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Home My WebLink About2015-05-18 City Council Agenda PacketCITY OF PALO ALTO CITY COUNCIL May 18, 2015 Special Meeting Council Chambers 5:30 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 May 18, 2015 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. PUBLIC COMMENT Members of the public may speak to agendized items; up to three minutes per speaker, to be determined by the presiding officer. If you wish to address the Council on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council, but it is very helpful. TIME ESTIMATES Time estimates are provided as part of the Council's effort to manage its time at Council meetings. Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting or to adapt to the participation of the public. To ensure participation in a particular item, we suggest arriving at the beginning of the meeting and remaining until the item is called. HEARINGS REQUIRED BY LAW 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 Special Orders of the Day 5:30-5:45 PM 1. Proclamation Recognizing City of Palo Alto Fire Department Paramedic 40th Anniversary and National Emergency Medical Services Week May 17-23, 2015 2. Selection of Applicants to Interview on June 4, 2015 for the Architectural Review Board Agenda Changes, Additions and Deletions City Manager Comments 5:45-5:55 PM Oral Communications 5:55-6:10 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 May 18, 2015 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 6:10-6:15 PM Items will be voted on in one motion unless removed from the calendar by three Council Members. 3. Approval of Final Payment and Withheld Retention in a Combined Total Amount of $232,137 to Republic Intelligent Transport Services, Inc. (a Siemens Company) for Work Performed No. C12143538 for Phase II of the LED Light Conversion Project (EL-10009) and Adoption of a Budget Amendment Ordinance for Fiscal Year 2015 in the Amount of $184,510 Offset with a Reduction in the Electric Fund Distribution Reserve 4. Approve and Authorize the City Manager or Designee to Execute the Following Seven Third-Party Energy Efficiency Program Contracts in a Combined Not to Exceed Amount of $6,625,000 and a Term for each through June 30, 2018: (1) CLEAResult Consulting, Inc., No. C15159135 in an Amount Not to Exceed $910,000; (2) Eagle Systems International, Inc. DBA Synergy Companies, No. C15159126 in an Amount Not to Exceed $540,000; (3) Eagle Systems International, Inc. DBA Synergy Companies, No. C15159125 in an Amount Not to Exceed $450,000; (4) Ecology Action of Santa Cruz, No. C15159124 in an Amount Not to Exceed $1,950,000; and the Following Three Contracts With a Shared Total Not to Exceed Amount of $2,775,000 (5) Ecology Action of Santa Cruz, No. C15155144A, (6) Enovity, Inc., No. C15155144B, and (7) BASE Energy, Inc., No. C15155144C 5. Utilities Advisory Commission Recommendation to Adopt a Resolution Modifying the Electric Special Project Reserve Guidelines 6. Adoption of the User Fee Cost Recovery Level Policy 7. Approval of Contract No. C1515321 with FOG Studio in the Amount of $97,900 for Design Services for the Baylands Interpretive Center Improvements Project PE-15029 8. Finance Committee Recommendation that Council: (1) Add a 25-Year Contract Term Option in Addition to the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program’s Existing 20-Year Contract Term Option; (2) Continue the CLEAN Program for Solar Resources at a Contract Price Reduced from 16.5¢/kWh to the Avoided Cost of the Solar Energy Generated (10.3 ¢/kWh to 10.4 ¢/kWh) with a Program Cap of 3 Megawatts; and (3) Expand the CLEAN Program's Eligibility to Non-Solar Renewable Energy Resources with a Program Cap of 3 Megawatts at a Contract Price Equal to the Avoided Cost of the Non- Solar Energy Generated (9.3 ¢/kWh to 9.4 ¢/kWh) 3 May 18, 2015 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. 9. Adoption of Resolution Authorizing Overtime and Portal to Portal Pay for Deployments Away from the City for the Palo Alto Fire Department 10. Request for Authorization to Increase Existing Contract with Newdorf Legal by an Additional $55,000 for a Total Contract Not to Exceed Amount of $160,000 for Legal Services Related to Litigation Matters Action Items Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters. 6:15-6:45 PM 11. Approval of a Construction Contract with Express Sign & Neon, Inc. for a Not to Exceed Amount of $327,558 for the Wayfinding Portion of the City Hall Remodel Project PE-12017 (Continued from April 13, 2015) 6:45-7:15 PM 12. PUBLIC HEARING: to Hear Objections to the Levy of Proposed Assessments on the Palo Alto Downtown Business Improvement District and Adoption of a Resolution Confirming the Report of the Advisory Board and Levying Assessment for Fiscal Year 2016 on the Downtown Palo Alto Business Improvement District 7:15-9:15 PM 13. Discussion and Direction Regarding a Possible Ordinance to Limit Formula Retail and Other Land Uses to Preserve Ground Floor Retail Along Commercial Areas on California Avenue and Some Intersecting Streets 9:15-10:45 PM 14. Composition and Purpose of an Advisory Committee for the Comprehensive Plan Update 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 May 18, 2015 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Additional Information Standing Committee Meetings Special Finance Committee Meeting, May 19, 2015 Special Policy and Services Committee Meeting May 21, 2015 Special Finance Committee Meeting May 21, 2015 Schedule of Meetings Schedule of Meetings Tentative Agenda Tentative Agenda Informational Report Informational Report on the City of Palo Alto Utilities Demand Side Management Achievements for Fiscal Year 2014 Proclamation Recognizing National Public Works Week May 17-23, 2015 Public Letters to Council Set 1 Set 2 Set 3 City of Palo Alto (ID # 5637) City Council Staff Report Report Type: Special Orders of the Day Meeting Date: 5/18/2015 City of Palo Alto Page 1 Summary Title: PAFD Paramedic 40th Anniversary Title: Proclamation Recognizing City Of Palo Alto Fire Department Paramedic 40th Anniversary and National Emergency Medical Services Week May 17-23, 2015 From: City Manager Lead Department: Fire See Attached Proclamation Attachments:  May 2105 Paramedic 40 Anniversary & National EMS Week Proclamation (DOC) CITY OF PALO ALTO PROCLAMATION THE 40th ANNIVERSARY OF PARAMEDIC SERVICES AND EMS WEEK 2015 WHEREAS, the Palo Alto Fire Department began delivering Advanced Life Support (ALS) paramedic services and ambulance transportation services to the City of Palo Alto and Stanford Lands in 1975; and WHEREAS, the Palo Alto Fire Department became one of the first fire departments in California to provide this service to the community; and WHEREAS, access to quality emergency care dramatically improves the survival and recovery rate of those who experience sudden illness or injury; and WHEREAS, the week of May 17-23, 2015 is designated National Emergency Medical Services (EMS) Week by the American College of Emergency Physicians (ACEP); and WHEREAS, National EMS Week brings together local communities and medical personnel to promote safety and honor the dedication of those who provide the day-to-day lifesaving services of medicine's "front line"; and WHEREAS, it is determined that those who give outstanding service to the people of this City and surrounding area, and whose dedication and extraordinary achievements save the lives of our community, and have a shared commitment to family and community life. NOW, THEREFORE, I, Karen Holman, Mayor of the City of Palo Alto, on behalf of the City Council do hereby proclaim May 18, 2015 as a day of celebration of the 40th Anniversary of the Palo Alto Fire Department’s Paramedic and Ambulance Program and recognize on behalf of the community the life-saving contributions of EMS professionals in the City of Palo Alto. Presented: May 18, 2015 ______________________________ Karen Holman Mayor CITY OF PALO ALTO OFFICE OF THE CITY CLERK May 18, 2015 The Honorable City Council Palo Alto, California Selection of Applicants to Interview on June 4, 2015 for the Architectural Review Board Staff is requesting the City Council select the candidates to be interviewed for one unexpired term(Ballantyne), on the Architectural Review Board, ending on December 15, 2017. Interviews are scheduled for Thursday, June 4, 2015 at 6:00 P.M. Each Council Member will receive a selection sheet to use in determining who will be interviewed. Copies of all applications are attached. Some applications may be redacted at the request of the applicant. A full set of non-redacted applications will be emailed to Council Members directly. Recommendation The requested action is for each Council Member to fill out the selection sheet indicating which of the candidates they will be interviewing. The City Clerk will announce who will be interviewed at the same meeting. Candidates who receive four or more votes will be scheduled for an interview. Applicants 1. Peter Baltay 2. Wynne Furth 3. Kenneth Huo 4. Flore Schmidt ATTACHMENTS:  Attachment A: ARB Baltay, Peter (PDF)  Attachment B: ARB Furth, Wynne (PDF)  Attachment C: ARB Huo, Kenneth (PDF)  Attachment D: ARB Schmidt, Flore (PDF) Department Head: Beth Minor, City Clerk Page 2 .f Architectural Review Board Application Personal Information Name: Peter Baltay W�IY Of PAL8 l\Lr@ldJA erry CLERK'S ef'P+et: Address: 450 Kipling Street, Palo Alto CA 94301 Cell Phone: 415 407-1621 0 Home t®office Phone: 650 327-7573 E-mail: peter@toposarchitects.com Are you a Palo Alto Resident?QYes @ No 15 HAY -5 PH 2: I 0 Do you have any relatives or members of your household who ar . e employed by the City o.L.ealo A.Jle., who are currently serving on the City Council, or who are Commissioners or Board Members? UYes(!