HomeMy WebLinkAbout2016-02-29 City Council Agenda PacketCITY OF PALO ALTO
CITY COUNCIL
February 29, 2016
Special Meeting
Council Chambers
6:05 PM
Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the
Council Chambers on the Thursday preceding the meeting.
1 February 29, 2016
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DURING NORMAL BUSINESS HOURS.
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TIME ESTIMATES Time estimates are provided as part of the Council's effort to manage its time at Council meetings. Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council
reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting or to adapt to the participation of the public. To ensure participation in a particular item, we suggest arriving at the beginning of the meeting and remaining until the item
is called. HEARINGS REQUIRED BY LAW
Applicants and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and up to three minutes for concluding remarks after other members of the public have spoken.
Call to Order
Study Session 6:05-7:15 PM
1. Finance Committee Recommends the City Council Review the
Assessment Results of the Enterprise Resource Planning System (ERP)
Needs; Review Recommendation to Plan for the Acquisition of a new
Integrated Government-Oriented ERP System and Separate
Provisioning of Utilities Billing Systems
Agenda Changes, Additions and Deletions
City Manager Comments 7:15-7:25 PM
Oral Communications 7:25-7:40 PM
Members of the public may speak to any item NOT on the agenda. Council reserves the right to limit the duration of Oral Communications period to 30 minutes.
2 February 29, 2016
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA
PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE.
DURING NORMAL BUSINESS HOURS.
Consent Calendar 7:40-7:45 PM Items will be voted on in one motion unless removed from the calendar by three Council Members.
2.Approval and Acceptance of Palo Alto Fire Department Quarterly
Performance Report for Second Quarter Fiscal Year 2016
3.Approval of a Professional Services Contract With Plante & Moran,
PLLC in an Amount Not-to-Exceed $359,925 for Enterprise Resource
Planning System (ERP) and Utility Billing Planning and System
Selection
4.Approval of the Acceptance and Expenditure of Citizens Options for
Public Safety (COPS) Funds for Various Law Enforcement Equipment
and Approval of a Budget Amendment in the Amount of $104,621 for
the Supplemental Law Enforcement Services Fund
5.Authorization to Apply for "Art Works" Grant From the National
Endowment for the Arts for Temporary art at Cubberley Community
Center
6.Approval of a Contract With Breneman Inc. in the Amount Not-to-
Exceed $250,000 for the Bowden Park Improvements Capital Project
PE-13008
7.Finance Committee Recommends Approval of Amendment to Table of
Organization by Adding 1.0 Management Analyst in the Development
Services Department
Action Items
Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials,
Unfinished Business and Council Matters. 7:45-9:00 PM
8.PUBLIC HEARING: Adoption of Two Ordinances: 1) Ordinance
Amending the Palo Alto Municipal Code Regulations Related to
Hazardous Materials use, Storage and Handling in the Office, Research
and Manufacturing Zoning Districts and Nonconforming Uses and
Facilities; and 2) Ordinance Regarding Amortization of Nonconforming
Uses at Communications & Power Industries LLC (CPI) Located at 607-
811 Hansen Way. Amendments to the Municipal Code Affect the
Following Sections and can be Reviewed at the Planning Department’s
Offices During Regular Business Hours at 250 Hamilton Avenue, Palo
Alto, 5th Floor: a. Chapter 18.04 (Definitions) Section 18.04.030 (66)
(A) and (B) and (127.7); b. Chapter 18.20 Office, Research, and
Hazardous MaterialsOrdinance
3 February 29, 2016
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.
Manufacturing [MOR, ROLM, RP and GM] Section 18.20.030 (Land
Uses) Table 1 (Industrial/Manufacturing District Land Uses); Section
18.20.040 Subsections (b) and (c); and Section 18.20.050
(Performance Criteria) c. Chapter 18.23 (Performance Criteria for
Multiple Family, Commercial, Manufacturing and Planned Community
Districts) Section 18.23.100 (Hazardous Materials) Subsection (B) d.
Chapter 18.70 (Nonconforming Uses and Noncomplying Facilities)
Sections 18.70.020 Through 18.70.100, Including Section 18.70.070
(Nonconforming Use - Required Termination) e. Chapter 17.16
(Hazardous Materials Management Plan) Sections 17.16.010
(Hazardous Materials Management Plan) and 17.16.025
(Supplemental Requirements for Emergency Response Plans) and f.
Chapter 17.20 (Hazardous Materials Inventory) Section 17.20.020
(Information required). Environmental Assessment: As a Regulatory
Action That Would Modify the List of Permitted Uses in Industrial Zones
to Protect the Health and Life Safety of Palo Alto Residents, the
Proposed Ordinances are Categorically Exempt From Review Under
Section 15308 (Class 8, Actions for Protection of the Environment) of
the State Guidelines for the California Environmental Quality Act
9:00-10:00 PM
9. Agreement With Empowerment Institute on Cool Block Small Pilot
Program (Continued From February 1, 2016)
Inter-Governmental Legislative Affairs
Council Member Questions, Comments and Announcements
Members of the public may not speak to the item(s)
Adjournment
AMERICANS WITH DISABILITY ACT (ADA) Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who
would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance.
4 February 29, 2016
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA
PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE.
DURING NORMAL BUSINESS HOURS.
Additional Information
Council and Standing Committee Meetings
City Council Public Improvement Corporation Meeting February 29, 2016
Finance Committee Meeting March 1, 2016
Schedule of Meetings
Schedule of Meetings
Tentative Agenda
Tentative Agenda
Public Letters to Council
Set 1
Informational Items
Revisions and Additional Information to the Office/R&D Administrative
Guidelines
City of Palo Alto (ID # 6192)
City Council Staff Report
Report Type: Study Session Meeting Date: 2/29/2016
City of Palo Alto Page 1
Summary Title: Results of Enterprise Resource Planning (ERP) Assessment
Title: Finance Committee Recommends the City Council Review the
Assessment Results of the Enterprise Resource Planning System (ERP) Needs;
Review Recommendation to Plan for the Acquisition of a new Integrated
Government-Oriented ERP System and Separate Provisioning of Utilities
Billing Systems
From: City Manager
Lead Department: IT Department
RECOMMENDATION
The Finance Committee recommends that the City Council:
(1) Review the results of the City’s Enterprise Resource Planning system (ERP)
evaluation. The ERP is the City’s software platform for finance, human resources,
public works, and utilities core functions.
(2) Review the recommendation to plan for the acquisition of a new integrated
government-oriented ERP and a separate provision of utility and refuse billing
services, taking into account recent investments in ERP functionality, such as the
new budgeting software, and potential opportunities for using third party
managed services in determining the new system requirements. Staff would
return to City Council with the results of this planning effort and recommended
next steps.
BACKGROUND
The City’s association with SAP began in 2002, when the City selected SAP to provide
an Enterprise Resource Planning (ERP) system to integrate various business processes
and establish a framework for the City to move toward electronic government. The City
completed installation of SAP Core modules in fiscal year 2003, when the SAP
Enterprise Central Component (ECC 6.0) was implemented. SAP has been operating
within the City since 2003, supporting Accounting, Finance, Purchasing, Project
Management, Plant Maintenance, Budgeting, Payroll, Human Resource Management,
and Service Order management functions.
City of Palo Alto Page 2
In 2009, the City completed a major upgrade to the SAP ERP system. It also replaced
the former utility billing system (Banner) with the SAP module for utilities: Customer
Relationship Management (CRM), Utilities Customer Electronic Services (also known as
My Utilities Account customer portal) and Business Intelligence systems (BI).
Both business and technology needs have changed since the City selected and
implemented SAP. Therefore, the City recently conducted a comprehensive evaluation
to develop a refreshed vision, with the goals of reducing IT application and
infrastructure support costs, improving flexibility, increasing ease of use, facilitating
further automation of business processes, and improving the quality and reliability of
information for decision making.
In June 2014, the City contracted with Plante Moran (CMR: 4560:14) for the Enterprise
Resource Planning Evaluation project to perform a comprehensive assessment of the
City’s SAP ERP environment and identify key strategic options and recommendations. In
addition to addressing the core SAP related functions, the project included the
identification and review of major third-party systems used by the City.
DISCUSSION
The assessment report resulting from Plante Moran’s work was completed in December
2014. The report’s Executive Summary is attached (Attachment A). In its report, Plante
Moran recommended that the City replace SAP with a new, fully integrated government
oriented ERP solution and a separate Utility billing best-of-breed solution. The report
can be found in its entirety on the City of Palo Alto website at the following location:
http://www.cityofpaloalto.org/gov/depts/it/value/accomplishments.asp
Staff considered Plante Moran’s recommendation to replace SAP with a new, fully
integrated government-oriented ERP solution with a separate Utility billing best-of-
breed solution. Staff also considered the input of a large SAP stakeholder group, made
up of representatives across departments. Finally the SAP steering committee, made up
of leaders from SAP user departments, provided additional leadership input and
recommended the following next steps:
(1a) Evaluate the potential opportunities for using 3rd party managed services
for certain functions identified in the scope of the existing City’s ERP system.
(1b) Plan for the acquisition of a new integrated government-oriented ERP and
separate provision of billing services. Take into account any recent investments
in ERP functionality, such as the new budgeting software, and also review the
results of (1a) in determining the new system requirements.
The planning and execution of the above two recommendations would require the
identification of a vendor through a RFP process, and the possibility of adding
City of Palo Alto Page 3
temporary staffing, to assist staff in evaluating options for supporting the City’s future
needs at an estimated cost of up to $250,000. This amount was included in the Fiscal
Year 2016 Operating Budget as approved by City Council.
By early Fiscal Year 2017, after receiving input from the vendor and the Finance
Committee, staff will return to the City Council for further discussion on the options and
implications for moving forward with replacement of the existing SAP system.
Staff anticipates that the full set of projects to implement and complete new solutions
for the City’s ERP needs may take until the 2020-2022 timeline dependent on the final
approved roadmap.
For completeness, staff is including the following information as suggestive of future
implementation costs. No approval is required at this time and the following dollar
amounts are shared for information purposes only. As part of the Plante Moran
assessment study, a five-year total cost analysis was performed. A new integrated
government-oriented ERP system is estimated to cost between $10 to $15 million (five-
year cost). Approximately 60% will be funded by the City’s Enterprise Funds and 40%
by the General Fund.
Finance Committee Consideration and Recommendation
The Finance Committee considered staff’s recommendations at its March 17, 2015
meeting. Meeting minutes are included as Attachment C.
RESOURCE IMPACT
As part of the Fiscal Year 2016 Adopted Operating Budget, funding of $250,000 was
budgeted in the IT Department to complete the planning and evaluation phases of ERP
replacement, as recommended above. Once planning and evaluation are complete,
currently anticipated for early Fiscal Year 2017, staff intends to return to the City
Council with a recommended ERP replacement project plan that includes a funding
strategy to pay for the estimated $10 to $15 million five-year cost for replacement.
ENVIRONMENTAL REVIEW
Planning for replacement of the City’s ERP software is not a project under the California
Environmental Quality Act (CEQA).
Attachments:
Attachment A: Palo Alto ERP System Evaluation Final Report (PDF)
Attachment B: Palo Alto ERP Evaluation City Council Presentation Fall 2015 (PPTX)
Attachment C: 03-17-15 FCM FINAL MINUTES (DOC)
Enterprise Resource Planning
System Evaluation
CITY OF PALO ALTO, CA | NOVEMBER 24, 2014
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ERP System Evaluation | Final Report
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Table of Contents
1 ERP Evaluation ................................................................................................................................. 4
1.1 Project Overview And Executive Summary ............................................................................. 4
1.1.1 Project Background .............................................................................................................. 4
1.1.2 Project Scope ....................................................................................................................... 4
1.1.3 Project Approach .................................................................................................................. 6
1.1.4 Summary of Observations .................................................................................................... 7
1.1.5 Executive Summary of Options and Recommendations ................................................... 11
1.1.6 Plante Moran Recommendation......................................................................................... 13
2 Current State/Gap Assessment ...................................................................................................... 14
2.1 Overview of Findings .............................................................................................................. 14
2.2 General Ledger / Financial Reporting .................................................................................... 14
2.3 Investment/Cash Management .............................................................................................. 16
2.4 Budgeting ............................................................................................................................... 17
2.5 Fixed Asset | Asset Management | Capital Improvement Planning ....................................... 20
2.6 Project Accounting ................................................................................................................. 22
2.7 Procurement ........................................................................................................................... 23
2.8 Accounts Payable .................................................................................................................. 25
2.9 Revenue Collection/Miscellaneous Billing/Accounts Receivable ........................................... 26
2.10 Payroll/Time Entry .................................................................................................................. 27
2.11 People Strategy and Operations (PSO) ................................................................................. 29
2.12 Utility Services Management / Refuse ................................................................................... 31
2.13 Current Technology Profile .................................................................................................... 33
3 ERP Marketplace Assessment ....................................................................................................... 36
3.1 Integrated ERP Environment ................................................................................................. 36
3.2 Best-of-Breed ......................................................................................................................... 37
3.3 Alternative Software Delivery Options: Hosting (“Cloud”) ...................................................... 38
3.4 ERP Vendor Consolidation .................................................................................................... 39
3.5 Summary Comparisons .......................................................................................................... 39
4 Options Analysis ............................................................................................................................. 43
4.1 Option 1: Status Quo with Investment .................................................................................. 43
4.2 Option 2: Upgrade SAP ......................................................................................................... 46
4.3 Option 2, Alternative A ........................................................................................................... 46
4.4 Option 2, Alternative B: .......................................................................................................... 47
4.5 Option 2: Cost Estimates and Summary ................................................................................ 48
4.6 Option 3: New ERP Environment ........................................................................................... 49
4.7 Option 3, Alternative A: .......................................................................................................... 49
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4.8 Option 3, Alternative B: .......................................................................................................... 50
4.9 Option 3: Cost Estimates and Summary ................................................................................ 51
4.10 Plante Moran Recommendation............................................................................................. 53
5 Recommended Next Steps ............................................................................................................. 54
5.1 ERP System Evaluation Approach ........................................................................................ 54
5.2 Phasing .................................................................................................................................. 56
5.3 Staff Backfill............................................................................................................................ 57
5.4 Data Cleansing / Conversion ................................................................................................. 58
5.5 Interface Development ........................................................................................................... 59
5.6 Report Development .............................................................................................................. 59
5.7 Change Management ............................................................................................................. 60
5.8 Communication Planning ....................................................................................................... 61
5.9 Process Re-Design ................................................................................................................ 62
5.10 5ERP System Training ........................................................................................................... 62
6 Appendices ..................................................................................................................................... 64
6.1 Appendix A: Project Charter .................................................................................................. 64
6.2 Appendix B: Application Inventory ........................................................................................ 73
6.3 Appendix C: Response Summary from City-wide User Survey ............................................. 80
6.4 Appendix D: Total Cost of Ownership Details and Assumptions ........................................... 81
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1 ERP Evaluation
1.1 PROJECT OVERVIEW AND EXECUTIVE SUMMARY
1.1.1 PROJECT BACKGROUND
The City of Palo Alto, CA (the “City” or “Palo Alto”) has an estimated 65,000 residents and is located in
Silicon Valley in the San Francisco Bay Area of California. The City’s FY 2014 operating budget is
$447 million and the City employs over 1,000 full and part time staff. Palo Alto is a full service city
providing administration, planning, code enforcement, public works,
water/wastewater/gas/electric/fiber utility, parks and recreation, public safety police and fire services.
The City is also the home to Stanford University, a world renowned Pac-12 conference research
institution.
The City currently utilizes the SAP ERP system to support its major Finance, Human Resource and
Utility Billing processes. The City’s history with SAP began in 2002 when the City selected SAP as its
preferred vendor for an Enterprise Resource Planning (ERP) system with the purpose of integrating
various business processes within the City and to pave the path for the City to moving toward the
direction of electronic Government. In fiscal year 2003, the implementation of the SAP Enterprise
Central Component (ECC 6.0), SAP core modules were completed and the SAP system has been
running in the City since 2003, supporting Accounting, Finance, Purchasing, Project Management,
Plant Maintenance, Budgeting, Payroll, Human Resource Management, and Service Order
Management.
In 2009, the City completed a major upgrade to the SAP ERP system, which also replaced the former
utility billing system (Banner) with the implementation of the SAP IS-U module, Customer Relationship
Management (CRM), Utilities Customer Electronic Services (also known as My Utilities Account
customer portal) and Business Intelligence systems (BI). Both business and technology needs have
changed dramatically since the current ERP solution was selected and implemented. Therefore, the
City desired to conduct a comprehensive evaluation to determine a solution to reduce IT application
and infrastructure support costs, improve flexibility, increase user friendliness and intuitiveness of
system, facilitate further automation of business processes, and improve quality and reliability of
information for decision making.
1.1.2 PROJECT SCOPE
The City engaged Plante Moran to perform a comprehensive assessment of the City’s SAP ERP
environment and identify key strategic options and recommendations. In addition to the core SAP
related functions the project included the identification and review of major best-of-breed and third-party
systems used by the City. The City requested that the evaluation provide the following:
GAP analysis to identify deficiencies in the current system
Identify effectiveness of current system at meeting business needs
Evaluation of hardware
Benchmark maintenance/support costs
Determine if city would benefit by soliciting proposals for alternative ERP solutions
ERP System Evaluation | Final Report
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Specifically, the project scope included conducting project management tasks, reviewing
documentation, conducting interviews and assessing the City’s technical environment to develop this
ERP evaluation for the following functional areas:
Administrative Services
Budget Accounting
Payroll Purchasing
Store
Utilities
Billing Management Device Management
Work Management
Business Intelligence
Financial Contract Accounts
Utilities Customer Electronic
Services
Customer Service and Customer Relationship Management
People Strategy & Operations
Processes and Management
Public Works
Refuse and Recycle Billing
Information Technology
Technology Strategy and Roadmap
All other departments (City Attorney, City Auditor, City Clerk, City Manager, Community Services,
Planning & Community Development, Information Technology, Library, Police and Fire)
Budget/Position
Time Entry
Procurement
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1.1.3 PROJECT APPROACH
The following chart illustrates the approach that was taken in performing the City’s ERP Evaluation:
The project was conducted using a participative and inclusive approach with significant input from the
City management and staff to ensure accuracy, completeness, and ownership of the resulting
recommendations. Participation was obtained through the following activities:
Establishing a Project Sponsor to maintain the project vision, act as a project champion,
provide a strategic perspective, and to remove project roadblocks when necessary.
Defining a Project Manager to ensure prompt and clear communication with the City
department staff, manage project activities, ensure project deliverables were reviewed by the
appropriate City staff, and to provide progress updates to the City management and other
interested stakeholders.
Conducting a project kick-off meeting and building awareness around the project.
Facilitating multiple project management status meetings to manage project activities and
provide status updates.
Conducting interviews with the City departmental end users to evaluate current systems and
business processes. Departmental management was encouraged to participate and invite
team members.
Collection and review of numerous documents provided by the City, as well as completed
questionnaires by the departments.
1. Initiation
•Define Project
Organizational Structure
•Develop Project Charter
•Develop Project Plan
•Establish Project
Collaboration Center
2. ERP Evaluation
•Review City
Documentation
•Conduct Departmental
Interviews
•Assess Technology
Environment
3. Draft
Evaluation Report
•Compile Findings
•Identify ERP Options
•Develop
Recommendations
•Prepare Draft Report
•Develop Action Plan
•Present Draft Findings
4. Finalize Report
•Review Draft ERP
Evaluation
•Update Draft Report
•Finalize Report
ERP System Evaluation | Final Report
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Soliciting input from the participating Departments that included the evaluation of the following
items:
o Identification of current systems
o Duplicate entry / re-keying of information
o Issues with / shortcoming of current systems
o Strengths of existing systems
o Unused features / functionality of SAP
o Opportunities to interface systems
o Unique City business rules
o Vendor interaction
o Current technology project initiatives / Future technology projects
Requesting and collecting data which was used to develop a total cost of ownership (TCO)
analysis.
Developing this ERP evaluation
The overall goal for implementing new technology not only focuses on the technology itself, but also
aims to enhance existing business processes performed by individual departments across the City.
Technology is intended to enhance departmental business processes by:
Making them more efficient
Making them more effective
Improving decision-making
Providing enhanced customer service to both internal and external customers
Improving access to information
Streamlining processes to reduce costs.
The overall goal of this ERP evaluation was to define a future course of action for the City’s SAP
investment and related applications and shadow systems. The approach utilized for collecting
information included interviews with primary process and systems owners, IT staff, and the City
department users regarding the existing technologies and processes.
1.1.4 SUMMARY OF OBSERVATIONS
While the current SAP environment supports the daily needs of the City and supports the ability of end
users to accomplish their responsibilities at a basic level, the current system structure has left the City
with many challenges. The following points summarize the key functional weaknesses regarding the
systems and processes that support financial management, human resources, payroll and other City
administrative functions.
Inefficiencies Due to Redundant Data Entry and Manual Processes
The existence of multiple standalone systems and reliance on desktop applications like Excel and
Access inevitably results in inefficient business processes. Disparate information systems result in
redundant data entry efforts because information is taken out of one system and entered into another.
Even when data can be directly downloaded via automated means, the organization of data and
formatting requires significant effort. In addition, there are still a host of manual processes that support
certain business functions. In a number of cases where standalone systems and desktop applications
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are now being used it is possible that unused modules of the SAP system could support these
functions.
Lack of an intuitive user interface
The City’s current financial, human resources and utility billing systems do not provide end users with
an intuitive and integrated experience across common transactions. With few exceptions, end-users
across all business areas stated that the current system was cumbersome and not user-friendly. The
systems lack sufficient querying tools and most departments rely on the Finance or IT department to
develop and provide many reports.
Workflow within SAP is Not Fully Utilized
One of the benefits of ERP systems is the availability of workflow to signal to a user when items exist
that require approval, review, or attention. The City is not currently using this feature in many areas of
the SAP system. This requires the need for separate manual approval processes and notifications
when work is ready to be completed in the system, leading to inefficiencies in the business process.
The SAP investment is not fully utilized overall
For several reasons, whether it is availability of staff, complexity of the function, or failure to fully meet
the needs of the department, the staff is not utilizing various features of SAP.
Heavy Reliance on IT and Outside Consultants for SAP Enhancement Requests
Along with SAP, the City utilizes a number of stand-alone systems. To meet the ever-changing needs
of government, it is often necessary to add a field or function or tweak a transaction process. These
minor or major enhancements to systems must be prioritized and handled by an IT Department whose
resources are stretched as a result and/or must be outsourced to a third party contractor. Additionally,
most reporting requests must be handled by IT staff, meaning that there is often a delay in getting
necessary information.
Complicated / Limited System Integration Requirements
Numerous standalone systems are used to report and gather data resulting in complex integrations to
the City’s main ERP system. Reliability of data is an issue in many City areas because information is
not processed in real-time or can be immediately synchronized between systems when reporting from
SAP. There are also cases where staff has limited ability to access current information in the required
systems. The cost to establish interfaces between additional systems to ensure timely and accurate
information is available is significant when considering the staff time necessary to test and maintain
these interfaces for the long term. The ERP Applications Environment Diagram represents the
complexity of the City’s existing application landscape. The City intends to continue adding systems to
this environment within the next year adding further system administration responsibility to the team.
ERP System Evaluation | Final Report
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Current ERP Applications Environment Diagram
texttext
SAP ERP
Expanded ERP
Capabilities
Outside Agency /
3rd Party Interfaces
Special Ledger
Project System
General Ledger
Accounting
Financial Supply
Chain
Management
Funds Management
Bank Accounting
WellsFargoPositive Pay, Cleared Checks,
Direct Deposit, AP Checks
US
Treasury
1099s
Social
Security
Administration
Cost Controlling
Business Objects
Sales and
Distribution
Accounts
Receivable
Financial
Accounting
Advanced Micro
Solutions (AMS)Accounts Payable
Doc1/e2Vault
Utilities
Management
Docusign
Purchasing
Checkfree
Online payments
Commerce Bank
E-Payables
Accounts Payable
Business
Warehouse
Asset Accounting
Logistics Materials
Management
Plant Maintenance
Human Resource
Management
Active Directory
Organizational
ManagementBenefits
Time Entry
Payroll
Utility Billing
Device
Management
Customer Service
Financial Contracts
Accounting
Utilities Customers
E-Services
Autodesk Utility DesignUtilities
Management
BMIPurchasing
CivicaIT
CLASSParks and Rec
CORE (iPay)Revenue
Collections
Dassian
OMB
GIS Geodesy
GIS Mapping
GoldMine
Utilities
Management
InTime/ISELINK
Payroll/Time Entry
I-Tron/MVRSUtilities Management
JP Morgan Chase
Smart Data
Accounts Payable
Maintenance ConnectionPublic Works and
Community ServicesMS Access
Utilities Management
MS Excel
Various
MS Project
Project Accounting
NeoGov
PSO
OpenGov
Financial Reporting
Outage ManagementUtilities
Management
Pattern Stream
OMB
Pitney Bowes
Utilities
Management
Questica
OMB
Quick ServeRevenue
Collections
SharePoint
Various
Segal Waters
Compensation Database
Skillsoft
PSO
Spinifex
PSO
SymPro
Treasury
TopobaseUtilities
Management
Training DB
PSO
US BankP-Card
ICMAEmployee Contributions
PARS
Employee Contributions
Hartford
Employee Contributions
ACES
Employee PERS Contributions
CalPERS
Employee Retirement
GreenWaste
Refuse
ERP System Evaluation | Final Report
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Reporting is Inadequate for City’s Needs
The City is faced with a number of mandated reporting needs. The standard reports that are available
within the system do not meet the overall needs of the City. Therefore, many departments are
maintaining separate spreadsheets in order to meet the day-to-day informational needs of the City and
its departments.
Lack of Self Service Functionality
Several employee facing processes are entirely manual and could benefit from better employee and
manager self-service functionality. For example manager self-service for employee performance
reporting is non-functional and employee self-service functionality is limited to read only transactions.
There were a number of consistent themes expressed during the process review sessions. Although it
is difficult to summarize opportunities to resolve dozens of issues identified, the unmet needs which
the City management and staff expressed as opportunities for improvement are as follows.
1. Redesigned and streamlined business processes incorporating established best business
practices.
2. Full integration between all system modules, allowing for the elimination of shadow
systems and other supplemental applications.
3. Real-time, immediate update and access to the financial and human resources
information.
4. Single entry of data and reduction in manual processes.
5. User-friendly, user-driven and flexible reporting tools with distributed, securitized access
to all users.
6. Elimination of paper-based processes and replacement with automated, online workflows
and approvals
7. Self-service capabilities and other “e-government” opportunities such as employee self-
service, remote time entry and mobile workforce capability.
8. Performance measurement and improved reporting capabilities.
9. Improved system of internal controls.
10. Reduced total cost of ownership.
11. City wide document management system and policy is needed. This will also help
automate many workflows.
As these themes indicate, there is an obvious need to improve upon the current systems environment.
To seize on this opportunity, Plante Moran is presenting a variety of strategic options and alternatives
for the City to evaluate as part of this assessment.
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1.1.5 EXECUTIVE SUMMARY OF OPTIONS AND RECOMMENDATIONS
Plante Moran has evaluated the City’s current ERP environment and has observed a clear trend toward selecting best of breed systems that
interface with SAP in order to achieve desired business objectives. In many cases, these best of breed systems replicate core SAP functionality
the City cannot realize at present. In recognition of this trend, three key options, with multiple best-of-breed alternatives have been identified to
assist the City to identify a viable strategic approach to further investment over the next five years. Each option offers some advantages and one
offers the most cost-effective and most suitable alternative based upon Plante Moran’s experience conducting system needs assessments and
selections when facing circumstances similar to Palo Alto. The table below defines these options and detailed information relative to each option.
The specific advantages and disadvantages of each option are provided in detail in a later section of this report.
OPTIONS DEFINITION AND EXECUTIVE ANALYSIS
Options Description
Option 1: Status Quo with Investment
ON PREMISE: Status Quo Current SAP
Modules + Existing Applications (Best of Breed
Systems) w/ Extended SAP Support
This option represents the City’s current investment position with the resources currently in
place supporting the SAP environment on premise today. It also represents the existing mix
of best of breed or third party applications interfaced with SAP supporting the budgeting, fixed
asset / asset management, human resources, purchasing, revenue collection, treasury, and
utilities management. The City is paying a premium for the addition of best of breed solutions
when core SAP functionality exists but cannot be fully realized.
Option 2a: Upgrade SAP
ALL IN CLOUD: Upgrade SAP Modules + Other
Existing Applications + Planned Applications
(Includes SAP Utility Billing)
This option represents the City’s migration to a Hybrid Cloud where the City would take
advantage of the HANA Enterprise Cloud to take advantage of hosted and managed services
from SAP. The City would assume maintenance responsibility for the non-SAP applications
that would reside in this environment and will retain ownership of these licenses.
Option 2b: Upgrade SAP
MIXED ENVIRONMENTS: Cloud Upgrade SAP
+ Existing + Planned Applications + On-Premise
Utility Billing Best of Breed
This option is essentially the same as 2a above with the exception of the addition of a utilities
best of breed system. The overlap between the core SAP and best of breed solutions
remains in this option and it does not appear to offer a viable strategic alternative.
Option 3a: New ERP Environment
NEW Fully Integrated ERP Environment + Utility
Billing Best of Breed
This option assumes the City reinvests in a new, fully integrated ERP solution that would take
advantage of the capabilities of a solution. The City would prepare an RFP for a solution that
incorporates all of the required functionality in addition to integrating with a new utilities best of
breed system.
Option 3b: New ERP Environment
NEW Limited ERP Environment + Existing
Applications + Planned Applications + Utility
Billing Best of Breed
This option assumes the City reinvests in a limited ERP environment where the existing and
planned best of breeds would be acquired in addition to a best of breed utilities management
system.
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Plante Moran performed a total cost analysis (TCO) for each option presented above. This analysis takes into consideration the one-time cost as
well as estimated ongoing costs, for each option based on assumptions defined later in this report. A summary analysis of the total cost of
ownership for each option identified in the report is provided in the table below:
Option 1 Option 2a Option 2b Option 3a Option 3b
ON PREMISE
Status Quo
with Investment
ALL IN CLOUD
Upgrade SAP and
Retain Existing Best of
Breed Systems
MIXED ENVIRONMENTS
Upgrade SAP Core
Financials/HR/Payroll Modules
Only Keep Existing Best of Breed
Systems Obtain Best of Breed
Utility Billing System
NEW ERP
Go to Market for a Fully
Integrated Public Sector
Focused ERP Solution and
Procure a Separate Utility
Billing Best of Breed Solution
NEW ERP
Go to Market for a Fully Integrated Core
Financials/Human Capital Management
Solution, Retain the Current Best of
Breed Systems and Procure a Utility
Billing Best of Breed
EXTERNAL COSTS
One-Time Cost Summary
Software License Fees -$ 3,628,151$ 3,391,151$ 1,069,984$ 1,670,133$
Additional Hardware Costs N/A N/A N/A N/A N/A
Consulting Implementation / Data Conversion / Interface
Development -$ 589,350$ 1,009,757$ 2,142,027$ 2,338,275$
Training N/A 566,850$ 686,850$ 120,000$ 250,850$
System Selection & Implementation Planning Fees N/A N/A 80,000$ 200,000$ 200,000$
Total External One-Time Costs -$ 4,784,351$ 5,167,758$ 3,532,012$ 4,459,258$
Reoccurring Cost Summary
Annual Software Licensing & Solution Support 667,910$ -$ 64,138$ 241,675$ 205,874$
Consulting Support Services 250,000$ -$ -$ 80,698$ 64,425$
Cloud (includes Licensing, Support, Interfaces & Consulting
Services)-$ 3,421,439$ 2,921,439$ -$ 646,080$
Training 112,500$ 150,000$ 165,000$ 75,000$ 115,000$
Total External Recurring Costs 1,030,410$ 3,571,439$ 3,150,577$ 397,373$ 1,031,379$
INTERNAL COSTS
Reoccurring Cost Summary
Current Support FTE 2,073,000$ 510,000$ 510,000$ 510,000$ 510,000$
Additional Support FTE'S -$ 530,000$ 530,000$ 400,000$ 530,000$
Total Internal Recurring Costs 2,073,000$ 1,040,000$ 1,040,000$ 910,000$ 1,040,000$
Year #1 Grand Total Cost 4,133,820$ 6,267,261$ 6,650,668$ 4,442,012$ 5,942,168$
FIVE YEAR ESTIMATES
Five-Year Estimate *17,138,248.00$ $25,559,803 $24,182,480 $9,911,572 $14,608,045
* Estimate includes one-time and reoccurring costs during year one, annual software licensing and solution support for planned application purchases in year one are assumed to incurred in years 2-5 only, and the future value of investments
has been adjusted for years 2-5 to account for a 3% annual rate for inflation.
Executive Summary of ERP Evaluation Project Alternatives
Cost Category
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1.1.6 PLANTE MORAN RECOMMENDATION
The SAP system offers a significant range of functionality and is capable of meeting most of the City’s
ERP needs. However, the City has not demonstrated the capacity of effectively utilize the range of
features offered by this complex system. The primary challenges with maintaining Options 1 and 2
would be the inefficiencies due to multiple systems and the cost of maintaining and supporting the
SAP system and the interfaces with a proliferation of best-of-breed solutions in the long run. Internal
and external costs to support the current environment, variety of standalone systems, and the lack of
integrated information are also main drivers for the City to consider additional options. Plante Moran
does not view Option 1 as a viable long term strategy primarily because the current version is not
supported by SAP starting in 2016.
At the time that the City purchased the SAP system, the ERP software market was quite limited.
Today there are a number of ERP options, designed explicitly for and available to, cities the size and
complexity of Palo Alto. Some of today’s ERP systems offer not only the core ERP functions, but also
many of the Expanded Capabilities, as shown in the prior diagram.
Overall, the City may decide to continue with SAP, but in view of the total cost of ownership differential
as well as the problems that it has had in maintaining and optimizing SAP in the past, Option 3 may
allow the City to lower the total cost of ownership and improve the functionality for City end users.
We recommend that the City issue an RFP to evaluate best of breed solutions with a fully
integrated public sector focused ERP solution and procure a separate utility billing best-of-
breed solution.
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2 Current State/Gap Assessment
2.1 OVERVIEW OF FINDINGS
One of the main strengths of the City’s current set of business systems is that they enable the City
business processes – i.e., employees are paid on time, purchases are made, applicants are hired,
financial reports are completed, and funds are budgeted and accounted for. In general, the current
systems facilitate basic financial, purchasing and human resource functions. There are, however,
some weaknesses that will be reviewed in further detail in the functional assessment areas below.
2.2 GENERAL LEDGER / FINANCIAL REPORTING
The City utilizes SAP for General Ledger, Budget Control and core Financial Reporting. SAP was
implemented over 10 years ago and is still supported by the vendor to this day. A majority of the
organization utilizes SAP for basic financial reporting purposes, however many of the departments
utilize Excel spreadsheets for budget tracking/reporting, as reporting from SAP has been described as
difficult.
Overall, the chart of accounts at the City has five segments and can approach 30 alpha numeric
characters as defined below:
Segment: Fund
Cost
Center
Business
Area/Dept. Account WBS
# of
characters:
3 8 3 5 10
As a whole, the current Chart of Accounts accommodates GAAP based on GASB standards for the
City’s CAFR. Despite not being on the most recent version of SAP, City staff has been able to
maintain a high level of effectiveness in its accounting processes.
STRENGTHS
The strengths of the current General Ledger / Financial Reporting environment include:
1. Chart of Accounts Structure: The current Chart of Accounts adequately accommodates
required GAAP based on GASB standards for the City’s CAFR.
2. Interdepartmental funds transfer: The system enables the transfer of funds between
departments, funds and projects through an automatic fund balancing feature. The feature
allows an authorized user to complete entries across multiple funds and the system prepares
the balancing entries in the background. This capability provides prevents these transfers
from creating out of balance situations and prevents the need to manually perform these
entries.
3. Audit Trail/Drill Down Functionality: Basic audit trail and drill down functionality is available
within SAP.
4. Closing Flexibility: SAP effectively supports month end and annual closings.
5. Familiarity with system: The current accounting staff is knowledgeable and familiar with the
current system.
6. Useful query/reporting tools: Users identified the query feature and Spinifex reporting tools
as major strengths that need to be retained in a new solution. However, staff would like
additional functionality, such as the ability to drill into further information from the reports.
7. Upload tools: SAP has functionality to upload journal entries from Excel into the financial
system.
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WEAKNESSES
1. Data Integrity: During the initial SAP implementation the City converted historical data which
is causing data integrity issues (remaining AR balances) to this day. While this is not an issue
resulting from SAP, this information converted resulted from an implementation process that
was not validated and it perpetuates error within the system.
2. Chart of Accounts and Validations: Not enough automated validations were implemented
when it comes to creation of new GL accounts, thus duplicates exist. Unique description for
each general ledger account is needed to avoid confusion when posting transactions and
generate reports. This is a process issue that has no relationship with SAP.
3. Manual Processes: SAP has automatic and recurring journal entry functionality, however it is
not being utilized. While the City does have the ability to utilize a template to upload the
journal into SAP, it requires manual intervention to open up the template and execute the
journal process. This is a process issue and not identified as an SAP system functional
deficiency.
4. Journal Entries Workflow: Requests for journal entries from the departments are submitted
via a hardcopy memo, which is difficult to track and ensure completion. Staff would like to
submit journal entries electronically, along with supporting documentation.
5. Reporting Tools: It is difficult for the casual system user to write new reports with the SAP
and Spinifex reporting tools. Staff indicated that the current financial system is not user-
friendly and provides limited ability to extract, manipulate and analyze data. Third party CPA
(MGO) compiles the CAFR and annual Streets Reports on behalf of the City. The City needs
more access and transparency in the third party system. Microsoft Excel is heavily used to
analyze the financial results (i.e. budget to actual variances).
6. Internal Orders Functionality: The City uses The Internal Orders functionality of SAP for
tracking statistical data for expenses relating to grants or specific sub-projects. It is also used
in other areas including Planning, Community Services, and others.
7. Accounting Decisions Responsibility: Various City departments have their own Accounting
liaison that make accounting decisions, which should reside strictly with the trained accounting
staff. This is recognized as a process and governance issue unrelated to SAP’s system
capabilities.
8. Electronic Document Management: Reviewing backup documentation is currently a
manual/paper process. Departments will park their journal entries in the system and send
paper "backup" for accounting to review.
9. Loss of Institutional Knowledge: City has lost quite a bit of institutional knowledge through
retirements which has hurt the SAP support structure. As a result, much of the functionality
SAP can provide has been ‘lost’ as the City power users retire. This is identified as a system
governance issue and not related to an SAP functional limitation or deficiency.
10. Reporting System Gaps: FI and FM funds integration reports differ in the way SAP is
configured resulting in conflicting reporting results creating confusion among the user base.
11. Donations Tracking: Accounting has to track outside of SAP and Questica the status of all
donations since the amounts cannot be determined by the individual departments at this time.
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OPPORTUNITIES
1. End-user financial reporting will be greatly improved from either an SAP upgrade of the
implementation of a new system, as many of the components and CAFR required financial
reports are provided out of the box from a host of potential vendor solutions.
2. If the City decides to upgrade its current SAP environment, it should start taking advantage of
the Internal Order feature for interdepartmental costs allocations or for tracking costs of a
specific job, allocating the costs to an asset, cost center or GL Account and analyzing the cost
centers for better-decision making purposes. Furthermore, the City should take advantage of
the SAP automatic and recurring journal entry functionality and turn on the journal entry
approval and posting workflow by turning on email alerts and modifying the rights of the roles
for the users involved in the process, in such a way that segregation of duties is achieved or
maintained.
3. A modern system can potentially provide users with improved non-financial reporting tools,
increased account and budget validation at the point of data entry, and greater ability to drill
down into system transactions. The City owns SAP Business Intelligence module, which is
currently used only by Utilities department. This City should consider expanding the use of this
tool across all departments in order to achieve better reporting and creation of user defined
automated dashboards that include financial and non-financial metrics.
4. The chart of accounts structure and cost center structures need to be optimized in order to
better align with business needs and provide more meaningful information to decision makers
and citizens.
5. A future system should include accounts payable invoice scanning, document storage and
retrieval, and electronic workflow processes. The City is currently contracting to outsource the
payables processing through Commerce Bank to provide these services, it is more efficient to
perform these functions within the core ERP whenever possible.
2.3 INVESTMENT/CASH MANAGEMENT
The City has the responsibility of managing many types of debt and investment instruments that
require significant planning and tracking efforts for ensuring sufficient funds are available to cover
liability and contractual obligations. The City’s Money Management / Treasury Division is responsible
for investing the City’s cash resources, investments, and facilitating the debt financing process in
accordance with the City’s investment policies and State statutes.
The City currently uses the Sympro software to centrally track the City’s investment portfolio activity
valued at $500 million. The software generates reports for analysis, reconciliation, and meet legal and
accounting reporting requirements including the production of quarterly investment reports for City
Council, forecasting investment maturities, and ensuring the City has sufficient cash liquidity.
Examples of reports generated including GASB 40, owned security list, variety of interest earnings,
past and future maturity activity, etc.
STRENGTHS
Sympro is a versatile and appropriate system for managing City’s investment portfolio.
WEAKNESSES
1. SAP Use: SAP is not being used to track the City’s management of investments and cash
flows and there is no programmed interface between Sympro and the City’s SAP GL at this
time. This requires all activities including, but not limited to, interest earnings, purchases, and
sales, to be represented as manual journal entries.
2. Reporting and Analysis: Cash flow analysis is currently being managed in MS Excel to
represent the needs of the entire organization.
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3. Staff Availability: Because cash flow forecasting involves manual processes necessary to
update these Excel workbooks to synchronize transactions, there is greater overhead to
produce current, actual summaries of cash flow forecasts reflecting the City’s current
investment holdings.
OPPORTUNITIES
It is very common for ERP vendors to partner with investment management solution providers,
including Sympro, to offer a direct integration with the ERP system can be achieved. A direct
integration with the City’s ERP system would:
1. Reduce administrative overhead involved in creating journal entries for account updates in
the GL and provide greater line item control options.
2. Provide the City with options to have utility and non-utility accounts receivables represented
in addition to an expense side module so a single cash flow analysis could be represented.
2.4 BUDGETING
Starting with the FY 2016 budget, the City’s annual operating and capital budgets are developed with
Questica Budget software, using extracted financial data from the City’s Enterprise Resource System
(SAP). Previously, the General Fund Long Range Financial Forecast (LRFF), labor cost modeling,
financial reporting, and monitoring of the City’s budget were completed on spreadsheets. Starting in
the FY 2016 budget process, Questica Budget will be used to develop, monitor, and review the City’s
budget.
The workflow process of receiving a budget proposal, packaging decision materials, and compiling text
and figures into the budget document will be automated using Questica Budget and the budget
document publishing software (PatternStream). Questica is integrated with the City’s current ERP
system (SAP) and PatternStream.
During the fiscal year, the Office of Management and Budget (OMB) and city departments adjust
department budgets to reallocate existing funds into more appropriate line items or augment a
department budget based on Council action. Beginning FY 2016, workflow for these processes will be
managed using Questica Budget by documenting the budget change and its justification. Any budget
change in Questica Budget will be adjusted in SAP through an interface that occurs daily.
STRENGTHS
The strengths of the current Budgeting environment include:
1. Systems Integrations: Budget preparation in Questica Budget is integrated with SAP and
Pattern Stream. The workflow and budget entry for this process will be managed by Questica
Budget with a daily interface to SAP to record the transaction in the financial system.
2. Streamlined Processes: Questica Budget results in a more a more streamlined budget
process. Staff in departments will provide information for budget change submittals, Budget
Amendment Ordinances (BAO), and annual budget proposals in a work flow environment.
Specific budget proposals for vehicle requests or position requests will be routed through the
workflow process to Public Works or People Strategy and Operations, respectively. OMB and
department staff can review and approve proposals and generate decision packages for
decision makers to review in a controlled setting.
3. Automated Workflows: Questica software has workflow capabilities for receiving a budget
proposal, packaging decision materials, and compiling text and figures into the budget
document, which eliminates manual processes, reduces errors, and allows Analysts in OMB to,
work with departments on cost saving measures
4. Reporting and Modeling Capabilities: Budget modeling, summarization, and reporting are
performed in Questica Budget. The functionality of the budget system allows staff to input
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escalation factors or dollar amounts for these scenarios and have these changes
automatically flow through the next ten fiscal years.
5. Performance Management and Dashboard Monitoring: The City reviewed various
performance management software solutions. Questica Budget released a performance
management module with dashboard capabilities in summer 2014. Staff intends to bring
forward a contract amendment in the fall to the City Council to change the license agreement
from seat licenses to a site license at a highly reduced cost. It is expected that managing the
City’s operations through central review of performance measures and dashboards will
enhance productivity and services for residents and the community.
6. Automated Spending Controls: SAP’s Budgeting Availability Controls (AVC) is used to warn
the user if 10% or 5% of budget remains. The department must then submit a budget change
request to OMB.
7. Efficiency Gains: With the implementation of Questica Budget software manual processes
will be eliminated, which reduces errors and allows Analysts in OMB and the departments to
work on higher value tasks such as cost saving measures, organizational analysis, and
performance management.
WEAKNESSES
The weaknesses of the current Budgeting environment include:
1. PO and PR Carry Forward (Reappropriations): The City carries forward its Purchase
Orders and Purchase Requisitions from one year to another. In the New Year the Accounting
department is posting the accruals thereby creating problems for budget reports by
department. The City is working to perform a change to the Municipal Code to address this
issue.
2. Cost Allocations: OMB department does not understand the basis of how percentages of
overhead costs allocations was determined and the execution of this process in SAP (no
assurance that is complete nor accurate). The configuration of these cost allocations was
performed by staff during SAP’s initial implementation who are no longer in the City’s employ
and the knowledge to understand how these were established was undocumented. OMB is in
the process of implementing Questica which will address this shortcoming.
3. SAP Reporting: Generating custom reports from SAP is difficult (i.e. department budget
showing key parameters) and requires a program to write the report. It is very difficult to obtain
fund reserve balance reports for any of the funds in real time. Data reports do not have the
required detail (i.e. budget to actual reports). Report data varies when reports are generated
by different users and cannot be tied back to the cost centers detail. As a result, departments
do not have confidence in the data in some reports.
4. SAP User Friendliness: Some City Departments do not use the SAP system to track and
report transactions (i.e. Public Safety) due to the perceived level of difficulty to produce reports.
As a result, departments feel they are not in control of their financial situation. In extreme
cases, due to the lag in P-card transaction posting, departments fully expend their budget and
have the need to submit a budget change request..
5. SAP User Training: Users are in high need of continuous training when it comes to budget
management and reporting in SAP modules (SAP FM, SAP PS, etc.).
PENDING ISSUES
1. Double Entries: SAP will remain the system of record for Position Management due to the
ERP system controlling and maintaining employee master data. Position cost center
allocations will be maintained in SAP. Since the budget for positions will be developed in
Questica Budget, and unless SAP and Questica Bydget integrates position changes during
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the Questica Budget implementation, position changes derived from the annual budget
process must be performed in parallel with both systems (SAP and Questica Budget).
OPPORTUNITIES
In the near term, the City will benefit from implementing and integrating Questica budgeting system
with SAP. The expected advantages of reducing the staff time involved in the budget development,
review, approval and adjustment processes in combination with an electronic workflow-driven
environment is anticipated.
In an optimally configured system the City would be able to accurately define and track progress
toward mission elements, while taking advantage of the following additional opportunities:
1. Streamline and make transparent the overhead costs allocations to easily check
completeness and accuracy
2. Gain control over budget line items changes, made directly within the system, via user security
rights and automated approval workflows
3. Implement better automated spending controls, fund center assignee controls, position
management controls etc.
4. Avoid double entries in two systems when it comes budgeting changes
5. Track donation status within the ERP system by the individual department
6. Improve reporting granularity, accuracy, confidence and speed
7. Increased user friendliness when it comes to usage of the ERP system due to its predefined
module functionality and reporting capabilities
Further the City should consider:
1. Providing formal and informal annual ERP and non-ERP systems training to end user, based
on business need and keep track of each user training compliance
2. Documenting in a “Center of Excellence” repository the best practices and lessons learned to
which all users have restricted access based on their business needs
3. Hold each Department accountable for maintaining updated policies, procedures, user
manuals and desktop procedures for all systems
4. Enforce ERP and non-ERP systems governance, especially when turnover takes place within
the Departments
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2.5 FIXED ASSET | ASSET MANAGEMENT | CAPITAL IMPROVEMENT
PLANNING
The City has decentralized asset management responsibilities involving multiple divisions and
departments. Community Services, Public Works, Utilities, and Administrative Services are key
service providers with responsibilities to ensure the City’s infrastructure assets provide reliable,
predictable levels of service at the lowest cost possible. The City recently completed an Enterprise
Asset Management Needs Assessment, Selection, and Implementation Plan to improve and manage
on the asset management practices. The assessment revealed the City had been maintaining its fixed
asset inventory to compliance with GASB 34 standards using SAP’s Fixed Asset module. New capital
projects and capital rehabilitation projects that extend asset life are captured from invoices and
timecards and posted into SAP’s project module. The project module is reconciled with the
construction in process account and project costs are capitalized annually during the year a given
project is closed.
The City maintains a rolling, five year capital improvement planning window which categories projects
into programs and into funds to facilitate the reporting process. Budgets for projects are developed by
phase, by program, and by project which assists in the management activity tracking process. The
City is further required to track its infrastructure investments by IBRC category which introduces a
more granular reporting and tracking requirement beginning with this year’s asset management
requirements.
STRENGTHS
1. Project Accounting: The City’s ability to account for labor and contracted costs by project
through the City’s time and attendance system in SAP so these costs can be accounted for
and capitalized, as appropriate, is a model best practice (as evidenced in non-internal service
funds or those involving Account 471).
2. Budget Development: Additionally, the City’s recent investment in Questica this year will
completely transform the budget development process for FY 2015 by establishing a
structured workflow for all departmental budget item submissions. It will reduce administrative
overhead in managing numerous complicated Excel spreadsheets and will integrate directly
with SAP which will be expected to remain as the system of record for all budget to actual
reporting within the City. Questica will provide the ability for departments to submit budget
changes for projects, close out projects, reallocate funds between projects, open new projects,
and tag new sources of revenue. Daily updates will be provided from SAP into Questica to
enable departments to more readily retrieve current state budget to actual information by
project, program, or fund.
3. Grant Accounting: The City is currently managing its $2.5 million in grants successfully
through SAP where each department is responsible for administering their own grant
obligations including advances (e.g. VTA), CDBG, FAA (new airport operations), county
(transportation reimbursement), and utilities (Santa Clara County Water District). The grant
reporting and tracking needs have been sufficient for those responsible in tracking this
information.
WEAKNESSES
1. Use of SAP Modules: The City’s asset management activities outside of the Utilities Department
are not using any of SAP’s Plant Management (PM) module capabilities. As a result, there is very
limited asset management accounting for activities involving regular and capital maintenance due
to several factors including:
The use of disparate systems and databases that are not integrated with SAP or its interfaced
systems preventing the City from portraying a uniform view of its asset infrastructure.
The inability to portray accumulated maintenance deficits contributing to accelerated asset life
deterioration
The absence of any work order or service request management tools to track regular and
preventive maintenance leads to increased asset liability.
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2. Capital Improvement Planning (Budget to Actual Reporting): The City does not currently
have a means to generate reports allowing departments to determine the status of a multi-year
projects. This is caused by the need to carryover previous year(s) funding from earlier budgets
when a project spans more than one fiscal year. When this happens, the ability to freeze a
project prior to the carryover at a specific point in time to reflect current to actual details is not
possible.
3. Tracking Internal Labor Against Projects: The means to provide an instant status report that a
project manager can design and initiate exports from remains elusive and not possible to
generate without advanced SAP system knowledge. This restriction appears to be limited to
internal service fund activity tracking at this time as CIP projects do not appear to have this
restriction.
4. Absence of a Comprehensive Asset Infrastructure Inventory: Capital assets are typically
tracked by aggregated quantities which is adequate for meeting GASB 34 accounting guidelines
but are insufficient for operational asset management activities. Non-capitalized assets also
involve significant maintenance responsibility for the City and are not inventoried in any system,
including SAP at this time. Without a comprehensive inventory, there is no way for the City to
manage its overall maintenance obligations to know where maintenance has been deferred or
needs to be performed.
5. Absence of Multi-Year Asset Maintenance/Management Forecasting: The City does not
have a program in place that forecasts asset maintenance needs beyond the five-year rolling CIP
planning horizon. The City currently recognizes fixed asset lifespans for infrastructure at 40+
years but there is no current planning mechanism in place to represent these longer term
commitments.
OPPORTUNITIES
The City’s recently completed Enterprise Asset Management System (EAMS) Needs Assessment,
Selection, and Implementation Strategy report identified the following opportunities that could be
realized through the use of an Enterprise Asset Management System. Integrations with the ERP
environment are necessary to execute a number of the following items:
1. Maintain Current Asset Inventories for Current Asset State Evaluations: The EAMS
must allow City staff to establish a comprehensive, uniform, current-state inventory asset
types across operational divisions in Public Works, Community Services, and Administrative
Services by current asset operating status (e.g. current/active, scheduled, retired). This
inventory needs to identify capitalized and non-capitalized fixed assets so they can be
associated with the identification numbers currently in SAP for fixed asset value tracking (e.g.
government-wide financial reports, statement of net assets).
2. Provide a Basis for Budgeting and Capital Asset Planning: The means to track budget to
actual cost at the asset detail level in addition to the project and program levels through the
City’s ERP presents new opportunities to weigh asset management alternatives at both the
near and long term. At present, the City’s operational divisions are identifying priorities based
upon an annual budget cycle and a five year capital investment timeframe. The lifespan of
most infrastructure far exceeds this planning window (often greater than 20 or more years).
The ability to identify past, present, and future resource asset resource commitments will
ultimately determine if infrastructure is being managed as cost-effectively as possible or if
corrective measures are necessary to prevent reduced asset life.
3. Balance New Infrastructure Investment Planning with Operations & Maintenance:
Operations and maintenance (O&M) budgets need to be re-evaluated to determine the impact
to service levels as operations and maintenance budgets are expected to support a larger
asset pool. In most cases, the size of asset pool increases at a rate faster than the amount of
funds allocated to O&M activities. This obviously diminishes the organization’s ability to
realize the given assets expected lifespan.
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4. Integrate City’s EAMS with ERP Human Resources, GL, and Budgeting Modules:
o The ability to access personnel rates through the HR module and assign these rates
to work activities within the City’s EAMS will ensure direct labor costs associated with
projects are accurately represented and available. Budgeting integration will allow for
capital maintenance or construction activities to be captured according to existing
project/program accounts. It will also facilitate the collection of this information at the
operations detail level. This allows for improved fixed asset reporting and accounting
at the end of each fiscal year when this inventory is updated. Integration with the GL
will allow for specific labor, materials, and equipment to be expensed to the assigned
account numbers which will expedite budget-to-actual reporting and improve the City’s
capability to calculate actual service level cost.
2.6 PROJECT ACCOUNTING
The City is currently using the SAP-PS (Project System) for its project cost accounting activities in
addition to Microsoft Project and Microsoft Excel. Project accounting is conducted by phase, by
program, and by individual project and typically involves larger capital projects involving public works,
utilities, and facilities related projects. Projects are typically created through the budgeting process on
a rolling five-year cycle. The City is able to use the SAP-PA to track project phasing but is not
currently using project task tracking capabilities at this time. Project management activities involving
scheduling, task assignments, activity dependencies, and milestone completion percentages are
performed outside of SAP using Microsoft Project or Excel.
STRENGTHS
1. Labor Cost Tracking: Project accounting is very effective at capturing labor costs through
SAP’s time and attendance entry system which can be coded directly to specific projects.
This provides a very efficient and effective means of providing labor cost allocations to
projects and also produces reports with accuracy. The City maintains tracking relationship
information for budgeted CIP projects against current and scheduled projects. Because of
these strengths the City has been able to:
2. Reporting Compliance: SAP allows the city to comply with all external reporting
requirements (e.g. Federal, State).
3. Disaster Reimbursement: In emergency or disaster declaration situations, the City has the
ability to track emergency related project costs through SAP’s project accounting toolset
allowing for reimbursement reporting. This is a critical function necessary to support public
safety and public works professionals responsible for ensuring the delivery of essential
services.
WEAKNESSES
1. Project Budget Tracking: One of the greatest obstacles to SAP’s project accounting system
is the capability of tracking real-time project budget or contract balances. Presently, project
managers are responsible for tracking their own project costs, tasks, and retainage in Excel
spreadsheets. This creates reporting challenges as information pertaining to the completion
status of project tasks, retainage release approvals, and vendor performance is not being
captured within SAP. Which results in a lost ability to generate standardized project status
reports. It is possible for departments to overspend their project budgets without exceeding
budget controls on a multi-year type project involving multiple funds. Therefore, budgetary
controls are not effective in these types of situations. Project managers are also constrained
by the fact that they cannot represent prior year budget to actual reporting because funds can
be carried over from the previous fiscal year. This precludes the ability to represent project
variances at previous points in time when conducting project status comparisons on similar
types of projects. It also prevents project managers from determining the amount remaining to
fund their projects.
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2. Project close-out: since project open/close dates are not consistently defined in SAP, the
ability to run a report on project closeout status leaves many projects open beyond their actual
lifespan. It also requires project managers to manually notify their financial analysis and/or
accounting when projects are completed to effectively closeout a project (e.g. releasing
payment/performance bonds, liquidating escrow accounts, accurately tracking the valid dates
for warranty coverage, etc.).
3. Contract Compliance: Contract administration is also complicated by the fact that there is no
way to track a contract back to multiple projects or from multiple contracts back to a single
contract. The absence of this knowledge prevents the organization from identifying the quality
and performance of prior vendors in addition to knowing whether vendors are authorized to
continue working for the City in accordance with performance requirements (e.g. liability
insurance is current, performance guarantees in place, business licenses are up to date, W-
9’s are still valid, etc.). At present, there is no relationship between the project management
module and SAP’s MM (Materials Management) where contract information resides.
4. Reporting Limitations: User/custom reporting queries are currently limited to those
personnel who are granted access to the SAP system and/or are afforded sufficient user
rights. SAP allows for users to have the ability to query on any data fields, project information,
or account codes however, many project managers are reported to not have sufficient access
system to generate their own reports. It should be noted, this information may not always be
consistently entered into SAP and therefore a process improvement opportunity could resolve
this challenge.
OPPORTUNITIES
In order to improve efficiencies in the area of project accounting, the City should consider the following
opportunities:
1. SAP’s Project System provides the opportunity to track projects encompassing multiple funds
and/or departments but this functionality is currently not being utilized. This creates situations
where shadow systems must be relied upon for accurately tracking this information to ensure
expenses are fairly allocated to the appropriate fund(s) involved.
2. The ability to reference contract terms involving the scope, services, materials, and milestones
through the Project System would be very beneficial. This would also avoid the time
consuming process involved in generating reports from purchase requisitions in order to locate
contract documents for specific projects and programs.
3. The City should identify options to institute project workflows that will enforce standardization
across all projects and departments involving approvals, expenditures, and receipts based
upon the City’s internal reporting policies and procedures. The ability to closeout projects on a
timely manner, represent project costs accurately for future performance comparison and
institute standardized reporting will provide a means to establish reliable performance metrics
in the future. This will also enable the City to benchmark its performance against other peer
municipalities as the City seeks to evaluate similar project types.
In late 2011, an Infrastructure Blue Ribbon Commission issued a report recommending the City invest
in an infrastructure management system. The system would track the condition and use of City
infrastructure at the project level with the intention of providing the basis for asset-detail budgeting and
longer-range asset maintenance projections. A new Enterprise Asset Management System (EAMS)
which will be capable of tracking work activities at the asset, project, program, and fund levels. The
system’s future (anticipated) integration with the City’s ERP will provide a means of capturing project
specific labor, equipment, materials, contract specifications, and other cost details. The opportunity to
provide project specific details involving work performed, GL line items charged, and dates of
performance will significantly advance the City’s project administration and reporting capabilities.
2.7 PROCUREMENT
The City has conducted extensive evaluations of its Purchasing Division policies, procedures, and
requirements under the City’s Municipal Code and Charter over the past four years. In 2011, the
Leadership ICMA team evaluated the City’s procurement operations and City’s Purchasing Manual. In
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2014, the City commissioned NIGP Consulting to prepare recommendations (Periscope Report) to
improve the administrative efficiency of the purchasing process in addition to focusing the
department’s efforts to become more strategic in focus. Reoccurring observations from the following
observations that were taken into account during the ERP evaluation process by Plante Moran:
Continued staff turnover in the Purchasing Division has led to inconsistency in administering
the purchasing manual and guiding staff through the purchasing process including contract
administration, bid solicitation, and the submittal of purchase requisitions
Formal and informal staff training is necessary for both purchasing and non-purchasing staff
to ensure purchasing processes are understood and enforced uniformly throughout the City’s
operations
Decentralization of the purchasing process has been identified as a strategic objective for the
City. The ability to allow departments greater flexibility to manage their own solicitation
process while maintaining necessary oversight controls administered by the City’s Purchasing
Division was repeatedly identified
A need to streamline the administrative process involving informal and formal solicitation
requirements was recognized by weighing the administrative costs to administer each form of
competitive bidding process against the overall risk to the City
The City currently issues about 2,220 purchase orders annually representing a total spend of
nearly $190 million
The City now requires a purchase order for any purchase over $5,000 at present and is
encouraging the use of P-Cards (avoiding the need to issue a PO) as a way to facilitate the
purchasing process and reduce the amount of time necessary to complete a purchase
Informal purchases (three quotes obtained by department) require about 3-6 weeks for
processing and formal procurements (public advertisement) require between 6-12 weeks to
process from start to finish
Limited oversight and flexibility relating to purchasing processes in SAP have lead the
Division to seek Requests for Proposal for the procurement of an e-procurement system
(including vendor self-registration) to replace the use of SAP as the Division’s main
purchasing system.
The Division has also investigated the potential investment in a document management
system to associate documents to purchasing and contract transactions in the new e-
procurement system.
STRENGTHS
The City has successfully initiated a P-Card system that has integrated with the SAP system for single
unit purchases under a $5,000 threshold. The City is currently able to pre-encumber funds when
purchase requisitions are made and encumber funds when a purchase order is issued. City staff are
able to see both types of encumbrances on their budgets in real time when reviewing their budget
status by fund (including specific line items).
WEAKNESSES
1. Contract Management: SAP’s Supplier Relationship Management Module (SRM) processing
is not being used to maintain contracts in SAP which limits capabilities for accessing contract
data and requires that the City maintain contracts with the creation of a purchase order.
Decentralization in the purchasing process along with missing controls in the SAP system
require that both the Purchasing Division and City departments manually monitor open
purchase orders. The system does not currently maintain contract expiration data and
automatically carries open purchase orders are carried over to subsequent fiscal years.
2. Lack of electronic workflow: SAP’s configuration is also noticeably weak in supporting
workflow processes. For example, W9 processing can be an issue for purchases made below
the PO threshold if the vendors W9 is not on file. The system allows purchases to be made
without confirming that the vendor has a W9 on file.
3. Commodity Codes: The City does not currently use NIGP codes but realizes the future
benefit in utilizing commodity codes.
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4. Limited Process Control: There is a weak relationship between the Municipal Code and
City’s Purchasing Manual. Inconsistencies provide for risks and create possible areas of
failure.
OPPORTUNITIES
The City’s selection of a new e-procurement system gives the organization flexibility to evaluate its
current purchasing processes and determine where these processes can be improved. When
evaluating a new “Best of Breed” purchasing system the division should consider:
1. Associating commodity codes to account codes to enable the organization to classify
purchasing data by products and services. The use of commodity codes facilitates the
grouping, categorization and analysis of spend data supporting the development of term
contracts.
2. Investigating/continuing to investigate the potential investment in a document management
system to associate documents to purchasing and contract transactions in the new e-
procurement system. A document management system is also necessary to take advantage
of vendor self-registration capabilities.
3. Establishing workflow controls for purchases that do not require a PO. A control to verify that
the vendors W9 is on file before automatically purchasing from a vendor would eliminate the
risk that purchases have been made from a vendor without a W9 on file.
4. Tracking vendor performance. Currently the City can’t track failure to perform situations.
Maintaining this additional vendor data can help the City make financial investments that have
the highest ROI.
Outside of Purchasing’s technology initiatives, the Division should evaluate, review and revise terms in
the Purchasing Manual to be consistent with the Municode. In accordance with the Periscope report,
the Code is law and is the highest level of procurement policy. The Manual should include the
requirements of the Municode.
2.8 ACCOUNTS PAYABLE
The City is entering into a contract with Commerce Bank to outsource its payment functions. This
process is set to start planning the project January 1st, 2015 with a go-live on or before June 30th. The
bank will scan invoices and pay vendors via credit card, check or ACH payment. These outsourced
activities will provide badly needed accountability over vendor invoices, increase efficiency of and
provide accountability over the invoice approval process, provide an electronic storage and retrieval
system for vendor invoices, and eventually may reduce overhead expenses related to processing
payments and cutting checks. Activities performed by the bank will be reported via an electronic
reconciliation file from Commerce Bank to the City. In addition to these services staff at the City are
also using Advanced Micro Solutions (AMS) 1099-ETC software and JP Morgan Chase Smart Data.
STRENGTHS
The City is currently issuing check runs on a weekly basis and this frequency is generally higher than
many communities Plante Moran evaluates. This practice prevents the City from incurring additional
liability for late fees when invoices are remitted by the departments on a timely basis.
WEAKNESSES
1. Limited Process Control: Decentralization in the process along with the absence of a vendor
self-service function has created situations where departments hold onto invoices creating
unknown liabilities, year-end accrual issues, unhappy vendor’s, late fees etc. Outsourcing the
City’s payment functions will eventually eliminate this issue to some degree assuming
departments promptly approve their invoices for payment.
2. Employee reimbursements: There are many California Public Records Act requests on
employee reimbursement transactions. It is vital to the organization that supporting
documentation is available and accessible. The absence of an integrated document
management system creates the need for shadow systems/shadow processes, especially
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where associated documentation is vital to maintain. The employee expense reimbursement
process exists mostly outside of the financial system. Supporting documentation is maintained
at the department level outside of SAP and is attached and forwarded to AP via excel
spreadsheet. This process is expected to move from AP to payroll.
OPPORTUNITIES
An integrated content management system would support the City’s response to public requests for
information as well as help support the organizations transparency. The outsourcing of the payables
function will reduce staff overhead for the City and will introduce the benefits of a third-part document
management system.
2.9 REVENUE COLLECTION/MISCELLANEOUS BILLING/ACCOUNTS
RECEIVABLE
Payments arrive at the City via a variety of methods and departments. The Cashier’s Office and
several departments accept cash payments, with some departments taking deposits directly to the
City’s bank. The City also uses a lockbox for utility payments. Procedures across the City for
recording and processing receipts vary (including both manual and automated methods for sending
receipt information to Accounting Department). Revenue Collections department and 12 other
departments across the City collect revenue and fees. Revenue Collections department has 4
cashiers. CORE system (the cash receipting system) and SAP (SCM and AR) are the primary cash
receipting, billing and posting systems at the City.
The City outsourced to third party vendor the collection of paramedic receivables.
STRENGTHS
The strengths of the current Miscellaneous Billing/Accounts Receivable environment include:
1. Multiple Receiving Methods: The current set of systems effectively accommodates the
organization’s receiving methods (i.e., Cash, Lock Box, Credit Card, Check, ACH, Credit
Memos, etc.)
2. Debit Card Transactions Processing: Transitioning to iPay (web version of Core system)
will allow processing of debit card transactions
3. Query Capability: Ability to query information in Core system
4. Revenue Collections Controls: Good controls have been put in place, like locked offices
with restricted access to cash registers, unique log-on in Core and locked cash drawers,
password protected the safe, no posting to accounts with no revenue allowed in SAP.
WEAKNESSES
The weaknesses of the current Miscellaneous Billing/ Accounts Receivable environment include:
1. ACH Payment Processing: ACH Payment processing is not automated. They are posted via
manual adjusting entries by the Accounting department, after research is performed to
determine whose department they pertain to.
2. Account validation: Core does not validate account numbers before posting transactions.
As a result, cashiers can post transactions to incorrect or invalid accounts. These errors are
not identified until they are interfaced with SAP. The process could be streamlined if cashiers
were notified of the errors, via a pop-up error message or other notification, before the
transaction was posted.
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3. Duplicate Records: SAP has many customer duplicates that need to be cleaned out. Thus,
the reporting of owed and paid amounts from SAP is hard to track by customer. This is a
process issue unrelated to the core functionality of SAP.
4. Reconciling Items: SAP GL does not match CORE system cash receipts balances.
Departments are not reconciling their cash receipts to their paid receivables. Some
departments rarely resolve reconciling items between SAP GL and their subledgers, leaving
them on the list of reconciling items for ever. This is a process issue unrelated to the core
functionality of SAP.
5. Delinquent Accounts and Interest Calculation: The SAP interest calculations are currently
incorrect due to wrong AR aging terms in SAP (SAP has 60-90-120 AR collection terms and
they need 30-60-90). As such, staff have to manually calculate interest on each of those
accounts and the automatic delinquent letters generated by SAP, are replaced with the
corrected manual ones by Revenue Collections department.
6. Police Department Issues: Police Department doesn’t have an automated POS system to
collect cash, even though it handles thousands of dollars/month and is in real need of a
system.
7. SAP Reporting: SAP AR Aging Reports have too many inaccuracies (cancellations, partial
payments, etc.), since SAP GL and Core are not reconciled. This is a process related issue
and not related to SAP’s core functionality.
8. SAP Training: Departments expressed the need of further training relating to SAP cash
receipts and receivables. They don’t feel like tracking and reporting of receivables and cash
receipts information in SAP is flexible or friendly enough (i.e. they can’t make a distinction
between write off and a cancelation of a receivable, document number type is the same for an
invoice, a cancellation and a write off type transaction on the reports, they can’t view
breakdown of payments that are received by payment type, etc.).
OPPORTUNITIES
In order to increase revenue realization, the City should consider the following opportunities:
1. Accounting should reconcile and resolve on time the cash receipts reconciling items between
SAP GL and Core system
2. Implement account validations in Core to validate account numbers before posting
transactions via a pop-up error message or other notification.
3. Clean up SAP customer duplicate records
4. Adjust AR aging terms in SAP from 60-90-120 to 30-60-90 to avoid recalculation of interest
and retyping of delinquent notices
5. Roll out the use of Core system to all other cash collecting departs (i.e Police department)
6. Train cash receipting departments how to use SAP tracking and reporting functionalities
2.10 PAYROLL/TIME ENTRY
The City’s Payroll process supports between 1100 – 1400 employees (depending on those employees
that are seasonal) and 11 different compensation/memorandum of understanding (MOU) plans.
Because of the many differences across the plans the fields in SAP need to be very specific.
Managers are responsible for approving timecards for salary staff and entering time for hourly staff.
Payroll processing is bi-weekly and all staff are paid on the same pay cycle regardless of
classification. The majority of employees take advantage of direct deposit and employees receive
their pay advices through email and through employee self-service.
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STRENGTHS
The SAP system is currently capable of handling most pay scenarios for standard classifications. A
simulated payroll is run on Monday and data elements associated with each payroll run including the
dates, number of work days, holidays, and accruals can be verified. FLSA reporting is fully supported
and overtime calculations impacting FLSA can also be handled. Strong capabilities also include:
1. Interfaces: Files are created by the SAP support team for CalPERS, ICMA, Mass Mutual,
and SSA so these organizations can receive notice of payroll disbursements. Other forms of
interfaces exist for situations involving:
a. COBRA Billings
b. Deferred Compensation
c. Annual Tax Witholdings to IRS
d. Garnishments
e. Work Orders (time entry against work orders)
f. Check Reconciliation
g. Budgeting (merit date and associated pay increases)
h. Deferred Compensation
i. Flex Spending
2. Employee Self Service: Allows employees to see accruals, benefit enrollment, and access
their pay advices on demand. Employees can edit their time cards within a six week period.
More capabilities could be realized but the current SAP version of ECC 6.0 does not allow for
an optimal configuration to support with the present City resources.
3. Absence/Leave Management: SAP enforces all PTO accruals and enforcement including
FMLA, donations of sick time to other employees, attendance policy management, and other
forms of general tracking are fully supported.
WEAKNESSES
1. Lack of electronic workflow: The absence of workflows, change notifications and the lack-off
ability to access data detail impacts managers’ ability to efficiently manage time card
approvals. The payroll process is dependent on each manager’s approval of their staff’s time
cards during the period. Some of the road blocks preventing timely submission of timecard
approvals include:
2. Data Validation: Approval of timecards that reference incorrect pay codes. Pay code detail
can only be viewed during time entry, not during approvals. Because of this, managers must
be familiar with all of the different compensation codes applicable to the staff they manage.
3. Workflow Notifications: Timecard edits after approval don’t trigger a re-approval workflow.
Managers do not receive a notification for timecard edits made after a timecard has been
approved. Managers are dependent on employees to notify them of these changes or the
change may go unapproved.
4. Shadow Systems: Hourly staff time detail is tracked outside of the system. Depending on the
department, hourly staff supporting data exists outside of SAP in the form of a paper sign in
sheet with time in/out or in an excel spreadsheet. Supervisors are responsible for entering
time for hourly employees and supporting documentation must be maintained.
5. Set-Up Challenges: Union detail is tied to pay code instead of job title/role In addition the
system restricts employees to enter time based on the schedule configured for their role. This
prevents some employees from entering the actual time worked (e.g., employees can’t enter
less/more than scheduled hours, night or weekend time unless they have a flex schedule).
6. Lack of Scheduling Functionality: Scheduling functionality is not available in the current
time and attendance system. Managers maintain shadow scheduling tools such as shared
outlook, Google, or paper calendars to manage employee time off throughout their
department.
7. Limited Training/Knowledge Transfer: It was also apparent during these sessions that
knowledge transfer across departments is limited because of the City’s decentralized
structure. As departments experience turnover and become dependent on shadow systems to
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conduct processes knowledge of current/available functionality may be lost. The group
participating in the cross-functional time entry/payroll session expressed frustration over
managing leave requests without a leave request submission portal. Discussion led to the
discovery that leave request submissions and approval capabilities exist in employee self-
service.
OPPORTUNITIES
In a decentralized environment it is even more essential that organizations focus on communicating
knowledge consistently and frequently. Documented processes that are continuously updated or
having quarterly management discussion sessions, for issue resolution discovery (mentioned in the
example above) are good communication practices.
Overall, the weaknesses that exist in the time entry/payroll processes exist because of the current
systems configuration or lack of functionality. In a new payroll environment union details could be tied
to job title/role instead of using different pay codes to differentiate between union employees.
Workflow and scheduling functionality should also be investigated during the selection of a new
system.
2.11 PEOPLE STRATEGY AND OPERATIONS (PSO)
People Strategy and operations (PSO) owns the employee lifecycle data for approximately 1,091
regular and up to 400 temporary/seasonal employees. The City has a complex collective bargaining
environment, with nine separate employee groups, some with different contract provisions. The
processes that PSO “owns” range from recruitment to new hire, benefits and compensation,
promotions, leaves of absence, changes in schedules and salary to retirement or end of employment.
Additional processes include that PSO manages include labor negotiations, discipline and grievances,
customer service inquiries, risk management, workers compensation, compensation, job descriptions,
salary schedules, employee development and training, succession planning, performance assessment,
and exit interviews.
PSO utilizes SAP for the majority of employee transactions from onboarding through employee
termination. In addition, NeoGov is utilized by the City for recruiting, applicant tracking and hiring
purposes. To summarize, human resources is another area in which it has been necessary to
purchase or develop a number of standalone systems in order to perform necessary business
functions. The lack of integration between these many systems results in a lot of manual reconciliation
and duplicate data entry.
STRENGTHS
The strengths of the current SAP and NeoGov environment include:
1. Basic Human Resources Management: Overall, the system facilitates many basic human
resources functions in an effective manner.
2. Security: The system has the ability to restrict user access to employee records.
3. Online applications: The City accepts online applications via NeoGov. Candidates are able
to enter their own information and have the flexibility to apply for a position from anywhere at
any time.
4. Job Descriptions: Job descriptions are retained in SAP and thus could be accessible to staff
and candidates via employee self-service and online recruiting.
5. Limited Self-Service: Employees can view read only payroll and benefit information online.
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WEAKNESSES
The key weaknesses of the current environment include:
1. Employee File: SAP maintains one master employee file, however departments must keep
paper files outside the system to be able to capture the level of employee information they
require.
2. Position Control: The position control ability within SAP is limited, with a particular problem
being an inability to tie positions to the budget.
3. Volunteer/Intern Management: Volunteer Management is a decentralized process, with
limited central PSO control.
4. Lack of Electronic Workflow: All Personnel Actions are paper driven processes which are
very tedious/labor intensive.
5. Lack of electronic document management: The employee record is kept in paper as the
current system does not accommodate scanned images/attach to the employee file.
6. Licenses and Certifications: The City uses multiple systems across departments to track
required licenses and certifications.
7. Compliance Reporting Limitations: The current system does not track federal compliance
related items such as EEO job categories. This makes reporting very tedious/labor intensive.
8. Employee Performance Management: Employee goal plans and performance evaluations
are a paper based process. While grading/comments are captured in SAP, the annual
evaluations are facilitated outside of the system.
9. Discipline Tracking: SAP is not being utilized to track disciplinary actions or employee
grievances. All associated grievance or disciplinary documentation is housed in the City's
SharePoint system.
10. Limited Employee Self-Service: The City does not have more robust employee self-service
functionality such as electronic benefit self-enrollment functionality.
11. Limited Manager Self-Service: SAP does not enable managers to manage their teams and
for employees to manage their transactions and information.
12. Reporting Limitations: The reports in some cases may lack the detail needed and this can
drive the need for separate spreadsheets to track personnel data. There are mandated reports
that need to be filed that SAP simply does not track. EEO reports are difficult to configure,
partly because the system was not set up for governmental reporting. Again, this leads to
redundancies and process inefficiencies.
OPPORTUNITIES
If fully deployed, a public sector focused ERP system will provide functionality that can resolve many
of the items listed above. Some of these automated functionalities include:
Automated performance evaluation/review
Tracking for investigations, disciplinary action, FMLA, grievances, reasonable
accommodations, etc.
Workflows for policy distribution, employee changes and improved data integration for auto-
populating information
Employee Self Service
Benefit Self Service
Overall, with new software integration and workflow many of the issues listed above will be resolved
and a savings of resources should be realized.
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2.12 UTILITY SERVICES MANAGEMENT / REFUSE
The City of Palo Alto Utilities (CPAU) started using SAP for their Utility Billing software needs in 2009.
Refuse billing was added to SAP ISU-BM at a later date. CPAU is currently serving about 30,000
customers and manages seven different types of services.
STRENGTHS
1. SAP Customization: The current SAP software can be configured to the City of Palo Alto
Utilities’ needs. An example would be the many unique validations that have been created in
the Utilities Billing to alert the end user when there is a billing exception. Users like the fact
that many views can be customized, the Utilities Billing layouts are flexible and FICA screens
can be modified to users’ desire
2. Data Availability: Level of detail that is available in Utilities Billing view in IC Web is
impressive. The amount of data available and the display of Business Partner & Premise in IC
Web are important to the Utilities users.
3. Data Export: Departments can easily export data from SAP to Excel
4. System Speed: In general SAP is very reliable and fast
5. Reporting Flexibility: The device management and FICA module of the SAP Utilities has a
lot of flexibility when it comes to reporting
WEAKNESSES
1. SAP ISU Maintenance: Because SAP is complex, is hard to maintain it with only internal
resources, thus specialized consultants are required. CPAU is only able to maintain the
software with its current resource. The City's SAP knowledgeable staff has been reduced so
that the remaining staff only have time to maintain the database. All enhancements have to be
contracted out to a third party and it has been difficult and expensive to find quality consultants
to make the necessary enhancements.
2. SAP ISU Customization and Upgrades: It is time consuming and costly to maintain and
customize SAP ISU modules
3. SAP ISU Standard Reporting: Very few standard reports have been defined in SAP so the
CPAU relies on the SAP BI software for most of their reporting needs. However, BI is very
complex and requires a specific skill set to master. Thus the data is typically downloaded and
manipulated in MS Excel. All statistical reporting comes from Green Waste so the City is very
dependent on their third party hauler for data. Currently Green Waste maintains all the data on
who has the trash containers/bins. If this information was included in the file that is sent to the
City, the City would no longer be dependent on Green Waste for their reporting needs. Service
Orders Dashboard with employee defined areas is needed to visualize all SO information on
one page.
4. Legislative Requirements: SAP ISU modules have not been upgraded in a while, thus the
software configuration does not incorporate the latest legal requirements which has forced the
City to use manual workarounds in order to fulfill legal requirements. This is becoming an
issue with net metering and peak/off-peak billing. As the utility industry becomes more
environmental friendly, more legislation will likely occur that will affect how the bills are
processed. If the software does not have updates to automate these mandated processes,
manual workarounds will have to continue.
5. SAP Training: A user needs to be trained well to maneuver through the program. Most people
only know what they use frequently and really don’t know what else might be available to
assist them with their job. Some also don’t understand how their actions in the software affect
others.
6. Utilities Business Practices: Most users feel that standard functionality is missing in the SAP
ISU software; therefore they have to find less efficient methods to perform tasks to do their
jobs, which adds more stress and frustration. The identification of best practices and possible
best of breed utilities software to satisfy them should be taken into account.
7. Pressure to Improve Services: Due to the location of Palo Alto the majority of the City
customers are more tech savvy than average, therefore their expectations for sophisticated
tools are higher than normal, which leads to pressure for improvement. The current customer
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utilities portal is lacking presentation and requires core functionality that is absent in the
current release.
8. Utilities Billing: Corrections/fixes/enhancements to the utilities invoice are challenging,
lengthy, costly, time consuming and difficult for the customer to understand. If an adjustment
needs to be made on a bill from a few months back, each bill after that adjustment will also
have to be manually adjusted. The current utility invoice/bill is not customer friendly. Some of
the miscellaneous refuse charges are billed through SD because there is no account in CRM,
but it is billed on a utility invoice with no description and it causes many customers to call in for
assistance on what they are being billed for. Budget billing is very complicated for the
customer and time consuming for staff when a payment is missed. This is due to penalty
amount not being printed on the budget bill. For payment arrangements, the staff has to create
two payment arrangements per customer to ensure that the unpaid amount goes back into
delinquency.
9. Utilities Rates Calculations: The rate design is challenging and limited in SAP. The City is
running out of rate codes so they are limited in adding more services. To set up rate
assistance, currently the user has to mark a flag twice on each service.
10. Refuse Billing: The design/configuration for refuse billing had to be manipulated to work with
the configuration set up for utilities, since the City did not purchase the SAP Waste & Recycle
module. Also there are issues with transferring of data between the third party (GreenWaste)
hauler’s software and SAP, which has caused incorrect billings.
11. System Validations: Many validation rules have been set which is causing thousands of
exceptions/plausible to be reported which is taking many labor hours to research and fix.
Many classification of errors once analyzed, no longer need to be reviewed at each step in the
billing process but they still reoccur.
12. Meter Reading Technology: It is very outdated. Reads are being hand keyed into the
majority of the hand held devices. Only 11% are drive by radio type meters. The downloading
the meter information to the hand helds is very complicated and restrictive. The SAP system
only allows for one meter read action per day.
13. Meter Inventory and Inspections: Meter inventory is difficult to enter. Meter
testing/inspection results cannot be tracked in SAP so Excel is being used instead.
14. Utilities AR Collections: Currently SAP ISU FICA does not have an aging report that shows
customers and how delinquent they are. Therefore, many delinquent accounts get unnoticed
until 6 months later. Accounts that have a delinquency less than $150, do not go through the
delinquent process and are maintained on a separate spreadsheet. Comparison of SAP ISU
AR balances to SAP SD AR balances is not performed currently.
15. Service Order Management: Customers cannot enter their own service order. The electrical
engineers create the service order estimate using AUD software and then the estimates are
loaded in SAP to compare to actuals. When looking at charges on a service order, the cost
line items do not sum up to the same line that has the planned cost, so the plan/Actual
comparison % is never accurate. City has no way of dispatching service order tasks directly
from SAP to employee calendars.
16. SAP ISU Integrations: There is no direct integration of Geodesy with SAP ISU modules (i.e.
DM). Every installed meter has information that has to be inputted into the GIS software.
17. IC Web Issues: CSR Dashboard is seriously lacking regarding ready data. Retrieval of data
requires multiple selections. Back buttons in IC Web do not consistently go back one level.
Lack of refresh button.
OPPORTUNITIES
If the City of Palo Alto Utilities would fully implement a best of breed utility billing software solution it
would resolve many of the weaknesses listed above. Some of the advantages of implementing a best
of breed solution are:
1. A fully featured, functional and configurable solution, one that is constantly evolving to meet
CPAU’s business needs without significant customizations or need for external spreadsheets
to complete core business process functions.
2. Integration with industry-leading applications due to formed partnerships and extensive
experience interfacing and integrating with many other third party applications.
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3. Successful implementations because the vendor’s staff only works with utility operations.
4. Hundreds of standard reports come with the standard software.
5. Majority of the best of breed solutions also come with an Ad-Hoc reporting tool that is very
user friendly.
6. A robust web portal which allows the CPAU’s administrator to make changes to the portal
when necessary.
7. The use of mobile devices in the field.
8. Standard software product releases and updates which include State and/or Federal
mandated changes. The cost of these updates is usually included with the software
maintenance agreement.
9. Regional user group meetings focused only on utilities.
2.13 CURRENT TECHNOLOGY PROFILE
OVERVIEW
The City’s IT staff with the sporadic help from outside consultants, support over 200 applications and
charge back the rest of the city departments. The current IT environment at the City includes:
1. The City network is spread across 30 sites interconnected in a star topology and uses dark
fiber optic connections, running at 1GB for the majority of the sites. The City has a dedicated
Gigabit fiber infrastructure connecting all remote sites, so all sites can be actually treated as
part of an extended LAN topology.
2. The City uses HP network equipment and is configured to have firewall redundancy, IPS
redundancy and core aggregation switch redundancy.
3. Remote access to the network is provided via PPTP VPN with AD/RADIUS authentication and
remote desktop service. The other network security features are rogue AP detection, wireless
spectrum, redundant controllers, and access control.
4. The City does not have a “bring your own device” or a mobile data management policy, but is
currently evaluating potential strategies and solutions which will allow access to the City’s
data. SolarWinds is used to administer, monitor and detect network issues.
5. For majority of the servers, the CPU utilization is normally greater than 50%, but the City does
not formally track the network traffic volume associated with the servers. For the server
maintenance, the City has vendor hardware and software maintenance contract.
6. Windows 2003 is the operating system used on the majority of the servers in the data center.
There are instances of Unix/Linux servers at the City as well. System access audits are
performed on a regular basis and access is adjusted accordingly.
7. The organization has standardized on the use of HP-UX 11.31 servers. The City has no cloud
services and is looking into various options (SaaS, IaaS and PaaS). A centralized storage
system is available for use and has expansion capabilities, but not without affecting the
backup windows currently being utilized.
8. Key services and applications on the servers are monitored using Solution Manager and early
watch reports. Backups are currently performed periodically to disk and then to tape and disk-
to-disk-to-tape using HP Data Protector 6.x software. The results of the backups are
monitored.
9. Oracle database platform is used as database management systems which serve various
applications.
10. Outlook is used for office productivity such as e-mail and calendaring, and there are
approximately 1200 e-mail mailboxes in use at the City.
11. The SAP ECC 6.0, BI, CRM, and ISU are installed on premise, on non-virtualized servers
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STRENGTHS
Selected strengths of the current IT environment include:
1. Network: The availability of the network is very high while its reliability is stable with minor
issues
2. Data Center Security: All systems in the data center are protected by UPS systems and also
by a power generator. Access to the data center is protected by a door access control system.
3. Antivirus and Anti-spyware: The operating system is running on the latest service pack and
antivirus and anti-spyware are run multiple times a day.
4. Audits: Security and license audits are conducted yearly
5. System and Data Backups: Nightly there is a file system back up, weekly database backups,
data is tested quarterly and an official test policy has been put in place
6. Data Retention: The city if following the 7 year data retention policy by keeping back-up tapes,
which are Weekly/monthly sent to off storage location
7. Centralized Management: The City is using Solution Manager to reduce and centralize the
management all its systems and end-to-end business processes
WEAKNESSES
The key weaknesses of the current environment include:
1. Encryptions: The backups are not encrypted, but are stored at an off-site secure data center
2. Server Redundancy: The City doesn’t have server redundancy
3. Workflow/Notifications: The City has not implemented in the SAP modules and portals the
workflows and notifications
4. Cloud services: The City doesn’t currently use any type of cloud services (SaaS, IaaS, PaaS)
5. Document Management System: The City didn’t purchase or implement any major
document management systems, due to storage space concerns
6. Data Archiving Strategy: The City doesn’t have in place a data archiving strategy for the
SAP ECC 6.0 data.
7. Disaster Recovery Plan: The City currently doesn’t have a documented disaster recovery
plan in place
8. Service Packs/Updates: SAP upgrades have not been performed in long time
9. IT Policies: The City had not written and implemented some of its IT policies, like the "Patch
Policy"
10. SAP Training: SAP is complex, but reliable and most issues come down to IT training
11. SAP Consulting Support: Third party SAP support consultants available in the market don’t
have deep knowledge of the areas the City needs help with. The ones that are available are
very expensive and need to be booked ahead of time and they work on East Coast timeframe
OPPORTUNITIES
Overall, specific opportunities for improvement in regard to the current technology environment
include:
1. The IT department should finish the full implementation of Solution Manager.
2. The City should consider encrypting at least of its backups stored at the off-site data center.
3. IT processes should be documented and followed to ensure policies and best practices are
followed.
4. The City should implement and document its disaster recovery plan as soon as possible
5. Regardless of its ERP system in operation, the City should not allow more than 1 year to pass,
before it performs the latest upgrade. Otherwise it runs the risk of not being able to operate
properly and not have the ERP system supported by the vendor, Thus, the IT depart should
install the latest SAP upgrades as soon as possible, if the City will decide to keep SAP as its
ERP of record.
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6. The City should consider implementing and turn on as many Workflows and Notifications as
possible in order to improve segregation of duties issues and help users complete
appropriately and on time all they tasks
7. The City should consider its storage issues and find a solution to implement a City wide
document management system and policy, to help user handle all support documentation
electronically relating to various transactions to meet statutory requirements
8. Budget permitted, the City should consider implementing a data archiving strategy, but only
after it stabilized its processes and finished implementing its main software systems
9. The IT department should document and maintain written SAP support procedures, to ensure
consistent and proper maintenance of the system
10. Since ERP systems are complex, all IT staff should be trained through rotation every year in
the latest changes of the ERP system in order to maintain it properly
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3 ERP Marketplace Assessment
3.1 INTEGRATED ERP ENVIRONMENT
The purpose of the Marketplace Assessment is to provide the City with an overview of the current
financial system and ERP software vendor marketplace. Information provided in this marketplace
assessment was gathered from prior Plante Moran project and consulting experience, feedback from
City staff during interviews, and external research.
Generally, enterprise financial system solutions evolved out of a desire to provide the functionality of
two or more systems, such as Financials and Human Resources, in an integrated software solution.
Enterprise software solutions experienced its first major growth in private sector businesses in their
manufacturing and supply chain operations. Many of these “Tier 1” ERP solution providers offer broad
solutions designed specifically for the private sector. Over the past several years, these solutions
were enhanced, configured and tested in public sector organizations. With these enhancements,
these solutions originally developed for private sector organizations could now be deployed in a public
sector setting.
There are also a number of “Tier 2” ERP software providers that originated and offer specific vertical
solutions designed for the public sector including fund accounting encumbrance accounting,
sophisticated budgeting, grants management, etc. and capabilities which are pervasive in this
segment. These solutions are typically characterized as “Tier 2” solutions and are normally deployed
in medium sized public organizations. Over time, there has been increased focus from these Tier 2
vendors towards developing niche solutions designed to compete with the Tier 1 providers. A third tier
of software providers also exists that are implemented in small organizations and will not be discussed
in this report due to the lack of relevance to the City. Medium size government agencies, such as the
City, often select financial management solutions identified as either Tier 1 or Tier 2 solutions.
The most basic differentiation between Tier 1 and Tier 2 providers lie within the depth of functionality,
breadth and complexity of the software.
Tier 1 providers have a broader offering that often include modules for Customer Relationship
Management (CRM), Enterprise Asset Management (EAM), Learning Management, Analytics and
Reporting, Data Warehousing, and Project Management modules. While Tier 1 providers offer robust
core financial modules, as well as HR and Payroll, typically they rely on third party vendors for
functionality specific to government activities in other functional areas. Most, but not all, Tier 1
providers have a large network of implementers available to implement their solution, many of which
have dedicated public sector practices. The most significant challenge with Tier 1 solutions is that
government agencies often find that they are not able to dedicate enough technical resources to
leverage expansive capabilities of the system to meet their needs. Due to their flexibility (thus
complexity) Tier 1 implementations are most successful at organizations with structured IT software
governance and/or ERP process governance, not typically demonstrated in organizations which have
implemented a fragmented software approach. In addition to the necessary governance, strong IT
project management is also critical for Tier 1 deployment. In several instances, Plante Moran has
worked with public sector clients who have implemented Tier 1 ERP systems and the following
situations have prevented them from realizing the full benefit of these systems; thus diminishing their
return on investment:
The governmental body did not budget the necessary capital to implement the solution and
optimize current business processes due to cost factors related to capital budget and resource
constraints.
The operating costs to maintain Tier 1 solutions relative to software maintenance and support
consumed operating budgets thus creating a situation where hiring the necessary internal
resources to maintain and enhance these systems (e.g., data mining, workflow, custom
reporting, etc.) was not feasible.
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Users of Tier 2 solutions often find that these solutions are more prescriptive; i.e., governmental best
practices are designed within the application. This is intuitive since Tier 2 solutions were designed for
use within the government sector. They may offer less flexibility and configurability than Tier 1 system
but, as a result, are typically less cumbersome to implement within their organization, because of their
native public sector design and more prescriptive implementation approach. Tier 2 vendors tend to
have their origin based in the government sector and have been improving and updating their software
products to offer a greater range of modules and functionality. As such, the Tier 2 vendors are touting
themselves as viable alternative solutions to Tier 1 providers. However, beyond enhanced
functionality, the scalability of the services being offered by Tier 2 solution providers is a strong
consideration when determining the best overall solution. Unlike Tier 1 solution providers, nearly all
Tier 2 solution providers implement their own software and do not rely on third party implementers.
The software marketplace has seen the emergence of solutions being touted as Tier 1.5’s, or “one and
a half.” Originally positioned as Tier 1 or Tier 2 solutions, these vendors have now positioned
themselves between the two tiers and often offer enhanced functionality in areas such as HR and
Payroll. They are also offering modules that are able to scale up to a larger client’s complexity and
transaction volume but at a lower cost and time to implement as compared to a Tier 1 provider.
Many of the solution providers will propose modules in the first two areas noted above as components
of their overall solution set that are characterized as “best-of-breed” solutions. For HR/Payroll
specifically, there are a number of niche solutions that have frequently been implemented by public
sector organizations to complement their existing financial system investment to obtain a “best-of-
breed” approach.
3.2 BEST-OF-BREED
A modification to Integrated ERP for delivering enterprise information solutions is the “best of breed”
approach. This solution architecture is based upon selecting the best individual product solution for
each functional requirement within the organization. The City’s current environment represents a “Best
of Breed” approach, utilizing a combination of systems, for example: SAP (Financials), Questica
(Budget) and custom/shadow systems that are not state-of-the-art. Because a business enterprise
operates in an integrated, rather than “stovepipe” fashion, creating an enterprise information solution
using a “best of breed” strategy involves designing, implementing, and supporting the required
technology integration. This, in fact, has represented a significant challenge for the City. Hence, the
City should seriously consider the various potential benefits and challenges inherent in a “best of
breed” approach.
In some cases, there isn’t a choice, and the organization must integrate “best of breed” products to
address requirements. This is the case when the functionality is specialized enough so that it does not
exist in extended ERP systems, e.g., GIS, DCS/SCADA, and LIMS. This is one of the reasons why
ERP vendors and 3rd Party software companies have developed Enterprise Application Integration
software, as well as why consulting firms offer network integration programming assistance.
Benefits of “Best of Breed.” The “Best of Breed” solution strategy enables the organization to select
the optimal solution for a particular problem or function within the enterprise. Hence, on a
requirement-by-requirement basis, there is less compromise required. This can also have some
benefits related to sizing the solution. The customer can avoid “overkill,” or “gold plating” solutions on
the one hand or, on the other hand, have an insufficient technology fit relative to requirements, that
may later result in the development of supplementary, or shadow systems to make up for product
limitations. Because of the more exact “fitting” of the solution to the discrete problem, the initial license
and implementation costs may be more appealing. A critical element is the importance of identifying
and understanding the organization’s functional requirements.
Challenges of “Best of Breed.” The countervailing perspective, as previously described in this
chapter’s description of ERP systems, is that the whole of the enterprise solution is greater than the
sum of its parts. Hence, optimal individual product selections may not result in the best enterprise-wide
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information solution. This can be reflected in both the technical challenges required for creating and
maintaining an integrated solution, the likely limitations of even an integrated “best of breed” solution,
and the total cost of ownership.
“Best of Breed” solutions, being created and implemented by different firms lack the single integrated
enterprise database common to ERP solutions. With ERP solutions, integration is designed into the
product and data is shared in real-time between the application modules. With “best of breed”
solutions, the customer must design and manage application integration. Current technology makes
this somewhat easier with industry programming and database standards, and well as Enterprise
Application Integration software. However, design, customization and maintenance of integrated
systems is far from trivial. Without integration, a “best of breed” approach can’t be considered an
enterprise information system.
Integration of systems can exist at a variety of different levels. One should be careful not to allow
vendor claims of product “integration” to be taken at face value. The devil is in the details. The
following are examples of some of the problems and implications relative to the integration challenge:
End user ability to drill-down into the underlying data may be more limited if data resides on
multiple platforms and databases.
Report development and crosscutting analysis of data across the organization is more
complex and will most likely require the development of an enterprise data warehouse.
Workflow technology may be more limited across platforms. Microsoft Office email products
can be used as a common “pipeline” backbone for workflow notifications. However not all
vendors have workflow capabilities that are integrated with off-the-shelf Office products.
