the project may change based on negotiation of public benefits for the proposed project. The City cost could go down. At the same time, if this approaches is unsuccessful, the City could be faced with funding the $47 million cost through a Finance measure. The greater cost and size of the project will limit the flexibility of options the City may be able to choose from. *Developer estimate, does not include contingency Other Considerations  City staff estimate the project cost for a typical design-bid-build project implementation for a building of approximately the same size, including land acquisition, to be $57M. Although staff have not conducted a detailed review of the public/private partnership project cost estimate of $47M, it $27M $20M Public Safety Building Total Estimate: $47M* Public/Private Partnership Total Additional Need Attachment A Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. appears that the $10M difference may be due to lack of contingencies and estimated soft costs, such as design, environmental assessment, and construction management, that are lower than those the City uses in its cost estimates. Additionally, the developer’s cost estimate for the project incorporates their stated ability to build the project more cheaply and efficiently.  The Jay Paul proposal was prescreened by City Council in September 2012, and the Planning and Transportation Commission (PTC) began the project initiation hearing on February 6, 2013. The PTC initiation hearing was continued to a future date. The current project schedule as prepared by Planning estimates an EIR hearing by the PTC in September 2013, with a potential project approval hearing by City Council in February 2014.  Relocation of the police department to a new public safety building would make approximately 22,600 of the current public safety building available for lease. Leased at $5/SF, this could generate $1.4M/year in revenue that could be used to fund projects or to leverage Certificates of Participation, depending on the size of the funding needed. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Fire Stations (revised 2/26/2013) Two Fire Stations, numbers 3 and 4, have been identified as needing replacement. Fire Station #3, known as the Rinconada Fire Station and located at 799 Embarcadero Road, was constructed in 1948. Station #4, known as the Middlefield Fire Station, is located at 3600 Middlefield Road and was constructed in 1953. A needs assessment study by RRM Design Group in April 2005 determined that both buildings had structural deficiencies and that the sites had a potential for liquefaction (ground instability) during a seismic event. Neither building meets the current building code for essential services facilities Funding Sources: No funding sources have been committed. Potential funding sources include Stanford mitigation funds and public/private partnerships *Fire Station #3 estimated at $6.7M, Station #4 estimated at $7.5M Other Considerations  At the fourth Council Retreat on infrastructure, there was enthusiasm for the idea of using replacement of the fire stations to incorporate community health services that would reflect Palo Alto’s changing demographics. Some potential funding sources include: federal, state, and local grants, Stanford mitigation funds and public/ private partnerships $14.2M Total Cost: $14.2M* Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Byxbee Park (revised 2/26/2013) As envisioned by the original artist and landscape architect, the completion of Byxbee Park would occur following capping of the remainder of the landfill (Phase 2C) and would consist of a network of white oyster shell-lined trails with wooden viewing platforms. The hilltops would also be accented with small soil mounds called “hillocks” to be used for planting wildflowers. Additionally, the parking lot for the park would be expanded Funding Sources: No funding sources have been committed. Potential funding sources include federal, state, and local grants, Stanford mitigation funds and parks development impact fees * Staff revision of 1991 estimate by Hargreaves Associates. Other Considerations  Final closure (capping) of the landfill was originally scheduled for 2012, but Council has directed staff to seek regulatory approvals to postpone capping until the 2014 construction season to allow consideration of an Energy/Compost Facility following the passage of Measure E in 2011.  CIP PE-13020, Byxbee Park Trails, was budgeted at $250,000 in FY2013 to begin constructing trails on the recently opened former landfill areas (Phase 2A and 2B). This work may reduce the cost of a future Byxbee Park project. Total Cost: $3.6M* $3.6M Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Bike/ Pedestrian Plan (revised 2/26/2013) The Palo Alto Bicycle and Pedestrian Transportation Plan 2012 expands the City’s existing bicycle infrastructure and proposes to implement a network of new on-street and off-street facilities for all user levels. Key components of the plan include 52 miles of new or enhanced multi-use paths, bicycle lanes, and bicycle boulevards, and new barrier crossings at a number of locations. Barrier crossings account for about three-fourths of the total estimated cost for implementing the plan. Funding Sources: A $1.5M grant was approved by Santa Clara County in November 2012 to fund the Matadero Creek Trail, a component of the Bicycle and Pedestrian Transportation Plan. Additional potential funding sources include federal, state and local grants, Stanford mitigation funds, development impact fees, and public/private partnerships. * Planning level estimate from Bicycle and Pedestrian Plan completed in 2012 Other Considerations  The estimated cost of $25M differs from the previous figure of $35M because the $10M Highway 101 at Adobe Creek Bike Bridge project, which is shown as a separate project, is part of the Bicycle and Pedestrian Plan and was included in the original $35M estimate. $1.5M $23.5M Total Cost: $25M* Santa Clara County Grant Funding Total Additional Need Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Bike Bridge (revised 2/26/2013) This project would build a year-round, grade-separated pedestrian and bicycle crossing of Highway 101 at Adobe Creek to connect South Palo Alto neighborhoods with the Baylands Nature Preserve and recreational and employment opportunities. The overcrossing is generally proposed as a 12-18’ wide pedestrian and bicycle bridge which would include a minimum 10’ wide travel way that would allow for a shared facility. Preliminary design and environmental assessment started in July 2012. Funding Sources: A $4M grant was approved by Santa Clara County in November 2012 to fund the Highway 101 Pedestrian/Bicycle Overcrossing. The grant proposal included a commitment of $1M from Development Impact Fees to further the design. A $4M One Bay Area Grant (OBAG) application is being submitted in early March 2013. Additional potential funding sources include Stanford mitigation funds, development impact fees, and public/private partnerships. * Feasibility Study completed in 2011, estimated at $6-10 Million, including $2M for design Other Considerations  The OBAG grant application is due on March 5, 2013. Staff expects that decisions on award of grants will be made in April or May 2013. $1M $4M $4M $0.35 $0.65 Total Cost $10M* Santa Clara County Grant Funding OBAG Grant Request Impact Fees Existing CIP Funding Total Additional Need Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Surface Catch Up (revised 2/26/2013) IBRC evaluated the maintenance needs of City streets and sidewalks as well as other surface facilities such as parking lots and off-road trails. The Surface Catch-up estimate includes all deferred maintenance that is not currently scheduled in the FY13-17 CIP Plan. The surface needs include $3.7M in sidewalk repairs, resurfacing of over 30 parking lots, approximately 9 miles of off-road trail repairs, traffic signals, intersection improvements and traffic calming improvements. The estimate does not include annual street maintenance. Funding Sources: No funding sources have been committed. * Staff Estimate based on 2011 construction costs. Other Considerations  The surface catch-up estimate includes approximately $1M in costs for maintenance of Downtown and California Avenue parking assessment district lots. These costs may be funded through parking permit revenues. Total Cost: $8.8M* $8.8M Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Parks Catch-up (2/26/2013) IBRC evaluated the maintenance needs of City parks and open space facilities. The Parks Catch-up estimate includes all deferred maintenance that is not currently scheduled in the FY13-17 CIP Plan. The parks and open space needs include turf, irrigation and playground replacement, pathway, tennis and basketball court resurfacing, and replacement of miscellaneous amenities such as benches, drinking fountains, lighting, signage, and trash receptacles. Funding Sources: No funding sources have been committed. Parks development impact fees are not available for