} No Are you available and committed to complete the term applied for? ®vesO No California state law requires appointed board and commission members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest (Form 700). Do you have an investment in, or do you serve as an officer or director of, a company doing business in Palo Alto which you believe is likely to: 1) engage in business with the City; 2) provide products or services for City projects; or 3) be affected by decisions of the board or commission you are applying for? Oves®No Excluding your principal residence, do you own real property in Palo Alto? ()v es @No How did you Learn about the vacancy on the Architectural Review Board? Ocommunity Group [{]Email from City Clerk 0Palo Alto Weekly 0Daily Post Deity Website 0Flyer Other:_�----------------------------- List relevant education, training, experience, certificates of training, licenses, or professional registration: Bachelor of Arts-Columbia University 1984 Master of Architecture-University of Washington 1990 Licensed California Architect since 1995 Owner and Principal Architect of TOPOS Architects since 2000. Employment TOPOS Architects (www.toposarchitects.com) Present or Last Employer: Occupation: Architect and builder Describe your involvement in community activities, volunteer and civic organizations: Past member of the San Mateo County Design Review Board Past member of the Redwood City Architectural Review Board Member of the Santa Clara County AIA Page 1 Architectural Review Board 1. What is it about the Architectural Review Board that is compatible with your experience and of specific interest to you, and why? I am an experienced local architect. I have worked successfully with the Palo Alto Planning and Buildnig Department on many projects. I have served on other design review boards and am familiar �ith the procedures and practices of public service. I believe that it is important to "give back" to the community. 2. Please describe an issue that recently came before the Board that is of particular interest to you and describe why you are interested in it. If you have never been to a Board meeting you can view an archive here: LINK. 429 University Avenue is a project meeting the 'objective' requirements (parking, FAR, height) yet still not fulfilling the 'subjective' requirements (compatibility, scale, massing). Much contention could have been avoided had the ARB been more insistent that the project comply with the subjective requirements of the Design Guidelines and Comprehensive Plan, even if it reduced the allowed maximums of the Zoning Code. 3. If appointed, what specific goals would you like to see the Architectural Review Board achieve, and why? How would you suggest accomplishing this? 1. I would like to see the Architectural Review Board be more willing to compromise on the objective standards of the Zoning Code to fullfill the subjective standards of the Design Guidelines and Comprehensive Plan. 2. I would like to see the Architecture Review Board (and City Council, and Planning Staff) provide more concrete feedback to reduce the number of design review cycles and move projects through the review process efficiently. 4. Please identify a project or projects that you find to be examples of good architecture, and explain why. You may attach samples, identify project addresses, or provide links. If you attach samples, staff may request that you bring hard copy print outs to the interviews. 1. 520 Cowper Street (Garden Court Hotel)-a wonderfully pedestrial friendly street front with e spacious end well designed vehicular entrance at the hotel help mask the mas of the buildng. Careful and playful detailing and lots of balconies provide en attractive link to Palo Alto's architecture heritage. 2. Courthouse Square, Redwood City-sometimes no buildng is best of all. A we;; used and loved public space created with lots of community input. Small flanking gazebos enhance the pedestrian nature of the public square. 3. 1600 El 'Gamino, Menlo Park (NE corner of El Camino end Encinal)-a beautifully executed rendition of a Mediterranean style building built in the twentieth-first century. The materials, detailing and massing fit the site and community and, while gently evoking the past, are not reproductions of outdated building techniques. 4. 270 University Avenue (Jos. A Banks store)-a well designed urban storefront that is both of our time (contemporary detailing and sustainable) yet of a scale and massing to fit into the University Avenue streetscape as a good neighbor. Not every building should be this dramatic, yet once in a while it is refreshing. 5. Architectural Review Board Members work with the documents listed below. If you have experience with any of these documents, please describe that experience. Experience with these documents is not required for selection. Palo Alto Comprehensive Plan LINK Zoning Code LINK El Camino Real Design Guidelines LINK El Camino Real Master Plan Study LINK and Appendices LINK Area Plans such as the South of Forest Avenue (SOFA) I and II Plans LINK California Environmental Quality Act LINK Permit Streamline Act LINK Density Bonus Law LINK Secretary of the Interior's Standards LINK Page2 Architectural Review Board / Consent to Publish Personal Information on the City of Palo Alto Website California Government Code Section 6254.21 states, in part, "No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual." The full code is attached. This consent form will not be redacted and will be attached to the Application and posted to the City's website. The full code can be read here: LINK Read the code, and check only ONE option below: 0 I give permission for the City of Palo Alto to post to the City's website the attached Board and Commission Application intact. I have read and understand my rights under Government Code Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. · OR 0 I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City's website. I am providing the following alternate information and request that they use the following contact information instead. Address: Cell Phone: 0Home 10office Phone: E-mail: l DigltallyslgnedbyPeterBaltay 5/5/2015· Peter Ba 1. ta yr �{:�:�::��:�;�,�;=,��::�··"· Signature: --------""-;;_·o._,.,_2m_s.o_s.o_s1_B_2,,_3-0_,. .. _. ----------Date:------ Page3 Architectural Review Board Architectural Review Board Application Personal Information Name: Wynne Furth Address: 216 Everett Avenue Palo Alto 94301 Cell Phone: 650.444-5888 (!)Home 10omce Phone: 650.326-9313 E-mail : wynne.furth@gmail.com Are you a Palo Alto Resident? (!)Yes Q No Do you have any relatives or members of your household who are employed by the City of Palo AJ!Q., who are currently serving on the City Council, or who are Commissioners or Board Members? Qves\!) No Are you available and committed to complete the term applied for? 0 ves0No California state law requires appointed board and commission members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest (Form 700). Do you have an investment in, or do you serve as an officer or director of, a company doing business in Palo Alto which you believe is likely to: 1)engage in business with the City; 2)provide products or services for City projects; or 3) be affected by decisions of the board or commission you are applying for? 0 Yes0 No Exciuding your principal residence, do you own real property in Palo Alto? ()res (!) No How did you Learn about the vacancy on the Architectural Review Board? Ocommunity Group D Email from City Clerk 0 Palo Alto Weekly Other: city clerk's office O oaily Post D City Website 0 Flyer List relevant education, training, experience, certificates of training! licenses! or professional registration: Trained in economics at Stanford (including design course from Matt Kahn); law at HaNard, with a focus on land use, local govt, and legal process; worked with and for California cities, notably Claremont and Palo Alto, advising building officials, planning/transportation/architectural/historic preseNation boards and city councils, and in the process received great training from applicants, staff, the board members, and the citizenry on design and its review, land use, architectural history, sustainability, and the need for clarity, civility, study, hardwork, a range of expertises, and integrity in design review. Participated in APA, ULI, and League of California Cities workshops and conferences on land use and design issues. Employment Changelab Solutions, Oakland -consulting attorney Present or Last Employer: occupation: lawyer (last full time employment: Burke Williams; McDonough Holland & Allen Describe your involvement in community activities, volunteer and civic organizations: Board member, Palo Alto Woman's Club; member and former Board president, Unitarian Universalist Church of Palo Alto; member, League of Women Voters; participant, Downtown North residential parking permit program working group; co-organizer and leader of Palo Alto Forward field trip exploring multiple-housing residential developments in Downtown Palo Alto from the 1920s to the 1990s. Page 1 Architectural Review Board City of Palo Alto | City Clerk's Office | 5/5/2015 5:15 PM ,r 1. What Is tt about the Architectural Review Board that Is compatible with your experience and of specific interest to you, and why? 6rt(P.� .7Jt� 1l� �evflV'� i>tp ptZ-4f eN� 111i5t� 191��111�0, �M�uJ !JI/ �l1'1J�,, CAJM�G /tttS-C.H rrJ� ,, cA-o?S vvi/l'lJ� in<?ti��e � �H� �� lt>0/' .. r?� w M rw Jp 'ittJ 2. Pie e describe an issue that recently came before the Board that is of partic lar interest to you ' and describe why you are Interested In It. If you have never been to a Board meeting you can view an archive here: LINK. __ p.$7· ji-t¢ t>tza1J1'�111�L--�� t?�� MG'M��? v�wrt.rfe��N 1/IVI� �� IN 11i6 ftuH'f 4 �N-re� &FltJf&NG.:? ..,.-, ji. c.-/ I� t?I ie$v11 "''1 f71 pill 71'(� "°"� 14 11'1 r11tJ17 : ..,,. VI� 1JG7l�NIN ' f-orZ:_ 0 t?�716'NIN "'"tA-.111'H I' .. IVP. e=t-1 �1H . 3. If appointed, what specific goals would you like to see the Architectural eview Board and why? How would you suggest this? I -1. "f(J p�NIU!Jt>N? � �ic.e>P-D � tJf • A �t.-7,? �?J�J-.l ! }11'(1£.f{ 4. Please identify a project or projects that you find o be examples of good architecture, an explain why. You may attach samples, Identify project addresses, or provide links. If you attach · samples-; bring hard copy print outs to tlftflnteivlews.··· ··· ··· -q,_�p p.-�t{t t(evftJ� c??vV�'? Wrl�� 77 /56NS.e ..- �� -1"'�� r��A1 r�P.�/t>+Jp N fc.G 5. Architectural Review Board M bers work with th documents listed If you have experience with any of these documents, please describe that experience. Experience with these documents is not required for selection. y(alo Alto Comprehensive Plan LINK . t>K- ·vzoning Code LINK � Real Design Guidelines LINK � Camino Real Master Plan Study LINK and Appendices LINK � �a Plans such as the South of Forest Avenue (SOFA) I and II Plans LINK Vcalifornia·Environmental Quality Act LINK yk: �mil Streamline Act LINK � Density Bonus Law LINK � Secretary of the Interior's Standards LINK . " Architectural Review Board t?