A more global issue is that when a customer adopts a “best of breed” strategy, they assume primary
responsibility for identifying, creating, enhancing, and maintaining product integration. One of the
inherent benefits of the ERP approach being sold by vendors, and demanded by the market, is in
providing and supporting an integrated enterprise solution. As a result, the market applies additional
pressure to drive creative responses to integration challenges. To some degree both ERP and “best of
breed” vendors have created discrete integration solutions. This is usually in response to individual
client requests, and if there is sufficient demand, vendors may productize and provide varying degrees
of support for these solutions. However, as previously noted, the nature of these interfaces needs to
be carefully evaluated.
An additional consideration is accurately estimating the total cost of ownership. The cost of the
solution is typically identified as including initial licenses, training and implementation costs, as well as,
ongoing costs for maintenance support. In addition, a significant cost may be related to developing
and maintaining interfaces between systems. IT staff or consultants must create and document point-
to-point interfaces between applications or implement and maintain Enterprise Application Integration
software. Developing integration capabilities is a type of customization and, as a result, must be
tested when relevant software application product upgrades are implemented. Hence, the total cost of
creating an integrated, “best of breed” solution should include these total lifecycle costs, including the
opportunity cost of applying IT staff and resources to create and maintain these interfaces.
3.3 ALTERNATIVE SOFTWARE DELIVERY OPTIONS: HOSTING (“CLOUD”)
In the past ten years alternative software delivery models have made their way into the ERP
marketplace, the most popular of which are hosted solutions. While the popularity of hosted enterprise
solutions did not materialize in the early part of this decade as many had predicted , organizations are
slowly embracing hosted solutions in order to relieve some of the burden of an overworked business
and technical staff. There are a variety of hosting models available to the public sector today, many
of which have been used interchangeably by vendors providing enterprise software to the public
sector and all identified as ‘the cloud.’
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In general, the market for full scale ERP delivered via ‘the cloud’ is still immature in the public sector.
However, SaaS has proven successful for more specialized applications such as document
management, CRM, and selected human resources applications. Private Cloud Computing is among
the highest interest areas across all cloud computing according to Gartner, with 75% of respondents in
Gartner polls pursuing a strategy in this area. One of the major goals is the evaluation of virtualization-
driven value and benefits. In addition, Software as a Service is rapidly gaining adoption; leading
Gartner to forecast more than 50% of respondents will have some form of SaaS based application
strategy by 2015. Factors driving this adoption are the high priority organizations are putting on
customer relationships, gaining greater insights through analytics, overcoming IT- and capital budget-
based limitations, and aligning IT more efficiently to strategic goals.
Overall, hosted solutions are gradually becoming a popular way to acquire modern software while
containing costs, especially amongst small-mid market public sector organizations.
3.4 ERP VENDOR CONSOLIDATION
Consolidation among public sector software vendors has left a fewer number of vendors providing
customized services to the Public Sector than in prior years. Organizations such as Harris, Oracle,
SunGard Public Sector, and Tyler Technologies have acquired competing software offerings over time
and, to varying extents, marketed, licensed, implemented and supported each of them. As such, the
remaining vendors have a larger installed base per vendor. It is anticipated that, over time, these
vendors will reduce, not increase, the number of ERP solutions that they will maintain and support for
the public sector. This consolidation of solution offerings is typical in the software industry as a result
of their desire to create a sustainable business model. Thus, it is important during the due diligence
and contract negotiation process, to consider any the future product plans available from software
providers, with the purpose of maximizing solution longevity and avoiding expensive capital outlays for
upgrades and for replacements.
3.5 SUMMARY COMPARISONS
Summary Comparison: Tier 1 versus Tier 2
The following table identifies some of the key differences between Tier 1 and Tier 2 software providers
on issues such as support requirements, cost of implementation services, cost of major version
upgrades, software support channel, and other factors:
Characteristic Tier 1 Vendors Tier 2 Vendors
Sample
Representative
Vendors:
Oracle (PeopleSoft and Oracle e-
Business Suite)
Workday
SAP
Oracle (JDE 1.5)
Lawson – (1.5)
CGI – (1.5)
Others
SunGard Public Sector (e.g.
OneSolution)
Tyler Technologies MUNIS and
Eden
New World Systems
Harris (e.g. Innoprise, etc.)
Others
Design
Considerations
Developed product for private sector
and later adapted for public sector
Many modules specific to public sector
Larger organizations with greater R&D
budgets, offer more robust technology
Primarily designed for public sector
More prescriptive functionality and
less conducive to customization
without altering source code
Often leverage common municipal
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Characteristic Tier 1 Vendors Tier 2 Vendors
Robust development tools
Scalable to leverage most robust
development and database
environments
technology standards (e.g. MS SQL
database). Some support Oracle
Environments leverage 3rd party
tools (database, report writer, etc.)
Ongoing
Technology Support
Resource
Requirements
Most require multiple technology FTE
to support
Also impacted by level of integration
with other organizational systems
Requires fewer technology FTE to
support
Also impacted by level of integration
with other organizational systems
Software
Functionality
Core modules have robust functionality
May lack public sector specific features
(e.g. encumbrance rollover, GASB 34
reporting, etc.)
License costs per user typically more
expensive than Tier 2
Incrementally less robust
functionality for core components
HR/Payroll solutions are frequently
less robust as compared to Tier 1
offerings
Many vendors offer additional public
sector modules, such as fleet
management, request for service,
etc.
License costs per user typically less
expensive than Tier 1
Implementation
Services for New
Installation
Requirement for multiple full time staff
to implement
Requires significantly greater
implementation vendor resources than
Tier 2 to implement including key staff
that are full-time to the project
Software implementers are typically
integrators / channel partners
Implementation services cost ratio
comparison to license fees often many
times software cost (frequently 3:1 or
higher)
Vendor “Homework” approach has
organization responsible for many
implementation tasks
Frequently implemented with
organization resources not
dedicated to the project
Rarely requires full-time vendor staff
to implement
Software vendors also implement
their own solutions
Implementation services ratio
typically closer to 1:1. 2:1 would be
more robust services approach
Staff required for
Implementation1
15-30 FTE 3-7 FTE
Ongoing support
staff required
6-14 FTE 1-3 FTE
1 Based on Plante Moran’s experience working with other clients on ERP selection and
implementation initiatives.
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Characteristic Tier 1 Vendors Tier 2 Vendors
Cost Model for
Major Version
Upgrades
Most major upgrades include significant
license fee costs
Most major upgrades require significant
levels of vendor services to assist
License fees for version upgrades
often included with maintenance
fees
Most major upgrades require
moderate levels of vendor services
Software Support
Channel
Mixed, some direct, some through
implementer / value added reseller
channel
Primarily direct vendor support
Hosting Options Generally hosted internally, some
offering ASP. Workday is one of the
only multi-tenant web-based options.
Generally hosted internally, some
offering ASP. Few multi-tenant
web-based options.
Summary Comparison: On-Site vs. Hosted
Characteristic Advantages Disadvantages
On Premises /
Internally Hosted
Financial
Applications
Environment
City has design control of
application architecture to focus on
reliability, availability and scalability
Optimal solution for “heavy-weight”
applications (not necessarily
designed for thin-client
deployment), typical of Tier 2
solutions.
Application are generally more
customizable and more easily able
to be integrated to County best of
breed business applications
Direct data access for custom
reporting
Ongoing maintenance costs are
less substantial that with hosted
solutions
Application upgrades can be
performed and coordinated on the
City schedule incrementally more so
that with a vendor hosted solution
Leverages existing technology,
people, and contracts
System reliability, security,
maintenance, and management
will remain the responsibility of
the City
Higher capital costs –
particularly for hardware and
related operating and database
software
The time required to implement
a new City hosted environment
is typically longer than with the
vendor hosted model
Workstation replacement cycles
must be maintained to more
reasonable levels
Vendor Hosted
Environment
Shared services model will allow the
City the benefit of additional
technology and tools to enhance the
security and administration of the
environment, which otherwise may
be unaffordable
If the City’s network or Internet
service is down, then its
employees lose access to the
application.
Uptime and disaster recovery
become more critical
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Characteristic Advantages Disadvantages
Decreased technical administration
workload for City IT staff. Cost
savings associated with reduced
demands on IT personnel
Typically, there are fewer
workstation software installation
requirements potentially lengthening
workstation replacement cycles.
The ASP vendor is responsible for
installing the system and its
subsequent support. Any type of
technical issue can often be
immediately isolated to the software
client or host application providing
the software.
The City is able to predict and
control costs more accurately,
depending on the negotiated
subscription contract & fees.
Changes to meet the City’s
unique requirements may not be
possible. The City may have to
adapt certain system
administration processes to be
consistent with vendor
processes.
Database or information security
risks increase with the ASP
model. Distributed
responsibilities for security
practices make for a more
complex environment.
Integration to City hosted best of
breed business applications
becomes more complex
While reducing City technical
support effort, will require City IT
managers to increase effort with
maintaining the vendor
relationship. The City would
need to manage a Service Level
Agreement on an ongoing basis
and specifically during periods
of contract discussions or
consulting during customization.
Volatility of future costs: ASP is
a subscription service and fees
are paid over a period of time.
The City can negotiate an initial
purchase price and annual fees,
but has less control over
subsequent subscription fees
and is subject to rate hikes after
the predetermined contract
period ends.
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4 Options Analysis
Consistent with project objectives and based on the evaluation of the current functional and the
technology environment, the City has three primary options in regard to the strategic direction of a
future applications environment, with variations/alternatives within multiple options. These are defined
at high level in the table below and analyzed in additional detail throughout this section of the report.
Key assumptions were necessary in preparing these estimates and these are represented in the
Detailed Cost of Ownership Details and Assumptions Section located in Appendix D.
Option Summary of Options/Alternatives
Option 1: Status
Quo with
Investment
Do Not Change the Current Application Environment. Remain on
the current version of SAP and retain existing best of breed systems.
Option 2: Upgrade
SAP
Upgrade SAP and pursue one of the alternatives below:
Upgrade all existing modules and retain existing best of
breed systems.
Upgrade only SAP Core Financials/HR/Payroll modules,
retain existing Best-of-Breed systems and procure a new
‘Best of Breed’ Utility Billing Solution to replace SAP Utility
Billing.
Option 3: New
ERP Environment
Replace Current Systems with an Integrated Public Sector
Focused ERP System and pursue one of the alternatives below:
Replace SAP and current best of breed solutions with a fully
integrated public sector focused ERP solution and procure a
separate utility billing best-of-breed solution
Replace remaining SAP functionality with a fully integrated
financials/hr solution, retain the current best of breed
systems and procure a utility billing best of breed.
Further details are described within each option analysis including their advantages and
disadvantages and other key factors for the City’s consideration.
4.1 OPTION 1: STATUS QUO WITH INVESTMENT
OVERVIEW
The City always has the option to remain with the ‘status quo’ environment and remain on its current
version of SAP and additional best-of-breed systems. This option represents the City’s current
investment position with the resources currently in place supporting the SAP environment on premise
today. It also represents the existing mix of best of breed or third party applications interfaced with
SAP supporting the budgeting, fixed asset / asset management, human resources, purchasing,
revenue collection, treasury, and utilities management. The City is paying a premium for the addition
of best of breed solutions when core SAP functionality exists but cannot be fully realized.
ADVANTAGES
Included below is a list of the most significant advantages to continuing with the status quo at the City:
1. Focus on existing enhancement requests: The City could focus on completing the existing
SAP enhancement requests in the queue
2. Limited Operational Impact: This option would not impact the financial and human resources
functions which have a broader internal user base.
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DISADVANTAGES
Included below is a listing of the most significant disadvantages to continuing with the status quo at
the City:
1. Product ‘Sunset’: The City is currently reaching the end of SAP’s ECC 6.0 support in
December 2015 and will be charged a premium for support beginning in 2016.
2. Staffing Challenges: The City’s SAP support team is not adequately staffed in number or
sufficient expertise to keep pace with the level of service demanded by the City’s business
units. The delays in supporting the core system environment are driving staff to pursue best of
breed solutions replicating the capabilities within the SAP core and extended modules.
3. High Costs: The City’s investment in supporting its ERP environment is significantly higher
than the vast majority of peer communities Plante Moran evaluates as it conducts its needs
assessments in terms of employees, operational complexity, and ERP requirements
represented by the City and inventoried in this evaluation.
4. Interface Complexity: The number of interfaces the City requires demands a system
architecture that facilities data exchange and the present, legacy environment is not optimized
in this manner.
OPPORTUNITIES
1. Training and Support: Identify staff training requirements and reporting needs within all
business units to support the systems administration for the next three years. Seek to provide
tactical training options to the City’s team especially in the areas of reporting and analysis.
OPTION 1: COST ESTIMATES AND SUMMARY
Based on Plante Moran’s experience with projects of similar scope, we have estimated internal and
external cost projections for the City to remain in its existing environment/status quo as represented
below. Key assumptions were necessary in preparing these estimates and these are represented in
the Detailed Cost of Ownership Details and Assumptions Section located in Appendix D.
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For several reasons, Palo Alto does not appear to have the luxury of maintaining the status quo and
continuing to use the existing SAP system ‘as- is’ for several more years. As noted in the Gap
Assessment section of this report, a number of functions work poorly at best. The support for the SAP
Utility Billing is challenged and this area is especially strategic for the City because of its importance
as a revenue source. Lastly, the SAP release the City is currently running is nearing the end of its
lifecycle, and the City will have increased difficulty in obtaining support for this software if it does not
upgrade.
Option 1
ON PREMISE
Status Quo
with Investment
EXTERNAL COSTS
One-Time Cost Summary
Software License Fees -$
Additional Hardware Costs N/A
Consulting Implementation / Data Conversion / Interface Development -$
Training N/A
System Selection & Implementation Planning Fees N/A
Total External One-Time Costs -$
Reoccurring Cost Summary
Annual Software Licensing & Solution Support 667,910$
Consulting Support Services 250,000$
Cloud (includes Licensing, Support, Interfaces & Consulting Services)-$
Training 112,500$
Total External Recurring Costs 1,030,410$
INTERNAL COSTS
Reoccurring Cost Summary
Current Support FTE 2,073,000$
Additional Support FTE'S -$
Total Internal Recurring Costs 2,073,000$
Year #1 Grand Total Cost 4,133,820$
FIVE YEAR ESTIMATES
Five-Year Estimate *17,138,248.00$
Cost Category
* Estimate includes one-time and reoccurring costs during year one, annual software licensing and solution support for planned
application purchases in year one are assumed to incurred in years 2-5 only, and the future value of investments has been adjusted
for years 2-5 to account for a 3% annual rate for inflation.
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4.2 OPTION 2: UPGRADE SAP
OVERVIEW
The City could decide to increase its current SAP investment and pursue a number of upgrade options.
This choice represents the City upgrading its current SAP investment and pursuing one of the
alternatives below:
1. Option 2, Alternative A: Upgrade all existing SAP modules and retain existing best of breed
systems.
2. Option 2, Alternative B: Upgrade only SAP Core Financials/HR/Payroll modules, retain
existing Best-of-Breed systems and procure a new Best of Breed Utility Billing Solution to
replace SAP Utility Billing Functionality.
4.3 OPTION 2, ALTERNATIVE A
Upgrade SAP and Retain Existing Best-of-Breeds.
This option represents the City’s migration to a Hybrid Cloud where the City would take advantage of
the HANA Enterprise Cloud to take advantage of hosted and managed services from SAP. The City
would assume maintenance responsibility for the non-SAP applications that would reside in this
environment and will retain ownership of these licenses.
ADVANTAGES
Included below is a listing of the most significant advantages to upgrading the current SAP
environment and retaining the existing best-of-breed portfolio:
1. Quicker Implementation: The City could accept the existing SAP proposal and move quickly
to begin work on the project. Even if the City would decide to bid the project with alternative
consulting vendors, as discussed below, the project would still move more quickly than one
requiring selection of a new ERP system.
2. Builds on Existing SAP Expertise: This alternative takes advantages of existing SAP
expertise among the general City staff and also the IT staff.
3. Builds on Existing SAP Relationship: This alternative also allows the City to build on an
existing relationship with SAP, rather than begin a new relationship with a new vendor. The
City retains ownership of its SAP licensing and has flexibility as to the environment it chooses
to manage its applications. The City will continue to pay an annual licensing fee that will
include software maintenance, migration services for SAP’s core finances, a new HR solution,
and a new utilities billing solution.
4. Utilization of Modern Cloud Technology: The City would be able to leverage the HANA
Enterprise Cloud architecture for both its business intelligence and application interface needs.
5. Improved Functionality: The SAP SRM module, enterprise asset management solution, e-
procurement solution, and an HR module are incorporated in this option.
6. Staff Optimization: Internal staff support would be reduced by 4.4 FTE’s in this new
environment for a total of 8 dedicated FTE’s. This includes seven (7) staff dedicated to
supporting SAP and one staff member dedicated to managing of the City’s Enterprise Asset
Management System.
DISADVANTAGES
Included below is a listing of the most significant disadvantages to upgrading the current SAP
environment and retaining the existing best-of-breed portfolio:
1. Mismatch of Technology to City’s Business Requirements: The City’s ERP requirements
do not appear to cross the threshold of being unique enough to require a Tier 1 ERP system
and the capabilities of Tier 1.5 and Tier 2 systems are believed to fulfill the City’s strategic
needs.
2. Proliferation of Best-of-Breed Systems: The City continues to invest in best of breed
solutions that duplicate capabilities available by the core SAP functionality available (e.g.
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e-receivables, asset management, human resources). The addition of specialized best of
breed applications increases the City’s overhead to test, manage, and coordinate the version
control for each system interface.
3. Complexity of Interface development and Support: The specialization necessary to
manage each additional best of breed application requires ongoing training that must be
coordinated between the business unit (core application stakeholders) and information
technology so institutional knowledge is retained.
4. High Cost of Ownership: Excess cost burden over five years exceeds $25 million in external
and internal funding is extreme.
5. Utility Billing Challenges: The SAP utilities billing solution proposed may require further
evaluation and has not been determined to adequately meet the requirements expected by the
Utilities Department.
4.4 OPTION 2, ALTERNATIVE B:
Upgrade SAP Core Financials/HR/Payroll Modules Only Keep Existing Best-of-Breed Systems
Obtain Best of Breed Utility Billing Solution.
This option is essentially identical to as Option 2 ’a’ above with the exception of the addition of a
utilities best of breed system. The overlap between the core SAP and best of breed solutions remains
in this option and it does not appear to offer a viable strategic alternative.
ADVANTAGES
Included below is a listing of the most significant advantages to upgrading the current SAP
financials/HR/payroll environment only, but also selecting a new non-SAP utility billing solution:
1. Appropriate Functionality: The Utilities Department has a solution that is designed to fulfill
the robust requirements servicing its water, sewer, gas, electric, and fiber billing requirements
that is compatible with its field resource application needs.
2. Utilization of Modern Cloud Technology: The City would be able to leverage the HANA
Enterprise Cloud architecture for both its business intelligence and application interface needs.
3. Builds on Existing SAP Expertise: This alternative takes advantages of existing SAP
expertise among the general City staff and also the IT staff.
4. Builds on Existing SAP Relationship: This alternative also allows the City to build on an
existing relationship with SAP, rather than begin a new relationship with a new vendor. The
City retains ownership of its SAP licensing and has flexibility as to the environment it chooses
to manage its applications. The City will continue to pay an annual licensing fee that will
include software maintenance, migration services for SAP’s core finances, a new HR solution.
5. Improved Functionality: The SAP SRM module, enterprise asset management solution, e-
procurement solution, and an HR module are incorporated in this option.
6. Staff Optimization: Internal staff support would be reduced by 4.4 FTE’s in this new
environment for a total of 8 dedicated FTE’s. This includes four (4) staff dedicated to
supporting SAP and one staff member dedicated to managing of the City’s Enterprise Asset
Management System. Three (3) staff business analysts would continue to support the best of
breed utilities system.
DISADVANTAGES
Included below is a listing of the most significant disadvantages to upgrading the current SAP
financials/HR/payroll environment only, but also selecting a new non-SAP utility billing solution:
1. Mismatch of Technology to City’s Business Requirements: The City’s ERP requirements
do not appear to cross the threshold of being unique enough to require a Tier 1 ERP system
and the capabilities of Tier 1.5 and Tier 2 systems are believed to fulfill the City’s strategic
needs.
2. Proliferation of Best-of-Breed Systems: The City continues to invest in best of breed
solutions that duplicate capabilities available by the core SAP functionality available (e.g. e-
receivables, asset management, human resources). The addition of specialized best of breed
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applications increases the City’s overhead to test, manage, and coordinate the version control
for each system interface.
3. Complexity of Interface development and Support: The specialization necessary to
manage each additional best of breed application requires ongoing training that must be
coordinated between the business unit (core application stakeholders) and information
technology so institutional knowledge is retained.
4. High Cost of Ownership: Excess cost burden over five years exceeds $25 million in external
and internal funding is extreme.
4.5 OPTION 2: COST ESTIMATES AND SUMMARY
Based on Plante Moran’s experience with projects of similar scope coupled with existing SAP upgrade
pricing information already provided to the City, we have estimated internal and external cost
projections for the City to upgrade its current SAP investment. Key assumptions were necessary in
preparing these estimates and these are represented in the Detailed Cost of Ownership Details and
Assumptions Section located in Appendix D.
Although upgrading SAP to the newest version and redeveloping the related processes as part of the
project seems viable, using this project to also upgrade Utility Billing with SAP would be difficult. If the
City decides to pursue and SAP upgrade path, we would instead suggest focusing on upgrading to
SAP while implementing a separate best-of-breed utility billing system. Based on our discussion with
City end users and knowledge of the public sector software marketplace, the City would seemingly
receive better utility billing functionality and support from either a separate best-of-breed utility system
or the utility billing abilities in a Tier II ERP system.
Option 2a Option 2b
ALL IN CLOUD
Upgrade SAP and Retain Existing
Best of Breed Systems
MIXED ENVIRONMENTS
Upgrade SAP Core Financials/HR/Payroll
Modules Only Keep Existing Best of Breed
Systems Obtain Best of Breed Utility Billing
System
EXTERNAL COSTS
One-Time Cost Summary
Software License Fees 3,628,151$ 3,391,151$
Additional Hardware Costs N/A N/A
Consulting Implementation / Data Conversion / Interface Development 589,350$ 1,009,757$
Training 566,850$ 686,850$
System Selection & Implementation Planning Fees N/A 80,000$
Total External One-Time Costs 4,784,351$ 5,167,758$
Reoccurring Cost Summary
Annual Software Licensing & Solution Support -$ 64,138$
Consulting Support Services -$ -$
Cloud (includes Licensing, Support, Interfaces & Consulting Services)3,421,439$ 2,921,439$
Training 150,000$ 165,000$
Total External Recurring Costs 3,571,439$ 3,150,577$
INTERNAL COSTS
Reoccurring Cost Summary
Current Support FTE 510,000$ 510,000$
Additional Support FTE'S 530,000$ 530,000$
Total Internal Recurring Costs 1,040,000$ 1,040,000$
Year #1 Grand Total Cost 6,267,261$ 6,650,668$
FIVE YEAR ESTIMATES
Five-Year Estimate *$25,559,803 $24,182,480
Cost Category
* Estimate includes one-time and reoccurring costs during year one, annual software licensing and solution support for planned application purchases in year one are
assumed to incurred in years 2-5 only, and the future value of investments has been adjusted for years 2-5 to account for a 3% annual rate for inflation.
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4.6 OPTION 3: NEW ERP ENVIRONMENT
OVERVIEW
Through a competitive RFP process, the City could procure and implement a fully integrated Tier 2 or
a Tier 1.5 ERP solution that includes both Core ERP and Extended ERP Modules, plus some variety
of integrations with best-of-breed solutions (e.g., Sympro). Most Tier 2 solutions are designed
specifically for the public sector so that they offer a wide variety of integrated modules versus Tier 1
solutions that are utilized by a wide variety of industries, including multi-national corporations with very
unique requirements. Tier 2 solutions typically have fewer configuration options and are tailored to
public sector organizations but require a significantly lower implementation effort and on-going internal
support. Tier 1 solutions (like SAP) typically require a much greater level of implementation,
maintenance and support resources but can provide the City with more robust functionality and greater
flexibility in order to handle very unique operational situations and business processes that are tailored
to the City’s. Given this assessment, it is likely that the a Tier 1.5 or Tier 2 solution would replace the
current SAP and best-of-breed applications and as well as the many additional spreadsheets and
other “shadow systems”
By changing systems, the City would maintain and support the current environment through the future
system selection and implementation effort. The system selection would be a competitive
procurement with stakeholder input to define requirements and measure vendor compliance in fulfilling
them. It would require a capital investment and necessitate ongoing sustained investment through
software maintenance and continued internal technical support.
Overall, in Option 3, the City would replace current systems with an Integrated Public Sector Focused
ERP System and pursue one of the alternatives below:
1. Option 3, Alternative A: Go to market for a fully integrated public sector focused ERP solution
and procure a separate utility billing best-of-breed solution.
2. Option 3, Alternative B: Go to market for a fully integrated core financials / human capital
management solution, retain the current best of breed systems and procure a utility billing best
of breed.
4.7 OPTION 3, ALTERNATIVE A:
Go to market for a fully integrated public sector focused ERP solution and procure a separate
utility billing best-of-breed solution.
This option assumes the City reinvests in a new, fully integrated ERP solution that would take
advantage of the capabilities of a Tier 1.5 or Tier 2 solution. This alternative is to select and
implement a government-oriented ERP system, which would be used for all functions, including those
supported by current best-of-breed solutions such as budget support. This alternative would also
pursue the procurement of a best of breed utility billing module for utility support. Overall, the City
would prepare an RFP for a solution that incorporates all current/required functionality in addition to
integrating with a new utilities best of breed system.
ADVANTAGES
Included below is a listing of the most significant advantages to replacing the existing applications
environment with an integrated ERP at the City:
1. Streamline the City’s Technology Investment and Improve Functionality: The City
selects an integrated ERP solution that fulfills the needs currently serviced by SAP in addition
to divesting itself from a majority of the best of breed systems the City owns and is obligated
to pay licensing maintenance, invest in internal/external staff support, and train staff to
effectively utilize.
2. Least Cost: The value proposition achieved from the savings estimated over five years for
this option exceeds a range between $7 - $15 million over the comparable alternatives.
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3. Staff Optimization: Internal staff support would be reduced by 4.4 FTE’s in this new
environment for a total of 8 dedicated FTE’s. This includes four (4) staff dedicated to
supporting the new ERP and one staff member dedicated to managing of the City’s Enterprise
Asset Management System. Is also retains three (3) staff dedicated to supporting the utility
best of breed system.
4. Less Reliance on Outside Consultants: The City builds internal capacity to administer and
optimally configure its ERP environment without relying upon external contract services for on-
call support services. It can also more effectively recruit and retain staff members that do not
require the specialization or highly competitive salary expectations SAP systems demand in
the heart of Silicon Valley.
5. On Going Support Sustainability: The City’s operations have demanded increased staffing
efficiency following the reductions in force drastically impacting the organization’s ability to
manage its SAP systems. The levels of expertise and staffing continues to increase as
service level expectations increase while support personnel remain unchanged. Furthermore,
the absence of succession planning has significantly impacted the institutional memory of the
organization. A Tier 1.5 or 2 system can be maintained with fewer staff while providing more
options for staff to assume a greater role in learning to manage less complex systems.
6. Most Government-Oriented: The Tier 1.5 or Tier 2 ERP system focused on a government
market would be more responsive to structuring solutions to meet the needs of the municipal
industry best practices.
7. Less Complex ERP: A Tier 1.5 or Tier 2 ERP system would be less complex to learn,
configure.
8. Fresh Start: With the move to a new product, the excitement of a “fresh start” makes the
implementation somewhat more likely to be successful. And in this case, staff involved in utility
billing would have the additional motivation of being able to implement a public sector focused
utility billing system.
DISADVANTAGES
Included below is a listing of the most significant disadvantages to replacing the existing applications
environment with an integrated ERP at the City:
1. Change Management Challenges: This option will cause the greatest disruption to staff
within the organization as processes, procedures, and training needs would likely require the
greatest amount of re-engineering.
2. Existing Investment Lost: The investment made to interface the present SAP systems would
be lost and the third party systems would have to be re-interfaced.
3. Extended Duration of Implementation Project: Establishing a transition of this magnitude
will require staff augmentation that will increase staff support requirements in order to
complete a complete migration which will require several years to perform.
4.8 OPTION 3, ALTERNATIVE B:
Go to market for a fully integrated core financials / human capital management solution, retain
the current best of breed systems and procure a utility billing best of breed.
This option assumes the City reinvests in a limited government-oriented ERP environment where the
existing and planned best of breeds would be retained in addition acquiring a new best of breed
utilities management system.
ADVANTAGES
Included below is a listing of the most significant advantages to replacing the current SAP
financials/HR/payroll environment only, retaining the existing best-of-breed project portfolio and
selecting a new non-SAP best-of-breed utility billing solution:
1. Low Cost: The value proposition achieved from the savings estimated over five years for this
option exceeds a range between $3 - $11 million over the comparable alternatives.
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2. Staff Optimization: Internal staff support would be reduced by 4.4 FTE’s in this new
environment for a total of 8 dedicated FTE’s. This includes four (4) staff dedicated to
supporting the new ERP and one staff member dedicated to managing of the City’s Enterprise
Asset Management System. Is also retains three (3) staff dedicated to supporting the utility
best of breed system.
3. Less Reliance on Outside Consultants: The City builds internal capacity to administer and
optimally configure its ERP environment without relying upon external contract services for on-
call support services. It can also more effectively recruit and retain staff members that do not
require the specialization or highly competitive salary expectations SAP systems demand in
the heart of Silicon Valley.
4. On Going Support Sustainability: The City’s operations have demanded increased staffing
efficiency following the reductions in force drastically impacting the organization’s ability to
manage its SAP systems. The levels of expertise and staffing continues to increase as
service level expectations increase while support personnel remain unchanged. Furthermore,
the absence of succession planning has significantly impacted the institutional memory of the
organization. A Tier 1.5 or 2 system can be maintained with fewer staff while providing more
options for staff to assume a greater role in learning to manage less complex systems.
DISADVANTAGES
Included below is a listing of the most significant disadvantages to replacing the current SAP
financials/HR/payroll environment only, retaining the existing best-of-breed project portfolio and
selecting a new non-SAP best-of-breed utility billing solution:
1. Complexity of Interface development and Support: The complexity of managing the myriad
of best of breed interfaces would present a significant implementation risk to success in
addition to an obvious premium increase with respect to cost as licensing and maintenance for
each system would need to be carried forward. The cost savings benefit is considerably
diminished in this alternative in contrast to a completely integrated alternative.
2. Change Management Challenges: This option will cause significant disruption to staff within
the organization as processes, procedures, and training needs would likely require the
greatest amount of re-engineering.
3. Existing Investment Lost: The investment made to interface the present SAP systems would
be lost and the third party systems would have to be re-interfaced.
4. Extended Duration of Implementation Project: Establishing a transition of this magnitude
will require staff augmentation that will increase staff support requirements in order to
complete a complete migration which will require several years to perform.
4.9 OPTION 3: COST ESTIMATES AND SUMMARY
Based on Plante Moran’s experience with projects of similar scope coupled with past actual pricing
taken from selected Tier 1.5 and Tier 2 vendor proposals to similar sized entities as the City, we have
estimated internal and external cost projections. Key assumptions were necessary in preparing these
estimates and these are represented in the Detailed Cost of Ownership Details and Assumptions
Section located in Appendix D.
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Overall, the City may decide to continue with SAP, but in view of the total cost of ownership differential
as well as the problems that it has had in maintaining and optimizing SAP in the past, Option 3 will
allow the City to pursue a fresh start, lowering the total cost of ownership and improving functionality
for City end users.
Option 3a Option 3bNEW ERP
Go to Market for a Fully
Integrated Public Sector
Focused ERP Solution and
Procure a Separate Utility Billing
Best of Breed Solution
NEW ERP
Go to Market for a Fully Integrated Core
Financials/Human Capital Management
Solution, Retain the Current Best of
Breed Systems and Procure a Utility
Billing Best of Breed
EXTERNAL COSTS
One-Time Cost Summary
Software License Fees 1,069,984$ 1,670,133$
Additional Hardware Costs N/A N/A
Consulting Implementation / Data Conversion / Interface Development 2,142,027$ 2,338,275$
Training 120,000$ 250,850$
System Selection & Implementation Planning Fees 200,000$ 200,000$
Total External One-Time Costs 3,532,012$ 4,459,258$
Reoccurring Cost Summary
Annual Software Licensing & Solution Support 241,675$ 205,874$
Consulting Support Services 80,698$ 64,425$
Cloud (includes Licensing, Support, Interfaces & Consulting Services)-$ 646,080$
Training 75,000$ 115,000$
Total External Recurring Costs 397,373$ 1,031,379$
INTERNAL COSTS
Reoccurring Cost Summary
Current Support FTE 510,000$ 510,000$
Additional Support FTE'S 400,000$ 530,000$
Total Internal Recurring Costs 910,000$ 1,040,000$
Year #1 Grand Total Cost 4,442,012$ 5,942,168$
FIVE YEAR ESTIMATES
Five-Year Estimate *$9,911,572 $14,608,045
* Estimate includes one-time and reoccurring costs during year one, annual software licensing and solution support for planned application purchases in year
one are assumed to incurred in years 2-5 only, and the future value of investments has been adjusted for years 2-5 to account for a 3% annual rate for
inflation.
Cost Category
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4.10 PLANTE MORAN RECOMMENDATION
While many incremental improvements could be made or added to the current applications which
would mitigate the investment required by changing systems, the primary challenge with maintaining
the status quo would be the inefficiencies and lack of centralized information due to multiple systems
and shadow systems.
Should the City conclude to remain with the current financial, procurement and personnel software
applications environment via an SAP Upgrade, it would delay the complexities of the decision process.
However, it may be likely that the City would conclude to change financial and personnel application
suites in the future, and the timing of the change may be less advantageous.
Overall, remaining with the current environment does not appear feasible in the long term and
inappropriate as a future strategic direction in context of the City’s strategic goals and
concerns of the current financial, procurement and personnel applications environment.
As such, the City should direct its analysis efforts towards the consideration of evaluating the
advantages and disadvantages of changing the current environment to either further deploying and
integrating current systems or replacing them with a suite of integrated ERP modules from an ERP
provider.
While current inefficiencies were difficult for City staff to quantify, there is a common belief amongst
staff that information tracking tools and processes are inefficient, and there is a universal
acknowledgement that current information silos and the complexity of the current environment are root
causes of the issue. Given the functional and technical risks associated with interfacing the City’s
multiple standalone core financial, procurement and personnel systems, as well as the related need to
fundamentally re-implement the existing system, the City may be best served to evaluate the full range
of ERP options via a competitive bid process.
Assuming that the results of the ERP System Evaluation are considered and the recommendations for
system selection and implementation presented in the sections below are followed, we recommend
that the City pursue Option 3, Alternative A: Go to market for a fully integrated public sector
focused ERP solution and procure a separate utility billing best-of-breed solution.
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5 Recommended Next Steps
5.1 ERP SYSTEM EVALUATION APPROACH
To implement the recommendations presented herein, the following approach is recommended:
1. Review and obtain a complete understanding of the ERP System Evaluation Report.
The report and accompanying options and alternatives should be reviewed in their entirety to
gain an understanding of what is being presented and to prompt discussion and feedback on
elements of the report.
2. Garner support for the recommendations. Within the report, there are numerous
recommendations that will direct the use of staff time and other resources at the City. Support
for the recommendations will be essential in its success. This support must come from the
City leadership including City Council, Executive Steering Committee and Department
Directors.
3. Establish capital budgets and obtain funding. As part of the initial implementation of the
Plan and on an on-going basis, funding will need to be obtained to implement the initiatives in
the Plan.
4. Execute. Once approval for the project has been obtained and initial capital funding requests
initiated, the implementation of recommendations can occur. Plante Moran has recommended
teams of resources by process area to execute specific initiatives. The City will need to
assign specific resources to fulfill the roles recommended.
5. Continue with system procurement. Best practice system selection approaches and
implementation approaches should be considered in the selection of a new system to replace
current SAP and related systems.
5.2 PROJECT STRUCTURE AND GOVERNANCE
Execution of the recommendations and implementation of a new system will require a well-coordinated
and well-organized governance structure in which to operate and manage the project. For the new
system being considered by the City, many staff at the City will be impacted. Complex system
implementations are most successful at organizations with structured project governance.
The process and technology changes will be significant and will impact all departments. There will
also likely be policy changes that will need to be considered and implemented to receive the full
benefits.
Strong project management is also critical for deployment, and becomes increasingly important with
the new system investment. As a result, it will be critical to form a project structure that incorporates
the following:
1. Considers the needs of a variety of stakeholders
2. Provides the ability to make decisions in the most efficient and effective manner
3. Ensures that project communication is flowing to the right individuals at the right time including
those that are part of the project team and those external to the project team
4. The project team structure is empowered by management to enforce policies
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Recommended Strategies:
1. Confirm a formal governance structure to coordinate the selection of the new system using the
current ERP evaluation teams as a basis, with the intent that structure can be leveraged and
specific roles can be re-defined for future design, implementation and maintenance phases of
the system lifecycle.
2. As part of the RFP process, request information from vendors as to the optimal City staffing
structure and time commitment required for a successful system implementation including on-
going support and maintenance of the system.
3. Prior to launching the implementation phase of the project, establish expectations with the City
staff as to the time commitment that will be required for a successful implementation.
4. With the assistance and advice from the selected vendor(s), institute an implementation
governance structure that is well-staffed and supported by executive management within the
City.
5. Establish policies to sunset legacy solutions, supplemental applications and shadow systems,
in conjunction with the new system implementation so that they do not perpetuate an
environment of dual information tracking.
6. Establish data retention requirements to guide and manage the scope of required data
conversion.
5.3 REQUEST FOR PROPOSAL (RFP) TACTICS
The Request for Proposal (RFP) for a new system will encompass a number of sections including a list
of the scope of software modules to procure and a list of detailed software specifications
supplemented by other tables including interface requirements and migration paths for existing
systems. We recommend the organization of potential modules as they relate to the continued
assessment for inclusion in various phases of the project to be organized as follows:
1. Core Modules: These modules are ones whose existing legacy software resides in SAP that
are intended to be replaced as part of the project through the RFP process although their
replacement will likely occur in various stages of software implementation.
2. Expanded Modules: These modules are ones that are being considered for further evaluation
during the RFP process and may or may not be replaced as part of the project depending on a
number of factors.
3. System Interfaces Required: These modules are ones that are not within the scope of the
project but may have interfaces to the implemented new solution. At some point in the future,
the City may consider replacement of these modules or a marketplace assessment to
determine the current vendor solution set that exists for these areas.
Recommended Strategies:
The following strategies should be considered by the City as it continues through the RFP and due
diligence activities leading up to the selection of a future ERP solution:
1. Vendor clarity in RFP. Ensure that software vendors are clear as to the strategy of the
organization as it relates to the procurement of replacement software.
2. Open procurement process. Preliminary project cost estimates for Tier 1.5 vs. Tier 2
vendors vary significantly. The City should define both functional and technical requirements
as part of the RFP process and allow both tier vendors propose their respective solutions.
Then the City will be able to evaluate the solutions based on the selection criteria and
conclude on the most appropriate level of investment. The ERP Marketplace Assessment
section further details the differences between the tiers.
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3. Identify other vendor capabilities and solution scope. Within the RFP, include additional
questions pertaining to the capabilities of vendors in other areas not considered as part of the
initial scope of the project (i.e., system interface required modules) but which may be available
from the vendors.
4. Balance a strategic vendor decision with a preliminary investment. Include all modules
which the City may consider as part of a new system procurement and structure the RFP to
provide “a la carte” pricing. This will allow the City to evaluate the full scope of the vendor
solution to aid in the strategic decision of the vendor platform, however make a subsequent
conclusion on phasing the investment.
5. Progressive elaboration. As the City learns more about the work of the project, planning can
progress, becoming more elaborate, over time. Using consultant templates and expert
judgment can assist with leveraging lessons learned from other similar local public sector
organizations; however specific implementation planning requirements will be increasingly
defined throughout the project phases.
6. Evaluate financing options. As part of the RFP process, the City may wish to consider
financing options that are available from the vendor or other third party to provide a more
palatable payment stream to fund the capital cost of the project.
7. Leverage a prime vendor approach towards implementation. Regardless of the solution
set that is selected, to the extent possible the City should work to maximize contracting with a
single, prime vendor who has prime responsibility for the implementation of the entire solution
set that is purchased by the organization. It is reasonable to expect that a substantial portion
of the current manual processes and shadow systems could be incorporated within a new
system. With the prime vendor approach, the City would have the opportunity to choose
separate personnel system, financial and purchasing functions should be combined and it is
envisioned that the software marketplace offers solutions that would provide the City the
opportunity to integrate all these major functions if desired.
8. Software and services solutions. Ensure that information is gleaned from providers of new
system solutions in areas of both product and service as part of the RFP and due diligence
activities. Specifically, this would include the following:
a. Review their product offerings as requested in the RFP.
b. Identify and contact relevant references of a comparable size to the City.
c. Develop vendor demonstration agendas that are geared towards identifying how the
vendors will achieve specific the City outcomes.
For multi-product solutions, assess the degree in which these various products have operated with
each other at other clients.
5.2 PHASING
Due to the integration and data access that they can provide, many systems, particularly ERP systems,
are complex and require organizational commitment to successfully implement them. It is not
uncommon for organizations the size of the City to take between 12 to 24 months to implement such
systems. The implementation of a new system presents a number of options as to when certain
modules are deployed frequently based on when the various business cycles are executed within the
City such as:
Fiscal year-end
Calendar year-end
CAFR development
Budget development
Open enrollment
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Recommended Strategies:
Although there is no perfect answer as to when certain modules should be deployed, the following
best practices should be considered related to the implementation phasing set of activities:
1. Implement complimentary modules together. There is a natural implementation phasing of
like modules as part of the deployment of a new system. For example, core financial modules
should be implemented together. Likewise, HR/Payroll modules, to the extent incorporated,
should be implemented together as well. This is another example of factors to be considered
when determining an overall implementation approach.
2. Avoid “Big Bang Approach”. The deployment of a new system is a very significant project
requiring a large amount of staff and vendor time to implement as it will impact people,
process, policy and technology. Careful phasing of implemented modules should be
performed versus a “big-bang” approach of implementing all software at the same time to
minimize overall project risk and to ensure optimal utilization of resources. The City may wish
to consider separating core financial modules, payroll and personnel, and procurement
functions into separate phases. Integrations to other the City systems should follow, as the
system modules are implemented over time.
3. Evaluate opportunities for “Quick-Win” implementations. There are a number of
opportunities to obtain quick-win implementations of a new system that provide visible
evidence of project success and minimize the risk of bringing all modules up simultaneously.
Frequently, modules such as Debt Service Management and Investment Management are
isolated to a limited number of individuals, are relatively simple to deploy and do not have
significant interaction with the core financial system. Opportunities for these quick-wins
should be explored during the vendor selection phase of the project and more closely during
system implementation. Certain “quick-wins” may need to be initially implemented in stand-
alone mode with or without temporary bridges in place and then later integrated when the core
system is live.
4. Implement considering natural business cycles. A natural tendency is to implement the
financial components of a new system such that go-live is on a fiscal year-end to have all
transactions for a year on one system. In general, there are many cases where this is not the
ideal situation as the post go-live challenges with implementing a new system impede
significant activities that are required for year-end close. HR/Payroll solutions tend to go-live
on a quarterly basis and the City may wish to consider going live at a calendar year break due
to the processing of W-2 statements for employees. Regardless, natural business cycles
should be considered as part of the phasing of new system modules.
5.3 STAFF BACKFILL
Frequently, staff who are the most desirable to lead a new system a replacement project are also the
ones who also have the most knowledge of the legacy environment and are viewed as key in
maintaining the integrity of the existing environment. This is true at the City in certain areas such as
Finance.
Recommended Strategies:
1. Factor backfill costs in project budget. The City should consider the feasibility of
additionally factoring backfill costs into the overall project budget that is presented to the City
Council as part of the entire project budget.
2. Consider recent retirees to provide backfill. To the extent feasible, evaluate the
opportunity of using any recently retired staff to provide backfill support for the project or to
provide assistance in critical areas deemed important for the project due to their institutional
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knowledge. This may include areas such as data cleansing, where institutional knowledge is
relevant, or for addressing day to day operational responsibilities, while current the City
subject matter experts focus their attention on the new system implementation effort.
3. Consider workload sharing. Based on normal business cycles, certain City staff may
become especially busy addressing operational requirements. During these times, to the
extent that other City staff can re-focus their efforts to assist them in their operational duties, it
can mitigate the bottlenecks which can result and increase staff availability to participate on
the project. Additionally this can help with staff cross-training, and collectively “upgrade” staff
skills in each work area. To the extent that the City can proactively initiate such approaches in
advance of the new system implementation project, it can provide benefits to allow subject
matter experts to more easily transition to their project roles.
5.4 DATA CLEANSING / CONVERSION
Legacy systems frequently have data stored in a variety of formats either electronically within the
system or in hard-copy format that is deemed as critical, and has data retention requirements.
Vendors will generally provide two approaches towards the conversion of client data. In one method,
vendors will provide a template format to the City and request that all data to be converted is provided
in the requested format regardless of the number of data sources that currently house this information.
In the second method, vendors will manage both the extraction and conversion of information into the
template format. In both cases, the data conversion process will be iterative in terms of extracting,
converting, reporting and reviewing.
Likewise, cleansing of the data prior to the data conversion activity during implementation, though time
consuming, will generally make this process occur more smoothly. Regardless of the methods taken,
data conversion is considered a critical part of system implementation and one that can be a critical
risk to the project if not managed correctly. A certain amount of data cleansing can occur after data is
extracted using programming.
Recommended Strategies:
1. Data conversion requirements. Define general data conversion requirements in the RFP
and work with the tentative finalist vendor during the last stages of the selection to finalize the
scope of conversion within the Statement of Work (SOW) with the vendor.
2. Historical information. Avoid converting all historical information to the new environment.
Establish and use data retention guidelines to drive the scope of conversion. Instead,
consider the conversion of summary information as a first course of action unless detail is
needed.
3. Historical data access. Consider alternative options of accessing historical information other
than electronically. This may include printing of reports to electronic files or the creation of a
data warehouse.
4. Design conversion specifications. Develop a cross-walk between legacy and new system
data as part of the conversion process. For example, this may include development of an
interface that allows users to enter in an old account that then displays the same account in
the new structure. Likewise, an old vendor number could populate a field in the new system to
act as a cross-reference.
5. Data cleansing. Begin data cleansing activities as early as possible. For example, the City
may wish to start reviewing its existing vendor file and eliminating duplicates or vendors who
no longer exist. During the implementation phase of the project, most vendors will provide
specific instructions related to data cleansing activities.
6. Use of data warehouse. As a separate internal project, consider the use of a data
warehouse for housing of legacy data for historical reporting purposes. If this route is chosen,
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clear responsibilities for separately acquiring and implementing the data warehouse will be
required to consider both vendor and the City staff involvement.
5.5 INTERFACE DEVELOPMENT
Interfaces related to the deployment of a new system can exist in various forms as follows:
1. Standard imports or exports provided by the vendor’s solution with entities and systems
outside of the City (e.g., benefit providers, other governmental entities, etc.).
2. Interfaces between the vendor’s solution and applications that are not being considered for
replacement as part of the project.
3. Interfaces between the vendor’s solution and applications that are being considered for
replacement as part of the project that may or may not be provided by the prime vendor.
Decisions as to who will develop and provide on-going support for system interfaces are another
important factor to consider. Certain vendors will provide toolsets that assist in the development and
management of system interfaces.
Recommended Strategies:
1. Identify interface requirements early. Define potentially needed interfaces between the
new system and external entities in the RFP. This would include existing as well as desired
new interfaces that would be populated in the Application Interface Table of the RFP.
2. Define full scope of interfaces. Define potentially needed interfaces between the new
system and other City systems not being replaced in the RFP. This would include existing as
well as desired new interfaces that would be populated in the Application Interface Table of
the RFP. Identify other candidate interfaces in the RFP with systems that may or may not be
replaced.
3. Prime vendor and interfaces. Ensure that the prime vendor is responsible for the delivery of
all system interfaces during implementation.
4. Shadow support staff. City staff should shadow vendor staff during system implementation
to develop an understanding of their conversion tools such that the City can maintain those
interfaces designated for the City support going forward.
5. Leverage existing interfaces. Consider allowing the software vendors to maintain interfaces
that exist between their product and entities outside of the City (e.g. benefit providers, IRS,
etc.) and, as an option, other systems not being considered for replacement by the City.
6. Process redesign consideration of interfaces. In conjunction and as a result of the
implementation’s business process redesign activities, perform the necessary work to further
inventory the system interface requirements, develop an system interface plan, design and
develop the system interfaces, test and accept the interfaces and implement them in
conjunction with the “out of the box” system implementation.
5.6 REPORT DEVELOPMENT
Although the selected vendor will likely provide a significant number of reports and queries through
their base system there will be a need for the City to have existing reports customized and to have
additional reports developed that are not available as part of the core set of reports. The skill sets
required for report development include not only the report development tools but also an
understanding of the database and/or views which the reporting tools access. Likewise, if the City
pursues the use of a separate data mart / data warehouse in order to perform more complex analysis,
additional skill sets will be needed.
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When software vendors demonstrate their solutions, the expectation of users being able to perform
ad-hoc reporting themselves is heightened as the vendors will present the process as simply involving
the point and click of a few buttons to generate the desired results. In reality, the process of using the
tool and developing an understanding of the database/view takes a period of time.
Recommended Strategies:
1. Establish expectations around reporting. Reset staff expectations that traditional reporting
should not necessarily be the first or most appropriate method towards obtaining the financial,
procurement or HR information that they seek. Instead, as part of the overall training
approach, ensure that staff understand the self service, inquiry and portal functions available
in the system, and when to use them. Reset staff expectations that not all reports will be
available at the go-live transition and that all users will be able to generate ad-hoc reports.
2. Ad-hoc reporting tools team. Identify a joint team of process owners and technical support
staff to be trained on the ad-hoc reporting tools during the implementation. These staff will
likely be generating custom-developed reports for some time after the go-live period.
3. Assess ad-hoc reporting tools. Obtain a clear understanding during the selection process
as to the reporting options available with each vendor solution and, for each reporting option,
who typically is using the tool.
4. Custom reports. Work with the software vendor during the implementation phase of the
project to develop a select set of custom reports, with their assistance, to improve knowledge
transfer as to both the product and database structure.
5.7 CHANGE MANAGEMENT
Project success comes from having a very clear idea of how management would like to run the City,
and then using redesigned processes and a new system to facilitate the way the City has envisioned it.
When process and software implementations do not meet expectations it is often due to people issues,
and not necessarily the technology. Research indicates a correlation between the success of a
change initiative and how well the people side is managed throughout the change. That is why
applying a change management methodology is critical to the success of such an initiative. A rigorous
change management methodology is critical to supporting the successful launch of new processes
and systems. The purchase and implementation of a new system and related technology is done to
assist in meeting organizational objectives and improving performance. Organizational performance
is also impacted by the people of an organization and the processes used to complete work.
Throughout the project, the goal is to balance these components, as illustrated:
People
Process
Technology
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5.8 COMMUNICATION PLANNING
As part of the first steps of change management planning, the City should develop communications
plans intended to guide project communications from process redesign through post-implementation.
By its nature, the project will affect many staff across the City.
Acknowledging the diverse City audiences that will be involved and impacted by this project, a
Communication Plan should be developed to create awareness and make the project relevant by
effectively communicating the impacts to both internal and external stakeholders. Sample objectives
for a Communication Plan may include:
1. Accurately distribute information in a timely manner concerning important project benchmarks
and progress to employees.
2. Use various media to provide multiple sources from which information concerning the project
can be accessible.
3. Ensure all information available is updated and accurate.
4. Reduce confusion among employees by providing a sole directive and source from which all
project information originates.
5. Provide clear channels of communication within which City project staff can operate to lead to
an expedited solution to issues that arise during the selection and implementation and after its
completion.
6. Encourage feedback from employees across the City
Recommended Strategies:
1. Assign a communication coordinator. The City should assign a communications
coordinator to the project management office to maintain and execute the communications
plan.
2. Identify and empower change agents. A Communications and Change Management Team
should recommend the appointment of key “change agents” within each Department to nurture
'buy in' and get Department staff committed to taking relevant actions. Such team members
will be involved in educating Department staff about the impacts and benefits of the project
and be “inspiration agents” by helping Department staff find ways to discover their potential,
overcome barriers, and celebrate successes. These staff should monitor "what is working",
"what isn't working" and "what do we need to change" – and provide regular feedback on
progress to Department staff.
5.9 PROCESS RE-DESIGN
The ERP System evaluation activities that were conducted surfaced several opportunities for
improvements in the management and execution of existing processes. Through the course of
conducting process owner process user review sessions, process-specific as well as the City-wide
issues and opportunities were surfaced. The City should re-engineer appropriate business processes
in conjunction with the implementation of the new ERP, as part of a successful change management
approach.
The mapping of “to be” business processes and certain high level process redesign can be performed
in advance of the implementation, either prior to or during the time that the City is facilitating a RFP
process. Along with process redesign, the City should select key performance indicators (KPIs) that
will be used to measure the City’s performance along with targets that are based on best practices.
Ideally, the City will measure performance according to selected KPIs prior to implementation, six
months after implementation, one year after implementation and quarterly thereafter (some
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organizations evolve to monthly, especially once business intelligence and dashboard solutions are
implemented).
The City should keep in mind the following:
1. The earlier process redesign is performed in the selection process, the more information the
City will have about the “to be” process which can serve as a basis for selection, along with
other factors such as cost, functionality, technology, implementation timeframe, etc.
2. If performed early in the process (e.g., prior to selection), management at the City will likely
face trade-offs in terms of cost versus ability to support “to be” processes.
3. The City will need to remain flexible in terms of which parts of the “to be” process are actually
implementable, given the new system capabilities. In fact, the vendor solution may provide
features resulting in a better, more efficient “to be” process.
During the implementation phase of the project, there may be significant levels of review conducted by
the selected vendor(s) to understand existing City processes and how their software can be used to
improve the efficiency and effectiveness of these processes. While vendors may offer additional
optional services to provide enhanced levels of implementation support to their customers, it is
generally considered the responsibility of the client to develop the actual procedural documentation
that defines exactly how these processes will operate with the selected system for use by process
owning and process end-user staff.
5.10 5ERP SYSTEM TRAINING
The City should develop appropriate training plans in conjunction with the implementation of the new
system. The City does not currently have a formalized enterprise wide training program for existing
financial, procurement and human resources systems.
The process of providing training to on the new system should occur in in conjunction with the
implementation of the new system. Training should be both functional and technical. Functional
training should be for both process owners and process end users. It will also be critical to provide the
necessary technical training to the City IT and departmental “power user” staff.
Recommended Strategies:
1. Establish training expectations. During the RFP development and due diligence activities
associated with reviewing vendor responses, ensure that any specific training expectations
are articulated to the vendors. As part of the due diligence phase with the finalist ERP
vendors obtain a clear understanding as to the level of training activities they will conduct
during the implementation phase of the project and the specific training materials.
2. Training team. During the implementation of the new system, formulate a Training Team
which will focus both on the implementation training requirements on the development of an
ongoing internal training program for continued exploitation of the capabilities of the new
system over time. Consider the use of a “train the trainer” approach, whereby the City would
save on vendor implementation expense, as well as encourage process owners to become
knowledgeable about the key aspects of the system.
3. Budget for future training. In future budget cycles, consider including an ongoing training
budget specific to the system, to assist in maximizing the ongoing leveraging of the City’s
investment.
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6 Appendices
6.1 APPENDIX A: PROJECT CHARTER
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Enterprise Resource Planning
Evaluation
Project Charter (Amended)
Project Number #46
Project Manager: Michael Tsao
Date: September 23, 2013
Version: 2
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A.1 Version History
ID Changes Date Created Author
Initial 09/25/2013 Mtsao
Modify contends 10/24/2013 mtsao
Add Appendix A 11/12/2013 Mtsao
SAP team diagram 06/18/2014 Mtsao
A.2 Background
The City’s history with SAP began in 2002 when the City selected SAP as its preferred vendor for an
Enterprise Resource Planning system with the purpose of integrating various business processes
within the City and to pave the path for the City to moving toward the direction of electronic
Government. In fiscal year 2003, the implementation of the SAP Enterprise Central Component (ECC
6.0), SAP core modules were completed and the SAP system has been running in the City since 2003,
supporting Accounting, Finance, Purchasing, Project Management, Plant Maintenance, Budgeting,
Payroll, Human Resource Management, and Service Order management. In 2009, the City completed
a major upgrade to the SAP ERP system and , which also replaced the former utility billing system
(Banner) with the implementation of the SAP IS-U module, Customer Relationship Management
(CRM), Utilities Customer Electronic Services (also known as My Utilities Account customer portal) and
Business Intelligence systems (BI). Both business and technology needs have changed dramatically
since the current ERP solution was selected and implemented. Therefore, City desires to conduct a
comprehensive evaluation to determine a solution to reduce IT application and infrastructure support
costs, improve flexibility, increase user friendliness and intuitiveness of system, facilitate further
automation of business processes, improve quality and reliability of information for decision making.
A.3 Project Description
ERP consultant to perform an analysis of City’s current SAP environment, business processes and our
strategy; evaluate the ERP market place; and help the City determine a refreshed vision for our ERP
needs. Utilities billing and a Human Resources Information System is included in scope of this project.
Project Objectives
By the end of FY14, an ERP consultant will present a comprehensive evaluation report to the City with
the following information:
Gap analysis of current application capability against business and technology needs and best
practices.
o Identify present and future needs
o Identify wins and successes (strengths)
o Identify pain-points and challenges (weaknesses)
o What are the risks and opportunities
Identify areas where the current application is capable of meeting needs.
o Identify the pros and cons of using the current application to fulfill these needs
o Estimate the time and costs to implement and support
o Compare these costs to alternatives
Conduct an overall evaluation to determine if the City should solicit proposals from other ERP
solution providers.
o Benchmark support and maintenance costs (i.e. to similar sized cities and municipalities.)
o Determine if the current application allows the ability to respond quickly and cost-
effectively to changing business and technical needs
A.4 Project Scope & Deliverables
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In Scope
Selecting an ERP evaluation consulting firm.
Perform an analysis of our current SAP environment.
Perform gap analysis of current application.
Deliver a comprehensive evaluation report.
Out of Scope
Selecting a new ERP solution for the City.
A.5 Flexibility Matrix
Most Flexible Moderately Flexible Least Flexible
Scope X
Schedule X
Cost X
A.6 Milestones
Milestone Description
Charter (this document)
Kickoff Meeting
RFP
Contract with Vendor
Business Impact Assessment (BIA)
Project Management Plan
Assessment Report and Recommendation
A.7 Deliverables
Deliverable Description
Gap analysis of current application capability against business and technology needs and best
practices.
o Identify present and future needs
o Identify wins and successes (strengths)
o Identify pain-points and challenges (weaknesses)
o What are the risks and opportunities
Identify areas where the current application is capable of meeting needs.
o Identify the pros and cons of using the current application to fulfill these needs
o Estimate the time and costs to implement and support
o Compare these costs to alternatives
Conduct an overall evaluation to determine if the City should solicit proposals from other ERP
solution providers.
o Benchmark support and maintenance costs (i.e. to similar sized cities and municipalities.)
o Determine if the current application allows the ability to respond quickly and cost-effectively
to changing business and technical needs
A.8 Success Criteria
Completion of the ERP evaluation before June 2014.
The ability for City leaders to determine the ERP strategy going forward.
Initial Assumptions and Constraints
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ID Type2 Description
1 A Consultant can provide clear path to the appropriate solution
2 A Identified consultant is within budget
3 C CoPA personnel are available when needed
4 A Consultant performs analysis as expected and within allowed time
A.9 Initial Risks and Issues
ID Type3 Description Owner Importance4
1 R Consultant is unable to identify current application
gap against business and technology needs
Michael 4
2 R Consultant knowledge not at expected level Michael 4
3 R Overall project costs are higher than budgeted Michael 2
4 I Consultant is unable to deliver the final evaluation
report on time
Michael 3
A.10 Sponsor Communication
A.11 Initial Communication Plan
Communication Description Frequency Format Recipients
Technology & The
Connected City
Committee
High Level Project
Overview
Once Regular
Scheduled
Meeting
Committee members
GRB Committee High Level Project
Overview
Once Regular
Scheduled
Meeting
Committee members
Information
Security Steering
Committee
High Level Project
Overview
Once Regular
Scheduled
Meeting
Committee members
GIS Steering
Committee
High Level Project
Overview
Once Regular
Scheduled
Meeting
Committee members
Utility Technology
Committee
High Level Project
Overview
Once Regular
Scheduled
Meeting
Committee members
A.12 Team and Communication
Initial Communication Plan
Communication Description Frequency Format Recipients
Kick-off Meeting Initial project
meeting
Once Meeting PM
Sponsor
SAP Core team
SAP Steering Committee
SAP PMO Team
Stakeholder/Liaisons
Status Updates Project Status,
Risk Status,
Milestone, Issue
Review, etc.
Weekly Email PM
Sponsor
SAP PMO Team
2 A: assumption; C: constraint
3 R: risk; I: issue
4 4: critical; 3: high; 2: medium; 1: low
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Consultant
Meeting
Regular meeting
for status and
review
Weekly Meeting PM
SAP PMO Team
Consultant
Project Team
Meeting
Regular meeting
for status and
review
Monthly Meeting PM
Sponsor
SAP PMO Team
Consultant
SAP End Users: See Appendix A
A.13 Project Authority
Title Resources Needed (Names)
Sponsor: Jonathan Reichental
Project manager: Michael Tsao
PMO Governance: PM, Sponsor, SAP Steering Committee
Business Process Owner: Finance: Laura Kuryk, Walter Rossmann, Greg Pustelnik,
Scott O’Neill;
Revenue Collection: Josie Stokes;
HR: Grace Castor;
Utilities CS: Anthony Enerio, Raveen Maan, Dave Yuan;
PW Refuse: Matt Krupp, Matt Raschke;
Project System: Sharon Macway, Anna Vuong;
Sales and Distribution and Plant Maintenance : Anna
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Vuong;
Steering committee PM, Sponsor, SAP Steering Committee
Core Team PM, TBD
Extended Team Plante & Moran, PLLC.
A.14 Purchase Request Information
Budget (First Year) $ 150,000
CIP or Cost Center: G/L number: 30050002-
31290
Multi-year yes/no NO
Procurement Method: RFP
SAP End Users by Department
Administrative Services
Accounting
Laura Kuryk
Budget
Christine Paras
Purchasing
Greg Pustelnik
Store
Scott O’Neill
Revenue Collection
Nichol Banks
Rick Claeys
City Attorney
Stacy Lavelle
City Auditor
Deniz Tunc
City Clerk
Beth Minor
City Manager
Katie Whitley
Danille Rice
Community Services
Budget/Position
Rob De Geus
Rhyena Halpern
Daren Anderson
Procurement
Sally Camozzi
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Marieke Gaboury
Catherine Bourquin
Time Entry
Erin Perez
Amy Johnson
Fire
Jeany Clattenburg
Information Technology
Sherri Wong
Library
Karol Gallucci
People Strategy & Operations
Elizabeth Egli
Planning & Community Environment
Budget/CIP
Alicia Spotwood
Robin Ellner
Procurement
Lisa Green
Rosemary Morse
Time Entry
Zariah Betten
Aline Eskandari
Police
Dana Lamberson
Barb Teixeira
Public Works
Karen Mitchell
Tatiana Pham
Utilities
Billing Management
Lissa Rendon – Customer Service Specialist - Lead
Eric Keniston – Resource Planner
Customer Service and Customer Relationship Management
Renee Ruiz – Customer Service Representative
Device Management
Barclay Rush - Customer Service Specialist - Lead
Financial Contract Accounts
Leon Timmons- Utilities Credit and Collections Specialists
Lissa Rendon - Customer Service Specialist - Lead
Utilities Customer Electronic Services
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Preet Maan - Customer Service Specialist
Work Management
Kelly Haruta – Coordinator Utilities Project
Melissa Smart – Coordinator Utilities Project
Business Intelligence
Lissa Rendon - Customer Service Specialist – Lead
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6.2 APPENDIX B: APPLICATION INVENTORY
As part of the Enterprise application analysis, an inventory of all key current software systems has been developed to support the areas in scope
for the project, as defined in the project charter. For each current system, the analysis categorizes the level of availability of that software from
other ERP vendors which sell their products to similar size governments. Additionally the analysis identifies a recommended preliminary migration
plan for the current application based on all factors. .
*Application Availability in the ERP Market
Legend Code Description
G Generally
Available
The module is generally available from most / many providers of ERP solutions to similar size entities
B Best of
Breed
The module is not generally available from most / many providers of ERP solutions to similar size entities and is typically
selected and implemented as a separate best of breed system, then later integrated to ERP, as feasible, based on
available funding and skills.
E Expanded
ERP
The module is available from certain, select providers of ERP solutions to similar size entities and if not selected and
implemented as part of the integrated ERP system, would need to be obtained by the City from a separate best of breed
system, then later integrated to ERP, as feasible, based on available funding and skills.
#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
1 SAP – BI Business Intelligence for reporting Utilities
Management G Ad-Hoc Reporting Tool
2 SAP FI-AA Asset Accounting (FI-AA) Asset Management G Fixed/Capital Assets
3 SAP –PS Project Systems (PS) Project
Management G Project Accounting
Contract Accounting
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
4 SAP PSM-FM
Funds Management Integration
(PSM-FM)
Integration of Project/Contract
Accounting with Funds Management
(Budgeting) and General Ledger to
match actuals vs. costs and keep
track of budgets and spending
Project Accounting
General Ledger
Budgeting
G
General Ledger
Budgeting
Project Accounting
5 SAP-FI
Financial Accounting (FI)
General Ledger (FI-GL)
Accounts Receivable (FI-AR)
Accounts Payable (FI-AP)
Bank Accounting (FI-BL)
Special Ledger (FI-SL)
Cost Controlling (CO)
General Ledger
Cost Accounting
Financial Reporting
G
General Ledger
Miscellaneous Billing and
Accounts Receivable
Account Payable
Project Accounting
6 SAP-FIN Financial Supply Chain Mgmt (FIN-
FSCM) Treasury G Purchasing
Contracts Management
7 SAP-HR
Human Resource Management (HR)
Active Directory (HR-AD)
Organizational Management (HR-
OM)
Benefits (HR-BEN)
Time Management (HR-TM)
Payroll (HR-PY)
Talent Management (HR-COM)
PSO and Payroll G
Human Resources
Payroll
Time and Attendance
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
8 SAP-IS-U/CCS
Utility Billing (CCS-BM)
Device Management (CCS-DM)
Customer Service (CCS-CS)
Financial Contracts Accounting
(CCS-FICA)
Customer E-Services (SAP-UCES)
Customer Relationship Mgmt (CRM-
CS)
Web Portal Interface (IC Web)
Utilities Customers E-Services
(UCES)
My Utilities Account (MUA)
Utilities
Management B Utilities Management
9 SAP-MM Logistics Materials Management Inventory
Management G Inventory Management
10 SAP-PM Plant Maintenance
Maintenance &
Inspections
Management
G & B
11 SAP-SD
Sales and Distribution
Price/Rates Calculation; Prod or
Service Availability Check; Customer
Credit Management; Material
Determination; Tax Determination;
etc.
Sales and
Distribution B Utility Billing
12 Accela Permits and inspection data Permits and
Inspections B N/A
13 Advanced Micro
Solutions (AMS)
1099-ETC software for generating
1099's Accounts Payable G Accounts Payable
14 Autodesk Utility Design
(AUD)
Estimating software used by Electric
Engineering.
Utilities
Management B N/A
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
15 BMI
Document management vendor for
planning and purchasing (contract
management)
Purchasing B Document Management
16 Checkfree Online Payments for Utilities Utilities
Management B N/A
17 Civica IT Web Development Toolset IT B Purchasing
18 CLASS Parks and Rec system Parks and Rec B N/A
19 Commerce bank e-Payables Accounts Payable G N/A
20 CORE (Ipay) Web based parking citation payment
and collection. Revenue Collections B Cash Receipting
22 Doc1/e2Vault Bill print extract module Utilities
Management B Utility Billing
23 Docusign Used to approve activities Purchasing B Purchasing
24 GIS Geodesy GIS mapping Utilities
Management B N/A
25 GoldMine CRM & Contact Management
Reporting
Utilities
Management G CRM
26 InTime/ISELINK Police Scheduling Software Payroll/Time Entry G & B
Human Resources
Payroll
Time & Attendance
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
27 I-Tron / MVRS
Collects move-in, move-out and
check reads for meters installed on
designated AMR meter reading
routes that fall under the fixed
network. Interface between SAP and
meter reading hand held device to
record meter reads.
Utilities
Management B N/A
28 JP Morgan Chase
Smart Data P-card system Accounts Payable G N/A
29 Maintenance
Connection Enterprise Asset Management Fixed Assets B Asset Management
30 MS Access Imports SAP data into Access for
reporting and analysis purposes
Utilities
Management G Utility Billing
31 MS Excel
Bid List - Vendor listing for
notification of competitive
solicitations
Purchasing G Purchasing
32 MS Excel IT Vendor File (shadow system) Purchasing G Purchasing
33 MS Excel
IT and Fire Department Contract
Tracking/Management (shadow
system)
Contract
Management G Contract Management
34 MS Excel
LOA absence tracking
Payment Calculations for leave
Workers compensation Claims
Budget Changes
Tracking incoming PAF's
PSO G
Human Resources
Payroll
Time & Attendance
35 MS Excel Calculate holdback percentages
Sales tax capture spreadsheet Accounts Payable G Accounts Payable
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
36 MS Excel - Meter
Reading Calendar
Provides the work plan for the meter
reading group and shows which
meter reading routes will be read and
when.
Utilities
Management B Utility Billing
37 MS Excel - Meter
Testing Results Meter testing/proofing results Utilities
Management B Utility Billing
38 MS Excel - Rate
Modeling Used for refuse rate modeling Utilities
Management B Utility Billing
39 MS Excel - Refuse
Notes
All customer account notes for refuse
billing
Utilities
Management B Utility Billing
40 MS Project Project Management/Task Tracking Project Accounting B N/A
41 NeoGov Recruitment and hire PSO B N/A
42 OpenGov Transparency/Dashboard Tool Financial Reporting B N/A
43 Outage Management Tracks power outages Utilities
Management B N/A
44 PatternStream Budget Publications Budgeting G Budgeting
45 Pitney Bowes Prints and archives bills (utilities) Utilities
Management B Utility Billing
46 Questica Budget system Budgeting B
47 Quick Serve
Will be used to process payments
once the City gets the application to
work.
Revenue Collections Cash Receipting
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
47 Sales tax shadow
system
Calculates sales tax for P-Card
purchases Accounts Payable G Accounts Payable
48
Segal Waters
Compensation
Database
Salary and benefit survey information
(rollout in August 2014) PSO B N/A
49 SharePoint
Logs of customer service,
grievances, discipline, project
documents, purchasing approval
documents
Various B N/A
50 Skillsoft eLearning system (rollout in July
2014) PSO B N/A
51 Spinifex
Payroll and HR reporting tool for the
state controllers report from SAP
data
PSO G Human Resources
52 SymPro Used to manage investments Treasury B N/A
53 Topobase GIS and mapping software used by
Engineering
Utilities
Management B N/A
54 Training database Home-grown, used to sign up for
classes PSO G
Human Resources
Payroll
Time & Attendance
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6.3 APPENDIX C: RESPONSE SUMMARY FROM CITY-WIDE USER SURVEY
8
Key Report Findings
and
End-User Survey Results
9
Key Findings
Inefficiencies Exist Due to Redundant Data
Entry, Manual Processes and Unused
Functionality
Workflow within SAP is Not Fully Utilized
Unrealized Benefits from Current City SAP
Investments
Substantial Risk / Overhead/Effort Involved to
Support an Increasing Number of Interfaces
10
Survey Results
442%
17%
33%
8%
HOW WOULD YOU CLASSIFY YOUR USE OF SAP?
Standard End-User Approver Super User Functional/Technical Owner
11
Survey Results
443%
19%
35%
3%
EXISTING FUNCTIONALITY MEETS MY NEEDS EFFECTIVELY TO
COMPLETE MY DAILY TASKS
Agree Neither Agree nor Disagree Disagree Unknown/Not Applicable
12
Key Findings
Heavy Reliance on IT and Outside Consultants
for SAP Enhancement Requests
Limited Reporting Capabilities
Lack of an intuitive user interface
Limited use of some ‘best practices’ as per
technology limitations/loss of institutional
knowledge
Limited ongoing training available
13
Survey Results
229%
13%
45%
13%
REPORTING CAPABILITIES SUFFICIENTLY ALLOW ME TO
PERFORM MY JOB
Agree Neither Agree nor Disagree Disagree Unknown/Not Applicable
14
Survey Results
119%
21%51%
9%
SAP TRAINING IS SUFFICIENTLY AVAILABLE WITHIN MY
DEPARTMENT
Agree Neither Agree nor Disagree Disagree Unknown/Not Applicable
15
Key Findings
SAP complexities frustrate users and
discourage use of current systems to satisfy
business needs
Lack of Self Service Functionality
Loss of SAP institutional knowledge
HIGH cost of ownership
16
Survey Results
221%
17%
38%
24%
SAP SUFFICIENTLY HANDLES THE CITY'S CURRENT BUSINESS
NEEDS
Agree Neither Agree nor Disagree Disagree Unknown/Not Applicable
17
Survey Results
111%
20%
42%
27%
SAP SUFFICIENTLY HANDLES THE CIT Y'S FUTURE BUSINESS
NEEDS
Agree Neither Agree nor Disagree Disagree Unknown/Not Applicable
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The ERP Assessment Survey tabulated by Vovici EFM includes further statistical analysis from
respondents completing the survey during the period 9/09/2014 – 9/16/2014. If you are interested in
obtaining a complete copy of the survey results and analysis report please contact the City of Palo Alto
Information Technology Department.
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6.4 APPENDIX D: TOTAL COST OF OWNERSHIP DETAILS AND ASSUMPTIONS
Option 1 Option 2a Option 2b Option 3a Option 3b
Cost Category Assumptions
ON PREMISE
Status Quo
with Investment
ALL IN CLOUD
Upgrade SAP and
Retain Existing Best of
Breed Systems
MIXED ENVIRONMENTS
Upgrade SAP Core
Financials/HR/Payroll
Modules Only Keep Existing
Best of Breed Systems Obtain
Best of Breed Utility Billing
System
NEW ERP
Go to Market for a Fully
Integrated Public Sector
Focused ERP Solution and
Procure a Separate Utility
Billing Best of Breed Solution
NEW ERP
Go to Market for a Fully Integrated
Core Financials/Human Capital
Management Solution, Retain the
Current Best of Breed Systems and
Procure a Utility Billing Best of
Breed
All SAP Modules 8, 23 -$ 2,750,000$ 2,250,000$ N/A N/A
Other Existing Software
Licenses and Support -$ -$ -$ N/A -$
Planned Software Licenses
and Support 3 N/A 878,151$ 878,151$ N/A 762,880$
Utility Best of Breed 24 N/A N/A 263,000$ 263,000$ 263,000$
All ERP Modules 30 N/A N/A N/A 806,984$ N/A
Core Modules 35 N/A N/A N/A N/A 644,253$
Additional Hardware Costs 1 N/A N/A N/A N/A N/A
All SAP Modules 8 N/A -$ -$ N/A N/A
Other Existing Software 9 N/A 160,000.00$ 160,000$ N/A N/A
Planned Software 10, 44 N/A 429,350$ 429,350$ N/A 398,478$
Utility Best of Breed 25 N/A N/A 420,407$ 420,407$ 420,407$
All ERP Modules 31 N/A N/A N/A 1,721,620$ N/A
Core Modules 36 N/A N/A N/A N/A 1,519,390$
New System Implementation
Training 11, 26, 46, 45 N/A 566,850.00$ 686,850$ 120,000$ 250,850$
System Selection &
Implementation Planning Fees 20 N/A N/A 80,000$ 200,000$ 200,000$
Subtotal for External One-Time Costs -$ 4,784,351$ 5,167,758$ 3,532,012$ 4,459,258$
All SAP Modules 2 250,000$ N/A N/A N/A N/A
Other Existing Software
Support 13 417,910$ N/A N/A N/A N/A
Other Planned Software
Support N/A N/A N/A N/A N/A
Utility Best of Breed 28 N/A N/A 64,138$ 64,138$ 64,138$
All ERP Modules 32 N/A N/A N/A 177,537$ N/A
Core Modules 37 N/A N/A N/A N/A 141,736$
Consulting (if On-Premise)
Support Services
All SAP Modules 27 250,000$ N/A N/A N/A N/A
Other Existing Software
Support 3 -$ N/A N/A N/A -$
Other Planned Software
Support 38 N/A N/A N/A N/A -$
Utility Best of Breed 29 N/A N/A -$ -$ -$
All ERP Modules 33 N/A N/A N/A 80,698$ N/A
Core Modules 40 N/A N/A N/A N/A 64,425$
Training
Utility Best of Breed 21 N/A N/A 15,000$ 25,000$ 25,000$
All ERP Modules 34 N/A N/A N/A 50,000$ N/A
Core Modules 41 N/A N/A N/A N/A 40,000$
All SAP Modules 8, 23 N/A 2,750,000$ 2,250,000$ N/A N/A
Other Existing Software
Support 13 N/A 417,910$ 417,910$ N/A 417,910$
Other Planned Software
Support 14 N/A 253,529$ 253,529$ N/A 228,170$
Utility Best of Breed N/A N/A Cost not available Cost not available Cost not available
All ERP Modules N/A N/A N/A Cost not available N/A
Core Modules N/A N/A N/A N/A Cost not available
Training
All SAP Modules 4, 15 100,000$ 100,000$ 100,000$ N/A N/A
Existing Software Support 5, 16 12,500$ 25,000$ 25,000$ N/A 25,000$
Planned Software Support 5, 17 N/A 25,000$ 25,000$ N/A 25,000$
Subtotal for External Recurring Costs 1,030,410$ 3,571,439$ 3,071,439$ 322,373$ 966,379$
Current (If On-Premise)
Support FTE's 6, 42, 43 2,073,000$ N/A N/A 510,000$ 510,000$
Additional (If On-Premise)
Support FTE's
All SAP Modules N/A N/A N/A N/A N/A
Existing Software Support N/A N/A N/A N/A N/A
Planned Software Support N/A N/A N/A N/A N/A
Utility Best of Breed 22 N/A 400,000$ 400,000$ 400,000$ 400,000$
All ERP Modules N/A N/A N/A N/A N/A
Core Modules N/A N/A N/A N/A N/A
Current (if Cloud) ERP and
Existing Software Support 12 N/A 510,000$ 510,000$ -$ -$
All SAP Modules N/A N/A N/A N/A N/A
Existing Software Support N/A N/A N/A N/A N/A
Planned Software Support 18 N/A 130,000$ 130,000$ N/A 130,000$
Utility Best of Breed N/A N/A N/A N/A N/A
All ERP Modules N/A N/A N/A N/A N/A
Core Modules N/A N/A N/A N/A N/A
Internal Costs 2,073,000$ 1,040,000$ 1,040,000$ 910,000$ 1,040,000$
EXTERNAL COSTS
One-Time Cost Summary (External)
Software License Fees
Consulting Implementation (Configuration / Data Conversion / Interface Development)
Additional (if Cloud) Support FTEs
Recurring Cost Summary (Internal)
Recurring Cost Summary (External)
Annual Software License and Solution Support (if On-Premise)
INTERNAL COSTS
Includes Licensing, Support & Consulting Services (if Cloud)
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Assumptions Option 1
1
2
3
4
5
6
7
13
27
Assumptions Option 2a
8
9
10
11
12
13
14
15
16
17
18
22
44
Assumptions Option 2b
8
9
10
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
28
29
Assumptions Option 3a
20
21
22
24
25
28
29
30
31
32
33
34
42
46
Assumptions Option 3b
3
9
10
13
14
16
17
18
20
21
22
24
25
28
29
35
36
37
38
40
41
43
45
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems core financial recurring training fees
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems core financial recurring consulting fees at 10% of license fees
Assumed to retain the following positions for Tier 1.5 or Tier 2 ERP core financial applications : 2 SAP Technical at $250,000 / per year and 2 SAP Functional at
$260,000 / per year.
Plus Utilities Best of Breed System training at $120,000 + Planned Applications Training ($130,850)
Assumed NO Best of Breed Utilities system recurring consulting fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems core financial licenses and support
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems core financial consulting implementation fees
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems core financial recurring license fees
Other Planned Software recurring consulting fees
Assumed 15 users/year for 10h at $ 1000 / user trained by rotation for Utilities Best of Breed application
Assumed 3 Utilities Business Analysts at $400,000/year for Best of Breed Utilities system
Utilities Best of Breed average license costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Utilities Best of Breed average consulting costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Average Best of Breed Utilities system recurring license and maintenance fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Estimated annual maintenance cost for other planned applications per third party vendor quotes
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other existing applications
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other planned applications
Per EAMS project recommendation to add 1 Asset Management Program Managers @ $130,000/year
Plante Moran estimated fees for system selection projects for Utilities Best of Breed software
Plus Utilities Best of Breed System training at $120,000
Assumed to be supported by a combination of external services (for hosted applications) and City's IT staff only for on-premise applications
Integrations with the planned applications including the AUD, Maintenance Connect, Core, NeoGov, etc. are assumed to require 100 hrs each at $400 per hour
Consulting Implementation with the planned applications including the E-Procurement Solution, Asset Management, SAP SRM; 50k for E procurement ; See
Maintenance Connect and SRM tabs
As per City provided annual maintenance cost for other existing applications
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems implementation consulting costs
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems recurring license and maintenance fees
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems recurring consulting fees
Assumed average trained costs for Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems
Assumed to retain the following positions for Tier 1.5 or Tier 2 ERP applications: 2 SAP Technical at $250,000 / per year and 2 SAP Functional at $260,000 / per
Utilities Best of Breed average license costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Utilities Best of Breed average consulting costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Average Best of Breed Utilities system recurring license and maintenance fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Assumed NO Best of Breed Utilities system recurring consulting fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems licenses and support
Average Best of Breed Utilities system recurring license and maintenance fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Assumed NO Best of Breed Utilities system recurring consulting fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Plante Moran estimated fees for system selection projects for Utilities Best of Breed software
Assumed 15 users/year for 10h at $ 1000 / user trained by rotation for Utilities Best of Breed application
Assumed 3 Utilities Business Analysts at $400,000/year for Best of Breed Utilities system
Assumed 3 Utilities Business Analysts at $400,000/year for Best of Breed Utilities system
SAP upgrade excluding Utilities Modules cost, which was assumed to be approximately $500,000
Utilities Best of Breed average license costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Utilities Best of Breed average consulting costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Users and admins training for SAP Upgrade and HANA Platform hybrid cloud plus Planned Software. Assumed 50 people for 40 hours at $200/hr. Plus Utilities
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other planned applications
Per EAMS project recommendation to add 1 Asset Management Program Managers @ $130,000/year
Users and admins training for Utilities Best of Breed at implementation time Assumed 15 people for 40 hours at $200/hr
Plante Moran estimated fees for system selection projects for Utilities Best of Breed software
Assumed 15 users/year for 10h at $ 1000 / user trained by rotation for Utilities Best of Breed application
Assumed to retain the following positions if maintaining a core ERP applications in a Tier #1 hosted environment with complete support services. 2 SAP
As per City provided annual maintenance cost for other existing applications
Estimated annual maintenance cost for other planned applications per third party vendor quotes
Assumed 50 users/year for 20h at $ 2,000 / user trained by rotation for ERP modules
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other existing applications
Assumed 3 Utilities Business Analysts at $400,000/year for Best of Breed Utilities system
Estimated implementation costs for planned software (HR, E-Procurement, Maintenance Connection)
Per SAP presentation on April 2014 it is assumed that HANA Enterprise Cloud with hybrid hosting and management between SAP and the City will be the chosen
solution
Integrations with the planned applications including the AUD, Maintenance Connect, Core, NeoGov, etc. are assumed to require 100 hrs each at $400 per hour
Consulting Implementation with the planned applications including the E-Procurement Solution, Asset Management, SAP SRM; 50k for E-procurement ; See
Estimated annual maintenance cost for other planned applications per third party vendor quotes
Assumed 50 users/year for 20h at $ 2,000 / user trained by rotation for ERP modules
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other existing applications
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other planned applications
Per EAMS project recommendation to add 1 Asset Management Program Managers @ $130,000/year
Integrations with the planned applications including the AUD, Maintenance Connect, Core, NeoGov, etc. are assumed to require 100 hrs each at $400 per hour
Consulting Implementation with the planned applications including the E-Procurement Solution, Asset Management, SAP SRM; 50k for E procurement ; See
Users and admins training for SAP Upgrade and HANA Platform hybrid cloud plus Planned Software. Assumed 50 people for 40 hours at $200/hr for HANA
Assumed to retain the following positions if maintaining a core ERP applications in a Tier #1 hosted environment with complete support services including: 2 SAP
Technical at $250, 000 / per year and 2 SAP Functional at $260,000 / per year.
As per City provided annual maintenance cost for other existing applications
2014 Fully Loaded Salaries for 12.5 FTEs in the City's SAP Support team
Assumed the City will not move to the Cloud services in the Option 1
As per City provided annual maintenance cost for other existing applications
Sierra Infosis annual consulting fees, as per City provided contract
Per SAP presentation on April 2014 it is assumed that HANA Enterprise Cloud with hybrid hosting and management between SAP and the City will be the chosen
solution
Additional Hardware Costs* - Materially insignificant for this analysis - Based upon our environmental assessment the City has plenty of capacity.
SAP Enterprise Support Contract - As provided by the City of Palo Alto, CA July 22, 2002 and updated for the calendar years 2013-2015
Assumed to be supported by a combination of external services (for hosted applications) and City's IT staff only for on-premise applications
Assumed 50 users/year for 20h at $ 2,000 / user trained by rotation for ERP modules
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other existing applications
{Thank You!}
For more information contact:
Adam Rujan, Partner
248-223-3328
adam.rujan@plantemoran.com
plantemoran.com
Enterprise Resource
Planning (ERP) Evaluation
Results and Discussion
Palo Alto City Council
September 15, 2015
2
Agenda
§Enterprise Resource Planning (ERP)
evaluation result
§Evaluate potential opportunities for using 3rd
party managed services
§Staff ’s recommendation for a new ERP
system
§Next Step and Tentative Timeline
§Questions/Observations
3
Enterprise Resource Planning
Evaluation
§Business and technology needs have changed
§Reduce IT application and infrastructure support
costs
§Increase user friendliness and intuitiveness
§Automation of business processes
§Improve flexibility, quality and reliability of
information for decision making
4
Enterprise Resource
Planning Evaluation
Results
5
Enterprise Resource Planning
Evaluation Result
Key Findings:
§Unrealized Benefits from Current City SAP
Investments
§SAP Functionality Not Fully Utilized (Workflow,
Reporting, Self-service, Intuitive User Interface)
§Loss of SAP Institutional Knowledge (Lack of
Training, Reliance on Outside Consultants)
§High Cost of Ownership
6
Enterprise Resource Planning
Evaluation Result
Option 1:Status Quo
Option 2:Upgrade SAP
Option 3:New ERP Environment
7
Enterprise Resource Planning
Evaluation Result
Plante Moran Recommendation:
Go to market for a fully integrated public sector
focused ERP solution and procure a separate
utility billing best-of-breed solution.
8
Enterprise Resource Planning
Evaluation Result
§Workshop with SAP Stakeholder, ~30+
representatives across departments
§SAP Steering committee provided additional
leadership input
9
Evaluate Potential
Opportunities for Using
3rd Party Managed
Services
10
Staff’s Recommendation
11
Staff’s Recommendation
§To evaluate the potential opportunities for
using 3rd party managed services for
functions identified in the scope of the
existing City’s ERP system
§Plan for acquisition of a new government-
oriented ERP system and separate provision
of billing services
12
Next Steps and Tentative Timeline
2013-15 ERP Evaluation & Recommendations Project Completed
March 17 Present ERP Assessment Update to Finance
Committee Completed
February to
June 2015 Budget Phase (Selection of Planning vendor)Completed
July 2015 to
Oct 2016 ERP Vendor Planning Phase In-progress
Nov 2016 to
June 2017 Budget Phase (Implement the Plan)Not-started
July 2017 to
June 2019+ERP Implementation (Likely by phases)Not-Started
13
Q/A
FINANCE COMMITTEE
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Special Meeting
Tuesday, March 17, 2015
Chairperson Schmid called the meeting to order at 6:01 P.M. in the Council
Chambers, 250 Hamilton Avenue, Palo Alto, California.
Present: Filseth, Kniss, Scharff, Schmid (Chair)
Absent:
Oral Communications
None.
Agenda Items
3. Review of the Assessment Results of the Enterprise Resource Planning
(ERP) Needs and Consideration of the Staff Recommendation to Plan
for the Acquisition of a New Integrated Government-oriented ERP
System and Separate Provisioning of Billing Systems.
Jonathan Reichental, Director of Information Technology and Chief
Information Officer, introduced Staff that had knowledge of the Systems,
Applications, and Production in Data Processing (SAP) (Program) suit of
applications and defined Enterprise Resource Planning (ERP): it was a term
that referred to computer systems that ran the core functions of
organizations. He said the core functions are things like “finance” and
“human resources”. Staff was interested in hearing the Finance Committee’s
(Committee) feedback and wanted to discuss SAP today: it is a core piece of
software and runs many key features of the City, it is central to the running
of the finance piece of the organization, it is critical to the Utilities
Department, the People Strategy and Operations Department, and the Public
Works Department for billing. There were barely any outages with SAP, the
Program was running close to 100 percent of the time; it was secure and
had many strengths. The Program was implemented around 2001, and was
up and running around 2003. Since there were a lot of changes with regard
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to technology in the last 10 years, Staff has looked at whether they were
using the right technology and that running SAP was very expensive; there
was increased frustration as the needs and complexity of the City increased.
Staff wanted an ERP they could modify relatively quickly. Staff received a
lot of feedback that SAP worked well, but it was outdated. The City has an
excessive amount of manual processes and Staff wanted to try to automate
them because Staff needed a system that produced reliable, timely and
easily accessible data. Staff found a vendor called Plante Moran that
evaluated and determined whether the City had the best system and offered
options that better supported the City. Plante Moran found that SAP was a
Tier One Program, which meant it had a lot of features, but the City only
used a portion of those features. Reporting was difficult; Staff was able to
get the reports they needed but it was often hard. In addition to hiring a
vendor, Staff sent out a survey and found out that other Staff members felt
the experience with SAP was not optimized, it did not have the ease of use
that applications today have. When SAP was instituted there was training
done but the people that received that training have left the City and that
training was not passed on to new people. As a result, there were people
that were not familiar with the Program and they were relying on technology
that was often acquired from outside help. Regarding the cost of ownership,
the return on investment was not up to the actual dollar amounts that were
put into it. Staff was spending $3 million per year, just to maintain SAP; of
that amount, $2 million went toward Staff time (14 full time equivalents),
plus about $1 million per year for the maintenance of the software. To build
out the Program, since 2003, Staff spent $17.5 million; the added labor
costs were about $43 million. Regarding key findings by the vendor, they
were: to remain as is until circumstances changed, the second was to
continue the investment in SAP and upgrade, and the third option was to
determine whether there was a different path for the City. There were
enormous risks with the first option because as time went on with software,
the vendor often had less and less of an interest in their product because
people upgraded, and support was given to the existing products. There
were ways to support the product, but the costs continued to go up because
it was a service for the vendor or the third party. Regarding the second
option of an upgrade, it involved new implementation. The vendor
recommended option three, which was to determine a new road map for the
City’s ERP needs and to find an integrated solution, rather than a series of
modules and different projects. The vendor also suggested the City break
out the Utility billing piece to have a more flexible billing solution for the rate
payers. After receiving the evaluation from Plante Moran, Staff brought
together about 30 stakeholders within the City to get City perspective, which
included a survey of hundreds of users in the City; the survey’s results were
fairly well aligned with the recommendation from Plante Moran. Next Staff
gathered the input from the vendor and the input from the stakeholders of
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the City and brought it before the SAP Steering Committee, which included
the Directors of Utilities, Public Works, Administrative Services, and People
Strategies and Operations. As Staff discussed buying software, they
recommended that software be bought that support their processes and that
the City conduct an evaluation of potential opportunities for using third party
managed services for specific functions in the scope of the existing City’s
ERP system. Staff did not know if there were opportunities, they were
simply asking the question. Additionally, Staff discussed the printing of bills
and how it was a commodity type service that was expensive; there was
question of whether there were other opportunities to do billing outside the
City. This led to a plan for acquisition of a new government oriented ERP
system and a separate provision for billing services. There were recently
approved investments around budgeting and the soon to be called E-
Procurement and Enterprise Asset Management; Staff was not going to
replace those investments because they were smart good products. He
noted that ERP software could be thought of in tiers, and there were viable
and less expensive solutions for government that were very successful.
The cost for a five year Program, to stay where the City was at was going to
cost $17 million; to upgrade software, which included implementation costs
and new capabilities was $25 million; and the third recommendation was
between $10-14 million. The next steps were going before the City Council
for approval and evaluation of the processes, then a request for proposal
(RFP), and then the beginning of an implementation. Today, the City was
running 306 technology solutions every day, about 29 were part of SAP, and
14 interfaces, which meant processes that share information with
organizations like banks and utilities.
Chair Schmid reiterated that the action the Committee was taking tonight
was just reviewing Staff presentation.
Council Member Filseth questioned what the whole evaluation and RFP
process was going to cost.
Michael Tsao, Senior Business Analyst, clarified that the Committee was
asking how much the Plante Moran Study was going to cost.
Council Member Filseth answered that he was asking for the cost to go out
for bids, to evaluate the vendors, to use consultants, and so forth; he
questioned whether Staff was going to be asking the Committee for a
Budget first.
Mr. Reichental replied yes, that was in the Fiscal Year (FY) 2016 Budget and
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the cost was going to be around $250,000. There were three components of
cost of several years: 1) the work that was done, which was around
$120,000; 2) if Staff went forward with the proposal, $250,000; and 3) the
product and implementation cost.
Council Member Filseth inquired if option three was chosen, and Staff looked
for a new system, if SAP was going to be a bidder.
Mr. Reichental said it was highly likely that they would participate in a bid.
Council Member Filseth inquired how SAP was generally; did they fall behind
a newer and more aggressive system. He assumed they were very practical.
Mr. Reichental said yes; SAP owned a big piece of the world’s financial
system and they had a good hold on it. They made some acquisitions lately,
bought some contemporary technology, and they were heavily invested in
new technology called HANA. This company made good strategic choices
around supporting cloud technologies (Cloud), they have redesigned
technology and emphasized the user experience and they were building
more capability specifically for government.
Council Member Filseth wanted to know if that was going to be part of the
upgrade to transfer information to the Cloud that was not there now.
Mr. Reichental agreed and said the technology for the City was Cloud and
mobile first; Staff always looked to a Cloud provided service.
David Ramberg, Assistant Director of Administrative Services wanted to
characterize SAP and said the question was: is SAP more than what the City
needed. The City was offered a large menu of options and was only using a
small portion of them. Staff wanted to probe that question because if there
was a good Tier Two that gave the City closer to what they needed, without
all the extras, it would cost less.
Council Member Filseth felt this kind of thing could be fixed in a contract,
whereas other things could not and would take massive switching costs.
Council Member Kniss recalled lessons learned with the Department of Motor
Vehicles, or when there was implementation in the Police Department, there
were many glitches. She felt the ability to rely on the system was important
and Staff was indicating that things were running well with SAP; she
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confirmed that Staff wanted to trade in SAP for something that would not
cost quite as much and had a smaller amount of capability.
Mr. Reichental agreed and said there were opportunity costs as well. It was
difficult for Utilities to have state-of-the-art billing today, without massive
investment.
Council Member Kniss thought that was the most persuasive argument
because she wanted to get all the bills on-line. The idea that was the
hardest to understand was the massive undertaking as the City went from
one system to the next.
Council Member Filseth remarked that it was sometimes difficult to get a job
done with a Tier One system.
Council Member Scharff recalled SAP was rocky, and there were still
complaints about SAP across the system. He heard that SAP was not
designed for Utilities billing and when there were requests for a redesign or
change, even in a small way, it cost $1 million to change. He thought the
reason for that came down to two things: 1) was an excuse factor, when
things did not go well people blamed SAP; and 2) people were not fully
trained and did not take time to learn how the system worked; he knew
departments were short-staffed. He thought that if there was an upgrade to
SAP, there might be more of the same issues. Doing the cheaper system
sounded better, but he wanted to be realistic. Staff needed to think a lot
about the implementation and the training because he did not want this to
happen to again.
Mr. Reichental agreed but added that if Staff did do the upgrade and
implemented the new system, it was effectively a new system. Right now
the City was behind many versions, so an upgrade was the same as a new
system. He thought it was important to address implementation and said
another distinction between an ERP system in 2003 and 2015 was one in
2003 was complicated and people had to learn it. In 2015, people expected
to be able to know how to use the latest technology within a few minutes;
some of the latest applications were intuitive enough and he expected to see
that in some of the newer software. Any user with a minimum amount of
business knowledge was able to go to an ERP system and run a report
relatively easily; the interface that was on SAP today was very difficult. If
the City went with option two or three, there was going to be the benefit of
contemporary solutions that helped with the training issues and Staff was
going to have the ability to take more of an advantage of the functions.
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Council Member Kniss questioned whether Mr. Reichental was going to be
with the City for some time because this was a long-term project.
Council Member Filseth commented that the City carried SAP since 2002 but
the problem of people trying to learn the Program and the problem of any
changes costing $1 million was an indication that there was an architectural
problem with the Program. He understood that Staff was saying that it was
time to make the shift to a new system.
Mr. Reichental answered that there was a small amount of discretion as to
when the change was going to happen but the vendor was sunsetting the
City’s version at the end of this calendar year; with a slight shift in
maintenance costs, the vendor was still going to be able to support the City
after that time.
Council Member Filseth commented that there no one at SAP that
understood the code, so there were no more resources available.
Mr. Reichental noted that SAP did not have any interest in the Cities’
version; their resources were all focused on their new versions.
Council Member Filseth agreed.
Chair Schmid emphasized implementation and how this related to the final
product. He noted there was a six year cycle, and in year five and six into
SAP, there were suggestions to reform. Six years later, there were these
problems, and the Audit Committee said the system was not working. What
Staff was asking for was not working because he thought there would be the
same problems in the future. Another problem was there would be new
systems that did the job better soon; he wanted to know a forecast and if
there was going to be a need for a new system in three years.