maintenance costs. * Staff Estimate based on 2011 construction costs. Other Considerations  Parks catch-up is reduced from the $14.5M figure used by IBRC due to Parks projects added to the FY13-17 CIP Plan. Total Cost: $9.8M* $9.8M Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Buildings Catch-up (revised 2/26/2013) IBRC evaluated the maintenance needs of all City buildings. The Buildings Catch-up estimate includes all deferred maintenance that is not currently scheduled in the FY13-17 CIP Plan, with the exception of deferred maintenance for Cubberley Community Center. Deferred maintenance requirements include roofing, HVAC, electrical and plumbing replacements. Interior and exterior improvements such as painting and carpet replacement are also included. Funding Sources: No funding sources have been committed. * Kitchell Report completed in 2008 with IBRC and staff assessment. Other Considerations  The Catch-up estimate includes about $900,000 for Municipal Services Center (MSC) deferred maintenance. This deferred maintenance would not be needed if a decision is made to move forward with replacement of the MSC. Additionally, staff will evaluate whether MSC deferred maintenance should be funded by the General Fund CIP Program. Total Cost: $4.5M* $4.5M Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Post Office (revised 9/13/2012) Acquisition of post office property and renovation of existing building. Funding Sources: Potential annual lease payments of $1.2M/year could be used if Development Center and Elwell Ct. office space uses were to be relocated to a City-acquired Post Office building. * Staff Estimate Other Considerations  Potential for avoided annual lease payments of $1.2M if Development Center and Elwell Court office space were to be relocated to City-acquired Post Office Total Cost: $10M* $10M Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Charleston/Arastradero (revised 2/26/2013) Landscaping, lighting and signal and signage improvements along the entire Charleston/Arastradero Corridor will allow for up to 7-8 feet bike lanes on both sides of the street. The landscape median provides a permanent improvement to transition from four travel lanes to three along the entire corridor. Addition of pedestrian crossing refuge islands, enhanced crosswalks, bulb-outs and bike boulevard signage are also included. The project’s goals are to reduce commute speeds and improve school related traffic congestion. Funding Sources: A Safe Routes to School grant was approved in the amount of $0.45M to improve Charleston Road from Alma Street to Middlefield Road. A $0.35M Environmental Enhancement and Mitigation Program (EEMP) grant application was submitted in January 2013. A $5.5M One Bay Area Grant (OBAG) application and a $0.5M Vehicle Emissions Reductions Based at Schools (VERBS) grant application are being submitted in early March 2013. Development impact fees from the Charleston/Arastradero Corridor Pedestrian and Bicyclist Safety Fund totaling $0.25M have been included in the FY 2013 CIP Plan for design of the Corridor plan, and an addition $0.57M is currently available in the Fund. *Staff prepared cost estimate in 2009 Other Considerations  Project cost increased from $6.1M because scheduled Charleston work was removed from the FY13- 17 CIP Plan.  The OBAG grant application is due on March 5, 2013. Staff expects that decisions on award of grants will be made in April or May 2013. Award of EEMP grants is expected in September 2013. $450,000 $350,000 $5,500,000 $500,000.00 $250,000.00 $570,000.00 $2,130,000.00 Total Cost $9.75M* Safe Routes to School Grant Funding EEMP Grant Request OBAG Grant Request VERBS Grant Request Existing CIP Funding Charleston/Arastradero Fund Total Additional Need Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Cubberley Replace/Expand (revised 2/26/2013) This project would completely replace the existing Cubberley Community Center with a new community center on the City-owned portion and new middle and high schools on the PAUSD-owned portion. Funding Sources: No funding sources have been committed. Potential funding sources include federal, state and local grants, Stanford mitigation funds, development impact fees from the Community Center Fund, and public/private partnerships. The City’s share of the project for the Community Center is $83M of the $200M. * Planning level estimate completed in 2012. Other Considerations  The project would be coordinated in cooperation with PAUSD if the Cubberley process ultimately yields a decision to pursue [up to] complete replacement and expansion of Cubberley Community Center. The Cubberley Community Advisory Committee is expected to make its recommendations to Council in March 2013. $117M $83M Total Cost: $200M* School District Total Additional Need Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Cubberley Deferred Maintenance (revised 2/26/2013) All maintenance required for Cubberley Community Center including HVAC, electrical and plumbing replacements, parking lot resurfacing, tennis courts and field repairs. Cubberley Deferred Maintenance includes both the City and PAUSD-owned portions of the Cubberley property. Funding Sources: No funding sources have been committed. * Kitchell Report completed in 2008, and some staff assessment Other Considerations  Addressing Cubberley deferred maintenance may not be necessary if Council decides to pursue complete replacement and expansion of Cubberley Community Center. Likewise, deferred maintenance on the PAUSD-owned portion of the property may not be necessary if Council decides not to renew the existing lease. The Cubberley Community Advisory Committee is expected to make its recommendations to Council in March 2013. Total Cost: $6.9M* $6.9M Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Animal Services Center (revised 2/26/2013) Construction of a new Animal Services Center at the former Los Altos Treatment Plant site. Funding Sources: No funding sources have been committed. Potential funding sources include federal, state and local grants, Stanford mitigation funds, and public/private partnerships. * Staff prepared cost estimate in 2009 Other Considerations  This project assumes relocation of the Animal Services Center to the Los Altos Treatment Plant site along with relocation of the MSC to allow auto dealer use for the East Bayshore site. No project is needed if relocation of the MSC does not occur.  The estimate of $6.9M is based on an Animal Services Center sized to serve Palo Alto, Mountain View, Los Altos, and Los Altos Hills. Given the ongoing discussions resulting from Mountain View ending its participation, a smaller facility with a lower cost may be built if the project moves forward. However, it is also possible that the City may enter into contracts with other jurisdictions that would offset the loss of revenue from Mountain View. Total Cost: $6.9M* $6.9M Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Civic Center (revised 2/26/2013) The waterproofing membrane that is beneath the Civic Center plaza deck is in need of replacement in order to prevent the current leakage of water into the garage area. The current leakage may eventually degrade the reinforcing steel that holds the deck structure together. The membrane has a lifespan of approximately 30 years and is the original installation from the 1969 Civic Center construction. Funding Sources: No funding sources have been committed. * Ferrari Moe estimate in 2004, adjusted for inflation in 2008 Other Considerations Total Cost: $16M* $16M Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Los Altos Treatment Plant (revised 2/26/2013) The Los Altos Treatment Plant (LATP) property contains a former wastewater treatment facility on a 6.5 acre portion of the site known as Area B. This project will initiate the development permit process to maximize usable land on Area B. The project will produce and execute plans to remediate historical contamination on the site, demolish the remaining treatment plant structures, and fill low areas including the former sludge ponds. Mitigation of wetland impacts will also be coordinated on the site following CEQA analysis. The mitigation is expected to include the creation of additional wetlands in the portion of the LATP site known as Area A. Conceptual design and environmental clearance for the project are included in the scope of work for a contract that will be brought to Council for approval in March 2013. Funding Sources: No funding sources have been committed. * Staff prepared estimate in 2008 Other Considerations  Following completion of the project, the land would be available for City use, sale, or lease to a third-party, generating undetermined revenues.  