�--u .. �t ) Consent to Publish Personal Information on the City of Palo Alto Website California Government Code Section 6254.21 states, in part, "No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual." The full code is attached. This consent form w/1 not be redacted and will be attached to the Application and posted to the City's website. The full code can be read here: LINK Read the code, and check only ONE option below: I give permission for the City of Palo Alto to post to the City's website the attached Board and Commission Application intact. I have read and understand my rights under Government Code Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. OR I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City's website. I am providing the following alternate information and request that they use the following contact information instead. Address: - Cell Phone: l &7"''!? 1 g Home I Office E-tnail: 6'.IJ'fo �tft i'fi"f e7 ti lvf"fl.-, 4 Signature: Hi.Jo /� Architectural Review Board t? �/]. .;' � \ Architectural Review Board Application Personal lnfonnation Name: Flore Schmidt Address: 1091 Tanland drive 207 # 94303 Palo Alto Cell Phone:650 714 8535 0 Home 1@offlce Phone: E-mail: sctvnidt.flore@gmail.com Are you a Palo Alto Resident?@Ves Q No Do you have any relatives or members of your household who are employed by the City o.1.ealo Al�, who are currently serving on the City Council, or who are Commissioners or Board Members? UYes\!) No Are you available and committed to complete the term applied for? ®vesONo California state law requires appointed board and commission members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest (Form 700). Do you have an investment in, or do you serve as an officer or director of, a company doing business in Palo Alto which you believe is likely to: 1)engage in business with the City; 2)provide products or services for City projects; or 3)be affected by decisions of the board or commission you are applying for? O ves®No Excluding your principal residence, do you own real property in Palo Alto?()ves @No How did you Learn about the vacancy on the Archltectural Review Board? Ocommunity Group 0Email from City Clerk 0Palo Alto Weekly 0 Daily PostDeity Website0Flyer List relevant education, training, experience, certificates of training, licenses, or professional registration: Full architecture degree, Paris-Versailles -France 1988 Graduate year in Rome La Sapienza University • Italy 1990 Cofounded and run 20 architect's Architecture Firm in Paris area, France 1991-2013 Experience includes: Residentials & multi appartment buildings I education (3 high scholl • 2 middle scholl) I remodelling University campus in Orsay/ Goverment {Civic hall, Library ... ) I sport facilities {stadium) I international experience I many competitions Not a California licensed architect Employment Present or Last Employer: Occupation: Moved to Silicon Valley 2014 /Currently works with Sunplanter INC a Solar building start up company, Palo Alto Describe your involvement in community activities, volunteer and civic organizations: Recently arrived in California. I am looking for involment opportunities in subject I am deeply interest in. As Teenager I have consistently been engaged in Christian charity actions. During the students years I have also given art classes (painting, drawing, sculpture & models) to 5-12 year children Page 1 Architectural Review Board City of Palo Alto | City Clerk's Office | 5/5/2015 5:02 PM 1. What is It about the Architectural Review Board that Is compatible with your experience and of specific interest to you, and why? For 20 years, I have been in France, on the other side of the table, submitting projects to building departments, boards & governments. Although the administrative organization is quite different, I have been wishing the French permit granting authorities were more open-minded, more professionally experienced and supported a higher vision. I also wished they better understood the designer's constraints and quest and there was a productive dialog between the designer and the authorities. I have been member of many architecture competition juries and I have been involved in several city planning projects from small to very large scale. 2. Please describe an issue that recently came before the Board that is of particular interest to you and describe why you are interested in it. If you have never been to a Board meeting you can view an archive here: LINK. I have no specific information about a particular case, but I have been witnessing over the last few years the restart of a cycle of tearing down small things and replacing them with huge structures, all over the Bay Area and very so in Palo Alto, and I am concerned about how the board can help maintain high quality standards through a period of shifting life style. I was in Architecture school in the BO's in Paris when 6 "new cities" were built in a rush in the fields around Paris, with very little previous thinking and while are historic cities were being bulldozered by developers. Nobody had envisionned the society problems this ideological city planning would generate, but we all spent our carrier years trying to fix the problems due to density and lack of upstream thinking and control. I would be very motivated to help the Architectural Review Board keep Palo Alto friendly, green and residential. 3. If appointed, what specific goals would you like to see the Architectural Review Board achieve, and why? How would you suggest accomplishing this? I am very impressed by the level of the thinking I have seen at work here. I understand Palo Alto is facing pressure about higher urban density. I have spent a large part of my professional life as an architect in France curing the failures of ill designed density built in the post war rush through lots of demolition. Building on my experience, I think Palo Mo's mission as a forward looking and globally admired city is to set new standards about how neighborhoods can be vibrant and quiet, busy and green. Palo Alto should harmoniously develop the environment but preserve every one's identity and freedom. I think it is a fascinating mission. How does "city planning" encourage "living together'', "energy and ressource conservation", "meanningfull life", " efficient business" ? 4. Please identify a project or projects that you find to be examples of good architecture, and explain why. You may attach samples, Identify project addresses, or provide links. If you attach samples, staff may request that you bring hard copy print outs to the interviews. Let me talk here about PA City Hall. I don't know if it works well internally, but I feel it provides PA downtown with remarquable qualities. His volume make it stand out like a goverment building should, his architectural design, the material employed gives a scale and style reference. It's a landmark. It's also manages to create a European style "piazza" which is both a focal point, a breath in the city, a harbour\\lhile it reveals the institution's importance, providing public parking too. I absolutely do not mean private buildings should be allowed what the City Hall is. I mean that architectural design, volume, layout, building implementation must be use to build a neighborhood quality, an order in the city meaning and hierarchy. However for the future, I strongly believe buildings should be designed around the sun so they are positive energy solar powered, so they treat the suntight and allow quality inner spaces while reducing the need for air conditionning and artificial lighting. To my european eyes, LEED Platinum is an easy target, I wish Palo Alto will really invent the next step ... 5. Architectural Review Board Members work with the documents listed below. If you have experience with any of these documents, please describe that experience. Experience with these documents is not required for selection. Palo Alto Comprehensive Plan LINK Zoning Code LINK El Camino Real Design Guidelines LINK El Camino Real Master Plan Study LINK and Appendices LINK Area Plans such as the South of Forest Avenue (SOFA) I and II Plans LINK California Environmental Quality Act LINK Permit Streamline Act LINK Density Bonus Law LINK Secretary of the Interior's Standards LINK Page 2 Architectural Review Board Consent to Publish Personal lnfonnation on the City of Palo Alto Website California Government Code Section 6254.21 states, in part, "No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual." The full code is attached. This consent form will not be redacted and will be attached to the Application and posted to the City's website. The full code can be read here: LINK Read the code, and check only ONE option below: 0 I give permission for the City of Palo Alto to post to the City's website the attached Board and Commission Application intact. I have read and understand my rights under Government Code Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. OR 0 I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City's website. I am providing the following alternate information and request that they use the following contact information instead. Address: Cell Phone: 0Home 10office Phone: E-mail: Signature: __ �_I ............... 1J-++-0_J-_____ Date: _05_0_5 _2015 Page 3 Architectural Review Board City of Palo Alto (ID # 5683) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/18/2015 City of Palo Alto Page 1 Summary Title: Capital Improvement Project Amendment: EL-10009 Street Light System Conversion and Adoption of a BAO Title: Approval of Final Payment and Withheld Retention in a Combined Total Amount of $232,137 to Republic Intelligent Transport Services, I nc. (a Siemens Company) for Work Performed C12143538 for Phase II of the LED Light Conversion Project (EL-10009) and Adoption of a Budget Amendment Ordinance for Fiscal Year 2015 in the Amount of $184,510 Offset with a Reduction in the Electric Fund Distribution Reserve From: City Manager Lead Department: Utilities Recommendation Staff recommends that Council: 1. Approve and authorize the City Manager or his designee to release a final payment and withheld retention for a combined total of two hundred thirty-two thousand one hundred thirty seven dollars ($232,137) to Republic Intelligent Transportation Services, Inc. (a Siemens Company, referred to herein as “Siemens”) for the work performed under Contract C12143538 for Phase II of the LED street light conversion project (EL- 10009). 