Mr. Reichental noted the cycle was usually that people complained about a
system, it was upgraded, and then people wanted the old system back. A
person needed to be three to five years beyond the new implementation
before people thought it worked and it met their needs. One thing that
distinguished the new SAP system today from an alternate was the City has
a complete ERP system in the building, and any change they wanted to
make they were responsible for; Staff did not have the state-of-the-art
because they were lagging behind upgrades. When a Cloud path was
proposed, the vendor took care of ensuring the product was always current.
If Staff chose the SAP Cloud version of the software, the product would
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periodically be upgraded by the vendor, so six years beyond the
implementation, the City would have the current product. The lag in
technology was eliminated with the Cloud type product.
Chair Schmid thought the difference was to go with a big company, or Staff
could go with a specialized company that focused on government services.
Both were vulnerable six years later because Palo Alto was such a small part
of their business, and were not the innovators and the other company may
be taken over by two or three innovators; both were vulnerable.
Mr. Reichental agreed and said that was something everyone had to deal
with going forward. It used to be that if a person bought into a large
company, there was high confidence, but he thought big players would fall
as often as the small players in the future; there was a massive risk in
selection. A debate amongst technology and the business world was how a
person was able to move between Cloud players, knowing they may be gone
overnight.
Council Member Kniss was interested in knowing what other cities were
doing, what was and was not working.
Mr. Reichental noted there was not a lot of activity with regard to ERP, but
there were candidates in California that they could look at.
Mr. Ramberg remarked that a lot of cities talk about implementation or they
say that it costs too much, but Palo Alto was actually still on the leading
edge as a City that was using a Tier One system successfully; Palo Alto
stood out in that way. He suggested that the situation could be looked at as
good or bad because other cities were not running a Tier One, or a person
could say that Palo Alto was complex and they needed a Tier One.
Council Member Kniss felt the important part was who was operating the
system and whether they had enough background and training.
Chair Schmid questioned what the timeline was.
Mr. Reichental relayed Staff would first go with the recommendation, and
then pursue the RFP, which would be at the end of FY 2016.
Chair Schmid remarked that the first thing to be done was to get a planning
vendor.
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Mr. Ramberg agreed.
Chair Schmid asked about budget authorization.
Mr. Ramberg explained that because of the size of the professional services
contract, it would come before the Council because it was above $85,000;
Staff was pushing beyond their June timeline and thought they would be
working beyond that.
Chair Schmid reiterated that Staff was working on the contract but the
Council was going to see the full description of the way Staff asked questions
by May or June 2015.
Mr. Ramberg asked for clarification on Chair Schmid’s question.
Chair Schmid explained that the proposal was going to include a description
of what Staff was asking for in more detail but the Council was going to get
that in May or June, 2015.
Mr. Ramberg reiterated that the first consulting engagement was for a firm
to help the City put together the specifications, which was a list of things
that the City needs the new system to do. That helped Staff craft the RFP,
which was going to go out in the later stage for SAP and the other vendors
to respond to.
Council Member Scharff recalled a contract dispute with SAP that was pretty
unpleasant and he remembered SAP being very difficult over the issues. He
recommended that someone review that history and decide if that
information plays into this situation or not. The difficulty of a vendor made a
person decide whether they wanted to choose them a second time.
Chair Schmid asked when that was.
Council Member Scharff did not remember but said it was in the last five
years. It might have been that things turned out okay, but he did not
remember the details; he suggested Staff review the history and recall if
Palo Alto was treated fairly or not.
Mr. Ramberg wanted to clarify the discussion about specifications and when
they were going to be generated and wanted to know if the Committee or
the Council wanted to review the specifications of the ERP system before
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Staff went out. There were occasions when Staff brought RFP specifications
to the Council so they could comment on them.
Chair Schmid understood this was a preliminary step to get someone to help
Staff through the process but when Staff asked for $250,000, the work
contract should describe some of the boundaries of what Staff was working
on.
ADJOURNMENT: Meeting adjourned at 8:33 P.M.
City of Palo Alto (ID # 6616)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 2/29/2016
City of Palo Alto Page 1
Summary Title: PAFD Performance Report FY16 Q2
Title: Approval and Acceptance of Palo Alto Fire Department Quarterly
Performance Report for Second Quarter Fiscal Year 2016
From: City Manager
Lead Department: Fire
Recommendation
Staff recommends City Council review and accept the Palo Alto Fire Department
Quarterly Performance Report for the Second Quarter of Fiscal Year 2016.
Background and Discussion
Last Fiscal Year the Palo Alto Fire Department (PAFD) identified performance reporting
as a key initiative, and began reporting on key performance measures quarterly.
The report provides overall calls for service information, as well as more detailed
information on the key service areas, including Emergency Medical Services, Fire
Suppression, Rescue and Hazardous Materials Response, and Fire Prevention. The
report also provides information on mutual and automatic aid with our regional public
safety partners and internal workforce planning efforts.
Performance measures include the following:
Calls for Service: This data provides information on the final outcome of all
emergency response calls. The data is tracked in the Fire Department’s Record
Management System, and uses standardized call type codes, which are defined
by the National Fire Incident Reporting System (NFIRS). The report includes
overall call volume by primary category, and a detailed listing of call type in the
service type sections.
Response Times: This aspect measures the time it takes from an emergency call
or request for response being created in the dispatch center to the arrival of
resources to the scene of the emergency. This information is tracked in the
Computer Aided Dispatch (CAD) System, and the performance goals, or service
City of Palo Alto Page 2
levels, are set by Council in accordance with county and national standards.
Ambulance Transports: The report provides the number of ambulatory transports
to hospitals or other medical care facilities, and the proportion of Emergency
Medical Calls that included transports. This information is tracked in the Fire
Department’s Emergency Medical Record Management System.
Fire Containment: This measures the proportion of building and structure fires
that are contained to the area or room of origin within Palo Alto and Stanford
Campus.
Mutual and Automatic Aid: This includes the number and proportion of all
incidents in which the PAFD provided aid to neighboring communities, as well as
the aid received from neighboring Fire Departments. This information is tracked
in the CAD System.
Permits: This provides the count of facility, electric vehicle, and solar permits
issued by the Fire Prevention Bureau. This information is currently tracked in the
Development Center’s Records Management System.
Inspections: A count of the total number of Hazardous Materials and State
Mandated inspections is provided. In addition, an estimated number of
inspections to be completed for the year is also provided to assess overall
workload performance to date.
Fire and Life Safety Plans Reviewed: This provides a total count of all plans
reviewed, as well as the proportion of plans that were reviewed within the time
guidelines.
Vacancies and Off-Line Employees: This section provides the total number of
budgeted full-time equivalent line personnel, current vacancies, and employees
that are off line from workers compensation or light duty. This information is
obtained from the Fire Department’s Staffing and Scheduling System (TeleStaff),
as well as the City’s Personnel Management System.
Succession Planning Metrics: This provides the number and proportion of line
personnel that are eligible to retire, or will be eligible within the next five years.
This information is tracked in the City’s Personnel Management System. This
report also provides the total number of hours line personnel have spent in an
acting capacity. Personnel serving in an acting capacity are a key component of
the Department’s overall succession planning efforts. Acting capacity allows
junior officers to learn the responsibilities of higher ranks with guidance from
senior officers. This information is tracked in TeleStaff.
City of Palo Alto Page 3
Training hours: The total number of training hours completed by all line
personnel is provided, as well as the average number of hours per each line
personnel on staff. This information is tracked in the Fire Department’s Record
Management System. Local, State and Federal mandates require fire personnel
to train a minimum of 20 hours per month.
Attachments:
ATTACHMENT A_Coverletter (PDF)
ATTACHMENT B_FY16 Q2 Report FINAL (DOCX)
ATTACHMENT C_Customer Survey (PDF)
ATTACHMENT D_Letters of Appreciation (PDF)
City of Palo Alto
Fire Department
Honorable Councilmembers,
I am pleased to provide the second quarterly Performance Report of Fiscal Year 2016. You will see that
our call volume continues to increase while our workforce decreases. Of considerable note is the forty-
eight percent (48%) increase in fires from this same quarter last year. We had four major fire incidents
during this time, three in Palo Alto and one on Stanford Campus at Maples Pavilion.
Two of these were residential structure fires and we were very fortunate that no occupants or
firefighters were injured. Both homes however were a total loss, even though first responders quickly
arrived in less than the 8 minute goal for response times.
It is important to note that residential structure fires burn much faster today than they did 20 years ago.
Current scientific studies conducted by the National Institute of Standards and Technology (NIST) and
Underwriters Laboratory (UL) demonstrate that modern home furnishings, made of synthetic and
petrochemical products (foam cushions and synthetic carpet) are primarily to blame. These furnishings
create dangerous flashover conditions in three to four minutes, long before fire crews could reasonably
arrive at the fire. A flashover is the near-simultaneous ignition of the room and directly exposed
combustible material in an enclosed area.
l am proud to report that our crews have done an excellent job this quarter. Even though there has been
an increase in fires. For the first time, we have met our performance goal to arrive at Fire Calls within 8
minutes ninety percent (90%) of the time. This performance improvement is a reflection of a key new
initiative known as Operational Readiness. This has driven changes to reduce our response times, with
particular attention to the time between crews being notified of the call from dispatch to the time they
start responding to the call. An ongoing challenge to response times continues to be the impacts of
traffic created by Palo Alto's narrow, congested streets and commute patterns.
In the coming months l will be presenting the Community Risk Assessment and am looking forward to
continuing dialogue on improving performance and services to meet the needs of our community.
Sincerely,
{
Eric Nickel, EFO, CFO, CFC
Fire Chief
Printed with soy-based inks on 100% recycled paper processed without chlorine
P.0 Box 10250
Palo Alto, CA 94303
650.329.2184
650.327.6951 fax
1 | P a g e
Palo Alto Fire Department
Quarterly Performance Report
Fiscal Year 2016, Second Quarter
Calls for Service
The Palo Alto Fire Department (PAFD) responded to a total of 2,234 calls for service in the second
quarter of Fiscal Year 2016. This includes responses within Palo Alto, Stanford, and neighboring cities to
provide Auto and Mutual Aid. Approximately seventy-eight percent (78%) of calls are generated from
Palo Alto, seventeen percent (17%) from Stanford, and the remainder from neighboring cities or
requests for regional fire deployment.
The majority of calls were for Emergency Medical Services, making up sixty-one percent (61%) of the
responses. Table 1 below shows the main categories of the calls to which PAFD responded. Calls are
classified based on the actual event occurred, rather than the initial call request.
Table 1. Calls for Service
Type FY15 Q2 FY16 Q2
Emergency Medical Service 1303 1352
Good Intent 388 400
False Alarm & False Call 299 269
Service Call 101 115
Rescue & Hazardous Material 48 58
Fire 25 37
Explosion, No Fire 0 3
Severe Weather & Natural
Disaster
1 0
Grand Total 2165 2234
Good Intent and False Alarm calls make up the second largest types of responses. Most calls for service
that may be a true threat of fire, gas or other emergency hazard are actually found to be something else
after Firefighters investigate the situation. These calls are coded as Good Intent calls. As well, many fire
alarm activations are from causes other than fire or emergency hazard. These situations are categorized
as False Alarm calls.
Emergency Medical Services
Emergency Medical Service (EMS) is the primary service that the Palo Alto Fire Department provides to
Palo Alto and Stanford. While this shift toward EMS is being seen across the region, the Palo Alto Fire
Department is the only Fire Department in the County that provides ambulance and transport services.
Of the 1,352 Emergency Medical Service calls the PAFD responded to in the second quarter of Fiscal Year
2016, the overwhelming majority were for medical, trauma and cardiac calls that did not involve a
vehicle accident.
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Table 2. EMS Performance Measures
Calls for Service FY15 Q2 FY16 Q2
NFIRS Code Description
321 EMS call, excluding vehicle accident with injury 1198 1255
322 Vehicle accident with injuries 71 72
324 Motor vehicle accident with no injuries 17 14
323 Motor vehicle/pedestrian accident 15 11
381 Rescue or EMS standby 2 0
Total 1303 1352
Transports
Number of Transports 932 977
Percent of EMS Calls resulting in transport 71.5% 72.3%
Response Times
Percent of first responder arriving on scene to EMS calls within 8 minutes 92.0% 91.5%
Percent of paramedic responder arriving on scene to EMS calls within 12 minutes 93.9% 98.3%
Median response time for first responder arriving on scene to EMS calls 05:19 04:47
Most EMS calls (72%) resulted in an ambulance transport to a local hospital or care facility. This is the
primary source of revenue generated from emergency medical services, and revenue received in this
quarter is on track with budget projections.
Response Time Goal Met: At least 90% of first responder arriving on scene to EMS calls within 8
minutes.
This quarter the PAFD first responder arrived on scene to EMS calls within 8 minutes ninety-two percent
(92%) of the time.
Response Time Goal Not Met: At least 99% of paramedic responder arriving on scene to EMS
calls within 12 minutes.
This quarter the PAFD paramedic responder arrived on scene to EMS calls within 12 minutes ninety-
eight percent (98%) of the time.
Fire Suppression
Very few of the potential fire calls coming into dispatch turn out to be a real fire once PAFD investigates
the scene and cause of the concerning elements. This quarter PAFD responded to 37 calls where fire was
present, with 7 occurring in neighboring cities.
This quarter saw an increase in the number and severity of fire incidents. This includes two residential
house fires within Palo Alto, which fortunately did not result in any loss of life or injury of occupants or
fire fighters.
The first occurred in early November 4, in the 500 Block of Maybell Ave. Engine 65 responded to the call
from the station just around the corner and noted there was a smoke odor present and fire visible in the
sky enroute to the location. E65 arrived on scene of a single story residence with heavy fire extending
from the home which was extending into the trees and impinging on the neighbor’s home. A quick fire
attack contained the fire to the original property, and with the assistance of PAPD the residents were
located and confirmed to be out of the home and safe in a neighbor’s house. One family member was
3 | P a g e
shown house and explained the type of damage that occurred. They requested some personal
belongings be removed and our fire crews were able to find and deliver the valuables.
The second fire occurred on December 2, on Bryant Street. A large column of smoke visible from several
miles away, and dispatch reported a fully involved structure. The Palo Alto Battalion Chief was the first
to arrive followed shortly by Mountain View Engine 53 on the automatic aid response. A total of 20
firefighters from Palo Alto and Mountain View responded to the fire. The house was fully involved on
arrival and crews contained the fire to the building of origin, however the adjacent property suffered
heat damage.
The other two fires were relatively small and were able to be contained to the area of origin. This
included a fire on the roof of Maples Pavilion on Stanford Campus caused by aging exterior lights, and an
electrical fire in a restroom of the Veterans Affairs building.
Table 3. Fire Performance Measures
Calls for Service FY15 Q2 FY16 Q2
NFIRS Code Description
113 Cooking fire, confined to container 5 8
100 Fire, other 5 8
111 Building fire 6 6
131 Passenger vehicle fire 3 4
150 Outside rubbish fire, other 0 3
114 Chimney or flue fire, confined to chimney or flue 0 1
116 Fuel burner/boiler malfunction, fire confined 0 1
118 Trash or rubbish fire, contained 3 1
130 Mobile property fire, other 1 1
132 Road freight or transport vehicle fire 0 1
140 Natural vegetation fire, other 0 1
143 Grass fire 0 1
162 Outside equipment fire 0 1
154 Dumpster or other outside trash receptacle fire 1 0
151 Outside rubbish fire, trash or waste fire 1 0
Total 25 37
Response Times
Percent of first responder arriving on scene to Fire calls within 8 minutes 79.7% 95.0%
Median response time for first responder arriving on scene to Fire calls 06:01 05:42
Fire Containment
Percent of building and structure fires contained to the room or area of origin 100% 50%
Response Time Goal Met: At least 90% of first responder arriving on scene to Fire calls within 8
minutes.
This quarter the PAFD first responder arrived on scene to Fire calls within 8 minutes ninety-five percent
(95%) of the time. This is a significant improvement with historical performance on this measure, which
typically is eighty-one percent (81%) to eighty-two percent (82%). The Fire Department has begun an
operational readiness initiative that includes some adjustments to reduce response times.
4 | P a g e
Fire Containment Goal Not Met: At least 90% of building and structure fires contained to the
room or area of origin.
This quarter there were three building fires within Palo Alto and one on Stanford. The two fires that
were not contained to room or area of origin were both residential home fires in Palo Alto. In both
cases, the fire had spread throughout the entire structure prior to arriving on scene despite a response
time under 8 minutes. PAFD additionally responded to two building fires as mutual aid to Mountain
View, however, the final confined to area information is unavailable.
Rescue and Hazardous Materials
The Fire Department responded to a total of 58 rescue and hazardous material calls. The most common
rescue call is for the removal of victims from a stalled elevator, which accounts for twenty-one percent
(21%) of these call types. Gas leak calls account for the majority of hazardous material calls, making up
thirty-one percent (31%).
Table 4. Rescue and Hazardous Materials Measures
Calls for Service FY15 Q2 FY16 Q2
NFIRS Code Description
353 Removal of victim(s) from stalled elevator 9 12
412 Gas leak (natural gas or LPG) 3 8
400 Hazardous condition, other 2 7
331 Lock-in (if lock out , use 511 ) 0 5
440 Electrical wiring/equipment problem, other 2 3
412U Gas leak (natural gas or LPG) - PA Utilities Related 7 3
413 Oil or other combustible liquid spill 1 3
442 Overheated motor 0 3
411 Gasoline or other flammable liquid spill 2 3
444U Power line down - PA Utilities Related 2 2
445 Arcing, shorted electrical equipment 2 2
444 Power line down 0 2
451 Biological hazard, confirmed or suspected 0 2
471 Explosive, bomb removal 0 1
480 Attempted burning, illegal action, other 0 1
422 Chemical spill or leak 0 1
421 Chemical hazard (no spill or leak) 0 0
460 Accident, potential accident, other 2 0
443 Light ballast breakdown 1 0
463 Vehicle accident, general cleanup 2 0
351 Extrication of victim(s) from building/structure 1 0
Total 48 58
Response Times
Median response time for first responder arriving on scene to
Rescue & Hazardous Materials calls
05:48 06:04
5 | P a g e
Mutual and Automatic Aid
The Fire Department has automatic aid agreements with five regional Fire Departments, including
Mountain View, Menlo Park, Woodside, Los Altos, and Santa Clara County Fire. The PAFD primarily
provides aid to Mountain View, and the data below shows an increase in the number of calls from the
prior fiscal year. This is due to the virtual consolidation effort with the cities of Mountain View and Los
Altos, which was completed at in the first quarter of FY15.
The Deputy Chief of Operations communicates regularly with the Mountain View Fire Department to
review the agreement and ensure Palo Alto’s resources are not overly relied upon. In this quarter, the
PAFD provided mutual or automatic aid to three other jurisdictions on a total of 116 incidents. Five
agencies provided mutual or automatic aid for calls within Palo Alto or Stanford on a total of 102
incidents.
Table 5. Mutual and Automatic Aid Performance Measures
Mutual and Auto Aid Provided FY15 Q2 FY16 Q2
Agency
Mountain View Fire 77 92
Santa Clara County Fire 21 24
Menlo Park Fire 1 0
All Mutual and Auto Aid Provided 99 116
Mutual and Auto Aid Received
Agency
Mountain View Fire 65 73
Menlo Park Fire 4 20
Woodside Fire 2 5
Santa Clara County Fire 11 3
Moffet Fire 0 1
All Mutual and Auto Aid Received 82 102
6 | P a g e
Fire Prevention
The Fire Prevention Bureau ensures compliance with the Fire Code for the safety of occupants and
protection of property. Fire Inspectors perform fire sprinkler and fire alarm plan checks, permitting, and
field inspections with the goal of ensuring all construction complies with local and national codes.
With the selection of the new Fire Marshall and the installation of the improved data tracking system,
some adjustments have been made to the performance measures. In addition, a thorough records
review was conducted to ensure that the total number of mandated inspections was accurate.
In comparison to the first quarter of this year, there was a slight rise in total plans reviewed coinciding
with rise in total inspections. We saw a drop in Electric Vehicle and Solar Permits, along with a drop in
total permits issued. This is expected as work usually slows during the winter holidays.
Table 6. Prevention Bureau Performance Measures
Permits FY15 Q2 FY16 Q2
Fire Permits Issued - 151
Electric Vehicle Permits Issued 9 13
Solar Permits Issued 23 32
Inspections
Hazardous Material Inspections Completed 47 98
Number of Hazardous Material Inspections for the year 270 207
Percent of Hazardous Material Facilities Inspections Complete to date 48.1% 90.3%
State Mandated Inspections Completed 21 114
Number of State Mandated Inspections for the year 96 340
Percent of State Mandated Facilities Inspections Complete to date 55.2% 58.5%
Fire and Life Safety Plan Review
Plans Reviewed 186 399
Percent of Reviews Completed On-Time 97.0% 100%
7 | P a g e
Workforce Planning
The Department operates daily emergency response operations with a total of 96.00 FTE line personnel.
This includes three battalions of crews that staff six stations in the City and Stanford 24 hours each day.
Over the last quarter, the department has operated with 9.0 positions vacant and 4.0 employees off-line
creating a total of 13.00 FTE positions that require backfilling.
This quarter the Department began the process of hiring entry level candidates from the most recent
eligibility list. We are expecting to bring two new firefighters on board next quarter. This will assist in
providing some relief from the amount of force-ins for our current personnel as well as reduce the
amount of overtime generated for backfilling.
The Training Battalion Chief continues to plan and coordinate a number of important trainings to ensure
our fire-fighting crews are familiar with new hazards, tools, and techniques. This quarter trainings
focused on infrequently used skills for Emergency Medical Services, smart home technologies, water
rescue, driver training, health and wellness, hazardous material awareness, respiratory protection, pain
management, and industrial ergonomics.
This quarter the PAFD launched a new mentoring program as part of the succession planning strategy.
This program pairs seasoned officers with junior firefighters, and identifies subject matter experts
internally for all personnel to connect with to improve their skills in certain areas. The kick-off included a
two-day training from a mentor and leadership expert.
Table 7. Vacancies and Off-Line Employees FY16 Q2
Classification Budgeted
FTE
Vacancies Off-Line Employees
(Workers
Comp/Light Duty)
Personnel
On Line
Percent of
Personnel
On Line
Battalion Chief 4.00 0.00 0.00 4.00 100%
Fire Captain 22.00 3.00 1.00 18.00 82%
Fire Apparatus Operator
& Fire Fighters
70.00 6.00 3.00 61.00 87%
TOTAL 96.00 9.00 4.00 83.00 87%
Table 8. Succession Planning
FY15 Q2 FY16 Q2
Number of Line Personnel Currently Eligible to Retire 10 18
Number of Line Personnel Eligible to Retire in Five Years 23 23
Percent of all Line Personnel Eligible to Retire within Five
Years
39.3% 43.2%
Number of Acting Battalion Chief Hours 1,136 372
Number of Acting Captain Hours 4,839 2,696
Number of Acting Apparatus Operator Hours 3,511 7,054
Training
Hours of Training Completed 5,965 6,091
Average Hours per Line Personnel 71.02 73.39
Number of Your Patients in this ReportYour Score
October 1, 2015 to December 31, 2015
EMS System Report
Palo Alto, CA
1515 Center Street
City of Palo Alto
1 (877) 583-3100
www.EMSSurveyTeam.com
Client 9701
service@EMSSurveyTeam.com
Lansing, Mi 48096
11495.50
Number of Patients in this Report
15,602
Number of Transport Services in All EMS DB
99
Page 1 of 28
City of Palo Alto
October 1, 2015 to December 31, 2015
Executive Summary
This report contains data from 114 City of Palo Alto patients who returned a questionnaire between
10/01/2015 and 12/31/2015.
The overall mean score for the standard questions was 95.50; this is a difference of 3.32 points from the
overall EMS database score of 92.18.
The current score of 95.50 is a change of 1.29 points from last period's score of 94.21. This was the 6th
highest overall score for all companies in the database.
You are ranked 1st for comparably sized companies in the system.
85.84% of responses to standard questions had a rating of Very Good, the highest rating. 99.36% of all
responses were positive.
Page 2 of 28
City of Palo Alto
October 1, 2015 to December 31, 2015
Demographics — This section provides demographic information about the patients who responded
to the survey for the current and the previous periods. The information comes from the data you
submitted. Compare this demographic data to your eligible population. Generally, the demographic
profile will approximate your service population.
Total
This PeriodLast Period
OtherFemaleMale OtherMaleTotalFemale
Under 18 2 3 05 022 0
18 to 30 0 2 02 231 0
31 to 44 2 4 06 582 1
45 to 54 2 1 03 6104 0
55 to 64 3 10 013 4117 0
65 and older 36 50 288 488031 1
Total 45 70 2117 114 47 65 2
Gender
Page 3 of 28
City of Palo Alto
October 01, 2015 to December 31, 2015
Dispatch Analysis
This analysis details the section results that concern dispatcher operations. The analysis contains the mean
scores for each survey question. The first column shows the company score and the total database score,
the second column is your variance from the database score.
Helpfulness of the person you called for ambulance service
94.54
92.28
2.26
Your Score
Total DB
Variance1000
Concern shown by the person you called for ambulance service
92.86
91.97
0.89
Your Score
Total DB
VarianceVariance1000
Extent to which you were told what to do until the ambulance arrived
90.56
90.27
0.29
Your Score
Total DB
VarianceVariance1000
Overall Section Score
Total DB
0.29
100
91.51
Variance
0
Your Score
92.65
Page 4 of 28
City of Palo Alto
October 01, 2015 to December 31, 2015
Ambulance Analysis
This analysis details the section results that concern ambulance operations. The analysis contains the mean
scores for each survey question. The first column shows the company score and the total database score,
the second column is your variance from the database score.
Extent to which the ambulance arrived in a timely manner
95.19
91.59
3.60
Your Score
Total DB
Variance1000
Cleanliness of the ambulance
96.34
93.88
2.46
Your Score
Total DB
Variance1000
Comfort of the ride
92.38
87.29
5.09
Your Score
Total DB
Variance1000
Skill of the person driving the ambulance
96.46
93.21
3.25
Your Score
Total DB
Variance1000
Overall Section Score
Total DB
3.25
100
91.49
Variance
0
Your Score
95.09
Page 5 of 28
City of Palo Alto
October 01, 2015 to December 31, 2015
Medic Analysis
This analysis details the section results that concern medic operations. The analysis contains the mean
scores for each survey question. The first column shows the company score and the total database score,
the second column is your variance from the database score.
Care shown by the medics who arrived with the ambulance
97.33
94.26
3.07
Your Score
Total DB
Variance1000
Degree to which the medics took your problem seriously
97.12
94.16
2.96
Your Score
Total DB
Variance1000
Degree to which the medics listened to you and/or your family
96.84
93.71
3.13
Your Score
Total DB
Variance1000
Skill of the medics
97.06
94.16
2.90
Your Score
Total DB
Variance1000
Extent to which the medics kept you informed about your treatment
95.48
92.61
2.87
Your Score
Total DB
Variance1000
Extent to which medics included you in the treatment decisions (if applicable)
94.82
92.38
2.44
Your Score
Total DB
Variance1000
Degree to which the medics relieved your pain or discomfort
95.11
90.60
4.51
Your Score
Total DB
Variance1000
Page 6 of 28
City of Palo Alto
October 01, 2015 to December 31, 2015
Medic Analysis
This analysis details the section results that concern medic operations. The analysis contains the mean
scores for each survey question. The first column shows the company score and the total database score,
the second column is your variance from the database score.
Medics' concern for your privacy
97.11
93.25
3.86
Your Score
Total DB
Variance1000
Extent to which medics cared for you as a person
98.25
94.11
4.14
Your Score
Total DB
Variance1000
Overall Section Score
Total DB
4.14
100
93.25
Variance
0
Your Score
96.57
Page 7 of 28
City of Palo Alto
October 01, 2015 to December 31, 2015
Billing Staff Assessment Analysis
This analysis details the section results that concern office operations. The analysis contains the mean
scores for each survey question. The first column shows the company score and the total database score,
the second column is your variance from the database score.
Professionalism of the staff in our ambulance service billing office
89.22
88.62
0.60
Your Score
Total DB
VarianceVariance1000
Willingness of the staff in our billing office to address your needs
87.89
88.78
Your Score
Total DB
Variance
-0.89
Variance1000
Overall Section Score
Total DB
Variance
100
-0.14
88.70
0
Your Score
88.56
Page 8 of 28
City of Palo Alto
October 01, 2015 to December 31, 2015
Overall Assessment Analysis
This analysis details the section results that concern assessment of operations. The analysis contains the
mean scores for each survey question. The first column shows the company score and the total database
score, the second column is your variance from the database score.
How well did our staff work together to care for you
97.47
93.18
4.29
Your Score
Total DB
Variance1000
Extent to which our staff eased your entry into the medical facility
97.75
93.32
4.43
Your Score
Total DB
Variance1000
Appropriateness of Emergency Medical Transportation treatment
97.00
93.13
3.87
Your Score
Total DB
Variance1000
Extent to which the services received were worth the fees charged
89.89
87.76
2.13
Your Score
Total DB
Variance1000
Overall rating of the care provided by our Emergency Medical Transportation service
97.75
93.33
4.42
Your Score
Total DB
Variance1000
Likelihood of recommending this ambulance service to others
96.24
92.73
3.51
Your Score
Total DB
Variance1000
Overall Section Score
Total DB
3.51
100
92.24
Variance
0
Your Score
96.02
Page 9 of 28
October 1, 2015 to December 31, 2015
City of Palo Alto
Question Analysis
This section lists a synopsis of the information about your individual questions and overall scores for this monthly reporting
period. The first column shows the company score from the previous period, the second column shows the change, the third
column shows your score for this period and the fourth column shows the total Database score.
Dispatch Analysis Last Period Change This Period Total DB
Helpfulness of the person you called for ambulance service 94.54-0.68 92.2895.22
Concern shown by the person you called for ambulance service 92.86-2.25 91.9795.11
Extent to which you were told what to do until the ambulance arrived 90.56-2.30 90.2792.86
Ambulance Analysis Last Period Change This Period Total DB
Extent to which the ambulance arrived in a timely manner 95.19-0.83 91.5996.02
Cleanliness of the ambulance 96.340.11 93.8896.23
Comfort of the ride 92.380.16 87.2992.22
Skill of the person driving the ambulance 96.461.13 93.2195.33
Medic Analysis Last Period Change This Period Total DB
Care shown by the medics who arrived with the ambulance 97.33-0.02 94.2697.35
Degree to which the medics took your problem seriously 97.120.72 94.1696.40
Degree to which the medics listened to you and/or your family 96.841.43 93.7195.41
Skill of the medics 97.061.19 94.1695.87
Extent to which the medics kept you informed about your treatment 95.482.86 92.6192.62
Extent to which medics included you in the treatment decisions (if applicable)94.823.87 92.3890.95
Degree to which the medics relieved your pain or discomfort 95.112.45 90.6092.66
Medics' concern for your privacy 97.113.66 93.2593.45
Extent to which medics cared for you as a person 98.252.65 94.1195.60
Billing Staff Assessment Analysis Last Period Change This Period Total DB
Professionalism of the staff in our ambulance service billing office 89.220.76 88.6288.46
Willingness of the staff in our billing office to address your needs 87.89-2.83 88.7890.72
Page 10 of 28
October 1, 2015 to December 31, 2015
City of Palo Alto
Question Analysis (Continued)
Overall Assessment Analysis Last Period Change This Period Total DB
How well did our staff work together to care for you 97.472.12 93.1895.35
Extent to which our staff eased your entry into the medical facility 97.752.03 93.3295.72
Appropriateness of Emergency Medical Transportation treatment 97.001.91 93.1395.09
Extent to which the services received were worth the fees charged 89.894.75 87.7685.14
Overall rating of the care provided by our Emergency Medical Transportation 97.752.52 93.3395.23
Likelihood of recommending this ambulance service to others 96.241.71 92.7394.53
Page 11 of 28
City of Palo Alto
October 1, 2015 to December 31, 2015
Dec
2014
Jan
2015
Feb
2015
Mar
2015
Apr
2015
May
2015
Jun
2015
Jul
2015
Aug
2015
Sep
2015
Oct
2015
Nov
2015
Dec
2015
Helpfulness of the person you called for ambulance service 96.15 97.22 98.21 96.09 95.83 92.67 85.71 95.00 93.93 96.51 92.36 100.00 95.83
Concern shown by the person you called for ambulance service 95.49 96.53 96.43 95.16 95.83 91.37 85.71 95.00 94.87 95.35 89.29 91.67 95.65
Extent to which you were told what to do until the ambulance 93.22 95.00 91.67 92.74 95.83 91.67 85.71 91.67 93.42 92.68 89.29 100.00 91.13
Extent to which the ambulance arrived in a timely manner 96.47 93.62 96.88 97.37 96.43 95.56 91.67 100.00 96.88 94.12 95.35 100.00 94.77
Cleanliness of the ambulance 97.22 95.35 96.15 95.83 100.00 96.83 94.44 96.43 96.67 95.74 95.00 80.20 98.73
Comfort of the ride 92.96 90.00 93.75 90.28 95.83 92.74 83.44 94.64 92.44 91.33 89.23 80.20 95.76
Skill of the person driving the ambulance 97.89 94.44 95.45 95.71 95.83 94.35 94.44 100.00 95.35 93.88 93.89 100.00 98.25
Care shown by the medics who arrived with the ambulance 97.30 95.83 98.33 99.31 100.00 95.90 91.67 95.31 97.87 97.50 95.63 100.00 98.28
Degree to which the medics took your problem seriously 96.58 94.32 100.00 99.26 100.00 96.77 91.67 95.00 96.20 97.00 95.12 100.00 98.28
Degree to which the medics listened to you and/or your family 96.18 93.60 100.00 98.53 100.00 95.90 94.44 93.33 96.74 94.79 95.12 100.00 97.81
Skill of the medics 97.50 94.77 98.08 98.48 100.00 96.37 91.67 93.33 95.65 96.88 95.00 95.00 98.68
Extent to which the medics kept you informed about your 96.74 95.95 98.21 97.50 95.00 95.56 91.67 90.00 95.56 90.56 92.11 95.00 98.04
Extent to which medics included you in the treatment decisions 94.25 95.16 98.08 97.83 100.00 95.31 90.63 86.36 95.39 88.12 90.91 100.00 97.22
Degree to which the medics relieved your pain or discomfort 96.37 88.57 93.18 97.00 100.00 94.83 83.33 88.64 95.00 91.46 92.86 100.00 96.43
Medics' concern for your privacy 95.77 92.36 96.15 99.14 95.00 93.42 89.29 92.31 95.83 91.67 95.39 95.00 98.56
Extent to which medics cared for you as a person 97.10 93.45 98.33 100.00 100.00 95.42 96.88 95.00 97.22 94.27 96.88 100.00 99.11
Professionalism of the staff in our ambulance service billing 92.86 86.11 95.00 86.67 91.67 87.88 91.67 90.91 90.79 85.23 89.58 50.50 92.39
Willingness of the staff in our billing office to address your 92.74 89.06 95.00 86.67 83.33 90.63 83.33 92.86 90.28 90.33 85.42 50.50 92.86
How well did our staff work together to care for you 98.24 94.51 97.92 96.77 100.00 94.74 90.63 96.88 95.11 95.10 95.63 100.00 98.61
Extent to which our staff eased your entry into the medical 97.79 95.35 93.75 97.58 85.00 93.86 90.63 96.88 94.44 96.50 96.34 95.00 99.07
Appropriateness of Emergency Medical Transportation treatment 96.55 95.00 92.31 99.17 100.00 94.92 90.63 97.06 96.20 93.37 93.90 100.00 99.07
Extent to which the services received were worth the fees 87.32 86.39 90.63 92.00 93.75 91.50 84.38 83.33 87.18 83.79 89.39 81.25 90.98
Overall rating of the care provided by our Emergency Medical 97.79 94.77 100.00 97.66 95.00 95.61 90.63 95.59 96.11 94.27 95.12 100.00 99.54
Likelihood of recommending this ambulance service to others 97.19 95.27 97.50 97.66 100.00 94.92 90.63 96.88 96.02 92.24 94.87 93.75 97.50
Your Master Score 96.00 93.77 96.59 96.46 96.64 94.38 90.03 94.19 95.10 93.39 93.53 93.73 97.08
Your Total Responses 84 49 17 42 7 66 9 17 48 52 45 5 64
Monthly Breakdown
Below are the monthly responses that have been received for your service. It details the individual score for
each question as well as the overall company score for that month.
Page 12 of 28
City of Palo Alto
October 1, 2015 to December 31, 2015
Monthly tracking of Overall Survey Score
Page 13 of 28
City of Palo Alto
October 1, 2015 to December 31, 2015
Greatest Increase and Decrease in Scores by Question
Increases
Last
Period
This
Period Change
Total DB
Score
Extent to which the services received were worth the fees charged 85.14 4.75 87.7689.89
Extent to which medics included you in the treatment decisions
(if applicable)
90.95 3.87 92.3894.82
Medics' concern for your privacy 93.45 3.66 93.2597.11
Extent to which the medics kept you informed about your
treatment
92.62 2.86 92.6195.48
Extent to which medics cared for you as a person 95.60 2.65 94.1198.25
Overall rating of the care provided by our Emergency Medical
Transportation service
95.23 2.52 93.3397.75
Degree to which the medics relieved your pain or discomfort 92.66 2.45 90.6095.11
How well did our staff work together to care for you 95.35 2.12 93.1897.47
Extent to which our staff eased your entry into the medical facility 95.72 2.03 93.3297.75
Appropriateness of Emergency Medical Transportation treatment 95.09 1.91 93.1397.00
Decreases
Last
Period
This
Period Change
Total DB
Score
Willingness of the staff in our billing office to address your needs 90.72 -2.84 88.7887.89
Extent to which you were told what to do until the ambulance
arrived
92.86 -2.30 90.2790.56
Concern shown by the person you called for ambulance service 95.11 -2.25 91.9792.86
Extent to which the ambulance arrived in a timely manner 96.02 -0.83 91.5995.19
Helpfulness of the person you called for ambulance service 95.22 -0.68 92.2894.54
Care shown by the medics who arrived with the ambulance 97.35 -0.02 94.2697.33
Page 14 of 28
City of Palo Alto
October 1, 2015 to December 31, 2015
Greatest Scores Above Benchmarks by Question
Highest Above Benchmark
This
Period Variance
Total DB
Score
Extent to which medics cared for you as a person 94.114.1498.25
Overall rating of the care provided by our Emergency Medical Transportation service 93.334.4297.75
Extent to which our staff eased your entry into the medical facility 93.324.4397.75
How well did our staff work together to care for you 93.184.2997.47
Care shown by the medics who arrived with the ambulance 94.263.0797.33
Degree to which the medics took your problem seriously 94.162.9697.12
Medics' concern for your privacy 93.253.8697.11
Skill of the medics 94.162.997.06
Appropriateness of Emergency Medical Transportation treatment 93.133.8797
Degree to which the medics listened to you and/or your family 93.713.1496.84
Page 15 of 28
City of Palo Alto
October 1, 2015 to December 31, 2015
Highest and Lowest Scores
Highest Scores
Last
Period
This
Period Change
Total DB
Score
Extent to which medics cared for you as a person 98.2595.60 2.65 94.11
Extent to which our staff eased your entry into the medical facility 97.7595.72 2.03 93.32
Overall rating of the care provided by our Emergency Medical
Transportation service
97.7595.23 2.52 93.33
How well did our staff work together to care for you 97.4795.35 2.12 93.18
Care shown by the medics who arrived with the ambulance 97.3397.35 -0.02 94.26
Lowest Scores
Last
Period
This
Period Change
Total DB
Score
Willingness of the staff in our billing office to address your needs 87.8990.72 -2.83 88.78
Professionalism of the staff in our ambulance service billing office 89.2288.46 0.76 88.62
Extent to which the services received were worth the fees charged 89.8985.14 4.75 87.76
Extent to which you were told what to do until the ambulance
arrived
90.5692.86 -2.30 90.27
Comfort of the ride 92.3892.22 0.16 87.29
Page 16 of 28
City of Palo Alto
October 1, 2015 to December 31, 2015
Key Drivers — This section shows the relative importance of each question to the respondents' overall
satisfaction. The greater the coefficient number, the more important the issue is to your patients' overall
satisfaction. The questions are arranged based on their weighted importance value.
Question Your Score
Correlation
Coeffecient
Skill of the person driving the ambulance .84114767596.46
Medics' concern for your privacy .76893996697.11
Professionalism of the staff in our ambulance service billing office .7598536989.22
Degree to which the medics relieved your pain or discomfort .74996534395.11
Care shown by the medics who arrived with the ambulance .74479618897.33
Extent to which medics included you in the treatment decisions (if applicable).74352371394.82
Degree to which the medics took your problem seriously .73859899397.12
Overall rating of the care provided by our Emergency Medical Transportation service .73503605797.75
Likelihood of recommending this ambulance service to others .72320476196.24
Helpfulness of the person you called for ambulance service .71784203194.54
Degree to which the medics listened to you and/or your family .71539931196.84
Appropriateness of Emergency Medical Transportation treatment .71366538897.00
How well did our staff work together to care for you .70891385897.47
Extent to which our staff eased your entry into the medical facility .70089302197.75
Cleanliness of the ambulance .69445168896.34
Concern shown by the person you called for ambulance service .69213747892.86
Extent to which the medics kept you informed about your treatment .6809714395.48
Extent to which medics cared for you as a person .67271961598.25
Extent to which you were told what to do until the ambulance arrived .65876729890.56
Willingness of the staff in our billing office to address your needs .64932668487.89
Comfort of the ride .6279057392.38
Skill of the medics .62431570997.06
Extent to which the services received were worth the fees charged .55946233889.89
Extent to which the ambulance arrived in a timely manner .55383488495.19
Page 17 of 28
City of Palo Alto
October 1, 2015 to December 31, 2015
Company Comparisons — The following chart gives a comparison of the mean score for each question as scored
by comparable companies. Your company is highlighted. There is also a green-shaded highlight of the highest
score for each question. This will show how you compare to similar companies.
Your
Company A B C D E F
Comparison Companies
Helpfulness of the person you called for ambulance service 89.57 88.10 95.38 90.42 91.1991.3594.54
Concern shown by the person you called for ambulance service 88.75 89.75 95.06 89.35 90.0191.8892.86
Extent to which you were told what to do until the ambulance 87.96 89.11 95.63 87.01 87.6388.9090.56
Extent to which the ambulance arrived in a timely manner 89.21 85.29 96.80 90.51 88.7890.5695.19
Cleanliness of the ambulance 91.99 90.17 97.60 93.30 92.0194.5496.34
Comfort of the ride 86.08 77.68 92.96 88.08 82.1987.9492.38
Skill of the person driving the ambulance 90.06 89.17 96.80 93.45 91.1995.5996.46
Care shown by the medics who arrived with the ambulance 93.52 90.50 98.75 93.25 93.2094.4497.33
Degree to which the medics took your problem seriously 91.29 90.82 97.60 93.55 92.7594.4497.12
Degree to which the medics listened to you and/or your family 90.68 88.71 97.89 92.38 91.8895.2596.84
Skill of the medics 90.42 88.37 98.80 93.58 94.1195.9497.06
Extent to which the medics kept you informed about your 88.65 85.46 98.17 90.91 90.6992.0095.48
Extent to which medics included you in the treatment decisions (if 88.59 87.95 97.76 91.48 89.7392.3494.82
Degree to which the medics relieved your pain or discomfort 87.67 83.97 94.22 89.31 90.9191.0795.11
Medics' concern for your privacy 89.54 87.54 96.79 92.95 90.7993.6797.11
Extent to which medics cared for you as a person 90.94 88.74 98.46 92.85 92.8695.0098.25
Professionalism of the staff in our ambulance service billing office 87.75 82.81 93.10 88.93 88.8585.8589.22
Willingness of the staff in our billing office to address your needs 88.23 81.33 92.86 88.64 88.2884.5087.89
How well did our staff work together to care for you 90.14 86.85 97.57 90.94 91.7494.7597.47
Extent to which our staff eased your entry into the medical facility 90.75 85.96 96.92 90.84 91.7492.8397.75
Appropriateness of Emergency Medical Transportation treatment 90.28 85.91 97.76 90.40 90.7193.6097.00
Extent to which the services received were worth the fees charged 84.69 80.58 94.79 86.47 87.0087.3489.89
Overall rating of the care provided by our Emergency Medical 89.57 86.04 98.21 90.34 92.2194.0697.75
Likelihood of recommending this ambulance service to others 89.09 85.05 98.13 91.04 90.4792.9696.24
Overall score 95.50 92.38 89.50 86.68 96.83 91.04 90.59
National Rank 6 31 62 73 2 50 54
Comparable Size (Medium) Company Rank 1 18 15
Page 18 of 28
City of Palo Alto
October 1, 2015 to December 31, 2015
Yo
u
r
Co
m
p
a
n
y
Total Score
Benchmark Comparison
95.50
To
t
a
l
D
B
Si
m
i
l
a
r
S
i
z
e
d
92.11 91.74
Helpfulness of the person you called for ambulance service 94.54 92.28 92.08
Concern shown by the person you called for ambulance service 92.86 91.97 91.61
Extent to which you were told what to do until the ambulance 90.56 90.27 90.06
Extent to which the ambulance arrived in a timely manner 95.19 91.59 90.98
Cleanliness of the ambulance 96.34 93.88 93.50
Comfort of the ride 92.38 87.29 88.05
Skill of the person driving the ambulance 96.46 93.21 93.01
Care shown by the medics who arrived with the ambulance 97.33 94.26 93.64
Degree to which the medics took your problem seriously 97.12 94.16 93.63
Degree to which the medics listened to you and/or your family 96.84 93.71 93.29
Skill of the medics 97.06 94.16 93.67
Extent to which the medics kept you informed about your 95.48 92.61 92.22
Extent to which medics included you in the treatment decisions 94.82 92.38 91.52
Degree to which the medics relieved your pain or discomfort 95.11 90.60 90.36
Medics' concern for your privacy 97.11 93.25 92.93
Extent to which medics cared for you as a person 98.25 94.11 93.45
Professionalism of the staff in our ambulance service billing 89.22 88.62 88.76
Willingness of the staff in our billing office to address your 87.89 88.78 89.02
How well did our staff work together to care for you 97.47 93.18 92.86
Extent to which our staff eased your entry into the medical 97.75 93.32 92.77
Appropriateness of Emergency Medical Transportation treatment 97.00 93.13 92.49
Extent to which the services received were worth the fees 89.89 87.76 87.26
Overall rating of the care provided by our Emergency Medical 97.75 93.33 92.85
Likelihood of recommending this ambulance service to others 96.24 92.73 91.75
Number of Surveys for the period 114
Page 19 of 28
City of Palo Alto
October 1, 2015 to December 31, 2015
Benchmark Trending Graphic - Below are the monthly scores for your service. It details the overall score for each month as well as your
subscribed benchmarks for that month.
Page 20 of 28
City of Palo Alto
October 1, 2015 to December 31, 2015
Cumulative Comparisons
This section lists a synopsis of the information about your individual questions and overall scores over the entire
lifetime of the dataset. The first column shows the company score and the second column details the total
database score.
Your Score Total DB
91.6494.72Overall Facility Rating
Dispatch 94.25 91.43
Helpfulness of the person you called for ambulance service 92.2095.38
Concern shown by the person you called for ambulance service 91.9094.62
Extent to which you were told what to do until the ambulance 90.1992.74
Ambulance 95.25 91.24
Extent to which the ambulance arrived in a timely manner 91.5795.66
Cleanliness of the ambulance 93.7596.71
Comfort of the ride 86.9792.50
Skill of the person driving the ambulance 92.6896.12
Medic 95.77 92.64
Care shown by the medics who arrived with the ambulance 93.6797.13
Degree to which the medics took your problem seriously 93.5796.83
Degree to which the medics listened to you and/or your family 93.3296.28
Skill of the medics 93.7596.69
Extent to which the medics kept you informed about your treatment 91.7494.98
Extent to which medics included you in the treatment decisions (if 91.5694.09
Degree to which the medics relieved your pain or discomfort 90.1694.01
Medics' concern for your privacy 92.5495.16
Page 21 of 28
City of Palo Alto
October 1, 2015 to December 31, 2015
Cumulative Comparisons (Continued)
Your Score Total DB
91.6494.72Overall Facility Rating
Medic 95.77 92.64
Extent to which medics cared for you as a person 93.4996.75
Billing Staff Assessment 89.4 88.02
Professionalism of the staff in our ambulance service billing office 87.9988.93
Willingness of the staff in our billing office to address your needs 88.0489.86
Overall Assessment 94.82 91.7
How well did our staff work together to care for you 92.7296.36
Extent to which our staff eased your entry into the medical facility 92.9296.36
Appropriateness of Emergency Medical Transportation treatment 92.6896.13
Extent to which the services received were worth the fees charged 86.5387.84
Overall rating of the care provided by our Emergency Medical 92.8596.52
Likelihood of recommending this ambulance service to others 92.4995.74
Page 22 of 28
The Top Box Analysis displays the number of responses for the entire survey by question and rating. The Top Box itself
shows the percentage of "Very Good" responses, the highest rating, for each question. Next to the company rating is the
entire EMS DB rating for those same questions.
Top Box Comparisons
October 1, 2015 to December 31, 2015
City of Palo Alto
EMS DB %
Very Good
Company
% Very
Good
Very
GoodGoodFairPoor
Very
Poor
Overall Company Rating 8 6 49 249 74.85%85.84%1891
Dispatch 1 1 15 37 72.89%78.66%199
Helpfulness of the person you called for ambulance
service 0 0 3 13 71 81.61%74.81%
Concern shown by the person you called for ambulance
service 0 1 5 11 67 79.76%73.84%
Extent to which you were told what to do until the
ambulance arrived 1 0 7 13 61 74.39%70.03%
Ambulance 4 1 8 50 72.58%85.42%369
Extent to which the ambulance arrived in a timely
manner 1 1 1 12 94 86.24%72.86%
Cleanliness of the ambulance 1 0 1 10 97 88.99%77.86%
Comfort of the ride 2 0 5 15 86 79.63%62.99%
Skill of the person driving the ambulance 0 0 1 13 92 86.79%76.60%
Medic 0 0 13 91 78.44%88.05%766
Care shown by the medics who arrived with the
ambulance 0 0 1 9 93 90.29%80.95%
Degree to which the medics took your problem
seriously 0 0 2 8 94 90.38%81.38%
Degree to which the medics listened to you and/or
your family 0 0 2 9 92 89.32%79.93%
Skill of the medics 0 0 1 10 91 89.22%80.62%
Extent to which the medics kept you informed about
your treatment 0 0 2 13 79 84.04%76.40%
Page 23 of 28
Top Box Comparisons
October 1, 2015 to December 31, 2015
City of Palo Alto
(Continued)
EMS DB %
Very Good
Company
% Very
Good
Very
GoodGoodFairPoor
Very
Poor
Overall Company Rating 8 6 49 249 74.85%85.84%1891
Extent to which medics included you in the treatment
decisions (if applicable)0 0 2 13 67 81.71%76.22%
Degree to which the medics relieved your pain or
discomfort 0 0 1 15 71 81.61%72.13%
Medics' concern for your privacy 0 0 1 9 85 89.47%77.18%
Extent to which medics cared for you as a person 0 0 1 5 94 94.00%81.13%
Billing Staff Assessment 2 1 2 18 63.50%68.06%49
Professionalism of the staff in our ambulance service
billing office 1 0 1 10 25 67.57%63.12%
Willingness of the staff in our billing office to address
your needs 1 1 1 8 24 68.57%63.87%
Overall Assessment 1 3 11 53 75.75%88.19%508
How well did our staff work together to care for you 0 0 1 8 90 90.91%77.14%
Extent to which our staff eased your entry into the
medical facility 0 0 1 7 92 92.00%77.47%
Appropriateness of Emergency Medical Transportation
treatment 0 0 1 10 89 89.00%77.25%
Extent to which the services received were worth the
fees charged 1 3 5 11 64 76.19%66.17%
Overall rating of the care provided by our Emergency
Medical Transportation service 0 0 1 7 92 92.00%78.37%
Likelihood of recommending this ambulance service to
others 0 0 2 10 81 87.10%78.10%
Page 24 of 28
October 1, 2015 to December 31, 2015
City of Palo Alto
Standard Deviation by Question
SD
Variance
Database
Standard
Deviation
Company
Standard
Deviation
Total
DBYour Score
Helpfulness of the person you called for ambulance service 94.54 92.28 12.239 15.481 3.24
Concern shown by the person you called for ambulance service 92.86 91.97 15.703 15.594 -0.11
Extent to which you were told what to do until the ambulance
arrived
90.56 90.27 18.518 17.599 -0.92
Extent to which the ambulance arrived in a timely manner 95.19 91.59 14.497 15.987 1.49
Cleanliness of the ambulance 96.34 93.88 12.522 12.401 -0.12
Comfort of the ride 92.38 87.29 18.055 19.773 1.72
Skill of the person driving the ambulance 96.46 93.21 9.366 13.871 4.51
Care shown by the medics who arrived with the ambulance 97.33 94.26 8.471 13.562 5.09
Degree to which the medics took your problem seriously 97.12 94.16 9.372 14.233 4.86
Degree to which the medics listened to you and/or your family 96.84 93.71 9.654 14.614 4.96
Skill of the medics 97.06 94.16 8.783 13.592 4.81
Extent to which the medics kept you informed about your 95.48 92.61 10.917 15.371 4.45
Extent to which medics included you in the treatment decisions (if
applicable)
94.82 92.38 11.541 15.982 4.44
Degree to which the medics relieved your pain or discomfort 95.11 90.60 10.613 18.081 7.47
Medics' concern for your privacy 97.11 93.25 8.783 14.123 5.34
Extent to which medics cared for you as a person 98.25 94.11 7.293 14.29 7.00
Professionalism of the staff in our ambulance service billing office 89.22 88.62 19.624 17.482 -2.14
Willingness of the staff in our billing office to address your needs 87.89 88.78 22.545 17.616 -4.93
How well did our staff work together to care for you 97.47 93.18 8.33 14.301 5.97
Extent to which our staff eased your entry into the medical facility 97.75 93.32 7.98 14.165 6.18
Appropriateness of Emergency Medical Transportation treatment 97.00 93.13 8.86 14.601 5.74
Extent to which the services received were worth the fees charged 89.89 87.76 21.12 20.70 -0.42
Overall rating of the care provided by our Emergency Medical
Transportation service
97.75 93.33 7.98 14.753 6.77
Likelihood of recommending this ambulance service to others 96.24 92.73 10.335 16.548 6.21
Overall Survey Rating 95.50 92.18 12.21 15.61 3.4
Page 25 of 28
City of Palo Alto
October 1, 2015 to December 31, 2015
Responses vs Score Histogram — This graph shows the number of responses on the Y
axis vs the average score on the X axis.
Page 26 of 28
Facilities in Database
October 1, 2015 to December 31, 2015
City of Palo Alto
Adair EMS Kirksville, MO Air San Juan Island Friday Harbor, WA
Alliance Health null Alliance Mobile Health Troy, MI
AMT Peoria, IL Bay State Springfield, MA
Bay Village Bay Village, OH Beaumont Troy, MI
Birmingham Fire Birmingham, MI Bloomfield Township Bloomfield Hills, MI
Carilion Clinic Roanoke, VA Cetronia Allentown, PA
City of Palo Alto Palo Alto, CA Columbus Connection Cols, OH
Community Ambulance Macon, GA Community Care EMS Ashtabula, OH
Community EMS MI Southfield, MI Community EMS OH Columbus, OH
Cumberland Carlisle, PA Cy-Fair Houston, TX
Cypress Creek Spring, TX DMC Care Detroit, MI
Edward Naperville, IL Emergent Health Partners Ann Arbor, MI
Employee Survey-LifeCare null EMSA Oklahoma City, OK
Escalon Ambulance Service Escalon, CA Ferndale Fire and Rescue Ferndale, MI
Genesis Community Zanesville, OH Gold Cross Menasha, WI
Guilford EMS Greensboro, NC Harris County Emergency Houston, TX
Health East St. Paul, MN Health Link Taylor, MI
HEMSI Hunsville, AL Hennepin County EMS Minneapolis, MN
Hot Springs Hot Springs, AR Hot Springs Village Hot Springs, AR
Howard County Nashville, AR Humboldt Winnemucca, NV
HVA null Iosco County EMS East Tawas, MI
Lassen County Ambulance Susanville, CA LifeCare Ambulance Battle Creek, MI
LifeCare Medical EMS Sterling, CO Life EMS Ambulance Grand Rapids, MI
LifeNet EMS Texarkana, TX Madison Heights Fire Madison Heights, MI
Malvern Malvern, AR MCHD Conroe, TX
Medcare Ambulance Columbus, OH Medic 1 Ambulance Canton, MI
Medic Ambulance Services Vallejo, CA Medic EMS Davenport, IA
Medstar Clinton Twp., MI Medstar Mobile Healthcare Fort Worth, TX
Mercy Flights Medford, OR Mercy Ohio Cincinnati, OH
Metro West Hillsboro, OR Mobile Life Support New Windsor, NY
Mobile Life Support New Windsor, NY Mobile Medical Response Saginaw, MI
MONOC Neptune, NJ Nature Coast Lecanto, FL
North Memorial Robbinsdale, MN North Shore LLJ Syosset, NY
Oceana Hart, MI Patterson District Patterson, CA
Pearland EMS Pearland, TX Portage County Stevens Point, WI
Pro EMS Cambridge, MA ProMed Muskegon, MI
Prompt Ambulance Highland, IN PTS Loveland, OH
Puckett Austell, GA Regional EMS Flint, MI
REMSA Reno, NV REMSA Air Transport Reno, NV
Ridgefield Fire Department Ridgefield, CT Riggs Ambulance Merced, CA
Royal Oak Fire Department Royal Oak, MI San Juan Island Friday Harbor, WA
San Marcos Hays County San Marcos, TX Scott & White Temple, TX
Senior Care Bronx, NY Sioux Land Sioux City, IA
SMCAS Niles, MI Snohomish County Fire Snohomish, WA
Page 27 of 28
St. Charles St. Peters, MO Stillwater Stillwater, OK
Suburban Palmer, PA Swartz Flint, MI
Texarkana Texarkana, TX Tri-Hospital Port Huron, MI
University Medical Center Lubbock, TX Van Buren EMS Paw Paw, MI
West Bloomfield Fire West Bloomfield, MI WestSide Community Newman, CA
York Regional EMS Yoe, PA
Page 28 of 28
October ll)2a15
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City of Palo Alto (ID # 6336)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 2/29/2016
City of Palo Alto Page 1
Summary Title: ERP and Utility Billing Planning and System Selection
Professional Services Contract
Title: Approval of a Professional Services Contract With Plante & Moran,
PLLC in an Amount Not-to-Exceed $359,925 for ERP and Utility Billing
Planning and System Selection
From: City Manager
Lead Department: IT Department
Recommended Motion
Staff recommends that Council consider the following motion:
Approve and Authorize the City Manager or His Designee to Execute, the Attached Professional
Services Contract with Plante & Moran, PLLC in the Amount Not to Exceed $359,925. This
Amount Comprises the Professional Services Fee of $287,940 and a 25% Contingency of
$71,985.
Background
The City selected SAP in 2002 as its preferred vendor for the ERP (enterprise resource planning)
system. In fiscal year 2003, the implementation of the SAP Enterprise Central Component (ECC
4.6C), SAP core modules was completed and the SAP system has been running in the City since
2003, supporting Accounting, Finance, Purchasing, Project Management, Plant Maintenance,
Budgeting, Payroll, Human Resource Management, and Service Order management. In 2009,
the City completed a major upgrade to the SAP ERP system (ECC 6.0), which also replaced the
former utility billing system (Banner) with the implementation of the SAP IS-U module,
Customer Relationship Management (CRM), Utilities Customer Electronic Services (also known
as My Utilities Account customer portal), industry solutions for public sector and Business
Intelligence (BI) systems.
Both business and technology needs have changed dramatically since the current ERP solution
was selected and implemented. Therefore, the City recently conducted a comprehensive
evaluation to help develop a refreshed vision, with the goals of reducing IT application and
infrastructure support costs, improving flexibility, increasing ease of use, facilitating further
automation of business processes, and improving the quality and reliability of information for
decision making.
City of Palo Alto Page 2
Recently, the city conducted an ERP Resource Planning Project (Phase 1) with the assistance of
Plante & Moran, PLLC (Plante Moran) to evaluate the City’s current SAP environment, business
processes and to get a refreshed vision of our ERP needs. The assessment report resulting from
Plante Moran’s work was completed in December 2014. The report’s Executive Summary is
attached (Attachment A). In its report, Plante Moran recommended that the City replace SAP
with a new, fully integrated government-oriented ERP solution and a separate Utility billing
best-of-breed solution. The report can be found in its entirety on the City of Palo Alto website
at the following location: http://www.cityofpaloalto.org/civicax/filebank/documents/48789.
Based on the Plante Moran recommendation and subsequent City staff input, the following
emerged as the next steps:
1. Plan for acquisition of a new government oriented ERP System.
2. Plan for acquisition of a separate provision for the Utility billing services.
3. Evaluate potential opportunities for using 3rd party managed services for functions to be
identified during the requirement gathering phase.
Therefore, the City desires to conduct a comprehensive requirement gathering process to be
able to select a new government-oriented ERP system(s) and utility billing system. The City
conducted a competitive selection process to identify a consultant to assist with the
requirement gathering process, development of request for proposals followed by the system
selection process for replacing the ERP and Utility billing systems currently used by the City.
Following a competitive selection process (detailed below) and evaluation of 7 proposals, staff
recommends Plante Moran to assist with these efforts.
Discussion
The City of Palo Alto requires the services of an ERP Planning and System Selection consultant
to perform requirement gathering for all functional areas that are currently using the ERP
services at the City. The consultant will also be working on creating RFP documents for
solicitation of ERP Solution(s), Utilities Billing system and managed services contract(s) for the
City.
The consultant will be performing the following tasks:
1. Project Management
2. Requirement Gathering
a. Review Phase 1 documentation
b. Stakeholders and Business Process Owner Interviews
c. Define Functional Requirements
d. Identify and Evaluate Process Candidates for Managed Services
e. Prepare ERP Business Process, Services, and Solution Requirements Summary
City of Palo Alto Page 3
Report
3. System and Services Selection
a. Develop Procurement Plan
b. Develop Request for Proposals Documents
c. Manage Responses to Vendor Questions During Proposal Period
d. Conduct Vendor Pre-Proposal Conference
e. Analyze Proposals and Facilitate Finalists Vendor Selection
f. Assist with developing documents for vendor Demo and Site Visits
g. Coordinate Software Demonstrations and Site Visits
h. Prepare Vendor Selection Findings Report
i. Facilitate the Selection of Preferred Vendor(s)
j. Support Contract Negotiations
The Consultant will develop two separate procurements, for: 1) an integrated ERP system
(respondents will be able to propose solutions to all or part of our ERP needs, with a priority on
optimum integration of each solution); and 2) a best of breed utility billing system (including
optional Meter Data Management system requirements for future smart meters). The ERP RFP
will invite vendors to propose on one or multiple functional areas included in the scope of the
RFP (e.g., financial management, human resource management, time and attendance).
Additionally, based on the managed services recommendations the City has accepted from the
requirements gathering phase, Consultant will assist the City with additional procurements
specific to fulfilling the managed services the City has identified.
The end result of the tasks mentioned above will be identified and selected systems (ERP
system(s) and Utility Billing System) and managed services as identified and procured for the
replacement of the City’s existing ERP and Utility Billing system(s). The RFPs for the ERP, utility
billing and managed services will be developed concurrently. The selection and
implementation of the new systems and services will be phased based on business needs,
resources and timelines.
Timeline
The City issued an RFP to identify a consultant to assist with the ERP and Utility Billing
requirement gathering and system selection process. The City received seven proposals from
potential vendors for the ERP and Utility Billing Planning and System Selection RFP. Following a
comprehensive proposal review and selection process including citywide departmental
stakeholders, the City selected Plante Moran as the consultant to assist with the ERP and Utility
Billing requirement gathering and system(s) selection process. Timelines mentioned below
were followed by the City during this process.
City of Palo Alto Page 4
ERP and Utility Billing Planning and System Selection - Bid Timelines (All Tasks Completed):
Task Date
Consultant RFP Issued September 07, 2015
Non-mandatory Pre-Proposal Teleconference September 22, 2015
Deadline for questions, clarifications September 25, 2015
Proposals Due
Total of 7 responses received
October 02, 2015 3:00 PM
Consultants Interviews
Total of 2 vendors were interviewed
December 2, 2015 & December 10, 2015
Consultant selected: Plante Moran December 23, 2015
City of Palo Alto Page 5
The proposed timelines for the ERP and Utility Billing requirement gathering and system(s)
selection project going forward are summarized in the following table.
Proposed ERP and Utility Billing Planning and System Selection – Upcoming Milestones
Task Date
Contract Signatures February 5, 2016
CMR Council Agenda February 29, 2016
Vendor on-board March 14, 2016
Requirement Gathering Report complete October 11, 2016
ERP and Utility Billing System Selection RFP
Process Starts
October 17,2016
ERP and Utility Billing Strategy Recommendations
– Finance Committee
November / December, 2016
ERP and Utility Billing Strategy Recommendations
– Council Presentation
January / February 2017
ERP and Utility Billing Implementation Commences
(Tentative)
July 2017
Resource Impact
Of the $359,925 authorized in this contract, $250,000 was budgeted in the Information
Technology Fund and was approved by City Council as part of the Fiscal Year 2016 Adopted
Budget. The additional $37,940 professional services fee for meter data management will be
funded from the Utilities Smart Grid Technology CIP EL-11014 and the $71,985 contingency will
be funded by Fiscal Year 2016 operational budget savings within the Information Technology
Fund.
As part of the Fiscal Year 2016 Adopted Operating Budget, funding of $250,000 was budgeted
in the IT Department to complete the planning and evaluation phases of ERP replacement, as
recommended above. Once planning and evaluation are complete, currently anticipated for
early Fiscal Year 2017, staff intends to return to the City Council with a recommended ERP
replacement project plan that includes a funding strategy to pay for the estimated $10 to $15
million five-year cost for replacement.
Policy Implications
Approval of these contracts is consistent with current City policies.
Environmental Review
This award of contract for professional software services is not a project under the California
Environmental Quality Act (CEQA), therefore, no environmental review is required.
Attachments:
Attachment A: Phase 1 - Palo Alto ERP System Evaluation Final Report (PDF)
ERP - C16160734 Plante Moran FINAL 02-09-2016.docx (PDF)
ERP - C16160734 Plante Moran Summary (PDF)
Enterprise Resource Planning
System Evaluation
CITY OF PALO ALTO, CA | NOVEMBER 24, 2014
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Table of Contents
1 ERP Evaluation ................................................................................................................................. 4
1.1 Project Overview And Executive Summary ............................................................................. 4
1.1.1 Project Background .............................................................................................................. 4
1.1.2 Project Scope ....................................................................................................................... 4
1.1.3 Project Approach .................................................................................................................. 6
1.1.4 Summary of Observations .................................................................................................... 7
1.1.5 Executive Summary of Options and Recommendations ................................................... 11
1.1.6 Plante Moran Recommendation......................................................................................... 13
2 Current State/Gap Assessment ...................................................................................................... 14
2.1 Overview of Findings .............................................................................................................. 14
2.2 General Ledger / Financial Reporting .................................................................................... 14
2.3 Investment/Cash Management .............................................................................................. 16
2.4 Budgeting ............................................................................................................................... 17
2.5 Fixed Asset | Asset Management | Capital Improvement Planning ....................................... 20
2.6 Project Accounting ................................................................................................................. 22
2.7 Procurement ........................................................................................................................... 23
2.8 Accounts Payable .................................................................................................................. 25
2.9 Revenue Collection/Miscellaneous Billing/Accounts Receivable ........................................... 26
2.10 Payroll/Time Entry .................................................................................................................. 27
2.11 People Strategy and Operations (PSO) ................................................................................. 29
2.12 Utility Services Management / Refuse ................................................................................... 31
2.13 Current Technology Profile .................................................................................................... 33
3 ERP Marketplace Assessment ....................................................................................................... 36
3.1 Integrated ERP Environment ................................................................................................. 36
3.2 Best-of-Breed ......................................................................................................................... 37
3.3 Alternative Software Delivery Options: Hosting (“Cloud”) ...................................................... 38
3.4 ERP Vendor Consolidation .................................................................................................... 39
3.5 Summary Comparisons .......................................................................................................... 39
4 Options Analysis ............................................................................................................................. 43
4.1 Option 1: Status Quo with Investment .................................................................................. 43
4.2 Option 2: Upgrade SAP ......................................................................................................... 46
4.3 Option 2, Alternative A ........................................................................................................... 46
4.4 Option 2, Alternative B: .......................................................................................................... 47
4.5 Option 2: Cost Estimates and Summary ................................................................................ 48
4.6 Option 3: New ERP Environment ........................................................................................... 49
4.7 Option 3, Alternative A: .......................................................................................................... 49
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4.8 Option 3, Alternative B: .......................................................................................................... 50
4.9 Option 3: Cost Estimates and Summary ................................................................................ 51
4.10 Plante Moran Recommendation............................................................................................. 53
5 Recommended Next Steps ............................................................................................................. 54
5.1 ERP System Evaluation Approach ........................................................................................ 54
5.2 Phasing .................................................................................................................................. 56
5.3 Staff Backfill............................................................................................................................ 57
5.4 Data Cleansing / Conversion ................................................................................................. 58
5.5 Interface Development ........................................................................................................... 59
5.6 Report Development .............................................................................................................. 59
5.7 Change Management ............................................................................................................. 60
5.8 Communication Planning ....................................................................................................... 61
5.9 Process Re-Design ................................................................................................................ 62
5.10 5ERP System Training ........................................................................................................... 62
6 Appendices ..................................................................................................................................... 64
6.1 Appendix A: Project Charter .................................................................................................. 64
6.2 Appendix B: Application Inventory ........................................................................................ 73
6.3 Appendix C: Response Summary from City-wide User Survey ............................................. 80
6.4 Appendix D: Total Cost of Ownership Details and Assumptions ........................................... 81
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1 ERP Evaluation
1.1 PROJECT OVERVIEW AND EXECUTIVE SUMMARY
1.1.1 PROJECT BACKGROUND
The City of Palo Alto, CA (the “City” or “Palo Alto”) has an estimated 65,000 residents and is located in
Silicon Valley in the San Francisco Bay Area of California. The City’s FY 2014 operating budget is
$447 million and the City employs over 1,000 full and part time staff. Palo Alto is a full service city
providing administration, planning, code enforcement, public works,
water/wastewater/gas/electric/fiber utility, parks and recreation, public safety police and fire services.
The City is also the home to Stanford University, a world renowned Pac-12 conference research
institution.
The City currently utilizes the SAP ERP system to support its major Finance, Human Resource and
Utility Billing processes. The City’s history with SAP began in 2002 when the City selected SAP as its
preferred vendor for an Enterprise Resource Planning (ERP) system with the purpose of integrating
various business processes within the City and to pave the path for the City to moving toward the
direction of electronic Government. In fiscal year 2003, the implementation of the SAP Enterprise
Central Component (ECC 6.0), SAP core modules were completed and the SAP system has been
running in the City since 2003, supporting Accounting, Finance, Purchasing, Project Management,
Plant Maintenance, Budgeting, Payroll, Human Resource Management, and Service Order
Management.
In 2009, the City completed a major upgrade to the SAP ERP system, which also replaced the former
utility billing system (Banner) with the implementation of the SAP IS-U module, Customer Relationship
Management (CRM), Utilities Customer Electronic Services (also known as My Utilities Account
customer portal) and Business Intelligence systems (BI). Both business and technology needs have
changed dramatically since the current ERP solution was selected and implemented. Therefore, the
City desired to conduct a comprehensive evaluation to determine a solution to reduce IT application
and infrastructure support costs, improve flexibility, increase user friendliness and intuitiveness of
system, facilitate further automation of business processes, and improve quality and reliability of
information for decision making.
1.1.2 PROJECT SCOPE
The City engaged Plante Moran to perform a comprehensive assessment of the City’s SAP ERP
environment and identify key strategic options and recommendations. In addition to the core SAP
related functions the project included the identification and review of major best-of-breed and third-party
systems used by the City. The City requested that the evaluation provide the following:
GAP analysis to identify deficiencies in the current system
Identify effectiveness of current system at meeting business needs
Evaluation of hardware
Benchmark maintenance/support costs
Determine if city would benefit by soliciting proposals for alternative ERP solutions
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Specifically, the project scope included conducting project management tasks, reviewing
documentation, conducting interviews and assessing the City’s technical environment to develop this
ERP evaluation for the following functional areas:
Administrative Services
Budget Accounting
Payroll Purchasing
Store
Utilities
Billing Management Device Management
Work Management
Business Intelligence
Financial Contract Accounts
Utilities Customer Electronic
Services
Customer Service and Customer Relationship Management
People Strategy & Operations
Processes and Management
Public Works
Refuse and Recycle Billing
Information Technology
Technology Strategy and Roadmap
All other departments (City Attorney, City Auditor, City Clerk, City Manager, Community Services,
Planning & Community Development, Information Technology, Library, Police and Fire)
Budget/Position
Time Entry
Procurement
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1.1.3 PROJECT APPROACH
The following chart illustrates the approach that was taken in performing the City’s ERP Evaluation:
The project was conducted using a participative and inclusive approach with significant input from the
City management and staff to ensure accuracy, completeness, and ownership of the resulting
recommendations. Participation was obtained through the following activities:
Establishing a Project Sponsor to maintain the project vision, act as a project champion,
provide a strategic perspective, and to remove project roadblocks when necessary.
Defining a Project Manager to ensure prompt and clear communication with the City
department staff, manage project activities, ensure project deliverables were reviewed by the
appropriate City staff, and to provide progress updates to the City management and other
interested stakeholders.
Conducting a project kick-off meeting and building awareness around the project.
Facilitating multiple project management status meetings to manage project activities and
provide status updates.
Conducting interviews with the City departmental end users to evaluate current systems and
business processes. Departmental management was encouraged to participate and invite
team members.
Collection and review of numerous documents provided by the City, as well as completed
questionnaires by the departments.
1. Initiation
•Define Project
Organizational Structure
•Develop Project Charter
•Develop Project Plan
•Establish Project
Collaboration Center
2. ERP Evaluation
•Review City
Documentation
•Conduct Departmental
Interviews
•Assess Technology
Environment
3. Draft
Evaluation Report
•Compile Findings
•Identify ERP Options
•Develop
Recommendations
•Prepare Draft Report
•Develop Action Plan
•Present Draft Findings
4. Finalize Report
•Review Draft ERP
Evaluation
•Update Draft Report
•Finalize Report
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Soliciting input from the participating Departments that included the evaluation of the following
items:
o Identification of current systems
o Duplicate entry / re-keying of information
o Issues with / shortcoming of current systems
o Strengths of existing systems
o Unused features / functionality of SAP
o Opportunities to interface systems
o Unique City business rules
o Vendor interaction
o Current technology project initiatives / Future technology projects
Requesting and collecting data which was used to develop a total cost of ownership (TCO)
analysis.
Developing this ERP evaluation
The overall goal for implementing new technology not only focuses on the technology itself, but also
aims to enhance existing business processes performed by individual departments across the City.
Technology is intended to enhance departmental business processes by:
Making them more efficient
Making them more effective
Improving decision-making
Providing enhanced customer service to both internal and external customers
Improving access to information
Streamlining processes to reduce costs.
The overall goal of this ERP evaluation was to define a future course of action for the City’s SAP
investment and related applications and shadow systems. The approach utilized for collecting
information included interviews with primary process and systems owners, IT staff, and the City
department users regarding the existing technologies and processes.
1.1.4 SUMMARY OF OBSERVATIONS
While the current SAP environment supports the daily needs of the City and supports the ability of end
users to accomplish their responsibilities at a basic level, the current system structure has left the City
with many challenges. The following points summarize the key functional weaknesses regarding the
systems and processes that support financial management, human resources, payroll and other City
administrative functions.
Inefficiencies Due to Redundant Data Entry and Manual Processes
The existence of multiple standalone systems and reliance on desktop applications like Excel and
Access inevitably results in inefficient business processes. Disparate information systems result in
redundant data entry efforts because information is taken out of one system and entered into another.
Even when data can be directly downloaded via automated means, the organization of data and
formatting requires significant effort. In addition, there are still a host of manual processes that support
certain business functions. In a number of cases where standalone systems and desktop applications
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are now being used it is possible that unused modules of the SAP system could support these
functions.
Lack of an intuitive user interface
The City’s current financial, human resources and utility billing systems do not provide end users with
an intuitive and integrated experience across common transactions. With few exceptions, end-users
across all business areas stated that the current system was cumbersome and not user-friendly. The
systems lack sufficient querying tools and most departments rely on the Finance or IT department to
develop and provide many reports.
Workflow within SAP is Not Fully Utilized
One of the benefits of ERP systems is the availability of workflow to signal to a user when items exist
that require approval, review, or attention. The City is not currently using this feature in many areas of
the SAP system. This requires the need for separate manual approval processes and notifications
when work is ready to be completed in the system, leading to inefficiencies in the business process.
The SAP investment is not fully utilized overall
For several reasons, whether it is availability of staff, complexity of the function, or failure to fully meet
the needs of the department, the staff is not utilizing various features of SAP.
Heavy Reliance on IT and Outside Consultants for SAP Enhancement Requests
Along with SAP, the City utilizes a number of stand-alone systems. To meet the ever-changing needs
of government, it is often necessary to add a field or function or tweak a transaction process. These
minor or major enhancements to systems must be prioritized and handled by an IT Department whose
resources are stretched as a result and/or must be outsourced to a third party contractor. Additionally,
most reporting requests must be handled by IT staff, meaning that there is often a delay in getting
necessary information.
Complicated / Limited System Integration Requirements
Numerous standalone systems are used to report and gather data resulting in complex integrations to
the City’s main ERP system. Reliability of data is an issue in many City areas because information is
not processed in real-time or can be immediately synchronized between systems when reporting from
SAP. There are also cases where staff has limited ability to access current information in the required
systems. The cost to establish interfaces between additional systems to ensure timely and accurate
information is available is significant when considering the staff time necessary to test and maintain
these interfaces for the long term. The ERP Applications Environment Diagram represents the
complexity of the City’s existing application landscape. The City intends to continue adding systems to
this environment within the next year adding further system administration responsibility to the team.
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Current ERP Applications Environment Diagram
texttext
SAP ERP
Expanded ERP
Capabilities
Outside Agency /
3rd Party Interfaces
Special Ledger
Project System
General Ledger
Accounting
Financial Supply
Chain
Management
Funds Management
Bank Accounting
WellsFargoPositive Pay, Cleared Checks,
Direct Deposit, AP Checks
US
Treasury
1099s
Social
Security
Administration
Cost Controlling
Business Objects
Sales and
Distribution
Accounts
Receivable
Financial
Accounting
Advanced Micro
Solutions (AMS)Accounts Payable
Doc1/e2Vault
Utilities
Management
Docusign
Purchasing
Checkfree
Online payments
Commerce Bank
E-Payables
Accounts Payable
Business
Warehouse
Asset Accounting
Logistics Materials
Management
Plant Maintenance
Human Resource
Management
Active Directory
Organizational
ManagementBenefits
Time Entry
Payroll
Utility Billing
Device
Management
Customer Service
Financial Contracts
Accounting
Utilities Customers
E-Services
Autodesk Utility DesignUtilities
Management
BMIPurchasing
CivicaIT
CLASSParks and Rec
CORE (iPay)Revenue
Collections
Dassian
OMB
GIS Geodesy
GIS Mapping
GoldMine
Utilities
Management
InTime/ISELINK
Payroll/Time Entry
I-Tron/MVRSUtilities Management
JP Morgan Chase
Smart Data
Accounts Payable
Maintenance ConnectionPublic Works and
Community ServicesMS Access
Utilities Management
MS Excel
Various
MS Project
Project Accounting
NeoGov
PSO
OpenGov
Financial Reporting
Outage ManagementUtilities
Management
Pattern Stream
OMB
Pitney Bowes
Utilities
Management
Questica
OMB
Quick ServeRevenue
Collections
SharePoint
Various
Segal Waters
Compensation Database
Skillsoft
PSO
Spinifex
PSO
SymPro
Treasury
TopobaseUtilities
Management
Training DB
PSO
US BankP-Card
ICMAEmployee Contributions
PARS
Employee Contributions
Hartford
Employee Contributions
ACES
Employee PERS Contributions
CalPERS
Employee Retirement
GreenWaste
Refuse
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Reporting is Inadequate for City’s Needs
The City is faced with a number of mandated reporting needs. The standard reports that are available
within the system do not meet the overall needs of the City. Therefore, many departments are
maintaining separate spreadsheets in order to meet the day-to-day informational needs of the City and
its departments.
Lack of Self Service Functionality
Several employee facing processes are entirely manual and could benefit from better employee and
manager self-service functionality. For example manager self-service for employee performance
reporting is non-functional and employee self-service functionality is limited to read only transactions.
There were a number of consistent themes expressed during the process review sessions. Although it
is difficult to summarize opportunities to resolve dozens of issues identified, the unmet needs which
the City management and staff expressed as opportunities for improvement are as follows.
1. Redesigned and streamlined business processes incorporating established best business
practices.
2. Full integration between all system modules, allowing for the elimination of shadow
systems and other supplemental applications.
3. Real-time, immediate update and access to the financial and human resources
information.
4. Single entry of data and reduction in manual processes.
5. User-friendly, user-driven and flexible reporting tools with distributed, securitized access
to all users.
6. Elimination of paper-based processes and replacement with automated, online workflows
and approvals
7. Self-service capabilities and other “e-government” opportunities such as employee self-
service, remote time entry and mobile workforce capability.
8. Performance measurement and improved reporting capabilities.
9. Improved system of internal controls.
10. Reduced total cost of ownership.
11. City wide document management system and policy is needed. This will also help
automate many workflows.
As these themes indicate, there is an obvious need to improve upon the current systems environment.
To seize on this opportunity, Plante Moran is presenting a variety of strategic options and alternatives
for the City to evaluate as part of this assessment.
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1.1.5 EXECUTIVE SUMMARY OF OPTIONS AND RECOMMENDATIONS
Plante Moran has evaluated the City’s current ERP environment and has observed a clear trend toward selecting best of breed systems that
interface with SAP in order to achieve desired business objectives. In many cases, these best of breed systems replicate core SAP functionality
the City cannot realize at present. In recognition of this trend, three key options, with multiple best-of-breed alternatives have been identified to
assist the City to identify a viable strategic approach to further investment over the next five years. Each option offers some advantages and one
offers the most cost-effective and most suitable alternative based upon Plante Moran’s experience conducting system needs assessments and
selections when facing circumstances similar to Palo Alto. The table below defines these options and detailed information relative to each option.
The specific advantages and disadvantages of each option are provided in detail in a later section of this report.
OPTIONS DEFINITION AND EXECUTIVE ANALYSIS
Options Description
Option 1: Status Quo with Investment
ON PREMISE: Status Quo Current SAP
Modules + Existing Applications (Best of Breed
Systems) w/ Extended SAP Support
This option represents the City’s current investment position with the resources currently in
place supporting the SAP environment on premise today. It also represents the existing mix
of best of breed or third party applications interfaced with SAP supporting the budgeting, fixed
asset / asset management, human resources, purchasing, revenue collection, treasury, and
utilities management. The City is paying a premium for the addition of best of breed solutions
when core SAP functionality exists but cannot be fully realized.
Option 2a: Upgrade SAP
ALL IN CLOUD: Upgrade SAP Modules + Other
Existing Applications + Planned Applications
(Includes SAP Utility Billing)
This option represents the City’s migration to a Hybrid Cloud where the City would take
advantage of the HANA Enterprise Cloud to take advantage of hosted and managed services
from SAP. The City would assume maintenance responsibility for the non-SAP applications
that would reside in this environment and will retain ownership of these licenses.
Option 2b: Upgrade SAP
MIXED ENVIRONMENTS: Cloud Upgrade SAP
+ Existing + Planned Applications + On-Premise
Utility Billing Best of Breed
This option is essentially the same as 2a above with the exception of the addition of a utilities
best of breed system. The overlap between the core SAP and best of breed solutions
remains in this option and it does not appear to offer a viable strategic alternative.
Option 3a: New ERP Environment
NEW Fully Integrated ERP Environment + Utility
Billing Best of Breed
This option assumes the City reinvests in a new, fully integrated ERP solution that would take
advantage of the capabilities of a solution. The City would prepare an RFP for a solution that
incorporates all of the required functionality in addition to integrating with a new utilities best of
breed system.
Option 3b: New ERP Environment
NEW Limited ERP Environment + Existing
Applications + Planned Applications + Utility
Billing Best of Breed
This option assumes the City reinvests in a limited ERP environment where the existing and
planned best of breeds would be acquired in addition to a best of breed utilities management
system.
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Plante Moran performed a total cost analysis (TCO) for each option presented above. This analysis takes into consideration the one-time cost as
well as estimated ongoing costs, for each option based on assumptions defined later in this report. A summary analysis of the total cost of
ownership for each option identified in the report is provided in the table below:
Option 1 Option 2a Option 2b Option 3a Option 3b
ON PREMISE
Status Quo
with Investment
ALL IN CLOUD
Upgrade SAP and
Retain Existing Best of
Breed Systems
MIXED ENVIRONMENTS
Upgrade SAP Core
Financials/HR/Payroll Modules
Only Keep Existing Best of Breed
Systems Obtain Best of Breed
Utility Billing System
NEW ERP
Go to Market for a Fully
Integrated Public Sector
Focused ERP Solution and
Procure a Separate Utility
Billing Best of Breed Solution
NEW ERP
Go to Market for a Fully Integrated Core
Financials/Human Capital Management
Solution, Retain the Current Best of
Breed Systems and Procure a Utility
Billing Best of Breed
EXTERNAL COSTS
One-Time Cost Summary
Software License Fees -$ 3,628,151$ 3,391,151$ 1,069,984$ 1,670,133$
Additional Hardware Costs N/A N/A N/A N/A N/A
Consulting Implementation / Data Conversion / Interface
Development -$ 589,350$ 1,009,757$ 2,142,027$ 2,338,275$
Training N/A 566,850$ 686,850$ 120,000$ 250,850$
System Selection & Implementation Planning Fees N/A N/A 80,000$ 200,000$ 200,000$
Total External One-Time Costs -$ 4,784,351$ 5,167,758$ 3,532,012$ 4,459,258$
Reoccurring Cost Summary
Annual Software Licensing & Solution Support 667,910$ -$ 64,138$ 241,675$ 205,874$
Consulting Support Services 250,000$ -$ -$ 80,698$ 64,425$
Cloud (includes Licensing, Support, Interfaces & Consulting
Services)-$ 3,421,439$ 2,921,439$ -$ 646,080$
Training 112,500$ 150,000$ 165,000$ 75,000$ 115,000$
Total External Recurring Costs 1,030,410$ 3,571,439$ 3,150,577$ 397,373$ 1,031,379$
INTERNAL COSTS
Reoccurring Cost Summary
Current Support FTE 2,073,000$ 510,000$ 510,000$ 510,000$ 510,000$
Additional Support FTE'S -$ 530,000$ 530,000$ 400,000$ 530,000$
Total Internal Recurring Costs 2,073,000$ 1,040,000$ 1,040,000$ 910,000$ 1,040,000$
Year #1 Grand Total Cost 4,133,820$ 6,267,261$ 6,650,668$ 4,442,012$ 5,942,168$
FIVE YEAR ESTIMATES
Five-Year Estimate *17,138,248.00$ $25,559,803 $24,182,480 $9,911,572 $14,608,045
* Estimate includes one-time and reoccurring costs during year one, annual software licensing and solution support for planned application purchases in year one are assumed to incurred in years 2-5 only, and the future value of investments
has been adjusted for years 2-5 to account for a 3% annual rate for inflation.
Executive Summary of ERP Evaluation Project Alternatives
Cost Category
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1.1.6 PLANTE MORAN RECOMMENDATION
The SAP system offers a significant range of functionality and is capable of meeting most of the City’s
ERP needs. However, the City has not demonstrated the capacity of effectively utilize the range of
features offered by this complex system. The primary challenges with maintaining Options 1 and 2
would be the inefficiencies due to multiple systems and the cost of maintaining and supporting the
SAP system and the interfaces with a proliferation of best-of-breed solutions in the long run. Internal
and external costs to support the current environment, variety of standalone systems, and the lack of
integrated information are also main drivers for the City to consider additional options. Plante Moran
does not view Option 1 as a viable long term strategy primarily because the current version is not
supported by SAP starting in 2016.
At the time that the City purchased the SAP system, the ERP software market was quite limited.
Today there are a number of ERP options, designed explicitly for and available to, cities the size and
complexity of Palo Alto. Some of today’s ERP systems offer not only the core ERP functions, but also
many of the Expanded Capabilities, as shown in the prior diagram.
Overall, the City may decide to continue with SAP, but in view of the total cost of ownership differential
as well as the problems that it has had in maintaining and optimizing SAP in the past, Option 3 may
allow the City to lower the total cost of ownership and improve the functionality for City end users.
We recommend that the City issue an RFP to evaluate best of breed solutions with a fully
integrated public sector focused ERP solution and procure a separate utility billing best-of-
breed solution.
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2 Current State/Gap Assessment
2.1 OVERVIEW OF FINDINGS
One of the main strengths of the City’s current set of business systems is that they enable the City
business processes – i.e., employees are paid on time, purchases are made, applicants are hired,
financial reports are completed, and funds are budgeted and accounted for. In general, the current
systems facilitate basic financial, purchasing and human resource functions. There are, however,
some weaknesses that will be reviewed in further detail in the functional assessment areas below.
2.2 GENERAL LEDGER / FINANCIAL REPORTING
The City utilizes SAP for General Ledger, Budget Control and core Financial Reporting. SAP was
implemented over 10 years ago and is still supported by the vendor to this day. A majority of the
organization utilizes SAP for basic financial reporting purposes, however many of the departments
utilize Excel spreadsheets for budget tracking/reporting, as reporting from SAP has been described as
difficult.
Overall, the chart of accounts at the City has five segments and can approach 30 alpha numeric
characters as defined below:
Segment: Fund
Cost
Center
Business
Area/Dept. Account WBS
# of
characters:
3 8 3 5 10
As a whole, the current Chart of Accounts accommodates GAAP based on GASB standards for the
City’s CAFR. Despite not being on the most recent version of SAP, City staff has been able to
maintain a high level of effectiveness in its accounting processes.
STRENGTHS
The strengths of the current General Ledger / Financial Reporting environment include:
1. Chart of Accounts Structure: The current Chart of Accounts adequately accommodates
required GAAP based on GASB standards for the City’s CAFR.
2. Interdepartmental funds transfer: The system enables the transfer of funds between
departments, funds and projects through an automatic fund balancing feature. The feature
allows an authorized user to complete entries across multiple funds and the system prepares
the balancing entries in the background. This capability provides prevents these transfers
from creating out of balance situations and prevents the need to manually perform these
entries.
3. Audit Trail/Drill Down Functionality: Basic audit trail and drill down functionality is available
within SAP.
4. Closing Flexibility: SAP effectively supports month end and annual closings.
5. Familiarity with system: The current accounting staff is knowledgeable and familiar with the
current system.
6. Useful query/reporting tools: Users identified the query feature and Spinifex reporting tools
as major strengths that need to be retained in a new solution. However, staff would like
additional functionality, such as the ability to drill into further information from the reports.
7. Upload tools: SAP has functionality to upload journal entries from Excel into the financial
system.
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WEAKNESSES
1. Data Integrity: During the initial SAP implementation the City converted historical data which
is causing data integrity issues (remaining AR balances) to this day. While this is not an issue
resulting from SAP, this information converted resulted from an implementation process that
was not validated and it perpetuates error within the system.
2. Chart of Accounts and Validations: Not enough automated validations were implemented
when it comes to creation of new GL accounts, thus duplicates exist. Unique description for
each general ledger account is needed to avoid confusion when posting transactions and
generate reports. This is a process issue that has no relationship with SAP.
3. Manual Processes: SAP has automatic and recurring journal entry functionality, however it is
not being utilized. While the City does have the ability to utilize a template to upload the
journal into SAP, it requires manual intervention to open up the template and execute the
journal process. This is a process issue and not identified as an SAP system functional
deficiency.
4. Journal Entries Workflow: Requests for journal entries from the departments are submitted
via a hardcopy memo, which is difficult to track and ensure completion. Staff would like to
submit journal entries electronically, along with supporting documentation.
5. Reporting Tools: It is difficult for the casual system user to write new reports with the SAP
and Spinifex reporting tools. Staff indicated that the current financial system is not user-
friendly and provides limited ability to extract, manipulate and analyze data. Third party CPA
(MGO) compiles the CAFR and annual Streets Reports on behalf of the City. The City needs
more access and transparency in the third party system. Microsoft Excel is heavily used to
analyze the financial results (i.e. budget to actual variances).
6. Internal Orders Functionality: The City uses The Internal Orders functionality of SAP for
tracking statistical data for expenses relating to grants or specific sub-projects. It is also used
in other areas including Planning, Community Services, and others.
7. Accounting Decisions Responsibility: Various City departments have their own Accounting
liaison that make accounting decisions, which should reside strictly with the trained accounting
staff. This is recognized as a process and governance issue unrelated to SAP’s system
capabilities.
8. Electronic Document Management: Reviewing backup documentation is currently a
manual/paper process. Departments will park their journal entries in the system and send
paper "backup" for accounting to review.
9. Loss of Institutional Knowledge: City has lost quite a bit of institutional knowledge through
retirements which has hurt the SAP support structure. As a result, much of the functionality
SAP can provide has been ‘lost’ as the City power users retire. This is identified as a system
governance issue and not related to an SAP functional limitation or deficiency.
10. Reporting System Gaps: FI and FM funds integration reports differ in the way SAP is
configured resulting in conflicting reporting results creating confusion among the user base.
11. Donations Tracking: Accounting has to track outside of SAP and Questica the status of all
donations since the amounts cannot be determined by the individual departments at this time.
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OPPORTUNITIES
1. End-user financial reporting will be greatly improved from either an SAP upgrade of the
implementation of a new system, as many of the components and CAFR required financial
reports are provided out of the box from a host of potential vendor solutions.
2. If the City decides to upgrade its current SAP environment, it should start taking advantage of
the Internal Order feature for interdepartmental costs allocations or for tracking costs of a
specific job, allocating the costs to an asset, cost center or GL Account and analyzing the cost
centers for better-decision making purposes. Furthermore, the City should take advantage of
the SAP automatic and recurring journal entry functionality and turn on the journal entry
approval and posting workflow by turning on email alerts and modifying the rights of the roles
for the users involved in the process, in such a way that segregation of duties is achieved or
maintained.
3. A modern system can potentially provide users with improved non-financial reporting tools,
increased account and budget validation at the point of data entry, and greater ability to drill
down into system transactions. The City owns SAP Business Intelligence module, which is
currently used only by Utilities department. This City should consider expanding the use of this
tool across all departments in order to achieve better reporting and creation of user defined
automated dashboards that include financial and non-financial metrics.
4. The chart of accounts structure and cost center structures need to be optimized in order to
better align with business needs and provide more meaningful information to decision makers
and citizens.
5. A future system should include accounts payable invoice scanning, document storage and
retrieval, and electronic workflow processes. The City is currently contracting to outsource the
payables processing through Commerce Bank to provide these services, it is more efficient to
perform these functions within the core ERP whenever possible.
2.3 INVESTMENT/CASH MANAGEMENT
The City has the responsibility of managing many types of debt and investment instruments that
require significant planning and tracking efforts for ensuring sufficient funds are available to cover
liability and contractual obligations. The City’s Money Management / Treasury Division is responsible
for investing the City’s cash resources, investments, and facilitating the debt financing process in
accordance with the City’s investment policies and State statutes.
The City currently uses the Sympro software to centrally track the City’s investment portfolio activity
valued at $500 million. The software generates reports for analysis, reconciliation, and meet legal and
accounting reporting requirements including the production of quarterly investment reports for City
Council, forecasting investment maturities, and ensuring the City has sufficient cash liquidity.
Examples of reports generated including GASB 40, owned security list, variety of interest earnings,
past and future maturity activity, etc.
STRENGTHS
Sympro is a versatile and appropriate system for managing City’s investment portfolio.
WEAKNESSES
1. SAP Use: SAP is not being used to track the City’s management of investments and cash
flows and there is no programmed interface between Sympro and the City’s SAP GL at this
time. This requires all activities including, but not limited to, interest earnings, purchases, and
sales, to be represented as manual journal entries.
2. Reporting and Analysis: Cash flow analysis is currently being managed in MS Excel to
represent the needs of the entire organization.
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3. Staff Availability: Because cash flow forecasting involves manual processes necessary to
update these Excel workbooks to synchronize transactions, there is greater overhead to
produce current, actual summaries of cash flow forecasts reflecting the City’s current
investment holdings.
OPPORTUNITIES
It is very common for ERP vendors to partner with investment management solution providers,
including Sympro, to offer a direct integration with the ERP system can be achieved. A direct
integration with the City’s ERP system would:
1. Reduce administrative overhead involved in creating journal entries for account updates in
the GL and provide greater line item control options.
2. Provide the City with options to have utility and non-utility accounts receivables represented
in addition to an expense side module so a single cash flow analysis could be represented.
2.4 BUDGETING
Starting with the FY 2016 budget, the City’s annual operating and capital budgets are developed with
Questica Budget software, using extracted financial data from the City’s Enterprise Resource System
(SAP). Previously, the General Fund Long Range Financial Forecast (LRFF), labor cost modeling,
financial reporting, and monitoring of the City’s budget were completed on spreadsheets. Starting in
the FY 2016 budget process, Questica Budget will be used to develop, monitor, and review the City’s
budget.
The workflow process of receiving a budget proposal, packaging decision materials, and compiling text
and figures into the budget document will be automated using Questica Budget and the budget
document publishing software (PatternStream). Questica is integrated with the City’s current ERP
system (SAP) and PatternStream.
During the fiscal year, the Office of Management and Budget (OMB) and city departments adjust
department budgets to reallocate existing funds into more appropriate line items or augment a
department budget based on Council action. Beginning FY 2016, workflow for these processes will be
managed using Questica Budget by documenting the budget change and its justification. Any budget
change in Questica Budget will be adjusted in SAP through an interface that occurs daily.