The General Fund and the Refuse Fund each own half of the LATP property. Total Cost: $2M* $2M Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Airport (revised 9/13/2012) Resurfacing of runway and taxiways and construction of 12,000 SF terminal building Funding Sources: The project is expected to be funded through Airport revenues upon transfer of the Airport to City operation. * Staff prepared estimate in 2012 Other Considerations Total Cost: $5M* $5M Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Playing Fields (at Golf Course) (revised 2/26/2013) 10.5 acres of existing Golf Course land is being set aside as part of the Golf Course reconfiguration project for potential playing fields. The fields will be constructed when/if funding becomes available Funding Sources: No funding sources have been committed. Potential funding sources include Stanford mitigation funds, parks development impact fees, and public/private partnerships. * very preliminary estimate based on artificial turf playing fields Other Considerations  Preliminary estimates range from $2M - $6M, with the $2M estimate representing three turf playing fields and the $6M estimate representing three artificial turf playing fields. These estimates do not include other amenities such as parking and lighting that would be associated with the project. Staff intends to work to develop conceptual plans and more precise cost estimates in the near future. Total Cost: $6M* Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Golf Course (revised 2/26/2013) The Golf Course project will reconfigure the entire Golf Course allowing a more Baylands-oriented golfing experience with significantly more naturalized areas and a smaller turf footprint (less fertilization, pesticide application and water use). The project will also set aside 10.5 acres for possible playing fields or other recreational facilities. The primary purpose of the Golf Course project is to accommodate the San Francisquito Creek Joint Powers Authority (SFCJPA) levee re-alignment project, which will encroach onto the existing Golf Course for critical flood control measures. Funding Sources: Staff estimate $3.2M will be paid by the SFCJPA as mitigation for the levee realignment project. The remaining $4.4M of construction costs will likely be financed through Certificates of Participation or other means over 20 years, with the debt payments to come from Golf Course revenues. Funding for the estimated $0.5M design cost is not yet identified. * Forrest Richardson estimate in 2012. $500,000 is design cost estimates Other Considerations  Does not include conceptual plans for 10.5 acres of land set aside to become potential playing fields if/ when funding becomes available.  Final amount of SFCJPA mitigation is under negotiation. $3.2M $4.4M $0.5M Total Project $8.1M* SFCJPA Mitigation Certificates of Participation Existing CIP Funding Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Municipal Services Center (revised 2/26/2013) Complete replacement of Municipal Services Center based on study completed by Leach Mounce Architects in 2003. Based on IBRC recommendation, CIP PE-12004 was created for a MSC Facilities Study to analyze options for locating City functions, personnel and equipment currently housed at MSC/ASC. Funding Sources: This project is expected to be funded by Enterprise Funds if implemented. * Leach Mounce Architects estimate in 2003 adjusted by staff for inflation Other Considerations  A complex study of the MSC property is currently budgeted for FY 2013. Staff is finalizing the scope and expects to release an RFP in Spring 2013. Total Cost: $93M* $93M Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Regional Water Quality Control Plant (RWQCP) (revised 9/13/2012) The recently completed Regional Water Quality Control Plant Long Range Facilities Plan projects project needs over the next 50 years, including retiring of the sewage sludge incinerators, addition of nutrient removal treatment processes, reverse osmosis membrane treatment for recycled water, and a number of other projects. Funding Sources: Palo Alto contributes 35% of the flow to the RWQCP, and would therefore be responsible for 35% of the project costs. The RWQCP partner cities would fund the remaining 65%. Palo Alto project costs would likely be funded through Utility Revenue bonds and/or the State Revolving Fund. * Long Range Facilities Plan report in 2012. Other Considerations Total Cost: $250M* $250M Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes Infrastructure Project Summary Sheet (all costs/revenues in millions of dollars) Project Estimated Cost Potential Funding Net Cost Importance Ranking Public Support Ranking Annual Operating Revenue Other One Time Costs Public Safety Building 47 27 20 tbd tbd 1.4 tbd Bike/Pedestrian Plan 25 1.5 23.5 tbd tbd Bike Bridge 10 9.35 0.65 tbd tbd Byxbee Park 3.6 0 3.6 tbd tbd Fire Stations 14.2 0 14.2 tbd tbd Streets 1 9.75 7.62 2.13 tbd tbd Sidewalks (surface catch-up) 2 3.7 0 3.7 tbd tbd Cubberley Replace/Expand 200 117 83 tbd tbd Parks Catch Up 9.8 0 9.8 tbd tbd Animal Services Center 6.9 0 6.9 tbd tbd Playing Fields (at Golf Course)6 0 6 tbd tbd tbd Post Office 10 0 10 tbd tbd 1.2 3 Ventura Community Center tbd tbd tbd tbd tbd School Childcare Centers tbd tbd tbd tbd tbd Surface Catch Up 5.1 0 5.1 Buildings Catch Up 4.5 0 4.5 Cubberley Deferred Maintenance 6.9 0 6.9 Civic Center 16 0 16 Los Altos Treatment Plant 2 0 2 tbd Airport 5 5 0 Golf Course 8.1 8.1 0 Municipal Services Center 93 93 0 Regional Water Quality Control Plant 88 88 0 Energy/Compost Facility 100 100 0 Sum:674.6 456.6 218.0 2.6 3 1 Streets project is defined as completion of the Charleston/Arastradero project with acceleration of the overall street resurfacing program; this placeholder estimate is for the Charleston/Arastradero project and does not yet include additional cost for accelerated resurfacing 2 Sidewalks catch-up is included in the Surface Catch-up project summary sheet, and represents the additional funding needed to complete Pr o j e c t s a p p r o v e d b y C o u n c i l f o r i n i t i a l pu b l i c o p i n i o n r e s e a r c h Ot h e r p r o j e c t s n o t p l a n n e d f o r pu b l i c o p i n i o n r e s e a r c h The project information and cost estimate information on this sheet represent staff’s best information at this time. Staff will continue to refine the information as new and more precise information becomes available. Attachment B Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes City of Palo Alto (ID # 3592) Committee for Potential Infrastructure Finance Measure Staff Report Report Type: Meeting Date: 3/7/2013 City of Palo Alto Page 1 Summary Title: Update on Infrastructure Strategic Planning and Timeline Title: Update on the Schedule for Conducting a Baseline Public Opinion Survey to Evaluate the Community’s Support for a Potential Finance Measure to Fund Infrastructure Needs, and Making Decisions about Next Steps, Including Recommendations for Preliminary Community Outreach From: City Manager Lead Department: City Manager Recommendation and Draft Motion: Draft Motion: I move that the Committee: Accept the updated strategic planning process and timeline included as Attachment A for evaluating the feasibility of a potential finance measure to fund infrastructure needs. Background On September 18, 2012, the City Council approved a high level plan and schedule for evaluating a potential infrastructure finance measure for the November 2014 ballot. Since last September, staff has proceeded with retaining assistance of outside experts in two areas: 1) public opinion research and 2) public communications and educational outreach. In December 2012, the City hired the public opinion research firm, Fairbank, Maslin , Maullin, Metz and Associates (FM3) to assist the City with its opinion research. In February 2013, the City retained the communications firm, TBWB Strategies (TBWB) to help evaluate the feasibility of a finance measure and develop communications, messaging, and community engagement strategies. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes City of Palo Alto Page 2 Discussion FM3 and TBWB, in collaboration with staff, have updated the near-term strategic planning process and timeline, and provided some preliminary recommendations on community outreach (included as Attachment A) for the Committee’s review. It is anticipated that the baseline public opinion survey questionnaire will be developed by the end of March 2013 and data will be collected in early April 2013. Data analysis will be complete in late April 2013 and recommendations will be presented to the Infrastructure Committee in May 2013 and the City Council in early June 2013. A detailed communication and outreach plan will be developed and ready for implementation by the end of June 2013, pending Council’s direction and appropriate timeline for a target election for a potential finance measure. Attachments:  Attachment A. Strategic Planning Process and Timeline (PDF) Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes   TO: City of Palo Alto  FROM:  Charles Heath and Joy Tatarka, TBWB Strategies     Dave Metz and Shakari Byerly, FM3 Research  RE:   Strategic Planning Process and Timeline  DATE:   February 27, 2013  _________________________________________________________________________    Thank you for the opportunity to work with the City of Palo Alto to develop funding  strategies to meet the community’s infrastructure needs. In many respects, Palo Alto is  the benchmark for forward thinking, thoughtful community planning and collaborative  decision making. We are excited by the opportunity to help a community with such a  proud tradition develop a plan for the years and decades ahead.     