2. Adopt a related Budget Amendment Ordinance (Attachment A) to appropriate $184,510 offset with a reduction from the Electric Fund Distribution Reserve to allow for such release for EL-10009. Background On April 9, 2012, the City awarded Phase II of the LED street light conversion contract in the amount of $1,017,214, including a ten percent contingency, to Siemens to replace 2,655 high pressure sodium (HPS) street light fixtures with energy efficient light-emitting diode (LED) fixtures (Staff Report #2564). Siemens completed installation work in 2013 and thus far has received progress payments totaling $699,882. However, Siemens failed to fulfill contract requirements, including provision of as-built drawings and streetlight inventory information, City of Palo Alto Page 2 and did not provide a final invoice to the City until January 2015. As a result, staff did not process a final invoice or release the retention money. Now that staff has received the requisite contract documents and a final invoice, the City is prepared to provide Siemens with a final payment in the amount of $232,137, which includes payment of the final invoice and withheld retention amounts. However due to Siemens significant delay in completing contract tasks and submission of its invoice, in order to make such a payment to Siemens staff must recover funds that were previously for the LED streetlight conversion project (EL-10009). The original budget for the five year Street Light Conversion project was $3,400,000. In mid- year 2014, staff returned $1,400,000 to Electric Fund reserves because the scope of the project was reduced after re-evaluation. The original plan was to convert all 6,500 HPS lamps to LED lamps serving the community. LED street lighting luminaires have a longer life (15-18 years) compared to traditional HPS luminaires (5-6 years), lower ongoing maintenance costs, and provide better lighting distribution pattern on the streets. The average power demand of the LED luminaires is lower than the average power demand of HPS street lights, in the range of 45- 50 percent. As of February 2015, the City has converted 85% or 5,500 cobra head street light fixtures from HPS to LED. The remaining 1,000 street lights have a mixture of decorative type fixtures. Staff plans to evaluate converting these decorative luminaires to LED within the next two to five years and will seek Council’s approval of additional expenditures if and when such are identified. Staff is investigating viable retrofit options and will work with the Planning Department, the Architectural Review Board, and community on acceptable designs. Discussion Under Contract C12143538 for the LED street light conversion project (EL-10009), Siemens was required to submit final as-built drawings and street light inventory information to the City before release of final payment. Staff made numerous requests to Siemens over the past two years for the final drawings and street light information but Siemens was not responsive. After trying without success to gather the documentation and pay out final invoices and withheld retention, the City finally closed the contract in 2013 and returned the remaining balance of $317,332 for EL-10009 to CIP project EL-10009 budget. Siemens finally submitted the required documents (as-builts, street light inventory information) to the City along with a final invoice in January 2015. Due to Siemens extensive delays and non- responsiveness, staff inadvertently overlooked holding the necessary funds to cover the final payment and withheld retention to Siemens when returning $1,400,000 from CIP project EL- 10009 to the Electric Fund reserves. The work has been verified and the project is deemed complete per the contract terms. As such, the City is now finally prepared to release the final payment along with the retention money to Siemens. The first three phases of the street light conversion project are complete. CIP project EL-10009 has a remaining balance of $137,335, of which $89,708 is recommended to be reappropriated to Fiscal Year 2016 through the adoption of the 2016-2020 Capital Improvement Program. The reappropriated funds will be used for the evaluation of options for retrofitting the remaining City of Palo Alto Page 3 decorative streetlights, and the balance will be used towards the final payment to Siemens. Therefore, the project requires an additional $184,510 to process the final payment (final invoice, withheld retention) of $232,137 to Siemens. Timeline Supply and Installation work under this contract is completed in its entirety. Resource Impact A Budget Amendment Ordinance in the amount of $184,510 offset with a reduction to the Electric Fund Distribution Reserve is recommended to fund the final payment (final invoice and withheld retention) for capital improvement project EL-10009 (Street Light System Conversion). Policy Implications Authorization of this Budget Amendment Ordinance does not represent a change in existing City policies. Environmental Review Approval of the final payment to Siemens, and adoption of a related Budget Amendment Ordinance is not a project under the California Environmental Quality Act and therefore, no environmental assessment is necessary. Attachments:  Attachment A: Budget Amendment Ordinance (PDF) 1 Revised December 08, 2014 5238/eb Ordinance No. XXXX ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR FISCAL YEAR 2015 TO INCREASE THE STREETLIGHT CONVERSION CAPITAL IMPROVEMENT PROJECT (EL-10009) IN THE ELECTRIC FUND IN THE AMOUNT OF $184,510, OFFSET BY A REDUCTION TO THE ELECTRIC FUND DISTRIBUTION RESERVE. The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. The Council of the City of Palo Alto finds and determines as follows: A. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Council on June 16, 2014 did adopt a budget for Fiscal Year 2015; and B. In July 2012 the City awarded a contract in the amount of $1,017,214, including a ten percent contingency, to Republic Intelligent Transport Services (Republic ITS, Inc., a Siemens Company, “Siemens”) to replace 2,655 high pressure sodium (HPS) street light fixtures with energy efficient light-emitting diode (LED) fixtures; and C. Siemens completed installation work in 2013, but did not fulfill contract requirements until recently, and thus far has received progress payments totaling approximately $699,882; and D. Due to significant delays on the part of Siemens in satisfying contractual obligations and submitting final invoices, staff has not processed the final invoice nor released the withheld retention; and E. Siemens satisfied its contractual obligations and submitted a final invoice in January 2015 and staff is now prepared to release a total final payment to Siemens in the amount of $232,137 (including payment of final invoice and withheld retention); and F. The work has been completed and verified, and the project is deemed complete per the contract terms by staff. The project has a remaining balance of $47,627 to use towards the final payment to Siemens, leaving a balance of $184,510 required in order to release the final payment to Siemens; and G. Staff therefore requires additional funds in the Streetlight Conversion capital improvement project (EL-10009) in order to release such final payment. SECTION 2. Therefore, the sum of One Hundred Eighty Four Thousand, Five Hundred and Ten Dollars ($184,510) is hereby appropriated in the Electric Fund for the Street Light Conversion Project (EL-10009), offset with an equal reduction in the Electric Fund Distribution Reserve. ATTACHMENT A 2 Revised December 08, 2014 5238/eb SECTION 3. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption. SECTION 4. The Council of the City of Palo Alto hereby finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: Enter Date Here AYES: NOES: ABSENT: ABSTENTIONS: NOT PARTICIPATING: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Senior Assistant City Attorney City Manager ____________________________ Director of Administrative Services ____________________________ Director of Utilities City of Palo Alto (ID # 5707) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/18/2015 City of Palo Alto Page 1 Summary Title: Utilities Department Energy Efficiency Contracts Title: Approve and Authorize the City Manager or Designee to Execute the Following Seven Third-Party Energy Efficiency Program Contracts in a Combined Not to Exceed Amount of $6,625,000 and a Term for each through June 30, 2018: (1) CLEAResult Consulting, Inc., C15159135 in an Amount Not to Exceed $910,000; (2) Eagle Systems International, Inc. DBA Synergy Companies, C15159126 in an Amount Not to Exceed $540,000; (3) Eagle Systems International, Inc. DBA Synergy Companies, C15159125 in an Amount Not to Exceed $450,000; (4) Ecology Action of Santa Cruz, C15159124 in an Amount Not to Exceed $1,950,000; and the Following Three Contracts With a Shared Total Not to Exceed Amount of $2,775,000 (5) Ecology Action of Santa Cruz, C15155144A, (6) Enovity, Inc., C15155144B, and (7) BASE Energy, Inc., C15155144C From: City Manager Lead Department: Utilities Recommendation Staff recommends that Council approve and authorize the City Manager, or his designee, to execute the attached seven third-party energy efficiency (EE) program contracts in a total amount not to exceed $6,625,000 and a term for each through June 30, 2018: Category 1: Residential EE programs (1) CLEAResult Consulting, Inc. Contract C15159135 in a not-to-exceed amount of $910,000 for the administration of the Home Efficiency Genie program, which provides in-home energy assessment and phone-based EE advisory services to residents; (2) Eagle Systems International, Inc. DBA Synergy Companies Contract C15159126 in a not-to-exceed amount of $540,000 for the administration of the Residential Energy Assistance Program, which provides no cost, direct installation EE services to prequalified residential customers that are eligible based on financial or medical needs; City of Palo Alto Page 2 Category 2: Small to Medium Commercial EE programs (3) Eagle Systems International, Inc. DBA Synergy Companies Contract C15159125 in a not-to-exceed amount of $450,000 for the administration of the MultiFamily Residence Plus+ Program, which provide no cost, direct installation of EE measures to multifamily residences with 4 or more units; (4) Ecology Action of Santa Cruz of Santa Cruz Contract C15159124 in a not-to- exceed amount of $1,950,000 for the administration of the SMB Energy Edge Program, which provides turnkey direct installation of EE measures to small and medium commercial customers; Category 3: Large Commercial & Industrial EE programs Staff will administer the following three contracts in a manner that ensures the aggregate amount of total compensation paid across all three contracts is in an amount not to exceed $2,775,000 over the Term of the agreements (through June 30, 2018). (5) Ecology Action of Santa Cruz of Santa Cruz Contract C15155144A in a combined not-to-exceed amount of $2,775,000 across a total of three contracts (C15155144A, C15155144B and C15155144C), of which this is one, for the administration of the C&I Energy Edge Program, which provides building energy performance optimization services to large commercial and industrial customers; (6) Enovity, Inc. Contract C15155144B in a combined not-to-exceed amount of $2,775,000 across a total of three contracts (C15155144A, C15155144B and C15155144C), of which this is one, for the administration of the Commercial and Industrial Energy Efficiency Program (“CIEEP”), which provides building energy performance optimization services to large commercial and industrial customers; (7) BASE Energy, Inc. Contract C15155144C in a combined not-to-exceed amount of $2,775,000 across a total of three contracts (C15155144A, C15155144B and C15155144C), of which this is one, for the administration of the Industrial and Commercial Efficiency (“ICE”) Program, which provides building energy performance optimization services to large commercial and industrial customers; Executive Summary Council has adopted a number of policies which support funding programs that maximize the deployment of cost-effective, reliable and feasible EE within the City of Palo Alto (“City”). The City Council last updated the City’s ten-year electric and gas efficiency goals in December 2012 for the period between 2014 and 2023. The cumulative savings targets based on these goals are 4.8% of the City’s projected electric usage and 2.85% of the City’s projected gas usage. In order to achieve these aggressive EE goals, the City of Palo Alto Utilities (CPAU) has contracted with third-party EE service providers since 2006 to expand the suite of EE programs for its customers. During FY 2014, third-party EE service providers delivered close to 60% of the electric savings and over 90% of the gas savings; the remaining savings are achieved through City of Palo Alto Page 3 staff-administered programs. The contract terms with third-party EE service providers are typically three years. Of the City’s seven existing third-party EE program contracts, four will expire on June 30, 2015. To ensure continuity of EE program services to the City’s customers, staff issued a Request for Proposals (RFP) for third-party EE program services in June 2014. The proposals were evaluated and staff recommends seven new contracts with five vendors for a term through June 30, 2018. If fully implemented, these contracts will cost $6,625,000 between Fiscal Year (FY) 2015 and FY 2018. Energy savings would be significant from these programs. These programs will be funded through the electric and gas public benefit funds as well as supply funds. Background State law (AB 1890; 1996) requires publicly owned electric utilities (POUs) to establish a public benefit charge of 2.85% of revenue to fund any or all of the following “public benefit” programs: • Cost-effective, Demand Side Management (DSM) services to promote EE and energy conservation. • New investment in renewable energy resources and technologies consistent with existing statutes and regulations that promote those resources and technologies. • Research, development and demonstration programs in the public interest which advance science or a technology not being adequately provided for by competitive and regulated markets. • Services for low-income electricity customers including, but not limited to, targeted EE installations and rate discounts. In addition, CPAU provides supplemental funding to implement efficiency programs from supply funds as long as the cost of efficiency is less than the cost of electric and gas supply. POUs are also required by state law (AB 2021(2006), as amended by AB 2227 (2012)) to develop annual electric efficiency targets over ten years based on all potentially achievable cost- effective energy savings and update the goals every four years. The City Council adopted the first set of ten-year electric and gas efficiency goals for the City in April 2007. The most recent electric and gas efficiency goals were adopted by the City Council in December 2012 for the period between 2014 and 2023 (Staff Report 3358). The current cumulative 10-year savings goals are 4.8% of the City’s projected electric usage and 2.85% of the City’s projected gas usage. Discussion In FY 2014, EE programs administered through third-party service providers accounted for nearly 60% of CPAU’s reported electric savings and over 90% of CPAU’s reported gas savings. These third-party EE programs are instrumental to CPAU’s ability to meet its aggressive EE goals. There were altogether 10 third-party administered EE programs during FY 2014. Three of these programs expired at the end of FY 2014, and as of June 30, 2015, four out of the remaining seven third-party EE program contracts will expire. To ensure continuity of EE City of Palo Alto Page 4 services to both the City’s residential and non-residential customers, staff issued an RFP for third-party EE program services in June 2014. The RFP covered three categories of work targeting different customer segments, with instructions requiring proposers to submit a separate proposal to each category. Proposals were evaluated based on the following criteria: 1. Quality and completeness of proposal; 2. Quality, performance and effectiveness of the proposed solution, goods and/or services; 3. Proposer’s experience delivering similar programs; 4. Cost to the City; 5. Proposer’s financial stability; 6. Proposer’s location; 7. Proposer’s prior record of performance with city or others; and 8. Proposer’s exceptions taken to the City’s standard agreement for professional services. The description for each category of work, the results of staff’s evaluation of the submitted proposals, and staff’s recommendations for contract approval are summarized below. Category 1: Residential EE programs  Develop and administer electric and/or natural gas efficiency programs for residential customers (single family including low income households, multi-family households) Category 1 programs target the residential segment, including low-income residential customers. EE programs addressing the residential segment are typically the least cost effective compared to other segments. Over the last decade, state and federal regulations have been aggressively increasing the efficiency standards for appliances such as refrigerators, thereby reducing the energy savings attributed to utility EE programs. At the same time, addressing the residential segment requires a multi-prong approach to educate consumers and contractors, which adds to overhead costs. Staff received six proposals in this category, selected the following two programs as finalists, and recommends Council approval for each agreement: (1) CLEAResult Consulting, Inc. (Contract C15159135) The Home Efficiency Genie program, proposed by CLEAResult Consulting, Inc., will serve both single- and multi-family residential households. This program will provide phone- based energy consulting services offering EE advice as well as assistance to customers, including help in selecting contractors, reviewing contractor bids, and financing home efficiency upgrade projects. This program also offers various levels of in-home energy assessment with a customer copayment; participating customers will receive a Home Energy Assessment Report that identifies EE upgrade opportunities and guides the customer through the upgrade process. Compensation to the program administrator is based on initial program development costs, an hourly rate for the phone-based energy advisor and fixed fee per in-home energy assessment. City of Palo Alto Page 5 The proposed contract not-to-exceed amount is $910,000 over the term of the contract (through June 30, 2018), with projected total program savings of 66,300 therms and 272,400 kilowatt-hours (kWh). This will be a new program to CPAU’s EE portfolio. (2) Eagle Systems International, Inc. DBA Synergy Companies (Contract C15159126) The Residential Energy Assistance Program (“REAP”), proposed by Eagle Systems International, Inc. DBA Synergy Companies, will provide direct installation, no-cost EE services, including weatherization and equipment replacement, to qualified customers based on financial or medical needs. City staff will provide a monthly list of eligible customers to the consultant. Compensation to the program administrator is based on a fixed per unit cost for each eligible measure installed or serviced; administrative costs are included in the per unit fixed costs. The proposed contract not-to-exceed amount is $540,000 over the term of the contract (through June 30, 2018), with projected total program savings of 25,722 therms and 166,180 kWh. Synergy has been administrating the REAP program on behalf of CPAU over the past ten years. Category 2: Small to Medium Commercial EE programs  Develop and administer electric and/or natural gas efficiency programs for small to medium sized commercial` customers Category 2 programs target the small and medium commercial segment, including multifamily residences. This customer segment is considered “hard to reach” and includes non-franchised businesses, restaurants and non-profit organizations with limited resources dedicated to address utility-related issues. These businesses often operate in a leased space on a short term basis (less than five years), and therefore have lower payback tolerance for EE investments. EE improvements targeting these customers often involve financing or direct installation assistance. Staff received ten proposals in this category, selected the following two programs as finalists, and recommends Council approval for each agreement: (3) Eagle Systems International, Inc. DBA Synergy Companies (Contract C15159125) The MultiFamily (MF) Residence Plus+ program, proposed by Eagle Systems International, Inc. DBA Synergy Companies, will provide direct installation, no-cost EE services to multi-family residences with 4 or more units, including apartments, hospices, and care centers. In addition, this program also targets select small and medium commercial properties to provide attic insulation service which is not available through the SMB EnergyEdge Program (see below). Compensation to the program administrator is based on a fixed per unit cost for each eligible measure installed or serviced; administrative costs are included in the per unit fixed costs. Eligible measures include common area upgrades such as attic insulation, efficient lighting upgrades and occupancy sensors. City of Palo Alto Page 6 The proposed contract not-to-exceed amount is $450,000 over the