STRENGTHS
The strengths of the current Budgeting environment include:
1. Systems Integrations: Budget preparation in Questica Budget is integrated with SAP and
Pattern Stream. The workflow and budget entry for this process will be managed by Questica
Budget with a daily interface to SAP to record the transaction in the financial system.
2. Streamlined Processes: Questica Budget results in a more a more streamlined budget
process. Staff in departments will provide information for budget change submittals, Budget
Amendment Ordinances (BAO), and annual budget proposals in a work flow environment.
Specific budget proposals for vehicle requests or position requests will be routed through the
workflow process to Public Works or People Strategy and Operations, respectively. OMB and
department staff can review and approve proposals and generate decision packages for
decision makers to review in a controlled setting.
3. Automated Workflows: Questica software has workflow capabilities for receiving a budget
proposal, packaging decision materials, and compiling text and figures into the budget
document, which eliminates manual processes, reduces errors, and allows Analysts in OMB to,
work with departments on cost saving measures
4. Reporting and Modeling Capabilities: Budget modeling, summarization, and reporting are
performed in Questica Budget. The functionality of the budget system allows staff to input
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escalation factors or dollar amounts for these scenarios and have these changes
automatically flow through the next ten fiscal years.
5. Performance Management and Dashboard Monitoring: The City reviewed various
performance management software solutions. Questica Budget released a performance
management module with dashboard capabilities in summer 2014. Staff intends to bring
forward a contract amendment in the fall to the City Council to change the license agreement
from seat licenses to a site license at a highly reduced cost. It is expected that managing the
City’s operations through central review of performance measures and dashboards will
enhance productivity and services for residents and the community.
6. Automated Spending Controls: SAP’s Budgeting Availability Controls (AVC) is used to warn
the user if 10% or 5% of budget remains. The department must then submit a budget change
request to OMB.
7. Efficiency Gains: With the implementation of Questica Budget software manual processes
will be eliminated, which reduces errors and allows Analysts in OMB and the departments to
work on higher value tasks such as cost saving measures, organizational analysis, and
performance management.
WEAKNESSES
The weaknesses of the current Budgeting environment include:
1. PO and PR Carry Forward (Reappropriations): The City carries forward its Purchase
Orders and Purchase Requisitions from one year to another. In the New Year the Accounting
department is posting the accruals thereby creating problems for budget reports by
department. The City is working to perform a change to the Municipal Code to address this
issue.
2. Cost Allocations: OMB department does not understand the basis of how percentages of
overhead costs allocations was determined and the execution of this process in SAP (no
assurance that is complete nor accurate). The configuration of these cost allocations was
performed by staff during SAP’s initial implementation who are no longer in the City’s employ
and the knowledge to understand how these were established was undocumented. OMB is in
the process of implementing Questica which will address this shortcoming.
3. SAP Reporting: Generating custom reports from SAP is difficult (i.e. department budget
showing key parameters) and requires a program to write the report. It is very difficult to obtain
fund reserve balance reports for any of the funds in real time. Data reports do not have the
required detail (i.e. budget to actual reports). Report data varies when reports are generated
by different users and cannot be tied back to the cost centers detail. As a result, departments
do not have confidence in the data in some reports.
4. SAP User Friendliness: Some City Departments do not use the SAP system to track and
report transactions (i.e. Public Safety) due to the perceived level of difficulty to produce reports.
As a result, departments feel they are not in control of their financial situation. In extreme
cases, due to the lag in P-card transaction posting, departments fully expend their budget and
have the need to submit a budget change request..
5. SAP User Training: Users are in high need of continuous training when it comes to budget
management and reporting in SAP modules (SAP FM, SAP PS, etc.).
PENDING ISSUES
1. Double Entries: SAP will remain the system of record for Position Management due to the
ERP system controlling and maintaining employee master data. Position cost center
allocations will be maintained in SAP. Since the budget for positions will be developed in
Questica Budget, and unless SAP and Questica Bydget integrates position changes during
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the Questica Budget implementation, position changes derived from the annual budget
process must be performed in parallel with both systems (SAP and Questica Budget).
OPPORTUNITIES
In the near term, the City will benefit from implementing and integrating Questica budgeting system
with SAP. The expected advantages of reducing the staff time involved in the budget development,
review, approval and adjustment processes in combination with an electronic workflow-driven
environment is anticipated.
In an optimally configured system the City would be able to accurately define and track progress
toward mission elements, while taking advantage of the following additional opportunities:
1. Streamline and make transparent the overhead costs allocations to easily check
completeness and accuracy
2. Gain control over budget line items changes, made directly within the system, via user security
rights and automated approval workflows
3. Implement better automated spending controls, fund center assignee controls, position
management controls etc.
4. Avoid double entries in two systems when it comes budgeting changes
5. Track donation status within the ERP system by the individual department
6. Improve reporting granularity, accuracy, confidence and speed
7. Increased user friendliness when it comes to usage of the ERP system due to its predefined
module functionality and reporting capabilities
Further the City should consider:
1. Providing formal and informal annual ERP and non-ERP systems training to end user, based
on business need and keep track of each user training compliance
2. Documenting in a “Center of Excellence” repository the best practices and lessons learned to
which all users have restricted access based on their business needs
3. Hold each Department accountable for maintaining updated policies, procedures, user
manuals and desktop procedures for all systems
4. Enforce ERP and non-ERP systems governance, especially when turnover takes place within
the Departments
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2.5 FIXED ASSET | ASSET MANAGEMENT | CAPITAL IMPROVEMENT
PLANNING
The City has decentralized asset management responsibilities involving multiple divisions and
departments. Community Services, Public Works, Utilities, and Administrative Services are key
service providers with responsibilities to ensure the City’s infrastructure assets provide reliable,
predictable levels of service at the lowest cost possible. The City recently completed an Enterprise
Asset Management Needs Assessment, Selection, and Implementation Plan to improve and manage
on the asset management practices. The assessment revealed the City had been maintaining its fixed
asset inventory to compliance with GASB 34 standards using SAP’s Fixed Asset module. New capital
projects and capital rehabilitation projects that extend asset life are captured from invoices and
timecards and posted into SAP’s project module. The project module is reconciled with the
construction in process account and project costs are capitalized annually during the year a given
project is closed.
The City maintains a rolling, five year capital improvement planning window which categories projects
into programs and into funds to facilitate the reporting process. Budgets for projects are developed by
phase, by program, and by project which assists in the management activity tracking process. The
City is further required to track its infrastructure investments by IBRC category which introduces a
more granular reporting and tracking requirement beginning with this year’s asset management
requirements.
STRENGTHS
1. Project Accounting: The City’s ability to account for labor and contracted costs by project
through the City’s time and attendance system in SAP so these costs can be accounted for
and capitalized, as appropriate, is a model best practice (as evidenced in non-internal service
funds or those involving Account 471).
2. Budget Development: Additionally, the City’s recent investment in Questica this year will
completely transform the budget development process for FY 2015 by establishing a
structured workflow for all departmental budget item submissions. It will reduce administrative
overhead in managing numerous complicated Excel spreadsheets and will integrate directly
with SAP which will be expected to remain as the system of record for all budget to actual
reporting within the City. Questica will provide the ability for departments to submit budget
changes for projects, close out projects, reallocate funds between projects, open new projects,
and tag new sources of revenue. Daily updates will be provided from SAP into Questica to
enable departments to more readily retrieve current state budget to actual information by
project, program, or fund.
3. Grant Accounting: The City is currently managing its $2.5 million in grants successfully
through SAP where each department is responsible for administering their own grant
obligations including advances (e.g. VTA), CDBG, FAA (new airport operations), county
(transportation reimbursement), and utilities (Santa Clara County Water District). The grant
reporting and tracking needs have been sufficient for those responsible in tracking this
information.
WEAKNESSES
1. Use of SAP Modules: The City’s asset management activities outside of the Utilities Department
are not using any of SAP’s Plant Management (PM) module capabilities. As a result, there is very
limited asset management accounting for activities involving regular and capital maintenance due
to several factors including:
The use of disparate systems and databases that are not integrated with SAP or its interfaced
systems preventing the City from portraying a uniform view of its asset infrastructure.
The inability to portray accumulated maintenance deficits contributing to accelerated asset life
deterioration
The absence of any work order or service request management tools to track regular and
preventive maintenance leads to increased asset liability.
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2. Capital Improvement Planning (Budget to Actual Reporting): The City does not currently
have a means to generate reports allowing departments to determine the status of a multi-year
projects. This is caused by the need to carryover previous year(s) funding from earlier budgets
when a project spans more than one fiscal year. When this happens, the ability to freeze a
project prior to the carryover at a specific point in time to reflect current to actual details is not
possible.
3. Tracking Internal Labor Against Projects: The means to provide an instant status report that a
project manager can design and initiate exports from remains elusive and not possible to
generate without advanced SAP system knowledge. This restriction appears to be limited to
internal service fund activity tracking at this time as CIP projects do not appear to have this
restriction.
4. Absence of a Comprehensive Asset Infrastructure Inventory: Capital assets are typically
tracked by aggregated quantities which is adequate for meeting GASB 34 accounting guidelines
but are insufficient for operational asset management activities. Non-capitalized assets also
involve significant maintenance responsibility for the City and are not inventoried in any system,
including SAP at this time. Without a comprehensive inventory, there is no way for the City to
manage its overall maintenance obligations to know where maintenance has been deferred or
needs to be performed.
5. Absence of Multi-Year Asset Maintenance/Management Forecasting: The City does not
have a program in place that forecasts asset maintenance needs beyond the five-year rolling CIP
planning horizon. The City currently recognizes fixed asset lifespans for infrastructure at 40+
years but there is no current planning mechanism in place to represent these longer term
commitments.
OPPORTUNITIES
The City’s recently completed Enterprise Asset Management System (EAMS) Needs Assessment,
Selection, and Implementation Strategy report identified the following opportunities that could be
realized through the use of an Enterprise Asset Management System. Integrations with the ERP
environment are necessary to execute a number of the following items:
1. Maintain Current Asset Inventories for Current Asset State Evaluations: The EAMS
must allow City staff to establish a comprehensive, uniform, current-state inventory asset
types across operational divisions in Public Works, Community Services, and Administrative
Services by current asset operating status (e.g. current/active, scheduled, retired). This
inventory needs to identify capitalized and non-capitalized fixed assets so they can be
associated with the identification numbers currently in SAP for fixed asset value tracking (e.g.
government-wide financial reports, statement of net assets).
2. Provide a Basis for Budgeting and Capital Asset Planning: The means to track budget to
actual cost at the asset detail level in addition to the project and program levels through the
City’s ERP presents new opportunities to weigh asset management alternatives at both the
near and long term. At present, the City’s operational divisions are identifying priorities based
upon an annual budget cycle and a five year capital investment timeframe. The lifespan of
most infrastructure far exceeds this planning window (often greater than 20 or more years).
The ability to identify past, present, and future resource asset resource commitments will
ultimately determine if infrastructure is being managed as cost-effectively as possible or if
corrective measures are necessary to prevent reduced asset life.
3. Balance New Infrastructure Investment Planning with Operations & Maintenance:
Operations and maintenance (O&M) budgets need to be re-evaluated to determine the impact
to service levels as operations and maintenance budgets are expected to support a larger
asset pool. In most cases, the size of asset pool increases at a rate faster than the amount of
funds allocated to O&M activities. This obviously diminishes the organization’s ability to
realize the given assets expected lifespan.
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4. Integrate City’s EAMS with ERP Human Resources, GL, and Budgeting Modules:
o The ability to access personnel rates through the HR module and assign these rates
to work activities within the City’s EAMS will ensure direct labor costs associated with
projects are accurately represented and available. Budgeting integration will allow for
capital maintenance or construction activities to be captured according to existing
project/program accounts. It will also facilitate the collection of this information at the
operations detail level. This allows for improved fixed asset reporting and accounting
at the end of each fiscal year when this inventory is updated. Integration with the GL
will allow for specific labor, materials, and equipment to be expensed to the assigned
account numbers which will expedite budget-to-actual reporting and improve the City’s
capability to calculate actual service level cost.
2.6 PROJECT ACCOUNTING
The City is currently using the SAP-PS (Project System) for its project cost accounting activities in
addition to Microsoft Project and Microsoft Excel. Project accounting is conducted by phase, by
program, and by individual project and typically involves larger capital projects involving public works,
utilities, and facilities related projects. Projects are typically created through the budgeting process on
a rolling five-year cycle. The City is able to use the SAP-PA to track project phasing but is not
currently using project task tracking capabilities at this time. Project management activities involving
scheduling, task assignments, activity dependencies, and milestone completion percentages are
performed outside of SAP using Microsoft Project or Excel.
STRENGTHS
1. Labor Cost Tracking: Project accounting is very effective at capturing labor costs through
SAP’s time and attendance entry system which can be coded directly to specific projects.
This provides a very efficient and effective means of providing labor cost allocations to
projects and also produces reports with accuracy. The City maintains tracking relationship
information for budgeted CIP projects against current and scheduled projects. Because of
these strengths the City has been able to:
2. Reporting Compliance: SAP allows the city to comply with all external reporting
requirements (e.g. Federal, State).
3. Disaster Reimbursement: In emergency or disaster declaration situations, the City has the
ability to track emergency related project costs through SAP’s project accounting toolset
allowing for reimbursement reporting. This is a critical function necessary to support public
safety and public works professionals responsible for ensuring the delivery of essential
services.
WEAKNESSES
1. Project Budget Tracking: One of the greatest obstacles to SAP’s project accounting system
is the capability of tracking real-time project budget or contract balances. Presently, project
managers are responsible for tracking their own project costs, tasks, and retainage in Excel
spreadsheets. This creates reporting challenges as information pertaining to the completion
status of project tasks, retainage release approvals, and vendor performance is not being
captured within SAP. Which results in a lost ability to generate standardized project status
reports. It is possible for departments to overspend their project budgets without exceeding
budget controls on a multi-year type project involving multiple funds. Therefore, budgetary
controls are not effective in these types of situations. Project managers are also constrained
by the fact that they cannot represent prior year budget to actual reporting because funds can
be carried over from the previous fiscal year. This precludes the ability to represent project
variances at previous points in time when conducting project status comparisons on similar
types of projects. It also prevents project managers from determining the amount remaining to
fund their projects.
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2. Project close-out: since project open/close dates are not consistently defined in SAP, the
ability to run a report on project closeout status leaves many projects open beyond their actual
lifespan. It also requires project managers to manually notify their financial analysis and/or
accounting when projects are completed to effectively closeout a project (e.g. releasing
payment/performance bonds, liquidating escrow accounts, accurately tracking the valid dates
for warranty coverage, etc.).
3. Contract Compliance: Contract administration is also complicated by the fact that there is no
way to track a contract back to multiple projects or from multiple contracts back to a single
contract. The absence of this knowledge prevents the organization from identifying the quality
and performance of prior vendors in addition to knowing whether vendors are authorized to
continue working for the City in accordance with performance requirements (e.g. liability
insurance is current, performance guarantees in place, business licenses are up to date, W-
9’s are still valid, etc.). At present, there is no relationship between the project management
module and SAP’s MM (Materials Management) where contract information resides.
4. Reporting Limitations: User/custom reporting queries are currently limited to those
personnel who are granted access to the SAP system and/or are afforded sufficient user
rights. SAP allows for users to have the ability to query on any data fields, project information,
or account codes however, many project managers are reported to not have sufficient access
system to generate their own reports. It should be noted, this information may not always be
consistently entered into SAP and therefore a process improvement opportunity could resolve
this challenge.
OPPORTUNITIES
In order to improve efficiencies in the area of project accounting, the City should consider the following
opportunities:
1. SAP’s Project System provides the opportunity to track projects encompassing multiple funds
and/or departments but this functionality is currently not being utilized. This creates situations
where shadow systems must be relied upon for accurately tracking this information to ensure
expenses are fairly allocated to the appropriate fund(s) involved.
2. The ability to reference contract terms involving the scope, services, materials, and milestones
through the Project System would be very beneficial. This would also avoid the time
consuming process involved in generating reports from purchase requisitions in order to locate
contract documents for specific projects and programs.
3. The City should identify options to institute project workflows that will enforce standardization
across all projects and departments involving approvals, expenditures, and receipts based
upon the City’s internal reporting policies and procedures. The ability to closeout projects on a
timely manner, represent project costs accurately for future performance comparison and
institute standardized reporting will provide a means to establish reliable performance metrics
in the future. This will also enable the City to benchmark its performance against other peer
municipalities as the City seeks to evaluate similar project types.
In late 2011, an Infrastructure Blue Ribbon Commission issued a report recommending the City invest
in an infrastructure management system. The system would track the condition and use of City
infrastructure at the project level with the intention of providing the basis for asset-detail budgeting and
longer-range asset maintenance projections. A new Enterprise Asset Management System (EAMS)
which will be capable of tracking work activities at the asset, project, program, and fund levels. The
system’s future (anticipated) integration with the City’s ERP will provide a means of capturing project
specific labor, equipment, materials, contract specifications, and other cost details. The opportunity to
provide project specific details involving work performed, GL line items charged, and dates of
performance will significantly advance the City’s project administration and reporting capabilities.
2.7 PROCUREMENT
The City has conducted extensive evaluations of its Purchasing Division policies, procedures, and
requirements under the City’s Municipal Code and Charter over the past four years. In 2011, the
Leadership ICMA team evaluated the City’s procurement operations and City’s Purchasing Manual. In
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2014, the City commissioned NIGP Consulting to prepare recommendations (Periscope Report) to
improve the administrative efficiency of the purchasing process in addition to focusing the
department’s efforts to become more strategic in focus. Reoccurring observations from the following
observations that were taken into account during the ERP evaluation process by Plante Moran:
Continued staff turnover in the Purchasing Division has led to inconsistency in administering
the purchasing manual and guiding staff through the purchasing process including contract
administration, bid solicitation, and the submittal of purchase requisitions
Formal and informal staff training is necessary for both purchasing and non-purchasing staff
to ensure purchasing processes are understood and enforced uniformly throughout the City’s
operations
Decentralization of the purchasing process has been identified as a strategic objective for the
City. The ability to allow departments greater flexibility to manage their own solicitation
process while maintaining necessary oversight controls administered by the City’s Purchasing
Division was repeatedly identified
A need to streamline the administrative process involving informal and formal solicitation
requirements was recognized by weighing the administrative costs to administer each form of
competitive bidding process against the overall risk to the City
The City currently issues about 2,220 purchase orders annually representing a total spend of
nearly $190 million
The City now requires a purchase order for any purchase over $5,000 at present and is
encouraging the use of P-Cards (avoiding the need to issue a PO) as a way to facilitate the
purchasing process and reduce the amount of time necessary to complete a purchase
Informal purchases (three quotes obtained by department) require about 3-6 weeks for
processing and formal procurements (public advertisement) require between 6-12 weeks to
process from start to finish
Limited oversight and flexibility relating to purchasing processes in SAP have lead the
Division to seek Requests for Proposal for the procurement of an e-procurement system
(including vendor self-registration) to replace the use of SAP as the Division’s main
purchasing system.
The Division has also investigated the potential investment in a document management
system to associate documents to purchasing and contract transactions in the new e-
procurement system.
STRENGTHS
The City has successfully initiated a P-Card system that has integrated with the SAP system for single
unit purchases under a $5,000 threshold. The City is currently able to pre-encumber funds when
purchase requisitions are made and encumber funds when a purchase order is issued. City staff are
able to see both types of encumbrances on their budgets in real time when reviewing their budget
status by fund (including specific line items).
WEAKNESSES
1. Contract Management: SAP’s Supplier Relationship Management Module (SRM) processing
is not being used to maintain contracts in SAP which limits capabilities for accessing contract
data and requires that the City maintain contracts with the creation of a purchase order.
Decentralization in the purchasing process along with missing controls in the SAP system
require that both the Purchasing Division and City departments manually monitor open
purchase orders. The system does not currently maintain contract expiration data and
automatically carries open purchase orders are carried over to subsequent fiscal years.
2. Lack of electronic workflow: SAP’s configuration is also noticeably weak in supporting
workflow processes. For example, W9 processing can be an issue for purchases made below
the PO threshold if the vendors W9 is not on file. The system allows purchases to be made
without confirming that the vendor has a W9 on file.
3. Commodity Codes: The City does not currently use NIGP codes but realizes the future
benefit in utilizing commodity codes.
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4. Limited Process Control: There is a weak relationship between the Municipal Code and
City’s Purchasing Manual. Inconsistencies provide for risks and create possible areas of
failure.
OPPORTUNITIES
The City’s selection of a new e-procurement system gives the organization flexibility to evaluate its
current purchasing processes and determine where these processes can be improved. When
evaluating a new “Best of Breed” purchasing system the division should consider:
1. Associating commodity codes to account codes to enable the organization to classify
purchasing data by products and services. The use of commodity codes facilitates the
grouping, categorization and analysis of spend data supporting the development of term
contracts.
2. Investigating/continuing to investigate the potential investment in a document management
system to associate documents to purchasing and contract transactions in the new e-
procurement system. A document management system is also necessary to take advantage
of vendor self-registration capabilities.
3. Establishing workflow controls for purchases that do not require a PO. A control to verify that
the vendors W9 is on file before automatically purchasing from a vendor would eliminate the
risk that purchases have been made from a vendor without a W9 on file.
4. Tracking vendor performance. Currently the City can’t track failure to perform situations.
Maintaining this additional vendor data can help the City make financial investments that have
the highest ROI.
Outside of Purchasing’s technology initiatives, the Division should evaluate, review and revise terms in
the Purchasing Manual to be consistent with the Municode. In accordance with the Periscope report,
the Code is law and is the highest level of procurement policy. The Manual should include the
requirements of the Municode.
2.8 ACCOUNTS PAYABLE
The City is entering into a contract with Commerce Bank to outsource its payment functions. This
process is set to start planning the project January 1st, 2015 with a go-live on or before June 30th. The
bank will scan invoices and pay vendors via credit card, check or ACH payment. These outsourced
activities will provide badly needed accountability over vendor invoices, increase efficiency of and
provide accountability over the invoice approval process, provide an electronic storage and retrieval
system for vendor invoices, and eventually may reduce overhead expenses related to processing
payments and cutting checks. Activities performed by the bank will be reported via an electronic
reconciliation file from Commerce Bank to the City. In addition to these services staff at the City are
also using Advanced Micro Solutions (AMS) 1099-ETC software and JP Morgan Chase Smart Data.
STRENGTHS
The City is currently issuing check runs on a weekly basis and this frequency is generally higher than
many communities Plante Moran evaluates. This practice prevents the City from incurring additional
liability for late fees when invoices are remitted by the departments on a timely basis.
WEAKNESSES
1. Limited Process Control: Decentralization in the process along with the absence of a vendor
self-service function has created situations where departments hold onto invoices creating
unknown liabilities, year-end accrual issues, unhappy vendor’s, late fees etc. Outsourcing the
City’s payment functions will eventually eliminate this issue to some degree assuming
departments promptly approve their invoices for payment.
2. Employee reimbursements: There are many California Public Records Act requests on
employee reimbursement transactions. It is vital to the organization that supporting
documentation is available and accessible. The absence of an integrated document
management system creates the need for shadow systems/shadow processes, especially
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where associated documentation is vital to maintain. The employee expense reimbursement
process exists mostly outside of the financial system. Supporting documentation is maintained
at the department level outside of SAP and is attached and forwarded to AP via excel
spreadsheet. This process is expected to move from AP to payroll.
OPPORTUNITIES
An integrated content management system would support the City’s response to public requests for
information as well as help support the organizations transparency. The outsourcing of the payables
function will reduce staff overhead for the City and will introduce the benefits of a third-part document
management system.
2.9 REVENUE COLLECTION/MISCELLANEOUS BILLING/ACCOUNTS
RECEIVABLE
Payments arrive at the City via a variety of methods and departments. The Cashier’s Office and
several departments accept cash payments, with some departments taking deposits directly to the
City’s bank. The City also uses a lockbox for utility payments. Procedures across the City for
recording and processing receipts vary (including both manual and automated methods for sending
receipt information to Accounting Department). Revenue Collections department and 12 other
departments across the City collect revenue and fees. Revenue Collections department has 4
cashiers. CORE system (the cash receipting system) and SAP (SCM and AR) are the primary cash
receipting, billing and posting systems at the City.
The City outsourced to third party vendor the collection of paramedic receivables.
STRENGTHS
The strengths of the current Miscellaneous Billing/Accounts Receivable environment include:
1. Multiple Receiving Methods: The current set of systems effectively accommodates the
organization’s receiving methods (i.e., Cash, Lock Box, Credit Card, Check, ACH, Credit
Memos, etc.)
2. Debit Card Transactions Processing: Transitioning to iPay (web version of Core system)
will allow processing of debit card transactions
3. Query Capability: Ability to query information in Core system
4. Revenue Collections Controls: Good controls have been put in place, like locked offices
with restricted access to cash registers, unique log-on in Core and locked cash drawers,
password protected the safe, no posting to accounts with no revenue allowed in SAP.
WEAKNESSES
The weaknesses of the current Miscellaneous Billing/ Accounts Receivable environment include:
1. ACH Payment Processing: ACH Payment processing is not automated. They are posted via
manual adjusting entries by the Accounting department, after research is performed to
determine whose department they pertain to.
2. Account validation: Core does not validate account numbers before posting transactions.
As a result, cashiers can post transactions to incorrect or invalid accounts. These errors are
not identified until they are interfaced with SAP. The process could be streamlined if cashiers
were notified of the errors, via a pop-up error message or other notification, before the
transaction was posted.
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3. Duplicate Records: SAP has many customer duplicates that need to be cleaned out. Thus,
the reporting of owed and paid amounts from SAP is hard to track by customer. This is a
process issue unrelated to the core functionality of SAP.
4. Reconciling Items: SAP GL does not match CORE system cash receipts balances.
Departments are not reconciling their cash receipts to their paid receivables. Some
departments rarely resolve reconciling items between SAP GL and their subledgers, leaving
them on the list of reconciling items for ever. This is a process issue unrelated to the core
functionality of SAP.
5. Delinquent Accounts and Interest Calculation: The SAP interest calculations are currently
incorrect due to wrong AR aging terms in SAP (SAP has 60-90-120 AR collection terms and
they need 30-60-90). As such, staff have to manually calculate interest on each of those
accounts and the automatic delinquent letters generated by SAP, are replaced with the
corrected manual ones by Revenue Collections department.
6. Police Department Issues: Police Department doesn’t have an automated POS system to
collect cash, even though it handles thousands of dollars/month and is in real need of a
system.
7. SAP Reporting: SAP AR Aging Reports have too many inaccuracies (cancellations, partial
payments, etc.), since SAP GL and Core are not reconciled. This is a process related issue
and not related to SAP’s core functionality.
8. SAP Training: Departments expressed the need of further training relating to SAP cash
receipts and receivables. They don’t feel like tracking and reporting of receivables and cash
receipts information in SAP is flexible or friendly enough (i.e. they can’t make a distinction
between write off and a cancelation of a receivable, document number type is the same for an
invoice, a cancellation and a write off type transaction on the reports, they can’t view
breakdown of payments that are received by payment type, etc.).
OPPORTUNITIES
In order to increase revenue realization, the City should consider the following opportunities:
1. Accounting should reconcile and resolve on time the cash receipts reconciling items between
SAP GL and Core system
2. Implement account validations in Core to validate account numbers before posting
transactions via a pop-up error message or other notification.
3. Clean up SAP customer duplicate records
4. Adjust AR aging terms in SAP from 60-90-120 to 30-60-90 to avoid recalculation of interest
and retyping of delinquent notices
5. Roll out the use of Core system to all other cash collecting departs (i.e Police department)
6. Train cash receipting departments how to use SAP tracking and reporting functionalities
2.10 PAYROLL/TIME ENTRY
The City’s Payroll process supports between 1100 – 1400 employees (depending on those employees
that are seasonal) and 11 different compensation/memorandum of understanding (MOU) plans.
Because of the many differences across the plans the fields in SAP need to be very specific.
Managers are responsible for approving timecards for salary staff and entering time for hourly staff.
Payroll processing is bi-weekly and all staff are paid on the same pay cycle regardless of
classification. The majority of employees take advantage of direct deposit and employees receive
their pay advices through email and through employee self-service.
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STRENGTHS
The SAP system is currently capable of handling most pay scenarios for standard classifications. A
simulated payroll is run on Monday and data elements associated with each payroll run including the
dates, number of work days, holidays, and accruals can be verified. FLSA reporting is fully supported
and overtime calculations impacting FLSA can also be handled. Strong capabilities also include:
1. Interfaces: Files are created by the SAP support team for CalPERS, ICMA, Mass Mutual,
and SSA so these organizations can receive notice of payroll disbursements. Other forms of
interfaces exist for situations involving:
a. COBRA Billings
b. Deferred Compensation
c. Annual Tax Witholdings to IRS
d. Garnishments
e. Work Orders (time entry against work orders)
f. Check Reconciliation
g. Budgeting (merit date and associated pay increases)
h. Deferred Compensation
i. Flex Spending
2. Employee Self Service: Allows employees to see accruals, benefit enrollment, and access
their pay advices on demand. Employees can edit their time cards within a six week period.
More capabilities could be realized but the current SAP version of ECC 6.0 does not allow for
an optimal configuration to support with the present City resources.
3. Absence/Leave Management: SAP enforces all PTO accruals and enforcement including
FMLA, donations of sick time to other employees, attendance policy management, and other
forms of general tracking are fully supported.
WEAKNESSES
1. Lack of electronic workflow: The absence of workflows, change notifications and the lack-off
ability to access data detail impacts managers’ ability to efficiently manage time card
approvals. The payroll process is dependent on each manager’s approval of their staff’s time
cards during the period. Some of the road blocks preventing timely submission of timecard
approvals include:
2. Data Validation: Approval of timecards that reference incorrect pay codes. Pay code detail
can only be viewed during time entry, not during approvals. Because of this, managers must
be familiar with all of the different compensation codes applicable to the staff they manage.
3. Workflow Notifications: Timecard edits after approval don’t trigger a re-approval workflow.
Managers do not receive a notification for timecard edits made after a timecard has been
approved. Managers are dependent on employees to notify them of these changes or the
change may go unapproved.
4. Shadow Systems: Hourly staff time detail is tracked outside of the system. Depending on the
department, hourly staff supporting data exists outside of SAP in the form of a paper sign in
sheet with time in/out or in an excel spreadsheet. Supervisors are responsible for entering
time for hourly employees and supporting documentation must be maintained.
5. Set-Up Challenges: Union detail is tied to pay code instead of job title/role In addition the
system restricts employees to enter time based on the schedule configured for their role. This
prevents some employees from entering the actual time worked (e.g., employees can’t enter
less/more than scheduled hours, night or weekend time unless they have a flex schedule).
6. Lack of Scheduling Functionality: Scheduling functionality is not available in the current
time and attendance system. Managers maintain shadow scheduling tools such as shared
outlook, Google, or paper calendars to manage employee time off throughout their
department.
7. Limited Training/Knowledge Transfer: It was also apparent during these sessions that
knowledge transfer across departments is limited because of the City’s decentralized
structure. As departments experience turnover and become dependent on shadow systems to
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conduct processes knowledge of current/available functionality may be lost. The group
participating in the cross-functional time entry/payroll session expressed frustration over
managing leave requests without a leave request submission portal. Discussion led to the
discovery that leave request submissions and approval capabilities exist in employee self-
service.
OPPORTUNITIES
In a decentralized environment it is even more essential that organizations focus on communicating
knowledge consistently and frequently. Documented processes that are continuously updated or
having quarterly management discussion sessions, for issue resolution discovery (mentioned in the
example above) are good communication practices.
Overall, the weaknesses that exist in the time entry/payroll processes exist because of the current
systems configuration or lack of functionality. In a new payroll environment union details could be tied
to job title/role instead of using different pay codes to differentiate between union employees.
Workflow and scheduling functionality should also be investigated during the selection of a new
system.
2.11 PEOPLE STRATEGY AND OPERATIONS (PSO)
People Strategy and operations (PSO) owns the employee lifecycle data for approximately 1,091
regular and up to 400 temporary/seasonal employees. The City has a complex collective bargaining
environment, with nine separate employee groups, some with different contract provisions. The
processes that PSO “owns” range from recruitment to new hire, benefits and compensation,
promotions, leaves of absence, changes in schedules and salary to retirement or end of employment.
Additional processes include that PSO manages include labor negotiations, discipline and grievances,
customer service inquiries, risk management, workers compensation, compensation, job descriptions,
salary schedules, employee development and training, succession planning, performance assessment,
and exit interviews.
PSO utilizes SAP for the majority of employee transactions from onboarding through employee
termination. In addition, NeoGov is utilized by the City for recruiting, applicant tracking and hiring
purposes. To summarize, human resources is another area in which it has been necessary to
purchase or develop a number of standalone systems in order to perform necessary business
functions. The lack of integration between these many systems results in a lot of manual reconciliation
and duplicate data entry.
STRENGTHS
The strengths of the current SAP and NeoGov environment include:
1. Basic Human Resources Management: Overall, the system facilitates many basic human
resources functions in an effective manner.
2. Security: The system has the ability to restrict user access to employee records.
3. Online applications: The City accepts online applications via NeoGov. Candidates are able
to enter their own information and have the flexibility to apply for a position from anywhere at
any time.
4. Job Descriptions: Job descriptions are retained in SAP and thus could be accessible to staff
and candidates via employee self-service and online recruiting.
5. Limited Self-Service: Employees can view read only payroll and benefit information online.
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WEAKNESSES
The key weaknesses of the current environment include:
1. Employee File: SAP maintains one master employee file, however departments must keep
paper files outside the system to be able to capture the level of employee information they
require.
2. Position Control: The position control ability within SAP is limited, with a particular problem
being an inability to tie positions to the budget.
3. Volunteer/Intern Management: Volunteer Management is a decentralized process, with
limited central PSO control.
4. Lack of Electronic Workflow: All Personnel Actions are paper driven processes which are
very tedious/labor intensive.
5. Lack of electronic document management: The employee record is kept in paper as the
current system does not accommodate scanned images/attach to the employee file.
6. Licenses and Certifications: The City uses multiple systems across departments to track
required licenses and certifications.
7. Compliance Reporting Limitations: The current system does not track federal compliance
related items such as EEO job categories. This makes reporting very tedious/labor intensive.
8. Employee Performance Management: Employee goal plans and performance evaluations
are a paper based process. While grading/comments are captured in SAP, the annual
evaluations are facilitated outside of the system.
9. Discipline Tracking: SAP is not being utilized to track disciplinary actions or employee
grievances. All associated grievance or disciplinary documentation is housed in the City's
SharePoint system.
10. Limited Employee Self-Service: The City does not have more robust employee self-service
functionality such as electronic benefit self-enrollment functionality.
11. Limited Manager Self-Service: SAP does not enable managers to manage their teams and
for employees to manage their transactions and information.
12. Reporting Limitations: The reports in some cases may lack the detail needed and this can
drive the need for separate spreadsheets to track personnel data. There are mandated reports
that need to be filed that SAP simply does not track. EEO reports are difficult to configure,
partly because the system was not set up for governmental reporting. Again, this leads to
redundancies and process inefficiencies.
OPPORTUNITIES
If fully deployed, a public sector focused ERP system will provide functionality that can resolve many
of the items listed above. Some of these automated functionalities include:
Automated performance evaluation/review
Tracking for investigations, disciplinary action, FMLA, grievances, reasonable
accommodations, etc.
Workflows for policy distribution, employee changes and improved data integration for auto-
populating information
Employee Self Service
Benefit Self Service
Overall, with new software integration and workflow many of the issues listed above will be resolved
and a savings of resources should be realized.
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2.12 UTILITY SERVICES MANAGEMENT / REFUSE
The City of Palo Alto Utilities (CPAU) started using SAP for their Utility Billing software needs in 2009.
Refuse billing was added to SAP ISU-BM at a later date. CPAU is currently serving about 30,000
customers and manages seven different types of services.
STRENGTHS
1. SAP Customization: The current SAP software can be configured to the City of Palo Alto
Utilities’ needs. An example would be the many unique validations that have been created in
the Utilities Billing to alert the end user when there is a billing exception. Users like the fact
that many views can be customized, the Utilities Billing layouts are flexible and FICA screens
can be modified to users’ desire
2. Data Availability: Level of detail that is available in Utilities Billing view in IC Web is
impressive. The amount of data available and the display of Business Partner & Premise in IC
Web are important to the Utilities users.
3. Data Export: Departments can easily export data from SAP to Excel
4. System Speed: In general SAP is very reliable and fast
5. Reporting Flexibility: The device management and FICA module of the SAP Utilities has a
lot of flexibility when it comes to reporting
WEAKNESSES
1. SAP ISU Maintenance: Because SAP is complex, is hard to maintain it with only internal
resources, thus specialized consultants are required. CPAU is only able to maintain the
software with its current resource. The City's SAP knowledgeable staff has been reduced so
that the remaining staff only have time to maintain the database. All enhancements have to be
contracted out to a third party and it has been difficult and expensive to find quality consultants
to make the necessary enhancements.
2. SAP ISU Customization and Upgrades: It is time consuming and costly to maintain and
customize SAP ISU modules
3. SAP ISU Standard Reporting: Very few standard reports have been defined in SAP so the
CPAU relies on the SAP BI software for most of their reporting needs. However, BI is very
complex and requires a specific skill set to master. Thus the data is typically downloaded and
manipulated in MS Excel. All statistical reporting comes from Green Waste so the City is very
dependent on their third party hauler for data. Currently Green Waste maintains all the data on
who has the trash containers/bins. If this information was included in the file that is sent to the
City, the City would no longer be dependent on Green Waste for their reporting needs. Service
Orders Dashboard with employee defined areas is needed to visualize all SO information on
one page.
4. Legislative Requirements: SAP ISU modules have not been upgraded in a while, thus the
software configuration does not incorporate the latest legal requirements which has forced the
City to use manual workarounds in order to fulfill legal requirements. This is becoming an
issue with net metering and peak/off-peak billing. As the utility industry becomes more
environmental friendly, more legislation will likely occur that will affect how the bills are
processed. If the software does not have updates to automate these mandated processes,
manual workarounds will have to continue.
5. SAP Training: A user needs to be trained well to maneuver through the program. Most people
only know what they use frequently and really don’t know what else might be available to
assist them with their job. Some also don’t understand how their actions in the software affect
others.
6. Utilities Business Practices: Most users feel that standard functionality is missing in the SAP
ISU software; therefore they have to find less efficient methods to perform tasks to do their
jobs, which adds more stress and frustration. The identification of best practices and possible
best of breed utilities software to satisfy them should be taken into account.
7. Pressure to Improve Services: Due to the location of Palo Alto the majority of the City
customers are more tech savvy than average, therefore their expectations for sophisticated
tools are higher than normal, which leads to pressure for improvement. The current customer
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utilities portal is lacking presentation and requires core functionality that is absent in the
current release.
8. Utilities Billing: Corrections/fixes/enhancements to the utilities invoice are challenging,
lengthy, costly, time consuming and difficult for the customer to understand. If an adjustment
needs to be made on a bill from a few months back, each bill after that adjustment will also
have to be manually adjusted. The current utility invoice/bill is not customer friendly. Some of
the miscellaneous refuse charges are billed through SD because there is no account in CRM,
but it is billed on a utility invoice with no description and it causes many customers to call in for
assistance on what they are being billed for. Budget billing is very complicated for the
customer and time consuming for staff when a payment is missed. This is due to penalty
amount not being printed on the budget bill. For payment arrangements, the staff has to create
two payment arrangements per customer to ensure that the unpaid amount goes back into
delinquency.
9. Utilities Rates Calculations: The rate design is challenging and limited in SAP. The City is
running out of rate codes so they are limited in adding more services. To set up rate
assistance, currently the user has to mark a flag twice on each service.
10. Refuse Billing: The design/configuration for refuse billing had to be manipulated to work with
the configuration set up for utilities, since the City did not purchase the SAP Waste & Recycle
module. Also there are issues with transferring of data between the third party (GreenWaste)
hauler’s software and SAP, which has caused incorrect billings.
11. System Validations: Many validation rules have been set which is causing thousands of
exceptions/plausible to be reported which is taking many labor hours to research and fix.
Many classification of errors once analyzed, no longer need to be reviewed at each step in the
billing process but they still reoccur.
12. Meter Reading Technology: It is very outdated. Reads are being hand keyed into the
majority of the hand held devices. Only 11% are drive by radio type meters. The downloading
the meter information to the hand helds is very complicated and restrictive. The SAP system
only allows for one meter read action per day.
13. Meter Inventory and Inspections: Meter inventory is difficult to enter. Meter
testing/inspection results cannot be tracked in SAP so Excel is being used instead.
14. Utilities AR Collections: Currently SAP ISU FICA does not have an aging report that shows
customers and how delinquent they are. Therefore, many delinquent accounts get unnoticed
until 6 months later. Accounts that have a delinquency less than $150, do not go through the
delinquent process and are maintained on a separate spreadsheet. Comparison of SAP ISU
AR balances to SAP SD AR balances is not performed currently.
15. Service Order Management: Customers cannot enter their own service order. The electrical
engineers create the service order estimate using AUD software and then the estimates are
loaded in SAP to compare to actuals. When looking at charges on a service order, the cost
line items do not sum up to the same line that has the planned cost, so the plan/Actual
comparison % is never accurate. City has no way of dispatching service order tasks directly
from SAP to employee calendars.
16. SAP ISU Integrations: There is no direct integration of Geodesy with SAP ISU modules (i.e.
DM). Every installed meter has information that has to be inputted into the GIS software.
17. IC Web Issues: CSR Dashboard is seriously lacking regarding ready data. Retrieval of data
requires multiple selections. Back buttons in IC Web do not consistently go back one level.
Lack of refresh button.
OPPORTUNITIES
If the City of Palo Alto Utilities would fully implement a best of breed utility billing software solution it
would resolve many of the weaknesses listed above. Some of the advantages of implementing a best
of breed solution are:
1. A fully featured, functional and configurable solution, one that is constantly evolving to meet
CPAU’s business needs without significant customizations or need for external spreadsheets
to complete core business process functions.
2. Integration with industry-leading applications due to formed partnerships and extensive
experience interfacing and integrating with many other third party applications.
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3. Successful implementations because the vendor’s staff only works with utility operations.
4. Hundreds of standard reports come with the standard software.
5. Majority of the best of breed solutions also come with an Ad-Hoc reporting tool that is very
user friendly.
6. A robust web portal which allows the CPAU’s administrator to make changes to the portal
when necessary.
7. The use of mobile devices in the field.
8. Standard software product releases and updates which include State and/or Federal
mandated changes. The cost of these updates is usually included with the software
maintenance agreement.
9. Regional user group meetings focused only on utilities.
2.13 CURRENT TECHNOLOGY PROFILE
OVERVIEW
The City’s IT staff with the sporadic help from outside consultants, support over 200 applications and
charge back the rest of the city departments. The current IT environment at the City includes:
1. The City network is spread across 30 sites interconnected in a star topology and uses dark
fiber optic connections, running at 1GB for the majority of the sites. The City has a dedicated
Gigabit fiber infrastructure connecting all remote sites, so all sites can be actually treated as
part of an extended LAN topology.
2. The City uses HP network equipment and is configured to have firewall redundancy, IPS
redundancy and core aggregation switch redundancy.
3. Remote access to the network is provided via PPTP VPN with AD/RADIUS authentication and
remote desktop service. The other network security features are rogue AP detection, wireless
spectrum, redundant controllers, and access control.
4. The City does not have a “bring your own device” or a mobile data management policy, but is
currently evaluating potential strategies and solutions which will allow access to the City’s
data. SolarWinds is used to administer, monitor and detect network issues.
5. For majority of the servers, the CPU utilization is normally greater than 50%, but the City does
not formally track the network traffic volume associated with the servers. For the server
maintenance, the City has vendor hardware and software maintenance contract.
6. Windows 2003 is the operating system used on the majority of the servers in the data center.
There are instances of Unix/Linux servers at the City as well. System access audits are
performed on a regular basis and access is adjusted accordingly.
7. The organization has standardized on the use of HP-UX 11.31 servers. The City has no cloud
services and is looking into various options (SaaS, IaaS and PaaS). A centralized storage
system is available for use and has expansion capabilities, but not without affecting the
backup windows currently being utilized.
8. Key services and applications on the servers are monitored using Solution Manager and early
watch reports. Backups are currently performed periodically to disk and then to tape and disk-
to-disk-to-tape using HP Data Protector 6.x software. The results of the backups are
monitored.
9. Oracle database platform is used as database management systems which serve various
applications.
10. Outlook is used for office productivity such as e-mail and calendaring, and there are
approximately 1200 e-mail mailboxes in use at the City.
11. The SAP ECC 6.0, BI, CRM, and ISU are installed on premise, on non-virtualized servers
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STRENGTHS
Selected strengths of the current IT environment include:
1. Network: The availability of the network is very high while its reliability is stable with minor
issues
2. Data Center Security: All systems in the data center are protected by UPS systems and also
by a power generator. Access to the data center is protected by a door access control system.
3. Antivirus and Anti-spyware: The operating system is running on the latest service pack and
antivirus and anti-spyware are run multiple times a day.
4. Audits: Security and license audits are conducted yearly
5. System and Data Backups: Nightly there is a file system back up, weekly database backups,
data is tested quarterly and an official test policy has been put in place
6. Data Retention: The city if following the 7 year data retention policy by keeping back-up tapes,
which are Weekly/monthly sent to off storage location
7. Centralized Management: The City is using Solution Manager to reduce and centralize the
management all its systems and end-to-end business processes
WEAKNESSES
The key weaknesses of the current environment include:
1. Encryptions: The backups are not encrypted, but are stored at an off-site secure data center
2. Server Redundancy: The City doesn’t have server redundancy
3. Workflow/Notifications: The City has not implemented in the SAP modules and portals the
workflows and notifications
4. Cloud services: The City doesn’t currently use any type of cloud services (SaaS, IaaS, PaaS)
5. Document Management System: The City didn’t purchase or implement any major
document management systems, due to storage space concerns
6. Data Archiving Strategy: The City doesn’t have in place a data archiving strategy for the
SAP ECC 6.0 data.
7. Disaster Recovery Plan: The City currently doesn’t have a documented disaster recovery
plan in place
8. Service Packs/Updates: SAP upgrades have not been performed in long time
9. IT Policies: The City had not written and implemented some of its IT policies, like the "Patch
Policy"
10. SAP Training: SAP is complex, but reliable and most issues come down to IT training
11. SAP Consulting Support: Third party SAP support consultants available in the market don’t
have deep knowledge of the areas the City needs help with. The ones that are available are
very expensive and need to be booked ahead of time and they work on East Coast timeframe
OPPORTUNITIES
Overall, specific opportunities for improvement in regard to the current technology environment
include:
1. The IT department should finish the full implementation of Solution Manager.
2. The City should consider encrypting at least of its backups stored at the off-site data center.
3. IT processes should be documented and followed to ensure policies and best practices are
followed.
4. The City should implement and document its disaster recovery plan as soon as possible
5. Regardless of its ERP system in operation, the City should not allow more than 1 year to pass,
before it performs the latest upgrade. Otherwise it runs the risk of not being able to operate
properly and not have the ERP system supported by the vendor, Thus, the IT depart should
install the latest SAP upgrades as soon as possible, if the City will decide to keep SAP as its
ERP of record.
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6. The City should consider implementing and turn on as many Workflows and Notifications as
possible in order to improve segregation of duties issues and help users complete
appropriately and on time all they tasks
7. The City should consider its storage issues and find a solution to implement a City wide
document management system and policy, to help user handle all support documentation
electronically relating to various transactions to meet statutory requirements
8. Budget permitted, the City should consider implementing a data archiving strategy, but only
after it stabilized its processes and finished implementing its main software systems
9. The IT department should document and maintain written SAP support procedures, to ensure
consistent and proper maintenance of the system
10. Since ERP systems are complex, all IT staff should be trained through rotation every year in
the latest changes of the ERP system in order to maintain it properly
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3 ERP Marketplace Assessment
3.1 INTEGRATED ERP ENVIRONMENT
The purpose of the Marketplace Assessment is to provide the City with an overview of the current
financial system and ERP software vendor marketplace. Information provided in this marketplace
assessment was gathered from prior Plante Moran project and consulting experience, feedback from
City staff during interviews, and external research.
Generally, enterprise financial system solutions evolved out of a desire to provide the functionality of
two or more systems, such as Financials and Human Resources, in an integrated software solution.
Enterprise software solutions experienced its first major growth in private sector businesses in their
manufacturing and supply chain operations. Many of these “Tier 1” ERP solution providers offer broad
solutions designed specifically for the private sector. Over the past several years, these solutions
were enhanced, configured and tested in public sector organizations. With these enhancements,
these solutions originally developed for private sector organizations could now be deployed in a public
sector setting.
There are also a number of “Tier 2” ERP software providers that originated and offer specific vertical
solutions designed for the public sector including fund accounting encumbrance accounting,
sophisticated budgeting, grants management, etc. and capabilities which are pervasive in this
segment. These solutions are typically characterized as “Tier 2” solutions and are normally deployed
in medium sized public organizations. Over time, there has been increased focus from these Tier 2
vendors towards developing niche solutions designed to compete with the Tier 1 providers. A third tier
of software providers also exists that are implemented in small organizations and will not be discussed
in this report due to the lack of relevance to the City. Medium size government agencies, such as the
City, often select financial management solutions identified as either Tier 1 or Tier 2 solutions.
The most basic differentiation between Tier 1 and Tier 2 providers lie within the depth of functionality,
breadth and complexity of the software.
Tier 1 providers have a broader offering that often include modules for Customer Relationship
Management (CRM), Enterprise Asset Management (EAM), Learning Management, Analytics and
Reporting, Data Warehousing, and Project Management modules. While Tier 1 providers offer robust
core financial modules, as well as HR and Payroll, typically they rely on third party vendors for
functionality specific to government activities in other functional areas. Most, but not all, Tier 1
providers have a large network of implementers available to implement their solution, many of which
have dedicated public sector practices. The most significant challenge with Tier 1 solutions is that
government agencies often find that they are not able to dedicate enough technical resources to
leverage expansive capabilities of the system to meet their needs. Due to their flexibility (thus
complexity) Tier 1 implementations are most successful at organizations with structured IT software
governance and/or ERP process governance, not typically demonstrated in organizations which have
implemented a fragmented software approach. In addition to the necessary governance, strong IT
project management is also critical for Tier 1 deployment. In several instances, Plante Moran has
worked with public sector clients who have implemented Tier 1 ERP systems and the following
situations have prevented them from realizing the full benefit of these systems; thus diminishing their
return on investment:
The governmental body did not budget the necessary capital to implement the solution and
optimize current business processes due to cost factors related to capital budget and resource
constraints.
The operating costs to maintain Tier 1 solutions relative to software maintenance and support
consumed operating budgets thus creating a situation where hiring the necessary internal
resources to maintain and enhance these systems (e.g., data mining, workflow, custom
reporting, etc.) was not feasible.
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Users of Tier 2 solutions often find that these solutions are more prescriptive; i.e., governmental best
practices are designed within the application. This is intuitive since Tier 2 solutions were designed for
use within the government sector. They may offer less flexibility and configurability than Tier 1 system
but, as a result, are typically less cumbersome to implement within their organization, because of their
native public sector design and more prescriptive implementation approach. Tier 2 vendors tend to
have their origin based in the government sector and have been improving and updating their software
products to offer a greater range of modules and functionality. As such, the Tier 2 vendors are touting
themselves as viable alternative solutions to Tier 1 providers. However, beyond enhanced
functionality, the scalability of the services being offered by Tier 2 solution providers is a strong
consideration when determining the best overall solution. Unlike Tier 1 solution providers, nearly all
Tier 2 solution providers implement their own software and do not rely on third party implementers.
The software marketplace has seen the emergence of solutions being touted as Tier 1.5’s, or “one and
a half.” Originally positioned as Tier 1 or Tier 2 solutions, these vendors have now positioned
themselves between the two tiers and often offer enhanced functionality in areas such as HR and
Payroll. They are also offering modules that are able to scale up to a larger client’s complexity and
transaction volume but at a lower cost and time to implement as compared to a Tier 1 provider.
Many of the solution providers will propose modules in the first two areas noted above as components
of their overall solution set that are characterized as “best-of-breed” solutions. For HR/Payroll
specifically, there are a number of niche solutions that have frequently been implemented by public
sector organizations to complement their existing financial system investment to obtain a “best-of-
breed” approach.
3.2 BEST-OF-BREED
A modification to Integrated ERP for delivering enterprise information solutions is the “best of breed”
approach. This solution architecture is based upon selecting the best individual product solution for
each functional requirement within the organization. The City’s current environment represents a “Best
of Breed” approach, utilizing a combination of systems, for example: SAP (Financials), Questica
(Budget) and custom/shadow systems that are not state-of-the-art. Because a business enterprise
operates in an integrated, rather than “stovepipe” fashion, creating an enterprise information solution
using a “best of breed” strategy involves designing, implementing, and supporting the required
technology integration. This, in fact, has represented a significant challenge for the City. Hence, the
City should seriously consider the various potential benefits and challenges inherent in a “best of
breed” approach.
In some cases, there isn’t a choice, and the organization must integrate “best of breed” products to
address requirements. This is the case when the functionality is specialized enough so that it does not
exist in extended ERP systems, e.g., GIS, DCS/SCADA, and LIMS. This is one of the reasons why
ERP vendors and 3rd Party software companies have developed Enterprise Application Integration
software, as well as why consulting firms offer network integration programming assistance.
Benefits of “Best of Breed.” The “Best of Breed” solution strategy enables the organization to select
the optimal solution for a particular problem or function within the enterprise. Hence, on a
requirement-by-requirement basis, there is less compromise required. This can also have some
benefits related to sizing the solution. The customer can avoid “overkill,” or “gold plating” solutions on
the one hand or, on the other hand, have an insufficient technology fit relative to requirements, that
may later result in the development of supplementary, or shadow systems to make up for product
limitations. Because of the more exact “fitting” of the solution to the discrete problem, the initial license
and implementation costs may be more appealing. A critical element is the importance of identifying
and understanding the organization’s functional requirements.
Challenges of “Best of Breed.” The countervailing perspective, as previously described in this
chapter’s description of ERP systems, is that the whole of the enterprise solution is greater than the
sum of its parts. Hence, optimal individual product selections may not result in the best enterprise-wide
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information solution. This can be reflected in both the technical challenges required for creating and
maintaining an integrated solution, the likely limitations of even an integrated “best of breed” solution,
and the total cost of ownership.
“Best of Breed” solutions, being created and implemented by different firms lack the single integrated
enterprise database common to ERP solutions. With ERP solutions, integration is designed into the
product and data is shared in real-time between the application modules. With “best of breed”
solutions, the customer must design and manage application integration. Current technology makes
this somewhat easier with industry programming and database standards, and well as Enterprise
Application Integration software. However, design, customization and maintenance of integrated
systems is far from trivial. Without integration, a “best of breed” approach can’t be considered an
enterprise information system.
Integration of systems can exist at a variety of different levels. One should be careful not to allow
vendor claims of product “integration” to be taken at face value. The devil is in the details. The
following are examples of some of the problems and implications relative to the integration challenge:
End user ability to drill-down into the underlying data may be more limited if data resides on
multiple platforms and databases.
Report development and crosscutting analysis of data across the organization is more
complex and will most likely require the development of an enterprise data warehouse.
Workflow technology may be more limited across platforms. Microsoft Office email products
can be used as a common “pipeline” backbone for workflow notifications. However not all
vendors have workflow capabilities that are integrated with off-the-shelf Office products.
A more global issue is that when a customer adopts a “best of breed” strategy, they assume primary
responsibility for identifying, creating, enhancing, and maintaining product integration. One of the
inherent benefits of the ERP approach being sold by vendors, and demanded by the market, is in
providing and supporting an integrated enterprise solution. As a result, the market applies additional
pressure to drive creative responses to integration challenges. To some degree both ERP and “best of
breed” vendors have created discrete integration solutions. This is usually in response to individual
client requests, and if there is sufficient demand, vendors may productize and provide varying degrees
of support for these solutions. However, as previously noted, the nature of these interfaces needs to
be carefully evaluated.
An additional consideration is accurately estimating the total cost of ownership. The cost of the
solution is typically identified as including initial licenses, training and implementation costs, as well as,
ongoing costs for maintenance support. In addition, a significant cost may be related to developing
and maintaining interfaces between systems. IT staff or consultants must create and document point-
to-point interfaces between applications or implement and maintain Enterprise Application Integration
software. Developing integration capabilities is a type of customization and, as a result, must be
tested when relevant software application product upgrades are implemented. Hence, the total cost of
creating an integrated, “best of breed” solution should include these total lifecycle costs, including the
opportunity cost of applying IT staff and resources to create and maintain these interfaces.
3.3 ALTERNATIVE SOFTWARE DELIVERY OPTIONS: HOSTING (“CLOUD”)
In the past ten years alternative software delivery models have made their way into the ERP
marketplace, the most popular of which are hosted solutions. While the popularity of hosted enterprise
solutions did not materialize in the early part of this decade as many had predicted , organizations are
slowly embracing hosted solutions in order to relieve some of the burden of an overworked business
and technical staff. There are a variety of hosting models available to the public sector today, many
of which have been used interchangeably by vendors providing enterprise software to the public
sector and all identified as ‘the cloud.’
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In general, the market for full scale ERP delivered via ‘the cloud’ is still immature in the public sector.
However, SaaS has proven successful for more specialized applications such as document
management, CRM, and selected human resources applications. Private Cloud Computing is among
the highest interest areas across all cloud computing according to Gartner, with 75% of respondents in
Gartner polls pursuing a strategy in this area. One of the major goals is the evaluation of virtualization-
driven value and benefits. In addition, Software as a Service is rapidly gaining adoption; leading
Gartner to forecast more than 50% of respondents will have some form of SaaS based application
strategy by 2015. Factors driving this adoption are the high priority organizations are putting on
customer relationships, gaining greater insights through analytics, overcoming IT- and capital budget-
based limitations, and aligning IT more efficiently to strategic goals.
Overall, hosted solutions are gradually becoming a popular way to acquire modern software while
containing costs, especially amongst small-mid market public sector organizations.
3.4 ERP VENDOR CONSOLIDATION
Consolidation among public sector software vendors has left a fewer number of vendors providing
customized services to the Public Sector than in prior years. Organizations such as Harris, Oracle,
SunGard Public Sector, and Tyler Technologies have acquired competing software offerings over time
and, to varying extents, marketed, licensed, implemented and supported each of them. As such, the
remaining vendors have a larger installed base per vendor. It is anticipated that, over time, these
vendors will reduce, not increase, the number of ERP solutions that they will maintain and support for
the public sector. This consolidation of solution offerings is typical in the software industry as a result
of their desire to create a sustainable business model. Thus, it is important during the due diligence
and contract negotiation process, to consider any the future product plans available from software
providers, with the purpose of maximizing solution longevity and avoiding expensive capital outlays for
upgrades and for replacements.
3.5 SUMMARY COMPARISONS
Summary Comparison: Tier 1 versus Tier 2
The following table identifies some of the key differences between Tier 1 and Tier 2 software providers
on issues such as support requirements, cost of implementation services, cost of major version
upgrades, software support channel, and other factors:
Characteristic Tier 1 Vendors Tier 2 Vendors
Sample
Representative
Vendors:
Oracle (PeopleSoft and Oracle e-
Business Suite)
Workday
SAP
Oracle (JDE 1.5)
Lawson – (1.5)
CGI – (1.5)
Others
SunGard Public Sector (e.g.
OneSolution)
Tyler Technologies MUNIS and
Eden
New World Systems
Harris (e.g. Innoprise, etc.)
Others
Design
Considerations
Developed product for private sector
and later adapted for public sector
Many modules specific to public sector
Larger organizations with greater R&D
budgets, offer more robust technology
Primarily designed for public sector
More prescriptive functionality and
less conducive to customization
without altering source code
Often leverage common municipal
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Characteristic Tier 1 Vendors Tier 2 Vendors
Robust development tools
Scalable to leverage most robust
development and database
environments
technology standards (e.g. MS SQL
database). Some support Oracle
Environments leverage 3rd party
tools (database, report writer, etc.)
Ongoing
Technology Support
Resource
Requirements
Most require multiple technology FTE
to support
Also impacted by level of integration
with other organizational systems
Requires fewer technology FTE to
support
Also impacted by level of integration
with other organizational systems
Software
Functionality
Core modules have robust functionality
May lack public sector specific features
(e.g. encumbrance rollover, GASB 34
reporting, etc.)
License costs per user typically more
expensive than Tier 2
Incrementally less robust
functionality for core components
HR/Payroll solutions are frequently
less robust as compared to Tier 1
offerings
Many vendors offer additional public
sector modules, such as fleet
management, request for service,
etc.
License costs per user typically less
expensive than Tier 1
Implementation
Services for New
Installation
Requirement for multiple full time staff
to implement
Requires significantly greater
implementation vendor resources than
Tier 2 to implement including key staff
that are full-time to the project
Software implementers are typically
integrators / channel partners
Implementation services cost ratio
comparison to license fees often many
times software cost (frequently 3:1 or
higher)
Vendor “Homework” approach has
organization responsible for many
implementation tasks
Frequently implemented with
organization resources not
dedicated to the project
Rarely requires full-time vendor staff
to implement
Software vendors also implement
their own solutions
Implementation services ratio
typically closer to 1:1. 2:1 would be
more robust services approach
Staff required for
Implementation1
15-30 FTE 3-7 FTE
Ongoing support
staff required
6-14 FTE 1-3 FTE
1 Based on Plante Moran’s experience working with other clients on ERP selection and
implementation initiatives.
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Characteristic Tier 1 Vendors Tier 2 Vendors
Cost Model for
Major Version
Upgrades
Most major upgrades include significant
license fee costs
Most major upgrades require significant
levels of vendor services to assist
License fees for version upgrades
often included with maintenance
fees
Most major upgrades require
moderate levels of vendor services
Software Support
Channel
Mixed, some direct, some through
implementer / value added reseller
channel
Primarily direct vendor support
Hosting Options Generally hosted internally, some
offering ASP. Workday is one of the
only multi-tenant web-based options.
Generally hosted internally, some
offering ASP. Few multi-tenant
web-based options.
Summary Comparison: On-Site vs. Hosted
Characteristic Advantages Disadvantages
On Premises /
Internally Hosted
Financial
Applications
Environment
City has design control of
application architecture to focus on
reliability, availability and scalability
Optimal solution for “heavy-weight”
applications (not necessarily
designed for thin-client
deployment), typical of Tier 2
solutions.
Application are generally more
customizable and more easily able
to be integrated to County best of
breed business applications
Direct data access for custom
reporting
Ongoing maintenance costs are
less substantial that with hosted
solutions
Application upgrades can be
performed and coordinated on the
City schedule incrementally more so
that with a vendor hosted solution
Leverages existing technology,
people, and contracts
System reliability, security,
maintenance, and management
will remain the responsibility of
the City
Higher capital costs –
particularly for hardware and
related operating and database
software
The time required to implement
a new City hosted environment
is typically longer than with the
vendor hosted model
Workstation replacement cycles
must be maintained to more
reasonable levels
Vendor Hosted
Environment
Shared services model will allow the
City the benefit of additional
technology and tools to enhance the
security and administration of the
environment, which otherwise may
be unaffordable
If the City’s network or Internet
service is down, then its
employees lose access to the
application.
Uptime and disaster recovery
become more critical
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Characteristic Advantages Disadvantages
Decreased technical administration
workload for City IT staff. Cost
savings associated with reduced
demands on IT personnel
Typically, there are fewer
workstation software installation
requirements potentially lengthening
workstation replacement cycles.
The ASP vendor is responsible for
installing the system and its
subsequent support. Any type of
technical issue can often be
immediately isolated to the software
client or host application providing
the software.
The City is able to predict and
control costs more accurately,
depending on the negotiated
subscription contract & fees.
Changes to meet the City’s
unique requirements may not be
possible. The City may have to
adapt certain system
administration processes to be
consistent with vendor
processes.
Database or information security
risks increase with the ASP
model. Distributed
responsibilities for security
practices make for a more
complex environment.
Integration to City hosted best of
breed business applications
becomes more complex
While reducing City technical
support effort, will require City IT
managers to increase effort with
maintaining the vendor
relationship. The City would
need to manage a Service Level
Agreement on an ongoing basis
and specifically during periods
of contract discussions or
consulting during customization.
Volatility of future costs: ASP is
a subscription service and fees
are paid over a period of time.
The City can negotiate an initial
purchase price and annual fees,
but has less control over
subsequent subscription fees
and is subject to rate hikes after
the predetermined contract
period ends.
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4 Options Analysis
Consistent with project objectives and based on the evaluation of the current functional and the
technology environment, the City has three primary options in regard to the strategic direction of a
future applications environment, with variations/alternatives within multiple options. These are defined
at high level in the table below and analyzed in additional detail throughout this section of the report.
Key assumptions were necessary in preparing these estimates and these are represented in the
Detailed Cost of Ownership Details and Assumptions Section located in Appendix D.
Option Summary of Options/Alternatives
Option 1: Status
Quo with
Investment
Do Not Change the Current Application Environment. Remain on
the current version of SAP and retain existing best of breed systems.
Option 2: Upgrade
SAP
Upgrade SAP and pursue one of the alternatives below:
Upgrade all existing modules and retain existing best of
breed systems.
Upgrade only SAP Core Financials/HR/Payroll modules,
retain existing Best-of-Breed systems and procure a new
‘Best of Breed’ Utility Billing Solution to replace SAP Utility
Billing.
Option 3: New
ERP Environment
Replace Current Systems with an Integrated Public Sector
Focused ERP System and pursue one of the alternatives below:
Replace SAP and current best of breed solutions with a fully
integrated public sector focused ERP solution and procure a
separate utility billing best-of-breed solution
Replace remaining SAP functionality with a fully integrated
financials/hr solution, retain the current best of breed
systems and procure a utility billing best of breed.
Further details are described within each option analysis including their advantages and
disadvantages and other key factors for the City’s consideration.
4.1 OPTION 1: STATUS QUO WITH INVESTMENT
OVERVIEW
The City always has the option to remain with the ‘status quo’ environment and remain on its current
version of SAP and additional best-of-breed systems. This option represents the City’s current
investment position with the resources currently in place supporting the SAP environment on premise
today. It also represents the existing mix of best of breed or third party applications interfaced with
SAP supporting the budgeting, fixed asset / asset management, human resources, purchasing,
revenue collection, treasury, and utilities management. The City is paying a premium for the addition
of best of breed solutions when core SAP functionality exists but cannot be fully realized.
ADVANTAGES
Included below is a list of the most significant advantages to continuing with the status quo at the City:
1. Focus on existing enhancement requests: The City could focus on completing the existing
SAP enhancement requests in the queue
2. Limited Operational Impact: This option would not impact the financial and human resources
functions which have a broader internal user base.
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DISADVANTAGES
Included below is a listing of the most significant disadvantages to continuing with the status quo at
the City:
1. Product ‘Sunset’: The City is currently reaching the end of SAP’s ECC 6.0 support in
December 2015 and will be charged a premium for support beginning in 2016.
2. Staffing Challenges: The City’s SAP support team is not adequately staffed in number or
sufficient expertise to keep pace with the level of service demanded by the City’s business
units. The delays in supporting the core system environment are driving staff to pursue best of
breed solutions replicating the capabilities within the SAP core and extended modules.
3. High Costs: The City’s investment in supporting its ERP environment is significantly higher
than the vast majority of peer communities Plante Moran evaluates as it conducts its needs
assessments in terms of employees, operational complexity, and ERP requirements
represented by the City and inventoried in this evaluation.
4. Interface Complexity: The number of interfaces the City requires demands a system
architecture that facilities data exchange and the present, legacy environment is not optimized
in this manner.
OPPORTUNITIES
1. Training and Support: Identify staff training requirements and reporting needs within all
business units to support the systems administration for the next three years. Seek to provide
tactical training options to the City’s team especially in the areas of reporting and analysis.
OPTION 1: COST ESTIMATES AND SUMMARY
Based on Plante Moran’s experience with projects of similar scope, we have estimated internal and
external cost projections for the City to remain in its existing environment/status quo as represented
below. Key assumptions were necessary in preparing these estimates and these are represented in
the Detailed Cost of Ownership Details and Assumptions Section located in Appendix D.
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For several reasons, Palo Alto does not appear to have the luxury of maintaining the status quo and
continuing to use the existing SAP system ‘as- is’ for several more years. As noted in the Gap
Assessment section of this report, a number of functions work poorly at best. The support for the SAP
Utility Billing is challenged and this area is especially strategic for the City because of its importance
as a revenue source. Lastly, the SAP release the City is currently running is nearing the end of its
lifecycle, and the City will have increased difficulty in obtaining support for this software if it does not
upgrade.
Option 1
ON PREMISE
Status Quo
with Investment
EXTERNAL COSTS
One-Time Cost Summary
Software License Fees -$
Additional Hardware Costs N/A
Consulting Implementation / Data Conversion / Interface Development -$
Training N/A
System Selection & Implementation Planning Fees N/A
Total External One-Time Costs -$
Reoccurring Cost Summary
Annual Software Licensing & Solution Support 667,910$
Consulting Support Services 250,000$
Cloud (includes Licensing, Support, Interfaces & Consulting Services)-$
Training 112,500$
Total External Recurring Costs 1,030,410$
INTERNAL COSTS
Reoccurring Cost Summary
Current Support FTE 2,073,000$
Additional Support FTE'S -$
Total Internal Recurring Costs 2,073,000$
Year #1 Grand Total Cost 4,133,820$
FIVE YEAR ESTIMATES
Five-Year Estimate *17,138,248.00$
Cost Category
* Estimate includes one-time and reoccurring costs during year one, annual software licensing and solution support for planned
application purchases in year one are assumed to incurred in years 2-5 only, and the future value of investments has been adjusted
for years 2-5 to account for a 3% annual rate for inflation.
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4.2 OPTION 2: UPGRADE SAP
OVERVIEW
The City could decide to increase its current SAP investment and pursue a number of upgrade options.
This choice represents the City upgrading its current SAP investment and pursuing one of the
alternatives below:
1. Option 2, Alternative A: Upgrade all existing SAP modules and retain existing best of breed
systems.
2. Option 2, Alternative B: Upgrade only SAP Core Financials/HR/Payroll modules, retain
existing Best-of-Breed systems and procure a new Best of Breed Utility Billing Solution to
replace SAP Utility Billing Functionality.
4.3 OPTION 2, ALTERNATIVE A
Upgrade SAP and Retain Existing Best-of-Breeds.
This option represents the City’s migration to a Hybrid Cloud where the City would take advantage of
the HANA Enterprise Cloud to take advantage of hosted and managed services from SAP. The City
would assume maintenance responsibility for the non-SAP applications that would reside in this
environment and will retain ownership of these licenses.
ADVANTAGES
Included below is a listing of the most significant advantages to upgrading the current SAP
environment and retaining the existing best-of-breed portfolio:
1. Quicker Implementation: The City could accept the existing SAP proposal and move quickly
to begin work on the project. Even if the City would decide to bid the project with alternative
consulting vendors, as discussed below, the project would still move more quickly than one
requiring selection of a new ERP system.
2. Builds on Existing SAP Expertise: This alternative takes advantages of existing SAP
expertise among the general City staff and also the IT staff.
3. Builds on Existing SAP Relationship: This alternative also allows the City to build on an
existing relationship with SAP, rather than begin a new relationship with a new vendor. The
City retains ownership of its SAP licensing and has flexibility as to the environment it chooses
to manage its applications. The City will continue to pay an annual licensing fee that will
include software maintenance, migration services for SAP’s core finances, a new HR solution,
and a new utilities billing solution.
4. Utilization of Modern Cloud Technology: The City would be able to leverage the HANA
Enterprise Cloud architecture for both its business intelligence and application interface needs.
5. Improved Functionality: The SAP SRM module, enterprise asset management solution, e-
procurement solution, and an HR module are incorporated in this option.
6. Staff Optimization: Internal staff support would be reduced by 4.4 FTE’s in this new
environment for a total of 8 dedicated FTE’s. This includes seven (7) staff dedicated to
supporting SAP and one staff member dedicated to managing of the City’s Enterprise Asset
Management System.
DISADVANTAGES
Included below is a listing of the most significant disadvantages to upgrading the current SAP
environment and retaining the existing best-of-breed portfolio:
1. Mismatch of Technology to City’s Business Requirements: The City’s ERP requirements
do not appear to cross the threshold of being unique enough to require a Tier 1 ERP system
and the capabilities of Tier 1.5 and Tier 2 systems are believed to fulfill the City’s strategic
needs.
2. Proliferation of Best-of-Breed Systems: The City continues to invest in best of breed
solutions that duplicate capabilities available by the core SAP functionality available (e.g.
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e-receivables, asset management, human resources). The addition of specialized best of
breed applications increases the City’s overhead to test, manage, and coordinate the version
control for each system interface.
3. Complexity of Interface development and Support: The specialization necessary to
manage each additional best of breed application requires ongoing training that must be
coordinated between the business unit (core application stakeholders) and information
technology so institutional knowledge is retained.
4. High Cost of Ownership: Excess cost burden over five years exceeds $25 million in external
and internal funding is extreme.
5. Utility Billing Challenges: The SAP utilities billing solution proposed may require further
evaluation and has not been determined to adequately meet the requirements expected by the
Utilities Department.
4.4 OPTION 2, ALTERNATIVE B:
Upgrade SAP Core Financials/HR/Payroll Modules Only Keep Existing Best-of-Breed Systems
Obtain Best of Breed Utility Billing Solution.
This option is essentially identical to as Option 2 ’a’ above with the exception of the addition of a
utilities best of breed system. The overlap between the core SAP and best of breed solutions remains
in this option and it does not appear to offer a viable strategic alternative.
ADVANTAGES
Included below is a listing of the most significant advantages to upgrading the current SAP
financials/HR/payroll environment only, but also selecting a new non-SAP utility billing solution:
1. Appropriate Functionality: The Utilities Department has a solution that is designed to fulfill
the robust requirements servicing its water, sewer, gas, electric, and fiber billing requirements
that is compatible with its field resource application needs.
2. Utilization of Modern Cloud Technology: The City would be able to leverage the HANA
Enterprise Cloud architecture for both its business intelligence and application interface needs.
3. Builds on Existing SAP Expertise: This alternative takes advantages of existing SAP
expertise among the general City staff and also the IT staff.
4. Builds on Existing SAP Relationship: This alternative also allows the City to build on an
existing relationship with SAP, rather than begin a new relationship with a new vendor. The
City retains ownership of its SAP licensing and has flexibility as to the environment it chooses
to manage its applications. The City will continue to pay an annual licensing fee that will
include software maintenance, migration services for SAP’s core finances, a new HR solution.
5. Improved Functionality: The SAP SRM module, enterprise asset management solution, e-
procurement solution, and an HR module are incorporated in this option.
6. Staff Optimization: Internal staff support would be reduced by 4.4 FTE’s in this new
environment for a total of 8 dedicated FTE’s. This includes four (4) staff dedicated to
supporting SAP and one staff member dedicated to managing of the City’s Enterprise Asset
Management System. Three (3) staff business analysts would continue to support the best of
breed utilities system.
DISADVANTAGES
Included below is a listing of the most significant disadvantages to upgrading the current SAP
financials/HR/payroll environment only, but also selecting a new non-SAP utility billing solution:
1. Mismatch of Technology to City’s Business Requirements: The City’s ERP requirements
do not appear to cross the threshold of being unique enough to require a Tier 1 ERP system
and the capabilities of Tier 1.5 and Tier 2 systems are believed to fulfill the City’s strategic
needs.
2. Proliferation of Best-of-Breed Systems: The City continues to invest in best of breed
solutions that duplicate capabilities available by the core SAP functionality available (e.g. e-
receivables, asset management, human resources). The addition of specialized best of breed
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applications increases the City’s overhead to test, manage, and coordinate the version control
for each system interface.
3. Complexity of Interface development and Support: The specialization necessary to
manage each additional best of breed application requires ongoing training that must be
coordinated between the business unit (core application stakeholders) and information
technology so institutional knowledge is retained.
4. High Cost of Ownership: Excess cost burden over five years exceeds $25 million in external
and internal funding is extreme.
4.5 OPTION 2: COST ESTIMATES AND SUMMARY
Based on Plante Moran’s experience with projects of similar scope coupled with existing SAP upgrade
pricing information already provided to the City, we have estimated internal and external cost
projections for the City to upgrade its current SAP investment. Key assumptions were necessary in
preparing these estimates and these are represented in the Detailed Cost of Ownership Details and
Assumptions Section located in Appendix D.
Although upgrading SAP to the newest version and redeveloping the related processes as part of the
project seems viable, using this project to also upgrade Utility Billing with SAP would be difficult. If the
City decides to pursue and SAP upgrade path, we would instead suggest focusing on upgrading to
SAP while implementing a separate best-of-breed utility billing system. Based on our discussion with
City end users and knowledge of the public sector software marketplace, the City would seemingly
receive better utility billing functionality and support from either a separate best-of-breed utility system
or the utility billing abilities in a Tier II ERP system.
Option 2a Option 2b
ALL IN CLOUD
Upgrade SAP and Retain Existing
Best of Breed Systems
MIXED ENVIRONMENTS
Upgrade SAP Core Financials/HR/Payroll
Modules Only Keep Existing Best of Breed
Systems Obtain Best of Breed Utility Billing
System
EXTERNAL COSTS
One-Time Cost Summary
Software License Fees 3,628,151$ 3,391,151$
Additional Hardware Costs N/A N/A
Consulting Implementation / Data Conversion / Interface Development 589,350$ 1,009,757$
Training 566,850$ 686,850$
System Selection & Implementation Planning Fees N/A 80,000$
Total External One-Time Costs 4,784,351$ 5,167,758$
Reoccurring Cost Summary
Annual Software Licensing & Solution Support -$ 64,138$
Consulting Support Services -$ -$
Cloud (includes Licensing, Support, Interfaces & Consulting Services)3,421,439$ 2,921,439$
Training 150,000$ 165,000$
Total External Recurring Costs 3,571,439$ 3,150,577$
INTERNAL COSTS
Reoccurring Cost Summary
Current Support FTE 510,000$ 510,000$
Additional Support FTE'S 530,000$ 530,000$
Total Internal Recurring Costs 1,040,000$ 1,040,000$
Year #1 Grand Total Cost 6,267,261$ 6,650,668$
FIVE YEAR ESTIMATES
Five-Year Estimate *$25,559,803 $24,182,480
Cost Category
* Estimate includes one-time and reoccurring costs during year one, annual software licensing and solution support for planned application purchases in year one are
assumed to incurred in years 2-5 only, and the future value of investments has been adjusted for years 2-5 to account for a 3% annual rate for inflation.
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4.6 OPTION 3: NEW ERP ENVIRONMENT
OVERVIEW
Through a competitive RFP process, the City could procure and implement a fully integrated Tier 2 or
a Tier 1.5 ERP solution that includes both Core ERP and Extended ERP Modules, plus some variety
of integrations with best-of-breed solutions (e.g., Sympro). Most Tier 2 solutions are designed
specifically for the public sector so that they offer a wide variety of integrated modules versus Tier 1
solutions that are utilized by a wide variety of industries, including multi-national corporations with very
unique requirements. Tier 2 solutions typically have fewer configuration options and are tailored to
public sector organizations but require a significantly lower implementation effort and on-going internal
support. Tier 1 solutions (like SAP) typically require a much greater level of implementation,
maintenance and support resources but can provide the City with more robust functionality and greater
flexibility in order to handle very unique operational situations and business processes that are tailored
to the City’s. Given this assessment, it is likely that the a Tier 1.5 or Tier 2 solution would replace the
current SAP and best-of-breed applications and as well as the many additional spreadsheets and
other “shadow systems”
By changing systems, the City would maintain and support the current environment through the future
system selection and implementation effort. The system selection would be a competitive
procurement with stakeholder input to define requirements and measure vendor compliance in fulfilling
them. It would require a capital investment and necessitate ongoing sustained investment through
software maintenance and continued internal technical support.
Overall, in Option 3, the City would replace current systems with an Integrated Public Sector Focused
ERP System and pursue one of the alternatives below:
1. Option 3, Alternative A: Go to market for a fully integrated public sector focused ERP solution
and procure a separate utility billing best-of-breed solution.
2. Option 3, Alternative B: Go to market for a fully integrated core financials / human capital
management solution, retain the current best of breed systems and procure a utility billing best
of breed.
4.7 OPTION 3, ALTERNATIVE A:
Go to market for a fully integrated public sector focused ERP solution and procure a separate
utility billing best-of-breed solution.
This option assumes the City reinvests in a new, fully integrated ERP solution that would take
advantage of the capabilities of a Tier 1.5 or Tier 2 solution. This alternative is to select and
implement a government-oriented ERP system, which would be used for all functions, including those
supported by current best-of-breed solutions such as budget support. This alternative would also
pursue the procurement of a best of breed utility billing module for utility support. Overall, the City
would prepare an RFP for a solution that incorporates all current/required functionality in addition to
integrating with a new utilities best of breed system.
ADVANTAGES
Included below is a listing of the most significant advantages to replacing the existing applications
environment with an integrated ERP at the City:
1. Streamline the City’s Technology Investment and Improve Functionality: The City
selects an integrated ERP solution that fulfills the needs currently serviced by SAP in addition
to divesting itself from a majority of the best of breed systems the City owns and is obligated
to pay licensing maintenance, invest in internal/external staff support, and train staff to
effectively utilize.
2. Least Cost: The value proposition achieved from the savings estimated over five years for
this option exceeds a range between $7 - $15 million over the comparable alternatives.
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3. Staff Optimization: Internal staff support would be reduced by 4.4 FTE’s in this new
environment for a total of 8 dedicated FTE’s. This includes four (4) staff dedicated to
supporting the new ERP and one staff member dedicated to managing of the City’s Enterprise
Asset Management System. Is also retains three (3) staff dedicated to supporting the utility
best of breed system.
4. Less Reliance on Outside Consultants: The City builds internal capacity to administer and
optimally configure its ERP environment without relying upon external contract services for on-
call support services. It can also more effectively recruit and retain staff members that do not
require the specialization or highly competitive salary expectations SAP systems demand in
the heart of Silicon Valley.
5. On Going Support Sustainability: The City’s operations have demanded increased staffing
efficiency following the reductions in force drastically impacting the organization’s ability to
manage its SAP systems. The levels of expertise and staffing continues to increase as
service level expectations increase while support personnel remain unchanged. Furthermore,
the absence of succession planning has significantly impacted the institutional memory of the
organization. A Tier 1.5 or 2 system can be maintained with fewer staff while providing more
options for staff to assume a greater role in learning to manage less complex systems.
6. Most Government-Oriented: The Tier 1.5 or Tier 2 ERP system focused on a government
market would be more responsive to structuring solutions to meet the needs of the municipal
industry best practices.
7. Less Complex ERP: A Tier 1.5 or Tier 2 ERP system would be less complex to learn,
configure.
8. Fresh Start: With the move to a new product, the excitement of a “fresh start” makes the
implementation somewhat more likely to be successful. And in this case, staff involved in utility
billing would have the additional motivation of being able to implement a public sector focused
utility billing system.
DISADVANTAGES
Included below is a listing of the most significant disadvantages to replacing the existing applications
environment with an integrated ERP at the City:
1. Change Management Challenges: This option will cause the greatest disruption to staff
within the organization as processes, procedures, and training needs would likely require the
greatest amount of re-engineering.
2. Existing Investment Lost: The investment made to interface the present SAP systems would
be lost and the third party systems would have to be re-interfaced.
3. Extended Duration of Implementation Project: Establishing a transition of this magnitude
will require staff augmentation that will increase staff support requirements in order to
complete a complete migration which will require several years to perform.
4.8 OPTION 3, ALTERNATIVE B:
Go to market for a fully integrated core financials / human capital management solution, retain
the current best of breed systems and procure a utility billing best of breed.
This option assumes the City reinvests in a limited government-oriented ERP environment where the
existing and planned best of breeds would be retained in addition acquiring a new best of breed
utilities management system.
ADVANTAGES
Included below is a listing of the most significant advantages to replacing the current SAP
financials/HR/payroll environment only, retaining the existing best-of-breed project portfolio and
selecting a new non-SAP best-of-breed utility billing solution:
1. Low Cost: The value proposition achieved from the savings estimated over five years for this
option exceeds a range between $3 - $11 million over the comparable alternatives.
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2. Staff Optimization: Internal staff support would be reduced by 4.4 FTE’s in this new
environment for a total of 8 dedicated FTE’s. This includes four (4) staff dedicated to
supporting the new ERP and one staff member dedicated to managing of the City’s Enterprise
Asset Management System. Is also retains three (3) staff dedicated to supporting the utility
best of breed system.
3. Less Reliance on Outside Consultants: The City builds internal capacity to administer and
optimally configure its ERP environment without relying upon external contract services for on-
call support services. It can also more effectively recruit and retain staff members that do not
require the specialization or highly competitive salary expectations SAP systems demand in
the heart of Silicon Valley.
4. On Going Support Sustainability: The City’s operations have demanded increased staffing
efficiency following the reductions in force drastically impacting the organization’s ability to
manage its SAP systems. The levels of expertise and staffing continues to increase as
service level expectations increase while support personnel remain unchanged. Furthermore,
the absence of succession planning has significantly impacted the institutional memory of the
organization. A Tier 1.5 or 2 system can be maintained with fewer staff while providing more
options for staff to assume a greater role in learning to manage less complex systems.
DISADVANTAGES
Included below is a listing of the most significant disadvantages to replacing the current SAP
financials/HR/payroll environment only, retaining the existing best-of-breed project portfolio and
selecting a new non-SAP best-of-breed utility billing solution:
1. Complexity of Interface development and Support: The complexity of managing the myriad
of best of breed interfaces would present a significant implementation risk to success in
addition to an obvious premium increase with respect to cost as licensing and maintenance for
each system would need to be carried forward. The cost savings benefit is considerably
diminished in this alternative in contrast to a completely integrated alternative.
2. Change Management Challenges: This option will cause significant disruption to staff within
the organization as processes, procedures, and training needs would likely require the
greatest amount of re-engineering.
3. Existing Investment Lost: The investment made to interface the present SAP systems would
be lost and the third party systems would have to be re-interfaced.
4. Extended Duration of Implementation Project: Establishing a transition of this magnitude
will require staff augmentation that will increase staff support requirements in order to
complete a complete migration which will require several years to perform.
4.9 OPTION 3: COST ESTIMATES AND SUMMARY
Based on Plante Moran’s experience with projects of similar scope coupled with past actual pricing
taken from selected Tier 1.5 and Tier 2 vendor proposals to similar sized entities as the City, we have
estimated internal and external cost projections. Key assumptions were necessary in preparing these
estimates and these are represented in the Detailed Cost of Ownership Details and Assumptions
Section located in Appendix D.
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Overall, the City may decide to continue with SAP, but in view of the total cost of ownership differential
as well as the problems that it has had in maintaining and optimizing SAP in the past, Option 3 will
allow the City to pursue a fresh start, lowering the total cost of ownership and improving functionality
for City end users.
Option 3a Option 3bNEW ERP
Go to Market for a Fully
Integrated Public Sector
Focused ERP Solution and
Procure a Separate Utility Billing
Best of Breed Solution
NEW ERP
Go to Market for a Fully Integrated Core
Financials/Human Capital Management
Solution, Retain the Current Best of
Breed Systems and Procure a Utility
Billing Best of Breed
EXTERNAL COSTS
One-Time Cost Summary
Software License Fees 1,069,984$ 1,670,133$
Additional Hardware Costs N/A N/A
Consulting Implementation / Data Conversion / Interface Development 2,142,027$ 2,338,275$
Training 120,000$ 250,850$
System Selection & Implementation Planning Fees 200,000$ 200,000$
Total External One-Time Costs 3,532,012$ 4,459,258$
Reoccurring Cost Summary
Annual Software Licensing & Solution Support 241,675$ 205,874$
Consulting Support Services 80,698$ 64,425$
Cloud (includes Licensing, Support, Interfaces & Consulting Services)-$ 646,080$
Training 75,000$ 115,000$
Total External Recurring Costs 397,373$ 1,031,379$
INTERNAL COSTS
Reoccurring Cost Summary
Current Support FTE 510,000$ 510,000$
Additional Support FTE'S 400,000$ 530,000$
Total Internal Recurring Costs 910,000$ 1,040,000$
Year #1 Grand Total Cost 4,442,012$ 5,942,168$
FIVE YEAR ESTIMATES
Five-Year Estimate *$9,911,572 $14,608,045
* Estimate includes one-time and reoccurring costs during year one, annual software licensing and solution support for planned application purchases in year
one are assumed to incurred in years 2-5 only, and the future value of investments has been adjusted for years 2-5 to account for a 3% annual rate for
inflation.
Cost Category
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4.10 PLANTE MORAN RECOMMENDATION
While many incremental improvements could be made or added to the current applications which
would mitigate the investment required by changing systems, the primary challenge with maintaining
the status quo would be the inefficiencies and lack of centralized information due to multiple systems
and shadow systems.
Should the City conclude to remain with the current financial, procurement and personnel software
applications environment via an SAP Upgrade, it would delay the complexities of the decision process.
However, it may be likely that the City would conclude to change financial and personnel application
suites in the future, and the timing of the change may be less advantageous.
Overall, remaining with the current environment does not appear feasible in the long term and
inappropriate as a future strategic direction in context of the City’s strategic goals and
concerns of the current financial, procurement and personnel applications environment.
As such, the City should direct its analysis efforts towards the consideration of evaluating the
advantages and disadvantages of changing the current environment to either further deploying and
integrating current systems or replacing them with a suite of integrated ERP modules from an ERP
provider.
While current inefficiencies were difficult for City staff to quantify, there is a common belief amongst
staff that information tracking tools and processes are inefficient, and there is a universal
acknowledgement that current information silos and the complexity of the current environment are root
causes of the issue. Given the functional and technical risks associated with interfacing the City’s
multiple standalone core financial, procurement and personnel systems, as well as the related need to
fundamentally re-implement the existing system, the City may be best served to evaluate the full range
of ERP options via a competitive bid process.
Assuming that the results of the ERP System Evaluation are considered and the recommendations for
system selection and implementation presented in the sections below are followed, we recommend
that the City pursue Option 3, Alternative A: Go to market for a fully integrated public sector
focused ERP solution and procure a separate utility billing best-of-breed solution.
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5 Recommended Next Steps
5.1 ERP SYSTEM EVALUATION APPROACH
To implement the recommendations presented herein, the following approach is recommended:
1. Review and obtain a complete understanding of the ERP System Evaluation Report.
The report and accompanying options and alternatives should be reviewed in their entirety to
gain an understanding of what is being presented and to prompt discussion and feedback on
elements of the report.
2. Garner support for the recommendations. Within the report, there are numerous
recommendations that will direct the use of staff time and other resources at the City. Support
for the recommendations will be essential in its success. This support must come from the
City leadership including City Council, Executive Steering Committee and Department
Directors.
3. Establish capital budgets and obtain funding. As part of the initial implementation of the
Plan and on an on-going basis, funding will need to be obtained to implement the initiatives in
the Plan.
4. Execute. Once approval for the project has been obtained and initial capital funding requests
initiated, the implementation of recommendations can occur. Plante Moran has recommended
teams of resources by process area to execute specific initiatives. The City will need to
assign specific resources to fulfill the roles recommended.
5. Continue with system procurement. Best practice system selection approaches and
implementation approaches should be considered in the selection of a new system to replace
current SAP and related systems.
5.2 PROJECT STRUCTURE AND GOVERNANCE
Execution of the recommendations and implementation of a new system will require a well-coordinated
and well-organized governance structure in which to operate and manage the project. For the new
system being considered by the City, many staff at the City will be impacted. Complex system
implementations are most successful at organizations with structured project governance.
The process and technology changes will be significant and will impact all departments. There will
also likely be policy changes that will need to be considered and implemented to receive the full
benefits.
Strong project management is also critical for deployment, and becomes increasingly important with
the new system investment. As a result, it will be critical to form a project structure that incorporates
the following:
1. Considers the needs of a variety of stakeholders
2. Provides the ability to make decisions in the most efficient and effective manner
3. Ensures that project communication is flowing to the right individuals at the right time including
those that are part of the project team and those external to the project team
4. The project team structure is empowered by management to enforce policies
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Recommended Strategies:
1. Confirm a formal governance structure to coordinate the selection of the new system using the
current ERP evaluation teams as a basis, with the intent that structure can be leveraged and
specific roles can be re-defined for future design, implementation and maintenance phases of
the system lifecycle.
2. As part of the RFP process, request information from vendors as to the optimal City staffing
structure and time commitment required for a successful system implementation including on-
going support and maintenance of the system.
3. Prior to launching the implementation phase of the project, establish expectations with the City
staff as to the time commitment that will be required for a successful implementation.
4. With the assistance and advice from the selected vendor(s), institute an implementation
governance structure that is well-staffed and supported by executive management within the
City.
5. Establish policies to sunset legacy solutions, supplemental applications and shadow systems,
in conjunction with the new system implementation so that they do not perpetuate an
environment of dual information tracking.
6. Establish data retention requirements to guide and manage the scope of required data
conversion.
5.3 REQUEST FOR PROPOSAL (RFP) TACTICS
The Request for Proposal (RFP) for a new system will encompass a number of sections including a list
of the scope of software modules to procure and a list of detailed software specifications
supplemented by other tables including interface requirements and migration paths for existing
systems. We recommend the organization of potential modules as they relate to the continued
assessment for inclusion in various phases of the project to be organized as follows:
1. Core Modules: These modules are ones whose existing legacy software resides in SAP that
are intended to be replaced as part of the project through the RFP process although their
replacement will likely occur in various stages of software implementation.
2. Expanded Modules: These modules are ones that are being considered for further evaluation
during the RFP process and may or may not be replaced as part of the project depending on a
number of factors.
3. System Interfaces Required: These modules are ones that are not within the scope of the
project but may have interfaces to the implemented new solution. At some point in the future,
the City may consider replacement of these modules or a marketplace assessment to
determine the current vendor solution set that exists for these areas.
Recommended Strategies:
The following strategies should be considered by the City as it continues through the RFP and due
diligence activities leading up to the selection of a future ERP solution:
1. Vendor clarity in RFP. Ensure that software vendors are clear as to the strategy of the
organization as it relates to the procurement of replacement software.
2. Open procurement process. Preliminary project cost estimates for Tier 1.5 vs. Tier 2
vendors vary significantly. The City should define both functional and technical requirements
as part of the RFP process and allow both tier vendors propose their respective solutions.
Then the City will be able to evaluate the solutions based on the selection criteria and
conclude on the most appropriate level of investment. The ERP Marketplace Assessment
section further details the differences between the tiers.
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3. Identify other vendor capabilities and solution scope. Within the RFP, include additional
questions pertaining to the capabilities of vendors in other areas not considered as part of the
initial scope of the project (i.e., system interface required modules) but which may be available
from the vendors.
4. Balance a strategic vendor decision with a preliminary investment. Include all modules
which the City may consider as part of a new system procurement and structure the RFP to
provide “a la carte” pricing. This will allow the City to evaluate the full scope of the vendor
solution to aid in the strategic decision of the vendor platform, however make a subsequent
conclusion on phasing the investment.
5. Progressive elaboration. As the City learns more about the work of the project, planning can
progress, becoming more elaborate, over time. Using consultant templates and expert
judgment can assist with leveraging lessons learned from other similar local public sector
organizations; however specific implementation planning requirements will be increasingly
defined throughout the project phases.
6. Evaluate financing options. As part of the RFP process, the City may wish to consider
financing options that are available from the vendor or other third party to provide a more
palatable payment stream to fund the capital cost of the project.
7. Leverage a prime vendor approach towards implementation. Regardless of the solution
set that is selected, to the extent possible the City should work to maximize contracting with a
single, prime vendor who has prime responsibility for the implementation of the entire solution
set that is purchased by the organization. It is reasonable to expect that a substantial portion
of the current manual processes and shadow systems could be incorporated within a new
system. With the prime vendor approach, the City would have the opportunity to choose
separate personnel system, financial and purchasing functions should be combined and it is
envisioned that the software marketplace offers solutions that would provide the City the
opportunity to integrate all these major functions if desired.
8. Software and services solutions. Ensure that information is gleaned from providers of new
system solutions in areas of both product and service as part of the RFP and due diligence
activities. Specifically, this would include the following:
a. Review their product offerings as requested in the RFP.
b. Identify and contact relevant references of a comparable size to the City.
c. Develop vendor demonstration agendas that are geared towards identifying how the
vendors will achieve specific the City outcomes.
For multi-product solutions, assess the degree in which these various products have operated with
each other at other clients.
5.2 PHASING
Due to the integration and data access that they can provide, many systems, particularly ERP systems,
are complex and require organizational commitment to successfully implement them. It is not
uncommon for organizations the size of the City to take between 12 to 24 months to implement such
systems. The implementation of a new system presents a number of options as to when certain
modules are deployed frequently based on when the various business cycles are executed within the
City such as:
Fiscal year-end
Calendar year-end
CAFR development
Budget development
Open enrollment
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Recommended Strategies:
Although there is no perfect answer as to when certain modules should be deployed, the following
best practices should be considered related to the implementation phasing set of activities:
1. Implement complimentary modules together. There is a natural implementation phasing of
like modules as part of the deployment of a new system. For example, core financial modules
should be implemented together. Likewise, HR/Payroll modules, to the extent incorporated,
should be implemented together as well. This is another example of factors to be considered
when determining an overall implementation approach.
2. Avoid “Big Bang Approach”. The deployment of a new system is a very significant project
requiring a large amount of staff and vendor time to implement as it will impact people,
process, policy and technology. Careful phasing of implemented modules should be
performed versus a “big-bang” approach of implementing all software at the same time to
minimize overall project risk and to ensure optimal utilization of resources. The City may wish
to consider separating core financial modules, payroll and personnel, and procurement
functions into separate phases. Integrations to other the City systems should follow, as the
system modules are implemented over time.
3. Evaluate opportunities for “Quick-Win” implementations. There are a number of
opportunities to obtain quick-win implementations of a new system that provide visible
evidence of project success and minimize the risk of bringing all modules up simultaneously.
Frequently, modules such as Debt Service Management and Investment Management are
isolated to a limited number of individuals, are relatively simple to deploy and do not have
significant interaction with the core financial system. Opportunities for these quick-wins
should be explored during the vendor selection phase of the project and more closely during
system implementation. Certain “quick-wins” may need to be initially implemented in stand-
alone mode with or without temporary bridges in place and then later integrated when the core
system is live.