Like many of the cities with whom we work, Palo Alto has a wide‐ranging set of needs  that generally fit under the heading of “infrastructure.” The combination of decades‐old  fire stations, police facilities, roads, sidewalks, parks, community centers and other  “infrastructure” along with a recent period of lean capital improvement budgets has  resulted in pent up needs that directly impact public safety, the quality of available  services, traffic and efficient city operations. You also have a variety of potential funding  sources that may be used to address these unfunded needs. Some of these funding  sources require voter approval and must be backed by broad community consensus  regarding the appropriateness of the funding source and the intended use of funds.  Other funding sources are available now or in the future at the Council’s discretion, but  may face competition for use from other service or facility needs.     Unlike most cities with whom we work, the City has already completed a thorough  process of collecting information and obtaining community and stakeholder input on the  identified needs. The Infrastructure Blue Ribbon Commission (IBRC) Final Report provides  an excellent framework for understanding the priority needs and potential solutions.     Given that voter‐approved funding is an essential component of tackling any significant  portion of Palo Alto’s identified needs, a careful strategic analysis must be performed to  narrow the scope of projects being considered for voter‐approved funding to those that  closely align with the Palo Alto electorate’s highest priorities for use of taxpayer dollars.  Potential voter‐approved funding sources must be narrowed to those that have sufficient  voter support to reach the approval threshold required for passage and those that are  deemed appropriate given the intended use of the funds. Furthermore, potential  election dates must be assessed to identify the opportunity that maximizes the chances  for success and minimizes competition with other controversial issues that could  undermine support.       Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes The centerpiece of this strategic assessment will be a statistically reliable survey of Palo  Alto voters aiming to answer the basic strategic questions identified in the prior  paragraph. By taking an accurate read of the community’s attitudes and opinions related  to infrastructure and taxes, we are confident that this survey will help significantly  narrow and refine the scope of projects, funding sources and potential timelines under  consideration. In addition, we will benefit from a clearer understanding of the existing  levels of community awareness for community infrastructure needs and the most  compelling themes that must be at the center of an infrastructure proposal.     With this information in hand, TBWB will develop a focused plan for building community  awareness, engaging key constituencies and building consensus around a viable  proposal. This plan will include the recruitment of a community advisory committee with  membership aligned to the focus of the funding proposal. It will also include a plan for  direct communication with residents, voters, stakeholders, and opinion leaders. In  addition to an outbound messaging plan, we will also advise on a process for collecting  community feedback so that a broad consensus can be developed through engagement  and dialogue. Throughout the process, our progress will be measured with tracking  research that can be compared against the baseline opinion survey. Messaging may be  tested and refined with qualitative research methods such as focus groups.    Due to the importance of this strategic assessment to the overall framing and focus of a  potential infrastructure funding proposal, we recommend carefully pacing community  outreach on this topic to preserve all available options until reliable data on community  priorities and opinions can be collected and recommendations formulated. With an  election occurring in June of 2014 at the very earliest, we have sufficient time to  complete this assessment and complete a thorough outreach program that lives up to  Palo Alto’s high standards for community engagement.    Given that a wide variety of projects, funding sources and election dates will be  considered as part of the assessment, TBWB Strategies is quickly reviewing any current  or planned city communication that could impact an infrastructure proposal to ensure  that all potential options are preserved. Messaging in this interim period, while the  strategic assessment is being completed, will focus on the process completed to date to  inventory the city’s needs as well as the process going forward to develop and reach  consensus on a proposed solution. TBWB will develop and distribute key messages that  may be used consistently across all city departments and bodies until we are ready to  embark on the next phase of more focused messaging related to a specific infrastructure  proposal. TBWB will also provide input and advice on messaging on related infrastructure  projects.     FM3 Research and TBWB Strategies are currently completing a detailed review of  projects and funding sources to develop concepts and messages to be tested in the  public opinion survey. We anticipate that the survey questionnaire will be drafted by late  March, finalized by mid‐April and data will be collected in early April. Data analysis will be  Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes complete in late April and recommendations will be presented to the Committee in May,  and the Council in early June. A detailed communication and outreach plan will be  developed and ready for implementation by the end of June, assuming this timeline is  appropriate given the recommended target election for a potential ballot measure.      The following timeline details how the process will unfold over the coming weeks:    February 2013 to June 2013 Infrastructure Committee/Council Timeline    Week of March 4   Infrastructure Committee update on infrastructure projects, research timeline  and process    Week of March 11   Consultants develop proposed research objectives    Week of March 18   Infrastructure Committee review and approval of research objectives    Week of April 1 & April 8   Consultants finalize survey and prepare for data collection    April 2013 – Public Opinion Survey Data Collection and Analysis    Week of May 13   Infrastructure Committee review of survey results and draft consultant  recommendations    Week of May 27   Infrastructure Committee approval of research findings and recommendations    June 2013   City Council review of research findings and Infrastructure Committee  recommendations   Pending City Council approval to proceed with next phase of communication and  outreach related to an infrastructure ballot measure, consultants will:  o Prepare Communication and Outreach Plan with recommended initial  messages, targets and media  o Identify key community leaders and stakeholders to participate on an  advisory committee to assist with strategic planning and outreach      Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes INFRASTRUCTURE COMMITTEE MINUTES 1 Special Meeting March 7, 2013 The Committee for Potential Infrastructure Finance Measure met on this date in the Council Conference Room at 4:02 P.M. Present: Berman, Klein (Chair), Scharff, Shepherd Absent: ORAL COMMUNICATIONS None ACTION ITEMS 1. Update on the Infrastructure Projects to be Evaluated in the City’s Baseline Public Opinion Survey and Consideration of any Committee Recommendations to the City Council on the Project List Chair Klein expressed concerns about the number of projects and the practicality of projects on the list. He questioned the inclusion of the bike bridge, because it was covered under financing. A second purpose of the meeting was to update costs for projects. Council Member Berman inquired whether only projects on the list would be part of the poll. Chair Klein answered no. The Infrastructure Committee (Committee) could recommend to the full Council that projects be deleted or added. James Keene, City Manager, explained one of the goals of the poll would be to gather data as much as possible on different projects, whether or not the projects became a part of a potential measure. Brad Eggleston, Assistant Director of Public Works, reported Staff included additional information about the Jay Paul public-private partnership proposal for the Public Safety Building project. An Environmental Impact Report (EIR) hearing was scheduled before the Planning and Transportation Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 2 March 7, 2013 Commission (P&TC) in September 2013. If the