contract term (through June 30, 2018), with projected total program savings of 55,332 therms and 887,376 kWh. This will be a new program to CPAU’s EE portfolio. (4) Ecology Action of Santa Cruz of Santa Cruz (Contract C15159124) The SMB EnergyEdge Program, proposed by Ecology Action of Santa Cruz, will provide turnkey, comprehensive EE retrofit services to small and medium sized businesses as well as select measures for multi-family buildings that are not covered by the MF Residence Plus+ program above. The program administrator will provide free audits to interested customers, develop a proposal with recommended EE retrofits, customer co- payment and projected payback, and complete the installation through its network of contractors. Customers do not need to separately apply for a CPAU rebate as that is handled directly by the program administrator. Compensation to the program administrator includes both the customer rebate and the contractor performance payment, which are both based on customer kWh and therm savings. Program administrative and marketing costs are included in the contractor performance payment. Eligible measures cover a variety of end uses including lighting, refrigeration, heating, venting and air conditioning (HVAC), and domestic hot water heating. The proposed contract not-to-exceed amount is $1,950,000 over the term of the contract (through June 30, 2018), with projected total program savings of 4,386 therms and 6,393,141 kWh. Of the contract amount, about half represents customer rebate payments while the other half represents contractor performance payments. Ecology Action of Santa Cruz has administered a similar EE retrofit program called RightLights+ for small to medium commercial customers within the City since 2008. Category 3: Large Commercial & Industrial EE programs  Develop and administer performance-based electric and/or natural gas efficiency programs for commercial, industrial and institutional customers Category 3 programs target CPAU Key Account customers in the government, institutional and private sectors within the City. Key Account customers are typically customers with utility bills that exceed $1 million per year, and also include customers that have special power needs for their facilities. Buildings within this customer segment typically have more complex energy systems, with a dedicated staff managing the facilities and related energy issues. CPAU maintains regular communication with these customers through an assigned Key Account Representative who acts as a single point of contact for all issues including utility services, garbage and recycling services, emergency preparedness, street maintenance and billing issues. Staff received seven proposals in this category, selected the following three programs as finalists, and recommends Council approval for each agreement: (5) Ecology Action of Santa Cruz of Santa Cruz (Contract C15155144A) City of Palo Alto Page 7  C&I Energy Edge Program (6) Enovity, Inc. (Contract C15155144B)  The Commercial and Industrial Energy Efficiency Program (“CIEEP”) (7) BASE Energy, Inc. (Contract C15155144C)  Industrial and Commercial Efficiency (“ICE”) Program The structure for these three contracts differs from the Category 1 and Category 2 Programs in that there is an aggregate not to exceed amount for compensation of $2,775,000 across all three agreements over the Term (through June 30, 2018), with an aggregate not to exceed amount of $925,000 per fiscal year. City staff will administer the three contracts in a manner that ensures that the total aggregate of compensation paid per fiscal year, and over the Term to all three consultants in the aggregate does not exceed those established not to exceed amounts. Under the terms of the three agreements, the three consultants also expressly acknowledge that: (a) the City is hiring three (3) consultants to perform the Category 3 work, (b) they are subject to the aggregate not to exceed compensation limits, and (c) none of the consultants are guaranteed any specific quantity of work. All three Category 3 programs are very similar in nature, primarily to encourage Key Account customers to optimize building energy performance through implementation of building infrastructure improvements, energy efficient equipment upgrade, and retrocommissioning of building energy systems. In the past 6 years, CPAU has contracted with Enovity, Inc. to service the Key Account segment. By expanding from one to three programs, CPAU projects that more Key Account customers will undertake comprehensive EE retrofits. The customer engagement process is identical for all three programs. The program administrator will coordinate with CPAU’s Key Account representatives to meet with the customer and obtain the customer’s agreement to perform an initial site assessment to identify potential EE measures, estimated energy savings, project cost and payback. Upon a customer’s approval, the program administrator will perform a detailed evaluation of the selected EE measures and develop a detailed evaluation report. Based on the detailed evaluation report, a customer will then decide which measures to implement and sign a Project Installation Agreement which provides details on the equipment specifications and installation requirements in order to qualify for CPAU incentives for EE projects. The program administrator may offer full turnkey installation service to the customer, or serve as technical advisor during the project implementation phase. Upon completion of the project, the program administrator will ensure that the project meets the specifications described in the Project Installation Agreement and prepare a final measurement and verification report. The program administrator will also assist the customer with separately applying for CPAU incentives. City of Palo Alto Page 8 Compensation for the CIEEP program (with Enovity, Inc.) and the C&I Energy Edge program (with Ecology Action of Santa Cruz) are identical, and are performance payments that are based on the implemented electric and gas savings at a rate of $0.135 per kWh and $0.908 per therm saved in the first year, respectively. Compensation for the ICE program (with BASE Energy, Inc.) is also a performance payment that is based on the implemented electric and gas savings at a rate of $0.106 per kWh and $1.00 per therm saved in the first year. Marketing and administrative costs are included in these rates. The maximum annual budget for all three programs is $925,000; over the contract term, the maximum budget is $2,775,000 for all three programs. The Compensation section (Exhibit “C”) of the three proposed program contracts shows the performance payment rates and the pooled not to exceed amounts. This pooled compensation approach provides flexibility to shift budget across the three Category 3 programs. Summary of Seven EE Programs and Agreements Table 1 below provides a summary of the recommended program contracts in each program category. Table 1. Summary of proposed program contracts in each program category Program Category Proposed Contract Approx. Annual Program Budget Not-to- Exceed Budget over contract term Estimated 3-year electric savings (kWh) Estimated 3-year gas savings (Therms) Category 1: Residential EE programs (1) CLEAResult Consulting, Inc. C15159135 $303,000 $910,000 272,400 66,300 (2) Eagle Systems International, Inc. DBA Synergy Companies C15159126 $180,000 $540,000 166,180 25,722 Category 2: Small to Medium Commercial EE programs (3) Eagle Systems International, Inc. DBA Synergy Companies C15159125 $150,000 $450,000 887,376 55,322 (4) Ecology Action of Santa Cruz C15159124 $650,000 $1,950,000 6,393,141 4,386 City of Palo Alto Page 9 Program Category Proposed Contract Approx. Annual Program Budget Not-to- Exceed Budget over contract term Estimated 3-year electric savings (kWh) Estimated 3-year gas savings (Therms) Category 3: Large Commercial & Industrial EE programs (5) Ecology Action of Santa Cruz C15155144A Pooled $925,000 Pooled $2,775,000 7,312,500 166,193 (6) Enovity, Inc. C15155144B 8,563,500 77,643 (7) BASE Energy, Inc. C15155144C 4,544,000 82,800 Total $2,208,000 $6,625,000 28,139,097 kWh 478,366 therms Overall, energy savings achieved through these proposed EE programs are cost effective when compared to the cost of supply resources.1 Based on the estimated program budget and energy savings, the weighted average cost of energy savings for these seven programs is about $0.05 per kWh and $0.47 per therm including both third-party program administration costs as well as customer rebates. By comparison, the levelized cost of carbon neutral electric supply is about $0.09 per kWh and the cost of natural gas supply is $0.69 per therm. Over the past three years, the cost of implementing EE averages around $0.05 per kWh and $0.46 therm; this information is updated each year in the CPAU Annual Demand Side Management (DSM) Programs Report. Savings are evaluated and verified annually by an outside third-party verifier. Resource Impact The funds to support these contracts are available within the Utilities Electric and Gas DSM budgets subject to the approval of the FY 2016 and subsequent year budget requests. Policy Implications The proposed contracts support the Council-approved Gas Utility Long-term Plan, the Ten-year EE Portfolio Plan, the Long-term Electric Acquisition Plan, the Utilities Strategic Plan, and Comprehensive Plan Goal N-9. Implementation of EE programs also support greenhouse gas reduction goals identified in Palo Alto’s Climate Protection Plan and in the California Global Warming Solutions Act of 2006 (AB 32). Environmental Review 1 Note that both Category 1 programs (Home Efficiency Genie and REAP) do not perform well individually in terms of cost effectiveness due to the high costs to provide field-based EE services to the residential sector and the limited energy savings that are attributable to the EE program. City of Palo Alto Page 10 Approval of the seven third-party EE agreements proposed in this staff report does not meet the definition of a project pursuant to Section 21065 of the California Public Resources Code, thus no environmental review under the California Environmental Quality Act (CEQA) is required and the work performed by consultants and staff in connection with these programs is categorically exempt from CEQA pursuant to section 15301 of Title 14 of the California Code of Regulations. Attachments:  Attachment 1: CLEARresult Consulting, Inc. Contract No. C15159135 (PDF)  Attachment 2: Eagle Systems International, Inc. DBA Synergy Companies Contract No. C15159126 (PDF)  Attachment 3: Eagle Systems International, Inc. DBA Synergy Companies Contract No. C15159125 (PDF)  Attachment 4: Ecology Action of Santa Cruz Contract No. C15159124 (PDF)  Attachment 5: Ecology Action of Santa Cruz Contract No. C15155144A (PDF)  Attachment 6: Enovity, Inc. Contract No. C15155144B (PDF)  Attachment 7: BASE Energy, Inc. Contract No. C15155144C (PDF) CITY OF PALO ALTO CONTRACT NO. C15159135 AGREEMENT BETWEEN THE CITY OF PALO ALTO AND CLEARESULT CONSULTING, INC. FOR PROFESSIONAL SERVICES This Agreement is entered into on this 1st day of June 2015 (“Agreement”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and CLEARESULT CONSULTING, INC., a Texas corporation, located at 4301 Westbank Dr., Bldg. A, Suite 300 Austin, TX 78746 ("CONSULTANT"). RECITALS The following recitals are a substantive portion of this Agreement. A. CITY intends to provide energy efficiency services to CITY’s residents (“Project”) and desires to engage a consultant to administer, manager and deliver a residential energy savings program 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 in Exhibit “A” in accordance with the terms and conditions contained in this Agreement. The performance of all Services shall be to the reasonable satisfaction of CITY. SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through June 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 Professional Services Rev. Feb. 20141 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA not preclude recovery of damages for delay if the extension is required due to the fault of CONSULTANT. 