4. Implement considering natural business cycles. A natural tendency is to implement the
financial components of a new system such that go-live is on a fiscal year-end to have all
transactions for a year on one system. In general, there are many cases where this is not the
ideal situation as the post go-live challenges with implementing a new system impede
significant activities that are required for year-end close. HR/Payroll solutions tend to go-live
on a quarterly basis and the City may wish to consider going live at a calendar year break due
to the processing of W-2 statements for employees. Regardless, natural business cycles
should be considered as part of the phasing of new system modules.
5.3 STAFF BACKFILL
Frequently, staff who are the most desirable to lead a new system a replacement project are also the
ones who also have the most knowledge of the legacy environment and are viewed as key in
maintaining the integrity of the existing environment. This is true at the City in certain areas such as
Finance.
Recommended Strategies:
1. Factor backfill costs in project budget. The City should consider the feasibility of
additionally factoring backfill costs into the overall project budget that is presented to the City
Council as part of the entire project budget.
2. Consider recent retirees to provide backfill. To the extent feasible, evaluate the
opportunity of using any recently retired staff to provide backfill support for the project or to
provide assistance in critical areas deemed important for the project due to their institutional
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knowledge. This may include areas such as data cleansing, where institutional knowledge is
relevant, or for addressing day to day operational responsibilities, while current the City
subject matter experts focus their attention on the new system implementation effort.
3. Consider workload sharing. Based on normal business cycles, certain City staff may
become especially busy addressing operational requirements. During these times, to the
extent that other City staff can re-focus their efforts to assist them in their operational duties, it
can mitigate the bottlenecks which can result and increase staff availability to participate on
the project. Additionally this can help with staff cross-training, and collectively “upgrade” staff
skills in each work area. To the extent that the City can proactively initiate such approaches in
advance of the new system implementation project, it can provide benefits to allow subject
matter experts to more easily transition to their project roles.
5.4 DATA CLEANSING / CONVERSION
Legacy systems frequently have data stored in a variety of formats either electronically within the
system or in hard-copy format that is deemed as critical, and has data retention requirements.
Vendors will generally provide two approaches towards the conversion of client data. In one method,
vendors will provide a template format to the City and request that all data to be converted is provided
in the requested format regardless of the number of data sources that currently house this information.
In the second method, vendors will manage both the extraction and conversion of information into the
template format. In both cases, the data conversion process will be iterative in terms of extracting,
converting, reporting and reviewing.
Likewise, cleansing of the data prior to the data conversion activity during implementation, though time
consuming, will generally make this process occur more smoothly. Regardless of the methods taken,
data conversion is considered a critical part of system implementation and one that can be a critical
risk to the project if not managed correctly. A certain amount of data cleansing can occur after data is
extracted using programming.
Recommended Strategies:
1. Data conversion requirements. Define general data conversion requirements in the RFP
and work with the tentative finalist vendor during the last stages of the selection to finalize the
scope of conversion within the Statement of Work (SOW) with the vendor.
2. Historical information. Avoid converting all historical information to the new environment.
Establish and use data retention guidelines to drive the scope of conversion. Instead,
consider the conversion of summary information as a first course of action unless detail is
needed.
3. Historical data access. Consider alternative options of accessing historical information other
than electronically. This may include printing of reports to electronic files or the creation of a
data warehouse.
4. Design conversion specifications. Develop a cross-walk between legacy and new system
data as part of the conversion process. For example, this may include development of an
interface that allows users to enter in an old account that then displays the same account in
the new structure. Likewise, an old vendor number could populate a field in the new system to
act as a cross-reference.
5. Data cleansing. Begin data cleansing activities as early as possible. For example, the City
may wish to start reviewing its existing vendor file and eliminating duplicates or vendors who
no longer exist. During the implementation phase of the project, most vendors will provide
specific instructions related to data cleansing activities.
6. Use of data warehouse. As a separate internal project, consider the use of a data
warehouse for housing of legacy data for historical reporting purposes. If this route is chosen,
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clear responsibilities for separately acquiring and implementing the data warehouse will be
required to consider both vendor and the City staff involvement.
5.5 INTERFACE DEVELOPMENT
Interfaces related to the deployment of a new system can exist in various forms as follows:
1. Standard imports or exports provided by the vendor’s solution with entities and systems
outside of the City (e.g., benefit providers, other governmental entities, etc.).
2. Interfaces between the vendor’s solution and applications that are not being considered for
replacement as part of the project.
3. Interfaces between the vendor’s solution and applications that are being considered for
replacement as part of the project that may or may not be provided by the prime vendor.
Decisions as to who will develop and provide on-going support for system interfaces are another
important factor to consider. Certain vendors will provide toolsets that assist in the development and
management of system interfaces.
Recommended Strategies:
1. Identify interface requirements early. Define potentially needed interfaces between the
new system and external entities in the RFP. This would include existing as well as desired
new interfaces that would be populated in the Application Interface Table of the RFP.
2. Define full scope of interfaces. Define potentially needed interfaces between the new
system and other City systems not being replaced in the RFP. This would include existing as
well as desired new interfaces that would be populated in the Application Interface Table of
the RFP. Identify other candidate interfaces in the RFP with systems that may or may not be
replaced.
3. Prime vendor and interfaces. Ensure that the prime vendor is responsible for the delivery of
all system interfaces during implementation.
4. Shadow support staff. City staff should shadow vendor staff during system implementation
to develop an understanding of their conversion tools such that the City can maintain those
interfaces designated for the City support going forward.
5. Leverage existing interfaces. Consider allowing the software vendors to maintain interfaces
that exist between their product and entities outside of the City (e.g. benefit providers, IRS,
etc.) and, as an option, other systems not being considered for replacement by the City.
6. Process redesign consideration of interfaces. In conjunction and as a result of the
implementation’s business process redesign activities, perform the necessary work to further
inventory the system interface requirements, develop an system interface plan, design and
develop the system interfaces, test and accept the interfaces and implement them in
conjunction with the “out of the box” system implementation.
5.6 REPORT DEVELOPMENT
Although the selected vendor will likely provide a significant number of reports and queries through
their base system there will be a need for the City to have existing reports customized and to have
additional reports developed that are not available as part of the core set of reports. The skill sets
required for report development include not only the report development tools but also an
understanding of the database and/or views which the reporting tools access. Likewise, if the City
pursues the use of a separate data mart / data warehouse in order to perform more complex analysis,
additional skill sets will be needed.
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When software vendors demonstrate their solutions, the expectation of users being able to perform
ad-hoc reporting themselves is heightened as the vendors will present the process as simply involving
the point and click of a few buttons to generate the desired results. In reality, the process of using the
tool and developing an understanding of the database/view takes a period of time.
Recommended Strategies:
1. Establish expectations around reporting. Reset staff expectations that traditional reporting
should not necessarily be the first or most appropriate method towards obtaining the financial,
procurement or HR information that they seek. Instead, as part of the overall training
approach, ensure that staff understand the self service, inquiry and portal functions available
in the system, and when to use them. Reset staff expectations that not all reports will be
available at the go-live transition and that all users will be able to generate ad-hoc reports.
2. Ad-hoc reporting tools team. Identify a joint team of process owners and technical support
staff to be trained on the ad-hoc reporting tools during the implementation. These staff will
likely be generating custom-developed reports for some time after the go-live period.
3. Assess ad-hoc reporting tools. Obtain a clear understanding during the selection process
as to the reporting options available with each vendor solution and, for each reporting option,
who typically is using the tool.
4. Custom reports. Work with the software vendor during the implementation phase of the
project to develop a select set of custom reports, with their assistance, to improve knowledge
transfer as to both the product and database structure.
5.7 CHANGE MANAGEMENT
Project success comes from having a very clear idea of how management would like to run the City,
and then using redesigned processes and a new system to facilitate the way the City has envisioned it.
When process and software implementations do not meet expectations it is often due to people issues,
and not necessarily the technology. Research indicates a correlation between the success of a
change initiative and how well the people side is managed throughout the change. That is why
applying a change management methodology is critical to the success of such an initiative. A rigorous
change management methodology is critical to supporting the successful launch of new processes
and systems. The purchase and implementation of a new system and related technology is done to
assist in meeting organizational objectives and improving performance. Organizational performance
is also impacted by the people of an organization and the processes used to complete work.
Throughout the project, the goal is to balance these components, as illustrated:
People
Process
Technology
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5.8 COMMUNICATION PLANNING
As part of the first steps of change management planning, the City should develop communications
plans intended to guide project communications from process redesign through post-implementation.
By its nature, the project will affect many staff across the City.
Acknowledging the diverse City audiences that will be involved and impacted by this project, a
Communication Plan should be developed to create awareness and make the project relevant by
effectively communicating the impacts to both internal and external stakeholders. Sample objectives
for a Communication Plan may include:
1. Accurately distribute information in a timely manner concerning important project benchmarks
and progress to employees.
2. Use various media to provide multiple sources from which information concerning the project
can be accessible.
3. Ensure all information available is updated and accurate.
4. Reduce confusion among employees by providing a sole directive and source from which all
project information originates.
5. Provide clear channels of communication within which City project staff can operate to lead to
an expedited solution to issues that arise during the selection and implementation and after its
completion.
6. Encourage feedback from employees across the City
Recommended Strategies:
1. Assign a communication coordinator. The City should assign a communications
coordinator to the project management office to maintain and execute the communications
plan.
2. Identify and empower change agents. A Communications and Change Management Team
should recommend the appointment of key “change agents” within each Department to nurture
'buy in' and get Department staff committed to taking relevant actions. Such team members
will be involved in educating Department staff about the impacts and benefits of the project
and be “inspiration agents” by helping Department staff find ways to discover their potential,
overcome barriers, and celebrate successes. These staff should monitor "what is working",
"what isn't working" and "what do we need to change" – and provide regular feedback on
progress to Department staff.
5.9 PROCESS RE-DESIGN
The ERP System evaluation activities that were conducted surfaced several opportunities for
improvements in the management and execution of existing processes. Through the course of
conducting process owner process user review sessions, process-specific as well as the City-wide
issues and opportunities were surfaced. The City should re-engineer appropriate business processes
in conjunction with the implementation of the new ERP, as part of a successful change management
approach.
The mapping of “to be” business processes and certain high level process redesign can be performed
in advance of the implementation, either prior to or during the time that the City is facilitating a RFP
process. Along with process redesign, the City should select key performance indicators (KPIs) that
will be used to measure the City’s performance along with targets that are based on best practices.
Ideally, the City will measure performance according to selected KPIs prior to implementation, six
months after implementation, one year after implementation and quarterly thereafter (some
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organizations evolve to monthly, especially once business intelligence and dashboard solutions are
implemented).
The City should keep in mind the following:
1. The earlier process redesign is performed in the selection process, the more information the
City will have about the “to be” process which can serve as a basis for selection, along with
other factors such as cost, functionality, technology, implementation timeframe, etc.
2. If performed early in the process (e.g., prior to selection), management at the City will likely
face trade-offs in terms of cost versus ability to support “to be” processes.
3. The City will need to remain flexible in terms of which parts of the “to be” process are actually
implementable, given the new system capabilities. In fact, the vendor solution may provide
features resulting in a better, more efficient “to be” process.
During the implementation phase of the project, there may be significant levels of review conducted by
the selected vendor(s) to understand existing City processes and how their software can be used to
improve the efficiency and effectiveness of these processes. While vendors may offer additional
optional services to provide enhanced levels of implementation support to their customers, it is
generally considered the responsibility of the client to develop the actual procedural documentation
that defines exactly how these processes will operate with the selected system for use by process
owning and process end-user staff.
5.10 5ERP SYSTEM TRAINING
The City should develop appropriate training plans in conjunction with the implementation of the new
system. The City does not currently have a formalized enterprise wide training program for existing
financial, procurement and human resources systems.
The process of providing training to on the new system should occur in in conjunction with the
implementation of the new system. Training should be both functional and technical. Functional
training should be for both process owners and process end users. It will also be critical to provide the
necessary technical training to the City IT and departmental “power user” staff.
Recommended Strategies:
1. Establish training expectations. During the RFP development and due diligence activities
associated with reviewing vendor responses, ensure that any specific training expectations
are articulated to the vendors. As part of the due diligence phase with the finalist ERP
vendors obtain a clear understanding as to the level of training activities they will conduct
during the implementation phase of the project and the specific training materials.
2. Training team. During the implementation of the new system, formulate a Training Team
which will focus both on the implementation training requirements on the development of an
ongoing internal training program for continued exploitation of the capabilities of the new
system over time. Consider the use of a “train the trainer” approach, whereby the City would
save on vendor implementation expense, as well as encourage process owners to become
knowledgeable about the key aspects of the system.
3. Budget for future training. In future budget cycles, consider including an ongoing training
budget specific to the system, to assist in maximizing the ongoing leveraging of the City’s
investment.
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6 Appendices
6.1 APPENDIX A: PROJECT CHARTER
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Enterprise Resource Planning
Evaluation
Project Charter (Amended)
Project Number #46
Project Manager: Michael Tsao
Date: September 23, 2013
Version: 2
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A.1 Version History
ID Changes Date Created Author
Initial 09/25/2013 Mtsao
Modify contends 10/24/2013 mtsao
Add Appendix A 11/12/2013 Mtsao
SAP team diagram 06/18/2014 Mtsao
A.2 Background
The City’s history with SAP began in 2002 when the City selected SAP as its preferred vendor for an
Enterprise Resource Planning system with the purpose of integrating various business processes
within the City and to pave the path for the City to moving toward the direction of electronic
Government. In fiscal year 2003, the implementation of the SAP Enterprise Central Component (ECC
6.0), SAP core modules were completed and the SAP system has been running in the City since 2003,
supporting Accounting, Finance, Purchasing, Project Management, Plant Maintenance, Budgeting,
Payroll, Human Resource Management, and Service Order management. In 2009, the City completed
a major upgrade to the SAP ERP system and , which also replaced the former utility billing system
(Banner) with the implementation of the SAP IS-U module, Customer Relationship Management
(CRM), Utilities Customer Electronic Services (also known as My Utilities Account customer portal) and
Business Intelligence systems (BI). Both business and technology needs have changed dramatically
since the current ERP solution was selected and implemented. Therefore, City desires to conduct a
comprehensive evaluation to determine a solution to reduce IT application and infrastructure support
costs, improve flexibility, increase user friendliness and intuitiveness of system, facilitate further
automation of business processes, improve quality and reliability of information for decision making.
A.3 Project Description
ERP consultant to perform an analysis of City’s current SAP environment, business processes and our
strategy; evaluate the ERP market place; and help the City determine a refreshed vision for our ERP
needs. Utilities billing and a Human Resources Information System is included in scope of this project.
Project Objectives
By the end of FY14, an ERP consultant will present a comprehensive evaluation report to the City with
the following information:
Gap analysis of current application capability against business and technology needs and best
practices.
o Identify present and future needs
o Identify wins and successes (strengths)
o Identify pain-points and challenges (weaknesses)
o What are the risks and opportunities
Identify areas where the current application is capable of meeting needs.
o Identify the pros and cons of using the current application to fulfill these needs
o Estimate the time and costs to implement and support
o Compare these costs to alternatives
Conduct an overall evaluation to determine if the City should solicit proposals from other ERP
solution providers.
o Benchmark support and maintenance costs (i.e. to similar sized cities and municipalities.)
o Determine if the current application allows the ability to respond quickly and cost-
effectively to changing business and technical needs
A.4 Project Scope & Deliverables
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In Scope
Selecting an ERP evaluation consulting firm.
Perform an analysis of our current SAP environment.
Perform gap analysis of current application.
Deliver a comprehensive evaluation report.
Out of Scope
Selecting a new ERP solution for the City.
A.5 Flexibility Matrix
Most Flexible Moderately Flexible Least Flexible
Scope X
Schedule X
Cost X
A.6 Milestones
Milestone Description
Charter (this document)
Kickoff Meeting
RFP
Contract with Vendor
Business Impact Assessment (BIA)
Project Management Plan
Assessment Report and Recommendation
A.7 Deliverables
Deliverable Description
Gap analysis of current application capability against business and technology needs and best
practices.
o Identify present and future needs
o Identify wins and successes (strengths)
o Identify pain-points and challenges (weaknesses)
o What are the risks and opportunities
Identify areas where the current application is capable of meeting needs.
o Identify the pros and cons of using the current application to fulfill these needs
o Estimate the time and costs to implement and support
o Compare these costs to alternatives
Conduct an overall evaluation to determine if the City should solicit proposals from other ERP
solution providers.
o Benchmark support and maintenance costs (i.e. to similar sized cities and municipalities.)
o Determine if the current application allows the ability to respond quickly and cost-effectively
to changing business and technical needs
A.8 Success Criteria
Completion of the ERP evaluation before June 2014.
The ability for City leaders to determine the ERP strategy going forward.
Initial Assumptions and Constraints
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ID Type2 Description
1 A Consultant can provide clear path to the appropriate solution
2 A Identified consultant is within budget
3 C CoPA personnel are available when needed
4 A Consultant performs analysis as expected and within allowed time
A.9 Initial Risks and Issues
ID Type3 Description Owner Importance4
1 R Consultant is unable to identify current application
gap against business and technology needs
Michael 4
2 R Consultant knowledge not at expected level Michael 4
3 R Overall project costs are higher than budgeted Michael 2
4 I Consultant is unable to deliver the final evaluation
report on time
Michael 3
A.10 Sponsor Communication
A.11 Initial Communication Plan
Communication Description Frequency Format Recipients
Technology & The
Connected City
Committee
High Level Project
Overview
Once Regular
Scheduled
Meeting
Committee members
GRB Committee High Level Project
Overview
Once Regular
Scheduled
Meeting
Committee members
Information
Security Steering
Committee
High Level Project
Overview
Once Regular
Scheduled
Meeting
Committee members
GIS Steering
Committee
High Level Project
Overview
Once Regular
Scheduled
Meeting
Committee members
Utility Technology
Committee
High Level Project
Overview
Once Regular
Scheduled
Meeting
Committee members
A.12 Team and Communication
Initial Communication Plan
Communication Description Frequency Format Recipients
Kick-off Meeting Initial project
meeting
Once Meeting PM
Sponsor
SAP Core team
SAP Steering Committee
SAP PMO Team
Stakeholder/Liaisons
Status Updates Project Status,
Risk Status,
Milestone, Issue
Review, etc.
Weekly Email PM
Sponsor
SAP PMO Team
2 A: assumption; C: constraint
3 R: risk; I: issue
4 4: critical; 3: high; 2: medium; 1: low
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Consultant
Meeting
Regular meeting
for status and
review
Weekly Meeting PM
SAP PMO Team
Consultant
Project Team
Meeting
Regular meeting
for status and
review
Monthly Meeting PM
Sponsor
SAP PMO Team
Consultant
SAP End Users: See Appendix A
A.13 Project Authority
Title Resources Needed (Names)
Sponsor: Jonathan Reichental
Project manager: Michael Tsao
PMO Governance: PM, Sponsor, SAP Steering Committee
Business Process Owner: Finance: Laura Kuryk, Walter Rossmann, Greg Pustelnik,
Scott O’Neill;
Revenue Collection: Josie Stokes;
HR: Grace Castor;
Utilities CS: Anthony Enerio, Raveen Maan, Dave Yuan;
PW Refuse: Matt Krupp, Matt Raschke;
Project System: Sharon Macway, Anna Vuong;
Sales and Distribution and Plant Maintenance : Anna
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Vuong;
Steering committee PM, Sponsor, SAP Steering Committee
Core Team PM, TBD
Extended Team Plante & Moran, PLLC.
A.14 Purchase Request Information
Budget (First Year) $ 150,000
CIP or Cost Center: G/L number: 30050002-
31290
Multi-year yes/no NO
Procurement Method: RFP
SAP End Users by Department
Administrative Services
Accounting
Laura Kuryk
Budget
Christine Paras
Purchasing
Greg Pustelnik
Store
Scott O’Neill
Revenue Collection
Nichol Banks
Rick Claeys
City Attorney
Stacy Lavelle
City Auditor
Deniz Tunc
City Clerk
Beth Minor
City Manager
Katie Whitley
Danille Rice
Community Services
Budget/Position
Rob De Geus
Rhyena Halpern
Daren Anderson
Procurement
Sally Camozzi
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Marieke Gaboury
Catherine Bourquin
Time Entry
Erin Perez
Amy Johnson
Fire
Jeany Clattenburg
Information Technology
Sherri Wong
Library
Karol Gallucci
People Strategy & Operations
Elizabeth Egli
Planning & Community Environment
Budget/CIP
Alicia Spotwood
Robin Ellner
Procurement
Lisa Green
Rosemary Morse
Time Entry
Zariah Betten
Aline Eskandari
Police
Dana Lamberson
Barb Teixeira
Public Works
Karen Mitchell
Tatiana Pham
Utilities
Billing Management
Lissa Rendon – Customer Service Specialist - Lead
Eric Keniston – Resource Planner
Customer Service and Customer Relationship Management
Renee Ruiz – Customer Service Representative
Device Management
Barclay Rush - Customer Service Specialist - Lead
Financial Contract Accounts
Leon Timmons- Utilities Credit and Collections Specialists
Lissa Rendon - Customer Service Specialist - Lead
Utilities Customer Electronic Services
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Preet Maan - Customer Service Specialist
Work Management
Kelly Haruta – Coordinator Utilities Project
Melissa Smart – Coordinator Utilities Project
Business Intelligence
Lissa Rendon - Customer Service Specialist – Lead
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6.2 APPENDIX B: APPLICATION INVENTORY
As part of the Enterprise application analysis, an inventory of all key current software systems has been developed to support the areas in scope
for the project, as defined in the project charter. For each current system, the analysis categorizes the level of availability of that software from
other ERP vendors which sell their products to similar size governments. Additionally the analysis identifies a recommended preliminary migration
plan for the current application based on all factors. .
*Application Availability in the ERP Market
Legend Code Description
G Generally
Available
The module is generally available from most / many providers of ERP solutions to similar size entities
B Best of
Breed
The module is not generally available from most / many providers of ERP solutions to similar size entities and is typically
selected and implemented as a separate best of breed system, then later integrated to ERP, as feasible, based on
available funding and skills.
E Expanded
ERP
The module is available from certain, select providers of ERP solutions to similar size entities and if not selected and
implemented as part of the integrated ERP system, would need to be obtained by the City from a separate best of breed
system, then later integrated to ERP, as feasible, based on available funding and skills.
#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
1 SAP – BI Business Intelligence for reporting Utilities
Management G Ad-Hoc Reporting Tool
2 SAP FI-AA Asset Accounting (FI-AA) Asset Management G Fixed/Capital Assets
3 SAP –PS Project Systems (PS) Project
Management G Project Accounting
Contract Accounting
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
4 SAP PSM-FM
Funds Management Integration
(PSM-FM)
Integration of Project/Contract
Accounting with Funds Management
(Budgeting) and General Ledger to
match actuals vs. costs and keep
track of budgets and spending
Project Accounting
General Ledger
Budgeting
G
General Ledger
Budgeting
Project Accounting
5 SAP-FI
Financial Accounting (FI)
General Ledger (FI-GL)
Accounts Receivable (FI-AR)
Accounts Payable (FI-AP)
Bank Accounting (FI-BL)
Special Ledger (FI-SL)
Cost Controlling (CO)
General Ledger
Cost Accounting
Financial Reporting
G
General Ledger
Miscellaneous Billing and
Accounts Receivable
Account Payable
Project Accounting
6 SAP-FIN Financial Supply Chain Mgmt (FIN-
FSCM) Treasury G Purchasing
Contracts Management
7 SAP-HR
Human Resource Management (HR)
Active Directory (HR-AD)
Organizational Management (HR-
OM)
Benefits (HR-BEN)
Time Management (HR-TM)
Payroll (HR-PY)
Talent Management (HR-COM)
PSO and Payroll G
Human Resources
Payroll
Time and Attendance
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
8 SAP-IS-U/CCS
Utility Billing (CCS-BM)
Device Management (CCS-DM)
Customer Service (CCS-CS)
Financial Contracts Accounting
(CCS-FICA)
Customer E-Services (SAP-UCES)
Customer Relationship Mgmt (CRM-
CS)
Web Portal Interface (IC Web)
Utilities Customers E-Services
(UCES)
My Utilities Account (MUA)
Utilities
Management B Utilities Management
9 SAP-MM Logistics Materials Management Inventory
Management G Inventory Management
10 SAP-PM Plant Maintenance
Maintenance &
Inspections
Management
G & B
11 SAP-SD
Sales and Distribution
Price/Rates Calculation; Prod or
Service Availability Check; Customer
Credit Management; Material
Determination; Tax Determination;
etc.
Sales and
Distribution B Utility Billing
12 Accela Permits and inspection data Permits and
Inspections B N/A
13 Advanced Micro
Solutions (AMS)
1099-ETC software for generating
1099's Accounts Payable G Accounts Payable
14 Autodesk Utility Design
(AUD)
Estimating software used by Electric
Engineering.
Utilities
Management B N/A
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
15 BMI
Document management vendor for
planning and purchasing (contract
management)
Purchasing B Document Management
16 Checkfree Online Payments for Utilities Utilities
Management B N/A
17 Civica IT Web Development Toolset IT B Purchasing
18 CLASS Parks and Rec system Parks and Rec B N/A
19 Commerce bank e-Payables Accounts Payable G N/A
20 CORE (Ipay) Web based parking citation payment
and collection. Revenue Collections B Cash Receipting
22 Doc1/e2Vault Bill print extract module Utilities
Management B Utility Billing
23 Docusign Used to approve activities Purchasing B Purchasing
24 GIS Geodesy GIS mapping Utilities
Management B N/A
25 GoldMine CRM & Contact Management
Reporting
Utilities
Management G CRM
26 InTime/ISELINK Police Scheduling Software Payroll/Time Entry G & B
Human Resources
Payroll
Time & Attendance
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
27 I-Tron / MVRS
Collects move-in, move-out and
check reads for meters installed on
designated AMR meter reading
routes that fall under the fixed
network. Interface between SAP and
meter reading hand held device to
record meter reads.
Utilities
Management B N/A
28 JP Morgan Chase
Smart Data P-card system Accounts Payable G N/A
29 Maintenance
Connection Enterprise Asset Management Fixed Assets B Asset Management
30 MS Access Imports SAP data into Access for
reporting and analysis purposes
Utilities
Management G Utility Billing
31 MS Excel
Bid List - Vendor listing for
notification of competitive
solicitations
Purchasing G Purchasing
32 MS Excel IT Vendor File (shadow system) Purchasing G Purchasing
33 MS Excel
IT and Fire Department Contract
Tracking/Management (shadow
system)
Contract
Management G Contract Management
34 MS Excel
LOA absence tracking
Payment Calculations for leave
Workers compensation Claims
Budget Changes
Tracking incoming PAF's
PSO G
Human Resources
Payroll
Time & Attendance
35 MS Excel Calculate holdback percentages
Sales tax capture spreadsheet Accounts Payable G Accounts Payable
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
36 MS Excel - Meter
Reading Calendar
Provides the work plan for the meter
reading group and shows which
meter reading routes will be read and
when.
Utilities
Management B Utility Billing
37 MS Excel - Meter
Testing Results Meter testing/proofing results Utilities
Management B Utility Billing
38 MS Excel - Rate
Modeling Used for refuse rate modeling Utilities
Management B Utility Billing
39 MS Excel - Refuse
Notes
All customer account notes for refuse
billing
Utilities
Management B Utility Billing
40 MS Project Project Management/Task Tracking Project Accounting B N/A
41 NeoGov Recruitment and hire PSO B N/A
42 OpenGov Transparency/Dashboard Tool Financial Reporting B N/A
43 Outage Management Tracks power outages Utilities
Management B N/A
44 PatternStream Budget Publications Budgeting G Budgeting
45 Pitney Bowes Prints and archives bills (utilities) Utilities
Management B Utility Billing
46 Questica Budget system Budgeting B
47 Quick Serve
Will be used to process payments
once the City gets the application to
work.
Revenue Collections Cash Receipting
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#
Current ERP
Application Application Notes-Description Functional Area(s)
Supported
ERP
Availability in
Marketplace
Expected ERP Module
47 Sales tax shadow
system
Calculates sales tax for P-Card
purchases Accounts Payable G Accounts Payable
48
Segal Waters
Compensation
Database
Salary and benefit survey information
(rollout in August 2014) PSO B N/A
49 SharePoint
Logs of customer service,
grievances, discipline, project
documents, purchasing approval
documents
Various B N/A
50 Skillsoft eLearning system (rollout in July
2014) PSO B N/A
51 Spinifex
Payroll and HR reporting tool for the
state controllers report from SAP
data
PSO G Human Resources
52 SymPro Used to manage investments Treasury B N/A
53 Topobase GIS and mapping software used by
Engineering
Utilities
Management B N/A
54 Training database Home-grown, used to sign up for
classes PSO G
Human Resources
Payroll
Time & Attendance
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6.3 APPENDIX C: RESPONSE SUMMARY FROM CITY-WIDE USER SURVEY
8
Key Report Findings
and
End-User Survey Results
9
Key Findings
Inefficiencies Exist Due to Redundant Data
Entry, Manual Processes and Unused
Functionality
Workflow within SAP is Not Fully Utilized
Unrealized Benefits from Current City SAP
Investments
Substantial Risk / Overhead/Effort Involved to
Support an Increasing Number of Interfaces
10
Survey Results
442%
17%
33%
8%
HOW WOULD YOU CLASSIFY YOUR USE OF SAP?
Standard End-User Approver Super User Functional/Technical Owner
11
Survey Results
443%
19%
35%
3%
EXISTING FUNCTIONALITY MEETS MY NEEDS EFFECTIVELY TO
COMPLETE MY DAILY TASKS
Agree Neither Agree nor Disagree Disagree Unknown/Not Applicable
12
Key Findings
Heavy Reliance on IT and Outside Consultants
for SAP Enhancement Requests
Limited Reporting Capabilities
Lack of an intuitive user interface
Limited use of some ‘best practices’ as per
technology limitations/loss of institutional
knowledge
Limited ongoing training available
13
Survey Results
229%
13%
45%
13%
REPORTING CAPABILITIES SUFFICIENTLY ALLOW ME TO
PERFORM MY JOB
Agree Neither Agree nor Disagree Disagree Unknown/Not Applicable
14
Survey Results
119%
21%51%
9%
SAP TRAINING IS SUFFICIENTLY AVAILABLE WITHIN MY
DEPARTMENT
Agree Neither Agree nor Disagree Disagree Unknown/Not Applicable
15
Key Findings
SAP complexities frustrate users and
discourage use of current systems to satisfy
business needs
Lack of Self Service Functionality
Loss of SAP institutional knowledge
HIGH cost of ownership
16
Survey Results
221%
17%
38%
24%
SAP SUFFICIENTLY HANDLES THE CITY'S CURRENT BUSINESS
NEEDS
Agree Neither Agree nor Disagree Disagree Unknown/Not Applicable
17
Survey Results
111%
20%
42%
27%
SAP SUFFICIENTLY HANDLES THE CIT Y'S FUTURE BUSINESS
NEEDS
Agree Neither Agree nor Disagree Disagree Unknown/Not Applicable
ERP System Evaluation | Final Report
80 | Page
The ERP Assessment Survey tabulated by Vovici EFM includes further statistical analysis from
respondents completing the survey during the period 9/09/2014 – 9/16/2014. If you are interested in
obtaining a complete copy of the survey results and analysis report please contact the City of Palo Alto
Information Technology Department.
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6.4 APPENDIX D: TOTAL COST OF OWNERSHIP DETAILS AND ASSUMPTIONS
Option 1 Option 2a Option 2b Option 3a Option 3b
Cost Category Assumptions
ON PREMISE
Status Quo
with Investment
ALL IN CLOUD
Upgrade SAP and
Retain Existing Best of
Breed Systems
MIXED ENVIRONMENTS
Upgrade SAP Core
Financials/HR/Payroll
Modules Only Keep Existing
Best of Breed Systems Obtain
Best of Breed Utility Billing
System
NEW ERP
Go to Market for a Fully
Integrated Public Sector
Focused ERP Solution and
Procure a Separate Utility
Billing Best of Breed Solution
NEW ERP
Go to Market for a Fully Integrated
Core Financials/Human Capital
Management Solution, Retain the
Current Best of Breed Systems and
Procure a Utility Billing Best of
Breed
All SAP Modules 8, 23 -$ 2,750,000$ 2,250,000$ N/A N/A
Other Existing Software
Licenses and Support -$ -$ -$ N/A -$
Planned Software Licenses
and Support 3 N/A 878,151$ 878,151$ N/A 762,880$
Utility Best of Breed 24 N/A N/A 263,000$ 263,000$ 263,000$
All ERP Modules 30 N/A N/A N/A 806,984$ N/A
Core Modules 35 N/A N/A N/A N/A 644,253$
Additional Hardware Costs 1 N/A N/A N/A N/A N/A
All SAP Modules 8 N/A -$ -$ N/A N/A
Other Existing Software 9 N/A 160,000.00$ 160,000$ N/A N/A
Planned Software 10, 44 N/A 429,350$ 429,350$ N/A 398,478$
Utility Best of Breed 25 N/A N/A 420,407$ 420,407$ 420,407$
All ERP Modules 31 N/A N/A N/A 1,721,620$ N/A
Core Modules 36 N/A N/A N/A N/A 1,519,390$
New System Implementation
Training 11, 26, 46, 45 N/A 566,850.00$ 686,850$ 120,000$ 250,850$
System Selection &
Implementation Planning Fees 20 N/A N/A 80,000$ 200,000$ 200,000$
Subtotal for External One-Time Costs -$ 4,784,351$ 5,167,758$ 3,532,012$ 4,459,258$
All SAP Modules 2 250,000$ N/A N/A N/A N/A
Other Existing Software
Support 13 417,910$ N/A N/A N/A N/A
Other Planned Software
Support N/A N/A N/A N/A N/A
Utility Best of Breed 28 N/A N/A 64,138$ 64,138$ 64,138$
All ERP Modules 32 N/A N/A N/A 177,537$ N/A
Core Modules 37 N/A N/A N/A N/A 141,736$
Consulting (if On-Premise)
Support Services
All SAP Modules 27 250,000$ N/A N/A N/A N/A
Other Existing Software
Support 3 -$ N/A N/A N/A -$
Other Planned Software
Support 38 N/A N/A N/A N/A -$
Utility Best of Breed 29 N/A N/A -$ -$ -$
All ERP Modules 33 N/A N/A N/A 80,698$ N/A
Core Modules 40 N/A N/A N/A N/A 64,425$
Training
Utility Best of Breed 21 N/A N/A 15,000$ 25,000$ 25,000$
All ERP Modules 34 N/A N/A N/A 50,000$ N/A
Core Modules 41 N/A N/A N/A N/A 40,000$
All SAP Modules 8, 23 N/A 2,750,000$ 2,250,000$ N/A N/A
Other Existing Software
Support 13 N/A 417,910$ 417,910$ N/A 417,910$
Other Planned Software
Support 14 N/A 253,529$ 253,529$ N/A 228,170$
Utility Best of Breed N/A N/A Cost not available Cost not available Cost not available
All ERP Modules N/A N/A N/A Cost not available N/A
Core Modules N/A N/A N/A N/A Cost not available
Training
All SAP Modules 4, 15 100,000$ 100,000$ 100,000$ N/A N/A
Existing Software Support 5, 16 12,500$ 25,000$ 25,000$ N/A 25,000$
Planned Software Support 5, 17 N/A 25,000$ 25,000$ N/A 25,000$
Subtotal for External Recurring Costs 1,030,410$ 3,571,439$ 3,071,439$ 322,373$ 966,379$
Current (If On-Premise)
Support FTE's 6, 42, 43 2,073,000$ N/A N/A 510,000$ 510,000$
Additional (If On-Premise)
Support FTE's
All SAP Modules N/A N/A N/A N/A N/A
Existing Software Support N/A N/A N/A N/A N/A
Planned Software Support N/A N/A N/A N/A N/A
Utility Best of Breed 22 N/A 400,000$ 400,000$ 400,000$ 400,000$
All ERP Modules N/A N/A N/A N/A N/A
Core Modules N/A N/A N/A N/A N/A
Current (if Cloud) ERP and
Existing Software Support 12 N/A 510,000$ 510,000$ -$ -$
All SAP Modules N/A N/A N/A N/A N/A
Existing Software Support N/A N/A N/A N/A N/A
Planned Software Support 18 N/A 130,000$ 130,000$ N/A 130,000$
Utility Best of Breed N/A N/A N/A N/A N/A
All ERP Modules N/A N/A N/A N/A N/A
Core Modules N/A N/A N/A N/A N/A
Internal Costs 2,073,000$ 1,040,000$ 1,040,000$ 910,000$ 1,040,000$
EXTERNAL COSTS
One-Time Cost Summary (External)
Software License Fees
Consulting Implementation (Configuration / Data Conversion / Interface Development)
Additional (if Cloud) Support FTEs
Recurring Cost Summary (Internal)
Recurring Cost Summary (External)
Annual Software License and Solution Support (if On-Premise)
INTERNAL COSTS
Includes Licensing, Support & Consulting Services (if Cloud)
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Assumptions Option 1
1
2
3
4
5
6
7
13
27
Assumptions Option 2a
8
9
10
11
12
13
14
15
16
17
18
22
44
Assumptions Option 2b
8
9
10
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
28
29
Assumptions Option 3a
20
21
22
24
25
28
29
30
31
32
33
34
42
46
Assumptions Option 3b
3
9
10
13
14
16
17
18
20
21
22
24
25
28
29
35
36
37
38
40
41
43
45
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems core financial recurring training fees
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems core financial recurring consulting fees at 10% of license fees
Assumed to retain the following positions for Tier 1.5 or Tier 2 ERP core financial applications : 2 SAP Technical at $250,000 / per year and 2 SAP Functional at
$260,000 / per year.
Plus Utilities Best of Breed System training at $120,000 + Planned Applications Training ($130,850)
Assumed NO Best of Breed Utilities system recurring consulting fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems core financial licenses and support
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems core financial consulting implementation fees
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems core financial recurring license fees
Other Planned Software recurring consulting fees
Assumed 15 users/year for 10h at $ 1000 / user trained by rotation for Utilities Best of Breed application
Assumed 3 Utilities Business Analysts at $400,000/year for Best of Breed Utilities system
Utilities Best of Breed average license costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Utilities Best of Breed average consulting costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Average Best of Breed Utilities system recurring license and maintenance fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Estimated annual maintenance cost for other planned applications per third party vendor quotes
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other existing applications
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other planned applications
Per EAMS project recommendation to add 1 Asset Management Program Managers @ $130,000/year
Plante Moran estimated fees for system selection projects for Utilities Best of Breed software
Plus Utilities Best of Breed System training at $120,000
Assumed to be supported by a combination of external services (for hosted applications) and City's IT staff only for on-premise applications
Integrations with the planned applications including the AUD, Maintenance Connect, Core, NeoGov, etc. are assumed to require 100 hrs each at $400 per hour
Consulting Implementation with the planned applications including the E-Procurement Solution, Asset Management, SAP SRM; 50k for E procurement ; See
Maintenance Connect and SRM tabs
As per City provided annual maintenance cost for other existing applications
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems implementation consulting costs
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems recurring license and maintenance fees
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems recurring consulting fees
Assumed average trained costs for Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems
Assumed to retain the following positions for Tier 1.5 or Tier 2 ERP applications: 2 SAP Technical at $250,000 / per year and 2 SAP Functional at $260,000 / per
Utilities Best of Breed average license costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Utilities Best of Breed average consulting costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Average Best of Breed Utilities system recurring license and maintenance fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Assumed NO Best of Breed Utilities system recurring consulting fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Average Tier 1.5 (Infor) and Tier 2 (Tyler) ERP systems licenses and support
Average Best of Breed Utilities system recurring license and maintenance fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Assumed NO Best of Breed Utilities system recurring consulting fees between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Plante Moran estimated fees for system selection projects for Utilities Best of Breed software
Assumed 15 users/year for 10h at $ 1000 / user trained by rotation for Utilities Best of Breed application
Assumed 3 Utilities Business Analysts at $400,000/year for Best of Breed Utilities system
Assumed 3 Utilities Business Analysts at $400,000/year for Best of Breed Utilities system
SAP upgrade excluding Utilities Modules cost, which was assumed to be approximately $500,000
Utilities Best of Breed average license costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Utilities Best of Breed average consulting costs between NorthStar, Cogsdale and Advanced Utility Systems (CO)
Users and admins training for SAP Upgrade and HANA Platform hybrid cloud plus Planned Software. Assumed 50 people for 40 hours at $200/hr. Plus Utilities
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other planned applications
Per EAMS project recommendation to add 1 Asset Management Program Managers @ $130,000/year
Users and admins training for Utilities Best of Breed at implementation time Assumed 15 people for 40 hours at $200/hr
Plante Moran estimated fees for system selection projects for Utilities Best of Breed software
Assumed 15 users/year for 10h at $ 1000 / user trained by rotation for Utilities Best of Breed application
Assumed to retain the following positions if maintaining a core ERP applications in a Tier #1 hosted environment with complete support services. 2 SAP
As per City provided annual maintenance cost for other existing applications
Estimated annual maintenance cost for other planned applications per third party vendor quotes
Assumed 50 users/year for 20h at $ 2,000 / user trained by rotation for ERP modules
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other existing applications
Assumed 3 Utilities Business Analysts at $400,000/year for Best of Breed Utilities system
Estimated implementation costs for planned software (HR, E-Procurement, Maintenance Connection)
Per SAP presentation on April 2014 it is assumed that HANA Enterprise Cloud with hybrid hosting and management between SAP and the City will be the chosen
solution
Integrations with the planned applications including the AUD, Maintenance Connect, Core, NeoGov, etc. are assumed to require 100 hrs each at $400 per hour
Consulting Implementation with the planned applications including the E-Procurement Solution, Asset Management, SAP SRM; 50k for E-procurement ; See
Estimated annual maintenance cost for other planned applications per third party vendor quotes
Assumed 50 users/year for 20h at $ 2,000 / user trained by rotation for ERP modules
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other existing applications
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other planned applications
Per EAMS project recommendation to add 1 Asset Management Program Managers @ $130,000/year
Integrations with the planned applications including the AUD, Maintenance Connect, Core, NeoGov, etc. are assumed to require 100 hrs each at $400 per hour
Consulting Implementation with the planned applications including the E-Procurement Solution, Asset Management, SAP SRM; 50k for E procurement ; See
Users and admins training for SAP Upgrade and HANA Platform hybrid cloud plus Planned Software. Assumed 50 people for 40 hours at $200/hr for HANA
Assumed to retain the following positions if maintaining a core ERP applications in a Tier #1 hosted environment with complete support services including: 2 SAP
Technical at $250, 000 / per year and 2 SAP Functional at $260,000 / per year.
As per City provided annual maintenance cost for other existing applications
2014 Fully Loaded Salaries for 12.5 FTEs in the City's SAP Support team
Assumed the City will not move to the Cloud services in the Option 1
As per City provided annual maintenance cost for other existing applications
Sierra Infosis annual consulting fees, as per City provided contract
Per SAP presentation on April 2014 it is assumed that HANA Enterprise Cloud with hybrid hosting and management between SAP and the City will be the chosen
solution
Additional Hardware Costs* - Materially insignificant for this analysis - Based upon our environmental assessment the City has plenty of capacity.
SAP Enterprise Support Contract - As provided by the City of Palo Alto, CA July 22, 2002 and updated for the calendar years 2013-2015
Assumed to be supported by a combination of external services (for hosted applications) and City's IT staff only for on-premise applications
Assumed 50 users/year for 20h at $ 2,000 / user trained by rotation for ERP modules
Assumed 25 users/year for 10h at $ 1000 / user trained by rotation for other existing applications
{Thank You!}
For more information contact:
Adam Rujan, Partner
248-223-3328
adam.rujan@plantemoran.com
plantemoran.com
Professional Services
Rev. March 31, 2015
CITY OF PALO ALTO CONTRACT NO: C16160734
AGREEMENT BETWEEN THE CITY OF PALO ALTO AND
FOR PROFESSIONAL SERVICES
This Agreement is entered into on this 29th day of February, 2016, (“Agreement”)
by and between the CITY OF PALO ALTO, a California chartered municipal corporation
(“CITY”), and Plante Moran LLC, a Limited Liability Corporation, located at 27400
Northwestern Highway, Southfield, MI 48034 ("CONSULTANT").
RECITALS
The following recitals are a substantive portion of this Agreement.
A. CITY intends to create an RFP to solicit products or services to replace the current ERP
(Enterprise Resource Planning) software systems (“Project”) and desires to engage a consultant
to CONSULTANT in connection with the Project (“Services”).
B. CONSULTANT has represented that it has the necessary professional expertise,
qualifications, and capability, and all required licenses and/or certifications to provide the
Services.
C. CITY in reliance on these representations desires to engage CONSULTANT to provide
the Services as more fully described in Exhibit “A”, attached to and made a part of this
Agreement.
NOW, THEREFORE, in consideration of the recitals, covenants, terms, and conditions,
in this Agreement, the parties agree:
AGREEMENT
SECTION 1. SCOPE OF SERVICES. CONSULTANT shall perform the Services described at
Exhibit “A” in accordance with the terms and conditions contained in this Agreement. The
performance of all Services shall be to the reasonable satisfaction of CITY.
SECTION 2. TERM.
The term of this Agreement shall be from the date of its full execution through 06/30/2018 unless
terminated earlier pursuant to Section 19 of this Agreement.
SECTION 3. SCHEDULE OF PERFORMANCE. Time is of the essence in the performance
of Services under this Agreement. CONSULTANT shall complete the Services within the term
of this Agreement and in accordance with the schedule set forth in Exhibit “B”, attached to and
made a part of this Agreement. Any Services for which times for performance are not specified
in this Agreement shall be commenced and completed by CONSULTANT in a reasonably
prompt and timely manner based upon the circumstances and direction communicated to the
CONSULTANT. CITY’s agreement to extend the term or the schedule for performance shall
not preclude recovery of damages for delay if the extension is required due to the fault of
CONSULTANT.
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SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to
CONSULTANT for performance of the Services described in Exhibit “A”, including both
payment for professional services and reimbursable expenses, shall not exceed Two Hundred and
Eighty-Seven Thousand Nine Hundred and Forty Dollars ($287,940.00). In the event Additional
Services are authorized, the total compensation for Services, Additional Services and
reimbursable expenses shall not exceed Three Hundred & Fifty-Nine Thousand Nine Hundred
& Twenty Five Dollars ($359,925.00) The applicable rates and schedule of payment are set out
at Exhibit “C-1”, entitled “HOURLY RATE SCHEDULE,” which is attached to and made a part
of this Agreement.
Additional Services, if any, shall be authorized in accordance with and subject to the provisions
of Exhibit “C”. CONSULTANT shall not receive any compensation for Additional Services
performed without the prior written authorization of CITY. Additional Services shall mean any
work that is determined by CITY to be necessary for the proper completion of the Project, but
which is not included within the Scope of Services described at Exhibit “A”.
SECTION 5. INVOICES. In order to request payment, CONSULTANT shall submit monthly
invoices to the CITY describing the services performed and the applicable charges (including an
identification of personnel who performed the services, hours worked, hourly rates, and
reimbursable expenses), based upon the CONSULTANT’s billing rates (set forth in Exhibit “C-
1”). If applicable, the invoice shall also describe the percentage of completion of each task. The
information in CONSULTANT’s payment requests shall be subject to verification by CITY.
CONSULTANT shall send all invoices to the City’s project manager at the address specified in
Section 13 below. The City will generally process and pay invoices within thirty (30) days of
receipt.
SECTION 6. QUALIFICATIONS/STANDARD OF CARE. All of the Services shall be
performed by CONSULTANT or under CONSULTANT’s supervision. CONSULTANT
represents that it possesses the professional and technical personnel necessary to perform the
Services required by this Agreement and that the personnel have sufficient skill and experience
to perform the Services assigned to them. CONSULTANT represents that it, its employees and
subcontractors, if permitted, have and shall maintain during the term of this Agreement all
licenses, permits, qualifications, insurance and approvals of whatever nature that are legally
required to perform the Services.
All of the services to be furnished by CONSULTANT under this agreement shall meet the
professional standard and quality that prevail among professionals in the same discipline and of
similar knowledge and skill engaged in related work throughout California under the same or
similar circumstances.
SECTION 7. COMPLIANCE WITH LAWS. CONSULTANT shall keep itself informed of
and in compliance with all federal, state and local laws, ordinances, regulations, and orders that
may affect in any manner the Project or the performance of the Services or those engaged to
perform Services under this Agreement. CONSULTANT shall procure all permits and licenses,
pay all charges and fees, and give all notices required by law in the performance of the Services.
SECTION 8. ERRORS/OMISSIONS. CONSULTANT shall correct, at no cost to CITY, any
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Rev. March 31, 2015
and all errors, omissions, or ambiguities in the work product submitted to CITY, provided CITY
gives notice to CONSULTANT. If CONSULTANT has prepared plans and specifications or
other design documents to construct the Project, CONSULTANT shall be obligated to correct
any and all errors, omissions or ambiguities discovered prior to and during the course of
construction of the Project. This obligation shall survive termination of the Agreement.
SECTION 9. COST ESTIMATES. If this Agreement pertains to the design of a public works
project, CONSULTANT shall submit estimates of probable construction costs at each phase of
design submittal. If the total estimated construction cost at any submittal exceeds ten percent
(10%) of CITY’s stated construction budget, CONSULTANT shall make recommendations to
CITY for aligning the PROJECT design with the budget, incorporate CITY approved
recommendations, and revise the design to meet the Project budget, at no additional cost to
CITY.
SECTION 10. INDEPENDENT CONTRACTOR. It is understood and agreed that in
performing the Services under this Agreement CONSULTANT, and any person employed by or
contracted with CONSULTANT to furnish labor and/or materials under this Agreement, shall act
as and be an independent contractor and not an agent or employee of CITY.
SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of
CONSULTANT are material considerations for this Agreement. CONSULTANT shall not
assign or transfer any interest in this Agreement nor the performance of any of
CONSULTANT’s obligations hereunder without the prior written consent of the city manager.
Consent to one assignment will not be deemed to be consent to any subsequent assignment. Any
assignment made without the approval of the city manager will be void.
SECTION 12. SUBCONTRACTING.
Subcontracts Authorized: Notwithstanding Section 11 above, CITY agrees that subcontractors
may be used to complete the Services. The subcontractors authorized by CITY to perform work
on this Project are: Our Utilities Department is seeking services to be provided by a
subcontractor, Utiliworks Consulting, LLC that specializes in the MDM sector of Utility Billing.
Utiliworks Consulting, LLC
2351 Energy Dr. STE 1010
Baton Rouge, LA 70808
Office: 225.766.4188
Fax: 225.612.6404
www.utiliworks.com
CONSULTANT shall be responsible for directing the work of any subcontractors and for any
compensation due to subcontractors. CITY assumes no responsibility whatsoever concerning
compensation. CONSULTANT shall be fully responsible to CITY for all acts and omissions of a
subcontractor. CONSULTANT shall change or add subcontractors only with the prior approval
of the city manager or his designee.
SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Nicole
Simpkinson as the Project Manager to have supervisory responsibility for the performance,
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Rev. March 31, 2015
progress, and execution of the Services as the project’s single point of contact to represent
CONSULTANT during the day-to-day work on the Project. If circumstances cause the
substitution of the project director, project coordinator, or any other key personnel for any
reason, the appointment of a substitute project director and the assignment of any key new or
replacement personnel will be subject to the prior written approval of the CITY’s project
manager. CONSULTANT, at CITY’s request, shall promptly remove personnel who CITY
finds do not perform the Services in an acceptable manner, are uncooperative, or present a threat
to the adequate or timely completion of the Project or a threat to the safety of persons or
property.
CITY’s project manager is Gunjan Kanwal, Information Technology Department, Information
Management Division, 250 Hamilton Ave, Palo Alto, CA 94303, Telephone: 650-329-2254. The
project manager will be CONSULTANT’s point of contact with respect to performance, progress
and execution of the Services. CITY may designate an alternate project manager from time to
time.
SECTION 14. OWNERSHIP OF MATERIALS. Upon delivery, all work product, including
without limitation, all writings, drawings, plans, reports, specifications, calculations, documents,
other materials and copyright interests developed under this Agreement shall be and remain the
exclusive property of CITY without restriction or limitation upon their use. CONSULTANT
agrees that all copyrights which arise from creation of the work pursuant to this Agreement shall
be vested in CITY, and CONSULTANT waives and relinquishes all claims to copyright or other
intellectual property rights in favor of the CITY. Neither CONSULTANT nor its contractors, if
any, shall make any of such materials available to any individual or organization without the
prior written approval of the City Manager or designee. CONSULTANT makes no
representation of the suitability of the work product for use in or application to circumstances not
contemplated by the scope of work.
SECTION 15. AUDITS. CONSULTANT will permit CITY to audit, at any reasonable time
during the term of this Agreement and for three (3) years thereafter, CONSULTANT’s records
pertaining to matters covered by this Agreement. CONSULTANT further agrees to maintain and
retain such records for at least three (3) years after the expiration or earlier termination of this
Agreement.
SECTION 16. INDEMNITY.
16.1. To the fullest extent permitted by law, CONSULTANT shall protect,
indemnify, defend and hold harmless CITY, its Council members, officers, employees and
agents (each an “Indemnified Party”) from and against any and all demands, claims, or liability
of any nature, including death or injury to any person, property damage or any other loss,
including all costs and expenses of whatever nature including attorneys fees, experts fees, court
costs and disbursements (“Claims”) resulting from, arising out of or in any manner related to
performance or nonperformance by CONSULTANT, its officers, employees, agents or
contractors under this Agreement, regardless of whether or not it is caused in part by an
Indemnified Party.
16.2. Notwithstanding the above, nothing in this Section 16 shall be construed
to require CONSULTANT to indemnify an Indemnified Party from Claims arising from the
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active negligence, sole negligence or willful misconduct of an Indemnified Party.
16.3. The acceptance of CONSULTANT’s services and duties by CITY shall
not operate as a waiver of the right of indemnification. The provisions of this Section 16 shall
survive the expiration or early termination of this Agreement.
SECTION 17. WAIVERS. The waiver by either party of any breach or violation of any
covenant, term, condition or provision of this Agreement, or of the provisions of any ordinance
or law, will not be deemed to be a waiver of any other term, covenant, condition, provisions,
ordinance or law, or of any subsequent breach or violation of the same or of any other term,
covenant, condition, provision, ordinance or law.
SECTION 18. INSURANCE.
18.1. CONSULTANT, at its sole cost and expense, shall obtain and maintain, in
full force and effect during the term of this Agreement, the insurance coverage described in
Exhibit "D". CONSULTANT and its contractors, if any, shall obtain a policy endorsement
naming CITY as an additional insured under any general liability or automobile policy or
policies.
18.2. All insurance coverage required hereunder shall be provided through
carriers with AM Best’s Key Rating Guide ratings of A-:VII or higher which are licensed or
authorized to transact insurance business in the State of California. Any and all contractors of
CONSULTANT retained to perform Services under this Agreement will obtain and maintain, in
full force and effect during the term of this Agreement, identical insurance coverage, naming
CITY as an additional insured under such policies as required above.
18.3. Certificates evidencing such insurance shall be filed with CITY
concurrently with the execution of this Agreement. The certificates will be subject to the
approval of CITY’s Risk Manager and will contain an endorsement stating that the insurance is
primary coverage and will not be canceled, or materially reduced in coverage or limits, by the
insurer except after filing with the Purchasing Manager thirty (30) days' prior written notice of
the cancellation or modification. If the insurer cancels or modifies the insurance and provides
less than thirty (30) days’ notice to CONSULTANT, CONSULTANT shall provide the
Purchasing Manager written notice of the cancellation or modification within two (2) business
days of the CONSULTANT’s receipt of such notice. CONSULTANT shall be responsible for
ensuring that current certificates evidencing the insurance are provided to CITY’s Chief
Procurement Officer during the entire term of this Agreement.
18.4. The procuring of such required policy or policies of insurance will not be
construed to limit CONSULTANT's liability hereunder nor to fulfill the indemnification
provisions of this Agreement. Notwithstanding the policy or policies of insurance,
CONSULTANT will be obligated for the full and total amount of any damage, injury, or loss
caused by or directly arising as a result of the Services performed under this Agreement,
including such damage, injury, or loss arising after the Agreement is terminated or the term has
expired.
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SECTION 19. TERMINATION OR SUSPENSION OF AGREEMENT OR SERVICES.
19.1. The City Manager may suspend the performance of the Services, in whole
or in part, or terminate this Agreement, with or without cause, by giving ten (10) days prior
written notice thereof to CONSULTANT. Upon receipt of such notice, CONSULTANT will
immediately discontinue its performance of the Services.
19.2. CONSULTANT may terminate this Agreement or suspend its
performance of the Services by giving thirty (30) days prior written notice thereof to CITY, but
only in the event of a substantial failure of performance by CITY.
19.3. Upon such suspension or termination, CONSULTANT shall deliver to the
City Manager immediately any and all copies of studies, sketches, drawings, computations, and
other data, whether or not completed, prepared by CONSULTANT or its contractors, if any, or
given to CONSULTANT or its contractors, if any, in connection with this Agreement. Such
materials will become the property of CITY.
19.4. Upon such suspension or termination by CITY, CONSULTANT will be
paid for the Services rendered or materials delivered to CITY in accordance with the scope of
services on or before the effective date (i.e., 10 days after giving notice) of suspension or
termination; provided, however, if this Agreement is suspended or terminated on account of a
default by CONSULTANT, CITY will be obligated to compensate CONSULTANT only for that
portion of CONSULTANT’s services which are of direct and immediate benefit to CITY as such
determination may be made by the City Manager acting in the reasonable exercise of his/her
discretion. The following Sections will survive any expiration or termination of this Agreement:
14, 15, 16, 19.4, 20, and 25.
19.5. No payment, partial payment, acceptance, or partial acceptance by CITY
will operate as a waiver on the part of CITY of any of its rights under this Agreement.
SECTION 20. NOTICES.
All notices hereunder will be given in writing and mailed, postage prepaid, by
certified mail, addressed as follows:
To CITY: Office of the City Clerk
City of Palo Alto
Post Office Box 10250
Palo Alto, CA 94303
With a copy to the Purchasing Manager
To CONSULTANT: Attention of the project director
at the address of CONSULTANT recited above
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SECTION 21. CONFLICT OF INTEREST.
21.1. In accepting this Agreement, CONSULTANT covenants that it presently
has no interest, and will not acquire any interest, direct or indirect, financial or otherwise, which
would conflict in any manner or degree with the performance of the Services.
21.2. CONSULTANT further covenants that, in the performance of this
Agreement, it will not employ subcontractors, contractors or persons having such an interest.
CONSULTANT certifies that no person who has or will have any financial interest under this
Agreement is an officer or employee of CITY; this provision will be interpreted in accordance
with the applicable provisions of the Palo Alto Municipal Code and the Government Code of the
State of California.
21.3. If the Project Manager determines that CONSULTANT is a “Consultant”
as that term is defined by the Regulations of the Fair Political Practices Commission,
CONSULTANT shall be required and agrees to file the appropriate financial disclosure
documents required by the Palo Alto Municipal Code and the Political Reform Act.
SECTION 22. NONDISCRIMINATION. As set forth in Palo Alto Municipal Code section
2.30.510, CONSULTANT certifies that in the performance of this Agreement, it shall not
discriminate in the employment of any person because of the race, skin color, gender, age,
religion, disability, national origin, ancestry, sexual orientation, housing status, marital status,
familial status, weight or height of such person. CONSULTANT acknowledges that it has read
and understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to
Nondiscrimination Requirements and the penalties for violation thereof, and agrees to meet all
requirements of Section 2.30.510 pertaining to nondiscrimination in employment.
SECTION 23. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO
WASTE REQUIREMENTS. CONSULTANT shall comply with the CITY’s Environmentally
Preferred Purchasing policies which are available at CITY’s Purchasing Department,
incorporated by reference and may be amended from time to time. CONSULTANT shall comply
with waste reduction, reuse, recycling and disposal requirements of CITY’s Zero Waste
Program. Zero Waste best practices include first minimizing and reducing waste; second,
reusing waste and third, recycling or composting waste. In particular, CONSULTANT shall
comply with the following zero waste requirements:
All printed materials provided by CCONSULTANT to CITY generated from a
personal computer and printer including but not limited to, proposals, quotes,
invoices, reports, and public education materials, shall be double-sided and
printed on a minimum of 30% or greater post-consumer content paper, unless
otherwise approved by CITY’s Project Manager. Any submitted materials printed
by a professional printing company shall be a minimum of 30% or greater post-
consumer material and printed with vegetable based inks.
Goods purchased by CONSULTANT on behalf of CITY shall be purchased in
accordance with CITY’s Environmental Purchasing Policy including but not
limited to Extended Producer Responsibility requirements for products and
packaging. A copy of this policy is on file at the Purchasing Division’s office.
Reusable/returnable pallets shall be taken back by CONSULTANT, at no
additional cost to CITY, for reuse or recycling. CONSULTANT shall provide
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documentation from the facility accepting the pallets to verify that pallets are not
being disposed.
SECTION 24. NON-APPROPRIATION
24.1. This Agreement is subject to the fiscal provisions of the Charter of the
City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any
penalty (a) at the end of any fiscal year in the event that funds are not appropriated for the
following fiscal year, or (b) at any time within a fiscal year in the event that funds are only
appropriated for a portion of the fiscal year and funds for this Agreement are no longer available.
This section shall take precedence in the event of a conflict with any other covenant, term,
condition, or provision of this Agreement.
SECTION 25. MISCELLANEOUS PROVISIONS.
25.1. This Agreement will be governed by the laws of the State of California.
25.2. In the event that an action is brought, the parties agree that trial of such
action will be vested exclusively in the state courts of California in the County of Santa Clara,
State of California.
25.3. The prevailing party in any action brought to enforce the provisions of this
Agreement may recover its reasonable costs and attorneys' fees expended in connection with that
action. The prevailing party shall be entitled to recover an amount equal to the fair market value
of legal services provided by attorneys employed by it as well as any attorneys’ fees paid to third
parties.
25.4. This document represents the entire and integrated agreement between the
parties and supersedes all prior negotiations, representations, and contracts, either written or oral.
This document may be amended only by a written instrument, which is signed by the parties.
25.5. The covenants, terms, conditions and provisions of this Agreement will
apply to, and will bind, the heirs, successors, executors, administrators, assignees, and
consultants of the parties.
25.6. If a court of competent jurisdiction finds or rules that any provision of this
Agreement or any amendment thereto is void or unenforceable, the unaffected provisions of this
Agreement and any amendments thereto will remain in full force and effect.
25.7. All exhibits referred to in this Agreement and any addenda, appendices,
attachments, and schedules to this Agreement which, from time to time, may be referred to in
any duly executed amendment hereto are by such reference incorporated in this Agreement and
will be deemed to be a part of this Agreement.
25.8 If, pursuant to this contract with CONSULTANT, CITY shares with
CONSULTANT personal information as defined in California Civil Code section 1798.81.5(d)
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about a California resident (“Personal Information”), CONSULTANT shall maintain reasonable
and appropriate security procedures to protect that Personal Information, and shall inform City
immediately upon learning that there has been a breach in the security of the system or in the
security of the Personal Information. CONSULTANT shall not use Personal Information for
direct marketing purposes without City’s express written consent.
25.9 All unchecked boxes do not apply to this agreement.
25.10 The individuals executing this Agreement represent and warrant that they
have the legal capacity and authority to do so on behalf of their respective legal entities.
25.11 This Agreement may be signed in multiple counterparts, which shall, when
executed by all the parties, constitute a single binding agreement
IN WITNESS WHEREOF, the parties hereto have by their duly authorized
representatives executed this Agreement on the date first above written.
CITY OF PALO ALTO
APPROVED AS TO FORM:
PLANTE MORAN LLC
Attachments:
EXHIBIT “A”: SCOPE OF WORK
EXHIBIT “A-1” ON CALL TASK ORDER (Optional)
EXHIBIT “B”: SCHEDULE OF PERFORMANCE
EXHIBIT “C”: COMPENSATION
EXHIBIT “C-1”: SCHEDULE OF RATES
EXHIBIT “D”: INSURANCE REQUIREMENTS
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EXHIBIT “A”
SCOPE OF SERVICES
EXHIBIT “A”
SCOPE OF SERVICES
CONSULTANT shall assist CITY with the requirement gathering process to be able to select a
government-oriented enterprise resource planning (ERP) system to best suit the CITY’s needs,
including assisting the CITY in writing the final request for proposals (RFP) followed by the
final system(s) and managed services vendor selection.
TASKS:
Phase 0: Project Management
The purpose of this phase is to conduct activities that are necessary to support a project of this
size and enhance its success for the CITY. Major deliverables include:
Project Organizational Structure
Project Charter
Project Plan
Project Kickoff
Regular Status Meetings
Project Collaboration Center
Task 1. Initiate Project
CONSULTANT will meet with the CITY’s project manager to introduce CONSULTANT’s
project team, finalize the project scope, deliverables and timetables, and identify any known
project risks, constraints or dependencies. CONSULTANT will work with the CITY to identify
subject matter experts and other participants for requirements and other working sessions.
CONSULTANT also will review requirements for project communications, including regular
status reporting, and executive sponsor and steering committee meetings. The outcome of this
meeting will be documented in the project charter by CONSULTANT.
Task 2. Define Project Governance and Organizational Structure
As standard practice in the majority of CONSULTANT’s engagements, especially those related
to technology and process transformation, CONSULTANT has designed a very collaborative
approach to ensure a high probability of success.
During the early stages of the project CONSULTANT will work with the CITY to create a cross-
functional group of representatives from across the CITY to be involved in the process. This
group will be involved in all aspects of defining system needs, selecting a new system and
creating an environment of collaboration and communication between critical organizational
departments throughout the CITY. A well-defined, governance model has will promote long-
term project success.
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Additionally, CONSULTANT anticipates the formation of project teams that consist of process
owners and process end-users of the various ERP components being reviewed (i.e.,
administrative services, utilities, people strategy and operations, public works, information
technology). CONSULTANT will provide role expectation documents for the CITY to use in the
selection of team members. These teams would be used to validate developed system
requirements and provide input during the vendor due diligence phase of the project. It is
anticipated that these groups would also form the basis of the project teams during the
implementation phase of the project. CONSULTANT anticipates assisting the CITY in defining
the following roles and responsibilities.
Project sponsor
Project manager
Project steering committee
Project selection team
Project administrator (coordinator)
Functional leads/teams
Technical lead/team
Readiness team (communications, change management, training)
CONSULTANT will formally document the roles and responsibilities of each of these project
stakeholders groups in the project charter.
Task 3. Develop Detailed Project Plan
Based on the preliminary project plan and schedule and new, additional information from the
initial planning meetings with the CITY’s project manager, CONSULTANT will work with the
CITY’s project manager and leadership group to develop a detailed project plan and schedule in
Microsoft Project™. This will include:
Major phases and milestones
Key project work tasks, dependencies and due dates with assigned responsibility
Deliverables
This project plan will be presented to the CITY for acceptance and will serve to set the scope and
schedule baselines. Any changes to these baselines will be reviewed and approved by the project
managers representing the CITY and CONSULTANT.
Task 4. Develop Project Charter
CONSULTANT will work with the CITY’s project manager to develop a project charter based
on the initial project planning meetings and detailed planning efforts in the previous tasks. The
charter document will include:
Business opportunity
Project objectives
Project overview and summary
Scope (both in and out of scope items)
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Deliverables and acceptance criteria
Schedule and key milestones
Project governance structure, roles and responsibilities
Project staffing
Critical success factors
Risks
Constraints and dependencies
Project assumptions
CONSULTANT will provide the charter document to the CITY’s executive sponsor group and
project steering committee to review and approve prior to significantly commencing project
activities.
Task 5. Establish Project Collaboration Center
Over the last few years, collaboration environments such as Microsoft SharePoint have become
increasingly viable tools in which to establish project collaboration environments for small, mid-
size and large-scale projects. These environments can serve a variety of purposes including
acting as a repository for documentation developed during the course of an ERP engagement.
CONSULTANT will work with the CITY to establish a project collaboration environment using
SharePoint to be hosted by the City that will last for the duration of the entire project.
Task 6. Conduct Project Kickoff
CONSULTANT will conduct a project kickoff with the CITY’s project sponsor, project
manager, and other core project team members to review the project scope, objectives, key
deliverables, and timeline as well as roles and responsibilities. CONSULTANT also will review
requirements and preferences for regular project communications, to be finalized in the
following task. Optionally, the CITY can include other project stakeholders to review
expectations for their involvement in the project.
Task 7. Provide Regular Project Status Updates
Continuous communication and feedback is the key to a successful project. In this way, problems
can either be avoided entirely or addressed early on to minimize wasted effort and keep the
project on schedule. CONSULTANT will work closely with the CITY to develop a
communication plan to include periodic status updates to the project sponsor and steering
committee and regular project status updates to the CITY’s project manager. At a minimum,
these updates will allow a regular opportunity to:
Report on the status of the project plan and timeline
Re-schedule tasks as necessary and update the project plan
Discuss major open issues and develop strategies to address them (including the use of a
risk and issue register)
Based on CONSULTANT’s experience with similar projects, CONSULTANT anticipates
updates to the CITY’s project manager to be scheduled in advance, last up to 30 minutes each (as
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needed), and continue through the duration of the project.
Phase 2a: Requirements Gathering
The purpose of this phase is to document the requirements for an ERP solution (including
Customer Information System (CIS)/Utility Billing (UB) and potential future Meter Data
Management (MDM) components) that will best meet the needs of the CITY. Major deliverables
include:
Requirements Report
Task 1. Collect and Review Documentation
CONSULTANT will leverage the documents CONSULTANT has already collected from the
CITY and review again the ERP System Evaluation Report. CONSULTANT will supplement
this information with new data to be collected via questionnaires to be completed by ERP
business process owners and end users prior to the departmental interviews in the following task.
These questionnaires will focus on business processes, critical functional requirements, interface
and data requirements, commonly used forms and reports, and use of shadow systems, such as
Excel or other databases.
Task 2. Conduct Interviews
CONSULTANT anticipates using a participative approach involving CITY staff to review
business processes, define business requirements, and identify interface and other technical
requirements. After reviewing data from the 2014 ERP Needs Assessment and
documentation collected in the previous task, CONSULTANT will conduct interviews with
teams representing departments directly involved with CITY’s key enterprise resource planning
processes. At a minimum, these will include:
Administrative Services
People Strategy and Operations
Public Works
Utilities
Information Technology
City Attorney
City Auditor
City Clerk
City Manager
Community Services
Planning and Community Environment
Library
Police
Fire
During the interviews, CONSULTANT will discuss key current business and workflows within
the CITY. These interviews will address the following areas:
Existing business processes and workflows
Associated business requirements
Data sharing and integration requirements including interaction with clients, the state,
outside agencies, and other city departments
Reporting requirements
Use of forms
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Task 3. Define Functional Requirements
As a basis for the development of functional requirements, CONSULTANT will leverage
existing best practice ERP (including CIS/UB and MDM) software specifications that
CONSULTANT has developed for other municipal clients similar in size and complexity to the
CITY. CONSULTANT will augment these with the unique city business requirements identified
during the 2014 ERP Needs Assessment and the departmental interviews in the previous task to
develop draft functional requirements to be included in the RFP.
CONSULTANT will distribute these draft functional requirements to the subject matter experts
involved in earlier interviews for review and prioritization (high, medium, and low).
CONSULTANT will facilitate cross functional review sessions to collect feedback and edits.
Final edits, additions, and deletions to the requirements will be incorporated for use in the RFP.
Vendors will be asked to respond to these specifications according to the following availability
key:
Y Functionality is available (Yes) as a standard feature of the software.
R Functionality is available through reports generated using proposed Reporting
tools.
M Functionality is provided through a Modification to the application, including
creation of a new workflow or development of a custom interface, which may
have an impact on future upgradability.
F Functionality is not available now, but will be available in a Future release of
the software within one year.
N Functionality is Not Available.
A cost column on the vendor response forms will be used for “M” or “F” responses to estimate
the cost to be incurred by the City to secure the required or desired functionality.
Task 4. Identify and Evaluate Process Candidates for Managed Services
Based on the CITY’s requirements defined in the previous task, CONSULTANT’s knowledge of
the managed services marketplace, and new market research, CONSULTANT will identify
business processes that could be candidates for managed services. CONSULTANT will conduct
a cost comparison of alternative managed services and evaluate their advantages, disadvantages,
and risks against the CITY’s current business processes and functional requirements. This
information will be used to prepare a cost of ownership to determine the business benefits to
pursuing any of the managed services options which could include but are not limited to:
Accounts Payable (E-Payables – e.g. Commerce Bank)
Human Resources: Candidate Screening / Regulatory Compliance (e.g. ACA)
Delinquent Collections: Processing and reporting of delinquent payments
Electronic Document Management (ECM)
Employee reimbursement processing
ACH Payment Processing: Automating the posting of adjustments to GL accounts
Online Payment Processing: Centralized payment processing for all service areas
Payroll: Processing payroll and tax reporting
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Registration Processing: Facilitating the registration of businesses, events, licensing,
permitting, and other forms of transactional activities
Utility Billing: Bill printing and collections processing
Task 5. Prepare ERP Business Process, Services, and Solution Requirements Summary
Report
CONSULTANT will prepare a Requirements Report encompassing each of the key ERP
business processes, services, and solutions involved for the Systems and Services Selection
Phase 2b. The report will:
Define detailed ERP functional and technical requirements (including for CIS/UB and
MDM)
Identify processes that are candidates for managed services
Include a comparative analysis of managed services alternatives features and costs
(CONSULTANT will provide cost data based upon CONSULTANT’s database of
vendor managed services cost data where available. CONSULTANT may augment this
information with a request for information (RFI) to collect additional cost data from
vendors if necessary.)
Make specific recommendations prior to proceeding with systems and/or services
selection
Phase 2b: Systems and Services Selection
The purpose of this phase is to lead the CITY through the RFP development and system(s)
and/or solution selection processes. This includes proposal evaluation, software/services
demonstrations, vendor interviews, and other due diligence activities as well as assistance in
contract negotiations. Major deliverables include:
Source Selection (RFP) Document(s)
Procurement Plan
Vendor Q&A
Proposal Analysis
Comparative Cost Analysis
Due Diligence Materials and Tools
Summary of the Selection Committee’s Software Solution(s) Recommendation
Summary of the Selection Committee’s Managed Service(s) Selection Recommendation
Signed Vendor Contract(s)
Task 6. Develop Procurement Plan
CONSULTANT will work closely with the CITY to develop a procurement plan to include all
desired evaluation phases (e.g., pass/fail administrative screening, finalists’ selection,
recommendation of apparently successfully vendor), evaluation criteria and weights for each
phase, and overall scoring and decision making process. The procurement plan will guide the
selection process for both software and managed services recommendations resulting from the
previous requirements gathering phase.
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Base RFP Scope for Core Business Systems: CONSULTANT will develop two separate
procurements, for: 1) an integrated ERP system; and 2) a best of breed utility billing system
(including future or optional MDM services). The ERP RFP may invite vendors to propose on
one or multiple functional areas included in the scope of the ERP (e.g., financial management,
human resource management, time and attendance). As part of these procurements, the inclusion
of solution hosting requirements including SaaS, IaaS, and PaaS options for vendors to address
in conformance with the CITY’s Cloud First Policy.
Optional RFP Scope for Managed Services: Based upon the managed services
recommendations the CITY has accepted from the previous requirements gathering phase,
CONSULTANT proposes up to two additional procurements specific to fulfilling the managed
services the CITY has identified. CONSULTANT’s clients have requested managed services
procurements to precede the selection of core business systems. The sequence can be dependent
upon the CITY’s business interests and needs and our team will work with the CITY to
determine the most suitable order of activities.
These can include options that include but are not limited to any of the following business areas
and functions:
Accounts Payable (E-Payables – e.g. Commerce Bank)
Human Resources: Candidate Screening / Regulatory Compliance (e.g. ACA)
Delinquent Collections: Processing and reporting of delinquent payments
Electronic Document Management (ECM): Employee reimbursement processing
ACH Payment Processing: Automating the posting of adjustments to GL accounts
Online Payment Processing: Centralized payment processing for all service areas
Payroll: Processing payroll and tax reporting
Registration Processing: Facilitating the registration of businesses, events, licensing,
permitting, and other forms of transactional activities
Utility Billing: Bill printing and collections processing
CONSULTANT typically uses a tiered process to reach the finalist decision. For example, the
CITY may wish to specify minimum criteria (e.g., minimum number of public sector clients or
clients of similar size and complexity). For those vendors meeting the minimum criteria, bid
responses would be evaluated against a second level of criteria, typically based solely on the RFP
response. The top two or three vendors that score the highest on this second round of scoring
would be considered for additional due diligence, including:
Software demonstrations/service provider interviews
Reference checking with comparable sites
Potential site visits
Other activities (e.g., vendor research, knowledge of vendor in marketplace as noted by
other clients or industry analysts)
The following list illustrates sample criteria CONSULTANT has successfully used to select
software solutions for utility and other public sector clients. CONSULTANT will work with the
CITY to refine criteria appropriate to the CITY’s unique circumstances and environment.
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Compliance with Administrative Requirements (Pass/Fail)
Vendor Experience and Qualifications
Implementation/Services Team Experience and Qualifications
Implementation/Services Approach and Schedule
Compliance with Functional and Technical Requirements
Compliance with Standard Contract Terms and Conditions
Total Cost of Ownership
CONSULTANT will assist the CITY in developing an associated scoring tool for all evaluation
phases and due diligence activities to be loaded onto PlanetBids.
Also to be included in the procurement plan will be the overall scoring and decision making
process. Scoring can be conducted by consensus with all members of the selection team
developing a single score, or by adding each of the selection team members’ scores.
Additionally, there may be situations in which certain members of the selection team may not be
comfortable with scoring certain elements of a vendor’s RFP response (e.g., technical
requirements for which they do not have knowledge or expertise).
Task 7. Develop Request for Proposals Documents
CONSULTANT will work closely with the CITY’s procurement officer to identify any required
RFP formats, forms, and all other procurement requirements and required documentation to be
included or considered in the development of the RFP(s). Where possible, CONSULTANT will
leverage CONSULTANT’s standard RFP format that has been successfully used for numerous
other public sector ERP software and services RFPs. CONSULTANT will include vendor
response forms to simplify RFP response for vendors and proposal analysis for the CITY”S
selection team. The standard format RFP is minimally expected to include the following:
Background and Current Environment
o General background information
o Current software and services environment and technology standards
o Operating and transaction volumes
o Current system user counts
o Required interfaces
o Data conversion requirements
o Other planned, related initiatives
Scope of Procurement
o Software
o Implementation services (where applicable)
- Project management
- System and operational procedure development
- Hardware and software installation
- Configuration and modifications
- Data conversion
- Report development
- Integration and interface development
- Testing
- Training for implementation team and end users
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- Documentation development
- Process redesign
- Change management
- Ongoing support and maintenance services
Evaluation Process
o Evaluation phases
o Evaluation criteria
o Timeline
Response Guidelines
Vendor Response Forms
Functional and Technical Requirements Forms
Cost Proposal Form
Other Required Forms
Attachments as Appropriate
CONSULTANT will distribute the draft RFPs to the CITY for review and comment.
CONSULTANT will incorporate revisions from the draft review and finalize the document(s) for
the CITY’s publication and distribution. During this activity, CONSULTANT will provide
consultation to the CITY’s project manager and steering committee regarding the ERP
marketplace and appropriate distribution protocols including: advertising, bid services, and other
methods to solicit responses.
Task 8. Manage Responses to Vendor Questions During Proposal Period
CONSULTANT anticipates that the CITY’s procurement policy would, as is common with
many public agencies, require that CITY staff be the formal point of vendor contact for the RFP.
As such, CONSULTANT would expect that the CITY’s project manager and purchasing staff
would act as the first line of vendor communication and for formal written questions and
answers. However, CONSULTANT will fully support this activity by developing the initial draft
responses to the CITY’s compiled list of vendor questions. CONSULTANT will then work with
the CITY to identify the appropriate CITY resources for any additional or supplemental review
or clarification. The finalized questions and answers will be provided to the CITY’s project
manager or purchasing staff for distribution, or for publication via the bid services, based upon
methods described in the RFPs.
Task 9. Lead Vendor Pre-Proposal Conference
CONSULTANT will develop an agenda and associated presentation materials for any vendor
pre-proposal conference(s). These will include a review of the applicable procurement rules,
procurement schedule, CITY background and current environment information, general
guidelines to vendors, required response format, review of vendor forms, and evaluation process
and criteria CONSULTANT will lead the pre-proposal conference with the CITY’s procurement
representative, project manager, and selected subject matter experts as appropriate.
Task 10. Analyze Proposals and Facilitate Finalists Vendor Selection
For each of the RFPs, vendors will be instructed to complete the vendor response forms included
in the RFP and submit them via PlanetBids. CONSULTANT will develop a detailed comparative
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analysis of proposals for the selection team’s reference in their scoring of the proposals.
CONSULTANT will highlight any risks or issues with the proposals based on CONSULTANT’s
significant implementation experience other municipalities similar to the CITY. Through a semi-
automated process we have successfully used numerous times, CONSULTANT will include a
tabulation and analysis of percent compliance with hundreds of application specifications that
will be included in the software RFP(s). CONSULTANT’s comparative analysis template
automatically calculates a blind numerical ranking of each proposal. This eliminates any bias.
The templates will support the selection team’s evaluation of each vendor on criteria defined in
the procurement plan developed in the previous phase, such as:
Compliance with Administrative Requirements (Pass/Fail)
Vendor Experience and Qualifications
Implementation/Services Team Experience and Qualifications
Implementation/Services Approach and Schedule
Compliance with Functional and Technical Requirements
Compliance with Standard Contract Terms and Conditions
Total Cost of Ownership
CONSULTANT will facilitate a finalists’ vendor selection meeting with the selection team to
review CONSULTANT’s comparative proposal analysis and recommendations, including
detailed cost analysis. CONSULTANT will employ the decision making process defined in the
procurement plan to facilitate the selection of the two or three most qualified vendors for
additional consideration and due diligence activities, including software demonstrations and
vendor interviews.
Task 11. Assist in Developing Demonstration and Other Due Diligence Materials
CITY will send notifications to those vendors who are proceeding forward to demonstrations
and/or interviews as well as letters to send to those vendors whose solutions are not being
considered based on initial review of their RFP responses. CONSULTANT will assist the CITY
in the development of a due diligence plan and associated material to use during the third phase
of evaluation to further evaluate the finalists vendors. These can include:
Demonstration scheduling template
Software demonstration agenda and script templates
Vendor interview scripts
Other due diligence templates, including reference check and site visit questionnaires
Task 12. Coordinate Software Demonstrations and Site Visits
CONSULTANT will coordinate software demonstrations and/or interviews for the finalists’
vendors. CONSULTANT will provide to the CITY logistics advice; demonstration and interview
agendas, schedules, and vendor packet templates; and sample scripts. CONSULTANT also will
train CITY subject matter experts on the development of demonstration scripts. CONSULTANT
will provide scoring templates for the selection team. The demonstrations and interviews will be
held onsite at the CITY and should include the members of the selection team as well as a cross-
section of staff from the CITY. CONSULTANT will be onsite to participate in up to a total of
six days of demonstrations.
DocuSign Envelope ID: E6FB7898-FB06-48B2-A21C-45F0456DE954
Professional Services
Rev. March 31, 2015
Should the CITY elect to conduct onsite visits, CONSULTANT will coordinate these according
to the due diligence plan. CONSULTANT will provide the CITY with detailed checklists of
issues and items to discuss and score during these visits. Note that as a result of the
demonstrations, it may be possible to eliminate one of the vendors, thereby reducing the number
of site visits required.
Task 13. Prepare Vendor Selection Findings Report
CONSULTANT will prepare a recommendations report, summarizing:
Procurement process, including evaluation criteria, weighting, and decision making
process
Software vendor analysis, including detailed comparison of functional and technical
capabilities, project management and implementation approaches, vendor qualifications,
costs, issues and risks
Managed services vendor analysis, including detailed comparison of service capabilities,
vendor qualifications, costs, issues and risks
Recommendations based on the requirements gathering in the earlier phase and the
CITY’s evaluation and scoring process developed early in this systems and/or services
selection phase
Task 14. Facilitate the Selection of Preferred Vendor(s)
After the due diligence activities, the CITY may choose to request additional clarification from
the vendors, conduct additional software demonstrations focused on specific areas of
functionality, or request a best and final offer. CONSULTANT will assist the CITY with these
activities as needed.
CONSULTANT will facilitate a meeting with the selection team to review the results of all of
the due diligence activities and select preferred vendors for software and managed services.
CONSULTANT will use the recommendations report developed in the previous task as input
into this meeting.
Task 15. Support Contract Negotiations
CONSULTANT will review the license and maintenance and/or support agreements provided by
the finalist software vendor(s) and the service agreements provided by the managed services
provider(s). For the software agreements, CONSULTANT will review terms and conditions
relating to term and termination of the agreement(s), purchase and support costs, caps on price
increases, recourse for non-performance by the vendor, software acceptance criteria, rights to the
source code if vendor declares bankruptcy, warranties and incorporation of the vendor’s response
to the RFP, governing law, insurance coverage requirements, rights to major new releases,
payment terms tied to major deliverables, controls over expenses, development of an
implementation plan, ongoing support criteria, and more.
CONSULTANT will review the same terms for the managed services agreement(s) as
applicable, as well as detailed scope of services, service levels, disaster recovery, penalties for
DocuSign Envelope ID: E6FB7898-FB06-48B2-A21C-45F0456DE954
Professional Services
Rev. March 31, 2015
non-performance, and more.
CONSULTANT’s recommendations for changes to contract language will be designed to protect
the CITY’s long term interests. Drafts of the final agreements will be presented to the CITY’s
legal counsel for their review. CONSULTANT can serve as an active member on the CITY’s
negotiations team, or play a more “behind the scenes” role as the CITY desires.
DocuSign Envelope ID: E6FB7898-FB06-48B2-A21C-45F0456DE954
Professional Services
Rev. March 31, 2015
EXHIBIT “B”
SCHEDULE OF PERFORMANCE
CONSULTANT shall perform the Services so as to complete each milestone within the number
of days/weeks specified below. The time to complete each milestone may be increased or
decreased by mutual written agreement of the project managers for CONSULTANT and CITY
so long as all work is completed within the term of the Agreement. CONSULTANT shall
provide a detailed schedule of work consistent with the schedule below within two weeks of
receipt of the notice to proceed.
Milestone/Deliverable
Anticipated Delivery
Timeframe
BASIC SERVICES
Detailed Project Plan Accepted
Deliverable: Detailed Project Plan
14 Days from Contract
Execution
Draft Requirements Report
Deliverable: Draft Requirements Report
Report Revisions
Deliverable: Final Requirements Report
Draft Request for Proposal (RFP) #1
Deliverable: Draft Request for Proposal #1
RFP #1 Revisions
Deliverable: Final Request for Proposal #1
Plante Moran Proposal Analysis Summary #1
Deliverable: Plante Moran Proposal Analysis Summary #1
Summary of Solution Recommendations #1
Deliverable: Summary of Solution Recommendations #1
Vendor Contract Review Comments and Negotiations #1
Deliverable: Vendor Contract Review Comments and
Negotiations
Draft Request for Proposal (RFP) #2
DocuSign Envelope ID: E6FB7898-FB06-48B2-A21C-45F0456DE954
Professional Services
Rev. March 31, 2015
Milestone/Deliverable
Anticipated Delivery
Timeframe
Deliverable: Draft Request for Proposal #2
RFP #2 Revisions
Deliverable: Final Request for Proposal #2
Plante Moran Proposal Analysis Summary #2
Deliverable: Plante Moran Proposal Analysis Summary #2
Summary of Solution Recommendations #2
Deliverable: Summary of Solution Recommendations #2
Vendor Contract Review Comments and Negotiations #2
Deliverable: Vendor Contract Review Comments and
Negotiations
MDM SERVICES
Stakeholder Interviews
Deliverable: Stakeholder Interviews
MDM Requirements
Deliverable: MDM Requirements
Proposal Evaluation Relative to MDM Responses
Deliverable: Proposal Evaluation Relative to MDM
Responses
DocuSign Envelope ID: E6FB7898-FB06-48B2-A21C-45F0456DE954
Professional Services
Rev. March 31, 2015
EXHIBIT “C”
COMPENSATION
The CITY agrees to compensate the CONSULTANT for professional services performed in
accordance with the terms and conditions of this Agreement, and as set forth in the budget
schedule below. Compensation shall be calculated based on the hourly rate schedule attached as
Exhibit C-1 up to the total not to exceed budget amount set forth below.
The compensation to be paid to CONSULTANT under this Agreement for all services described
in Exhibit “A” (“Basic Services,” “Optional Services,” and “MDM Services”) and all travel and
other reimbursable expenses shall not exceed $287,940.00. CONSULTANT agrees to complete
all Basic Services, Optional Services (at the CITY’s election), and MDM Services including all
travel and other reimbursable expenses, within this amount. Any work performed or expenses
incurred for which payment would result in a total exceeding the maximum amount of
compensation set forth herein shall be at no cost to the CITY.
CONSULTANT shall perform the tasks and categories of work as outlined and budgeted below.
The CITY’s Project Manager may approve in writing the transfer of budget amounts between
any of the tasks or categories listed below provided the total compensation for Basic Services
and Optional Services, including reimbursable expenses, does not exceed $359,925.00.
BUDGET SCHEDULE (BASIC SERVICES) ESTIMATED AMOUNT
Detailed Project Plan Accepted
Deliverable: Detailed Project Plan
$10,000
Draft Requirements Report
Deliverable: Draft Requirements Report
$50,000
Report Revisions
Deliverable: Final Requirements Report
$10,000
Draft Request for Proposal (RFP) #1
Deliverable: Draft Request for Proposal #1
$15,000
RFP #1 Revisions
Deliverable: Final Request for Proposal #1
$0
Plante Moran Proposal Analysis Summary #1
Deliverable: Plante Moran Proposal Analysis Summary #1
$20,000
Summary of Solution Recommendations #1
Deliverable: Summary of Solution Recommendations #1
$9,665
DocuSign Envelope ID: E6FB7898-FB06-48B2-A21C-45F0456DE954
Professional Services
Rev. March 31, 2015
BUDGET SCHEDULE (BASIC SERVICES) ESTIMATED AMOUNT
Vendor Contract Review Comments and Negotiations #1
Deliverable: Vendor Contract Review Comments and
Negotiations
$9,400
Draft Request for Proposal (RFP) #2
Deliverable: Draft Request for Proposal #2
$15,000
RFP #2 Revisions
Deliverable: Final Request for Proposal #2
$0
Plante Moran Proposal Analysis Summary #2
Deliverable: Plante Moran Proposal Analysis Summary #2
$20,000
Summary of Solution Recommendations #2
Deliverable: Summary of Solution Recommendations #2
$9,665
Vendor Contract Review Comments and Negotiations #2
Deliverable: Vendor Contract Review Comments and
Negotiations
$9,400
Sub-total Basic Services $178,130.00
Travel and Other Reimbursable Expenses $0
Total Basic Services $178,130.00
DocuSign Envelope ID: E6FB7898-FB06-48B2-A21C-45F0456DE954
Professional Services
Rev. March 31, 2015
BUDGET SCHEDULE (OPTIONAL SERVICES) ESTIMATED AMOUNT
Draft Request for Proposal (RFP) #3
Deliverable: Draft Request for Proposal #3
$5,000
RFP #3 Revisions
Deliverable: Final Request for Proposal #3
$0
Plante Moran Proposal Analysis Summary #3
Deliverable: Plante Moran Proposal Analysis Summary #3
$20,000
Summary of Solution Recommendations #3
Deliverable: Summary of Solution Recommendations #3
$9,780
Draft Request for Proposal (RFP) #4
Deliverable: Draft Request for Proposal #4
$5,000
RFP #4 Revisions
Deliverable: Final Request for Proposal #4
$0
Plante Moran Proposal Analysis Summary #4
Deliverable: Plante Moran Proposal Analysis Summary #4
$20,000
Summary of Solution Recommendations #4
Deliverable: Summary of Solution Recommendations #4
$9,780
Sub-total Optional Services $69,560.00
Travel and Other Reimbursable Expenses $0
Total Optional Services $69,560.00
The CITY may also request that CONSULTANT provide additional contract negotiations
support. Compensation for these services shall be based on a time and materials basis and
calculated based on the hourly rate schedule attached as Exhibit C-1.
BUDGET SCHEDULE (MDM SERVICES) ESTIMATED AMOUNT
Stakeholder Interviews
Deliverable: Stakeholder Interviews
$12,000
MDM Requirements
Deliverable: MDM Requirements
$12,500
DocuSign Envelope ID: E6FB7898-FB06-48B2-A21C-45F0456DE954
Professional Services
Rev. March 31, 2015
BUDGET SCHEDULE (MDM SERVICES) ESTIMATED AMOUNT
Proposal Evaluation Relative to MDM Responses
Deliverable: Proposal Evaluation Relative to MDM
Responses
$15,750
Sub-total MDM Services $40,250.00
Travel and Other Reimbursable Expenses $0
Total MDM Services $40,250.00
CITY may request additional optional services to include support for additional RFPs for
software or services within the functional scope of the Scope of Services in Exhibit A.
CONSULTANT shall provide these additional optional services at the following fee schedule.
BUDGET SCHEDULE
(ADDITIONAL OPTIONAL SERVICES)
ESTIMATED AMOUNT
(EACH)
Draft Request for Proposal (RFP)
Deliverable: Draft Request for Proposal
$5,000
RFP Revisions
Deliverable: Final Request for Proposal
$0
Plante Moran Proposal Analysis Summary
Deliverable: Plante Moran Proposal Analysis Summary
$20,000
Summary of Solution Recommendations
Deliverable: Summary of Solution Recommendations
$9,780
Sub-total Additional Optional Services $34,780
Travel and Other Reimbursable Expenses $0
Total Additional Optional Services $34,780
The CITY may also request that CONSULTANT provide additional contract negotiations
support. Compensation for these services shall be based on a time and materials basis and
calculated based on the hourly rate schedule attached as Exhibit C-1.
DocuSign Envelope ID: E6FB7898-FB06-48B2-A21C-45F0456DE954
Professional Services
Rev. March 31, 2015
Total Basic Services $178,130.00
Total Optional Services $69,560.00
Total MDM Services $40,250.00
Additional Services (Not to Exceed) (25%) $71, 985.00
Maximum Total Compensation (Not to Exceed) $359,925.00
REIMBURSABLE EXPENSES
The administrative, overhead, secretarial time or secretarial overtime, word processing,
photocopying, in-house printing, insurance and other ordinary business expenses are included
within the scope of payment for services and are not reimbursable expenses.
All requests for payment of expenses shall be accompanied by appropriate backup information.
Any expense shall be approved in advance by the CITY’s project manager.
ADDITIONAL SERVICES
The CONSULTANT shall provide additional services only by advanced, written authorization
from the CITY. The CONSULTANT, at the CITY’s project manager’s request, shall submit a
detailed written proposal including a description of the scope of services, schedule, level of
effort, and CONSULTANT’s proposed maximum compensation, including reimbursable
expense, for such services based on the rates set forth in Exhibit C-1. The additional services
scope, schedule and maxim compensation shall be negotiated and agreed to in writing by the
CITY’s project manager and CONSULTANT prior to commencement of the services. Payment
for additional services is subject to all requirements and restrictions in this Agreement.
DocuSign Envelope ID: E6FB7898-FB06-48B2-A21C-45F0456DE954
Professional Services
Rev. March 31, 2015
EXHIBIT “C-1”
HOURLY RATE SCHEDULE
Hourly rate for all categories (including all travel and incidental expenses): $235/hour. This
hourly rate includes all travel and associated expenses. Travel and other expenses will not be
separately compensated.
DocuSign Envelope ID: E6FB7898-FB06-48B2-A21C-45F0456DE954
Professional Services
Rev. March 31, 2015
EXHIBIT “D”
INSURANCE REQUIREMENTS
CONTRACTORS TO THE CITY OF PALO ALTO (CITY), AT THEIR SOLE EXPENSE, SHALL FOR THE TERM OF THE CONTRACT
OBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW, AFFORDED BY
COMPANIES WITH AM BEST’S KEY RATING OF A-:VII, OR HIGHER, LICENSED OR AUTHORIZED TO TRANSACT
INSURANCE BUSINESS IN THE STATE OF CALIFORNIA.
AWARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS, AS SPECIFIED, BELOW:
REQUIRED TYPE OF COVERAGE REQUIREMENT
MINIMUM LIMITS
EACH OCCURRENCE AGGREGATE
YES
YES
WORKER’S COMPENSATION
EMPLOYER’S LIABILITY
STATUTORY
STATUTORY
YES
GENERAL LIABILITY, INCLUDING
PERSONAL INJURY, BROAD FORM
PROPERTY DAMAGE BLANKET
CONTRACTUAL, AND FIRE LEGAL
LIABILITY
BODILY INJURY
PROPERTY DAMAGE
BODILY INJURY & PROPERTY DAMAGE
COMBINED.
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
YES AUTOMOBILE LIABILITY, INCLUDING
ALL OWNED, HIRED, NON-OWNED
BODILY INJURY
- EACH PERSON
- EACH OCCURRENCE
PROPERTY DAMAGE
BODILY INJURY AND PROPERTY
DAMAGE, COMBINED
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
YES PROFESSIONAL LIABILITY, INCLUDING,
ERRORS AND OMISSIONS,
MALPRACTICE (WHEN APPLICABLE),
AND NEGLIGENT PERFORMANCE
ALL DAMAGES $1,000,000
YES THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: CONTRACTOR, AT ITS SOLE COST AND
EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT THE ENTIRE TERM OF ANY
RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY CONTRACTOR AND ITS
SUBCONTRACTORS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS’ COMPENSATION, EMPLOYER’S LIABILITY AND
PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSUREDS CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS,
AND EMPLOYEES.
I. INSURANCE COVERAGE MUST INCLUDE:
A. A PROVISION FOR A WRITTEN THIRTY (30) DAY ADVANCE NOTICE TO CITY OF CHANGE IN
COVERAGE OR OF COVERAGE CANCELLATION; AND
B. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR
CONTRACTOR’S AGREEMENT TO INDEMNIFY CITY.
C. DEDUCTIBLE AMOUNTS IN EXCESS OF $5,000 REQUIRE CITY’S PRIOR APPROVAL.
II. CONTACTOR MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE.
III. ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO “ADDITIONAL
INSUREDS”
A. PRIMARY COVERAGE
WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED, INSURANCE AS
AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRIBUTING WITH ANY OTHER
INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSUREDS.