project moved forward, the Council could potentially approve it in February 2014. Chair Klein recommended requested the reason for postponing the Public Safety Building project. Curtis Williams, Director of Planning and Community Environment, explained the P&TC did not initiate the project, because the Public Safety Building was not adequate to meet the needs of the Police Department and there were some issues concerning design. The applicant was making modifications for the initiation. Chair Klein inquired whether all parties was aware that further delay would prevent inclusion of the project in a 2014 revenue measure. Mr. Williams would inform the P&TC of the date requirements, because he did not believe it was aware of that fact. Mayor Scharff indicated the P&TC needed to get the Public Safety Building project on its Agenda as soon as possible. If the P&TC did not initiate it, he could have it appealed to the Council. He requested a revised schedule prior to February 2014 if at all possible. Mr. Keene indicated Staff would do so. Another component to the project delay was the estimated timeframe for a third-party financial review on the public benefits value. That could be done separately from the planning review process. The scale of the financial review would have some bearing on the cost of the project. Mr. Williams reported Staff should be able to perform the analysis within the next few months. Mr. Keene would provide Staff with a specific target date. The financial analysis would inform the potential to have 100 percent of costs provided through the project rather than needing financing. Vice Mayor Shepherd inquired whether it was possible for the Council to approve the public benefits component of the Public Safety Building project prior to the P&TC discussion. Mr. Keene stated Staff would need to provide a detailed schedule. There would be a correlation between the level of public benefits and the scale of the project. Staff could provide some hypotheticals about the value based on different scale scenarios. It would be beneficial to know the scale of public benefits based on a submitted proposal. Vice Mayor Shepherd asked if Staff could provide information to the Council. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 3 March 7, 2013 Mr. Keene responded yes. Vice Mayor Shepherd did not want the project to stall. Mr. Keene suggested including the Public Safety Building project in polling to determine support for a 100 percent revenue measure funded project as opposed to another scenario. Mr. Eggleston reported Staff could not provide a final design for Byxbee Park without having resolution of the Measure E Energy Compost Facility. Given the uncertainties, the Committee might want to consider whether it should be on the list for polling. The City received a $1.5 million grant for the bike pedestrian plan. The City's matching funds of $500,000 was not shown in the chart. In developing the five-year Capital Improvement Program (CIP) for Fiscal Years (FY) 2014-2018, Staff proposed $1.2 million per year to implement the bike pedestrian plan with the proposed funding source being the Stanford University Medical Center funds. The City received a $4 million grant for the bike bridge, with $1 million in impact fees as matching funds. Staff submitted an additional grant application for $4 million to the One Bay Area Grant (OBAG) program. CIP funding for design had been authorized. The estimated cost for the project was $6-$10 million. If the City received the OBAG grant, approximately $650,000 would be unfunded. Council Member Berman doubted outstanding grant applications would be funded. Mr. Eggleston noted only a portion of surface catch-up projects were listed for polling. Surface catch-up was defined as parking lot repairs and resurfacing, off-road trails, maintenance on traffic circles, street lights, and sidewalks. The City had a 30-year cycle to perform sidewalk maintenance, repair, and construction; however, the Infrastructure Blue Ribbon Commission (IBRC) determined the 30-year cycle was underfunded by approximately $3.7 million. The Council added $2.2 million to the Infrastructure Reserve to fund keep-up projects. Staff would propose allocations of those $2.2 million funds to the Council on March 18, 2013. Approximately $2 million of the $2.2 million was proposed for streets and sidewalks. In addition, Staff proposed additional funding through the five- year CIP. If the Council proceeded with the recommended approach, then the catch-up portion would be eliminated. Mayor Scharff inquired whether Staff did not recommend polling on sidewalks. Mr. Eggleston responded yes, unless the Committee did not agree with that approach. The community indicated streets and sidewalks were key infrastructure needs that the City was not adequately addressing. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 4 March 7, 2013 Council Member Berman felt the community would question a revenue measure that did not contain streets and sidewalks if street and sidewalk improvements were not visible. Mr. Eggleston explained catching-up the 30-year sidewalk program did not mean all sidewalks would be repaired and improved. Mayor Scharff inquired about costs for shortening the 30-year cycle to a 10- year cycle. Mr. Eggleston clarified that Mayor Scharff wanted to know the cost for cycling through sidewalks in all 23 districts in 10 years rather than 30 years. Mayor Scharff replied yes. Sidewalks around town were atrocious, and he wanted them improved. Mr. Keene explained Staff was capable of providing cost estimates for different periods of time in order to accomplish a certain amount of work. The Committee might want to test the community's willingness to pay more for improvements over a shorter period of time. Council Member Berman noted the City had two different sidewalk programs, a 30-year program and a quick fix program, and inquired which was leading to resident frustration. Chair Klein felt including streets and sidewalks in a revenue measure would enticement voters to support the measure. Mr. Keene explained many of the projects on the list were needs and numbers generated about necessary things and not included in existing CIPs. Some CIP projects could be supported in a revenue measure. The Committee should consider the state of infrastructure in the City as a whole, given a revenue measure was one of a number of funding sources for projects. Chair Klein reported that he, Ms. Tucker and the City Manager agreed the word infrastructure was not appropriate. Mayor Scharff used Capital Investment Program in the State of the City Address. Mr. Eggleston estimated the United States Postal Service (USPS) would place the Post Office Building on the market in May 2013 or slightly later with a competitive bid process lasting 30-45 days. Vice Mayor Shepherd asked if Staff expected the Post Office Building would be sold. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 5 March 7, 2013 Mr. Eggleston responded yes. Mr. Keene noted Staff would provide the Council with a brief on appraisals. Mr. Williams added the report was scheduled in April 2013. Mayor Scharff asked how much $1.2 million would generate per year if the City purchased the Post Office Building through Certificates of Participation (CoP). Mr. Keene indicated Staff calculated a purchase and improvement scenario and a pay-back period. Joe Saccio, Assistant Director of Administrative Services, reported renting some space back to USPS and potentially swapping space in City Hall to private users would provide enough funds for the City to issue CoPs to purchase and renovate the Post Office Building. Mr. Keene inquired about a 10-year pay-back period. Mr. Saccio stated the payback period was approximately 15 years for simple pay-back. There was a relatively high internal rate of return. Mr. Keene explained payback did not mean the City would lose money, but that the City would own the building free and clear in 15 years. Mr. Eggleston reported the City received one grant and applied for three other grants for the Charleston/Arastradero Corridor project. CIP funding for design was authorized. The Charleston/Arastradero Corridor Development Impact Fee Fund contained $570,000 earmarked for the project. Chair Klein requested an explanation of the footnote regarding the cost estimate. Mr. Eggleston explained Staff originally included $6.1 million for the Charleston component in the five-year CIP plan. In 2012 while developing the new five-year CIP plan, Staff removed that amount of funding. The original version was lower by $6.1 million, because part of it was shown as funded. Mr. Keene stated the project cost did not change. Chair Klein believed that was a dramatic cost increase. Mr. Eggleston reiterated that the project cost did not increase. It was a shift of funding rather than a cost increase. Mr. Keene clarified that the amount for a potential finance measure changed. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 6 March 7, 2013 Vice Mayor Shepherd asked if funding decreased to $2.13 million. Mr. Eggleston agreed the unfunded amount would be $2.13 million if the City received all grant funds. Mr. Klein requested Staff update the cost estimate as it was almost four years old. Mr. Eggleston explained Staff was reviewing the original construction costs as they developed total project costs to ensure consistent assumptions were utilized. Once that review was complete, many of the numbers would change slightly. Sheila Tucker, Assistant to the City Manager, inquired about a date to complete the review. Mr. Eggleston stated Staff would try to finish it by the end of March 2013. Vice Mayor Shepherd asked who recommended polling for the Charleston/Arastradero Corridor project. Council Member Berman did not recall the IBRC discussing polling in depth. Chair Klein noted the Council approved projects on the list for polling. Vice Mayor Shepherd would not consider polling for this project. Council Member Berman suggested polling could provide a better sense of the project. Vice Mayor Shepherd indicated some Parent Teach Associations (PTA) supported the project. Council Member Berman felt approval of a revenue measure would be assisted by the Council demonstrating it kept costs down as much as possible. There seemed to be some support in the community for maintaining the Post Office Building and its historic structure. Chair Klein dreamed of completing all projects without utilizing a revenue measure. Revenue sources were available that the IBRC did not have for consideration. Mayor Scharff did not want the community to think a bond measure was a foregone conclusion, and preferred to fund projects without a bond measure. The Council had a range of funding options, including small revenue measures. Chair Klein noted the Jay Paul project was a variable. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 7 March 7, 2013 Vice Mayor Shepherd requested a briefing with regard to the proposed business license tax, because that could be a source of funding. Mr. Eggleston reported the Cubberley Community Advisory Committee (CCAC) completed its work, and the final report was scheduled to go to the Council for consideration on March 14, 2013. Chair Klein asked how the breakdown between the City and the Palo Alto Unified School District (PAUSD) was calculated. Mr. Eggleston explained the breakdown was calculated using square footages to rebuild existing structures with some additions based on the acreage that the City and PAUSD own. Chair Klein inquired whether the City had 8 acres and PAUSD had 27 acres. Vice Mayor Shepherd indicated the City had more buildings; PAUSD had fields, parking lots, and theatres. Chair Klein suggested the breakdown was based on square footage of constructed matters. Mr. Eggleston stated the calculations considered square footages of buildings and who owned the land the buildings would be located on, and then applied a simple dollar amount per square foot. Chair Klein requested that calculation. One variable in Cubberley negotiations was trading the City's present 8 acres for a different 8 acres. Mayor Scharff suggested the Committee consider a Cubberley project once details from the CCAC were known. Chair Klein recalled the Council told the CCAC that it was unlikely a revenue measure would include Cubberley. Vice Mayor Shepherd noted the CCAC mentioned a general bond in order to build the high school at some point in time. Mayor Scharff stated CCAC wanted a high school in 25 years. Mr. Eggleston reported 12 sites as 12 elementary schools provided after- school childcare. Through the Cubberley Lease Agreement, the City paid PAUSD approximately $600,000 annually to provide those sites. All sites were portables provided by PAUSD. Eleven sites were operated by Palo Alto Community Childcare (PACC). Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 8 March 7, 2013 Chair Klein understood the Executive Director of PACC felt no great improvements were needed at the afterschool childcare centers. Vice Mayor Shepherd agreed PACC felt it had a good operation with PAUSD, and asked who paid for the portables used at the sites. Mr. Eggleston explained the City paid PAUSD to provide a site for after- school care. The sites could be either classrooms or portables. The City did not pay directly for the portable; it made only the annual payment to PAUSD. City Staff met with the Executor Director and CFO of PACC to discuss the different facilities. Overall PACC was pleased with the kind of service and facilities it received from PAUSD. PACC did report some additional needs for a few of the very old portables and for additional portables to accommodate the number of children. Vice Mayor Shepherd agreed PACC had an accommodation problem at some of the sites. Mr. Eggleston noted PACC did not state that needs could not be met through PAUSD. PACC was intrigued with the thought that the City would be potentially interested in some sort of project. Chair Klein indicated more revenue sources were available than were discussed at the 2012 Council Retreats. He inquired whether the first $23 million listed on packet page 4 could be used for any projects. Mr. Keene answered technically yes. Approximately $2 million of the $23.2 million was earmarked for housing. Mr. Eggleston clarified $2 million was earmarked for affordable housing. The Council just approved the loan for the Maybell affordable housing project. The loan of $2.6 million would come from this fund; however the loan would be repaid. He believed there was an earlier outlay of approximately $1.7 million. Chair Klein indicated there was approximately $20 million remaining. He asked if the second sustainability fund of $12 million included conditions on the use of those funds. Mr. Keene indicated the sustainability fund had a mutual agreement between Stanford and the City as far as use of funds, but was generally fungible. Mayor Scharff believed the bike part was clearly within the available funds, and the bike paths on Arastradero could be within funds. He inquired whether projects could be substituted in order to meet the restrictions on those funds. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 9 March 7, 2013 Mr. Eggleston indicated the agreement referenced generic sustainability, greenhouse gas emission reductions, and projects that could be listed in the City's Climate Protection Plan. Vice Mayor Shepherd felt funds would be available for shuttle planning. She believed sustainability funds could be used for bicycle-related projects only. Mr. Keene stated everything the Council envisioned in the Bicycle/Pedestrian Transportation Master Plan would be eligible in this fund. Chair Klein noted a reference on page 6 to new sustainability issues. Mr. Keene reported Staff created a sustainability board composed of Department Directors to create a sense of permanent involvement by all departments on sustainability issues. Staff discussed creating a community or executive advisory board composed of company sustainability officers as an advisory board to Staff on sustainability issues. Chair Klein suggested noting in the report that the sustainability board was composed of City Staff. He inquired whether Committee Members wished to discuss project additions or deletions. Vice Mayor Shepherd recommended removal of the childcare centers, and noted the Ventura Community Center site was not identifiable yet. Mr. Eggleston reported the Ventura Community Center was a former school purchased by the City in 1980. PACC operated the site as a childcare center. Under the Purchase Agreement, PAUSD had a right to repurchase the site from the City at any time. A 2008 report identified approximately $2 million of unmet infrastructure needs. A $350,000 CIP project was underway at the site. Staff proposed an approximate $700,000 project for FY 2016 to review the mechanical and electrical systems. Based on the 2008 report, Staff proposed $1.3 million in needs. Vice Mayor Shepherd indicated details for the Ventura Community Center and Cubberley Community Center should be finalized before the Committee considered projects for those sites. Mayor Scharff suggested polling on the Ventura site to obtain useful information. Vice Mayor Shepherd wanted to delete school childcare centers from the polling list, but not Ventura. Yet, she was unsure how to proceed on Ventura, because PAUSD could repurchase it at any time. Mayor Scharff remarked the polling could determine if the community wanted to make improvements there. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 10 March 7, 2013 Vice Mayor Shepherd questioned the type of improvements to be made at Ventura. Mayor Scharff believed the poll would provide that information. The Committee could remove the Ventura project prior to finalization of polling information. He would remove the Post Office Building, because it could be financed without using a revenue measure. He would remove Cubberley, because it was premature. He recommended adding a parking garage Downtown and a parking garage on California Avenue. Vice Mayor Shepherd inquired with Mayor Scharff consider replacing the Post Office Building with the Roth Building. Mayor Scharff was more interested in determining if people wanted a history museum in the Roth Building. Council Member Berman was ambivalent with regard to Byxbee Park, and agreed with removing Cubberley. He recommended removing Palo Alto Animal Services (PAAS), because it was tied to the Municipal Services Center (MSC) site. He suggested including the Junior Museum and Zoo, because it could generate support for a measure. Chair Klein favored deleting childcare centers, the Post Office Building, Cubberley, and the bike bridge in Byxbee Park. He did not favor adding the Junior Museum and Zoo, because the Council would be treating it more favorably than the Art Center and Children's Theatre. He agreed with polling regarding parking garages; however, whether the City funded construction of parking garages would be a policy decision. Mr. Keene suggested the Council could want to make a policy change if polling was favorable. Mayor Scharff agreed polling information would be helpful to a policy discussion. Chair Klein requested comments on the suggestion to eliminate the bike bridge. Council Member Berman inquired whether funding for the bike bridge was tied up in outstanding grant requests. Chair Klein stated the City received grants totaling half the funds needed. Council Member Berman questioned whether remaining grant requests would be successful. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 11 March 7, 2013 Mayor Scharff wanted to poll for the bike bridge, because he wanted to know the community's support and he had concerns about receiving grants. Chair Klein noted Staff did not recommend polling for Byxbee Park. Vice Mayor Shepherd felt the community was passionate about improving Byxbee Park and indicated people used the park on weekends. Mayor Scharff did not want to poll for it, because the anaerobic digester issue was not resolved and the vision for improvements was incorrect. Chair Klein agreed it should be deleted. If the Council polled on Byxbee Park, the community would state the Council had a hidden agenda. Council Member Berman felt Byxbee Park had a poll through the previous vote. Chair Klein noted a 3-1 vote to eliminate Byxbee Park and requested a vote to remove the Cubberley site. Mayor Scharff voted yes. Council Member Berman agreed. Vice Mayor Shepherd voted yes. Chair Klein indicated Cubberley was removed from the list. Mr. Keene asked if the removal included all aspects of Cubberley. Chair Klein answered yes. He requested a vote to remove the Post Office Building. Mayor Scharff agreed to remove it. Vice Mayor Shepherd stated yes. Council Member Berman voted yes. Chair Klein stated that was unanimous to remove the Post Office Building from the list. He asked for a vote on the Ventura site removal. Mayor Scharff voted no. Vice Mayor Shepherd elected to leave it on. Chair Klein indicated a 3-1 vote to retain the Ventura site on the list. He asked for a vote on removing the childcare centers. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 12 March 7, 2013 Mayor Scharff voted yes. Vice Mayor Shepherd agreed. Council Member Berman stated yes. Chair Klein noted four items removed from the list, three by unanimous vote. Council Member Berman believed PAAS should not be included in a revenue measure, because nothing would have been determined regarding the MSC. Vice Mayor Shepherd did not believe the MSC was an issue. Council Member Berman understood the City would not rebuild the PAAS Center unless changes were made to the MSC. Chair Klein stated that was incorrect. Mr. Keene reported Staff was considering using limited tax dollars to improve PAAS. Staff received requests regarding potential uses of the Los Altos Treatment Plant site, including a possible private sale or for other uses. Chair Klein indicated the decision concerned polling, not policy. Vice Mayor Shepherd wanted to know the community's level of support. Council Member Berman would agree to poll on PAAS in order to gain information. Chair Klein noted another potential revenue source of the Honda dealership if PAAS was relocated. Chair Klein explained one suggestion was to locate the PAAS Center on the Los Altos Treatment Plant site; however, Honda was interested in leasing that space. He inquired whether Honda remained interested. Mr. Keene replied yes. Honda had renewed interest for competition reasons. Chair Klein indicated PAAS remained on the list. He requested a vote on the parking garages. There was a unanimous vote to add parking garages Downtown and at California Avenue. Chair Klein asked if the Junior Museum and Zoo should be added. Mayor Scharff supported adding it. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 13 March 7, 2013 Vice Mayor Shepherd preferred not to add it. Council Member Berman favored adding it. Vice Mayor Shepherd suggested polling on the Junior Museum and Zoo could interfere with its strategy for fundraising. Mr. Keene suggested consideration of fiber to the home, undergrounding utilities, and the transit center. Mayor Scharff agreed to undergrounding utilities. Council Member Berman was concerned that the transit center would become the story. Vice Mayor Shepherd recalled the Finance Committee had a recommendation for the Council, and wished to hear that discussion before making a decision. Council Member Berman was curious about fiber. Mayor Scharff viewed fiber and undergrounding utilities in the same category, and recommended polling on both or neither. Because the projects were such big issues, they should not be included in a revenue bond. Vice Mayor Shepherd inquired whether funds could be collected for fiber and undergrounding differently than others projects. Mayor Scharff explained undergrounding utilities was such a large project, the Council would need some sort of an electric fund charge or a utility tax. Chair Klein was not in favor of polling for undergrounding utilities or fiber to the premises, because they were different types of projects and because of the large dollar amounts. He asked whether the Roth Building should be included on the list. Vice Mayor Shepherd inquired about the status of fundraising for the project. Mr. Keene stated the Friends of the History Museum did not have enough funding. Mayor Scharff favored polling for whether or not to locate a history museum there. Vice Mayor Shepherd expressed the same concerns for the history museum as for the Junior Museum and Zoo, and requested the City Manager comment. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 14 March 7, 2013 Mr. Keene believed the Roth Building would require a relatively small amount of funds, probably $2-3 million. Chair Klein inquired whether the Friends groups had raised any funds. Mr. Keene reported the group had raised funds, but was approximately $2 million short. Chair Klein voted no to adding the Roth Building. Mayor Scharff voted yes to add it. Council Member Berman inquired whether the project was to locate a museum in the Roth Building. Mayor Scharff explained some people wanted to fund a history museum, and there was a $3 million gap in funding. Council Member Berman voted yes to add the Roth Building. Vice Mayor Shepherd suggested using the same manipulations with the Roth Building as was used with the Post Office Building. Chair Klein indicated those manipulations would be much trickier in a residential neighborhood. Vice Mayor Shepherd suggested receiving more information on how to poll. Chair Klein indicated the Roth Building would be included with a vote of 3-1, and requested addition suggestions. Mr. Keene noted the $16 million Civic Center Building was not on the list. Mayor Scharff would add that to the list. Mr. Keene indicated it was not part of the Council list. Chair Klein did not want to poll on it, because it was a project that had to be done. 2. Update on the Schedule for Conducting a Baseline Public Opinion Survey to Evaluate the Community’s Support for a Potential Finance Measure to Fund Infrastructure Needs, and Making Decisions about Next Steps, Including Recommendations for Preliminary Community Outreach Sheila Tucker, Assistant to the City Manager, reported development of the questionnaire should be completed by the end of March 2013, data collection Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 15 March 7, 2013 should begin in early April, analysis should be completed in late April, Staff would provide recommendations to the Infrastructure Committee (Committee) in May, and Staff would present Committee recommendations to the Council in early June. Staff was discussing a communication plan for community outreach which would be based on survey results. Charles Heath, TBWB Strategies, agreed with prior comments that infrastructure was not an appropriate framing of the issue. The Committee needed to utilize terms that had more meaning to the public to help them understand how this relates to services and offerings. The fundamental questions were whether a voter-approved revenue measure was essential to the execution of projects; what the measure would