B. CROSS LIABILITY
DocuSign Envelope ID: E6FB7898-FB06-48B2-A21C-45F0456DE954
Professional Services
Rev. March 31, 2015
THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS UNDER THE POLICY
SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED AGAINST ANOTHER,
BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL
LIABILITY OF THE COMPANY UNDER THIS POLICY.
C. NOTICE OF CANCELLATION
1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON
OTHER THAN THE NON-PAYMENT OF PREMIUM, THE CONSULTANT SHALL PROVIDE
CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE
OF CANCELLATION.
2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-
PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A
TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION.
NOTICES SHALL BE EMAILED TO:
InsuranceCerts@CityofPaloAlto.org
DocuSign Envelope ID: E6FB7898-FB06-48B2-A21C-45F0456DE954
Certificate Of Completion
Envelope Id: E6FB7898FB0648B2A21C45F0456DE954 Status: Completed
Subject: Please DocuSign: C16160734 Plante Moran ERP RFP Project FINAL 02-09-2016.docx
Source Envelope:
Document Pages: 31 Signatures: 1 Envelope Originator:
Certificate Pages: 2 Initials: 0 Kenneth Mullen
AutoNav: Enabled
EnvelopeId Stamping: Enabled
Time Zone: (UTC-08:00) Pacific Time (US & Canada)
250 Hamilton Ave
Palo Alto , CA 94301
Kenneth.Mullen@CityofPaloAlto.org
IP Address: 199.33.32.254
Record Tracking
Status: Original
2/9/2016 3:56:37 PM
Holder: Kenneth Mullen
Kenneth.Mullen@CityofPaloAlto.org
Location: DocuSign
Signer Events Signature Timestamp
Adam Rujan
Adam.Rujan@plantemoran.com
Partner
Security Level: Email, Account Authentication
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Sent: 2/9/2016 3:59:14 PM
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Signed: 2/10/2016 4:41:42 AM
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Gunjan Kanwal
gunjan.kanwal@cityofpaloalto.org
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Sent: 2/9/2016 3:59:14 PM
Electronic Record and Signature Disclosure:
Not Offered
ID:
Sherrrie Wong
sherrie.wong@cityofpaloalto.org
Management Analyst
City of Palo Alto
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Sent: 2/9/2016 3:59:14 PM
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City of Palo Alto (ID # 6597)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 2/29/2016
City of Palo Alto Page 1
Summary Title: Approval of Acceptance of COPS Funds
Title: Approval of the Acceptance and Expenditure of Citizens Options for
Public Safety (COPS) Funds on Various Law Enforcement Equipment and
Approval of a Budget Amendment Ordinance in the amount of $104,621 For
the Supplemental Law Enforcement Services Fund
From: City Manager
Lead Department: Police
RECOMMENDATION
Staff recommends that the City Council:
1. Approve the acceptance and expenditure of Citizens Options for Public Safety (COPS)
funds from the State of California; and
2. Amend the Fiscal Year 2016 Budget Appropriation Ordinance (BAO) for the
Supplemental Law Enforcement Services Fund (SLESF) budget by:
a. Increasing revenue from the State by $104,621; and,
b. Increasing the Facilities and Equipment allocation by $104,621 to purchase
safety equipment.
BACKGROUND
Since 1997, the California State Budget Act has included allocations to counties and cities for
the COPS program. This funding is intended to fill the need for additional resources at the local
level to ensure public safety. Under the provisions of Government Code Section 30061, a
percentage of the funds are allocated to counties and cities, based upon population, for law
enforcement services. Funds must supplement existing services and cannot be used to supplant
any existing funds. Each city is also required to deposit the funds into a separate Supplemental
Law Enforcement Services Fund so that these funds are not intermingled with General Fund
dollars.
Previous uses of COPS funds have included the purchase of a replacement K-9 unit, crime scene
evidence collection vehicle, firearm instructor hearing protection, surveillance equipment,
interview recording system, mobile data terminals, youth program activities, upgrades to the
City of Palo Alto Page 2
telecommunications infrastructure, upgrades to the patrol vehicle and traffic motorcycle
programs, and property and evidence operational and security improvements.
Last year, the City Council approved COPS funding for the purchase of auto citation software,
VOIP phone recording equipment, training weapons, body-worn surveillance equipment,
moving target system, and investigative software. The Police Department has received funds
each year under this program since its inception in 1998. Annual allocations have averaged
$100,000 over the last few years.
DISCUSSION
Staff proposes to use the COPS funds in the following manner:
Virtual Training Simulator ($75,000)
Scenario-based firearms training simulator systems allow police agencies the
opportunity to enhance perishable skills for police officers by giving them the
opportunity to more frequently and thoroughly practice firearms training, tactical
decision making, communication skills, defensive tactics and officer safety skills. All this
can be done without the cost of firearms facility rental, expending firearms ammunition
or having to rent similar systems or facilities from another agency.
Less Lethal Launchers ($30,000)
In an effort to more safely take persons who are armed and are a danger to the public
or to themselves into custody, officers are afforded several different less lethal tools.
Officers can utilize the less lethal launcher to accomplish many different scenarios from
a safe distance and with less chance of injury to both the officer and the subject. The
department currently has ten (10) launchers which are deployed in some patrol
vehicles. Purchasing approximately 20 additional launchers will enable each patrol
vehicle to be equipped with a launcher.
RESOURCE IMPACT
A total of $104,621 of expenditures are anticipated, all of which will be covered by grant
funding. There will be no impact to the General Fund as ongoing maintenance costs for the
items purchased by the SLESF will be absorbed in the Department’s existing non-salary budget.
The City received the official notice (http://www.sco.ca.gov/Files-ARD-
Payments/copsdofletter_1516.pdf) from the California Department of Finance in September
2015 that the City’s COPS allocation for Fiscal Year 2016 is $104,621. Revenues and
expenditures of $104,621 will be budgeted in the City’s SLESF through a Budget Amendment
Ordinance.
POLICY IMPLICATIONS
Expenditures of funds associated with COPS funds are consistent with City Policy.
ENVIRONMENTAL ASSESSMENT
City of Palo Alto Page 3
Acceptance of COPS funding and the proposed expenditures for public safety equipment are
not projects subject to CEQA requirements.
City of Palo Alto (ID # 6639)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 2/29/2016
City of Palo Alto Page 1
Summary Title: National Endowment for the Arts Grant Application
Title: Authorization to Apply for "Art Works" Grant From the National
Endowment for the Arts for Temporary art at Cubberley Community Center
From: City Manager
Lead Department: Community Services
Recommended Motion
Staff recommends that Council authorize:
1) Staff to submit an application for an “Art Works” grant through the National
Endowment for the Arts for temporary visual art that focuses on the Cubberley
campus; and
2) The City Manager or his designee from the Community Services Department to
accept the grant.
Executive Summary
The “Art Works” grant from the National Endowment for the Arts (Attachment A) will
support temporary public art projects at the Cubberley Community Center intended to
engage the community and gather input for future arts initiatives at the site.
Background
Creative placemaking is defined as the integration of artists and arts organizations in
the development of physical places that are publicly accessible in collaboration with the
community. The intended purpose of the grant is to foster meaningful engagement
between the public, artists, and the existing Cubberley stakeholders, thereby animating
the environment and generating valuable feedback for future arts programming and
creative placemaking efforts at the site. Using the feedback given by the NEA regarding
the “Our Town” application submitted last year, staff feels that this Art Works
application for smaller pilot projects to explore the possibilities at the Cubberley site will
be successful.
Cubberley Community Center is on the campus of the former Cubberley High School,
which closed in 1979. Cubberley High School was the setting of Ron Jones' teaching
experiment, The Third Wave, and was one of three public high schools in Palo Alto in
City of Palo Alto Page 2
the 1960s and 1970s. Today, Cubberley Community Center is home to several
community organizations and amenities, such as a Chinese reading room, dance
classes, artist studios, gyms and ball fields, as well as a theater. Foothill College also
holds classes at the Cubberley site. Palo Alto Unified School District (PAUSD) owns most
of the land and leases it to the City of Palo Alto. The City owns 8 acres at the site.
Discussion
The existing use of the Cubberley site includes a broad range of stakeholders, including
the organizations and individuals leasing space at the site and the many visitors to the
campus. The Community Services Department with the Arts and Science Division feels
that temporary public art would be an excellent way to bring these stakeholders
together in collaborative projects and to engage in discussion regarding the future use
and design of Cubberley. The activities proposed here will in no way displace the
current Cubberley stakeholders or the various users of the site and amenities.
Cubberley already has a vibrant visual artist studio program, a panapoly of cultural and
performing arts groups and nonprofit arts and service organizations. Arts & Science
staff has been in discussion with our Community Services partners regarding the many
possibilities to engage these stakeholders and transform Cubberley into a creative
cultural destination where arts are integral in the creative discussions and activities that
take place. The three temporary public art projects supported by the Art Works grant
would be a key step in that direction. Staff anticipates commissioning three temporary
projects: one community meal/food related project to engage the community in
dialogue about the future arts programming at Cubberley over a shared meal, a second
commission of a participatory nature that may manifest in a sculptural installation that
engages visitors, and a third project by a lead artist engaging the community in
creating a mural at the Cubberley site.
The Council has been discussing possible ways to gather input from the community
about core values, this type of artist led project could be an excellent way to gather
some of that important insight while reanimating the Cubberley campus.
Resource Impact and Timeline
The National Endowment for the Arts’ Art Works Grant funds for visual arts range
between $10,000 and $100,000, with the average being $25,000. Staff is currently
determining the request amount, but anticipates it will be about $45,000. The awards
will be announced November 2016 and the earliest start date for programming is
January 2017. The City’s grant match requirement is 100% of the awarded grant
amount. Staff plans to fulfill the matching requirement with in kind donations and
existing funds in public art derived from the municipal percent for art ordinance. The
grant match requirements will be fulfilled within the department’s existing budget.
Policy Implications
City of Palo Alto Page 3
Staff will fully comply with the rules and policies for grant submission as outlined in City
Policy 1-12: Grant and Funding request Applications.
Submission of a grant application for the enhancement of Cubberley Community Center
is consistent with Policy C-19 of the Community Services Element of the City’s
Comprehensive Plan: “Develop improvement plans for the maintenance, restoration and
enhancement of community facilities, and keep these facilities viable community assets
by investing the necessary resources.”
Environmental Review
Submission of a grant proposal is not considered a project under the California
Environmental Quality Act.
Attachments:
Attachment A: Art Works Grant Program Description (PDF)
Attachment B: Grant Application Authorization (PDF)
Attachments:
Attachment A: ART WORKS Grant Program Description (PDF)
Attachment B: Grant Application Form (PDF)
ART WORKS Guidelines: Grant Program Description
The guiding principle of "Art Works" is at the center of everything we do at the NEA. "Art Works" refers to
three things: the works of art themselves, the ways art works on audiences, and the fact that art is work
for the artists and arts professionals who make up the field.
Art works by enhancing the value of individuals and communities, by connecting us to each other and to
something greater than ourselves, and by empowering creativity and innovation in our society and
economy. The arts exist for beauty itself, but they also are an inexhaustible source of meaning and
inspiration.
The NEA recognizes these catalytic effects of excellent art, and the key role that arts and design
organizations play in revitalizing them. To deepen and extend the arts' value, including their ability to
foster new connections and to exemplify creativity and innovation, we welcome projects that:
Are likely to prove transformative with the potential for meaningful change, whether in the
development or enhancement of new or existing art forms, new approaches to the creation or
presentation of art, or new ways of engaging the public with art;
Are distinctive, offering fresh insights and new value for their fields and/or the public through
unconventional solutions; and
Have the potential to be shared and/or emulated, or are likely to lead to other advances in the field.
Beyond encouraging projects that demonstrate these characteristics, we want to achieve the following
four objectives through the Art Works category:
Creation: The creation of art that meets the highest standards of excellence,
Engagement: Public engagement with diverse and excellent art,
Learning: Lifelong learning in the arts, and
Livability: The strengthening of communities through the arts.
Items of interest:
Partnerships can be valuable to the success of projects. While not required, applicants are
encouraged to consider partnerships among organizations, both in and outside of the arts, as
appropriate to their project.
American arts and design organizations must be inclusive of the full range of demographics of their
communities, as well as individuals of all physical and cognitive abilities. Toward that end, we
encourage projects for which NEA support is sought to strive for the highest level of inclusiveness in
their audiences, programming, artists, governance, and staffing. We also welcome projects that will
explicitly address the issue of inclusion.
We are interested in projects that extend the arts to underserved populations those whose
opportunities to experience the arts are limited by geography, ethnicity, economics, or disability. This
is achieved in part through the use of Challenge America funds.
We are interested in projects, regardless of the size or type of applicant organization, that are of
national, regional, or fieldwide significance; that tour in several states; or that provide an unusual or
especially valuable contribution because of geographic location. This includes local projects that can
have significant effects within communities or that are likely to serve as models for a field.
We urge organizations that apply under these guidelines to involve artists in their projects and to
provide specific information on the participating artists in their applications.
We are committed to supporting equitable opportunities for all applicants and to investing in diversity
in the arts including works of all cultures and periods.
We recognize that the significance of a project can be measured by excellence and invention, not
solely by budget size, institutional stature, or the numbers of people or areas that are reached.
We urge applicants to make accommodations for individuals with disabilities an integral part of their
projects.
The Art Works category does not fund direct grants to individuals. Direct grants to individuals are offered
only in the category of Literature Fellowships.
Grants generally will range from $10,000 to $100,000. No grants will be made below $10,000. Grants of
$100,000 or more will be made only in rare instances, and only for projects that we determine
demonstrate exceptional national or regional significance and impact. In the past few years, well over
half of the agency's grants have been for amounts less than $25,000.
To apply, choose a discipline
City of Palo Alto (ID # 6482)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 2/29/2016
City of Palo Alto Page 1
Summary Title: Bowden Park Improvements Project
Title: Approval of a Contract With Breneman Inc. In the Amount Not- to-
Exceed $250,000 for the Bowden Park Improvements Capital Project PE-
13008
From: City Manager
Lead Department: Public Works
Recommendation
Staff Recommends that Council:
1. Approve and authorize the City Manager or his designee to execute the
attached contract with Breneman Inc. (Attachment A) in an amount not to
exceed $250,000 for the Bowden Park Improvements (Capital Improvement
Program project PE-13008); and
2. Authorize the City Manager or his designee to negotiate and execute one or
more change orders to the contract with Breneman for related, additional
but unforeseen work that may develop during the project, the total value of
which shall not exceed $25,000, for a total authorized amount not to
exceed $275,000.
Background
The Bowden Park Improvements project (PE-13008) includes maintenance and
infrastructure improvements to the children’s playground, play equipment and
surfacing upgrades, site amenities, and landscaping and irrigation system
renovations. The project scope and improvements were reviewed in a community
meeting on May 28, 2014. Staff also presented the project to the Parks and
Recreation Commission (PRC) on June 24, 2014 and updated the concept plan to
include site amenities and pathways in accordance with PRC and community
City of Palo Alto Page 2
comments. On August 26, 2014, the final improvement plan and the Park
Improvement Ordinance (PIO) recommendations were presented to PRC for
approval. The project was approved by the Architectural Review Board (ARB) on
December 9, 2014. The PIO was adopted and approved by Council on December
15, 2014. Following completion of the project design and construction
documents, the construction phase of the project was advertised for bids on
December 2, 2015.
Discussion
Planned improvements at Bowden Park include:
Playground Area:
Replacing aged playground equipment. Equipment support posts will
remain in place to which new play elements will be attached.
Installing a new retaining wall in front of the existing damaged wall. The
existing wall will act as a tree root barrier for the new retaining wall.
Repaving damaged asphalt and applying slurry seal to all asphalt areas
within the playground.
Installing new rubberized and engineered wood fiber surfacing to increase
safety and accessibility of the playground equipment and to meet
Americans with Disabilities Act (ADA) requirements.
Adding decomposed granite pavement to protect tree and planter areas.
Adding recycled landscape bark mulch in planters.
Installing a new concrete edge around the middle playground equipment.
Renovating the existing fence and adding two new fence sections.
Installing a new concrete ramp.
Park and Playground Area:
Renovating the existing irrigation system to correct/enhance coverage.
Planting drought-tolerant shrubs in planters.
Installing new landscape metal header board at the edge of the
decomposed granite pavement and adjacent lawn areas.
Upgrading/refurbishing the existing site amenities and/or installing new
amenities (benches, picnic tables, drinking fountains, trash/recycling
receptacles).
City of Palo Alto Page 3
Other renovation items included as additive bid alternates include:
Bid Alternate 1 - Adding new bike racks near the corner of North California
and Alma Streets.
Bid Alternate 2 - Adding two new recycled plastic picnic tables inside the
playground area.
Bid Alternate 3 - Adding two new recycled plastic benches inside the
playground area.
Bid Alternate 4 - Adding a new decomposed granite pathway with metal
header board edging at park access from Alma Street and modifying the
irrigation line at the new decomposed granite pathway area.
Bid Alternate 5 - Adding recycled landscape bark mulch on the northeast
and southeast perimeters of the park to replace existing ivy and to reduce
water usage.
Bid Alternate 6 - Replacing all wood benches with synthetic material.
These improvements will ensure that the playground equipment and park
amenities are safe and in good condition. The project will also incorporate
sustainability practices into the park’s landscaping and enhance park aesthetics.
Bid Process and Analysis:
On December 2, 2015, a notice inviting formal bids (IFB) for the Bowden Park
Improvements project was posted on Planet Bids. The bidding period was 55
calendar days. On January 26, 2015, bids were received from six qualified
contractors as listed on the attached Bid Summary (Attachment B). Table 1 below
provides a brief summary of the bid process:
Table 1. Summary of Bid Process
Bid Name/Number Bowden Park Improvements/ IFB
#159161
Proposed Length of Project 90 Calendar days
Number of Builder Exchangers Notified 9
Number of Contractors Notified 153
City of Palo Alto Page 4
Total Days to Respond to Bid 55
Pre-Bid Meeting December 15, 2015
Number of Company Attendees at Pre-
Bid Meeting
2
Number of Bids Received: 6
Base Bid Price Range $229,600 - $324,274
Additive Bid Alternative Price Range $15,730 - $71,518
Engineer’s estimate for this project is $251,592 for base bid and $35,517 for
additive bid alternates (1 through 6), with a total cost estimate of $287,109.
As presented in Table 1, the base bid prices ranged from a high bid of $324,274 to
a low bid of $229,600, representing 29% above to 10% below the engineer’s
estimate of $251,592. The additive bid alternate prices ranged from a high bid of
$71,518 to a low bid of $15,730, representing 101% above to 126% below the
engineer’s estimate of $35,517. While the lowest base bid of $229,600 was
submitted by Breneman, the lowest additive alternate bid of $15,730 was
submitted by RE Schultz Construction. However, the lowest base bid of $229,600
(approx. 10% below engineer’s estimate) and the lowest total bid (base plus
additive alternate) of $250,000 (approx. 15% below engineer’s estimate) are both
submitted by Breneman. RE Schultz Construction is the second lowest bidder
with a base bid of $240,637 and total bid (base plus additive alternate) of
$256,367.
After review of the bids received, staff has determined that Breneman is the
lowest responsible bidder. Staff recommends the Base Bid of $229,600, plus
Additive Alternates (1 through 6) of $20,400, for a total of $250,000, submitted by
Breneman be accepted and Breneman be declared the lowest responsible bidder.
The change order contingency amount of $25,000, which equals ten percent of
the total contract, is requested for related, additional, but unforeseen work which
may develop during the project. Therefore, the total not to exceed amount of the
contract is $275,000 (base plus change order contingency).
Staff checked references provided by Breneman for other similar projects
completed by the contractor. The references were satisfactory with no significant
complaints with Breneman’s previous work. Staff also checked the contractor’s
license with the State License Board and found the license current and active.
City of Palo Alto Page 5
Resource Impact
City Council approved Capital Improvement Program (CIP) funds for the Bowden
Park Improvements project (PE-13008) in the amount of $332,000 for the design
and construction phases, of which up to $275,000 will be used for construction.
Timeline
Following Council approval of the construction contract, a 90-day construction
phase starting in April 2016 and ending in June 2016 is anticipated.
Policy Implications
The proposed CIP recommendations are consistent with Policy C-26 of the
Community Services element of the Comprehensive Plan, which encourages
maintaining park facilities as safe and healthy community assets; and Policy C-22,
which encourages new community facilities to have flexible functions to ensure
adaptability to the changing needs of the community.
Environmental Review
The proposed improvements are considered minor alterations and repairs to
existing facilities and are categorically exempt under the California Environmental
Quality Act (CEQA) section 15301 guidelines.
Attachments:
Attachment A - Construction Contract C16159161 (PDF)
Attachment B - Bid Summary Bowden Park (XLSX)
Invitation for Bid (IFB) Package 1 Rev. April 20, 2015
CONSTRUCTION CONTRACT
CONSTRUCTION CONTRACT
Contract No. C16159161
City of Palo Alto
BOWDEN PARK IMPROVEMENT Project
Invitation for Bid (IFB) Package 2 Rev. April 20, 2015
CONSTRUCTION CONTRACT
CONSTRUCTION CONTRACT
TABLE OF CONTENTS
SECTION 1 INCORPORATION OF RECITALS AND DEFINITIONS…………………………………….…………..6
1.1 Recitals…………………………………………………………………………………………………………………….6
1.2 Definitions……………………………………………………………………………………………………………….6
SECTION 2 THE PROJECT………………………………………………………………………………………………………...6
SECTION 3 THE CONTRACT DOCUMENTS………………………………………………………………………………..7
3.1 List of Documents…………………………………………………………………………………………….........7
3.2 Order of Precedence……………………………………………………………………………………………......7
SECTION 4 CONTRACTOR’S DUTY…………………………………………………………………………………………..8
4.1 Contractor's Duties…………………………………………………………………………………………………..8
SECTION 5 PROJECT TEAM……………………………………………………………………………………………………..8
5.1 Contractor's Co-operation………………………………………………………………………………………..8
SECTION 6 TIME OF COMPLETION…………………………………………………………………………………….......8
6.1 Time Is of Essence…………………………………………………………………………………………………….8
6.2 Commencement of Work…………………………………………………………………………………………8
6.3 Contract Time…………………………………………………………………………………………………………..8
6.4 Liquidated Damages…………………………………………………………………………………………………8
6.4.1 Other Remedies……………………………………………………………………………………………………..9
6.5 Adjustments to Contract Time………………………………………………………………………………….9
SECTION 7 COMPENSATION TO CONTRACTOR……………………………………………………………………….9
7.1 Contract Sum……………………………………………………………………………………………………………9
7.2 Full Compensation……………………………………………………………………………………………………9
SECTION 8 STANDARD OF CARE……………………………………………………………………………………………..9
8.1 Standard of Care…………………………………………………………………………………..…………………9
SECTION 9 INDEMNIFICATION…………………………………………………………………………………………..…10
9.1 Hold Harmless……………………………………………………………………………………………………….10
9.2 Survival…………………………………………………………………………………………………………………10
SECTION 10 NON-DISCRIMINATION……..………………………………………………………………………………10
10.1 Municipal Code Requirement…………….………………………………..……………………………….10
SECTION 11 INSURANCE AND BONDS.…………………………………………………………………………………10
Invitation for Bid (IFB) Package 3 Rev. April 20, 2015
CONSTRUCTION CONTRACT
11.1 Evidence of Coverage…………………………………………………………………………………………..10
SECTION 12 PROHIBITION AGAINST TRANSFERS………………………………………………………….……….11
12.1 Assignment………………………………………………………………………………………………………….11
12.2 Assignment by Law.………………………………………………………………………………………………11
SECTION 13 NOTICES …………………………………………………………………………………………………………….11
13.1 Method of Notice …………………………………………………………………………………………………11
13.2 Notice Recipents ………………………………………………………………………………………………….11
13.3 Change of Address……………………………………………………………………………………………….12
SECTION 14 DEFAULT…………………………………………………………………………………………………………...12
14.1 Notice of Default………………………………………………………………………………………………….12
14.2 Opportunity to Cure Default…………………………………………………………………………………12
SECTION 15 CITY'S RIGHTS AND REMEDIES…………………………………………………………………………..13
15.1 Remedies Upon Default……………………………………………………………………………………….13
15.1.1 Delete Certain Services…………………………………………………………………………………….13
15.1.2 Perform and Withhold……………………………………………………………………………………..13
15.1.3 Suspend The Construction Contract…………………………………………………………………13
15.1.4 Terminate the Construction Contract for Default………………………………………………13
15.1.5 Invoke the Performance Bond………………………………………………………………………….13
15.1.6 Additional Provisions……………………………………………………………………………………….13
15.2 Delays by Sureties……………………………………………………………………………………………….13
15.3 Damages to City…………………………………………………………………………………………………..14
15.3.1 For Contractor's Default…………………………………………………………………………………..14
15.3.2 Compensation for Losses…………………………………………………………………………………14
15.4 Suspension by City……………………………………………………………………………………………….14
15.4.1 Suspension for Convenience……………………………………………………………………………..14
15.4.2 Suspension for Cause………………………………………………………………………………………..14
15.5 Termination Without Cause…………………………………………………………………………………14
15.5.1 Compensation………………………………………………………………………………………………….15
15.5.2 Subcontractors………………………………………………………………………………………………..15
15.6 Contractor’s Duties Upon Termination………………………………………………………………...15
SECTION 16 CONTRACTOR'S RIGHTS AND REMEDIES……………………………………………………………16
16.1 Contractor’s Remedies……………………………………..………………………………..………………….16
Invitation for Bid (IFB) Package 4 Rev. April 20, 2015
CONSTRUCTION CONTRACT
16.1.1 For Work Stoppage……………………………………………………………………………………………16
16.1.2 For City's Non-Payment…………………………………………………………………………………….16
16.2 Damages to Contractor………………………………………………………………………………………..16
SECTION 17 ACCOUNTING RECORDS………………………………………………………………………………….…16
17.1 Financial Management and City Access………………………………………………………………..16
17.2 Compliance with City Requests…………………………………………………………………………….17
SECTION 18 INDEPENDENT PARTIES……………………………………………………………………………………..17
18.1 Status of Parties……………………………………………………………………………………………………17
SECTION 19 NUISANCE……………………………………………………………………………………………………….…17
19.1 Nuisance Prohibited……………………………………………………………………………………………..17
SECTION 20 PERMITS AND LICENSES…………………………………………………………………………………….17
20.1 Payment of Fees…………………………………………………………………………………………………..17
SECTION 21 WAIVER…………………………………………………………………………………………………………….17
21.1 Waiver………………………………………………………………………………………………………………….17
SECTION 22 GOVERNING LAW AND VENUE; COMPLIANCE WITH LAWS……………………………….18
22.1 Governing Law…………………………………………………………………………………………………….18
22.2 Compliance with Laws…………………………………………………………………………………………18
SECTION 23 COMPLETE AGREEMENT……………………………………………………………………………………18
23.1 Integration………………………………………………………………………………………………………….18
SECTION 24 SURVIVAL OF CONTRACT…………………………………………………………………………………..18
24.1 Survival of Provisions……………………………………………………………………………………………18
SECTION 25 PREVAILING WAGES………………………………………………………………………………………….18
SECTION 26 NON-APPROPRIATION……………………………………………………………………………………….19
26.1 Appropriation………………………………………………………………………………………………………19
SECTION 27 AUTHORITY……………………………………………………………………………………………………….19
27.1 Representation of Parties…………………………………………………………………………………….19
SECTION 28 COUNTERPARTS………………………………………………………………………………………………..19
28.1 Multiple Counterparts………………………………………………………………………………………….19
SECTION 29 SEVERABILITY……………………………………………………………………………………………………19
29.1 Severability………………………………………………………………………………………………………….19
SECTION 30 STATUTORY AND REGULATORY REFERENCES …………………………………………………..19
30.1 Amendments of Laws…………………………………………………………………………………………..19
Invitation for Bid (IFB) Package 5 Rev. April 20, 2015
CONSTRUCTION CONTRACT
SECTION 31 WORKERS’ COMPENSATION CERTIFICATION………………………………………………….….19
31.1 Workers Compensation…………………………………………………………………………………….19
SECTION 32 DIR REGISTRATION AND OTHER SB 854 REQUIREMENTS………………………………..…20
32.1 General Notice to Contractor…………………………………………………………………………….20
32.2 Labor Code section 1771.1(a)…………………………………………………………………………….20
32.3 DIR Registration Required…………………………………………………………………………………20
32.4 Posting of Job Site Notices…………………………………………………………………………………20
32.5 Payroll Records…………………………………………………………………………………………………20
Invitation for Bid (IFB) Package 6 Rev. April 20, 2015
CONSTRUCTION CONTRACT
CONSTRUCTION CONTRACT
THIS CONSTRUCTION CONTRACT entered into on February 29, 2016 (“Execution Date”) by and between
the CITY OF PALO ALTO, a California chartered municipal corporation ("City"), and BRENEMAN INC.
("Contractor"), is made with reference to the following:
R E C I T A L S:
A. City is a municipal corporation duly organized and validly existing under the laws of the State of
California with the power to carry on its business as it is now being conducted under the statutes of the
State of California and the Charter of City.
B. Contractor is a California Corporation duly organized and in good standing in the State of
California, Contractor’s License Number 872124 and DIR Registration No. 1000000650. Contractor
represents that it is duly licensed by the State of California and has the background, knowledge, experience
and expertise to perform the obligations set forth in this Construction Contract.
C. On December 2, 2015, City issued an Invitation for Bids (IFB) to contractors for the Bowden Park
Improvement Project (“Project”). In response to the IFB, Contractor submitted a Bid.
D. City and Contractor desire to enter into this Construction Contract for the Project, and other
services as identified in the Contract Documents for the Project upon the following terms and conditions.
NOW THEREFORE, in consideration of the mutual promises and undertakings hereinafter set forth
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is mutually agreed by and between the undersigned parties as follows:
SECTION 1 INCORPORATION OF RECITALS AND DEFINITIONS.
1.1 Recitals.
All of the recitals are incorporated herein by reference.
1.2 Definitions.
Capitalized terms shall have the meanings set forth in this Construction Contract and/or in the General
Conditions. If there is a conflict between the definitions in this Construction Contract and in the General
Conditions, the definitions in this Construction Contract shall prevail.
SECTION 2 THE PROJECT.
The Project is the BOWDEN PARK IMPROVEMENT PROJECT Project, located at 2298 HIGH STREET, Palo
Alto, CA. 94301 ("Project").
Invitation for Bid (IFB) Package 7 Rev. April 20, 2015
CONSTRUCTION CONTRACT
SECTION 3 THE CONTRACT DOCUMENTS.
3.1 List of Documents.
The Contract Documents (sometimes collectively referred to as “Agreement” or “Bid Documents”) consist
of the following documents which are on file with the Purchasing Division and are hereby incorporated by
reference.
1) Change Orders
2) Field Orders
3) Contract
4) Bidding Addenda
5) Special Provisions
6) General Conditions
7) Project Plans and Drawings
8) Technical Specifications
9) Instructions to Bidders
10) Invitation for Bids
11) Contractor's Bid/Non-Collusion Affidavit
12) Reports listed in the Contract Documents
13) Public Works Department’s Standard Drawings and Specifications (most current version at
time of Bid)
14) Utilities Department’s Water, Gas, Wastewater, Electric Utilities Standards (most current
version at time of Bid)
15) City of Palo Alto Traffic Control Requirements
16) City of Palo Alto Truck Route Map and Regulations
17) Notice Inviting Pre-Qualification Statements, Pre-Qualification Statement, and Pre-
Qualification Checklist (if applicable)
18) Performance and Payment Bonds
3.2 Order of Precedence.
For the purposes of construing, interpreting and resolving inconsistencies between and among the
provisions of this Contract, the Contract Documents shall have the order of precedence as set forth in the
preceding section. If a claimed inconsistency cannot be resolved through the order of precedence, the City
shall have the sole power to decide which document or provision shall govern as may be in the best
interests of the City.
Invitation for Bid (IFB) Package 8 Rev. April 20, 2015
CONSTRUCTION CONTRACT
SECTION 4 CONTRACTOR’S DUTY.
4.1 Contractor’s Duties
Contractor agrees to perform all of the Work required for the Project, as specified in the Contract
Documents, all of which are fully incorporated herein. Contractor shall provide, furnish, and supply all
things necessary and incidental for the timely performance and completion of the Work, including, but not
limited to, provision of all necessary labor, materials, equipment, transportation, and utilities, unless
otherwise specified in the Contract Documents. Contractor also agrees to use its best efforts to complete
the Work in a professional and expeditious manner and to meet or exceed the performance standards
required by the Contract Documents.
SECTION 5 PROJECT TEAM.
5.1 Contractor’s Co-operation.
In addition to Contractor, City has retained, or may retain, consultants and contractors to provide
professional and technical consultation for the design and construction of the Project. The Contract
requires that Contractor operate efficiently, effectively and cooperatively with City as well as all other
members of the Project Team and other contractors retained by City to construct other portions of the
Project.
SECTION 6 TIME OF COMPLETION.
6.1 Time Is of Essence.
Time is of the essence with respect to all time limits set forth in the Contract Documents.
6.2 Commencement of Work.
Contractor shall commence the Work on the date specified in City’s Notice to Proceed.
6.3 Contract Time.
Work hereunder shall begin on the date specified on the City’s Notice to Proceed and shall be completed
not later than .
within ninety calendar days (90) after the commencement date specified in City’s Notice
to Proceed.
By executing this Construction Contract, Contractor expressly waives any claim for delayed early
completion.
6.4 Liquidated Damages.
Pursuant to Government Code Section 53069.85, if Contractor fails to achieve Substantial Completion of
the entire Work within the Contract Time, including any approved extensions thereto, City may assess
liquidated damages on a daily basis for each day of Unexcused Delay in achieving Substantial Completion,
based on the amount of five hundred dollars ($500) per day, or as otherwise specified in the Special
Provisions. Liquidated damages may also be separately assessed for failure to meet milestones specified
elsewhere in the Contract Documents, regardless of impact on the time for achieving Substantial
Completion. The assessment of liquidated damages is not a penalty but considered to be a reasonable
estimate of the amount of damages City will suffer by delay in completion of the Work. The City is entitled
to setoff the amount of liquidated damages assessed against any payments otherwise due to Contractor,
Invitation for Bid (IFB) Package 9 Rev. April 20, 2015
CONSTRUCTION CONTRACT
including, but not limited to, setoff against release of retention. If the total amount of liquidated damages
assessed exceeds the amount of unreleased retention, City is entitled to recover the balance from
Contractor or its sureties. Occupancy or use of the Project in whole or in part prior to Substantial
Completion, shall not operate as a waiver of City’s right to assess liquidated damages.
6.4.1 Other Remedies. City is entitled to any and all available legal and equitable remedies City may
have where City’s Losses are caused by any reason other than Contractor’s failure to achieve Substantial
Completion of the entire Work within the Contract Time.
6.5 Adjustments to Contract Time.
The Contract Time may only be adjusted for time extensions approved by City and memorialized in a
Change Order approved in accordance with the requirements of the Contract Documents.
SECTION 7 COMPENSATION TO CONTRACTOR.
7.1 Contract Sum.
Contractor shall be compensated for satisfactory completion of the Work in compliance with the Contract
Documents the Contract Sum of Two Hundred Fifty Thousand Dollars ($250,000).
[This amount includes the Base Bid and Additive Alternates B, 1-6.]
7.2 Full Compensation.
The Contract Sum shall be full compensation to Contractor for all Work provided by Contractor
and, except as otherwise expressly permitted by the terms of the Contract Documents, shall cover all
Losses arising out of the nature of the Work or from the acts of the elements or any unforeseen difficulties
or obstructions which may arise or be encountered in performance of the Work until its Acceptance by
City, all risks connected with the Work, and any and all expenses incurred due to suspension or
discontinuance of the Work, except as expressly provided herein. The Contract Sum may only be adjusted
for Change Orders approved in accordance with the requirements of the Contract Documents.
SECTION 8 STANDARD OF CARE.
8.1 Standard of Care.
Contractor agrees that the Work shall be performed by qualified, experienced and well-supervised
personnel. All services performed in connection with this Construction Contract shall be performed in a
manner consistent with the standard of care under California law applicable to those who specialize in
providing such services for projects of the type, scope and complexity of the Project.
Invitation for Bid (IFB) Package 10 Rev. April 20, 2015
CONSTRUCTION CONTRACT
SECTION 9 INDEMNIFICATION.
9.1 Hold Harmless.
To the fullest extent allowed by law, Contractor will defend, indemnify, and hold harmless City, its City
Council, boards and commissions, officers, agents, employees, representatives and volunteers (hereinafter
individually referred to as an “Indemnitee” and collectively referred to as "Indemnitees"), through legal
counsel acceptable to City, from and against any and liability, loss, damage, claims, expenses (including,
without limitation, attorney fees, expert witness fees, paralegal fees, and fees and costs of litigation or
arbitration) (collectively, “Liability”) of every nature arising out of or in connection with the acts or
omissions of Contractor, its employees, Subcontractors, representatives, or agents, in performing the Work
or its failure to comply with any of its obligations under the Contract, except such Liability caused by the
active negligence, sole negligence, or willful misconduct of an Indemnitee. Contractor shall pay City for any
costs City incurs to enforce this provision. Except as provided in Section 9.2 below, nothing in the Contract
Documents shall be construed to give rise to any implied right of indemnity in favor of Contractor against
City or any other Indemnitee.
Pursuant to Public Contract Code Section 9201, City shall timely notify Contractor upon receipt of
any third-party claim relating to the Contract.
9.2 Survival.
The provisions of Section 9 shall survive the termination of this Construction Contract.
SECTION 10 NON-DISCRIMINATION.
10.1 Municipal Code Requirement.
As set forth in Palo Alto Municipal Code section 2.30.510, Contractor certifies that in the performance of
this Agreement, it shall not discriminate in the employment of any person because of the race, skin color,
gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status,
familial status, weight or height of such person. Contractor acknowledges that it has read and understands
the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination
Requirements and the penalties for violation thereof, and will comply with all requirements of Section
2.30.510 pertaining to nondiscrimination in employment.
SECTION 11 INSURANCE AND BONDS.
11.1 Evidence of coverage.
Within ten (10) business days following issuance of the Notice of Award, Contractor shall provide City with
evidence that it has obtained insurance and shall submit Performance and Payment Bonds satisfying all
requirements in Article 11 of the General Conditions.
Invitation for Bid (IFB) Package 11 Rev. April 20, 2015
CONSTRUCTION CONTRACT
SECTION 12 PROHIBITION AGAINST TRANSFERS.
12.1 Assignment.
City is entering into this Construction Contract in reliance upon the stated experience and qualifications of
the Contractor and its Subcontractors set forth in Contractor’s Bid. Accordingly, Contractor shall not
assign, hypothecate or transfer this Construction Contract or any interest therein directly or indirectly, by
operation of law or otherwise without the prior written consent of City. Any assignment, hypothecation or
transfer without said consent shall be null and void, and shall be deemed a substantial breach of contract
and grounds for default in addition to any other legal or equitable remedy available to the City.
12.2 Assignment by Law.
The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of
Contractor or of any general partner or joint venturer or syndicate member of Contractor, if the Contractor
is a partnership or joint venture or syndicate or co-tenancy shall result in changing the control of
Contractor, shall be construed as an assignment of this Construction Contract. Control means more than
fifty percent (50%) of the voting power of the corporation or other entity.
SECTION 13 NOTICES.
13.1 Method of Notice.
All notices, demands, requests or approvals to be given under this Construction Contract shall be given in
writing and shall be deemed served on the earlier of the following:
(i) On the date delivered if delivered personally;
(ii) On the third business day after the deposit thereof in the United States mail, postage prepaid, and
addressed as hereinafter provided;
(iii) On the date sent if sent by facsimile transmission;
(iv) On the date sent if delivered by electronic mail; or
(v) On the date it is accepted or rejected if sent by certified mail.
13.2 Notice to Recipients.
All notices, demands or requests (including, without limitation, Change Order Requests and Claims) from
Contractor to City shall include the Project name and the number of this Construction Contract and shall be
addressed to City at:
To City: City of Palo Alto
City Clerk
250 Hamilton Avenue
P.O. Box 10250
Palo Alto, CA 94303
Copy to: City of Palo Alto
Public Works Administration
250 Hamilton Avenue
Palo Alto, CA 94301
Attn: Elizabeth Ames
AND
[Include Construction Manager, If Applicable.]
Invitation for Bid (IFB) Package 12 Rev. April 20, 2015
CONSTRUCTION CONTRACT
City of Palo Alto
Utilities Engineering
250 Hamilton Avenue
Palo Alto, CA 94301
Attn:
In addition, copies of all Claims by Contractor under this Construction Contract shall be provided to the
following:
Palo Alto City Attorney’s Office
250 Hamilton Avenue
P.O. Box 10250
Palo Alto, California 94303
All Claims shall be delivered personally or sent by certified mail.
All notices, demands, requests or approvals from City to Contractor shall be addressed to:
Breneman, Inc.
Attn: James Breneman
2000 Norris Road
Walnut Creek, CA 94596
13.3 Change of Address.
In advance of any change of address, Contractor shall notify City of the change of address in writing. Each
party may, by written notice only, add, delete or replace any individuals to whom and addresses to which
notice shall be provided.
SECTION 14 DEFAULT.
14.1 Notice of Default.
In the event that City determines, in its sole discretion, that Contractor has failed or refused to perform any
of the obligations set forth in the Contract Documents, or is in breach of any provision of the Contract
Documents, City may give written notice of default to Contractor in the manner specified for the giving of
notices in the Construction Contract, with a copy to Contractor’s performance bond surety.
14.2 Opportunity to Cure Default.
Except for emergencies, Contractor shall cure any default in performance of its obligations under the
Contract Documents within two (2) Days (or such shorter time as City may reasonably require) after receipt
of written notice. However, if the breach cannot be reasonably cured within such time, Contractor will
commence to cure the breach within two (2) Days (or such shorter time as City may reasonably require)
and will diligently and continuously prosecute such cure to completion within a reasonable time, which
shall in no event be later than ten (10) Days after receipt of such written notice.
Invitation for Bid (IFB) Package 13 Rev. April 20, 2015
CONSTRUCTION CONTRACT
SECTION 15 CITY'S RIGHTS AND REMEDIES.
15.1 Remedies Upon Default.
If Contractor fails to cure any default of this Construction Contract within the time period set forth above
in Section 14, then City may pursue any remedies available under law or equity, including, without
limitation, the following:
15.1.1 Delete Certain Services. City may, without terminating the Construction Contract, delete
certain portions of the Work, reserving to itself all rights to Losses related thereto.
15.1.2 Perform and Withhold. City may, without terminating the Construction Contract, engage
others to perform the Work or portion of the Work that has not been adequately performed by
Contractor and withhold the cost thereof to City from future payments to Contractor, reserving to
itself all rights to Losses related thereto.
15.1.3 Suspend The Construction Contract. City may, without terminating the Construction
Contract and reserving to itself all rights to Losses related thereto, suspend all or any portion of
this Construction Contract for as long a period of time as City determines, in its sole discretion,
appropriate, in which event City shall have no obligation to adjust the Contract Sum or Contract
Time, and shall have no liability to Contractor for damages if City directs Contractor to resume
Work.
15.1.4 Terminate the Construction Contract for Default. City shall have the right to terminate
this Construction Contract, in whole or in part, upon the failure of Contractor to promptly cure
any default as required by Section 14. City’s election to terminate the Construction Contract for
default shall be communicated by giving Contractor a written notice of termination in the manner
specified for the giving of notices in the Construction Contract. Any notice of termination given to
Contractor by City shall be effective immediately, unless otherwise provided therein.
15.1.5 Invoke the Performance Bond. City may, with or without terminating the Construction
Contract and reserving to itself all rights to Losses related thereto, exercise its rights under the
Performance Bond.
15.1.6 Additional Provisions. All of City’s rights and remedies under this Construction Contract
are cumulative, and shall be in addition to those rights and remedies available in law or in equity.
Designation in the Contract Documents of certain breaches as material shall not waive the City’s
authority to designate other breaches as material nor limit City’s right to terminate the
Construction Contract, or prevent the City from terminating the Agreement for breaches that are
not material. City’s determination of whether there has been noncompliance with the
Construction Contract so as to warrant exercise by City of its rights and remedies for default under
the Construction Contract, shall be binding on all parties. No termination or action taken by City
after such termination shall prejudice any other rights or remedies of City provided by law or
equity or by the Contract Documents upon such termination; and City may proceed against
Contractor to recover all liquidated damages and Losses suffered by City.
15.2 Delays by Sureties.
Time being of the essence in the performance of the Work, if Contractor’s surety fails to arrange for
completion of the Work in accordance with the Performance Bond, within seven (7) calendar days from the
date of the notice of termination, Contractor’s surety shall be deemed to have waived its right to complete
the Work under the Contract, and City may immediately make arrangements for the completion of the
Work through use of its own forces, by hiring a replacement contractor, or by any other means that City
determines advisable under the circumstances. Contractor and its surety shall be jointly and severally
Invitation for Bid (IFB) Package 14 Rev. April 20, 2015
CONSTRUCTION CONTRACT
liable for any additional cost incurred by City to complete the Work following termination. In addition, City
shall have the right to use any materials, supplies, and equipment belonging to Contractor and located at
the Worksite for the purposes of completing the remaining Work.
15.3 Damages to City.
15.3.1 For Contractor's Default. City will be entitled to recovery of all Losses under law or
equity in the event of Contractor’s default under the Contract Documents.
15.3.2 Compensation for Losses. In the event that City's Losses arise from Contractor’s default
under the Contract Documents, City shall be entitled to deduct the cost of such Losses from
monies otherwise payable to Contractor. If the Losses incurred by City exceed the amount
payable, Contractor shall be liable to City for the difference and shall promptly remit same to City.
15.4 Suspension by City
15.4.1 Suspension for Convenience. City may, at any time and from time to time, without
cause, order Contractor, in writing, to suspend, delay, or interrupt the Work in whole or in part for
such period of time, up to an aggregate of fifty percent (50%) of the Contract Time. The order
shall be specifically identified as a Suspension Order by City. Upon receipt of a Suspension Order,
Contractor shall, at City’s expense, comply with the order and take all reasonable steps to
minimize costs allocable to the Work covered by the Suspension Order. During the Suspension or
extension of the Suspension, if any, City shall either cancel the Suspension Order or, by Change
Order, delete the Work covered by the Suspension Order. If a Suspension Order is canceled or
expires, Contractor shall resume and continue with the Work. A Change Order will be issued to
cover any adjustments of the Contract Sum or the Contract Time necessarily caused by such
suspension. A Suspension Order shall not be the exclusive method for City to stop the Work.
15.4.2 Suspension for Cause. In addition to all other remedies available to City, if Contractor
fails to perform or correct work in accordance with the Contract Documents, City may
immediately order the Work, or any portion thereof, suspended until the cause for the suspension
has been eliminated to City’s satisfaction. Contractor shall not be entitled to an increase in
Contract Time or Contract Price for a suspension occasioned by Contractor’s failure to comply
with the Contract Documents. City’s right to suspend the Work shall not give rise to a duty to
suspend the Work, and City’s failure to suspend the Work shall not constitute a defense to
Contractor’s failure to comply with the requirements of the Contract Documents.
15.5 Termination Without Cause.
City may, at its sole discretion and without cause, terminate this Construction Contract in part or in whole
upon written notice to Contractor. Upon receipt of such notice, Contractor shall, at City’s expense, comply
with the notice and take all reasonable steps to minimize costs to close out and demobilize. The
compensation allowed under this Paragraph 15.5 shall be the Contractor’s sole and exclusive
compensation for such termination and Contractor waives any claim for other compensation or Losses,
including, but not limited to, loss of anticipated profits, loss of revenue, lost opportunity, or other
consequential, direct, indirect or incidental damages of any kind resulting from termination without cause.
Termination pursuant to this provision does not relieve Contractor or its sureties from any of their
obligations for Losses arising from or related to the Work performed by Contractor.
Invitation for Bid (IFB) Package 15 Rev. April 20, 2015
CONSTRUCTION CONTRACT
15.5.1 Compensation. Following such termination and within forty-five (45) Days after receipt
of a billing from Contractor seeking payment of sums authorized by this Paragraph 15.5.1, City
shall pay the following to Contractor as Contractor’s sole compensation for performance of the
Work :
.1 For Work Performed. The amount of the Contract Sum allocable to the portion of the
Work properly performed by Contractor as of the date of termination, less sums previously paid to
Contractor.
.2 For Close-out Costs. Reasonable costs of Contractor and its Subcontractors:
(i) Demobilizing and
(ii) Administering the close-out of its participation in the Project (including, without
limitation, all billing and accounting functions, not including attorney or expert fees) for a
period of no longer than thirty (30) Days after receipt of the notice of termination.
.3 For Fabricated Items. Previously unpaid cost of any items delivered to the Project Site
which were fabricated for subsequent incorporation in the Work.
.4 Profit Allowance. An allowance for profit calculated as four percent (4%) of the sum of
the above items, provided Contractor can prove a likelihood that it would have made a profit if
the Construction Contract had not been terminated.
15.5.2 Subcontractors. Contractor shall include provisions in all of its subcontracts, purchase
orders and other contracts permitting termination for convenience by Contractor on terms that
are consistent with this Construction Contract and that afford no greater rights of recovery against
Contractor than are afforded to Contractor against City under this Section.
15.6 Contractor’s Duties Upon Termination.
Upon receipt of a notice of termination for default or for convenience, Contractor shall, unless the notice
directs otherwise, do the following:
(i) Immediately discontinue the Work to the extent specified in the notice;
(ii) Place no further orders or subcontracts for materials, equipment, services or facilities,
except as may be necessary for completion of such portion of the Work that is not
discontinued;
(iii) Provide to City a description in writing, no later than fifteen (15) days after receipt of the
notice of termination, of all subcontracts, purchase orders and contracts that are
outstanding, including, without limitation, the terms of the original price, any changes,
payments, balance owing, the status of the portion of the Work covered and a copy of
the subcontract, purchase order or contract and any written changes, amendments or
modifications thereto, together with such other information as City may determine
necessary in order to decide whether to accept assignment of or request Contractor to
terminate the subcontract, purchase order or contract;
(iv) Promptly assign to City those subcontracts, purchase orders or contracts, or portions
thereof, that City elects to accept by assignment and cancel, on the most favorable terms
reasonably possible, all subcontracts, purchase orders or contracts, or portions thereof,
that City does not elect to accept by assignment; and
(v) Thereafter do only such Work as may be necessary to preserve and protect Work already
in progress and to protect materials, plants, and equipment on the Project Site or in
transit thereto.
Upon termination, whether for cause or for convenience, the provisions of the Contract
Documents remain in effect as to any Claim, indemnity obligation, warranties, guarantees,
Invitation for Bid (IFB) Package 16 Rev. April 20, 2015
CONSTRUCTION CONTRACT
submittals of as-built drawings, instructions, or manuals, or other such rights and obligations
arising prior to the termination date.
SECTION 16 CONTRACTOR'S RIGHTS AND REMEDIES.
16.1 Contractor’s Remedies.
Contractor may terminate this Construction Contract only upon the occurrence of one of the following:
16.1.1 For Work Stoppage. The Work is stopped for sixty (60) consecutive Days, through no act
or fault of Contractor, any Subcontractor, or any employee or agent of Contractor or any
Subcontractor, due to issuance of an order of a court or other public authority other than City
having jurisdiction or due to an act of government, such as a declaration of a national emergency
making material unavailable. This provision shall not apply to any work stoppage resulting from
the City’s issuance of a suspension notice issued either for cause or for convenience.
16.1.2 For City's Non-Payment. If City does not make pay Contractor undisputed sums within
ninety (90) Days after receipt of notice from Contractor, Contractor may terminate the
Construction Contract (30) days following a second notice to City of Contractor’s intention to
terminate the Construction Contract.
16.2 Damages to Contractor.
In the event of termination for cause by Contractor, City shall pay Contractor the sums provided for in
Paragraph 15.5.1 above. Contractor agrees to accept such sums as its sole and exclusive compensation
and agrees to waive any claim for other compensation or Losses, including, but not limited to, loss of
anticipated profits, loss of revenue, lost opportunity, or other consequential, direct, indirect and incidental
damages, of any kind.
SECTION 17 ACCOUNTING RECORDS.
17.1 Financial Management and City Access.
Contractor shall keep full and detailed accounts and exercise such controls as may be necessary for proper
financial management under this Construction Contract in accordance with generally accepted accounting
principles and practices. City and City's accountants during normal business hours, may inspect, audit and
copy Contractor's records, books, estimates, take-offs, cost reports, ledgers, schedules, correspondence,
instructions, drawings, receipts, subcontracts, purchase orders, vouchers, memoranda and other data
relating to this Project. Contractor shall retain these documents for a period of three (3) years after the
later of (i) Final Payment or (ii) final resolution of all Contract Disputes and other disputes, or (iii) for such
longer period as may be required by law.
Invitation for Bid (IFB) Package 17 Rev. April 20, 2015
CONSTRUCTION CONTRACT
17.2 Compliance with City Requests.
Contractor's compliance with any request by City pursuant to this Section 17 shall be a condition precedent
to filing or maintenance of any legal action or proceeding by Contractor against City and to Contractor's
right to receive further payments under the Contract Documents. City many enforce Contractor’s
obligation to provide access to City of its business and other records referred to in Section 17.1 for
inspection or copying by issuance of a writ or a provisional or permanent mandatory injunction by a court
of competent jurisdiction based on affidavits submitted to such court, without the necessity of oral
testimony.
SECTION 18 INDEPENDENT PARTIES.
18.1 Status of parties.
Each party is acting in its independent capacity and not as agents, employees, partners, or joint ventures’
of the other party. City, its officers or employees shall have no control over the conduct of Contractor or
its respective agents, employees, subconsultants, or subcontractors, except as herein set forth.
SECTION 19 NUISANCE.
19.1 Nuisance Prohibited.
Contractor shall not maintain, commit, nor permit the maintenance or commission of any nuisance in
connection in the performance of services under this Construction Contract.
SECTION 20 PERMITS AND LICENSES.
20.1 Payment of Fees.
Except as otherwise provided in the Special Provisions and Technical Specifications, The Contractor shall
provide, procure and pay for all licenses, permits, and fees, required by the City or other government
jurisdictions or agencies necessary to carry out and complete the Work. Payment of all costs and expenses
for such licenses, permits, and fees shall be included in one or more Bid items. No other compensation
shall be paid to the Contractor for these items or for delays caused by non-City inspectors or conditions set
forth in the licenses or permits issued by other agencies.
SECTION 21 WAIVER.
21.1 Waiver.
A waiver by either party of any breach of any term, covenant, or condition contained herein shall not be
deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or condition
contained herein, whether of the same or a different character.
Invitation for Bid (IFB) Package 18 Rev. April 20, 2015
CONSTRUCTION CONTRACT
SECTION 22 GOVERNING LAW AND VENUE; COMPLIANCE WITH LAWS.
22.1 Governing Law.
This Construction Contract shall be construed in accordance with and governed by the laws of the State of
California, and venue shall be in a court of competent jurisdiction in the County of Santa Clara, and no
other place.
22.2 Compliance with Laws.
Contractor shall comply with all applicable federal and California laws and city laws, including, without
limitation, ordinances and resolutions, in the performance of work under this Construction Contract.
SECTION 23 COMPLETE AGREEMENT.
23.1 Integration.
This Agreement represents the entire and integrated agreement between the parties and supersedes all
prior negotiations, representations, and contracts, either written or oral. This Agreement may be amended
only by a written instrument, which is signed by the parties.
SECTION 24 SURVIVAL OF CONTRACT.
24.1 Survival of Provisions.
The provisions of the Construction Contract which by their nature survive termination of the Construction
Contract or Final Completion, including, without limitation, all warranties, indemnities, payment
obligations, and City’s right to audit Contractor’s books and records, shall remain in full force and effect
after Final Completion or any termination of the Construction Contract.
SECTION 25 PREVAILING WAGES.
This Project is not subject to prevailing wages. Contractor is not required to pay prevailing wages in the
performance and implementation of the Project in accordance with SB 7, if the public works contract does
not include a project of $25,000 or less, when the project is for construction work, or the contract does not
include a project of $15,000 or less, when the project is for alteration, demolition, repair, or maintenance
(collectively, ‘improvement’) work.
Or
Contractor is required to pay general prevailing wages as defined in Subchapter 3, Title 8 of the
California Code of Regulations and Section 16000 et seq. and Section 1773.1 of the California Labor Code.
Pursuant to the provisions of Section 1773 of the Labor Code of the State of California, the City Council has
obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work
in this locality for each craft, classification, or type of worker needed to execute the contract for this
Project from the Director of the Department of Industrial Relations (“DIR”). Copies of these rates may be
obtained at the Purchasing Division’s office of the City of Palo Alto. Contractor shall provide a copy of
prevailing wage rates to any staff or subcontractor hired, and shall pay the adopted prevailing wage rates
as a minimum. Contractor shall comply with the provisions of all sections, including, but not limited to,
Sections 1775, 1776, 1777.5, 1782, 1810, and 1813, of the Labor Code pertaining to prevailing wages.
Invitation for Bid (IFB) Package 19 Rev. April 20, 2015
CONSTRUCTION CONTRACT
SECTION 26 NON-APPROPRIATION.
26.1 Appropriations.
This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto
Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the
event that the City does not appropriate funds for the following fiscal year for this event, or (b) at any time
within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds
for this Construction Contract are no longer available. This section shall take precedence in the event of a
conflict with any other covenant, term, condition, or provision of this Agreement.
SECTION 27 AUTHORITY.
27.1 Representation of Parties.
The individuals executing this Agreement represent and warrant that they have the legal capacity and
authority to do so on behalf of their respective legal entities.
SECTION 28 COUNTERPARTS
28.1 Multiple Counterparts.
This Agreement may be signed in multiple counterparts, which shall, when executed by all the parties,
constitute a single binding agreement.
SECTION 29 SEVERABILITY.
29.1 Severability.
In case a provision of this Construction Contract is held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not be affected.
SECTION 30 STATUTORY AND REGULATORY REFERENCES.
30.1 Amendments to Laws.
With respect to any amendments to any statutes or regulations referenced in these Contract Documents,
the reference is deemed to be the version in effect on the date that the Contract was awarded by City,
unless otherwise required by law.
SECTION 31 WORKERS’ COMPENSATION CERTIFICATION.
31.1 Workers Compensation.
Pursuant to Labor Code Section 1861, by signing this Contract, Contractor certifies as follows:
“I am aware of the provisions of Section 3700 of the Labor Code which require every employer to be
insured against liability for workers’ compensation or to undertake self-insurance in accordance with the
provisions of that code, and I will comply with such provisions before commencing the performance of the
Work on this Contract.”
Invitation for Bid (IFB) Package 20 Rev. April 20, 2015
CONSTRUCTION CONTRACT
SECTION 32 DIR REGISTRATION AND OTHER SB 854 REQUIREMENTS.
32.1 General Notice to Contractor.
City requires Contractor and its listed subcontractors to comply with the requirements of SB 854.
32.2 Labor Code section 1771.1(a)
City provides notice to Contractor of the requirements of California Labor Code section 1771.1(a), which
reads:
“A contractor or subcontractor shall not be qualified to bid on, be listed in a bid proposal, subject to the
requirements of Section 4104 of the Public Contract Code, or engage in the performance of any contract
for public work, as defined in this chapter, unless currently registered and qualified to perform public work
pursuant to Section 1725.5. It is not a violation of this section for an unregistered contractor to submit a
bid that is authorized by Section 7029.1 of the Business and Professions Code or Section 10164 or 20103.5
of the Public Contract Code, provided the contactor is registered to perform public work pursuant to
Section 1725.5 at the time the contract is awarded.”
32.3 DIR Registration Required.
City will not accept a bid proposal from or enter into this Construction Contract with Contractor without
proof that Contractor and its listed subcontractors are registered with the California Department of
Industrial Relations (“DIR”) to perform public work, subject to limited exceptions.
32.4 Posting of Job Site Notices.
City gives notice to Contractor and its listed subcontractors that Contractor is required to post all job site
notices prescribed by law or regulation and Contractor is subject to SB 854-compliance monitoring and
enforcement by DIR.
32.5 Payroll Records.
City requires Contractor and its listed subcontractors to comply with the requirements of Labor Code
section 1776, including:
(i) Keep accurate payroll records, showing the name, address, social security
number, work classification, straight time and overtime hours worked each day
and week, and the actual per diem wages paid to each journeyman, apprentice,
worker, or other employee employed by, respectively, Contractor and its listed
subcontractors, in connection with the Project.
(ii) The payroll records shall be verified as true and correct and shall be certified
and made available for inspection at all reasonable hours at the principal office
of Contractor and its listed subcontractors, respectively.
(iii) At the request of City, acting by its project manager, Contractor and its listed
subcontractors shall make the certified payroll records available for inspection
or furnished upon request to the project manager within ten (10) days of receipt
of City’s request. City requests Contractor and its listed subcontractors to
submit the certified payroll records at the end of each week during the Project.
Invitation for Bid (IFB) Package 21 Rev. April 20, 2015
CONSTRUCTION CONTRACT
(iv) If the certified payroll records are not produced to the project manager within
the 10-day period, then Contractor and its listed subcontractors shall be subject
to a penalty of one hundred dollars ($100.00) per calendar day, or portion
thereof, for each worker, and City shall withhold the sum total of penalties from
the progress payment(s) then due and payable to Contractor. This provision
supplements the provisions of Section 15 hereof.
(v) Inform the project manager of the location of contractor’s and its listed
subcontractors’ payroll records (street address, city and county) at the
commencement of the Project, and also provide notice to the project manager
within five (5) business days of any change of location of those payroll records.
IN WITNESS WHEREOF, the parties have caused this Construction Contract to be executed the
date and year first above written.
CITY OF PALO ALTO
____________________________
Purchasing Manager
City Manager
APPROVED AS TO FORM:
____________________________
Senior Asst. City Attorney
APPROVED:
____________________________
Public Works Director
CONTRACTOR
By:___________________________
Name:________________________
Title:__________________________
Date: _________________________
City of Palo Alto, Public Works Department
Attachment B - Bid Analysis
Project: PE - 13008 Bowden Park Improvement Project
Date Opened: January 26, 2016
Engineer's Estimate
Base Bid $251,592.00
Contingency (10%)$25,160.00
Total (Base+Contingency)$276,752.00
Bid Alternate $35,517
Bid Summary
Unit Price Total Item Price Unit Price Total Item Price Unit Price Total Item Price Unit Price Total Item Price Unit Price Total Item Price Unit Price Total Item Price
001 1 LS Mobilization $ 5,000.00 $ 5,000.00 $ 15,000.00 $ 15,000.00 $ 30,000.00 $ 30,000.00 $ 15,000.00 $ 15,000.00 $ 33,164.00 $ 33,164.00 $ 12,450.00 $ 12,450.00
002 1 LS Demolition and Removal $ 25,000.00 $ 25,000.00 $ 21,000.00 $ 21,000.00 $ 30,300.00 $ 30,300.00 $ 20,000.00 $ 20,000.00 $ 22,464.00 $ 22,464.00 $ 31,900.00 $ 31,900.00
003 1 LS Playground Equipment $ 91,048.00 $ 91,048.00 $ 126,191.00 $ 126,191.00 $ 120,000.00 $ 120,000.00 $ 135,000.00 $ 135,000.00 $ 115,501.00 $ 115,501.00 $ 144,992.00 $ 144,992.00
004 1 LS Site Furnishings $ 73,962.00 $ 73,962.00 $ 31,543.00 $ 31,543.00 $ 13,000.00 $ 13,000.00 $ 60,000.00 $ 60,000.00 $ 38,910.00 $ 38,910.00 $ 50,520.00 $ 50,520.00
005 1,200 SF Asphalt Pavement $ 8.00 $ 9,600.00 $ 20.60 $ 24,720.00 $ 19.17 $ 23,004.00 $ 14.00 $ 16,800.00 $ 12.40 $ 14,880.00 $ 10.00 $ 12,000.00
006 6,200 SF Accelerated Curing Slurry Seal (Slurry
Seal Type I)$ 1.45 $ 8,990.00 $ 1.17 $ 7,254.00 $ 0.44 $ 2,728.00 $ 2.00 $ 12,400.00 $ 1.61 $ 9,982.00 $ 1.71 $ 10,602.00
007 170 SF Concrete Paving (includes pathway,
trash pads, and access ramp)$ 20.00 $ 3,400.00 $ 15.00 $ 2,550.00 $ 300.00 $ 51,000.00 $ 127.00 $ 21,590.00 $ 122.85 $ 20,884.50 $ 213.00 $ 36,210.00
008 1,060 SF Decomposed Granite Paving $ 10.00 $ 10,600.00 $ 2.15 $ 2,279.00 $ 8.21 $ 8,702.60 $ 15.00 $ 15,900.00 $ 11.12 $ 11,787.20 $ 10.00 $ 10,600.00
009 1 LS Landscape Irrigation $ 1,000.00 $ 1,000.00 $ 6,600.00 $ 6,600.00 $ 6,400.00 $ 6,400.00 $ 1,300.00 $ 1,300.00 $ 1,896.00 $ 1,896.00 $ 10,000.00 $ 10,000.00
010 1 LS Planting $ 1,000.00 $ 1,000.00 $ 3,500.00 $ 3,500.00 $ 10,900.00 $ 10,900.00 $ 3,600.00 $ 3,600.00 $ 4,756.00 $ 4,756.00 $ 5,000.00 $ 5,000.00
$ 229,600.00 $ 240,637.00 $ 296,034.60 $ 301,590.00 $ 274,224.70 $ 324,274.00
001 1 LS Additive Bid Alternate #1 Bike Rack $ 3,000.00 $ 3,000.00 $ 1,300.00 $ 1,300.00 $ 3,500.00 $ 3,500.00 $ 6,430.00 $ 6,430.00 $ 5,760.00 $ 5,760.00 $ 12,000.00 $ 12,000.00
002 1 LS Additive Bid Alternate #2 Picnic Table $ 5,100.00 $ 5,100.00 $ 4,560.00 $ 4,560.00 $ 3,250.00 $ 3,250.00 $ 6,680.00 $ 6,680.00 $ 8,376.00 $ 8,376.00 $ 6,613.00 $ 6,613.00
003 1 LS Additive Bid Alternate #3 Benches $ 2,900.00 $ 2,900.00 $ 2,570.00 $ 2,570.00 $ 2,000.00 $ 2,000.00 $ 3,790.00 $ 3,790.00 $ 9,899.00 $ 9,899.00 $ 3,218.00 $ 3,218.00
004 1 LS Additive Bid Alternate #4 Additional
Decomposed Granite $ 4,500.00 $ 4,500.00 $ 2,200.00 $ 2,200.00 $ 8,650.00 $ 8,650.00 $ 11,710.00 $ 11,710.00 $ 19,277.00 $ 19,277.00 $ 8,825.00 $ 8,825.00
005 1 LS Additive Bid Alternate # 5 Mulch $ 2,000.00 $ 2,000.00 $ 1,600.00 $ 1,600.00 $ 4,850.00 $ 4,850.00 $ 5,480.00 $ 5,480.00 $ 6,784.00 $ 6,784.00 $ 11,500.00 $ 11,500.00
006 1 LS Additive Bid Alternate #6 Synthetic
Material Benches $ 2,900.00 $ 2,900.00 $ 3,500.00 $ 3,500.00 $ 3,500.00 $ 3,500.00 $ 3,790.00 $ 3,790.00 $ 21,422.00 $ 21,422.00 $ 4,500.00 $ 4,500.00
20,400.00$ 15,730.00$ 25,750.00$ 37,880.00$ 71,518.00$ 46,656.00$
250,000.00$ 256,367.00$ 321,784.60$ 339,470.00$ 345,742.70$ 370,930.00$ Total (Base + Bid Alternate)
Bid Item Approx.
Quantity Unit Description
G&G Builders, Inc.
Total Base Bid
Base Bid
Bid Alternate
Total Bid Alternate
Breneman Inc.RE Schultz Construction Calstate Construction Suarez & Munoz Construction,
Inc.
Integra Construction Services,
Inc.
City of Palo Alto (ID # 6661)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 2/29/2016
City of Palo Alto Page 1
Summary Title: Development Center and Business Registry Staffing
Title: Approval of Amendment to Table of Organization by Adding 1.0
Management Analyst in the Development Services Department
From: City Manager
Lead Department: City Manager
Recommendation
The Finance Committee recommends that the City Council amend the Table of
Organization by adding 1.0 Management Analyst in the General Fund, Development
Services Department.
Background
The City Council passed Ordinance No. 5279 in November 2014 establishing the
Business Registry program and on January 19, 2016 amended the original program to
exempt small businesses and small non-profits. The Development Services Department
is taking a lead in administering the Business Registry Program. As a result of the
additional responsibilities being assigned to the Development Center and the current
high volume work-load for the existing Development Center staff, a staffing and
workload assessment study was contracted by Human Resources. The staffing study
concluded that current staffing resources do not support the level of administration and
reporting required to meet the demands of this new program and the existing workload
exceeds the current level of staffing, therefore staff recommends the addition of one
Full-Time Equivalent (FTE) Management Analyst. There is an immediate need to
request this position in order to hire and train in a timely manner to meet Business
Registry demands and maintain the existing level of service in the Development Center.
The Finance Committee reviewed staff’s recommendation on February 16, 2016 and
unanimously supported the recommendation to amend the Table of Organization by
adding 1.0 Management Analyst in the General Fund, Development Services
Department.
Discussion
The Palo Alto Development Center is a “one stop” customer service center which
experiences extremely high customer demand for services every day with approximately
City of Palo Alto Page 2
4,000 permits issued per year. Since March 2015, the Development Center (DC)
Manager and Economic Development Manager have been co-leaders of the Business
Registry project. Currently, the day-to-day administration is handled at the
Development Center under the DC Manager. The implementation of the Business
Registry program has been complex and demanding and has impacted the existing
workload for the DC Manager. The duties in administering the Business Registry involve
the following:
• Oversee day-to-day administration of Business Registry:
• Manage outreach and notifications processes as well as timely response to
inquiries and answering questions;
• Create reports for status updates to monitor compliance;
• Merger of the Business Registry program with Certificate of Occupancy by
assisting in the creation of procedures, interplay with Accela, and training staff;
and
• Administer Business Registry payments, fees and refunds.
In order to determine appropriate allocation of new Business Registry work among
current staffing and evaluate the demands and requirements to support the existing
workload, Human Resources contracted for a staffing and workflow analysis of the
administrative support functions in the Development Center Department, including a
review of current classifications, and options for supporting the additional
responsibilities associated with administering the Business Registry Program and
supporting the existing workload. The findings determined that the DC Manager needs
additional support to provide required assistance on this key program and to maintain
the high level of service currently provided in the Development Center. The analysis
concluded that a Management Analyst is the appropriate classification to handle the
necessary duties to efficiently operate the Business Registry and provide additional
support for Development Center administrative functions. With the existing level of
demand in the Development Center and the ongoing responsibilities associated with the
Business Registry administration a full time employee is required.
In addition, the findings note that the Development Center Services Department should
evaluate the use of contractors in supporting Development Center services since there
is an ongoing high demand for inspection and plan review. The review points out that
while the use of contractors in the staffing model has provided flexibility to manage
fluctuations in demand for services, it has contributed to a high level of turnover of
trained and experienced contract personnel. Staff will evaluate the ongoing work-load
needs and return with possible recommendations on use of contract personnel during
the development of the Fiscal Year 2017 operating budget.
At this time, the only change recommended to the Fiscal Year 2016 budget is to add
one FTE Management Analyst to support the Business Registry program and the
significant Development Center workload. Attached is an updated Fiscal Year 2016
Table of Organization to reflect the addition of this one FTE.
City of Palo Alto Page 3
Resource Impact
The addition of one FTE Management Analyst is estimated to cost $53,224 for salary
and benefits for the remainder of the current fiscal year and approximately $164,040
annually. Sufficient funding is available within the Development Services department’s
Fiscal Year 2016 budget, through the use of salary savings and unencumbered contract
dollars, to fund the additional expenses associated with this position through this fiscal
year. Development Services is currently conducting a comprehensive fee study to align
the Department’s Municipal Fees with expenses. Development Services intends to offset
ongoing future expenses associated with this additional position through appropriate
adjustments to the Fiscal Year 2017 Municipal Fee schedule with the goal of reaching
100% full cost recovery. Staff will bring forth recommendations to adjust fees and
achieve cost-neutrality as part of the development of the Fiscal Year 2017 operating
budget, and subsequent Business Registry updates, subject to council approval.
City of Palo Alto (ID # 6484)
City Council Staff Report
Report Type: Action Items Meeting Date: 2/29/2016
Summary Title: Hazardous Materials Ordinance Amendment
Title: PUBLIC HEARING: Adoption of Two Ordinances: 1) Ordinance
Amending the Palo Alto Municipal Code Regulations Related to Hazardous
Materials use, Storage and Handling in the Office, Research and
Manufacturing Zoning Districts and Nonconforming Uses and Facilities; and
2) Ordinance Regarding Amortization of Nonconforming Uses at
Communications & Power Industries LLC (CPI) Located at 607-811 Hansen
Way. Amendments to the Municipal Code Affect the Following Sections and
can be Reviewed at the Planning Department’s Offices During Regular
Business Hours at 250 Hamilton Avenue, Palo Alto, 5th Floor: a. Chapter
18.04 (Definitions) Section 18.04.030 (66) (A) and (B) and (127.7); b. Chapter
18.20 Office, Research, and Manufacturing [MOR, ROLM, RP and GM] Section
18.20.030 (Land Uses) Table 1 (Industrial/Manufacturing District Land Uses);
Section 18.20.040 sub sections (b) and (c); and Section 18.20.050
(Performance Criteria) c. Chapter 18.23 (Performance Criteria for Multiple
Family, Commercial, Manufacturing and Planned Community Districts)
Section 18.23.100 (Hazardous Materials) Subsection (B) d. Chapter 18.70
(Nonconforming Uses and Noncomplying Facilities) Sections 18.70.020
through 18.70.100, Including Section 18.70.070 (Nonconforming Use -
Required Termination) e. Chapter 17.16 (Hazardous Materials Management
Plan) Sections 17.16.010 (Hazardous Materials Management Plan) and
17.16.025 (Supplemental requirements for emergency response plans) and f.
Chapter 17.20 (Hazardous Materials Inventory) Section 17.20.020
(Information required). Environmental Assessment: As a Regulatory Action
That Would Modify the List of Permitted Uses in Industrial Zones to Protect
the Health and Life Safety of Palo Alto Residents, the Proposed Ordinances Is
Categorically Exempt From Review Under Section 15308 (Class 8, Actions for
Protection of the Environment) of the State Guidelines for the California
Environmental Quality Act
From: City Manager
City of Palo Alto Page 1
Lead Department: Planning and Community Environment
Recommendation
Staff recommends that the City Council:
a) adopt the hazardous materials ordinance included in Attachment A;
b) adopt the amortization ordinance included in Attachment B (recommended by the PTC,
with the encouragement to continue efforts to negotiate an alternative), or the
alternative ordinance included as Attachment C, including the added text referencing a
possible agreement between the City and CPI; and
c) authorize the City Manager to execute an agreement with terms substantially similar to
those in Attachment D.
Note: Staff is continuing to confer with CPI and neighborhood stakeholders regarding
potential language for an alternate ordinance (Attachment C) and terms of an agreement
(Attachment D) between the City and CPI to implement that ordinance. If the parties reach
agreement on substantive terms for recommendation to Council, staff will provide these
materials in the Council’s February 25, 2016 and make them publically available. If there is
no such agreement, staff may recommend Council action on items (a) and (b) above (with
the ordinance recommended by the PTC), and not (c).
Executive Summary
The proposed draft hazardous materials ordinance at Attachment A would amend provisions in
the Palo Alto Municipal Code (PAMC) related to industrial zoning districts in four principal ways:
It would define three categories or “tiers” of hazardous materials uses, including two
that are already addressed in the code (Tier 1 and Tier 3), and one that is not (Tier 2);
It would define “sensitive receptors” that could potentially be affected if there is an
accidental release of hazardous materials from hazardous materials uses and the
hazardous materials travel off site;
It would establish a minimum distance between Hazardous Materials Tier 2 uses and
sensitive receptors; and
It would prohibit Hazardous Materials Tier 3 uses in the City.
The ordinance would also make adjustments to provisions in the code governing non-
conforming uses.
The proposed draft amortization ordinance at Attachment B proposes termination dates for the
three facilities at Communication & Power Industries, LLC (CPI) that would become legal and
non-conforming following the effective date of the ordinance in Attachment A. The plating
shop facility at CPI would be required to terminate or move more than 300’ away from the
neighbors in 2026 and the other CPI facilities would be required to terminate or move more
than 300’ away from sensitive receptors by 2052.
City of Palo Alto Page 2
was released to Matadero Creek as the result of improper weekend shutdown of process
equipment and improper opening of a containment valve that discharges to the creek.
Current Hazardous Materials Regulations and Implementation
In 2007 the City Council enacted zoning code amendments to address hazardous materials.
Section 18.23.100 (Hazardous Materials) of the Municipal Code was intended to prevent new
hazardous materials uses or intensification of uses above the CalARP thresholds, and to provide
more notification for residents throughout the city when adjacent facilities increased or
modified hazardous materal use and storage.
Specifically, the City Council added provisions to the Zoning Ordinance to require uses such as
CPI to comply with the California Accidential Release Prevention Program (CalARP) regulations
and provide regularly prepared Risk Management Plans (RMP) for local review. In addition, the
zoning required a conditional use permit for any new facility and for conversion or
reconstruction of any existing facilities subject to CalARP regulations. New and reconstructed
CalARP facilities with RMPs (now proposed to be defined as “Hazardous Materials Tier 3” uses)
were prohibited within 300 feet of a residential zone or existing residential uses. (For more
information regarding existing requirements of the Palo Alto Municipal Code, please see the
first few sections of !EOM’s technical memorandum in Attachment E.)
In March 2012, CPI reduced the amount of Potasssium Cyanide and Nitric Acid on site below
the CalARP threshold quantities and was no longer required to comply with the CalARP
regulations. Under the proposed ordinance, CPI has three facilities that would qualify as
Hazardous Materials Tier 2 use. Under the proposed protective distance requirements, those
facilities would become nonconforming.
Study of Current Risk at CPI and Findings
The ity hired !EOM to conduct a Risk !ssessment of PI’s operations. !EOM reviewed
documents, conducted a site visit to the plating shop and cryogenic liquid storage area, and
reviewed PI’s hemical Management Program, which is required by both the U.S. EP! (for
compliance with the Clean Air Act) and Cal-OSHA (administering California requirements that
employers implement an Injury and Illness Prevention Program). AECOM also undertook
validation of prior CPI air dispersion modeling (from the 2008 RMP), identified five potential
‘extreme events,’ and performed air dispersion modeling to estimate potential off-site health
effects from the two extreme events determined to be ‘most likely’ to occur. (See MR#4622
from October 6, 2014 for more details,
https://www.cityofpaloalto.org/civicax/filebank/documents/44095) AECOM issued its report in
January 2014.
!EOM’s air dispersion modeling demonstrated that a hypothetical nitric acid release event
could result in health effects up to 92 feet from the assumed release, or to the first row of
residences in the Barron Park neighborhood, south from Building 2. Air dispersion modeling of
the cryogenic hydrogen release event showed that the toxic end point would terminate within
City of Palo Alto Page 5
PI’s property boundaries and would not reach the adjacent residences.
Public and Council Review of CPI Risk Assessment
On February 20, 2014, the City held a community meeting where neighbors expressed the
concern that the ‘extreme events’ modelled in the Risk !ssessment did not address a major
earthquake, which might affect the wider community and cause a delay in public safety
response. To address the neighbors’ concern, !EOM developed another air dispersion model
to examine the impact if a major earthquake compromised the containment of chemicals in the
plating shop and the building housing it. The supplemental evaluation examined a hypothetical
scenario based on assumptions about the nature of the earthquake damage to the building and
the resulting mixing of chemicals that AECOM described as “highly unrealistic.” Based on these
assumptions, AECOM concluded that the hypothetical scenario could result in a release with
the potential to affect residential uses up to a distance of 616 feet from the plating shop. (See
CMR #4622,
https://www.cityofpaloalto.org/civicax/filebank/documents/44095).
Representatives of CPI commented that this scenario, which assumes substantial building
damage from a major earthquake, should be evaluated in the context of the building’s seismic
strengthening and the likelihood of an earthquake occurring that would cause damage
sufficient to result in the mixing of chemicals in the plating shop. CPI retained a consultant
(Albus-Keefe & Associates) (AKA) to conduct a probabilistic assessment of the likelihood of
ground shaking sufficient to cause structural failure of the second floor. AKA concluded that
the probability of this level of ground shaking would be 0.75% over 50 years, or less than the
current uilding ode requirements. The ity’s consultants at AECOM subsequently reviewed
this report and concluded that !K!’s results were reasonable, with several limitations. !EOM
also noted several additional items that would be helpful to understand in order to evaluate the
probability of ground motion seriously affecting Building 2 and observed that the AKA review
did not constitute a comprehensive seismic risk evaluation.
At the October 6, 2014 City Council meeting, PI’s consultant ENVIRON submitted a declaration
further commenting on the supplemental evaluation. That declaration, along with !EOM’s
response and other documents, is available on the ity’s website at
http://www.cityofpaloalto.org/gov/depts/pln/new projects/cpi.asp. Following public
testimony, the City Council directed staff to develop a zoning ordinance to regulate plating
shops and similar facilities with similar hazards, identify incompatible adjacent uses, identify
appropriate volumes of hazardous materials for regulation, possibly establishing tiers in the
ordinance for facilities covered, and incorporate an amortization schedule for any non-
conforming facilities. (See City Council Minutes October 6, 2014,
http://www.cityofpaloalto.org/civicax/filebank/documents/44878.)
On November 16, 2015, staff presented drafts of the attached ordinances to the City Council for
review and discussion. At that meeting, the Council directed staff to revise the first ordinances
in several ways, and take both ordinances to the Planning & Transportation Commission for
City of Palo Alto Page 6
review and recommendations. (The ouncil’s action minutes are included as Attachment G.)
The City Council also asked staff to explore with CPI and its neighbors the potential for an
agreement that could add an option to eliminate the plating shop from the site entirely (rather
than moving it to be 300’ away from the neighbors).
On January 27, 2016, the Planning and Transportation Commission (PTC) reviewed the draft
ordinances and recommended them to the City Council for adoption. (Verbatim minutes are
included as Attachment H.) Although the version of the amortization ordinance reviewed by
the Commission did not include an incentive to move the plating shop offsite, the Commission
discussed ongoing negotiations and supported reaching an agreement between the parties. No
additional review by the Commission is necessary.
Discussion
Regulatory changes in the attached draft hazardous materials ordinance (Attachment A)
address definitions, restrictions (including minimum distances), and the amortization of non-
conforming facilities. These issues are discussed below.
Definitions
The proposed ordinance would define three “tiers” of hazardous materials users where there
are currently two, and would define as “sensitive receptors” those uses that may include
individuals who are more susceptible than others to adverse effects from exposure to toxic
chemicals and other pollutants.
Section 18.23.100()(i) through (iv) of the ity’s Municipal ode currently regulates uses of
hazardous materials in excess of the “UP!” thresholds (quantities) defined by the State Health
and Safety Code, Division 20, Chapter 6.95. These uses would now be defined as “Hazardous
Materials Tier 1” uses as long as they did not involve Toxic or Highly Toxic Substances. (Also see
discussion of Tier 2, below.) The CUPA program requires facilities which store, use or handle
more than 55 gallons, 500 pounds, or 200 cubic feet of regulated material to submit a
Hazardous Materials Business Plan (HMBP) that reports the on site chemical inventory.1
According to the Palo Alto Fire Department, as of October 30, 2015 there were approximately
420 buildings with hazardous materials in Palo Alto. The Hazardous Materials Tier 1 uses with
hazardous materials less than CUPA threasholds are dispersed throughout Palo Alto, and
include a wide variety of land uses such as gas stations, manufacturing businesses, retailers
who sell paint, solvents and pesticides, and nail salons.
1 Santa Clara County Department of Environmental Health's Hazardous Materials Compliance Division is the
Certified Unified Program Agency (CUPA) and administers the Hazardous Waste Generator Program and Tiered
Permitting (California Health and Safety Code Chapter 6.5), Underground Storage Tank Program (California Health
and Safety Code Chapter 6.7) and the Risk Management Program (California Health and Safety Code Chapter 6.95).
As a Participating Agency, the Palo Alto Fire Department administers the Hazardous Materials Business Plans
requirement (California Health and Safety Code Chapter 6.95) and Aboveground Storage Tank (California Health
and Safety Code Chapter 6.67).
City of Palo Alto Page 7
ased on staff’s analysis, these proposed regulations would make three existing Tier 2 facilities
“legal and non-conforming,” meaning that the uses were legally permitted when they were
instituted, but would no longer conform to the ity’s zoning. The affected facilities are all on
the CPI site (Buildings 1A, 1B and 2/2A).6
Amortization of Non-Conforming Uses
As first discussed in April 2012, amortization is one means by which a city can terminate a
nonconforming facility. Amortization can phase-out a use or facility that is either incompatible
with adjacent uses or where a change in use is desired as part of an orderly transition to other
uses, for example, the conversion of an area from light industrial uses to residential. In the
past, the City of Palo Alto has provided amortization periods from five years to 30 years and has
terminated uses including a nonprofit molecular research activity, a dance studio, art studio,
gero-psychaitric skilled nursing facility, and tire sales and installation.
Generally, when zoning regulations change in a manner incompatible with a current use that
was lawfully established, the non-conforming use may remain but cannot expand or intensify.
The alifornia Supreme ourt has held, however, that “zoning legislation may validly provide
for the eventual termination of nonconforming uses without compensation if [the legislation]
provides a reasonable amortization period commensurate with the investment involved.”
Metromedia, Inc. v. City of San Diego (1980) 435 Cal3d 848. Thus, to determine an amortization
schedule, the City must look at the value of the investments involved, and the Court has
indicated that “the reasonableness of the amortization period depends on the interplay of
many factors, including the depreciated value of the structures to be removed, their remaining
useful life, and the hardship to the public if they are left standing.” City of Salinas v. Ryan
Outdoor Advertising, Inc. (1987) 189 CalApp3d 416.
The proposed draft hazardous materials ordinance would clarify that non-conforming uses may
be amortized in less than 15 years, when supported by a site-specific amortization study.
In 2011, following three accidental hazardous materials releases at CPI, the City commissioned
an amortization study to determine a reasonable amortization period for CPI to meet the
standards for new CalARPP facilities that were contained in the Zoning Ordinance adopted in
2007. (This was before CPI reduced its use of hazardous materials below the CalARP thresholds
that the ordinance proposes to define as “Hazardous Materials Tier 3.”) The study, prepared by
economic real estate consultants CB Richard Ellis, concluded that a reasonable termination date
for PI’s plating shop would be 20 years from the date that the most significant improvements
occurred on the CPI site, which was in 2006. Thus the CB Richard Ellis study would support an
ordinance eliminating the nonconforming use in 2026. CPI subsequently submitted its own
The staff recommendation to use 300 feet as the minimum separation for hazardous materials uses (Hazardous
Materials Tiers 2) is based on the ouncil’s prior determination in 2007 to use 300 feet for uses with hazardous
materials over CalARP thresholds. It is also three times the distance of off-site impacts identified in the 2014
dispersion modelling completed by the ity’s consultant !EOM.
City of Palo Alto Page 10
6
amortization study which concluded that the plating shop could not be separated from the rest
of the facility, and that a reasonable amortization period for the entire facility would be about
40 years - or in 2052.
Both amortization studies can be reviewed at
http://www.cityofpaloalto.org/gov/depts/pln/new projects/cpi.asp.
The proposed amortization ordinance (Attachment B) accepts the conclusions of both studies7
regarding CPI and would require that the plating shop be moved more than 300 feet away from
sensitive receptors by the end of 2026. The alternate version (Attachment C) presumes
technologies may change such that CPI can take advantage of the incentive which provides for
additional time in exchange for moving the plating shop off-site. This incentive (which at
publication time, the City is continuing to discuss with representatives of CPI and the neighbors)
would be predicated on execution of an enforceable agreement intended to provide additional
detail and enforcement mechanisms. The terms of such an agreement are provided in
Attachment D.
Public Outreach
City staff has made an effort to ensure that those who may be interested in the attached
ordinance are aware of the ity’s interest in regulating hazardous materials uses. Staff and
consultants from AECOM conducted a community meeting on October 22, 2015 and a written
summary of questions and answers from that meeting is provided as a part of the Council Staff
Report, see
http://www.cityofpaloalto.org/civicax/filebank/documents/49766.
Staff also provided notice to potentially affected Hazardous Materials Tier 2 uses, and reached
out to those businesses that appeared on an initial list based on the 2014 inventory forms
submitted to the Palo Alto Fire Department. In the course of this outreach and review of the
2015 inventory forms, three of the potential Hazardous Materials Tier 2 uses that were on the
list shown at the October 22nd meeting have been determined to qualify as a Hazardous
Materials Tier 1 use (reducing the number of facilities on the list from 14 to the 11 listed in
Table 2 above).
Staff also reached out to representatives of CPI and the adjacent neighborhood to discuss terms
of a potential agreement to provide an incentive for CPI to relocate the plating shop off-site
rather than 300 feet from the property line. While the neighborhood representatives included
in these discussions could not speak definitively for the neighborhood as a whole, staff’s hope is
that their opinions and input reflect general sentiment of area residents and that the terms
See Attachment F for !EOM’s peer review of the 2011/2012 amortization studies. !EOM’s review concluded
that both studies are technically sound, and offered two important observations. Specifically, a longer amortization
period could be required if CPI has made investments in its facility since the date of the studies; also if plating
technologies change, it may be possible for CPI to separate its plating shop from the rest of the uses on its site
prior to the year 2052.
City of Palo Alto Page 11
7
included in Attachment D will be acceptable to the neighborhood as well as the signatories (the
City and CPI).
Timeline
Ordinances require two readings and become effective 31 days following adoption.
Resource Impact
The proposed draft ordinances would modify zoning regulations in the City and provide a
termination date for three legal and non-conforming uses that would be created under the new
zoning. No additional City resources would be required to implement the ordinances, however,
if additional facilities become subject to regulation or if substantial disputes arise from
adoption of the ordinances, additional resources may be required.
Policy Implications
The ity’s omprehensive Plan contains goals and policies that are protective of neighborhood
quality of life and the health of the community. The Plan also contains goals and policies that
support Palo !lto’s image as a business-friendly community (Policy B-10). On balance, the
proposed ordinance is consistent with the Plan’s vision of a healthy community which is
supportive of businesses to the extent that they are compatible with Palo !lto’s residential
character and natural environment (see Policy L-4, Goal B-1).
Environmental Review
As a regulatory action that would modify the list of permitted uses in industrial zones to protect
the health and life safety of Palo Alto residents, the proposed ordinances would be categorically
exempt from review under Section 15308 (Class 8, Actions for Protection of the Environment)
of the State Guidelines for the California Environmental Quality Act.
Attachments:
Attachment A: Hazardous Materials Ordinance (PDF)
Attachment B: Amortization Ordinance (Recommended by Planning and Transportation
Commission) (PDF)
Attachment C: Updated Amortization Ordinance - Will Be Distributed in the Council
packet of February 25, 2016 (DOCX)
Attachment D: Proposed Agreement between the City of Palo Alto and CPI - Will Be
Distributed in the Council Packet of February 25, 2016 (DOCX)
Attachment E: AECOM Technical Memo Re: Background Materials Identifying Tier
between CUPA and CalARP (DOCX)
Attachment F: AECOM Memo Re: Amortization Studies (PDF)
Attachment G: City Council Action Minutes of November 16 (PDF)
Attachment H: Planning and Transportation Commission Draft Excerpt Verbatim
Minutes (DOC)
Attachment I: Correspondence (PDF)
City of Palo Alto Page 12
Attachment A
NOT YET APPROVED
Ordinance No. _____
Ordinance of the Council of the City of Palo Alto
Amending Zoning Regulations related to Hazardous Materials Use, Storage, and
Handling in the Office, Research, and Manufacturing Zoning Districts
The Council of the City of Palo Alto does ORDAIN as follows:
SECTION 1. Findings and Declarations. The City Council finds and declares as follows:
A. The City of Palo Alto is committed to ensuring the quality of life, including public
health, safety, and welfare, of its residential neighborhoods, as evidenced by Goal L-3 of the
City’s Comprehensive Plan, which calls for the protection and enhancement of safe, attractive
residential neighborhoods.
B. There are businesses within the City that because of the types and quantities of
hazardous materials used, handled, and/or stored onsite may pose offsite health, safety, and
welfare effects.
C. In 2007, the City Council amended the Palo Alto Municipal Code to prohibit uses
that have acutely hazardous materials above thresholds identified in Title 19 of the California
Code of Regulations within 300 feet of residential zoned properties or existing residential
properties within a non-residential zone. There are currently no such uses within Palo Alto,
however the City is concerned that new such uses could present a risk regardless of their
distance from residential uses.
D. The City is also concerned that there may be uses within the City, both at this
time and potentially in the future, which involve hazardous materials that do not exceed
thresholds identified in Title 19, but that nonetheless may present a risk of offsite health, safety
and welfare effects, particularly if they are located within proximity to land uses such as
residences, schools, daycare centers, elder care facilities and similar uses whose occupants may
be more susceptible than the general population to the adverse effects of exposure to toxic
chemicals and other pollutants.
E. On October 6, 2014, the City Council discussed issues associated with
Communication & Power Industries, LLC (CPI), which is located in the Stanford Research Park
but is immediately adjacent to a residential neighborhood. The Council directed staff to
prepare an ordinance that would identify appropriate hazardous materials thresholds,
considering the spectrum of businesses, facilities, and buildings in the City, and possibly
establish tiers for the facilities covered that take into account the quantities and types of
hazardous materials used, handled, and/or stored onsite and their proximity to land uses that
could experience health effects if an accidental release of hazardous materials were to occur
and travel off site.
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F. The California Health and Safety Code at Division 20, Chapter 6.95 identifies
threshold quantities of hazardous materials (referred to as “CUPA thresholds”) above which
businesses are required to prepare Hazardous Materials Business Plans. Hazardous Materials
Business Plans, among other things, must include an inventory of hazardous materials onsite
and an emergency response plan that identifies the steps, actions, and communications to be
performed in the event of an accidental release. The State Legislature recognizes that “the
information provided by business and area plans is necessary in order to prevent or mitigate
the damage to the health and safety of persons and the environment from the release or
threatened release of hazardous materials into the workplace and environment.”
G. A subset of the uses subject to the requirements of Health and Safety Code
Division 20, Chapter 6.95 are considered to involve acutely hazardous materials that may result
in health effects upon an accidental release. These include those defined as toxic or highly
toxic by the California Fire Code Chapter 2.
H. Establishing a minimum distance between these hazardous materials users in
the City’s industrial zoning districts and sensitive receptors will be protective of public health,
safety and welfare by preventing new uses of this type from locating within proximity of
existing sensitive receptors, and by preventing new sensitive receptors within industrial zoning
districts, when they would be within proximity of these hazardous materials uses.
I. Similarly, preventing establishment of new uses using these hazardous materials
above thresholds defined in Title 19 of the California Code of Regulations will be protective of
public health, safety and welfare by eliminating the risk of exposure due to accidental releases
from these uses.
J. Existing uses and sensitive receptors within industrial zoning districts that do not
comply with this ordinance would become legal and non-conforming uses. Those uses would be
prevented from expanding or intensifying and could be subject to termination through
amortization.
SECTION 2. Section 18.04.030 (Definitions) of Chapter 18.04 (Definitions) of the
Palo Alto Municipal Code is hereby amended to read as follows:
(a)
. . .
(66) Hazardous Materials.
(A) “Hazardous Materials Tier” means a manufacturing or processing use that utilizes,
handles, and/or stores particular types and quantities of hazardous materials as
follows:
(i) “Tier 1” means uses with quantities of hazardous materials that are not
defined as Toxic or Highly Toxic hazardous materials and that are both above
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the threshold quantities in Health and Safety Code Division 20, Chapter 6.95
and below the Title 19 thresholds of the California Code of Regulations.
(ii) “Tier 2” means uses with quantities of Toxic or Highly Toxic hazardous
materials that are both above the threshold quantities in Health and Safety
Code Division 20, Chapter 6.95 and below the Title 19 thresholds of the
California Code of Regulations.
(iii) “Tier 3” means uses with quantities of hazardous materials above the Title 19
thresholds of the California Code of Regulations.
(B) “Toxic and Highly Toxic hazardous materials” means substances defined in the
California Fire Code Chapter 2, as amended, and as adopted and amended by Title
17 of the City Municipal Code, and subject to requirements of ‘High-hazard Group H-
4’ of the State Building Code, as buildings that use, handle, or store hazardous
materials that are considered health hazards.
. . .
(127.7)“Sensitive Receptors” means land uses such as residences, schools, daycare
centers and homes, homes for the elderly, convalescent homes and similar uses whose
occupants may be more susceptible than the general population to the adverse effects
of exposure to toxic chemicals and other pollutants.
. . .
SECTION 3. Section 18.20.030 (Land Uses), Table 1 (Industrial/Manufacturing District Land Uses) of Chapter 18.20 (Office, Research, and Manufacturing [MOR, ROLM, RP and GM] Districts) of the Palo Alto Municipal Code is hereby amended to read as follows:
(a) Permitted and Conditionally Permitted Land Uses
Table 1 lists the land uses permitted or conditionally permitted in the industrial and manufacturing districts.
Table 1
Industrial/Manufacturing District Land Uses
[P = Permitted Use CUP = Conditional Use Permit Required]
MOR ROLM
ROLM(E) RP RP(5) GM
Subject to
regulations in
Chapter:
ACCESSORY AND SUPPORT USES
Accessory facilities and P P P P Chs. 18.40, 18.42
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activities customarily
associated with or
essential to permitted
uses, and operated
incidental to the
principal use.
Automatic Teller
Machines P P P P 18.20.030(d)
Home Occupations,
when accessory to
permitted residential
uses.
P P P P Chs. 18.40, 18.42
EDUCATIONAL, RELIGIOUS, AND ASSEMBLY USES
Business and Trade
Schools P
Religious Institutions P P P
Colleges and
Universities P P P
Private Clubs, Lodges,
or Fraternal
Organizations
CUP CUP CUP CUP
Private Schools (K-12) CUP CUP CUP CUP
HEALTH CARE SERVICES
Ambulance Services CUP
Convalescent Facilities CUP CUP CUP CUP 18.23.100(B)
Medical Office P CUP CUP
Medical Research P P P 18.20.030(c)
Medical Support Retail P 18.20.030(b)
Medical Support
Services P 18.20.030(b)
MANUFACTURING AND PROCESSING USES
Manufacturing P P P 18.23.100(B)
Recycling Centers CUP CUP CUP
Research and
Development CUP P P P 18.23.100(B)
Warehousing and P P P
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Distribution
OFFICE USES
Administrative Office
Services P P CUP
Financial Services CUP CUP
Professional and
General Business Office P P
PUBLIC/QUASI-PUBLIC USES
Service and Equipment
Yards P
Utility Facilities CUP
Utility Facilities
essential to provision of
utility services but
excluding
construction/storage
yards, maintenance
facilities, or corporation
yards
CUP CUP CUP
RECREATION USES
Commercial Recreation CUP CUP CUP
Neighborhood
Recreational Centers CUP
RESIDENTIAL USES
Single-Family Not permitted 18.20.040(b) Two-Family Not permitted
Multiple-Family CUP CUP CUP
Residential Care Homes P CUP P CUP P CUP 18.23.100(B)
RETAIL USES
Eating and Drinking
Services, excluding
drive-in and take-out
services
CUP CUP CUP
Retail Services CUP CUP CUP
SERVICE USES
Animal Care, excluding P
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boarding and kennels
Boarding and Kennels CUP
Day Care Centers P CUP P CUP P CUP 18.23.100(B)
Emergency Shelters
for the Homeless P (ROLM(E) 18.20.030(d)
Family Day Care
Homes
Small Family Day Care P CUP P CUP P CUP P 18.23.100(B)
Large Family Day Care P CUP P CUP P CUP P 18.23.100(B)
General Business
Services P
Lodging
Hotels providing not
more than 10% of
rooms with kitchens
CUP
Mortuaries and
Funeral Homes P
Personal Services CUP CUP CUP
Vehicle Services
Automobile Service
Stations, subject to
site and design review
in accord with the
provisions of Chapter
18.30(G)
CUP CUP
Automotive Services CUP
Off-site new vehicle
storage for auto
dealerships located in
Palo Alto
CUP CUP
TEMPORARY USES
Temporary Parking
Facilities, provided
that such facilities
shall remain no more
than five years
CUP CUP CUP CUP
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TRANSPORTATION USES
Passenger
Transportation
Terminals
CUP
SECTION 4. Subsections (b) and (c) of Section 18.20.040 (Site Development Standards) of Chapter 18.20 (Office, Research, and Manufacturing [MOR, ROLM, RP and GM] Districts) of the Palo Alto Municipal Code is hereby amended to read as follows:
. . .
(b) Development Standards for Exclusively Residential Uses
Residential uses shall be permitted in the MOR, RP, RP(5), ROLM, ROLM(E), and GM
zoning districts, subject to the following criteria.
(1) It is the intent of these provisions that a compatible transition be provided from
lower density residential zones to higher density residential or non-residential zones.
The Village Residential development type should be evaluated for use in transition areas
and will provide the greatest flexibility to provide a mix of residence types compatible
with adjacent neighborhoods.
(2) No new single-family or two-family residential development is permitted in any
of the office, research and manufacturing districts, and no new residential development
is permitted within 300 feet of an existing Hazardous Materials Tier 2 use. Existing
single-family and two-family uses and existing residential development within 300 feet
of an existing Hazardous Materials Tier 2 use shall be permitted to remain, consistent
with the provisions of Chapter 18.70 (Nonconforming Uses and Noncomplying Facilities).
(3) MOR District. All multi-family development in the MOR zoning district shall be
permitted subject to approval of a conditional use permit and compliance with the
development standards prescribed for the RM-30 zoning district.
(4) RP and RP(5) Districts. All multi-family development in the RP, and RP(5) zoning
districts that is located within 150 feet of an R-E, R-1, R-2, RMD, or similar density
residential PC zone shall be permitted subject to the provisions above in
18.20.040(b)(2), approval of a conditional use permit, and compliance with the
development standards prescribed for the RM-15 zoning district, including Village
Residential development types. Multi-family development in the MOR, RP, and RP(5)
zoning districts that is located greater than 150 feet from an R-E, R-1, R-2, RMD, or low
density residential PC shall be permitted subject to the provisions above in
18.20.040(b)(2), approval of a conditional use permit, and compliance with the
development standards prescribed for the RM-30 zoning district.
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(5) ROLM (E) District. All multi-family development in the ROLM(E) zoning district
shall be permitted subject to the provisions above in 18.20.040(b)(2), approval of a
conditional use permit, and compliance with the development standards prescribed for
the RM-15 zoning district.
(6) ROLM District. All multi-family development in the ROLM zoning district shall be
permitted subject to the provisions above in 18.20.040(b)(2), approval of a conditional
use permit, and compliance with the development standards prescribed for the RM-30
zoning district.
(7) GM District. All residential development is prohibited in the GM zoning district.
(c) Development Standards for Mixed (Residential and Nonresidential) Uses in the
MOR, ROLM, ROLM(E), RP, and RP(5) and GM zoning Districts
Mixed (residential and nonresidential) uses shall be permitted in the MOR, ROLM,
ROLM(E), RP, and RP(5) and GM zoning districts, subject to the following criteria:
(1) It is the intent of these provisions that a compatible transition be provided from
lower density residential zones to higher density residential, non-residential, or mixed
use zones. The Village Residential development type should be evaluated for use in
transition areas and will provide the greatest flexibility to provide a mix of residence
types compatible with adjacent neighborhoods.
(2) New sensitive receptor land uses shall not be permitted within 300 feet of a
Hazardous Materials Tier 2 or Tier 3 use. Existing sensitive receptors shall be permitted
to remain, consistent with the provisions of Chapter 18.70 (Nonconforming Uses and
Noncomplying Facilities).
(3)(2) ROLM(E) District. Mixed (residential and nonresidential) development in the
ROLM(E) zoning district shall be permitted, subject to the provisions above in
18.20.040(c)(2), approval of a conditional use permit, determination that the
nonresidential use is allowable in the district and that the residential component of the
development complies with the development standards prescribed for the RM-15
zoning district. The maximum floor area ratio (FAR) for mixed use development is 0.3 to
1.
(4)(3) ROLM District. Mixed (residential and nonresidential) development in the ROLM
zoning district shall be permitted, subject to the provisions above in 18.20.040(c)(2),
approval of a conditional use permit, determination that the nonresidential use is
allowable in the district and that the residential component of the development
complies with the development standards prescribed for the RM-30 zoning district. The
maximum floor area ratio (FAR) for mixed use development is 0.4 to 1.
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(5)(4) GM District. Mixed use (residential and nonresidential) development is
prohibited in the GM zoning district.
In computing residential densities for mixed (residential and nonresidential) uses, the
density calculation for the residential use shall be based on the entire site, including the
nonresidential portion of the site.
SECTION 5. Section 18.20.050 (Performance Criteria) of Chapter 18.20 (Office,
Research, and Manufacturing [MOR, ROLM, RP and GM] Districts) of the Palo Alto Municipal Code is hereby amended to read as follows:
All development in the Office/Research/Manufacturing zoning districts shall comply
with the requirements and guidelines outlined in Chapter 18.23. Such requirements and
guidelines are intended to reduce the impacts of these non-residential uses on
surrounding residential districts and other sensitive receptors.
SECTION 6. Subsection (B) of Section 18.23.100 (Hazardous Materials) of Chapter
18.23 (Performance Criteria for Multiple Family, Commercial, Manufacturing and Planned Community Districts) of the Palo Alto Municipal Code is hereby amended to read as follows:
(B) Requirements
(i) The project shall be designed to comply with all safety, fire and building codes
for the storage, use and handling of the hazardous materials involved.
(ii) Any new structure that is designated an "H" occupancy (storage, use and
handling of specified types and quantities of hazardous materials), or any existing
structure that is converted to an "H" occupancy, as specified by the California Building
Code, shall be designed in accordance with the currently adopted California Building
Code and Fire Code.
(iii) Where a use or building or area used for supporting such storage, use and/or
handling is located within 150 feet of a sensitive receptor, residential zoning district or
parcel with existing residential uses located within nonresidential zones residential
zoning district or of properties with existing residential uses located within
nonresidential zones (residential properties), the business owner shall provide a report
to the fire department addressing the adequacy of the emergency contingency plan,
which addresses safety of the nearby sensitive receptor or residential zones residential
area, including but not limited to, procedures for accidental releases or other
emergencies, and other protective measures as required by Health and Safety Code
Division 20, Chapter 6.95, upon:
(a) A change in the types of hazardous materials stored, used or handled on the site
resulting in quantities above the reporting threshold established in California Health and
Safety Code Division 20, Chapter 6.95; and/or
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(b) A 100% or greater increase in the quantities of a previously disclosed hazardous
material stored, used or handled on the site at buildings or areas already above the
reporting threshold established in California Health and Safety Code Division 20,
Chapter 6.95; and/or
(c) Release/threatened release incidents.
(iv) For any such use or facility outlined in (iii) above, upon application for any
building permit for improvements that would result in a change in the types of
hazardous materials stored, used or handled on the site or an increase in the quantities
of hazardous materials stored, used or handled on the site, the city shall provide written
notice to the owners, and operators, and occupants of residents of all sensitive
receptors and residentially zoned parcelsresidential property within 150 feet from the
property line, not later than ten days after issuance of the building permit. The notice
shall inform the property the sensitive receptor or residentially zoned property owners,
operators, and occupants that an application has been received, the nature of the
request (such as the type of materials), that the fire department and building
department have determined the project to be in compliance with relevant hazardous
materials regulations, and that the application and details are on file with the fire
department and/or building department.
(v) New Hazardous Materials Tier 1 manufacturing uses and new facilities (buildings
or areas) or modifications to existing facilities accommodating such uses shall be
permitted subject to compliance with the development standards prescribed for the
relevant industrial/manufacturing zoning district and the reporting and noticing
requirements identified above in Section 18.23.100(B)(iii).
(vi) New Hazardous Materials Tier 2 manufacturing uses and new facilities (buildings
or areas), or modifications to existing facilities accommodating these uses shall be
permitted subject to compliance with the development standards prescribed for the
relevant industrial/manufacturing zoning district and the reporting and noticing
requirements identified above in Section 18.23.100(B)iii, provided:
(a) approval by the fire chief of an emergency response plan that specifically
addresses toxic and highly toxic hazardous materials that exceed the quantities specified
in Section 17.16.025 of the Municipal Code shall be required;
(b) approval of a conditional use permit shall be required together with notification
by the City to owners, operators, and occupants of sensitive receptors or residentially
zoned land within 600 feet; and
(c) notwithstanding the provisions above, in no event shall such use, facility, or
improvement be allowed in the MOR zoning district or be allowed closer than 300 feet
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to a sensitive receptor or residentially zoned land if such facility or improvement is
located in a ROLM, ROLM(E), RP, RP(5), or GM district.
(vii) No Hazardous Materials Tier 3 uses shall be permitted in the City of Palo Alto.
(viiviii) No facility proposing the use of BioSafety Level 4 etiological agents shall be
permitted in the city of Palo Alto.
SECTION 7. Section 18.70.020 through Section 18.70.100 (regarding changes to
nonconforming uses and noncomplying facilities) of Chapter 18.70 (Nonconforming Uses and
Noncomplying Facilities) of the Palo Alto Municipal Code is hereby amended as follows:
18.70.020 Nonconforming use -Expansion.
(a) A nonconforming use shall not be altered, enlarged, expanded, or extended,
except as provided in subsection (b) this prohibition shall include any moving,
enlargement, extension, expansion or alteration of a nonconforming use which:
(1) Increases the site area or floor area occupied by such use on the same or any
additional site;
(2) Increases the number of structures or the size of any structure housing such
nonconforming use or portion thereof.
(b) A nonconforming use which occupies a portion of a building may be expanded to
include additional floor area within the same building; provided that:
(1) Without substantial remodeling or reconstruction, the portion of building into
which expansion is proposed is not reasonably susceptible to use or occupancy by a
conforming use. The determination of whether a portion of a building is reasonably
susceptible to use or occupancy by a conforming use shall be made by the building
official and shall take into consideration, but not be limited to, the following:
(A) Whether any required remodeling or reconstruction would involve structural
alterations;
(B) Whether the building was designed and constructed for the nonconforming
use occupying the building or portion thereof, or uses of similar intensity or
classification;
(C) The degree of privacy, separation, and protection afforded the portion of the
building into which expansion is proposed from intrusion, interference, noise, and
similar effects resulting from or generated by the nonconforming use;
(D) Availability of access to the portion of the building into which expansion is
proposed.
(2) Such expansion within the building does not create, cause, or increase any
additional nonconformance or noncompliance with the requirements of this title.
(3) Nothing contained in this section authorizes a change in the nature of a
nonconforming use contrary to the provision of Section 18.70.030.
18.70.030 Nonconforming use -Change.
(a) Except as provided in subsection (b), a nonconforming use shall not be changed
to or replaced by any use except a conforming use.
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(b) A nonconforming use may be changed to or replaced by another nonconforming
use which would have been permitted under the most recent zoning classification of the
property under which the nonconforming use was a conforming use and which is of no
higher occupancy rating than the existing nonconforming use as defined by Title 16
subject to the following limitations:
(1) The change or replacement shall not increase the extent of the nonconformity,
or the nature of the activity, or the site area or floor area occupied by the
nonconforming use on the site, except as may be provided by Section 18.70.020(b).
(2) Any period of temporary vacancy or discontinuance associated with such change
or replacement shall not exceed the limitations established by Section 18.70.040.
(3) Such change or replacement of nonconforming use to or by another
nonconforming use shall be permitted only if the building, or portion of a building,
presently occupied by the nonconforming use is not reasonably capable of conversion to
accommodate use and occupancy by a conforming use, without substantial
reconstruction or remodeling. The building official shall determine whether the building,
or portion of a building, is reasonably capable of such conversion. Said determination
shall take into consideration, but not be limited to, the following:
(A) Whether changes in the nature of the building or a portion of the building
would be required by Title 16 or similar regulations in order to convert the use of the
building, or portion of the building, to a conforming use;
(B) Whether any reconstruction or remodeling necessary to convert the use and
occupancy of the building, or a portion of the building, involves structural alterations;
(C) Whether the building, or portion of the building, was originally designed and
constructed for the particular existing nonconforming use or uses of similar character.
(c) A nonconforming use which is changed to or replaced by a conforming use shall
not be reestablished, and any portion of a site or any portion of a building, the use of
which changes from a nonconforming to a conforming use, shall not thereafter be used
except to accommodate a conforming use.
18.70.040 Nonconforming use -Discontinuance.
(a) On any site having facilities thereon valued at less than one thousand dollars,
any nonconforming use, other than a residential use, which is discontinued or
abandoned or otherwise ceases operation and use of the site for a period of six months
or longer shall not be resumed, reestablished, or continued, and all subsequent use of
such site and facilities thereon shall conform to this title.
(b) On any site not subject to subsection (a), a nonconforming use of facilities
designed and constructed for nonresidential purposes which is discontinued or
abandoned or otherwise ceases operation and use of the site for a period of one year or
more shall not be resumed, and all subsequent use of such site and facilities thereon
shall conform to this title.
(c) Notwithstanding the provisions of Section 18.70.030, or the provisions of
subsections (a) and (b) of this section, in any residential district, a nonresidential,
nonconforming use occupying facilities originally designed and constructed for
residential use which is discontinued or abandoned or otherwise ceases operation and
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use of the site for a period of ninety days or greater shall not be continued or
recommenced, and any subsequent use of the site and facilities shall conform to this
title. This provision shall not be construed to prevent a change of ownership or
management of such nonconforming use; provided, that any cessation of operation of
the use is solely in connection with the transfer of ownership or management to a
specifically designated person or entity and is solely for the purpose of accomplishing
any transfer of title, equipment, operational control, or similar purpose.
18.70.050 Nonconforming use -Maintenance and repair of facility.
Facilities occupied or used by a nonconforming use permitted by this chapter shall be
subject to the following provisions governing maintenance, repairs, alterations, or
replacement:
(a) Normal and routine maintenance of any structure for the purpose of preserving
its existing condition, retarding or eliminating wear and tear or physical depreciation, or
complying with the requirements of law, shall be permitted.
(b) Incidental alteration shall be permitted, provided the value of the incidental
alterations in any one-year period shall not exceed twenty percent of the value of the
facility prior to such alterations.
(c) Structural alterations or enlargement of the facility shall be permitted only to
accommodate a conforming use, or when made to comply with the requirements of
law.
18.70.060 Nonconforming use -Replacement of facility.
A facility, used or occupied wholly or partly by one or more nonconforming uses, which
is damaged or destroyed by any means except ordinary wear and tear and depreciation,
may be reconstructed or replaced only for occupancy or use by a conforming use,
except in the following instances:
(a) Where none of the nonconforming uses is subject to termination as provided by
Section 18.70.070, reconstruction or replacement for continued occupancy or use by
such nonconforming use shall be permitted only in accord with the following limitations:
(1) The extent of nonconformity, or the intensity of activity, or the site area or floor
area occupied by the nonconforming use subsequent to reconstruction or replacement
of the facility shall not exceed that existing prior to reconstruction or replacement.
(2) Reconstruction or replacement shall be subject to all applicable laws,
regulations, and procedures otherwise governing construction on the site.
(b) When one or more of the nonconforming uses is subject to termination as
provided by Section 18.70.070, reconstruction or replacement for continued occupancy
or use by such nonconforming use shall be permitted only in accord with the following
limitations:
(1) During the first one-third of the applicable termination period of such use, the
facility may be reconstructed or replaced; provided the value of such reconstruction or
replacement shall not exceed seventy-five percent of the value of the facility prior to
damage or destruction.
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(2) During the second one-third of the applicable termination period of such use,
the facility may be reconstructed or replaced; provided the value of such reconstruction
or replacement shall not exceed fifty percent of the value of the facility prior to damage
or destruction.
(3) During the last one-third of the applicable termination period of such use, the
facility may be reconstructed or replaced; provided the value of such reconstruction or
replacement shall not exceed twenty-five percent of the value of the facility prior to
damage or destruction.
(4) Any reconstruction or replacement permitted in this chapter shall not extend or
otherwise modify the required termination date established by Section 18.70.070 and
applied to the nonconforming use prior to such reconstruction or replacement. Said
termination date shall apply to all portions of the site or structure, including those
portions reconstructed or replaced.
18.70.070 Nonconforming use -Required termination.
(a) In any district, a nonconforming, nonresidential use occupying a site having
facilities thereon valued at less than one thousand dollars, shall be terminated within
five years from the effective date of this section, or within five years from the date such
use becomes nonconforming, whichever date is later, and within such time the
improvements shall either be removed, or converted or modified to accommodate a
conforming use.
(b) In any district, a nonconforming, nonresidential use of a site not subject to
subsection (a) of this section shall be terminated in accord with the following provisions
and schedules:
(1) When occupying or using facilities designed and built for residential use, the
nonconforming use shall be terminated within ten years from July 20, 1978, or within
ten years from the date such use becomes nonconforming, whichever date is later, and
within such time the improvements shall either be removed, or converted or modified
to accommodate a conforming use.
(2) When occupying or using facilities designed or built for nonresidential use, the
nonconforming use shall be terminated, and the facilities shall be converted or modified
to accommodate a conforming use, or shall be removed at or before the time limit
prescribed in subdivision (3) of this subsection; provided, however, that unless a site-
specific amortization study is prepared, no such termination, removal, or conversion
shall be required within fifteen years from July 30, 1978, or within fifteen years from the
date such use became nonconforming, whichever date is later; provided, however, that
uses which were made non-conforming as a result of the 1974 Fire Zone 1 Study, by
Ordinance No. 2777, adopted March 25, 1974, shall terminate on November 23, 1990;
and provided, further, that any use made nonconforming by said Ordinance No. 2777,
the primary purpose of which is to prepare and deliver food to senior citizens, shut-ins
and others with limited mobility may remain and shall not be subject to termination
pursuant to this section. Such uses shall be permitted to remodel, improve or replace
site improvements in accordance with applicable site development regulations,
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provided that any such remodeling, improvement or replacement shall not result in any
increased floor area.
Notwithstanding the dates of termination of uses required by this subsection (b)(2), the
required termination dates of the following uses shall be as hereinafter set forth:
(A) The nonconforming use(s) of the property at 440-460 Page Mill Road for
nonprofit orthomolecular and molecular medical research functions shall terminate on
or before July 20, 1998.
(B) The nonconforming use of the property at 464 Colorado Avenue for a dance
studio and associated parking shall terminate on or before July 20, 2003.
(C) The nonconforming use of the property at 440 Pepper Street for an art studio
specializing exclusively in the medium of monotype printmaking and associated
instructional uses shall terminate on or before July 20, 2018. Nothing in this ordinance
shall be construed to create a vested right for the nonconforming uses to remain after
July 20, 2003.
(D) The nonconforming use of the property at 4277 Miranda for a gero-
psychiatric skilled nursing facility shall terminate on or before January 20, 1994.
(E) The nonconforming uses of the property at 3200 Park Boulevard/340 Portage
Avenue/Olive Avenue for retail, research and development, warehouse, and storage
uses are permitted in approximately the same ratio of uses existing as of October 16,
2006, subject to the following limitations: (1) retail uses shall not exceed 60,000 square
feet, and (2) truck deliveries and other noisy outdoor activities shall be limited to the
hours of 8:00 a.m. to 9:00 p.m. weekdays and 9:00 a.m. to 9:00 p.m. weekends.
(F) The nonconforming use of the property at 2011 El Camino Real for tire sales
and installation shall terminate on or before April 26, 2009.
Such uses shall be permitted to remodel, improve or replace site improvements in
accordance with applicable site development regulations, provided that any such
remodeling, improvement or replacement shall not result in any increased floor area or
increase in intensity of the use, nor any loss of parking.
(3) The following schedule shall govern the period of time for termination of
nonconforming uses specified in subdivision (2) of this subsection unless a site-specific
amortization study is prepared:
Type of Construction Defined by
Building Code
Age of Structure Computed
From Date of Construction
Type I – Totally noncombustible 35 years
Type II – Fire resistive 35 years
Type III – Noncombustible
exterior, combustible interior 30 years
Type IV – Heavy timber 30 years
Type II – Nonrated 25 years
Type V – Wood frame 20 years
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(4) Nothing contained in this subsection shall extend or otherwise modify any
termination date provided by any previously existing ordinance for any use which
became nonconforming under such ordinance prior to the effective date of this section.
Such termination dates for such previously existing nonconforming uses are
incorporated in this section and shall remain in effect.
(c) The director of planning and community environment shall determine those
properties the use of which were lawfully existing uses permitted or conditionally
permitted, in the districts in which they were located immediately prior to July 20, 1978,
and which uses were rendered nonconforming by reason of the adoption of this title on
July 20, 1978, and those properties which, prior to July 20, 1978, were located in an R-1
district which was imposed by reason of annexation of the property to the city without
benefit of prezoning, the uses of which were lawfully existing uses permitted or
conditionally permitted operating subject to a conditional use permit prior to the date
of annexation. Written notice of such nonconformance shall be mailed to the owner of
record of each such property and to the occupant of the property. Within two years of
the date of mailing of such notice, any owner of such property, lessee of such property
with the written consent of owners, or purchaser of such property when acting pursuant
to a contract of sale in writing duly executed and acknowledged by both the buyer and
the owner of record, may apply to have such property excepted from the termination
provisions of this section. Said application may be made to the director of planning and
community environment in such form as may be prescribed by the director of planning
and community environment. Said application shall include, but not be limited to, a
statement of the location and size of the property, the nature of its use on July 20, 1978,
a statement of reasons establishing that the use is compatible with and will not be
detrimental to the uses designated in the Comprehensive Plan for the surrounding area
and properties, a map of the subject property indicating the location of all parcels of
real property within a distance of three hundred feet from the exterior boundary of the
subject property, a list as shown in the last equalized assessment roll, of the name and
address of the owner of record of each such parcel, and such other information as may
be required by the director of planning and community environment.
(1) Such application shall be accompanied by such fee as is prescribed in the
municipal fee schedule.
(2) Upon receipt of such application, the director of planning and community
environment shall so inform the chairperson of the planning commission who shall set a
date for a public hearing on the application which shall be held within a reasonable time
from the date of filing of the application. Notice of the hearing shall be given by
publication once in a local newspaper at least twelve days prior to the hearing and by
mail to owners and occupants of real property within 300 feet of the subject property.
(3) Upon the date set for hearing, the planning commission shall conduct a public
hearing thereon, unless, for cause, the commission shall on that date continue the
matter. Upon conclusion of the hearing, the commission shall determine whether the
use of the property on July 20, 1978, is compatible and not detrimental to the land uses
designated in the Comprehensive Plan for the surrounding areas of properties. In the
event the commission so finds, it shall recommend to the city council that the use shall
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be exempted from the termination provisions of this section. The commission may
recommend such conditions as it may find necessary to insure compatibility including,
but not limited to, required improvement of or modifications to existing improvements
on the property, limitations on hours of operation, limitation on the nature of
operations, and a specified term of years for which the exception shall be granted.
(4) Upon receipt of the recommendation of the planning commission, the city
council shall consider the application within a reasonable time. The council may, at its
option, conduct a public hearing on the matter.
In the event the council finds the use of the subject property to be compatible with and
not detrimental to those land uses designated in the Comprehensive Plan for the
surrounding area and properties, it shall, by motion, except said use from the
termination provisions of this section. In granting such exception, the council may
include such conditions as are deemed necessary to insure such compatibility, including,
but not limited to, the conditions set out in subsection (c)(3) of this section.
(5) Any use which is excepted from the termination provisions of this section, and
which is changed pursuant to Section 18.70.030 shall be subject to the termination
provisions of this section as though no exception had been granted.
(6) Any use excepted from the termination provisions of this section shall be
permitted to remodel, improve, or replace site improvements on the same site, without
the necessity to comply with site development regulations, for continual use and
occupancy by the same use; provided, that any such remodeling, improvement, or
replacement shall not result in increased floor area, number of dwelling units, height,
length, or any other increase in the size of the improvement.
(d) Notwithstanding the provisions of this section, any off-street parking lot which
was lawfully existing and not subject to any required termination provisions of any
predecessor ordinance on the effective date of this section, and which on that date was
and continues to be used accessory to a lawful conforming permitted use, shall be
permitted to continue in existence and use for the life of the principal use to which it is
accessory, regardless of whether said parking lot and principal use are located in the
same district.
18.70.080 Noncomplying facility -Enlargement.
(a) Except as specifically permitted by subsections (b) and (c) hereof or by Section
18.12.050(a), no enlargement, expansion, or other addition or improvement to a
noncomplying facility shall be permitted which increases the noncompliance. This
section shall not be construed to prohibit enlargement or improvement of a facility,
otherwise permitted by this title, which does not affect the particular degree of or
manner in which the facility does not comply with one or more provisions of this title.
(b) Except in areas designated as special study areas, the director of planning and
community environment may permit minor additions of floor area to noncomplying
facilities in the commercial CC, CS and CN zones and in the industrial MOR, ROLM, RP
and GM districts, subject to applicable site development regulations, for purposes of on-
site employee amenities, resource conservation, or code compliance, upon the
determination that such minor additions will not, of themselves, generate substantial
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additional employment. Such additions may include, but not be limited to, the
following:
(1) Area designed and used solely for providing on-site services to employees of the
facility, such as recreational facilities, credit unions, cafeterias and day care facilities;
(2) Area designated for resource conservation, such as trash compactors, recycling
and thermal storage facilities; and
(3) Area designed and required for hazardous materials storage facilities,
handicapped access, and seismic upgrades.
18.70.090 Noncomplying facility -Maintenance and repair.
(a) Normal and routine maintenance of a noncomplying facility shall be permitted
for the purpose of preserving its existing condition, retarding or eliminating wear and
tear or physical depreciation, or complying with the requirements of law.
(b) Incidental alterations to a noncomplying facility shall be permitted, provided
such alterations do not increase the degree of noncompliance, or otherwise increase the
discrepancy between existing conditions and the requirements of this title.
(c) Structural alterations to a noncomplying facility shall be permitted when
necessary to comply with the requirements of law, or to accommodate a conforming
use when such alterations do not increase the degree of noncompliance, or otherwise
increase the discrepancy between existing conditions and requirements of this title.
18.70.100 Noncomplying facility -Replacement.
A noncomplying facility which is damaged or destroyed by any means except ordinary
wear and tear and depreciation may be reconstructed only as a complying facility,
except as follows:
(a) When the damage or destruction of a noncomplying facility affects only a
portion of the facility that did not constitute or contribute to the noncompliance, said
portion may be repaired or reconstructed to its previous configuration.
(b) When the damage or destruction of a noncomplying facility affects a portion of
the facility that constituted or contributed to the noncompliance, any replacement or
reconstruction to such damaged portion shall be accomplished in such manner as not to
reinstate the noncompliance or degree of noncompliance caused by the destroyed or
damaged portion of the facility, and otherwise in full compliance with this title;
however, if the cost to replace or reconstruct the noncomplying portion of the facility to
its previous configuration does not exceed fifty percent of the total cost to replace or
reconstruct the facility in conformance with this subsection, then the damaged
noncomplying portion may be replaced or reconstructed to its previous configuration. In
no event shall such replacement or construction create, cause, or increase any
noncompliance with the requirements of this title.
(c) Notwithstanding subsections (a) and (b) hereof, a noncomplying facility in the
commercial CS, CN and CC zones and the industrial MOR, ROLM, RP and GM districts,
except for those areas designated as special study areas, existing on August 1, 1989,
which when built was a complying facility, shall be permitted to be remodeled,
improved or replaced in accordance with applicable site development regulations other
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than floor area ratio, provided that any such remodeling, improvement or replacement
shall not result in increased floor area.
(d) Notwithstanding subsections (a), (b) and (c) hereof, a noncomplying facility
housing a conforming use in the R-1 and RE zones, which when built was a complying
facility, which is damaged or destroyed by non-willful means (i.e., acts of God) shall be
permitted to be replaced, on the same site, and in its previous configuration, without
necessity to comply with the current site development regulations, provided that any
such replacement shall not result in increased floor area, height, length or any other
increase in the size of the facility.
(e) Except as otherwise provided in this section with regard to replacement or
reconstruction of a portion of a facility to its previous noncomplying condition, all
reconstruction shall be subject to all applicable laws, regulations, and procedures
otherwise governing construction on the site at the time said construction is
undertaken.
SECTION 8. Section 17.16.010 (Hazardous Materials Management Plan) of Chapter 17.16 (Hazardous Materials Management Plan) of the Palo Alto Municipal Code is hereby amended as follows:
Each applicant for a permit, a renewed permit, or an amended permit pursuant to this
title shall file a written plan, for the fire chief's approval, to be known as a hazardous
materials management plan (HMMP), which shall demonstrate the suitable storage of
hazardous materials. The HMMP may be amended at any time with the consent of the
fire chief. The HMMP shall be a public record except as otherwise specified. Section
18.23.100 in Title 18 identifies notification requirements of the availability of the
HMMP. Approval of the HMMP shall mean that the HMMP has provided adequate
information for the purposes of evaluating the permit approval. Such approval shall not
be understood to mean that the city has made an independent determination of the
adequacy of that which is described in the HMMP.
SECTION 9. Section 17.16.025 (Supplemental requirements for emergency
response plans) of Chapter 17.16 (Hazardous Materials Management Plan) of the Palo Alto
Municipal Code is hereby amended to read as follows:
(a) In addition to the HMMP requirements set forth in this chapter, any person who
handles a hazardous material or a mixture containing a hazardous material, which has a
quantity at any one time during the reporting year equal to or greater than a total
weight of five hundred pounds, or a total volume of fifty-five gallons, or two hundred
cubic feet at standard temperature and pressure (STP) for compressed gas shall
establish and implement a plan for emergency response to a release or threatened
release of a hazardous material pursuant to this section. Said plan, including the
hazardous materials inventory statement (the "HMIS") described in Chapter 17.20 of
this title, shall comprise the "business plan" for purposes of Chapter 6.95 of Title 20 of
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the California Health and Safety Code. Section 18.23.100 in Title 18 identifies
notification requirements of the availability of the business plan.
SECTION 10. Subsection (a) of Section 17.20.020 (Information required) of Chapter
17.20 (Hazardous Materials Inventory) of the Palo Alto Municipal Code is hereby amended to
read as follows:
(a) Information shall be included in the HMIS for each hazardous material or mixture
containing a hazardous material stored or handled in a facility (aggregated over all such
materials stored in one or more storage facilities) where the aggregate quantity
throughout the facility at any one time during the reporting year is equal to or greater
than five hundred pounds in weight for solids, fifty-five gallons for liquids, or two
hundred cubic feet at standard temperature and pressure (STP) for compressed gases.
Additionally, an HMIS also shall be filed for any "acutely hazardous materials" stored on
site, above threshold reporting quantities pursuant to 40 CFR Part 355, Appendix A 42
U.S.C. 11001.
…
SECTION 11. If any section, subsection, clause or phrase of this Ordinance is for any
reason held to be invalid, such decision shall not affect the validity of the remaining portion or
sections of the Ordinance. The Council hereby declares that it would have adopted the
Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the
fact that any one or more sections, subsections, sentences, clauses or phrases be held invalid.
SECTION 12. The City Council finds that this ordinance falls under the California
Environmental Quality Act (CEQA) exemption found in Title 14 California Code of Regulations
Section 15308 (Class 8, Actions for Protection of the Environment), because it is designed to
assure the maintenance, enhancement, or protection of the environment and involves
procedures for the protection of the environment aimed at reducing risks to sensitive receptors
associated with potential accidental releases of hazardous materials.
//
//
//
//
//
//
//
//
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____________________________ ____________________________
____________________________ ____________________________
____________________________
____________________________
NOT YET APPROVED
SECTION 13. This ordinance shall be effective on the commencement of the thirty-
first day after the date of its adoption.
INTRODUCED:
PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
Mayor
APPROVED:
City Manager
Director of Planning and Community
Environment
Director of Administrative Services
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Attachment B
NOT YET APPROVED
Ordinance No. _____
Ordinance of the Council of the City of Palo Alto
Amending Zoning Regulations to Amortize Non-Conforming Hazardous Materials
Uses at Communications & Power Industries, Inc., Located 607-811 Hansen Way
The Council of the City of Palo Alto does ORDAIN as follows:
SECTION 1. Findings and Declarations. The City Council finds and declares as follows:
A. The City of Palo Alto is committed to ensuring the quality of life, including public
health, safety, and welfare, of its residential neighborhoods, as evidenced by Goal L-3 of the
City’s Comprehensive Plan, which calls for the protection and enhancement of safe, attractive
residential neighborhoods.
B. There are facilities within the City that because of the types and quantities of
hazardous materials used, handled, and/or stored may pose offsite health, safety, and welfare
effects. One such facility is Communications & Power Industries, Inc. (CPI), 607-811 Hansen
Way. CPI is located within the Stanford Research Park and is also immediately adjacent to a
residential neighborhood.
C. In 2007, the City Council amended the Palo Alto Municipal Code to prohibit new
businesses that have acutely hazardous materials above thresholds identified in Title 19 of the
California Code of Regulations within 300 feet of residential zoned properties or existing
residential properties within a non-residential zone. In 2007, CPI used and stored acutely
hazardous materials above the Title 19 thresholds. Subsequently, CPI reduced its use and
storage of hazardous materials.
D. In February 2016, the Council amended the Municipal Code to further address
potential risks presented by uses that involve hazardous materials that do not exceed
thresholds identified in Title 19, but that nonetheless may present a risk of offsite health, safety
and welfare effects, particularly if they are located within proximity to land uses such as
residences, schools, daycare centers, elder care facilities and similar uses whose occupants may
be more susceptible than the general population to the adverse effects of exposure to toxic
chemicals and other pollutants.
E. The Council established a minimum distance between users of acutely hazardous
materials that are defined as toxic or highly toxic by the California Fire Code Chapter 2 in the
City’s industrial zoning districts, and sensitive receptors, defined as residences, schools, daycare
centers, elder care facilities and similar uses.
F. The uses in buildings 1A, 1B and 2 at CPI are subject to this regulation and are
legal and non-forming under its terms. Under the Municipal Code, CPI may not expand or
intensify the non-conforming uses. In addition, the Council wishes to establish a schedule to
phase out the non-conforming uses through amortization.
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G. In 2011, the City retained the real estate economics firm CB Richard Ellis to
prepare a study to determine when CPI’s plating shop use could be terminated. The study
concluded that 20 years from the date of the studied investments, or 2026 would provide a
reasonable amortization period.
H. CPI subsequently retained another consultant to provide a separate study of this
issue, concluding that the plating shop could not be separated from the rest of the facility, and
that approximately 40 years would provide a reasonable amortization period for the entire
facility.
I. The City retained an additional consultant, AECOM Inc., to assist the City with
various tasks related to hazardous materials regulation, including conducting a peer review of
the prior amortization studies. AECOM found the methods and conclusions of both studies to
be generally valid, subject to several assumptions and clarifications.
SECTION 2. Section 18.70.070 (Nonconforming use – Required termination) of
Chapter 18.70 (Nonconforming Uses and Noncomplying Facilities) of the Palo Alto Municipal
Code is hereby amended to add Subsection (b)(2)(G) as follows:
(G) The non-conforming hazardous materials uses located within Building 2 and the
associated chemical storage area at 811 Hansen Way shall terminate or be relocated
greater than 300 feet from sensitive receptors on or before December 31, 2026. The
non-conforming hazardous materials uses located within Buildings 1A and 1B at 607
Hansen Way shall terminate or be relocated greater than 300 feet from sensitive
receptors on or before December 31, 2052.
SECTION 3. If any section, subsection, clause or phrase of this Ordinance is for any
reason held to be invalid, such decision shall not affect the validity of the remaining portion or
sections of the Ordinance. The Council hereby declares that it would have adopted the
Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the
fact that any one or more sections, subsections, sentences, clauses or phrases be held invalid.
SECTION 4. The City Council finds that this ordinance falls under the California
Environmental Quality Act (CEQA) exemption found in Title 14 California Code of Regulations
Section 15308 (Class 8, Actions for Protection of the Environment), because it is designed to
assure the maintenance, enhancement, or protection of the environment and involves
procedures for the protection of the environment aimed at reducing risks to sensitive receptors
associated with potential accidental releases of hazardous materials.
//
//
//
2
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____________________________ ____________________________
____________________________ ____________________________
____________________________
____________________________
NOT YET APPROVED
SECTION 5. This ordinance shall be effective on the commencement of the thirty-
first day after the date of its adoption.
INTRODUCED:
PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
Mayor
APPROVED:
City Manager
Director of Planning and Community
Environment
Director of Administrative Services
3
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ATTACHMENT C
UPDATED AMORTIZATION ORDINANCE
(Will be distributed in the Council Packet of February 25, 2016)
ATTACHMENT D
PROPOSED AGREEMENT BETWEEN THE CITY OF PALO ALTO AND CPI
(Will be distributed in the Council Packet of February 25, 2016)
Attachment E
AECOM 415 796 8100 tel
300 California, Suite 400 415 796 8200 fax
San Francisco, CA 94101
www.aecom.com
Memorandum
To: Hillary Gitelman
Cc: Margaret Monroe
Subject: Background Materials to Identify a “Tier” between CUPA
and CalARP Thresholds
From: Rod Jeung
Date: January 7, 2016
Introduction and Summary
The intent of this memorandum is to identify buildings that have types and quantities of
hazardous materials onsite that could pose concern for neighboring land uses due to accidental
releases of these chemicals. The identification focuses on the type of hazardous materials, the
amount of hazardous materials, and the proximity of these buildings to sensitive land uses. The
State definition of hazardous material is a substance that, because of its quantity, concentration,
or physical or chemical characteristics, poses a significant present or potential hazard to human
health and safety or to the environment if released into the workplace or environment
(California Health and Safety Code, Division 20, Chapter 6.95, Section 25501(n)). This definition
encompasses substances listed in the Code of Federal Regulations and the California Code of
Regulations.
There are multiple buildings throughout the City of Palo Alto, hereafter referred to as the City,
where hazardous materials are used, handled, or stored. Whether releases of hazardous
materials might result in a potentially significant health effect on nearby uses depends on:
the quantity of these materials, the inherent characteristics of these materials,
the location of, and circumstances resulting in, an accidental release,
the availability of a “transport” medium to convey the hazardous materials to a receptor
(i.e., through the air, water, dermal contact, or ingestion),
the proximity of the receptor(s), and
the administrative and engineering controls at the building that serve to prevent and/or
minimize accidental releases and to respond to these accidents.
This memorandum describes the existing procedures used by the City to obtain, notice, and
report information about hazardous materials, and provides background for an approach to
classifying manufacturing uses based on the type and quantity of onsite hazardous materials.
The City’s hazardous materials regulations (at Section 18.23.100 of the Municipal Code) already
identify two classifications, or tiers:
the first tier is for businesses with hazardous materials that must file an inventory form
– this tier includes a diverse set of businesses with hazardous materials that must
obtain permits from the Palo Alto Fire Department; and
a second tier is for businesses with “acutely hazardous materials” that exceed Title 19
quantities (also known as the California Accidental Release Program thresholds, or
CalARP thresholds, for short) and consequently must prepare a Risk Management
Prevention Plan – there are no businesses in the City that currently exceed the Title 19
quantities, which are substantially greater than the reporting thresholds used to
identify the first tier of uses.
The City Council in October 2014 directed staff to develop a new tier between the above two
tiers. Staff’s proposal was presented and discussed by the City Council at its November 16, 2015
meeting. This memorandum for the Planning and Transportation Commission acknowledges
and incorporates the direction from the Council’s motion at the November 2015 meeting.
The new tier zeroes in on hazardous materials that can result in human health hazards, as
opposed to physical hazards. In particular, the new tier is defined as those facilities with toxic or
highly toxic hazardous materials above specific quantities, because these chemicals are
considered by state and federal agencies, as well as fire and building safety codes, to pose a
potential for health effects on nearby uses in the event of an accidental release. It is proposed
that such facilities within 300 feet of a sensitive receptor would be prohibited; beyond 300 feet,
such facilities would need a Conditional Use Permit from the City Council.
It should be noted that the new tier submitted to the Council in November 2015 also included
Extremely Hazardous Substances, as defined by 40 CFR Part 355, Appendices A and B. Many of
these substances are also considered toxic or highly toxic, although there are chemicals on one
list that are not on the other list. Concerns raised prior to and during the Council meeting about
arriving at a reasonable threshold resulted in abandoning the use of Extremely Hazardous
Substances as a criterion for the new tier.
Existing Hazardous Materials Inventories and Reporting
Businesses are required to submit information about their hazardous materials use on a
standard, statewide Hazardous Materials Registration Form. The form requests information
about the types, amounts, and hazard classifications for each hazardous material to be used,
handled, or stored onsite. As noted, these forms are part of a statewide system (California
Environmental Reporting System [CERS]) and provide a consistent way of reporting hazardous
materials across businesses and jurisdictions. Businesses are required to certify the accuracy of
their inventory statements on an annual basis. Hazardous materials inspectors from the Palo
Alto Fire Department verify the accuracy of the inventories during hazardous material
inspections. The Palo Alto Fire Department is required by State law to inspect the buildings
and/or facilities that exceed the “CUPA thresholds” (see below for definition) at least once
every three years.
The City requires businesses to report and obtain permits when hazardous materials quantities
exceed the State Health and Safety Code (Division 20, Chapter 6.95) and Certified Unified
Program Agency (CUPA) regulations, with one exception as indicated in Table 1 (see italicized
information). Those hazardous materials classified as toxic or highly toxic must be reported to
the Palo Alto Fire Department at quantities less than the State threshold quantities (referred
hereafter as the “CUP! thresholds”).
Table 1
Hazardous Materials Threshold Quantities Currently Requiring Permits
Type of
Hazardous
Material
City of Palo Alto State (Health and Safety Code)
Liquids
(gallons)
Solids
(pounds)
Compressed
Gases
(cubic feet)
Liquids
(gallons)
Solids
(pounds)
Compressed
Gases
(cubic feet)
Hazardous
Materials
other than
those
enumerated
below
55 500 200
55 500 200
Toxic 10 100 Any amount
Highly Toxic Any amount Any amount Any amount
Sources: City of Palo Alto, Municipal Code, Title 17 (Hazardous Materials Storage), Chapter 17.20 (Hazardous
Materials Inventory); State Health and Safety Code, Division 20, Chapter 6.95, Section 25507(a)(1)
Note: Italicized text indicates Palo Alto reporting and permitting requirements that are more stringent than those
in the State Health and Safety Code that are used by most jurisdictions in the state.
More specifically, the City, in its reporting requirements, distinguishes between facilities that
have certain types of chemicals (i.e., toxic and highly toxic materials); whereas, the State in its
threshold quantities does not make this distinction. Facilities in the City using any amount of
“highly toxic” hazardous materials are required to file hazardous materials inventory forms and
obtain a permit. For materials that are considered “toxic,” the City requires the inventory forms
and a permit from the Palo Alto Fire Department for 10 gallons or more of a toxic liquid, for 100
pounds or more of a toxic solid, and for any amount of a compressed toxic gas.
Existing Requirements for Hazardous Materials Business Plans /
Hazardous Materials Management Plans
Businesses that exceed the CUPA thresholds defined by the State Health and Safety Code (see
Table 1) are required to prepare Hazardous Materials Business Plans (HMBPs). The State code
establishes minimum statewide standards for the content of the HMBPs and allows local
jurisdictions the discretion to adopt more stringent standards. In the City, HMBP requirements
are addressed in Title 17 (Chapter 17.16 Hazardous Materials Management Plan) of the
Municipal Code.
The City requirements in Title 17 identify two reporting threshold quantities. Businesses that
are required to submit a hazardous materials inventory form must prepare a Hazardous
Materials Management Plan (HMMP) as defined by the State Fire Code. If the quantities are at or
above the CUPA thresholds, businesses must provide supplementary materials that make the
HMMP the equivalent of the state HMBP.
In general, HMBPs/HMMPs contain the following information:
a site plan identifying, among other things, the locations of hazardous material handling
and storage areas, evacuation staging areas, and emergency response equipment;
an inventory of the amount and types of chemicals onsite;
a description of methods to separate and protect stored hazardous materials from
factors that may cause a fire or explosion, or the production of a flammable, toxic, or
poisonous gas, or the deterioration of the primary or secondary containment;
a monitoring program and recordkeeping forms; and
employee training in safety procedures in the event of a release or threatened release of
a hazardous material.
The supplementary materials required by the City for businesses at or above the CUPA
thresholds, in order to make the HMMP the equivalent of an HMBP, include:
emergency response plans and procedures in the event of a release or threatened
release of a hazardous material;
procedures for mitigating a release or threatened release;
evacuation plans and procedures for the business site;
procedures to prevent an accidental spill or leak of hazardous materials from reaching
the sewer or storm drainage systems; and
alarm notifications within the facility and to neighboring facilities that may be affected
by an off-site release.
These plans are available for public inspection, except for specific information about the precise
location where hazardous materials are stored and handled on site.
The Palo Alto Municipal Code, similar to the State Code, has a list of materials that are excluded
from a hazardous material classification and, therefore, exempt from the HMMP requirements.
These materials include:
retail products, defined as hazardous materials contained solely in consumer products
packaged for distribution by retail businesses for the general public,
commercial products used at the facility solely for janitorial or minor maintenance
purposes,
hazardous materials contained in a substance intended for use as animal food,
hazardous materials located at a work station in a quantity reasonably required for use
as determined by the fire chief under the circumstances,
hazardous materials exempted by the fire chief when it has been demonstrated to the
satisfaction of the city that the material in the quantity and/or solution stored does not
present a significant actual or potential hazard to the public health, safety, or welfare.
Proposed Chemicals of Interest for the New Tier
There are many types of hazardous materials and regulations governing their use and disposal.
The City’s regulations in Title 18 (Zoning) do not distinguish among these different types of
hazardous materials, with one exception. Section 18.23.100 specifically identifies hazardous
materials that require preparation of a Risk Management Prevention Plan pursuant to Title 19
(California Accidental Release Program) of the California Code of Regulations. Title 19
“regulated substances” include toxic and flammable substances subject to Section 112(r) of the
federal Clean Air Act and Extremely Hazardous Substances. Title 19 covers hazardous materials
that result in human health hazards and physical hazards.
The City Council expressed concern in October 2014 that hazardous materials at quantities less
than Title 19 levels could adversely affect nearby land uses and an approach should be
developed to address this potential effect.
The City’s hazardous materials requirements for permits provide direction to respond to the
Council’s motion in that they already require hazardous materials inventory forms from
businesses with toxic and highly toxic materials at amounts less than the CUPA thresholds. The
definitions of toxic or highly toxic substances are found in the California Fire Code (see Chapter
60 of the 2013 edition). These chemicals produce a lethal dose or lethal concentration in
laboratory animals.1
1 Highly Toxic. A material which produces a lethal dose or lethal concentration which falls within any of the
following categories:
1. A chemical that has a median lethal dose (LD50) of 50 milligrams or less per kilogram of body weight when
administered orally to albino rats weighing between 200 and 300 grams each.
2. A chemical that has a median lethal dose (LD50) of 200 milligrams or less per kilogram of body weight
when administered by continuous contact for 24 hours (or less if death occurs within 24 hours) with the
bare skin of albino rabbits weighing between 2 and 3 kilograms each.
3. A chemical that has a median lethal concentration (LC50) in air of 200 parts per million by volume or less of
gas or vapor, or 2 milligrams per liter or less of mist, fume or dust, when administered by continuous
inhalation for one hour (or less if death occurs within 1 hour) to albino rats weighing between 200 and 300
grams each.
Mixtures of these materials with ordinary materials, such as water, might not warrant classification as highly
toxic. While this system is basically simple in application, any hazard evaluation that is required for the precise
categorization of this type of material shall be performed by experienced, technically competent persons.
Toxic. A chemical falling within any of the following categories:
1. A chemical that has a median lethal dose (LD50) of more than 50 milligrams per kilogram, but not more
than 500 milligrams per kilogram of body weight when administered orally to albino rats weighing
between 200 and 300 grams each.
2. A chemical that has a median lethal dose (LD50) of more than 200 milligrams per kilogram but not more
than 1,000 milligrams per kilogram of body weight when administered by continuous contact for 24 hours
(or less if death occurs within 24 hours) with the bare skin of albino rabbits weighing between 2 and 3
kilograms each.
3. A chemical that has a median lethal concentration (LC50) in air of more than 200 parts per million but not
more than 2,000 parts per million by volume of gas or vapor, or more than 2 milligrams per liter but not
more than 20 milligrams per liter of mist, fume or dust, when administered by continuous inhalation for 1
hour (or less if death occurs within 1 hour) to albino rats weighing between 200 and 300 grams each.
While they do not address all hazards, such as physical hazards, they encompass many of the
hazardous material characteristics that the City Council requested be addressed by the new tier.
Moreover, toxic or highly toxic chemicals are already used in the City’s regulatory permit
system; i.e., such chemicals require permits from the Fire Department (for a Use and Occupancy
permit) and from the Building Department (for a “High-hazard Group H-4” permit).
Identification of Businesses with Chemicals of Interest
Based on the types of chemicals of interest identified above, the hazardous materials
information forms on file with the Palo Alto Fire Department were reviewed to identify those
buildings with these chemicals in quantities that exceed the CUPA thresholds. Of the
approximately 420 buildings that have forms on file in 2015, 13 facilities have toxic or highly
toxic chemicals above the CUPA thresholds.
As shown in Table 2, the following observations describe the businesses in the City with toxic or
highly toxic materials:
Eight of the facilities are located in the Stanford Research Park, two at the Stanford
Medical Center, and three in the San Antonio Road/Bayshore Corridor at the
southeastern end of the City.
Eleven of the facilities have toxic hazardous materials only. Two facilities - CPI Building
2 and the Palo Alto Research Center on Hillview Avenue – have both toxic and highly
toxic hazardous materials onsite.
Most of the facilities have relatively few toxic or highly toxic materials in amounts that
exceed the CUPA thresholds: nine facilities have 1 to 2 such chemicals; two facilities
have 3 such chemicals; and two (CPI Building 1B and CPI Building 2) have more than 10
such chemicals.
Buildings 12 and 13 in Table 2 are the only buildings in the City with toxic and highly toxic
hazardous materials in excess of the state thresholds that are not in an industrial/
manufacturing zone. They are both related to Stanford medical facilities, use and store
sanitizers and cleaners, and are not waste chemicals or chemicals used in a manufacturing
process. Because hospitals and other medical facilities provide services to the ill, youth, and
elderly, all of whom are considered sensitive receptors, they are required to implement
safeguards to avoid accidental exposure. As a result, these facilities are not anticipated to pose
the same public health effects that industrial buildings might, and are not recommended to be
included as buildings of interest for the proposed zoning regulations.
In summary, there are 11 buildings with toxic or highly toxic hazardous materials in sufficient
quantities that would be included in the new tier.
Table 2
Buildings with Toxic and Highly Toxic Hazardous Materials in Excess of CUPA Thresholds
Class 13
Class 31 # of Highly # of
Building Toxic Chemicals Toxic Chemicals
1 CPI 1A x 1
2 CPI 1B x 14
3 CPI 2/2A x 14 x 6
4 CPI 4 x 2
5 Dupont (Genecor International) x 3
6 Hammon Plating -855 Commercial x 2
7 ONED x 2
8 Palo Alto Research Center -3333 Coyote x 2
9 Palo Alto Research Center -3406 Hillview x 2 x 1
10 Space Systems Loral B3 x 1
11 Space Systems Loral B4 x 1
12 Stanford Central Core x 1
13 Stanford Phase 1 Diagnostic and Treatment x 2
Source: CERS data (hazardous materials inventory forms) filed by each of the businesses with City of Palo Alto Fire Department,
2015; data compiled by AECOM, 2015.
Notes:
Class 31 Toxic Materials
Class 13 Highly Toxic Materials
* Hazardous materials at this facility consist of miscellaneous flammable and combustible
liquids, none of which individually is expected to exceed CUPA thresholds.
Italicized buildings are not proposed for consideration in new tier of manufacturing uses with quantities of individual toxic or
highly toxic substances above the CUPA thresholds.
Proposed Receptors of Interest
The City’s existing hazardous materials regulations (Section 18.23.100 of the Municipal Code)
require noticing and specify use restrictions for businesses with hazardous materials in
quantities above CUPA thresholds. The noticing and use restrictions target residential
properties only (i.e., residentially zoned properties or a property with existing residential uses
in a nonresidential zone). The City Council during its discussion in October 2014 expressed
concern that other uses, besides residential uses, may also be particularly susceptible to
hazardous materials exposure.
The US Environmental Protection Agency, local/regional air quality management districts, and
public health agencies all recognize that certain populations are more susceptible to hazardous
materials exposure. In light of the City Council’s direction, the “receptors” that are targeted to
be informed and protected by the new zoning revisions is proposed to be expanded to include
“sensitive receptors” – residential areas, medical facilities, schools (typically, elementary and
middle schools), daycare facilities, homes for the elderly, or convalescent facilities.
Proposed Proximity to Sensitive Receptors
!s mentioned in the “Introduction and Summary,” a key factor in determining the potential for
off-site adverse health consequences from an accidental release is the distance between a
building with toxic or highly toxic hazardous materials and the sensitive receptors. The January
2014 risk assessment by AECOM showed that there are multiple factors, including the amount
of chemicals, the type of chemicals, the meteorological conditions, and the engineering and
administrative controls employed at a business, that affect the distance to the “toxic endpoint”2
and whether acute health risks may affect off-site neighboring land uses. The proximity of
sensitive receptors to buildings/facilities with toxic or highly toxic hazardous materials needs
to be considered in establishing the potential for land use incompatibilities and changes to the
City’s zoning regulations.
The definition of “proximity” can reasonably be based on the City’s current zoning and
hazardous materials regulations (Section 18.23.100):
150 feet – Residential properties receive written notice from the City when there would
be a change in the types or quantities of hazardous materials under conditions specified
in the regulations and an application for a building permit to enable such change is
approved.
300 feet – Businesses with hazardous materials above Title 19 thresholds are not
permitted within this distance (300 feet) of a residential property. Beyond 300 feet,
such businesses require a Conditional Use Permit.
The lesser distance above is relevant for manufacturing uses at or above the CUPA thresholds:
For any business proposing to change the type and quantities of hazardous materials stored,
used, or handled when the conditions in Section 18.23.100(B)(iii) are met (i.e., there is a change
in the amount of hazardous materials that results in exceeding the CUPA thresholds or a
doubling of the amount onsite, or the business has a release or threatened release incident),
residential property owners within 150 feet must be notified within 10 days after the issuance
of the building permit to enable such changes at the site (see Section 18.23.100(B)(iv)).
The greater distance above is relevant for manufacturing uses at or above the Title 19
thresholds: Pursuant to the City’s current regulations at Section 18.23.100 (B)(vi), no building
proposing to store, use, or handle hazardous materials that meet or exceed the threshold
quantities established by Title 19 of the California Code of Regulations (the California
Accidental Release Program) would be permitted within 300 feet of a residentially zoned
property or a residential use. None of the buildings in the City currently has hazardous
materials in amounts that trigger the Title 19 requirements. However, if a business were to
2 The toxic endpoint is the concentration of an acutely hazardous substance above which there may be a serious
acute health effect following a single short-term exposure.
exceed the Title 19 thresholds, Section 18.23.100(B)(vi) would require City Council approval of
a Conditional Use Permit. Conditional Use Permits require that addresses within 600 feet of the
subject property be notified.
In light of the current regulations, the new tier, which includes buildings above the CUPA
thresholds but below the Title 19 thresholds, should logically result in a notification, setback,
and/or some restriction in uses with chemicals of interest at some distance greater than 150
feet (the notification requirement for businesses meeting the CUPA thresholds) and up to 300
feet (the setback requirement for businesses meeting the Title 19 thresholds). Because existing
buildings, as well as future buildings, could use amounts of hazardous materials, up to the Title
19 thresholds, it is reasonable that the noticing and regulatory distance for the new tier should
be no more than 300 feet from a sensitive receptor.
At a distance of 300 feet, three of the buildings identified in Table 2 would become nonforming
uses, if buildings with toxic/highly toxic chemicals above the state thresholds were not
permitted. The buildings are CPI Buildings 1A, 1B, and 2. This determination is based on the
hazardous materials inventory forms filed by these businesses in 2015.
Conclusion
A new tier of manufacturing uses has been defined that is: (1) conveniently based on hazardous
materials inventory forms provided to the Palo Alto Fire Department; (2) consistent with the
City Council’s direction to identify businesses with chemicals below the Title 19 (CalARP
thresholds) and with operations and potential hazards that could affect nearby land uses; and
(3) logically based and consistent with the existing notification and reporting requirements and
distances in Section 18.23.100. Table 3 summarizes the existing two tiers and how the new tier
fits in.
Table 3
Industrial/Manufacturing Tiers based on Hazardous Materials Type and Quantities
Tier
Type of Hazardous
Materials Regulated
Quantities
(X=maximum amount at
one time at site) New Restrictions on Use
1 All hazardous materials,
unless they meet Tier 2
or Tier 3 definitions
X < Title 19 (CalARP) None, except noticing would apply
to sensitive receptors (instead of
residential properties only)
2 Toxic/Highly Toxic
Hazardous Materials
CUPA < X < Title 19
(CalARP)
Prohibited within 300 feet of
sensitive receptor; CUP beyond
300 feet
3 Extremely Hazardous
Substances
X > Title 19 (CalARP) No such uses currently exist in the
City. Per City Council November
2015 direction, new uses subject to
Title 19 with Extremely Hazardous
Substances would be prohibited.
Memorandum
AECOM
300 California, Suite 400
San Francisco, CA 94101
www.aecom.com
415 796 8100 tel
415 796 8200 fax
Attachment
Table A-1
Buildings with Toxic and Highly Toxic Hazardous Materials in Amounts Greater Than
CUPA Thresholds (Max Daily Amounts), by Individual Chemical
Applicable CUPA
Threshold Amount (Cu.
Ft.=200, Gallons=55,
Pounds=500) Cubic Feet Gallons Pounds
Building/Substance (T=Toxic; HT=Highly Toxic)
CPI 1A 607 Hansen Way
Bead Blasting Waste (T) 0 0 670 500
CPI 1B 607 Hansen Way
Barium Contaminated Waste (T) 0 0 500 500
Bead Blasting Waste (T) 0 0 2,680 500
Beryllium Oxide Containing Waste (T) 0 0 4,000 500
Electroless Nickel Waste (T) 0 165 0 55
Ethylene Glycol Liquid Waste (T) 0 440 0 55
Kanthal/Copper Waste (T) 0 0 750 500
Misc. Labpack Waste (T) 0 0 1,200 500
Nickel Chloride Solution (T) 0 55 0 55
Nickel Stripping Waste (T) 0 110 0 55
Nickel Sulfamate Solution (T) 0 55 0 55
Scrubber Cleaning Waste (T) 0 330 0 55
Toxic Liquid Plating Chemicals (T) 0 200 0 55
Waste Cyanide Containing Liquid (T) 0 110 0 55
Wastewater Sludge (T) 0 0 4,900 500
Building/Substance Cubic Feet Gallons Pounds
Applicable CUPA
Threshold Amount (Cu.
Ft.=200, Gallons=55,
Pounds=500)
CPI 2 811 Hansen Way
Bead Blasting Waste (T) 0 0 670 500
CM-07 - Wood's Strike (T) 0 101 0 55
CM-09 - Nickel Chloride Plate (T) 0 327 0 55
Crohone Blasting Waste (T) 0 0 750 500
Cyanide Wastewater (T) 0 3,245 0 55
Emission Carbonates (T) 0 0 1,060 500
Hydrosulfuric Acid, Hydrogen Sulfide (T) 0 0 1,690 500
NA-01 - Wood's Strike (T) 0 75 0 55
NA-03 - Watts Nickel (T) 0 218 0 55
NB-01 - Wood's Strike (T) 0 75 0 55
NB-03 - Nickel Sulfamate (T) 0 218 0 55
PM-02 - Rinse Static (HT) 0 83 83 55
PM-04 - Rinse - Recycle (Local) (HT) 0 83 83 55
PM-09 - Rinse – Static (HT) 0 58 58 55
PM-11 - Rinse – Static (HT) 0 58 58 55
PM-24 - Cyanide Strip (HT) 0 58 58 55
PM-25 - Rinse - Slow Flow (HT) 0 58 58 55
PT-04 – Platinum (T) 0 75 0 55
Sulfuric Acid (T) 0 0 2,487 500
Waste Soldering Rinse (T) 0 55 0 55
CPI 4 3120 Hansen Way
Bead Blasting Waste (T) 0 0 1,340 500
Perfluoro Compounds and Coolants (T) 0 60 0 55
Source: CERS data (hazardous materials inventory forms) filed by each of the businesses with City of Palo Alto Fire Department, 2015; data compiled by AECOM, 2015.
Building/Substance Cubic Feet Gallons Pounds
Applicable CUPA
Threshold Amount (Cu.
Ft.=200, Gallons=55,
Pounds=500)
Dupont (Genecor) 925 Page Mill Road
Ammonium Hydroxide (T) 0 148 0 55
Hydrosulfuric acid, hydrogen sulfide (T) 0 236 0 55
Sodium Hydroxide (pellets) (T) 0 145 0 55
Hammon Plating, 855 Commercial
Nickel Sulfate Hexahydrate (T) 0 660 0 55
Sodium Nitrate (T) 0 0 2,000 500
ONED Material, 2625 Hanover Street
Hydrosulfuric Acid, Hydrogen Sulfide (T) 0 0 2,700 500
Waste Sodium Hydroxide Solution (T) 0 55 0 55
Palo Alto Research Center, 3333 Coyote Hill Road
Hydrogen Fluoride (T) 0 0 4,165 500
Hydrosulfuric Acid, Hydrogen Sulfide (T) 0 0 1,666 500
Palo Alto Research Center, 3406 Hillview Ave
Carbon Tetrachloride (T) 300 0 0 200
Chlorine Std Solution Ampules 30 mg/L chlorine (T) 200 0 0 200
Phosphine (HT) 400 0 0 200
Space Systems Loral Bldg 3, 3825 Fabian Way
Hydrochloric Acid (T) 0 200 0 55
Space Systems Loral Bldg 4, 3825 Fabian Way
Specially Denatured Alcohol (SDA) 40-B, 200 Proof (T) 0 69 0 55
Stanford Central Core 07-302, 300 Pasteur
Oasis 146 Multi-Quat Sanitizer (T) 0 87 0 55
Stanford Phase 1 07-310 thru 07-314, 300 Pasteur
Automated Gram Stain Kit (Solution III) and Cleaning
Solution (T) 0 143 0 55
Super Sani-Cloth Germicidal Disposable Wipes (T) 0 0 700 500
2
AECOM
300 California, Suite 400
San Francisco, CA 94101
www.aecom.com
415 796 8100 tel
415 796 8200 fax
industrial facilities. He has experience managing, directing, and administering scientific work
force conducting broad spectrum program of highly sophisticated basic and applied research. Mr.
Couture has specific expertise in electroplating. metal finishing, and electronic components
manufacturing and has served as senior technical advisor to non-governmental environmental
organizations and U.S. government agencies on international environmental regulatory compliance
consulting and program development.
Amortization Period
AECOM reviewed the 2011 CBRE Amortization Study as well as the 2012 CPI response to the
analysis. In general, the evaluation approach deployed by CBRE is standard and reflects common
practice for considering the depreciated value of facilities, especially where reported depreciation
value numbers to the IRS are not available. It is clear that CBRE also did not have complete access to
all data and therefore did not know specifically the reported depreciated value of the plating
facility. Rather, CBRE used Marshall Evaluation Service life estimates to straight-line depreciate the
plating facility based on Marshall asset categories,reasonable practice in the absence of better
information.If AECOM had access to the actual reported depreciation of CPI’s facilities, we would be
able to provide more accurate estimate of when the plating facility and other buildings would be
fully depreciated. It is noted that the CBRE study was completed in 2011. If CPI has made capital
improvements to Building 2, the amortization period of 15 years to 2026 could be extended further
into the future.
Fundamental to CBRE’s evaluation was the assumption that the plating facility could be placed off
site without meaningful loss to CPI’s overall operation. In other words, the relocation or
outsourcing of thefacility would not result in substantialdisruption to CPI’s overall business
operations. This assumption may have resulted from CBRE’s scope of work, which may have
requested narrow line of investigation; i.e., what would be reasonable amortization period for
the plating shop only?
We find that CPI’s response to the CBRE Amortization Study is more business and legal argument
than an economic one. There is no supporting economic or financial information in the CPI
response that would suggest that the useful economic life of Building ʹ should be different than
identified by CBRE. In fact, the 40-year-threshold minimum, argued for in CPI’s response, would
imply that CPI is amortizing its facilities in Palo Alto at the slower depreciation rate. While AECOM
does not have access to CPI’s full detail tax receipts, we would be surprised if CPI were not
depreciating its assets as guided by the IRS. Commercial buildings are depreciated at 39 years Ȃ but
can depreciate more rapidly under certain circumstances Ȃ and capital equipment is depreciated
more rapidly still at the point of construction/installation. Unless building was constructed within
the last five years, one would expect much faster depreciation value.
However, since the plating shop appears to be critical to the ongoing operations of the overall
facility, as discussed below, then an amortization analysis would need to be widened to account for
the entire facility, including recently rehabilitated buildings and any new fixed equipment installed
on the site. As such, the CBRE study is reasonable for its intended purpose Ȃ to examine Building ʹ
independently Ȃ but limited in that it does not account for all of CPI’s facilities.
3
AECOM
300 California, Suite 400
San Francisco, CA 94101
www.aecom.com
415 796 8100 tel
415 796 8200 fax
CPI’s Plating Shop Interconnectivity with Other Onsite Facility Operations
CPI asserted in its 2012 response to the CBRE study that the plating facility is integral to the rest of
their business on Hansen Way and cannot be outsourced or relocated. Dr. Bhagat and Mr. Couture,
AECOM’s industrial engineers familiar with the manufacture of electronic devices in CPI’s lines of
businesses (as well as similar types of precision electronic devices), do not disagree with the CPI
argument concerning the interrelationship between the plating operations and other onsite
activities. Although CPI’s response to the CBRE Amortization Study were not supported by details
or specifics, and did not necessarily justify minimum 40-year amortization period, the comments
about the nature and process of product manufacturing were not invalid.
Based on our review of the information provided by CPI regarding their product manufacturing and
quality control/testing operations and our experience working with clients involved in
manufacturing electronic components and devices (and employing the same chemical cleaning,
etching, and plating processes employed at CPI’s Palo Alto facility), we understand CPI’s reasoning
that their plating and non-plating operations have critical interconnectivity and that these
operations must be performed within contiguous process areas. The devices manufactured by CPI,
including the individual components and sub-assemblies that ultimately make up these devices,
commonly move between mechanical (i.e., non-chemical), wet chemical process operations (e.g.,
cleaning, etching, plating), and quality control/testing operations, sometimes making multiple
passes back and forth among these operations.
Due to the precision nature of the devices manufactured by CPI, controlling and mitigating
environmental contamination of these devices are critical to their function and reliability for CPI’s
customers. The additional handling of components, sub-assemblies, and devices that would be
involved in conducting some of the manufacturing operations processes in an offsite/non-
contiguous facility could introduce additional opportunities for exposing the components/devices
to environmental contamination.
If the chemical cleaning, finishing, and/or plating operations associated with the manufacture of
these devices were required to be relocated to an offsite facility, the additional logistics, handling,
and transport that would be involved in moving the components, sub-assemblies, and devices
between the current CPI facility and offsite facility(ies) would add labor, other costs, and time to the
manufacturing process. The longer manufacturing time and additional costs that would be incurred
could make CPI’s product less competitive among other industry providers of these products.
Although we have not spoken to any CPI representatives or visited the facilities, it is our conclusion,
for the sake of ensuring product reliability and cost competitiveness of CPI’s devices, that all of the
manufacturing operations involved (including assembly and testing operations) should be co-
located, whether that be at CPI’s Palo Alto facility or an offsite location. Therefore, any amortization
evaluation/valuation should include all interconnected manufacturing operations/facilities and not
be limited to the wet chemical operations of concern.
Notwithstanding the above conclusion, the option of relocating the plating functions elsewhere
onsite at greater distance from sensitive receptor land uses should not be dismissed. Substantial
capital expenditures would be incurred by CPI to relocate plating operations elsewhere onsite, but
this option would mitigate several of the arguments in CPI’s response to the CBRE study.
4
AECOM
300 California, Suite 400
San Francisco, CA 94101
www.aecom.com
415 796 8100 tel
415 796 8200 fax
Notably, AECOM’s opinion that the facilities be co-located onsite or offsite is based on current
technologies and understanding of the processes that occur at CPI. In contrast to the chemical metal
finishing/plating operations currently conducted by CPI at their Palo Alto facility, there are existing
commercially available process technologies and process/manufacturing technologies in
development/early stage commercialization that could potentially replace the wet chemical
manufacturing operations that are conducted in CPI Building 2. These alternative manufacturing
process technologies may include, but are not necessarily limited to:
x Plasma etching
x Chemical Vapor Deposition
x Supercritical C02 cleaning/degreasing
x 3-Dprinting
Given the future availability of these alternative technologies for activities similar to those
performed at the CPI’s plating shop, it is not inconceivable that CPI might take advantage of them
and reduce the toxic/highly hazardous materials and Extremely Hazardous Substances use,
handling, and storage at Building ʹ or perform some of the Building ʹ activities non-contiguous
from other onsite operations.
Ram Bhagat, PhD, PMP, FASM
Chief Scientist and Senior Engineering Manager
Areas of Expertise Summary
Dr. Bhagat is a subject matter expert (SME) in materials, metallurgy,
manufacturing, defense electronics, and mechanics. He has over 20 years
of experience in managing, directing, and administering a scientific work
force conducting a broad spectrum program of highly sophisticated basic
and applied research, and exploratory and advanced development of new
or improved materials used in Naval/Air force/Army weapon platforms and
systems.
Dr. Bhagat is also a recognized systems engineering leader of
national/international prominence. He planned and executed difficult
programs of national significance demonstrating outstanding attainment in
the multifunctional materials, sensors, computational materials science
and fracture mechanics.
Delivered results to sponsors and stakeholders for over 75
programs/projects on time and within budget.
Skilled in effective communication at multiple levels of the
organization, delegating tasks, mentoring and motivating.
Responsive, results-oriented and agile.
Experience
United States Millennium Challenge Corporation (MCC),
Infrastructure Consulting Services – Energy, AECOM [Germantown,
MD], Chief Scientist and Senior Engineering Manager, 2015. Dr.
Bhagat was one of the principal authors of the proposal leading to a BPA
win for AECOM in July 2015; $50M (proposed, no BPA level ceiling) for 5
years.
United States Department of Defense, DSTAT/IAC, URS Corporation
[Germantown, MD], Chief Scientist and Senior Engineering Manager,
2013. Dr. Bhagat was the principal author and program lead for Advanced
Materials for the DSTAT IDIQ proposal. URS was awarded DSTAT IDIQ in
June 2014 with a ceiling of $3B for 5 years.
U.S. Customs and Border Protection (CBP) [Arlington, VA],
Assessment, and Analysis of a MACS MSC Truck Based Mobile
Sensor Platform, URS Corporation [Germantown, MD], Chief
Scientist and Senior Engineering Manager, 2014. Dr. Bhagat submitted
a comprehensive report for the performance of vibration and shock
monitoring, assessment, and analysis of a MACS MSC truck based mobile
sensor platform to Systems Engineering Directorate, Office of Technology
Innovation and Acquisition (OTIA).
United States Navy, Advanced Steam Turbine Magnetic Bearing
Engineering Model (AST MBEM), Dresser-Rand Corporation
Defense Systems Engineering
Metals Plating and Surface
Engineering
High Temperature Multifunctional
Materials Design and Analysis
Coatings and Thermal Protection
Systems
Metallurgy and Composites
Aerospace Products Manufacturing
Processes and Standards
Sensors and Nanotechnology
Computational Materials Science
Structures Engineering and Mechanics
Defense Special Projects
Education
PhD, Metallurgical/Materials Science
and Engineering, Indian Institute of
Technology, Mumbai India, 1982
MSME, Mechanical Engineering, West
Virginia University, 1981
BS, Metallurgical/Materials Science
and Engineering, Indian Institute of
Technology, Roorkee, India, 1975
Licenses/Registrations
None
Years of Experience
With AECOM <1
With Other Firms 38
With URS >2
Professional Associations
Fellow, ASM International
NRC Fellow, NASA Glenn Research
Center
Member, Project Management
AECOM Ram Bhagat, PhD, PMP, FASM
Page 2 of 3
International (PMI)
Member, MRS, SAMPE, TMS
Member, AAAS, ACerS, ASM International, IEEE
Member, NACE International
[Wellsville, NY], Chief Scientist, 2011-2012. Dr. Bhagat managed,
directed, and administered a recognized scientific work force at Dresser-
Rand Govt. Business Unit – Navy/Nuclear in demonstrating a new
technology – advanced steam turbine magnetic bearing engineering
model (AST MBEM) for Ohio Class submarines. A very challenging,
program of national significance for tomorrow’s Navy. [Budget: $9.3M]
United States Department of Defense, Multiple Projects (see below),
Northrop Grumman Corporation [Linthicum, MD], Advisory Engineer
– Materials and Mechanics SME, 2002-2010, Cost > $100 M, Northrop
Grumman Electronic Systems. Performance on large defense programs
is presented below:
Large Defense Programs
IFTS, IFMU, F-16 ABR, F22, AWACS, Wedgetail, Blue Yonder, SSMIS,
BAT, Longbow, AURA, STS SBIRS, V9, V10, B-1, JSTARS, Blue Storm,
SPQ9B, Expo, JSF, Cobra Judy, VADER, Phoenix, G/ATOR (Ground/Air
Task Oriented Radar), ManTech Programs, and High Mobility
Multipurpose Wheeled Vehicle (HMMWV).
Significant Results and Achievements
Provided DOD with significant operational benefits through critical
root-cause analysis after a catastrophic fatigue failure of a JSTAR in
operation. Determined that a rotating part made of steel was given a
wrong heat treatment by a vendor; the hardness was too high.
Defined a new design and rework of a critical component whose
earlier failure led to scrubbing a satellite launch. My root-cause
analysis showed that a solder cracked due to a lack of strain relief for
the transistor leads. Authored a new document for the rework.
Established the root cause of fracture (of HTCC ceramic substrate) in
conjunction with environment-assisted slow crack growth for products
already built. Led a risk analysis for the products’ acceptance. The
customer accepted my specific recommendations.
Led a thorough metallurgical evaluation combined with finite element
analysis and concluded that the risk of device failure in the field as a
result of a missed processing step was minimal. The customer
accepted my recommendations and authorized shipment.
Determined that a plated magnetic ceramic suffered a thermal shock
as a result of rapid cooling during the solder reflow cycle, and cracked.
Suggested changes to the reflow cycle. This solved the problem.
Determined the root cause of device (silicon carbide transistor) failure
during thermal fatigue testing. Saved the program from potential
cancellation, thereby saving NGES millions of dollars.
Patents and Invention Disclosures
ExoFlash Consolidation Technology for Fabricating Fully Dense
Nanostructured Materials (Patent, US 6,402,802 B1, awarded in 2002,
principal inventor)
A Materials Solution to Nozzle-Clogging Issue in Thermal Spray
(invention disclosure, principal inventor)
Training and Certifications
2011, Project Management Professional (PMP) [Credentialed 2011-2020]
2004, Leadership Program at Northrop Grumman Corporation
2003, Art of Negotiation
2002, Proposal Manager's Course (CLC-02) at Northrop Grumman Corp.
1988, Executive Management Program at Penn State University
AECOM Ram Bhagat, PhD, PMP, FASM
Page 3 of 3
Publications (Total count > 300)
Bhagat, R. B. Casting Fiber Reinforced Metal Matrix Composites. In:
Treatise on Materials Science and Technology Volume 32: Metal Matrix
Composites: Processing and Interfaces. R. Arsenault and R. Everett (eds),
Academic Press, Orlando, FL, pp. 43 82 [1991].
Rajesh, G., A. Sinharoy, and R.B. Bhagat, A Fracture Mechanics Based
Numerical Analysis for Predicting Optimum Interface Properties in a Metal
Matrix Composite, Composites Engg, Vol. 5, No. 6, pp. 583-596 [1995].
Woytera, S.A., R.B. Bhagat, and M.F. Amateau, Development of Niobium
Aluminide Based Composites with Improved Toughness using Treated
Reinforcements, Acta Metallurgica et Materialia, Vol. 44, No. 3, pp. 963-
976 [March 1996].
Bhagat, R.B., J.C. Conway, Jr., M.F. Amateau and R.A. Brezler III,
Mechanical properties, wear resistance and a fracture mechanics based
wear model for tungsten carbide-based cermets, Wear, Vol. 201, No. 1-2,
pp. 233-243 [1996].
Bhagat, R.B., Advanced Aluminum Powder Metallurgy Alloys and
Composites, Invited contributor to ASM Handbook Volume 7 Powder
Metal Technologies and Applications, ASM International, Materials Park,
OH, [1998].
Raut, J., K.A. Fichthorn, and R.B. Bhagat, Sintering Mechanisms of
Aluminum Nanocrystals – A Molecular Dynamics Study, Nanostructured
Materials, Vol. 10, N0. 5, pp. 837-851 [1998].
Bhagat, R.B., Specification for Electroless Palladium Plating for Printed
Circuit Boards [PDS30058], Northrop Grumman Corporation - ES [2005].
Bhagat, R.B., S. Gurkovich, and C. Van Sickle, Intermetallics in Solder
Joints, Proceedings of the Northrop Grumman Fifth Annual Materials
Science Forum, 20-21 June 2006, El Segundo, CA. [Presenter: Bhagat]
Bhagat, R.B., Gold Embrittlement Mitigation to Improve Solder Joint
Reliability in ES Products, Proceedings of the 3rd ES Symposium, 7&8
November 2007, Baltimore, MD.
Chronology
2011-2013: Dresser-Rand/Oxford Global Resources, Beverly, MA
2002-2010: Northrup Grumman Corporation, Baltimore, MD
1984-2001: Pennsylvania State University, State College, PA
1982-1984: NASA Lewis Research Center, Cleveland, OH
Contact Information
Company: AECOM Technical Services
Address: 12420 Milestone Center Drive, Suite 150
Germantown, MD 20876
Direct: 443-737-1297
Mobile: 814-876-3333
ram.bhagat@aecom.com
Stephen Couture, P.E., DEE, BCEE
Principal Water/Wastewater Engineer
Overview
Mr. Couture has experience in industrial wastewater treatment, including
system design engineering, water use optimization and wastewater
minimization, pollution prevention, water/wastewater utility energy
conservation, and environmental regulatory compliance. Additional
experience includes training for water/wastewater treatment operators
and development of industrial pretreatment and permitting programs for
municipal wastewater utilities. He has also provided environmental
regulatory and technical consultation to clients and legal counsel in
negotiating administrative, civil, and criminal enforcement settlements.
Additionally, Mr. Couture has served as senior technical advisor to non-governmental environmental organizations and U.S. government agencies
on international environmental regulatory compliance consulting and
program development.
Project Specific Experience
Electroplating. Metal Finishing, and Electronic Components
Manufacturing MAHLE Engine Components USA (Atlantic, IA)
Served as Project Technical Director and senior technical consultant on an industrial wastewater discharge compliance project to identify toxic
constituents in the wastewater treatment facility’s effluent and evaluate modifications to meet WET testing requirements. Technology evaluations included chelate breaking chemistry evaluations, Advanced Oxidation
Processes, diffusion dialysis, and evaporation. In parallel with evaluating upgrades to the industrial wastewater treatment system for surface water
discharge compliance, the project included evaluating the option of
discharging pretreated industrial wastewater to the local municipal sewerage system. The sewer discharge option evaluation included
assessing the impact to the POTW through respirometry and ultraviolet transmittance testing and the impact to the POTW receiving water through an anti-degradation assessment.
Pratt & Whitney (Columbus, GA)
Served as senior technical consultant for the conceptual design of
upgrades to the wastewater pretreatment facility for a jet engine maintenance and overhaul facility. In addition to engine maintenance and
overhaul operations, the facility includes chemical metal finishing operations to produce turbine engine components used in the maintenance and overhaul of jet engines.
Areas of Expertise
Industrial Wastewater Treatment
Municipal Wastewater Treatment Environmental Regulations
Industrial Water Treatment
Pretreatment and Permitting Water/Wastewater Systems
Water and Energy Conservation
Years of Experience
With AECOM: 11 With Other Firms: 26 Years
Education
MS/Environmental Engineering/ University of Maine/1978
BS/Civil/Environmental Engineering/University of Maine/1976
Registration/Certification
Diplomate Environmental
Engineer (DEE) Board Certification in Water and
Wastewater Engineering
(American Academy of
Environmental Engineers)
Board Certified Environmental
Engineer (BCEE) in Environmental Sustainability
(American Academy of
Environmental Engineers)
Professional Engineer, Maine and Massachusetts
Project Apollo -Confidential Client (China)
Senior technical consultant for process water reduction program development and industrial wastewater treatment systems’
compliance/performance at multiple printed circuit board manufacturing facilities. The project is part of the client’s assessment of their suppliers’ environmental compliance status and vulnerabilities and compliance with
their benchmark for water footprint reduction. Provided guidance and technical consultation to in country audit team regarding:
• printed circuit board manufacturing process and associated
wastewater treatment systems’ auditing.
• development of wastewater sampling plan.
• evaluation of in-process modifications for process water use minimization.
• independent technical review of project findings, recommendations, and deliverables.
Raytheon Company
• Cooling Water Treatment System – DOD Radar Station (Kwajalein Atoll, Marshall Islands), Supervising engineer on preliminary and final design of high-purity recirculating
cooling water treatment system for phased array radar electronics for DOD Strategic Defense Initiative tracking
system.
• Missile Systems Division – Printed Circuit Board Metal
finishing Facility (Andover, MA), project manager on design,
installation, and commissioning of industrial wastewater
treatment system clarifier.
• Microwave and Power Tube Division (Waltham, MA), design
engineer and project manager on industrial wastewater
treatment recycle system for metal plating facility. Project
included metal recovery and rinsewater recycle using ion
exchange. Wastewater treatment included metal precipitation
and microfiltration. Project responsibilities included
construction management, system commissioning, and
operator training.
• Equipment Division (Waltham, MA), design engineer and
project manager on industrial wastewater treatment system for printed circuit board facility electroplating and metal
plating processes
Tyco
• Fire and Building Products Division (Lubbock, TX), member
of design and commissioning team for the industrial wastewater pretreatment systems (chelated metal precipitation/filtration, wastewater recycle ultrafiltration).
3
Responsibilities included technical lead on wastewater treatability studies and inprocess wastewater minimization
source reduction modifications.
• Printed Circuit Group (Manchester, CT and Stafford, CT), prepared industrial wastewater treatment systems’ evaluations (three facilities) to assist company with meeting negotiated
settlement requirements for Connecticut Department of Environmental Protection enforcement action. Tasks included preparing wastewater pretreatment discharge permit
applications and development and implementation of wastewater treatment upgrade and metal discharge reduction program.
IBM
Project engineer on industrial wastewater treatment system upgrade
design (Essex Junction, VT and Manassas, VA), for semiconductor fabrication facilities.
Texas Instruments, Inc. (Attleboro, MA), project engineer for
industrial wastewater treatment system pilot testing, design, and commissioning for multi-faceted electroplating, metal finishing, and
electronic components manufacturing facility.
TRW Carr Division (Cambridge, MA), prepared final design of
facility’s industrial wastewater segregation collection system. Also
conducted troubleshooting evaluation of facility’s industrial wastewater treatment system and developed electroplating metal
finishing process operations’ source reduction waste minimization modifications.
M/A-COM Advanced Semiconductor Division (Lowell, MA),
designed high purity process water treatment system (RO, ion exchange, UV disinfection) for the facility’s GaAs gate array
semiconductor fabrication operations.
Pollution Prevention/Waste Minimization Consulting and Design
Lockheed Martin - Avionics Systems Integration Division (Owego, NY) Provided technical consultation in identifying and evaluating
wastewater reduction/reuse and water use reduction optimization opportunities at Lockheed Martin’s avionics electronics
manufacturing and integration facility. Prepared final project report
presenting the evaluation of opportunities and recommendations for implementing wastewater reduction/reuse and water use reduction,
optimization to achieve company’s project goal of 25% reduction of wastewater discharged and water usage.
4
United Technologies Hamilton Standard Division (Windsor Locks, CT), project engineer for development electroplating/metal
finishing operations; inprocess source reduction waste minimization modifications and preliminary design of electroplating metal finishing
operations. US Agency for International Development, World Environment
Center (Latvia and Estonia), senior technical consultant for pollution prevention waste minimization program development, implementation, and training for the metal finishing electroplating
industry.
Texas Instruments Inc., (Attleboro, MA), conducted a facility wide source reduction waste minimization study at the company’s electronic components and electroplating-metal finishing facility,
resulting in a 45% reduction in the facility’s process water consumption and wastewater discharge volume.
MITRE (Bedford, MA), project engineer for final design of in-
process source reduction modifications for facility’s printed circuit board manufacturing, metal finishing, and satellite photography
developing operations. Vishay-Sprague (Concord, NH), evaluated facility’s industrial
wastewater reduction and treatment recycle options for operations related to the manufacture (conventional metal finishing electroplating) of tantalum capacitors.
EG&G Electro-optics (Salem, MA), prepared facility’s industrial
wastewater discharge permit and treatment system design plans submittal for regulatory approval.
Varian Vacuum Products (Lexington, MA), managed contract
operation of the site’s groundwater remediation system.
Conference and Workshop Presentations
A Combined Source Reduction/Process Modification and Pretreatment/Recycle Waste Management Strategy at a Metals Product Machining and Finishing Facility, Water Environment Federation, Industrial Water Quality Conference,
Providence, Rhode Island, 2007.
Tools for Reducing [Industrial Pollutant Loadings, Maine Wastewater Control
Association Spring Conference, Ogunquit, Maine, 2005.
Technologies for Compliance, Metal Products and Machining Point Source
Category Effluent Guideline Rule Seminar, sponsored by the Maine Metal
Products Association - Environmentally Conscious Manufacturing
Project, Portland, Maine, 1995.
5
Pollution Prevention Technology Transfer Electroplating Industry Waste
Minimization in the Republic of Latvia, presented at the 6th Annual New
England Environmental Expo, Boston, Massachusetts, April 1994.
Meeting Water Quality Based Discharge Limits with Advanced Treatment
Technology, presented at the Ninth Conference on Pollution Control for the
Metal Finishing Industry, Orlando, Florida. Sponsored by the American Electroplaters and Surface Finishers Society and the United States
Environmental Protection Agency, 1988.
Source Reduction of Hazardous Waste in the Printed Circuit Industry, presented at the Second Annual Hazardous Materials Management Conference,
Philadelphia, Pennsylvania. Sponsored by Pollution Engineering Magazine, June 1984.
Publications
"World Environment Center's Waste Minimization Demonstration
Projects for the Electroplating Metal Finishing Industry in Latvia", Plating
and Surface Finishing, November 1993 (co-author).
"Electronics: Wastewater Treatment Systems at Texas Instruments
Among the Most Advanced in Industry," United Today, Spring 1988 issue.
"Environmental Update for Printed Circuit Manufacturers," Printed Circuit
Fabrication, May 1985 (contributing author).
"Chapter 16 - Wastewater Treatment," Institute for Interconnecting and Packaging Electronic Circuits Guidelines for Chemical Handling Safety in Printed
Circuit Manufacture, IPC-CS-70, 1984 (contributing author).
"High Purity Process Water Treatment for a Microelectronics Device
Fabrication Facility" Microcontamination, April/May 1984 (co-author).
Alexander Quinn, Director of Sustainable Economics Résumé
appropriate development fee program and public benefits
package for Berkeley’s Downtown Area Plan. The intent of
the analysis was to maximize public benefit (e.g. affordable
housing, streetscape improvements, parking management,
transportation demand management, etc.) without saddling
projects where no developments would be initiated in
Downtown. AECOM deployed its multidisciplinary team of
economists, architects, costing engineers, and planners to
provide the most realistic depiction of development on
opportunity sits in Downtown. Ultimately, the analysis arrived
at a recommended fee level for downtown and an estimate of
how much the fee program would provide over the 20-year
Downtown Area Plan planning period.
Fruitvale Business Improvement District Economic
Strategy, Oakland, CA
Market repositioning strategy for the Unity Council's Fruitvale
Business Improvement District. The strategy included a real
estate and retail repositioning analysis, as well as an
evaluation of best management practices of business
improvement districts. AECOM performed a local shopper
intercept survey, retail leakage analysis - accounting for the
informal economy - and a opportunity site analysis to inform
the direction of the business district.
Coliseum City, New NFL Stadium and Ancillary Real
Estate Development, Oakland, CA
AECOM performed a comprehensive study for a new football-
only stadium with the Oakland-Alameda County Coliseum
Authority. The analysis also considered supporting
commercial/ entertainment development. The study includes
analysis of local market conditions, analysis of the operations
of other NFL stadiums, demand for the Raiders, coordination
with ongoing masterplanning efforts, development
recommendations, forecasts of future stadium and other
development operations, and analysis of the viability of public
and private funding based on estimated construction costs
and operating needs. Mr. Quinn served as the market lead for
the potential ancilary development.
Balboa Reservoir Development Evaluation, San
Francisco CA
Evaluation of the land value and optimum development
program for the San Francisco Public Utilities Commission's
ancillary property near the Balboa BART Station. AECOM
evaluated the potential opportunity for mixed income housing
that maximized affordable housing and community open
space, while still generating sufficient returns for the property
owner (SFPUC). AECOM performed a full market and cash
flow analysis to inform the land value potential and the
affordable housing generation from the development. This
included considering 4 percent low income housing tax
credits and an infrastructure financing district. The analysis
informs a request for qualification process for developers who
will bid for the property.
Cleantech Corridor Feasibility Analysis and Clustering
Strategy, Los Angeles, CA
Evaluation and identification of Cleantech industry
opportunities for an aging manufacturing node south of
Downtown Los Angeles. The analysis evaluates market
opportunities presented in the corridor, location factors that
drive Cleantech site selection, evaluation of the corridor’s
competitive position, and a development strategy to facilitate
a Cleantech industry cluster within the study area. The
analysis also reviews existing Cleantech clusters across the
world that have parallels to Los Angeles. Mr. Quinn served as
Project Manager on this project for the Los Angeles
Community Redevelopment Agency.
Las Begonias Master Plan Market Analysis and Cash
Flow Model, Lima, Perú
Market and feasibility evaluation for the redevelopment of
Lima's growing downtown and burgeoning Class A office
market in San Isidro. For Urbanova, AECOM evaluated the
future Class A office, lifestyle retail, and hotel demand for
Lima's downtown area, providing the client with a detailed
absorption schedule by parcel. In addition, AECOM
developed a full cash flow model with estimates on returns on
investments, projected equity required, and premiums
realized by building a new park in the downtown. In total,
AECOM developed a long-term schedule and cash flow
model for over 500,000 square meters of new mixed-use
development that would be built over the next thirty years. In
addition to the demand projections and cash flow analysis,
AECOM also delivered both models to allow Urbanova to
adjust their projections as new data becomes available.
Central Market Economic Strategy, San Francisco, CA
Mr. Quinn served as the Principal-In-Charge for the Mayor’s
Office of Economic and Workforce Development. AECOM led
a study that was the culmination of more than ten months of
community outreach, technical research, and collaboration of
a diverse group of stakeholders, focused on creating a clear
and unified plan for improving the Central Market district, a
vital part of San Francisco’s urban core. The area had
struggled with high vacancy rates, lack of private investment,
physical blight, and other social challenges. The Economic
Strategy sought to build on existing community assets and
harness the energy brought about by the recent presence of
the creative technology industry as well as the growth of
cultural and performing arts organizations, facilities, and
institutions. Since the strategy, the study area has
experienced a remarkable rise in economic activity with over
Alexander Quinn, Director of Sustainable Economics Résumé
two million square feet of office absorption over a two year
period and over 1,000 housing multifamily housing units
under construction. Technology companies Dolby, Twitter,
and Square have all located in the area. The project won a
number of awards, including the San Francisco Chamber
Economic Development Award and the National American
Planning Association Award in Economic Development.
Port of Port Townsend Eco-Industrial Park Feasibility
Study, Port Townsend, WA
Having acquired 24 acres adjacent to its airport, the Port of
Port Townsend requested assistance from AECOM to
determine the feasibility of developing an eco-industrial park
on the site. The primary purposes of the study was to 1)
assess the demand for use of a light industrial facility at this
site, 2) develop profiles of likely facility users and 3) formulate
a conceptual design of future site development. The AECOM
team prepared a market study of the potential for an eco-
industrial park, identified existing conditions on the site and
prepared initial conceptual plans for review by the Port
Commissioner. The report included recommendations for LID
and sustainable design guidelines for buildings.
Japan Center Revitalization Plan, San Francisco, CA
Development of an urban design concept for 3-D Investments
to help create a world-class retail experience in the
neighborhood, while remaining true to the community's
cultural roots. A range of urban design schemes and
concepts address both commercial and residential land uses,
and improve the streetscape, pedestrian experience, and
transit access. A market and development feasibility analysis
was performed prior to the community participation process,
thereby confining the community discussion to economically
viable development alternatives.
Chinatown Economic and Tourism Development Action
Plan, San Francisco, CA
Economic Action Strategy to improve community economic
vitality for one of the City’s historic and cultural gems. San
Francisco’s Chinatown still acts as a gateway for Chinese
immigrants. Chinatown also is historic landmark as one of the
first Chinese communities in America initiated during the
California Gold Rush of 1849. While the neighborhood is a
historic and cultural gem, Chinatown struggles economically
as a predominantly low-income and poorly educated
population. In conjunction with local community organizations,
the Economic Action Plan assessed prevailing socio-
economic conditions, real estate markets, visitation, and
development opportunities in Chinatown. The action plan
included a visitor intercept survey to identify potential physical
and business improvements that would increase tourism
activity in Chinatown while maintaining its unique cultural
heritage. AECOM facilitated a community economic forum to
determine economic development priorities, community
champions, and city and local organizations to carry out
community priorities. The action plan will be used both as a
local economic strategy and as a mechanism to obtain
addition community development funds for the physical and
social improvement of Chinatown.
Northeast Fairfield Station Market Strategy and Industry
Cluster Analysis, CA
AECOM developed a market and industrial tenanting strategy
for the City of Fairfield for a large scale master-planned
community directly adjacent to a new Amtrak Station that is
part of the Capitol Corridor line in Northern California. The
market study evaluates viable rail logistics uses and
cleantech industries that could be located in the planned
research and development park, which could be located near
a major transit hub in Fairfield. The analysis includes detailed
housing absorption projections over the life cycle of the
project development, as well as optimized development mix
recommendations. In addition, the industrial tenanting
strategy evaluated cleantech industry site location attributes
to determine the ideal industrial area plan to meet this
growing real estate market in California. Finally, the market
analysis performed a comparable case study analysis of
projects throughout the Western United States to determine
absorption and land value premiums associated with
proximity to the planned regional rail station and incorporate
green infrastructure and building systems into the master
planned community.
Bayshore Boulevard Economic Action Plan,
San Francisco, CA
The development of an economic action plan and retail
corridor strategy for the City of San Francisco’s Bayshore
Boulevard area. The final plan includes retail corridor case
studies, real estate market analyses, employment analyses,
existing business mix and opportunity site identification,
stakeholder interviews and surveys, and community outreach.
The goal of the plan is to determine the desired business mix,
land use plan, and economic development strategies that
would best work towards the revitalization and redevelopment
of the Bayshore corridor. The plan focuses on actionable
near-term strategies that will generate immediate impacts on
the business environment along Bayshore Boulevard.
Alexander Quinn served as the project manager for AECOM
for the City of San Francisco’s Redevelopment Agency.