look like, what were funding sources, and what was the prioritization of projects. In moving away from infrastructure to a more compelling set of themes, he wanted flexibility to move towards a theme that resonated with the public based on opinion research. He suggested the Committee and City Departments utilize interim messaging while opinion research results were analyzed, and would have some preliminary ideas at the next meeting. Shakari Byerly, FM3 Research, felt hearing the Committee's perspective on options and funding sources was helpful. The baseline survey would test the priorities approved by the Committee. The initial list of projects was not too broad in terms of testing at a high conceptual level the public priorities. She suggested testing some conceptual issues as well in order to understand and assess the public view of the City's Budget and finances, and then have a series of potential messaging frames to determine which projects aligned with the public's perceptions. Chair Klein inquired whether it was better to poll 10 or 15 issues. Ms. Byerly anticipated the interview would likely last between 15 and 20 minutes; therefore, 15 or 10 issues could be polled. It would be advantageous to narrow the issues. Council Member Berman asked how many respondents were they hoping to interview. Ms. Byerly indicated they would start with approximately 600. Mayor Scharff inquired whether they could question respondents regarding 14 items in 20 minutes. Ms. Byerly explained they would not test in-depth each item. Descriptions of the projects would be high level and succinct. Mayor Scharff requested a recommendation for the number of issues. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 16 March 7, 2013 Ms. Byerly preferred to begin with information that the Council was interested in knowing. It was difficult to state an appropriate number of items until the questionnaire was being developed. The best practice was for the Council to provide direction regarding topics it wanted public input on. If public opinion supported the Council's proposed direction, focus groups could be utilized to test a much broader level. Mayor Scharff asked if she meant the Council should choose the topics on which it wanted information, the questions would be developed, and she would inform the Council whether topics should be removed from the list. Ms. Byerly answered yes. Mr. Heath explained at this early stage in the process, there was an incentive to err on the side of inclusiveness. The limiting factor would be the amount of time a respondent would remain on the phone. He could not provide the trade-offs until the actual questionnaire was developed and timed. James Keene, City Manager, noted another consideration was the impact of the number of projects on the ultimate vote. That was more variable, and topics could be grouped to mitigate against the number of projects. Chair Klein expressed concern that polling on potential and probable projects would have negative public feedback. Mr. Heath stated any topic tested in the poll would be a serious consideration for inclusion in a revenue measure. Mayor Scharff inquired about the process for polling with regard to different revenue measures. Chair Klein indicated that was not part of the current Agenda Item. Ms. Byerly reported the initial polling might touch on a variety of subjects, some of which could include mechanisms to fund projects. The initial baseline survey would touch on some of that discussion. Mayor Scharff believed polling on projects and other subjects would limit the number of projects that could be tested in 20 minutes. Ms. Byerly reported an initial baseline poll would test a variety of general revenue measures, but the discussion would not be long in order to remain within the allotted time. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 17 March 7, 2013 Mr. Keene stated a typical baseline survey would include potential projects, potential revenue vehicles, and potential amounts the public would be willing to pay. Mr. Heath explained a potential revenue proposal could be reverse engineered from that data. He would provide proposed research objectives for the poll to ensure agreement regarding the type of information to be obtained through polling. Ms. Tucker noted the consulting contract provided funds to perform up to two additional tracking polls, perhaps to refine messaging or test a smaller set of projects. Council Member Berman asked if Ms. Byerly consulted on the Palo Alto Unified School District (PAUSD) Measure 8 parcel tax. Ms. Byerly answered no. She worked with the City on the library measure. Vice Mayor Shepherd inquired whether projects should be included in the poll if the public had voiced it opposition to them. Chair Klein believed only a small number of the public was vocal on any issue. Mr. Heath explained a statistically reliable poll could determine with a small group's opposition extended to the larger population. In addition to telling voters the potential projects, a poll could simulate the kind of information the public would learn over the course of the campaign. That could provide a better sense of the viability of the measure. Vice Mayor Shepherd inquired about management of the public's social networking regarding the poll. Mr. Heath reported a poll indicated the voters' opinions at the time questions were asked. The Committee should attempt to choose a time period for conducting the poll that was least susceptible to social networking. If he thought some factor had arisen since the poll was conducted that could have shifted public opinion, then he could utilize a tracking survey to determine the shift in public opinion on a given subject. Council Member Berman asked about the breadth of questions in the poll. Ms. Byerly explained there were a number of ways to test project priorities. A poll could obtain a total importance ranking in order to gauge the intensity. From that information, she could generally rank projects and Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 18 March 7, 2013 provide information to the Council. Occasionally, follow-up polls would be utilized to ask the respondent to rank priority of projects. Council Member Berman wanted to know the percentage of the public that felt negatively towards projects. Ms. Byerly envisioned having some question packages with rough dollar figures and simply asking support, oppose, and to what extent. She should be able to provide that type of information. Chair Klein believed a question regarding new fire stations would be surprising to the community, and inquired whether the poll could provide sufficient background to allow respondents to give an informed answer. Ms. Byerly suggested a longer context could be provided in that type of situation, and that situation would be considered when developing the questionnaire. Chair Klein asked if the questioner could tell respondents that recent surveys had shown that fire stations X and Y were inadequate because of whatever reasons. Ms. Byerly reported that type of information would be used. Mr. Keene suggested more context could provide different results. Mr. Heath did not want to measure a false creation because the respondent received information he did not previously have. The public would not necessarily have that information when they walked into the voting booth. Chair Klein stated respondents would not support projects if they did not have any background information. Mr. Heath indicated lack of support could be offset by a general belief that fire stations were important. The public could be more willing to fund fire stations even with limited understanding. The poll would assist him in understanding that factor. Ms. Byerly explained one purpose of the baseline survey was to test perceptions or awareness of the condition. Mr. Heath reported the education and outreach program should inform the public about needs in the community. Chair Klein supported polling, because only a small minority of voters Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes MINUTES 19 March 7, 2013 expressed their opinions to elected officials. Ms. Tucker asked the Committee to accept the report. Staff would return at the next meeting with goals, objectives, and preliminary work on communications. Mr. Keene stated no polling or communication work would be performed prior to Staff returning to the Committee. FUTURE MEETINGS AND AGENDAS Chair Klein suggested the next meeting be scheduled for March 21, 2013. Sheila Tucker, Assistant to the City Manager, reported a number of conflicts with Committee Members on March 21, 2013. James Keene, City Manager, noted he would not be available. Ms. Tucker noted Mayor Scharff and Council Member Berman were unavailable. Chair Klein suggested March 28, 2013. Mr. Keene noted he would not be available on March 28. Chair Klein confirmed the next Infrastructure Committee meeting would be scheduled for Thursday, March 28, 2013 at 4:00 P.M. ADJOURNMENT: The meeting adjourned at 6:00 P.M. Attachment 8: 03/07/2013, Agenda, Staff Reports and Minutes