City of Palo Alto Page 1
Planning and Transportation Commission 1
Draft Verbatim Minutes 2
January 27, 2016 3
4
DRAFT EXCERPT 5
Public Hearing 6
The Planning and Transportation Commission will hold a Public Hearing and consider recommending two 7
Ordinances to the City Council: An Ordinance that amends the Municipal Code regulations related to 8
Hazardous Materials Use, Storage and Handling in the Office, Research and Manufacturing Zoning 9
Districts and an Ordinance amortizing uses at Communications & Power Industries LLC (CPI), 607-811 10
Hansen Way. Amendments to the Municipal Code include the following sections: 11
12
a. Chapter 18.04 (Definitions) Section 18.04.030 (66) (A) (B) (C) and (127.7); 13
b. Chapter 18.20 Office, Research, and Manufacturing [MOR, ROLM, RP and GM] Section 14
18.20.030 (Land Uses) Table 1 (Industrial/Manufacturing District Land Uses); Section 15
18.20.040 sub sections (b) and (c) (Site Development Standards); and Section 16
18.20.050 (Performance Criteria) 17
c. Chapter 18.23 (Performance Criteria for Multiple Family, Commercial, Manufacturing and 18
Planned Community Districts) Section 18.23.100 (Hazardous Materials) subsection (B) 19
d. Chapter 18.70 (Nonconforming Uses and Noncomplying Facilities) Section 18.70.020 20
through Section 18.70.100, including Section 18.70.070 (Required Termination) 21
e. Chapter 17.16 (Hazardous Materials Management Plan) Section 17.16.010 (Hazardous 22
Materials Management Plan) and 23
f. Chapter17.20 (Hazardous Materials Inventory) Section 17.20.020 (Information required). 24
25
[The Commission heard this item following Item Number 1.] 26
27
Chair Fine: So this is a public hearing to consider recommending an Ordinance to the City Council that 28
amends the Municipal Code regulations related to hazardous materials use, storage and handling in the 29
Office, Research and Manufacturing Zoning Districts and an Ordinance regarding amortization of uses at 30
Communications and Power Industries. And the staff report has all the Codes that are affected here. I'd 31
also like to remember, remind the members of the public, if you'd like to speak to an item, please provide 32
a card up to us at the front, and we will listen to you. I believe staff has a report here. 33
34
Commissioner Downing: Chair, if I may? A point of privilege. I will need to step out for this item. I am 35
within 500 feet of this site, so it would be improper for me to participate tonight. 36
37
Chair Fine: Thank you for reminding me. Let's go through recusals and disclosures. 38
39
Commissioner Tanaka: The City Attorney also mentioned to me that my house is too close, so same 40
situation. 41
42
Chair Fine: Vice-Chair. 43
44
Vice-Chair Gardias: So before, I had, like maybe some other Commissioners, I had a conversation with 45
the representation from CPI that's present here on the floor, so I would like to disclose this item. Thank 46
you. 47
48
Chair Fine: I also had a discussion with Canyon Snow, the consultant for CPI, and I had an email 49
discussion with Art Liberman and Markus Fromherz from the Barron Park Association, but nothing that's 50
not in the public record. Commissioner Waldfogel. 51
52
Commissioner Waldfogel: I also had a discussion with the representatives from CPI. 53
54
Attachment H
City of Palo Alto Page 2
Commissioner Alcheck: Myself as well, Mike Alcheck. As representatives, Mr. Snow contacted me in an 1
effort to discuss any questions I might have about the agendaed item, and we had a discussion about it, 2
but most of the information we covered, all of the information we covered was in the packet. 3
4
Chair Fine: Excellent. Let's move to the staff report. 5
6
Hillary Gitelman, Planning and Community Environment Director: Thank you, Mr. Chair and 7
Commissioners. Hillary Gitelman, the Planning Director. And I want to take a minute to introduce the 8
folks who are with me here this evening. Special thanks to Rod Jeung, on my right, who is from the 9
consulting firm AECOM, is working for the City and prepared the technical memos that supplement the 10
staff report. So he's here to bail me out if you have questions on that material. Helping him bail me out 11
is Meg Monroe on our staff who's been shepherding this item for years now. And representatives of the 12
Palo Alto Fire Department. In addition, Molly Stump, the City Attorney, is here. I think I warrant sort of 13
a personal presence from the City Attorney herself because I'm at great risk of getting myself into trouble 14
or something. I don't know. 15
16
But we're here to talk about two separate Ordinances which were in your packet, related to the issue of 17
hazardous materials in Palo Alto. So there's been a long history and this is kind of a technical matter. 18
The Commission hasn't really been involved in this, so I'm going to take a little bit more time than usual 19
to go through a staff presentation. We're going to share some background with you about how we got to 20
where we are today, try and summarize the two Ordinances, one of which is quite complicated, talk 21
about the next steps. As I indicated, Rod is here to help with some of the technical information. 22
23
As you know from the findings that are included in each of the draft Ordinances, the objectives of this 24
whole exercise relate to maintaining health, safety and welfare in Palo Alto; instituting regulations related 25
to a class of hazardous materials uses that are not currently regulated by the City; and providing for 26
termination of nonconforming uses if and when the proposed Ordinance should be adopted. So we had a 27
long discussion with the Council in November and received very specific direction from them to proceed 28
with the two Ordinances you have this evening. They also directed us simultaneously to explore a 29
potential for agreement between the parties. And I'll go into that a little bit at the end of this meeting 30
which we hope will focus on the Ordinances, but I wanted you to be aware that discussions are under 31
way, and I think we indicate that in our staff report. 32
33
So just in terms of the chronology. This goes back to 2006 when CPI plating shop activities were 34
consolidated in Palo Alto, so the intensity of that use on the CPI site increased. And then there were a 35
series of hazardous materials releases that just raised a level of concern in the community and down here 36
at City Hall. And I, we go through a number of years here in which the zoning, City zoning was amended 37
in 2007 to address some of the concerns that had been raised. There were amortization studies 38
prepared in 2011 and '12 which I'll talk about further in a moment. What, what's not shown really on 39
this chronology is some of the risk assessments and analysis that AECOM has done for us in the last few 40
years. And we can answer some questions about that if you like. 41
42
So first let me summarize the Hazardous Materials Ordinance. It effectively defines three different tiers 43
of hazardous materials uses and creates requirements that are specific to each. Some of these already 44
exist in the Code and some of them are new, but this idea that there are tiers is a new concept that we're 45
introducing into the Ordinance. It also defines sensitive receptors, and it establishes a minimum distance 46
between the middle tier of hazardous materials uses and the sensitive receptors. Then at the Council's 47
direction, it prohibits these, the third tier of hazardous materials uses, and I'll talk about what that is in a 48
minute. And then it addresses this whole question of amortizing nonconforming uses. Finally, it includes 49
some conforming amendments to the City's Fire Code. Most of the changes we're talking about are in 50
the Zoning Ordinance. 51
52
So this is a map of the City's Industrial Zoning Districts where the new Ordinance would apply. 53
Effectively we're amending that section of the Code that applies to these parts of town. There is an 54
amendment to the nonconforming use provisions, a minor amendment to the nonconforming use sections 55
that applies Citywide, but most of the changes are, just affect the shaded districts here. So in our 56
City of Palo Alto Page 3
existing Municipal Code, there are currently two different groups or now we're calling them tiers of 1
hazardous materials uses that are regulated. The first one, which now we're calling Tier 1, involve 2
hazardous materials quantities above what we refer to as the CUPA thresholds. Now, those thresholds 3
are established in State law, and CUPA uses are generally regulated by the County. Although, in Palo 4
Alto the Palo Alto Fire Department plays a role in reviewing and inspecting uses that exceed the CUPA 5
threshold. And there are requirements that the State applies and that we apply to this first tier of uses 6
which really are not proposed to change in the new Ordinance. So the third tier, so we're bookending 7
here, the first tier is the lowest tier. The highest tier is Tier 3. This is already in our Code as well. This 8
was added to the Code in 2007. This is the tier that exceeds the Title 19 threshold or what we call the 9
CalARP thresholds. Currently our Municipal Code prohibits Tier 3 uses within 300 feet of residences or 10
Residential Zoning Districts. We are now in this Ordinance proposing that these uses be prohibited 11
everywhere in Palo Alto. I should say that we are not aware, there are no Tier 3 uses currently in Palo 12
Alto. 13
14
So the main, you know, sort of the central portion of the Zoning Ordinance is to create this middle tier or 15
Tier 2 which is defined as hazardous materials uses involving toxic or highly toxic materials in quantities 16
that are above the CUPA threshold and below the Title 19 or the CalARP threshold. So it's between the 17
Tier 1 and Tier 3 in terms of quantities when it involves toxic and highly toxic materials, and those are 18
defined in the State Fire Code. The idea that is presented in the Ordinance is to prohibit, similar to the 19
current regulations for Tier 3 uses, the new Ordinance would prohibit Tier 2 uses within 300 feet of 20
sensitive receptors and Residential Zoning Districts. There are also some other requirements outside of 21
that 300-foot limit. These uses require a use permit. There's some notice requirements and other things 22
that would apply. The bottom line is that there are 11 Tier 2 uses that would be regulated for the first 23
time under this new Ordinance. And we have a map showing the 11 uses. They're in the pink with the 24
little green dotted lines around them. The green dotted lines show the 300-foot minimum distance 25
around each of the Tier 2 uses. The map also shows the sensitive receptors and Residential Zoning 26
Districts that are referred to in the Ordinance. And just to be specific, the sensitive receptors are shown 27
on the screen here. Effectively they are land uses, I'm sorry, was there a question? 28
29
Male: (inaudible) 30
31
Ms. Gitelman: I don't really see the yellow there, but most of the kind of lightly shaded ... 32
33
Chair Fine: The question is if yellow is housing, and I think it is. Yes. 34
35
Male: Just making sure. 36
37
Male: So residential (inaudible). 38
39
Ms. Gitelman: Yeah. You can see it on the hard copy of the slide. It is in fact yellow. On the screen, it 40
doesn't look yellow. Yes. 41
42
So I have a couple slides that compare the current requirements to the proposed requirements. This 43
shows that under the current Ordinance, there's a distance requirement for noticing that affects the Tier 44
1 and Tier 3 uses in terms of where uses are not permitted. The Tier 3 uses are not permitted within 45
300 feet of sensitive receptors. And then in the proposed Ordinance, the new distance requirement, the 46
notice requirements are essentially the same, but in the last column there, the not permitted column, Tier 47
2 facilities are not permitted within 300 feet of sensitive receptors, and Tier 3 facilities are just not 48
permitted. 49
50
So the Commission is probably familiar with the concept of nonconforming uses. The Code defines 51
nonconforming uses as uses that were legal at the time they were established, but they are no longer in 52
conformance with the City's Zoning Ordinance. And the Code effectively prohibits nonconforming uses 53
from being expanded or intensified. The, these rules about nonconforming uses would apply to those 11 54
businesses we talked about. I'm sorry. Not to all 11 of them, to any of the 11 that are within the 55
minimum 300-foot distance, because those are the uses that would become legal and nonconforming. 56
City of Palo Alto Page 4
So this map kind of shows the bottom line. Again, you see the pink Tier 2 uses, the green dotted line 1
around those uses, and then really there are only 3 of the 11 where the green dotted line overlaps the 2
Residential Zoning Districts or the sensitive receptors, and those are the three uses at CPI that would 3
become legal and nonconforming under this Ordinance. Here's just an aerial map of CPI pointing out 4
where the plating shop use is in Building 2. Building 2 is a large building, but the plating shop is just a 5
portion of it. You see just how large the CPI site is as well. 6
7
So generally nonconforming uses have the right to remain in place, but there is an opportunity to phase 8
them out if you provide compensation or if you provide a reasonable amortization period that's 9
proportional to the investment that was made in the facility. So our Code already establishes some 10
termination dates for a bunch of different uses and provides a minimum of 15 years for businesses or 11
uses to be amortized. The proposed Ordinance proposed, proposes a change to that 15-year minimum 12
to say that it could be less if there's a site-specific amortization study that justifies a lesser period. 13
14
And there were two site-specific amortization studies prepared for the CPI facility. The first one was 15
specific to the plating shop in Building 2. It was prepared by CB Richard Ellis at the direction of the City, 16
and it concluded that at that time the amortization period based on the value of the investment that had 17
been made in the facility was 15 years or extended to the year 2026. CPI disputed the results of that 18
study and did their own study in 2012. The study really looks at the whole facility and its operations and 19
concluded that the plating shop could not be separated from the rest of the facility, and if you had to 20
amortize the whole facility, an appropriate amortization period would extend out 40 years or more to, 21
and we said to the year 2052. 22
23
So Rod and his folks reviewed both of these studies and found them to be basically sound in terms of the 24
scope of their endeavor. There were a few nuances that we've noted in the staff report and on this slide. 25
And effectively the approach we're taking in the Ordinance is to accept both of these studies at face 26
value. So we've used both of them in preparation of the Ordinance which requires that the plating shop 27
use would have to be relocated at least 300 feet, so that minimum distance that we've established in the 28
Ordinance, within the next, now it's 10 years because 5 years have passed, so by the year 2026. And 29
then because CPI's amortization study said well, you can't separate the plating shop from the balance of 30
the other uses, it would, presumably it would still be onsite and luckily they have that very large site I 31
showed you in the aerial, so it would be possible to physically relocate the plating shop use more than 32
300 feet away from the residential properties that abut the property and still be more than 300 feet, you 33
know, still be on the property. So the plating shop would still be related to, proximate to the rest of the 34
uses and the rest of the nonconforming uses would have to relocate by the date of 2052 which was the 35
date in that second amortization study. 36
37
So in terms of next steps, tonight we're hoping that you will conduct a public hearing, you know, hear the 38
public comments and that you will ask us any questions you have, make your own comments and 39
ultimately form a, forward a recommendation to the City Council. We have staked out a claim to a time 40
on the agenda at the City Council on February 22nd for their consideration of these two Ordinances. 41
42
And then as I mentioned, we're trying to reach a settlement or a compromise on this. If our 43
conversations are fruitful, it would probably involve amending the Amortization Ordinance to provide an 44
incentive for moving the plating shop entirely out of town instead of 300 feet away but still on the site. 45
And in doing that, in exchange for some more years, you know, so a little more time to obviously 46
technologies would have to change, but that's the kind of concept we're hoping or we're working 47
towards. It would be contingent on some kind of enforceable agreement that would give certainty to all 48
the parties, the City, the company and the neighbors. So fingers crossed that we will, those discussions 49
will bear fruit but, you know, with or without an agreement, we're proposing to move forward with the 50
Ordinances to the City Council in February. Thanks so much. We're happy to answer questions. 51
52
Chair Fine: Thank you, Director Gitelman. As we just heard obviously this is a public health and welfare 53
issue, and we have a number of speakers who would like to speak to that, so let's start with the public. 54
Vice-Chair. 55
56
City of Palo Alto Page 5
Vice-Chair Gardias: Thank you, Mr. Chairman. So we have five speaker cards. I'm going to read out the 1
name and, of the speaker, of the upcoming speaker, and then the following one. So first one is Tom 2
Grant, followed by Amanda Mogan. And you have five minutes. 3
4
Tom Grant: Hello. My name is Tom Grant, and I'm the Vice President of Engineering for the Microwave 5
Power Products Division of CPI in Palo Alto. I've spent 34 years at CPI. I'm speaking to you tonight at 6
the request of Bob Fickett, CPI's President. Bob is unable to attend this meeting as he's on business 7
travel. In my role at CPI, I'm heavily involved in our manufacturing processes in Palo Alto including those 8
involving the use of chemicals and have a significant knowledge of the operations of our facilities. As you 9
are no doubt aware, CPI is the successor to the original business of Varian Associates, and we have been 10
in the same Stanford Research Park location since 1953. Our plate shop has been in its current location 11
for almost 60 years. It plays a vital role in the manufacturing of products used to treat cancer patients, 12
enable global communication systems and protect American and allied military personnel. The Zoning 13
Ordinance regulating a new class of hazardous materials that is under discussion tonight is unnecessary. 14
It specifically targets CPI and our manufacturing processes and facilities in Palo Alto. Based on my 15
experience at CPI, conclusions of numerous governmental agencies and the studies and findings of 16
multiple third-party experts, it is clear that CPI Palo Alto facilities are safe and safely operated. Three 17
independent experts have studied our facilities and processes in-depth. All of them, including those hired 18
by the City of Palo Alto, have come to the same conclusion. Our facilities are safe and pose no 19
reasonable threat of harm to our neighbors or our community. CPI understands why we are standing in 20
front of you today to discuss this Zoning Ordinance. Although we might wish it otherwise, we accept that 21
this process is being driven by fear not scientific fact. Fear is a strong and important emotion, but it 22
should not be the basis by which the City drives out a safe, longstanding and respected member of its 23
business community. CPI continues to endeavor to be a responsible and reasonable member of the Palo 24
Alto community. Since coming to Palo Alto in 1953, our operations have always been in conformance 25
with the law, and we do not intend for that to change. Therefore, we are prepared to continue to work 26
with the City and its representatives to conform to the new Zoning Ordinance that is being discussed 27
tonight provided that we are given a reasonable and feasible period of time in which to do so. The 28
current Amortization Ordinance being proposed is not reasonable. If CPI is penalized with an unrealistic 29
and unprecedented short amortization period that threatens the economic viability of our company, we 30
are willing and prepared to fight both Ordinances with legal action. Nonetheless, CPI will retain its 31
commitment to and focus on the continued safety of our operations. We look forward to continuing to 32
work through this issue with City representatives. Thank you for your time. 33
34
Vice-Chair Gardias: Thank you, Mr. Grant. Ms. Amanda Mogan followed by Jennifer Johnson. 35
36
Amanda Mogan: Good evening. My name is Amanda Mogan, and I am the Director of Investor Relations 37
for Communications & Power Industries. I have worked for CPI for 10 years which makes me a relative 38
newbie to the company. I grew up in this area. I went to high school at MA and earned my graduate 39
degree in communications at Stanford. I'm standing in front of you tonight because over the past 10 40
years I have been highly involved in CPI's community relations and in addressing questions about the 41
safety of our shared community and the fears of local residents. At times CPI has been portrayed 42
publicly as a callous and unfeeling Goliath trampling on the lives of local residents without any 43
consideration of their concerns. When numerous independent studies have shown our operations to be 44
safe, we have been accused of buying the results and brainwashing our employees. These accusations 45
could not be farther from the truth. I'd like to present a clearer picture of CPI's employees and the work 46
they do to maintain the health and safety of our community. I'll start with the employees themselves as 47
they are a unique animal in this time and in this area. CPI's approximately 600 Palo Alto employees have 48
worked for the company for an average of 20 years. Many of our employees spend their entire careers 49
with the company. They believe in the importance of the work that they do and in the company. Their 50
dedication and loyalty says quite a lot about CPI as a company and as an employer. More than 200 of 51
our Palo Alto employees are engineers and scientists. We also have highly trained assemblers and 52
technicians as well as office workers. These are not stupid people nor are they shy. They are well 53
trained in and committed to safety, and they speak up if there is an issue. CPI has a robust community 54
response program. We investigate and respond to all types of calls from the community. The questions 55
posed have ranged from concerns about a white cloud on our property which was steam to claims that 56
City of Palo Alto Page 6
CPI has caused an outbreak of fleas at a nearby house. We take each call very seriously. In recent 1
years in response to neighborhood inquiries, we have hired noise consultants, trimmed residents' trees, 2
investigated odors coming from sources including skunks in a nearby hotel laundry room, notified 3
neighboring businesses about complaints we have received regarding noise on their properties, and so 4
on. But when our investigations have shown that we can improve the situation, CPI has made the 5
merited changes. For example, when the City's' consultant made recommendations about chemical 6
deliveries, CPI personnel examined the delivery processes and put additional safeguards in place. We 7
take advantage of every opportunity to continue to improve the safety of our facility no matter the source 8
of the suggestion. As someone who has spent the past 10 years talking about the safety of CPI's 9
facilities and was witness to the enormous behind-the-scenes effort that goes into investigating every 10
neighborhood complaint and enacting each independent expert's recommendations for strengthening our 11
already impressive safety culture, I can assure you CPI is far from unfeeling. The company protects its 12
employees and environment with an unflagging commitment to safety and takes community concerns 13
very seriously. We know that when our community is safe, our workforce is safe and vice versa. Thank 14
you for your time and attention. 15
16
Vice-Chair Gardias: Thank you, Ms. Mogen. Ms. Jennifer Johnson followed by Betsy Lake. 17
18
Jennifer Johnson: Good evening and thank you. My name is Jennifer Johnson and I'm a cofounder of 19
Canyon Snow Consulting in Los Gatos. We are part of the CPI team working on communications with 20
members of the community. And I'm also an environmental engineer with a Master's Degree that 21
focused on air pollution modeling, and so I thought I would take a moment to share some insight on 22
models that have been used to predict offsite impacts from the facility and to talk about how 23
conservative those models are. The reason I'd like to raise this topic is to recognize that one of the key 24
issues up for discussion is the length of time for CPI's plating operation to remain a neighbor to the 25
nearby Barron Park community. Some of the concerns of the neighbors are based on the possibility of a 26
harmful offsite impact. However, we can confidently say that there is no likelihood of an incident or spill 27
onsite that would result in a harmful offsite impact. As you may know, offsite impact studies were done 28
by a number of experts looking at different possible accident scenarios. One scenario with normal 29
operations showed no offsite impacts from a spill. One scenario modeled to take place during a chemical 30
delivery did show potential offsite impacts, but the model only took place when the outdoor temperatures 31
were higher than those temperatures at which CPI allows deliveries. So when the heat rises in, ambient 32
heat rises they don't allow the deliveries, so that actually is not a possible accident scenario. And then 33
the third scenario modeled an earthquake of an unknown but catastrophic size that even the City staff 34
agreed was unrealistic that did show an offsite impact. In other words, no reasonable scenarios that 35
were tested would show a harmful offsite impact from CPI, a spill at CPI. In addition to the unlikely 36
conditions I just mentioned, the models themselves are based on very conservative assumptions, and I 37
wanted to share examples of three of those with you. The first is that you put chemical properties into 38
the model, and one of the properties is vapor pressure which helps you predict how well a chemical will 39
evaporate from a liquid state into the air. In our case, the actual vapor pressure of the chemicals used at 40
CPI is lower than the vapor pressure used in the model, and so the models over-predict the amount of 41
vaporization and the amount of offsite impact that would happen from a spill. Second, weather 42
conditions are put into the model, and in this case the ambient air temperatures during a potential spill 43
are assumed to be over 90 degrees and the speed of the wind is assumed to be lower than what is 44
normal for this area. And the importance of that is that high winds would dissipate any cloud or plume 45
and reduce the impacts. So under these modeling conditions, the plume would stick together better than 46
and more than what would be realistic. Finally, the third example. The modeling exercise assumes that 47
a spill would occur outdoors, and that the total amount of chemicals stored onsite would become entirely 48
and instantly spilled in a puddle on the ground. In reality, the chemicals are stored in baths and closed 49
vessels indoors. The baths, if they were to fail, would spill onto the floor which is structured like a strong 50
mesh. Any spillage flows through the mesh into collection pipes and into closed tanks below the floor, so 51
none of the predicted evaporation or the perfect cloud would even have a chance to materialize or 52
migrate anywhere. And it's also worth noting that since the Loma Prieta earthquake where no releases 53
occurred there have been even further retrofits put in place. So I share all this with the hope of a better 54
understanding that some of the fears are based in part on very conservative and very unlikely modeling 55
and scenarios. And very much appreciate the chance to share that tonight. 56
City of Palo Alto Page 7
1
Vice-Chair Gardias: Thank you, Ms. Johnson. Ms. Betsy Lake followed by Bob Moss. 2
3
Betsy Lake: Good evening. I'm Betsy Lake, the last of the CPI contingent tonight. I am a former 4
resident of Palo Alto, graduate of Stanford Law School, and I'm now with Holland and Knight in San 5
Francisco, and we represent CPI. And I believe you've received my letter in your packets. And as stated 6
in that letter and as acknowledged by the City staff, CPI has legally vested property rights in this facility 7
in CPI in Palo Alto. And as noted by Tom, CPI is ready to defend them vigorously. CPI has not found 8
there to be a rational basis that supports the Tier 2 Zoning Ordinance but, as Tom also stated, CPI is 9
working with the City to try to achieve a reasonable settlement. And that really all revolves around 10
amortization. It revolves around how much time CPI has to come into conformance. And as I discussed 11
in my letter, I think there's lots of reasons why the proposed amortization schedule should be extended, 12
and the current Amortization Ordinance proposal is not legally sufficient. First, the City's existing 13
Amortization Ordinance is set at 15 years from the date the Ordinance is passed. And this proposal 14
would allow only 10 years for the plate shop chemical uses. Second, the proposal to provide less than 15
the minimum number of years is unprecedented in the City of Palo Alto. The City has only granted 16
extensions. They have never shortened the amortization time period. Third, the City's experts admit that 17
the 2026 date isn't valid if there's been additional improvements to the plating shop, and there have been 18
additional improvements. And then finally, it, the City's amortization study focuses only on one portion of 19
the site, the plating shop, and the City's experts acknowledge that the plate shop is integral to CPI's 20
operations and if the entire operations were to be amortized, that time period would run to 2052. That 21
said, we have started on behalf of CPI talking to the City about coming to agreeable settlement terms, 22
and we encourage the Planning Commission to in turn encourage the City and the parties to continue 23
those settlement discussions and to extend the amortization period so as to avoid a protracted and 24
expensive legal process which frankly would be good for me, but I think the outcome of a settlement 25
agreement would provide a great deal of certainty to the City, CPI and the stakeholders that would be 26
valuable. So thank you very much. 27
28
Vice-Chair Gardias: Thank you, Ms. Lake. Mr. Bob Moss. 29
30
Bob Moss: Thank you and I'll start out by saying that I've had decades of experience working with 31
hazardous and toxic materials, many of which are a lot nastier than anything that CPI uses, and so I'm 32
very well aware of the risks that you encounter when you have these kinds of materials onsite. So the 33
first question is do we need to tighten up our Ordinance, and I think absolutely we do. I think the 34
Ordinance that the staff is recommendation, recommending is reasonable, and I think we should start, 35
the first thing we should do is say yes, we have to have a tightening of the way we allow the use of 36
hazardous materials, especially right adjacent to residential areas. And by the way, it's not just 37
residential. A couple of blocks away we have a school. If we happen to have a spill at the time when 38
there's a relatively high wind coming from the north, we can have that toxic material come down over 39
Barron Park School, which is even nastier than just coming down on the homes. So we definitely have to 40
control what we put there and how we handle it. Now the first question, of course, is should we be 41
required, should we require CPI to amortize, and the answer is absolutely, there is no question. When 42
you have a risk to public health and safety, you are completely justified in amortizing out that use. Is 43
2026 a reasonable time? I think 2016 would be better, but if we're required to give them the extra time, 44
then we can go to 2026, but not 2027. The next question is how do we control what they're doing and 45
how they're doing it. Now it's kind of interesting. CPI claims that they have to have the plating lab 46
onsite, and they can't move it even 3 or 400 feet. We used to have parts plated in San Jose, in Fremont, 47
in Milpitas. We didn't have to have our plating lab onsite. We had a plating lab, this is talking about SSL, 48
but there were some things that we had to have plated elsewhere. It didn't bother us that it was being 49
plated 10 or 20 miles away. Saying that CPI absolutely must have their plating lab onsite and, oh by the 50
way, right next to the housing is absolutely inconceivable, completely unjustified. The next question is 51
how do we enforce this requirement, and I would suggest that if CPI doesn't move their plating facility at 52
least 400 feet from the residential area, that they be fined because they are creating a public health and 53
safety hazard, and the City can impose requirements when there is a public health and safety impact and 54
we have a risk to the health and safety of the people who live here. So I don't see any reason why we 55
should back off. I think we should be doing even more to make CPI safe and not creating an 56
City of Palo Alto Page 8
environmental hazard for the people who live in Palo Alto and particularly in Barron Park. I don't think 1
we should be risking the lives and the health and safety. CPI is saying they have all these controls in 2
place, but they've had three spills. One of them was a delivery truck. CPI doesn't control the delivery 3
trucks. We could have a delivery truck come in tomorrow and spill, and CPI would say oh, it's not our 4
fault. We didn't drive the truck. We just worry about what's on our site. That doesn't pay. Move 5
forward, approve the proposal the staff has suggested, and see if we can't justify amortization even 6
sooner than 2016. 7
8
Vice-Chair Gardias: Thank you, Mr. Moss. We have one more speaker card, Mr. Samir Tuma. You have 9
five minutes. 10
11
Samir Tuma: Good evening, Commissioners. Samir Tuma, 827 Chimalus Drive, a neighbor of CPI's. 12
This, you know, I remember several years ago when we started down this process, and at that time I 13
was sitting up there as a Planning Commissioner. And this first came to light, those of us who lived in 14
the neighborhood had no idea that it was there, and that came to light essentially because of an accident 15
that happened, that impacted our neighbors, made people sick. We have lived with this for years and 16
years and years. CPI is a master of delay here. They keep delaying. They want more studies. They 17
want more, you know, conflict of what the consultants say, and they try to obfuscate the issue and make 18
it difficult. It's really not that difficult. You have, you and the City Council and the City of Palo Alto have 19
an obligation to the residents to protect us. We have a hazard. It's very clearly a problem, and you 20
know we have, I think we've been incredibly patient. We've been told all along that the clock was 21
ticking, so yes, it was taking time, but the amortization had already begun. Now there's some question 22
about that. So it's really time to act. It's time to get this thing going, time to get it in place. CPI is going 23
to do whatever they're going to do from a litigation perspective. You can't back down. You've got to be, 24
you've just got to stick up to them and just do the right thing. You know, this is about the health and 25
safety of residents, and we've waited long enough. So please get this going, get it back to Council. Let's 26
get the Ordinance passed, and let's get them out of town. Thank you. 27
28
Vice-Chair Gardias: Thank you, Mr. Suma. I believe we're getting more speaker cards. So I just received 29
one more card, but apparently there is a couple more in the pipeline, so let's hear from Mr. Arthur 30
Liberman. And then we are awaiting additional speaker cards. Mr. Liberman, you have five minutes. 31
32
Arthur Liberman: Thank you. Good evening, Chair Fine and Commissioners. This story with CPI and the 33
residents of the City and residences has a long history. I think you're probably aware of that. I sent you 34
a long timeline, a two-page timeline before the meeting took, to fill you in on the history. I appeared 35
before this Commission ten years ago. Mayor Burt was the PTC Chair at the time, and maybe that has 36
something to say about your future political care. I don't know. But I do want to emphasize a few 37
points, first about the location of the CPI plating shop. If you look at that, one of the pictures that I 38
showed you which has an outline of where the CPI facility is and nearby residences, you can see how 39
close we are. We live really close to it, and much, close to the facility and specifically close to where the 40
hazardous materials are in the facility. When they sneeze, we catch cold. And Mayor Burt, himself the 41
owner for many years of a plating business in an industrial area in another city, said last November, and I 42
quote, "I would not want to be over the fence from this facility." Now CPI will tell you that they've 43
operated a plating shop there for many years. It is true that Varian had a plating shop, but that was built 44
at another time. That was before Bhopal. It was before EPCRA, the Emergency Planning and 45
Community Right-to-Know Act. It was before Barron Park became part of Palo Alto. We were 46
unincorporated Santa Clara County, and that was one mistake that was made to have allowed that facility 47
to be built. And another mistake, the second mistake, was to allow it to be rebuilt in the same place and 48
even more so without notifying us or informing us or consulting with us or having any kind of open 49
process. Mayor Burt also said at that meeting on November, last November, something rather very 50
important which I want to quote. He said, "We've become very, more urbanized in Palo Alto, and long 51
term it'll even be more so. We understand risks and incompatible uses better than we did." He went on 52
to say if we had hindsight, we wouldn't have done this sighting. So part of this meeting tonight or this 53
Ordinance is to redress that issue and that decision which was made some time back. I'm not going to 54
talk too much about the accident in 2006, except that it was the event that opened our eyes to what was 55
in our backyards and brought me to come to this, to the, to this issue, to investigate the issue and 56
City of Palo Alto Page 9
understand it. The investigation that the City carried out after that accident identified a number of 1
issues, inadequate process procedures, insufficient employee training, missing engineering controls. 2
Every accident is different. It's an accident. There was an accident recently, or not recently, a couple of 3
years after that first accident, in 2008, which was an acid spill that happened during delivery. Now CPI is 4
trying to be vigilant, but I'm sure that they would agree that not all circumstances can be foreseen, not 5
all conditions can be understood, and not all accidents can be prevented. Certainly natural disasters 6
cannot be predicted, and because CPI is so close, just one misstep with their toxic and highly toxic 7
materials would wreak havoc on our community. So if you turn over the page you can see a picture of, 8
that was taken from the internet of an accident involving a nitric acid spill at a plating business in 9
Massachusetts near a residential zone. And that indicates why it is so essential to have a buffer zone 10
between residents and toxic and highly toxic materials, and that's the first Ordinance from the staff that 11
is before you. Finally, let me just mention a few words about amortization. We'd like the CPI plate shop 12
to close or move now before something terrible happens, but the City Attorney says it can't be done 13
without due process. Amortization gives them due process. It gives CPI the time to obtain a full return 14
on their investment. Plating shops need to be rebuilt every 15 or 20 years. That's not me saying that, 15
that's Mr. Fickett who said that, he's the President of CPI, who said that publicly. So the 16
recommendation of the City's consultant estimating a 20-year economic play back, payback for its plating 17
shop when it was built is fair. And from our point of view, the clock has been ticking ever since that time 18
of 2006. So it should really not be a big hardship for CPI to rebuild or move their plating shop. Ten 19
years gives them plenty of time to restructure their process flow and their product fabrication. In 20
summary, we've come a long way since I was here ten years ago, but you need to act now. Vice Mayor 21
Scharff said at the meeting in November, "I don't really want it to be delayed where we have more and 22
more discussions forever without actually moving it forward." And that's exactly how we feel. It's really 23
time for it, the PTC to move this forward, follow directions indicated by the staff proposals and approve 24
them and move them to the Council. Thank you. 25
26
Vice-Chair Gardias: Thank you, Mr. Liberman. We like your comments about the Chairman and there is 27
more untapped talent here in the Commission and in the audience. So please come more often. Thank 28
you. We have one more speaker, Ms. Romola Georgia. You have five minutes. 29
30
Romola Georgia: Thank you. Good evening, Commissioners and staff. Hi. I'm Romola Georgia. I've 31
lived in the Barron Park neighborhood for 35 years, and I've been writing and speaking to you since 32
2007, after CPI released the toxic nitric acid fumes into our neighborhood. And today, I'm asking you 33
one more time to please make our neighborhood safe. I want you to know that the problems connected 34
with this facility are ongoing and various. We live daily with geysers of unknown vapors and alarms and 35
sirens and noisy trucks delivering toxic contents. Would anybody here, who's here tonight who wants 36
toxic and hazardous materials removed from our Palo Alto neighborhoods please stand up and give a 37
wave? There are a few of us here, great. Thank you all. And I, I'm feeling very grateful to the Council 38
and staff for its long work regarding risks and zoning and amortization. In this year of focus on our 39
community's sustainability, I believe a top priority is the health and safety of residents. The risks of toxic 40
and hazardous materials are a major impediment to a sustainable, resilient community. The reports 41
before you are certainly complex, but our Barron Park neighborhood sees the issue, I believe, with great 42
clarity. Operations that use large quantities of toxic materials and chemicals should not be located right 43
next to homes. The homes on our blocks are filled with live people including babies and young children 44
and seniors. Moving CPI's operations from an industrial area in San Carlos to just a few feet from our 45
homes was a most unfortunate mistake, and it's time to rectify that error, remove this danger from 46
Barron Park. The news shows us daily that earthquakes and industrial accidents are neither predictable 47
nor preventable. Please, please vote tonight to approve the Ordinances to change the zoning rules and 48
begin the process that will help CPI move its plating facility and all toxic and hazardous material away 49
from our homes. We've been petitioning you and waiting nearly ten years. Thank you. 50
51
Vice-Chair Gardias: Thank you, Ms. Georgia. I believe we have no more speaker cards. 52
53
Robin Ellner, Administrative Associate III: No more cards. 54
55
Vice-Chair Gardias: Thank you. 56
City of Palo Alto Page 10
1
Chair Fine: Thank you, everyone, for voicing your minds. We really appreciate the turnout tonight. I'd 2
like to turn it over to the Commission for a round of questions. Let's do five minutes each, and then any 3
comments you may have. Commissioner Rosenblum. 4
5
Commissioner Rosenblum: First just a question for staff. I want to clarify the purview of the PTC in this 6
matter, and there are a few things that I can see that are in the report that might be things that you 7
want us to comment on, but I wanted to clarify. The first is are you asking for whether or not the tiering 8
definition makes sense. So the representatives from CPI have challenged the definition of tiering, and so 9
question one is, is that on the agenda. Let me just go through these first, and then maybe you get an 10
answer for all of them at once. The second is whether or not CPI fits within the tiering structure if the 11
tiering structure seems appropriate. The third is an evaluation of the amortization schedule, and then 12
within that is whether there's reason to consider amortization for just the plate shop, is the schedule itself 13
fair. So in terms of guidance that the PTC can give back to Council, is there a particular area that you're 14
looking for us to concentrate on? 15
16
Ms. Gitelman: Thank you for those questions. I think the Commission understands that any time we 17
have a proposed Ordinance that proposes to amend Title 18, the Zoning Ordinance, the Code provides 18
for the Commission to review the Ordinance and make a recommendation to the Council. So just at a 19
high level, that's where we are. I think I indicated in my presentation, however, that we have been 20
working with the Council on this particular set of Ordinances for a long time and feel like we've gotten 21
very specific direction from them about what the Council's expectations are. So while they need your 22
recommendation to proceed, I don't know that they're looking for the Commission to rethink everything. 23
I think, you know, you could add value for sure with your questions and comments. I think particularly 24
on the Hazardous Materials Ordinance and the way we structure it around tiers and sensitive receptors, 25
that would be fantastic. But I don't think the Council is at this point expecting, you know, a whole, you 26
know, overturning of one direction and going in another. So I don't know if I got to all three of your 27
questions. Molly, you have anything to add? Okay, yeah. 28
29
Chair Fine: Any other Commissioners have questions? Commissioner Waldfogel. 30
31
Commissioner Waldfogel: Thank you. That wasn't for me, was it? A short five minutes. No problem. 32
Thank everybody for their presentations. I'd just like a clarification on page 19 of the packet, the Section 33
4 of the proposed Ordinance, (b)(2), just a clarification. Does this restrict residential improvements 34
within the 300-foot radius of the Tier 2 facilities? 35
36
Ms. Gitelman: I'm sorry. Could you help me find where you are? 37
38
Commissioner Waldfogel: It's page, I'm sorry, it's page 7, but it says P&TC packet 19 of 66, so this big 39
thing. Section 4, Part (b), development standards for exclusively residential uses, Number 2 and the 40
underlined part that says existing residential development within 300 feet. Let's see. No new residential 41
development is permitted within 300 feet of an existing hazardous Tier 2 materials use. 42
43
Ms. Gitelman: I found where you are. This is an excellent question. We've drafted this Ordinance to 44
make it, to ensure that there are no new sensitive receptors introduced within 300 feet of Tier 2 uses 45
when those sensitive receptors occur, when, in regards to residences when it occurs within the Industrial 46
Zoning District. 47
48
Commissioner Waldfogel: And what would trigger that? Would redevelopment, would a new kitchen for 49
example be triggered, would that be allowed under this? 50
51
Ms. Gitelman: Let me say right off the bat we haven't identified any residences that are currently within 52
300 feet of these Tier 2 uses that are within the Industrial Zoning Districts. So this rule about 53
nonconforming uses and you can't expand and you can't introduce new uses doesn't apply to the 54
Residential Districts that abut the industrial zoning. This is, we're only amending the Industrial Zoning 55
Standards. 56
City of Palo Alto Page 11
1
Commissioner Waldfogel: Thank you for the clarification. It wasn't clear from this text. 2
3
Chair Fine: Mr. Vice-Chair. 4
5
Vice-Chair Gardias: Thank you, Mr. Chairman. I have to time myself then, so rules are rules. I have 6
several questions, so please help me just with the distribution. So the first is related to the other 7
municipalities that might have a similar restriction, not necessarily tiering but pretty much just having the 8
boundary within the similar bracket between Title 19 and CUPA being applicable to the residential areas. 9
So could you give us example of some other municipalities, how they resolve this? I don't know if you 10
have them. So that would be my first question. We can just go through the other ones. 11
12
Ms. Gitelman: We have not identified another jurisdiction that has taken this approach of regulating a 13
tier between the CUPA and the Title 19, so we're forging new ground here. 14
15
Vice-Chair Gardias: The second question is about, just a moment. Is about the 300 feet perimeter, and I 16
believe this was, the reasoning was provided in the packet already, but if you could just clarify it for us. 17
What's the reason behind the 300-feet buffer zone between those facilities and the receptors? Why 300? 18
Why not some other, 200 or some other area? What's the methodology behind establishing this 19
(inaudible). 20
21
Ms. Gitelman: Certainly I'd be happy to respond to that. First, we have to recollect this is not the first 22
time that Palo Alto has embarked on a regulation around hazardous materials uses that is relevant here. 23
So back in 2007 when the Council initiated their desire to regulate hazardous materials uses, they created 24
this 300-foot distance between residential uses and what we're now calling Tier 3 uses. So when we 25
were charged with coming up with a minimum distance in this case, we used that earlier Ordinance as a 26
model. Basically we said, you know, back in the day if the Council was saying 300 feet was appropriate 27
for Tier 3, then it should be appropriate in this case for Tier 2. There's certainly no rationale to go larger 28
than 300. 29
30
Vice-Chair Gardias: And then the last question, I'm sorry. And the last question I had is about the 31
definition of the sensitive receptors that's on page 15 of the packet, that is paragraph, that's the 32
definition of the sensitive receptors. And I can just tell you that there's no need to go into the packet. 33
So pretty much businesses are not included in this definition, and that may be the case because there are 34
no residences, because it focuses on the residences. My question is like this, why office buildings are not 35
within this area of the safety zone? 36
37
Rod Jeung, AECOM: If I may, Vice-Chair. One of the reasons we started off with looking at uses that 38
might be affected besides just a residential in the residentially zoned properties which was previously 39
addressed in the existing zoning regulations is to recognize that there are certain populations that are 40
going to be more vulnerable to exposure to hazardous materials. And typically in environmental 41
documents, health risk assessments, you're looking at populations that might have immunities, might be 42
exposed easily and suffer consequences and compromised lung conditions. So we're looking at people 43
with asthma, children, residents, people in schools. Typically people in office buildings don't have the 44
same duration of exposure, and they typically have the air conditioning systems that allow the ventilation 45
and the exposure to hazardous materials to be obviated. 46
47
Vice-Chair Gardias: So if I may make comments, a couple of comments. So yes, that's right, but then 48
you can also foresee some other factors. Business is a concentration of the population and also during 49
the delivery hours and they may be exposed to those harmful vapors as well. So they may be subject of 50
the spill or some other incident. And then you're right, I mean, they have HVAC systems and others, but 51
regardless, right. My recommendation would be to include them just because that this is, that within 52
that, during the operation, during the time of the operations between 8:00 and 5:00, whenever CPI 53
operates, then pretty much you have the people are moving from their residences and just moving to the 54
businesses. That may not be the case. Maybe there is known business within the area, but that, there 55
may be a risk, right? So that's number one. Number two comment, and I'm already out, over my time, 56
City of Palo Alto Page 12
but I think that the Chair is granting me more leeway here. So keeping this 300 feet radius, I think that 1
if we may ask you to or if I may ask you just to take a look at the, what was the reason or calculation 2
behind this 300 feet that maybe there were different factors that were taken into consideration. So I 3
think that before, to have the final say of the radius, we would like to know there's some rationale, right. 4
Is it the wind? What was the rationale back then? Maybe there needs to be, it needs to be modified. 5
Thank you. 6
7
Chair Fine: Thank you, Vice-Chair. I have a couple of questions I'll go through also. So first of all, 8
they're kind of specific. Has the City undertaken any other site-specific amortization studies recently? 9
10
Ms. Gitelman: Certainly not recently, not that I’m aware of, no. 11
12
Chair Fine: Not in the past ten years or so? So this is the only one? 13
14
Ms. Gitelman: Not that I'm aware of. 15
16
Chair Fine: Have any other cities updated their Amortization Ordinance when it specifically affects a 17
single user or land use like this? 18
19
Ms. Gitelman: You know, I'm hesitating to answer just because I don't know the facts behind some of 20
the other amortization periods and situations we know about. We know, you know, that Mountain View 21
right over the border at one point amortized an industrial facility out in conjunction with a rezoning that 22
they did. So they were rezoning an area that was kind of industrial and mixed use to residential or some 23
other use, and so they gave the business a certain amount of time to leave. And then at some point the 24
business came and said we need a little more time. We need five more years, and they gave it, but there 25
was a kind of back and forth about what the period was going to be. I don't know, you know, what the 26
studies were that led to that, whether it was site specific or whether it was more general. So I'm afraid I 27
can't help you more than that. 28
29
Chair Fine: And then my last question is also about site specific amortization studies. The Ordinance 30
doesn't really have a quality threshold for those, does it? So I mean, what is the City of Palo Alto 31
considering such a study and should that be in the Ordinance? 32
33
Ms. Gitelman: I mean, I think basically an amortization study has to determine in a legally sufficient 34
manner what the value of the investment is and how long it would take the business owner to recoup the 35
value of that investment. So that's the philosophy or the thought process behind the study. And we 36
would, you know, need one that's prepared by someone who knows how to do this thing and that we 37
think would withstand a legal challenge. So I don't know that that needs to be in the Ordinance per se. 38
I think it goes without saying. 39
40
Chair Fine: All right. That's it for my questions. Let's turn to comments. And if anybody is interested, 41
one other thing I'd like to do this year is, we are able to make a motion at any time. So if you feel we 42
are ready at any time when we're discussing things, put a motion on the floor, and it will either die or 43
we'll talk about it. I see Commissioner Rosenblum. 44
45
Commissioner Rosenblum: I'll just make a comment. I feel, I'm taking to heart a couple of things. First 46
is Director Gitelman's comment that this has been a long time coming with Council. They spent a lot of 47
time going back and forth crafting this. From a statutory perspective, this has to go through the PTC, but 48
that Council at this point has given some clear direction about what they want to see. I feel like the 49
items of discussion are items of law that are going through a process with, between the City's lawyers 50
and CPI, and I'm not sure that we're here to open a hearing about amortization schedules, etc. I'd be 51
inclined to make a motion on this, but I'm going to wait to hear if there are any other comments first, 52
and then I'm going to come back and make a motion to accept staff recommendation unless one of my 53
colleagues persuades me otherwise. 54
55
Chair Fine: Commissioner Alcheck. 56
City of Palo Alto Page 13
1
Commissioner Alcheck: On the bullet point list of the presentation, it's the fourth, fifth bullet says while 2
moving forward with the two Ordinances, the Council's directing us to explore potential for an agreement 3
that would eliminate the CPI plating shop from the site sooner than provided for in the draft Amortization 4
Ordinance. Can we explore that? Is there, I mean, we have residents tonight who would like to see 5
them out tomorrow. Is there a fund that we can tap to create a financial incentive to encourage their 6
departure? Can we participate in, I'm exploring as requested. I guess what I'm trying to say is I feel 7
similarly with Commissioner Rosenblum, you know, that, you know, the Council wants us to move this 8
forward, and I don't feel particularly confident, I mean if the appointed expert felt that both the reports 9
regarding amortization were, what was their terminology? It's like the most vague. I want to get it right. 10
He said, yeah, I mean, yeah, the, gosh, not what I wanted. 11
12
Chair Fine: Please, they were good. 13
14
Commissioner Alcheck: Right, and you get my point. I guess what I'm trying to say is I don't feel 15
particularly confident in sort of suggesting any change to the Ordinance as its written, and so I feel more 16
comfortable moving it forward to Council to leave them with the responsibility of making this decision. 17
That said, they've asked for a discussion of potential alternatives of moving CPI out earlier. And based 18
on the presentation that CPI gave about amortization, it sounds like they're losing money here, that they 19
didn't expect to lose based on the schedule. They were hoping their investment would, I guess, provide 20
income for a greater period of time. So I'm just throwing this out there as an, one option, but are there 21
other ideas for how to, what was the language here? I'm all over the place tonight. You know, eliminate 22
the plating shop sooner than provided for in the amortization schedule. And my follow-up question, and 23
this is for my Commissioners as well, I mean, arguably the residents are interested in that, so are we 24
motivated enough to participate as a City on behalf of Barron Park to create the quote/unquote safer 25
environment that the Barron Park residents that are here tonight are interested in? 26
27
Molly Stump, City Attorney: So through the Chair, City Attorney Molly Stump. Perhaps I can help, 28
Commissioner Alcheck. So to clarify the Council's direction, the Council did want to move forward the 29
two draft Ordinances to this Commission for this Commission's input and recommendation in a timely 30
manner back to the Council. The direction to explore was really to the staff, and probably part of the 31
reason for that direction coming not to this Commission and its public process but to the staff is because 32
it does involve areas of legal risk. And so those explorations are underway, and that's happening really 33
at a staff level. I think the Council's direction to this Commission is to make sure that you help them to 34
keep the process moving by keeping these two draft Ordinances moving forward and back to them. And 35
we do have this date in February to do that, but the other process is running in parallel. 36
37
Commissioner Alcheck: So in response to that, I feel comfortable moving these Ordinances forward, but 38
I would encourage staff as directed by Council to work tirelessly to sort of come to some agreement. 39
And I say that because despite CPI's statements that the ten-year time period is too short, it sounds like 40
the residents feel very strongly the ten-year period of time is too long, and so I think there's potential 41
here. So I would, I am in favor of adding to our recommendation a note that we really do encourage our 42
City to potentially partner with CPI to come to an amicable result that everybody could be pleased with. 43
That's it. 44
45
Chair Fine: Thank you. Vice-Chair Gardias. 46
47
Vice-Chair Gardias: Thank you. I just want to come back to the comment about the offices, and I was 48
thinking about this whole paragraph, about the definition. I understand where you're coming from pretty 49
much. From perspective of just defining those that would be more susceptible to the, to any risk than 50
the general population, which my understanding doesn't align with your, the way that you're trying to 51
approach it because given that there's no general population definition, then it's going to be, this clause 52
will be in question, and then pretty much the risk may occur somewhere else, and then somebody else 53
may raise the flag and say look, I am part of the general population, they didn't think about me and so 54
forth. So for this reason, I would recommend and I will just, when there's going to be a motion on the 55
floor, I will just propose to change this to pretty much expand it to the, to any of those that are within 56
City of Palo Alto Page 14
the given proximity. And I have language that I can recommend to you for consideration, so pretty much 1
as opposed to those are more susceptible than the general population, I would propose that those whose 2
occupants may be susceptible to the adverse effects of exposure of toxic chemical and pollutants due to 3
the risk, due to the proximity of the location. This pretty much will just address the entire population 4
that is within the certain radius as opposed to just singling out certain occupancies. 5
6
Chair Fine: Thank you, Vice-Chair. Commissioner Alcheck. 7
8
Commissioner Alcheck: We don't have a motion on the table yet, but I just want to throw it out there 9
before ones come up. I'm sort of looking to Commissioner Rosenblum to make it. I'm not sure I'm 10
comfortable supporting an amendment to the proposed Ordinance simply because I think it's pretty 11
complicated, and I think it's laying the groundwork for a referenced discussion or negotiation. And so my 12
preference would be to support a motion endorsed or recommended this Ordinance without amendment. 13
I know you, there isn't a motion on the table and that's not necessarily an, or a proposal yet, so I just 14
wanted to throw that out there before one was made. 15
16
Chair Fine: Thank you. Commissioner Rosenblum. 17
18
MOTION 19
20
Commissioner Rosenblum: I'd like to make the motion and specifically in this case I am trusting that the 21
City in the negotiations with CPI is moving towards an amicable settlement and certainly hope that that's 22
the case. So I would make a motion that Council, that the two Ordinances as written by staff move on to 23
Council with PTC's recommendation. I don't see a particular need to add the qualifier and they should 24
look for an even faster settlement. I didn't necessarily see overwhelming, and neighbors certainly have 25
been patient, but it seems like in terms of legal options, there's been bookends from the minimum which 26
CPI disputes to a maximum which the City obviously disputes. And looking for something outside those 27
ranges, I'm just, I think is a bit of a wild goose chase. So the motion is for the two Ordinances to be 28
passed to Council with PTC's endorsement as they were written. 29
30
SECOND 31
32
Commissioner Alcheck: Second. 33
34
Chair Fine: So we have a motion on the floor from Commissioner Rosenblum, seconded by Commissioner 35
Alcheck. I'm going to take a moment to make a couple of comments. I agree with Commissioner 36
Rosenblum that we are not the Legal Department, we are the Planning Commission. In that case, that 37
means we need to think about the zoning implications here, particularly as they relate to public health 38
and safety. Commissioner Alcheck, you had a good question that Council was asking how we might do 39
this sooner. If staff is updating 18.70.070, the part about amortization studies, to include a part saying if 40
we've done a study, that's the clock, when the clock starts, why not just say, you know, do it in a year? 41
That is an option, so I'm just putting that out there. The, I think I'm going to support the motion. 42
43
AMENDMENT 44
45
Chair Fine: I'd like to make one friendly amendment. It's a few small things. Although I'm not in 46
support of saying all occupants may be susceptible to toxic, I would like to propose adding religious 47
facilities as sensitive receptors. I think the point of the sensitive receptors issue is to protect children and 48
the elderly. Religious facilities often have those groups. And then there's also many references to single-49
family and two-family, shouldn't we just say residential? So my amendment would be to add religious 50
facilities as sensitive receptors and instead of saying single-family or two-family, just say residential uses. 51
52
Commissioner Rosenblum: I accept the friendly amendment. 53
54
Chair Fine: Commissioner Alcheck? 55
56
City of Palo Alto Page 15
Commissioner Alcheck: I will accept the friendly amendment, but I'm not entirely sure I understand the 1
rationale behind expanding the receptors element of this, but I feel confident that staff could 2
communicate our support for the Ordinance and that the City Council will figure this out. 3
4
AMENDMENT ACCEPTED 5
6
Chair Fine: Director Gitelman. 7
8
Ms. Gitelman: If I could interject particularly on the question about residential uses. I think you're 9
reacting to, I'm looking at packet page 16 of 66. What you see here is the table of uses that are allowed 10
in these Industrial Districts, and like in other zoning districts, this table differentiates between single-11
family, two-family and other residential uses. So this is kind of a function of the way our Code is 12
structured, and so it would be difficult to make that change. The change about religious institutions, you 13
know, we would really have to analyze what the implications would be for the Ordinance. I don't know 14
whether there would be any religious institutions within the 300 feet of any of the other uses, so that 15
would take some additional effort to determine whether that's a change that has meaningful import or 16
not. 17
18
AMENDMENT WITHDRAWN 19
20
Chair Fine: Then I think I would withdraw my friendly amendment and just ask staff to explore the 21
implication of adding religious facilities as a sensitive receptor. It's to you, Commissioner Rosenblum. 22
23
Commissioner Rosenblum: So from a process standpoint, we go back to the original motion and subject 24
it to a vote. Is that correct? 25
26
Chair Fine: I would, the original motion, I withdrew my first friendly amendment, and I'm putting a 27
second one forward about just asking staff to explore religious facilities for Council's ... 28
29
Commissioner Rosenblum: So we're back to the original motion. Is that correct? 30
31
Chair Fine: Yes. Vice-Chair. 32
33
Vice-Chair Gardias: Thank you. So just based on this, what I was discussing previously, I'd like to just 34
propose a friendly amendment that, to include offices. And then based on the discussion, it may be of 35
the same nature pretty much, a recommendation to the staff to analyze what would be impact of 36
including offices within this group of the sensitive receptors. 37
38
Ms Gitelman: To the Chair, you know, of course it would take analysis to give you specific implications of 39
what that change would be, but I'd like to point out that we're talking about regulating facilities that are 40
within Industrial Districts where office use is a common occurrence. So I anticipate that we would find 41
that such a change would materially affect the impacts of this Ordinance and make it very difficult to 42
administer, potentially implicating a lot of these other Tier 2 uses. And now again, I can't say that with 43
certainty, but it would be, I think, a material change. 44
45
Vice-Chair Gardias: I totally understand. For this reason, I will not be, based on the discussion that my 46
colleagues just had, right, so I understand there could be material impact on this. But nevertheless, 47
right, that's an area I think of a risk, and then we need to just address it one way or the other. 48
49
Chair Fine: So we have a motion on the floor that the PTC endorses the two Ordinances and direct ... 50
51
Vice-Chair Gardias: I have one more. 52
53
Chair Fine: One more (inaudible)? 54
55
AMENDMENT 56
City of Palo Alto Page 16
1
Vice-Chair Gardias: Yes. I have, so that was recommendation to the staff, right. But I have amendment 2
to make which is pretty much to include in the language to look at the 300, methodology behind 300-feet 3
radius and include the language in the Ordinance that is, that supports the 300-feet radius and that may 4
be pretty much the 300-feet radius or other ones calculated as and then blah, blah, blah, just spelling out 5
the methodology behind the calculation. When you're going to look at it, it might, the radius may change 6
which of course it's not going to affect the selection of these three facilities, but may affect other future 7
locations. You may decide after analysis to change the radius to make it smaller or larger. 8
9
Chair Fine: Commissioner Rosenblum. 10
11
Commissioner Rosenblum: So just point of order. I'm not sure what, where we are in this. Are you 12
proposing an amendment to the motion? Are we ... 13
14
Vice-Chair Gardias: That's correct, yes. 15
16
Commissioner Rosenblum: So from my perspective, there's no reason to include this as an amendment 17
to the motion. If you want to direct staff to additionally elucidate Council as to why 300 was the number, 18
then I think that's perfectly appropriate, but I don't think it has, it isn't really part of the motion. And I 19
don't think that we have sort of staff recommendations of further study as part of the motion. 20
21
Vice-Chair Gardias: So the reason behind this is that when they look at that definition methodology that 22
was established several years ago, they may find it's not supported today. And then someone may come 23
later on and just pretty much challenge us with just providing the number that's not truly properly 24
researched. So for this reason, I would like to just have it as part of the motion because if we're going to 25
just let it flow with the number that's not truly scientifically supported, we just expose ourselves to risk. 26
So for this reason, I would like to have it as part of the motion. 27
28
Ms. Stump: Through the Chair, if I may. Thank you, Vice-Chair Gardias. So this is a complicated area 29
technically as well as legally and from a policy standpoint. And it's my understanding, our expert can 30
help me if I'm wrong, that the chemical substances proposed to be regulated here have a variety of 31
properties. And so really it's a policy decision, and it probably does not have the level of precision that 32
you're thinking it may have, in part because we are talking about a general rule that can be understood 33
by businesses and residents that needs to apply to a whole class and category of chemicals. So I suspect 34
that when we look at this, we will be seeing something much more general about reasonable protective 35
buffers as opposed to a specific numerical formula. 36
37
Vice-Chair Gardias: I totally understand this, but then still, right, that there is a, then there may be some 38
reason behind this that's physically calculated, and then there is some reason buffer that's added to this. 39
So pretty much for, I think that this is worth just making an effort and just taking a look at this, what was 40
defined many years ago. 41
42
Chair Fine: I think that is a friendly amendment. It's to Commissioner Rosenblum. 43
44
AMENDMENT NOT ACCEPTED 45
46
Commissioner Rosenblum: I don't accept this as a friendly amendment for the reason I stated. I'm very 47
supportive of you giving in the notes recommendation to staff to pursue this and to give more direction 48
to Council, but I don't see it as part of this motion. 49
50
Chair Fine: Commissioner Alcheck. 51
52
Commissioner Alcheck: Agree. 53
54
Chair Fine: So we have a motion on the floor that the PTC endorses the, Vice-Chair. 55
56
City of Palo Alto Page 17
AMENDMENT 1
2
Vice-Chair Gardias: So I'd like to try again, and then just propose it as a not friendly amendment for the 3
vote. 4
5
AMENDMENT FAILS 6
7
Chair Fine: Do we have a second for the Vice-Chair's unfriendly amendment to look at the methodology 8
behind the 300-foot radius and include language in the Ordinance that supports the radius? I see none. 9
Back to it. We have a motion that the PTC endorses the current two Ordinances as written by staff, and 10
that the Council pass them, or the Council explore them. And then the friendly amendment to that is that 11
staff explores implication of adding religious facilities as a sensitive receptor. Commissioner Rosenblum, 12
do you want to speak to your motion? 13
14
Commissioner Rosenblum: Sorry. I don't think that there was a friendly amendment as you just 15
mentioned. I think that was withdrawn by you. Is that correct? 16
17
Chair Fine: I thought we had gone through it twice, but I'm willing to leave it off. I think it is in the 18
record at this point. 19
20
Commissioner Rosenblum: It was a recommendation that staff research the implications of religious 21
facilities. That's not, you mentioned friendly amendment, so I wanted to make sure it's not an 22
amendment to this motion. 23
24
Chair Fine: So the motion is just clean. 25
26
Commissioner Rosenblum: Yes. Motion is that we, the PTC supports the two Ordinances as written by 27
staff to go through to Council for them to consider passing. 28
29
Chair Fine: Commissioner Alcheck, do you want to speak to the motion? 30
31
Commissioner Alcheck: I don't have much to say except to encourage a speedy and amicable resolution 32
to this process, and I hope that we achieve it. 33
34
VOTE 35
36
Chair Fine: All right, let's vote. All in favor. All against, none. 37
38
Commission Action: Commissioner Rosenblum moved to approve staff recommendations second 39
by Commissioner Alcheck. Passed 5-0-2 with Commissioners Downing and Tanaka recused. 40
41
Ms. Gitelman: Thank you, Commissioners. 42
2
In 2006, an industrial accident at CPI released nitric acid fumes that wafted over the homes on
Chimalus and Tippawingo. The investigation revealed that it was caused by a combination of factors:
carelessness, inadequate process procedures, poor employee training and a lack of engineering
controls.
That’s when I became involved. I am a retired physicist and a resident on Chimalus Drive. At one time
I was the Engineering Manager of a division of a large multinational corporation. Our division made
vacuum electronic devices, similar in many respects to the vacuum electronic devices that CPI makes
in Palo Alto.
I attach a two page detailed timeline with significant events that happened, year by year.
The words written in red in the timeline indicate an initiative by residents. You can see that over this
period of time, residents have worked with:
the Palo Alto Fire Department to request unannounced inspections and to insure that CPI
complies with the Fire Code by installing an emergency generator;
with CPI to request that they find more secure locations for hazardous materials and install
toxic gas sensors;
with the County which was responsible for overseeing the CalARP program to insure
regulations were followed; and
with the City Planning officials to demonstrate that the juxtaposition of plating shop with
houses or other sensitive receptors poses a risk to residents and is incompatible with good
zoning practices in Palo Alto.
Some key points from the timeline (labelled with numbers in red, circled in red):
1 In 2004 and 5, CPI rebuilt their plating shop.
When CPI applied to rebuild its plating shop a few years before the accident, the City did not consult
with residents. We weren’t even notified! There was no environmental review. At that time, Palo Alto
had a different City Manager, Planning Department and Fire Marshal. CPI, for its part, did not reach
out to neighbors – it was a stealth operation.
I have been told that some highly regarded experts in the plating industry advised CPI management
at the time to not rebuild it in the same place. Instead, they advised CPI to rebuild it on the other side
of their property, away from residents’ homes. These experts were well versed in both plating
technology and land use zoning. They were aware of the rapidly increasing concern in the public
about chemical accidents involving hazardous materials, and also aware of the subsurface
contamination in areas of Barron Park and elsewhere in Palo Alto caused by leaking containers of
volatile organic compounds at a number of places in the Research Park.
But CPI management said no - it would be too expensive. CPI’s management put its short term
financial interests ahead of the welfare of our community. The situation would have transpired
differently had CPI listened to those experts. The ordinances before you are the consequences of
CPI’s ill-advised management decision.
3
Merely because the plating shop had been there previously was not a reason for it to be rebuilt in the
same place. Homes were actually on Chimalus long before Varian (precursor to CPI) built its plating
shop. That happened at a different time, when Barron Park was unincorporated Santa Clara County,
and the two jurisdictions did not communicate. A project review in 2004 would have revealed the
changing land uses in the Research Park and in Palo Alto and the tightened regulatory policies – at
Federal, State and City level - focused on greater scrutiny in the siting for facilities with large
amounts of extremely hazardous materials. At the City Council meeting last November, in
commenting on the change in times and new perspectives for hazardous material facilities, Mayor
Burt said: “We understand risks and incompatible uses better than we did. If we had hindsight,
we wouldn't have done this siting.”
2 In 2006, an industrial accident at CPI released toxic nitric acid fumes.
Until that accident occurred, neither I nor my neighbors were aware that CPI was consolidating its
hazardous materials operations in Palo Alto from its previous location in San Carlos, and rebuilding
its Plating Shop directly behind homes on our street. We had been kept entirely in the dark.
With a little research after the toxic fume release accident, we learned that CPI had an enormous
inventory of extremely hazardous material on its site. Some was stored in outdoor sheds outside
along the fence wall with residents. For a number of years, CPI’s plating shop was the only site in
Palo Alto with quantities of materials (nitric acid and potassium cyanide – both high toxic materials)
above the thresholds in the State of California Title 19/ California Accidental Release
Program(CalARP).
Moreover, CPI designed its plating operation so that tanker trucks full of acid make deliveries in the
narrow driveway between its building and our homes. CPI has lowered its inventories of hazardous
chemicals on its site, but they have increased the frequency of deliveries. During one such delivery in
2008 a significant amount of hydrochloric acid was spilled. The AECOM independent consultant hired
by the city said, in the report released in 2014, that the vapors from an accident involving nitric acid
delivery would have very serious repercussions to our health. Worse things could happen, it says, if
acids and cyanide materials would somehow mix, such as in a catastrophic earthquake.
3 In 2010, Palo Alto City officials authorize Amortization study
In 2010, new leadership in the City recognized the problem: the juxtaposition of a plating shop with
the largest amount of extremely hazardous materials in Palo Alto located just on the other side of a
fence from residents. The City sponsored an independent Amortization study by CB Richard Ellis, a
respected Real Estate firm in San Francisco. They were charged to determine the length of time
required for CPI to recoup its financial investment in the plating shop. The report was released in
2012. It says that CPI would recoup its investment in 20 years from 2006 when CPI says its
investment was complete and the facility was operational.
4 In 2015, Palo Alto City Council approved the Staff proposal for new ordinances
By doing so, our City - both Council and Staff - has come to the understanding that this type facility
should not be located so close to homes. The current situation poses a risk to nearby residents and
is incompatible with good zoning standards and current zoning practices. Already residents have
been patient, working very hard with all parties for 10 years, trying to be cooperative, to find a way
forward. Let’s not put this off any more. As Vice-Mayor Scharff said at the November C ouncil
4
meeting: “ I don't really want it to be delayed where we have more and more discussions
forever without actually moving forward.”
In Summary – we ask the PTC to approve the zoning ordinance that would make CPI’s plating shop a
non-conforming use and the ordinance to amortize it
Arthur Liberman
751 Chimalus Drive
1
Ellner, Robin
From:David Boxerman <dboxerman@yahoo.com>
Sent:Wednesday, January 27, 2016 5:02 PM
To:Planning Commission
Cc:David Boxerman
Subject:Amortization of CPI and zoning changes
Dear Committee members, You have reviewed the details concerning CPI and its dangerously close proximity to residents on the other side
of the wall and beyond. Hopefully you will move forward with a plan to amortize their facility and also change
the zoning issues related to dangerous operations adjacent to residential property.
We moved here long before CPI moved its San Carlos operations to Hansen Way. The City approved this move without notifying adjacent residents, and essentially helped create the dangerous situation we live with every
day. It's the City's responsibility and obligation to rectify the situation. We would like CPI out of here NOW,
but since that's not very likely, they need to be gone ASAP. And don't let CPI's legal threats scare you into
backing down;. If CPI truly cared about the City's residents, they would move their operations to a safer location, even if only 300'.away from residents. But they have no plans to do that unless required to, because PROFIT is their
concern, not the welfare of people. Their executive, Mr. Fickett, stood before a crowd of angry residents at
Barron Park School about 7 years ago and told us: "It would cost us $40,000,000 to move, and WE'RE NOT
MOVING!" His words still ring in my ears whenever CPI comes up in a conversation. Two concluding points....
1. CPI objects to any amortization, yet there is a useful life span of their facility and equipment. If they were
truly 'good' neighbors as they portray themselves, why wouldn't they begin the process sooner rather than later, at less expense than waiting until everything is outdated and presents an even higher risk to neighbors and their employees? The answer?: Dollars matter,more than people. It really is all about money, profit, and greed. It's
not about being a responsible corporation like Varian or HP.
2. Knowing what you've learned over the months about CPI's dangerous materials present on its property, answer this question honestly: Would YOU want to live as close as 100', or 200' or even 300' from CPI and risk exposure to the dangers CPI presents? I don't imagine you would. So here's your chance to do something
about a situation the City helped create. Don't be intimidated by CPI's lawyers. Stand up to them and stand
behind the residents that have stood behind you since this issue began almost a decade ago.
We, the neighbors, have done all that we can. Now it's your turn to do the right thing. It's your responsibility.
David Boxerman
3470 Tippawingo St.
1
Ellner, Robin
From:Lilian Marcus <lilianmarcus1@gmail.com>
Sent:Wednesday, January 27, 2016 4:48 PM
To:Planning Commission
Subject:Amortization of CPI
I live on Chimalus Drive, but more than 300 feet (I think) from the building with the toxic materials. I am very concerned about the danger of someone being harmed, so I really believe the CPI should not be allowed to have
the plating shop there.
Please support the neighborhood by insisting that they stop it.
Best regards, Lilian Marcus
1
Ellner, Robin
From:Mark Steres <msteres@awattorneys.com>
Sent:Thursday, January 21, 2016 5:17 PM
To:Planning Commission
Cc:Stump, Molly; Gitelman, Hillary; Lait, Jonathan; Silver, Cara
Subject:Letter re January 27, 2016 PTC Meeting - Agenda Item #3 - Ordinances re Hazardous
Material Users and Amortization Schedule
Attachments:20160121170736567.pdf; 0511_001.pdf; 0512_001.pdf; 0513_001.pdf; 0514_001.pdf
Chairman and Members of the Planning and Transportation Commission, on behalf of Communications & Power
Industries LLC, please see the enclosed correspondence and attachments relating to Item #3 on your Agenda for the
January 27, 2016 meeting. Thank you for your consideration.
Mark Steres
Aleshire & Wynder
Office 310 527‐6672
1
Ellner, Robin
From:Markus Fromherz <markus@fromherz.us>
Sent:Monday, January 25, 2016 8:29 AM
To:Planning Commission
Subject:Statement to support the proposed zoning ordinances on hazardous materials
locations
Dear Planning and Transportation Commission, The Board of the Barron Park Association supports the Barron Park residents who live near CPI and ask you to
approve the two ordinances before you on January 27: to create a buffer zone between residents and sites with
Toxic and Highly Toxic materials and to Amortize the CPI Plating Shop.
About a decade ago, CPI made a corporate decision to consolidate its hazardous materials activity at the very
back of its property on Hansen way, virtually in the backyards of Barron Park Residents who live on Chimalus
and Tippawingo. Residents were unaware of this at the time.
Soon after, an industrial accident at CPI released toxic nitric acid fumes that spread into neighborhood. During a delivery of acids in 2008, which take place in a narrow alleyway between CPI’s Plating Shop and the backyards
of residents, a significant amount of hydrochloric acid was spilled. Palo Alto hired an independent consultant to
evaluate this and other risks to residents from the hazardous materials in the CPI Plating Shop. Their report,
released in 2014, said that an accident during nitric acid delivery could cause serious health consequences to residents living nearby. Worse things could happen, they stated, if acids and cyanide materials would somehow mix, such as in a catastrophic earthquake.
So much extremely hazardous material so close to residents’ homes is inconsistent with good zoning practices.
The City Council, in their meeting last November, recognized this. Plating is an intrinsically messy and dangerous process. It involves extremely hazardous materials. The City has identified CPI as one of the sites in Palo Alto with Toxic and Highly Toxic chemicals within 300’ of residents, and the Council voted last
November to change the zoning to make such sites a non-conforming use and, in a separate ordinance, to phase
out the CPI Plating Shop over time.
The phase out, through amortization, would happen after a number of years, at a point when CPI would have received a full return on its investment in its Plating Shop facility. To determine this time, the City sponsored a
study in 2010 by an independent consultant, CB Richard Ellis, a Real Estate firm in San Francisco. The report,
released in 2012, stated that a reasonable time would be 20 years from the time when CPI invested in rebuilding
the Plating Shop, which was in 2006.
The neighbors of CPI have been trying for many years to have the City of Palo Alto take action to remove the
CPI Plating Shop and the large amounts of extremely hazardous materials. During all this time, the Board of the
Barron Park Association has supported these efforts, and we continue to do so. We urge the Commission to
support the two proposed ordinances from the Staff at your meeting on January 27. Sincerely,
Markus Fromherz
President, Barron Park Association
1
Ellner, Robin
From:Reine Flexer <reine13@gmail.com>
Sent:Wednesday, January 20, 2016 3:16 PM
To:Planning Commission
Subject:Dangerous materials too close to residences -January 27th meeting
Hello,
Please allow me to share some information re the texts you will review on January 27th. The subject may be
new for some of you, but residents in Barron Park have been following the issues for many years and have been
concerned about the delays. I am: Reine Flexer at 595 Matadero avenue, a block south or Chimalus, which borders the CPI plants.
CPI keeps their tanks of dangerous chemicals just behind the residents fence. I believe that CPI workers are
very sincere when they say they follow safety measures carefully, however, following an earthquake or not,
accidents can happen and would be disastrous, people could even die. The present draft would also prevent OTHER companies from moving inside the city with highly toxic material, and current companies would not be allowed to increase such material beyond a dangerous limit.
Your coming meeting is a followup to the City Council's unanimous decision last November to authorize the
Planning Department Staff to draw up two ordinances: one that would modify zoning codes for sites using toxic and highly toxic materials near residences, which would make the CPI Plating Shop a 'non-conforming use', and a second that would amortize the CPI Plating Shop (require it to close after a certain number of years, when CPI
has obtained a full return on its investment, as determined previously by a City authorized consultant.
Many of my neighbors agree with me. Please support the City staff proposals and vote for both ordinances. Thank you,
Regards,
Reine Flexer
1
Ellner, Robin
From:Romola Georgia <rgeorgia@yahoo.com>
Sent:Tuesday, January 26, 2016 2:50 PM
To:Planning Commission
Cc:Gitelman, Hillary; Art Liberman
Subject:Rezoning and Amortization
As a long-time Palo Alto resident, a Santa Clara County Master Gardener, and a member of the
Barron Park Green Team, I urge you, at your January 27th meeting, to support the City Staff’s
proposal for two ordinances:
first, to require a buffer between residents and sites that use and store toxic and highly toxic
materials
second, to begin the amortization of the CPI plating shop.
These ordinances were drawn up following a unanimous vote in the City Council last November and
are very important to the health and safety of Barron Park residents.
Hazardous Materials and Plating Shops should not be right next to families and children. Toxic
releases and spills have proved that allowing the consolidation of CPI plating shop, with its large
inventory of highly toxic materials, was an unfortunate error. Palo Alto residents receive notification
when any project will impact our homes and neighborhoods, but no notice was given of this
consolidation. Mayor Burt said in November at the City Council meeting: “I would not want to be over
the fence from this facility.” I personally never forget that the plating shop is on the second floor of
Building 2 and we are very close to major earthquake faults.
This issue has a long history. Since 2006, the Chimalus neighbors have worked tirelessly to reduce
the risks to residents and resolve the looming threat of some grave accident or natural disaster at CPI
that would endanger the health and safety of our neighborhood.
I spent last Sunday afternoon at Palo Alto's Sustainability and Climate Action Summit working
with other Palo Altans to plan for a sustainable and resilient future. I urge you to take a big step
toward that future by approving these ordinances and making our neighborhood free from toxic
dangers.
Please review the background information and timeline provided by Art Liberman and and then vote
to approve the zoning ordinance that would make CPI’s plating shop a non-conforming use and also
to approve the ordinance to amortize the plating shop. Thank you for your attention.
Sincerely,
Romola Georgia
XXX6484
City of Palo Alto (ID # 6618)
City Council Staff Report
Report Type: Action Items Meeting Date: 2/29/2016
City of Palo Alto Page 1
Summary Title: Cool Block Small Pilot Program
Title: Agreement with Empowerment Institute on Cool Block Small Pilot
Program (Continued From February1, 2016)
From: City Manager
Lead Department: City Manager
Recommendation
Authorize the City Manager to sign the attached Cool Block Pilot Memorandum of Understanding
between the City of Palo Alto and Empowerment Institute.
Background
In 2012 the Council authorized the City Manager to sign a Letter of Intent (LOI) to participate in
the Cool Cities Challenge being organized in implemented by David Gershon, the Empowerment
Institute, and its partner organizations (Attachment A).
That “Challenge” has been modified slightly to the Cool Block Pilot Program, which is the
subject of the attached MOU (Attachment B). While one interpretation would be that the City
Manager could sign this new MOU on his own authority, based upon that prior direction,
Council re-authorization is being sought because:
The Cool Block Pilot is in a slightly different form that the earlier proposal, although the
concept is similar.
The Pilot involves a process of neighborhood engagement of between 10-30 city blocks
and this Consent Item informs the Council and community of that intention.
The earlier LOI included the following language: If the Council approves the LOI, and as
staff learns of EI’s success in fundraising, staff will return to Council with a process to test
community interest through targeted outreach to key stakeholders and some method of
surveying household interest.
The Cool Block Pilot is a program that will require relatively little staff time over the next 12-14
months but will secure enough assistance from the Empowerment Institute to test the
effectiveness of this block-based engagement effort to accelerate household and neighborhood
action on climate change, resiliency, social connectedness and growing the green economy. As
City of Palo Alto Page 2
the details below lay out, the results of the pilot will shape the formal competitive RFP to later
be issued by The Empowerment Institute, which will provide significant funding and support for
a broader city-wide Cool Cities Challenge (still using the block as an organizing basis). We may
again decide to participate in that competition, as The Empowerment Institute has now secured
funding to advance that program. Again, participation in this pilot program in no way obligates
the City to further participation nor does it guarantee our automatic selection.
In any case, the City may independently learn some important lessons from this pilot. The core
component of our role will lie in the identification of the pilot blocks and helping to identify and
recruit block leaders, in up to 30 blocks.
Further Detail form the Attached MOU
The Cool Block grows out of a vision to reinvent our cities from the bottom up in the age of
climate change to help people adopt low carbon and environmentally sustainable lifestyles,
disaster resilient and livable neighborhoods and collaborate together as neighbors and citizens.
It builds upon David Gershon and his Empowerment Institute’s decades of experience
furthering pro-social behavior change and community engagement throughout America and the
world. It does this through a nine-meeting, 4 1/2-month program co-led by a group of
neighbors living on a block or in a building. Participants in the program select from a menu of
112 action recipes. Some actions are done as individuals and others are
Attachments:
Attachment A: Staff Report October 2012 (DOC)
Attachment B: TCB MOU Between CoPA and EI (DOC)
City of Palo Alto (ID # 3170)
City Council Staff Report
Report Type: Action Items Meeting Date: 10/22/2012
City of Palo Alto Page 1
Council Priority: Environmental Sustainability
Summary Title: Cool Cities Challenge
Title: Approval of Letter of Intent to Participate in Cool Cities Challenge
From: City Manager
Lead Department: Public Works
Recommendation
Staff recommends that Council authorize the City Manager or his designee to sign
the Letter of Intent to participate in the Cool Cities Challenge (Attachment A)
being organized and implemented by David Gershon, the Empowerment Institute
and its partner organizations.
Background
David Gershon, author of the Low Carbon Diet, co-founder of the Empowerment
Institute (EI), and a leading social change practitioner, has visited Palo Alto on
several occasions in preceding months to invite our participation in the ambitious
Cool City Challenge (CCC) community engagement program. This has led to the
current invitation to Palo Alto to formalize this potential working partnership
through a Letter of Intent (LOI).
The purpose of the CCC is to scale up a proven community-based social
innovation to achieve dramatic greenhouse gas emission reductions in three early
adopter American cities and three neighborhoods in San Paolo, Brazil of
comparable size to the American cities, and then disseminate this model
worldwide. The ultimate goal of the CCC is to develop a scalable social innovation
capable of making a dramatic change to retard climate change.
With international climate change legislation failing to get traction in adoption or
City of Palo Alto Page 2
implementation, and the long timeframe required to scale up technological
solutions, there is a need now for viable and scalable strategies for addressing
global warming. Cities represent 70% of the planet’s CO2 emissions and in
developed countries citizens’ daily lifestyle choices represent at least 50% of
these emissions with huge opportunities for efficiency. This provides the potential
for a high leverage opportunity to address global warming if cities can achieve
substantial behavior change among its citizens by taking individual behavior
change to a communitywide scale. Further, this could serve as a demand-side
driver for local green economic development.
The Empowerment Institute—a leader in environmental behavior change and
community engagement—over the past two decades has developed a
methodology to help cities empower citizens to reduce their carbon footprint by
25% through the Low Carbon Diet EcoTeam program and a strategy to achieve
between 25% and 75% household participation. This methodology has been
tested on a smaller scale in over 300 US cities and 6 countries including China. The
CCC is designed to bring this potentially transformative social innovation to scale
(community-wide) first in the three California demonstration cities and Sao Paulo
and then to the wider world based on the experience and lessons learned in the
demonstration cities.
The Empowerment Institute (EI) will provide each of the cities deep technical
assistance in its implementation. This Institute has a successful track record in
designing and implementing successful behavior change programs and
community engagement strategies for cities both in the United States and
Europe. The content of these behavior change programs include Low Carbon
Lifestyles, Green Living, Livable Neighborhoods, and Disaster-resilient
Communities. In particular, their Low Carbon Diet Program has been disseminated
to over 300 US cities with 46 of those cities in California.
To enable this project to be most effectively disseminated after this prototype
phase, EI has enlisted the commitment of major research institutions to study,
evaluate, and assist in the analytics. EI reports that these partners are Lawrence
Berkeley National Laboratory, UC Berkeley, UC Davis and Stanford.
EI assumes that cities do not have resources to implement this type of social
innovation, and has committed to raising the funds for the cities. One of the
City of Palo Alto Page 3
purposes of the Letters of Intent with potential demonstration cities is to indicate
potential participation by cities that will aid in the Empowerment Institute’s fund
raising goals. If EI is successful in raising the funds to provide the support and
staffing in the demonstration cities over the three year program period, then EI
will issue Requests for Proposals from cities for evaluation and final selection of
the demonstration cities to participate in the program. That proposal process is
expected to occur sometime later in 2013.
Discussion
The Cool Cities Challenge gives Palo Alto a chance to contribute to developing a
potentially game changing local solution to climate change. Palo Alto is already a
leader in climate protection in many ways, so this is an opportunity to achieve the
next level and advance our climate action and energy efficiency goals.
CCC potentially provides the City with a platform that allows for integration of its
many sustainability programs and which can be applied literally block by block
across our community. Neighborhood groups would allow Palo Alto to get better
take up in these programs; it also allows for efficiency in the financial investments
that will create and distribute these programs.
The CCC provides Palo Alto an opportunity to more tightly knit together the social
fabric of the community. It also allows for the integration of sustainable
community outreach efforts.
Resource Impact
No significant direct costs to the City are associated with the staff
recommendation to sign the LOI. Staff will continue to work with EI, and other
partners (Cool Davis, California Air Resources Board, Lawrence Berkeley National
Labs), to advance the City’s community engagement goals and our efforts to
reduce GHG emissions.
As indicated in the attached LOI, fiscal impacts associated with long-term
participation in this ambitious program will be offset by funding secured by EI; as
mentioned earlier in this report, the Cool Cities Challenge program will only occur
if EI is able to secure adequate funding. Indirect fiscal impacts associated with the
implementation of a household based demand-side carbon reduction program
are undetermined. While this initiative is based on EI providing new funding to
City of Palo Alto Page 4
support this effort, a program as ambitious and as far reaching as this in its intent
and design will certainly draw on existing city staff, Council, and community
capacity. On the other hand, staff anticipates that local businesses and
entrepreneurs could respond as local demand for carbon reduction products and
services emerge as one outcome of this program.
While submission of a LOI by the City signals our serious interest in this initiative,
it commits to no binding obligation. The City will again need to carefully review
the results this initiative may produce and the investment that this initiative will
require, if and when EI issues the formal Request for Proposals later in 2013. By
that point, the City should be able to have a clearer understanding of the costs of
participation that may occur beyond the funding EI provides and a better sense of
our citizens’ interest in participating.
If the Council approves the LOI, and as staff learns of EI’s success in fundraising,
staff will return to Council with a process to test community interest through
targeted outreach to key stakeholders and some method of surveying household
interest.
A good understanding of the receptivity of our citizens to participating in a multi-
year high touch outreach and behavior change program such as this would be
important as a prelude to our submission of any formal proposal to EI when they
issue their Request for Proposals in 2013.
Policy Implications
Participation in the Cool Cities Challenge would assist Palo Alto in implementing
its Climate Protection Plan and is fully consistent with the Greenhouse Gas
reduction goals of that plan.
Environmental Review
Submitting a LOI to participate in the Cool Cities Challenge does not constitute a
project under the California Environmental Quality Act (CEQA).
Attachments:
Cool City Challenge Letter of Intent (DOCX)
THE COOL BLOCK PILOT MEMORANDUM OF UNDERSTANDING
BETWEEN THE CITY OF PALO ALTO AND EMPOWERMENT INSTITUTE
OVERVIEW
The Cool Block grows out of a vision to reinvent our cities from the bottom up in the age of
climate change to help people adopt low carbon and environmentally sustainable lifestyles,
disaster resilient and livable neighborhoods and collaborate together as neighbors and citizens.
It builds upon David Gershon and his Empowerment Institute’s decades of experience
furthering pro-social behavior change and community engagement throughout America and
the world. It does this through a nine-meeting, 4 1/2-month program co-led by a group of
neighbors living on a block or in a building. Participants in the program select from a menu of
112 action recipes. Some actions are done as individuals and others are collective and carried
out by The Cool Block team.
The pilot phase of The Cool Block program will take place in three cities: Palo Alto, San
Francisco and Los Angeles. The Cool Block program will then be integrated into the Cool City
Challenge – a three-year campaign to achieve a minimum of 25% carbon reduction among a
minimum of 25% of the households in a community along with creating disaster resilient
neighborhoods and green economic development. The Cool Block pilot program provides an
advantage to participating cities to being favorably considered for the statewide competitive
RFP process to receive a 3-year grant of $2.5 million to participate in the Cool City Challenge.
This is because of the social infrastructure, program knowledge and integration into city
services that will have been created. That said, participation in Cool City Challenge is not
guaranteed.
This MOU below describes The Cool Block two-phase pilot in the City of Palo Alto from
January 2016 to March 2017. What follows are roles, responsibilities, deliverables and a
timeline for Empowerment Institute and the City of Palo Alto.
EMPOWERMENT INSTITUTE DELIVERABLES
1. Recruit, train and coach 30 Cool Block leaders and deliver the program on 30 blocks in two
phases.
Phase 1: Pilot The Cool Block program independently, or if ready, with the alpha tech
platform on 10 blocks.
Phase 2: Pilot the beta version on The Cool Block program and tech platform on an
additional 20 blocks with support of community groups.
2. Build The Cool Block technology platform, a web and smartphone platform to track results,
share best practices, and integrate city agency, non-profit and local business services into
the program’s actions.
2
3. Work with the City of Palo Alto to integrate city programs and services into The Cool Block
tech platform around the relevant actions.
4. Research and integrate into The Cool Block tech platform local business, community
organization and state services and programs around the relevant actions.
5. Produce a report on pilot outcomes that includes carbon reduction per household,
household and block level actions taken, participation rate per block and feedback on
various aspects of the program.
CITY OF PALO ALTO DELIVERABLES
1. Participation of City Manager to frame, communicate, and execute The Cool Block program
internally with city staff and externally in the community.
2. Participate with the Office of Sustainability and other city staff to integrate The Cool Block
program into the S/CAP strategy and encourage the participation of the S/CAP Advisory
Board.
3. Assist in creating The Cool Block strategy including identification of blocks and potential
block leaders.
4. Assist in the recruitment of community organization leaders around the four core pillars of
The Cool Block program and respective actions: carbon reduction, disaster resiliency, water
conservation/quality and livability/social cohesion.
5. Participate on the design team of the Cool City Challenge to accelerate bold climate action
toward carbon neutrality in up to 20 California cities through the use of this platform and
funding.
6. Participate in communication and events at the local and state level.
PILOT TIMELINE: JANUARY 2016 TO JUNE 2017
Recruit and train of Cool Block leaders: January to March 2016
The Cool Block pilot phase 1 (10 blocks): April to August 2016
The Cool Block pilot phase 2 (20 blocks): October 2016 to February 2017
COOL CITY CHALLENGE TIMELINE: MAY 2017 TO DECEMBER 2020
Cool City Challenge RFP announcement: May 2017
Cool City Challenge RFP due: July 2017
3
Cool City Challenge awards to cities: September 2017
Cool City Challenge Deployment: January 1, 2018 to December 31, 2020
___________________________________
David Gershon,
CEO, Empowerment Institute
___________________________________
Date
____________________________________
Jim Keene, City Manager, City of Palo Alto
____________________________________
Date
Attachment B
CITY OF PALO ALTO
INTERIM OFFICE/R&D ANNUAL LIMIT GUIDELINE
February 17, 2016
Pursuant to the authority granted by Palo Alto Municipal Code (“PAMC”) Section
18.85.208, the following Interim Office/R&D Annual Limit Program Guideline
(“Guideline”) is hereby adopted and determined to be desirable for the implementation
and enforcement of PAMC Section 18.85.200 (Annual Office Limit) of PAMC Chapter
18.85 (Interim Zoning Ordinances). All defined terms used in this Guideline shall have
the meaning set forth in PAMC Section 18.85.201.
Overview: The purpose of this Guideline is to implement the annual limit on Office/R&D
development adopted by Ordinance Number 5357 on October 26, 2015. The annual
limit was adopted on an interim basis for two years (until November 26, 2017) or until
the Comprehensive Plan Update is completed, whichever occurs first.
No more than 50,000 gross square feet of new Office/R&D development can be
approved within a given fiscal year in the subset of the City shown in Attachment A and
adopted as Exhibit A of Ordinance 5357. This Guideline is intended to implement the
interim annual limit in Fiscal Year 2015/16 and Fiscal Year 2016/17.
Program Guideline:
A. Applicability. This Interim Office/R&D Annual Limit Program Guideline is
applicable to all discretionary development applications proposing an increase in
gross square footage devoted to one or more of the following uses,1 when the
site is located within the area shown on Exhibit A of Ordinance 5357:
Research & Development as defined in PAMC Section 18.04.030(123)
Administrative Office Services as defined in PAMC Section 18.04.030(6)
General Business Office as defined in PAMC Section 18.04.030(61)
Medical Office as defined in PAMC Section 18.04.030(95)
Professional Office as defined in PAMC Section 18.04.030(116).
Building permit applications and associated use and occupancy certificates are
not discretionary and applications proposing use or reuse of existing building
space via non-discretionary applications are not subject to the Interim
Office/R&D Annual Limit.
B. Exemptions. Exempted applications, as defined below, shall be processed in
accordance with applicable sections of the PAMC without regard to the
The text of the cited definitions is included in Attachment B.
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procedures established by this Guideline. The decision to approve or disapprove
such applications shall be appealable to the City Council in accordance with
existing provisions of the PAMC.
An applicant may request in writing a formal determination that a pending
application is exempt pursuant to one of the exemptions outlined below at any
time. The resulting written determination shall be considered a code
interpretation that is appealable to the City Council consistent with Section
18.01.025 of the PAMC.
1. Accessory office space that is incidental to and customarily associated with a
principal use or facility. Examples include a small office space used in
conjunction with a retail establishment, a hotel, a school, or a religious
institution.
2. City office space.
3. Any application proposing less than 2,000 new gross square feet of Research
& Development, Administrative Office Services, General Business Office,
and/or Professional Office, where such application does not also involve the
Medical Office exemption in item (4) below.
4. Any application proposing a project containing less than 5,000 new gross
square feet of Medical Office, where such application does not also involve
the exemption in item (3) above.
5. “Pipeline Projects” as follows:
a. Projects which obtained a planning entitlement prior to the effective
date of Ordinance 5357 (November 25, 2015).
b. Projects which are the subject of a planning entitlement application
that was submitted to the City in 2013 or 2014 and deemed complete
by the City on or before March 31, 2015.
C. “Self-Mitigating Projects” which provide rental housing for more members of the
workforce than would be employed in the project, and which provide substantial
transportation demand management (TDM) strategies either individually or in
combination with other projects or programs such that parking and traffic
conditions in the site vicinity would be improved.
D. Economic Hardship Waiver or Adjustment. An applicant may request that
requirements of Ordinance 5357 be adjusted or waived based upon showing that
applying the requirements of Ordinance 5357 would effectuate an
unconstitutional taking of property or otherwise have an unconstitutional
application to the property.
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1. The applicant shall bear the burden of presenting evidence to support a
hardship-related waiver or modification and shall submit an economic
analysis along with an explanation of the factual and legal basis for the claim
to the Director of Planning.
2. The Director of Planning shall review the request and forward it to the City
Council with a recommendation within 60 days. The City Council shall
consider the request at a noticed public meeting, along with the economic
analysis and the Director’s recommendation, and provide a final decision to
grant or deny the request.
E. Processing and review of applications subject to the Interim Office/R&D Annual
Limit.
1. Applications subject to the Interim Office/R&D Annual Limit shall be
processed in accordance with the PAMC and the California Environmental
Quality Act (CEQA), except that neither the Director of Planning nor the City
Council shall adopt the CEQA document or act upon any such applications
between July 1 and March 31 of each year.
2. The Director of Planning shall review all such applications that are pending
final action by the Director of Planning or City Council as of the close of
business on March 31 of each year, and determine which applications are
eligible for consideration.
a. Pending applications only become eligible for consideration if they have
been recommended for approval by the Architectural Review Board
(ARB) and the Planning & Transportation Commission (PTC – for Site and
Design and rezoning applications only), and if review pursuant to CEQA
has been completed. For purposes of this section, subdivision requests
accompanying entitlement applications do not need to be submitted or
processed.
b. Applications that are not eligible for consideration at the close of
business on March 31 will be reviewed for eligibility in the following fiscal
year unless the 50,000 square foot annual limit has not been reached as
described in paragraph (c) below. In this case, additional applications
may become eligible and be considered between March 31 and June 30,
as long as the 50,000 square foot annual limit is not reached.
3. If the sum total of new square footage proposed by all eligible applications
on the close of business on March 31 is 50,000 square feet or less, all of the
applications will be acted upon by the approving authority established in the
PAMC. For example, the Director of Planning would act upon Architectural
Review applications, and that action would be appealable to the City Council.
INTERIM OFFICE/R&D ANNUAL LIMIT GUIDELINE
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The City Council would act upon applications requiring Site and Design or
rezoning.
4. If the sum total of new square footage proposed by all eligible applications
on the close of business on March 31 is greater than 50,000 square feet, the
Director of Planning shall prepare the applications for hearing by the City
Council as follows:
a. At an initial hearing, the Director shall provide the City Council with all
pending applications, including required CEQA documents,
recommended findings and conditions of approval. Each applicant will
be invited to present their project at the initial hearing, and the City
Council may provide comments and direction regarding the
recommended findings and conditions. The initial review of the eligible
projects by the City Council may be spread over more than one meeting
if time does not allow review of all projects on one meeting agenda.
i. If the City Council is unable to support approval of the
required CEQA document or the required findings for
any of the eligible projects, it may direct staff to prepare
findings for denial or impose conditions that will permit
it to make the necessary findings.
ii. Projects that are denied based upon not meeting
required findings for approval are no longer eligible
projects and the applicant must submit a new planning
entitlement for a substantially different project for
proposed development at the same site.
b. At a second public hearing, the Director shall provide the City Council
with a recommended ranking of the eligible applications using the
scoring criteria included below. The Director may convene a panel
consisting of the Chair of the ARB and the Chair of the PTC to assist in
the ranking. At the second public hearing, the City Council shall review
the Director’s recommendation and select the projects that shall
receive an office/R&D allocation. The projects selected shall receive
planning entitlement approval at the same hearing, which shall occur
before the end of the fiscal year on June 30. The City Council shall
approve, deny, or approve as modified the project(s) receiving an
office/R&D allocation.
c. Any application that is not approved by the City Council solely because
it exceeds the office/R&D allocation shall be denied unless the
applicant requests that the project be rolled over for consideration in
the next fiscal year. In addition, the applicant may request his/her
application be rolled over to the next fiscal year if the City Council
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proposes to modify the project by reducing its square footage and the
applicant declines to do so. A project can be rolled over only one time.
F. Expiration of Office/R&D Allocation. Once a project has been approved, all
applicable entitlement timelines apply to the project, including the expiration of
approvals. If an entitlement expires, the approved allocation also expires. The
allocation cannot be carried over to another development proposal; it must be
used for the approved project or it will be lost.
G. Review Criteria and Scoring.
1. Eligible applications that were deemed complete by the City between March
31 and June 15, 2015 shall have priority over other projects and shall be
evaluated against each other and granted an allocation before other eligible
applications are considered
2. Review criteria are established in Ordinance 5347 as follows:
Impacts
a. The density of the development in the context of underlying
zoning and the site surroundings; and
b. The ability to avoid or address potential impacts on traffic and
parking;
Design
c. The quality of design, including the attention to human scale
where the building(s) meet the street, the compatibility with
surroundings, and the overall architectural quality; and
Environmental Quality
d. Environmental quality
Public Benefit
e. The value to the community of public benefits offered; and
Uses
f. Mixed use projects including substantial housing; and
g. Mixed use projects including retail; and
h. Mixed use projects that provide space for cultural amenities such
as but not limited to art galleries and studios
3. The Director’s recommendation shall be based on an evaluation of eligible
applications weighting the review criteria as shown in the score card in Table
1, below. All projects will be ranked against each other according to the
point totals they receive.
4. The City Council may accept the Director’s recommendation or modify it
based on its independent review of the criteria, and shall determine which
eligible applications will be approved, approved with modifications, or
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denied, such that the total square footage approved does not exceed 50,000
new gross square feet of the uses listed in Section A, above.
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Notes:
1. For purposes of this section, exceptions to the “Build to Line” standard and requests for parking reductions per PAMC Section 18.52.050 shall not be
considered. Section 18.52.050 can be used to allow parking adjustments based on provision of on-site amenities, shared parking, senior housing,
affordable housing, housing near transit, and TDM plans.
2. Benefits may be intrinsic to the project, such as affordable housing units, publicly accessible open spaces, publicly accessible off-street parking,
community meeting space, or subsidized rent for community-serving non-profits. Benefits may also be extrinsic improvements or voluntary financial
contributions to larger community initiatives. Some benefits may be quantifiable and some may not.
3. By rewarding provision of uses that may not be permitted in all zoning districts, this section effectively gives some priority to those projects that are
proposed within districts that allow the desired uses (when those uses are incorporated into the proposed project).
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Attachment A
Map of Areas Subject to the Interim Office/R&D Annual Limit
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