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 Eight Hundred Sixty-Four Thousand Five Hundred Dollars ($864,500). In the event Additional Services are authorized, the total compensation for Services, Additional Services shall not exceed Forty-Five Thousand Five Hundred Dollars ($45,500). The applicable rates and schedule of payment are set out in Exhibit “C”, which is attached to and made a part of this Agreement. No Reimbursable Expenses are contemplated as part of this Agreement. Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit “C”. CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described in 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, 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 subconsultants, 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, Professional Services Rev. Feb. 2014 2 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA 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 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 the CITY’s stated construction budget, CONSULTANT shall make recommendations to the CITY for aligning the Project design with the budget, incorporate CITY approved recommendations, and revise the design to meet the Project budget, at no additional cost to CITY. SECTION 10. INDEPENDENT CONTRACTOR. It is understood and agreed that in 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 the CITY. SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of CONSULTANT are material considerations for this Agreement. CONSULTANT shall not assign or transfer any interest in this Agreement nor the performance of any of 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. Option B: Subcontracts Authorized: Notwithstanding Section 11 above, CITY agrees that subconsultants may be used to complete the Services. The subconsultants authorized by CITY to perform work on this Project are: As set forth in Exhibit A attached to this Agreement. CONSULTANT shall be responsible for directing the work of any subconsultants and for any compensation due to subconsultants. CITY assumes no responsibility whatsoever concerning compensation. CONSULTANT shall be fully responsible to CITY for all acts and omissions of a subconsultant. CONSULTANT shall change or add subconsultants only with the prior approval of the city manager or his designee. Professional Services Rev. Feb. 2014 3 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign David Siddiqui as the project supervisor to have supervisory responsibility for the performance, progress, and execution of the Services 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. The City’s project manager is Christine Tam or her designee, Utilities Department, Marketing Services Division, 250 Hamilton Ave, Palo Alto, CA 94303. The project manager will be CONSULTANT’s point of contact with respect to performance, progress and execution of the Services. The CITY may designate an alternate project manager from time to time. SECTION 14. OWNERSHIP OF MATERIALS. Upon delivery, all work product, including without limitation, 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 attorney’s 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 Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA to require CONSULTANT to indemnify an Indemnified Party from Claims arising from the active negligence, sole negligence or willful misconduct of an Indemnified Party. 16.3. The acceptance of CONSULTANT’s services and duties by CITY shall not operate as a waiver of the right of indemnification. The provisions of this Section 16 shall survive the expiration or early termination of this Agreement. 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 Purchasing Manager 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. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA 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 Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA 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 subconsultants, 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 the 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 the 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 Consultant to City generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double-sided and printed on a minimum of 30% or greater post-consumer content paper, unless otherwise approved by the 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 the City shall be purchased in accordance with the 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 Office. • Reusable/returnable pallets shall be taken back by the Consultant, at no additional Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA cost to the City, for reuse or recycling. Consultant shall provide documentation from the facility accepting the pallets to verify that pallets are not being disposed. SECTION 24. NON-APPROPRIATION. 24.1. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion 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. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. 25.1. In its performance of Services under this Agreement, CONSULTANT and its Representatives may acquire and otherwise gain access to Confidential Information, as defined in Exhibit “E”, which is exempt from public disclosure under the California Public Records Act, Cal. Gov. Code section 6250 et seq. CONSULTANT agrees to protect such Confidential Information from disclosure to any third parties, in accordance with the terms and conditions set forth in Exhibit “E” attached to this Agreement. SECTION 26. MISCELLANEOUS PROVISIONS. 26.1. This Agreement will be governed by the laws of the State of California. 26.2. 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. 26.3. 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. 26.4. 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. 26.5. 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. 26.6. If a court of competent jurisdiction finds or rules that any provision of this Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA 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. 26.7. 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. 26.8 If, pursuant to this contract with CONSULTANT, City shares with CONSULTANT personal information as defined in California Civil Code section 1798.81.5(d) about a California resident (“Personal Information”), CONSULTANT shall maintain reasonable and appropriate security procedures to protect that Personal Information, and shall inform City immediately upon learning that there has been a breach in the security of the system or in the security of the Personal Information. CONSULTANT shall not use Personal Information for direct marketing purposes without City’s express written consent. 26.9 All unchecked boxes do not apply to this agreement. 26.10 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. 26.11 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. Attachments: EXHIBIT “A”: SCOPE OF SERVICES EXHIBIT “B”: SCHEDULE OF PERFORMANCE EXHIBIT “C”: COMPENSATION EXHIBIT “D”: INSURANCE REQUIREMENTS EXHIBIT “E”: CONFIDENTIALITY AGREEMENT EXHIBIT “F”: IDENTITY INFORMATION PROTECTION EXHIBIT “G”: SOFTWARE AS A SERVICE SECURITY AND PRIVACY TERMS AND CONDITIONS CITY OF PALO ALTO ___________________________ City Manager APPROVED AS TO FORM: __________________________ Senior Deputy City Attorney CLEARESULT CONSULTING, INC. By:___________________________ Name:_________________________ Title:________________________ Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA Vice President Lauren Casentini EXHIBIT “A” SCOPE OF SERVICES CONSULTANT will leverage its residential demand side management program implementation expertise and experience to implement a home efficiency assessment and advisor program (“Program”) on behalf of the City of Palo Alto Utilities (“CITY”). CONSULTANT will provide CITY with efficiency advisors that are residential efficiency experts with a strong command of building science technical knowledge, sales skills, and excellent customer service skills. CONSULTANT will provide both field-based and phone-based services to support customers as part of the Program. A. PROGRAM OVERVIEW Name Home Efficiency Genie Program Brief Program Description CONSULTANT’s Program will provide in-person and phone-based efficiency consulting services to CITY customers offering energy efficiency advice as well as assistance to customers including selection of contractors for installation of efficiency improvements, review of contractor bids, and financing for home and efficiency upgrade projects (including the CITY’s SMART residential rebate program). CONSULTANT’s Program will also offer various levels of in-home energy assessment with a customer copayment. CONSULTANT will offer participating customers a Home Energy Assessment Report, at varying levels, that identifies energy efficiency upgrade opportunities. As with the phone-based services, CONSULTANT will also guide the customer through the efficiency upgrade process following a Home Energy Assessment Report, including, as noted assistance with selection of contractors and bids and financing. With assistance from CONSULTANT, as the customer desires, any installation of efficiency measures will be completed by contractors at the price selected by the customer. Customers have the option to select contractors, review bids and explore financing with the assistance and guidance of CONSULTANT under the Program. CONSULTANT will claim energy savings from all measures installed by the customer as a result of the recommendations from the efficiency audits conducted by CONSULTANT as part of the Program. While some of these measures are covered under the CITY’s Smart Energy Program, customers participating in the Program are ineligible to apply for rebates for these measures under the City’s Smart Energy Program. This ensures that there will be no double- counting of energy savings between the CONSULTANT program and the Smart Energy Program. CONSULTANT will (a) notify the customer in writing, and in advance of any customer participation in the Program, that customer is not eligible for rebates under the City’s Smart Energy Program, should customer elect to participate in CONSULTANT’s Program. Such notice shall specifically describe the measures and rebates that customer will become ineligible for under the City’s Smart Energy Program upon participation in CONSULTANT’s Program; and (b) obtain a written waiver from the customer acknowledging that customer understands they are ineligible to apply for the Smart Energy Program rebate prior to the home efficiency audit. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA Where customer elects to participate in the Program, but does not install all measures recommended by CONSULTANT, customer’s eligibility to participate in the City’s Smart Rebate Program will be governed by the City’s existing terms and conditions applicable to the Smart Rebate Program, as the same may be amended from time to time (see cityofpaloalto.org/smartenergy). Target Market The Program will serve single-family and multi-family residential households within the CITY’s territory. Annual Energy Savings Target CONSULTANT’s energy savings targets for the Program for the term of the Agreement are as provided in Table A.1. Table A.1 Program Energy & Water Saving Targets Year Therms Saved kWh Saved Gallons Saved FY 2015 0 0 0 FY 2016 22,100 90,800 815,000 FY 2017 22,100 90,800 815,000 FY 2018 22,100 90,800 815,000 FY 2015 - FY 2018 66,300 272,400 2,445,000 In addition to the specific project components identified in Section B “Program Implementation and Delivery”, CONSULTANT will develop and implement a Marketing Plan, Quality Assurance Plan and Staffing Plan. Marketing Plan To generate leads for the Program, CONSULTANT will conduct marketing, education and outreach (ME&O) through a variety of channels, including real estate professionals, contractor trade allies, neighborhood associations, and local employers among others. CONSULTANT will also work with CITY to leverage other CITY marketing activities (e.g. bill inserts, email communications) as much as possible to drive leads to the Program. Quality Assurance Plan CONSULTANT will supervise and manage relationships with contractors that CONSULTANT recommends to customers for completing efficiency upgrade projects. CONSULTANT will operate according to a quality assurance plan that emphasizes transparent and efficient procurement procedures, quality installation of direct install measures, installation Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA of high efficiency equipment, compliance with the CITY rebate program requirements, and high levels of customer satisfaction. CONSULTANT will obtain pre-approval from CITY for all energy and water efficient devices that they intend to install at customer homes as part of the Program. All direct install measures will meet the minimum efficiency ratings required by CITY. CONSULTANT agrees to ensure that all manufacturer product warranties held either by CONSULTANT or contractors recommended by CONSULTANT to customer will be transferred to the customer in connection with installation; and that CONSULTANT will be available to replace any defective direct installs for customers. Without limiting Section 16 (Indemnity) of the Agreement, CONSULTANT agrees and understands it is responsible for all costs and damages associated with any theft, vandalism, damage or criminal acts involving or committed by CONSULTANT staff, contractors or agents involving a customer or customer premises, including issues related to workmanship or damage caused by contractors recommended by CONSULTANT to customers. CONSULTANT will ensure high quality work is performed by contractors through vetting contractor credentials and licensing, monitoring customer feedback and reviewing rebate applications and associated contractor invoices and contacting customers to ensure measures were installed. Evaluation CONSULTANT will interface with CITY’s contracted evaluation, measurement and verification firms as necessary. CONSULTANT will evaluate Program efficacy for participating customers by comparing pre and post Program consumption, and shall include this information in each quarterly update. Staffing Plan CONSULTANT agrees to staff the Program in accordance with the Staffing Plan set forth below. CONSULTANT shall notify the CITY concerning proposed changes to the plan, and all such changes require prior written consent of the CITY. CITY reserves the right to (i) request CONSULTANT conduct criminal background checks to City’s satisfaction on all CONSULTANT’s staff, contractors or agents that may enter customer property, and (ii) require that any staff, contractor or agent of CONSULTANT that fails the background check shall not be permitted to enter any customer premises. David Siddiqui, Director, CLEAResult Mr. Siddiqui is responsible for overseeing the portfolio of energy advising programs in California. Based in CLEAResult’s San Mateo office, Mr. Siddiqui will engage with the CITY and the CONSULTANT team to ensure the Program is delivered on schedule and within budget. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA Jeff Srauss, Program Manager, CLEAResult Mr. Strauss will be the Program manager and primary point of contact for the CITY. Mr. Strauss is responsible for managing, training, and mentoring the implementation team in CLEAResult’s San Mateo office. Energy Advisor, CLEAResult CLEAResult will provide a dedicated, full-time Energy Advisor to provide phone-based energy advising services. The Energy Advisor will also provide outreach and contractor services in support of the Program’s goals. Energy Analyst / BPI Building Analyst, CLEAResult CLEAResult will provide a part-time Energy Analyst / BPI Building Analyst to provide field- based energy assessment and field quality control services. The Energy Analyst / BPI Building Analyst will also provide outreach and contractor mentorship in support of the Program’s goals. Renee Yama, Director, Marketing Account Management, CLEAResult As CLEAResult’s Director of Marketing Account Management, Ms. Yama works with regional implementation teams to provide marketing strategy and supervise the CLEAResult marketing team to ensure that client goals are met. The in-house marketing resources and expertise of CLEAResult will be leveraged for the development of the Program website and collateral as well as additional marketing services and local execution of the marketing plan as needed. B. PROGRAM IMPLEMENTATION AND DELIVERY The following outlines the program design and implementation applicable to CONSULTANT: Task 1- PROGRAM RAMP-UP Task 1.1 Marketing Material Development ● CONSULTANT will customize a Home Energy Action Plan for CITY. ● CONSULTANT will launch a Program website with program description and customer sign-up web-to-lead HTML form. ● CONSULTANT will develop draft marketing brochure for use by contractors and energy advisors to promote Program and other existing CITY residential rebate offerings to customers. ● CONSULTANT shall submit to CITY all marketing materials, including websites, press releases, brochures, and any content mentioning Program in any capacity for approval prior to publishing said Program materials. Task 1.2 Program Development ● CONSULTANT will assign a Program Manager to manage the day-to-day operations of the Program to ensure its success and serve as the primary point of contact for the CITY. ● CONSULTANT will host Program kick-off meeting with CITY, work with CITY to finalize range of programs promoted by CONSULTANT and review/integrate existing marketing and rebate materials for these programs. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA ● CONSULTANT will finalize the schedule of activities that provides a monthly work plan and implementation timeline and submit such plan to City for review and approval. ● Define Marketing, Education & Outreach (ME&O) plan, including identification of outreach activities, locations and frequency for CITY’s review and approval. Task 1.3 Customer Relationship Management & Data Tracking ● CONSUTANT will provide CITY with proposed performance metrics for monthly reporting, work with CITY to finalize performance metrics, customize its Customer Relationship Management (CRM) system to meet CITY requirements, and launch CRM system within two weeks of finalizing metrics. Customization of the CONSULTANT’s CRM system includes setting up existing rebates in the system and setting up fields for the specific Program metrics for detailed tracking, reporting and billing. TASK 2 - PROGRAM LAUNCH Task 2.1 Initial Marketing, Education, and Outreach: CONSULTANT will begin with an initial ME&O campaign to all potential partner organizations to introduce them to the Program, establish the relationships, and discuss the goals and expectations of the Program. This campaign includes: ● Outreach to local contractors to establish a pool of participating home performance (HVAC, insulation, lighting etc.) contractors for the purposes of referring homeowner leads; ● Training qualified contractors to market the Program in CITY’s territory by referring clients to Program; ● Outreach to local real estate professionals to establish Program referral channels; ● Outreach to large local employers to promote Program participation; ● Assisting CITY to directly promote the Program through bill inserts or email communications; ● Media, case studies (through Palo Alto Patch, etc.); ● Conducting presentations at relevant events leveraging existing audiences; ● Upgrade success events at previously upgraded homes; and ● Launching a simple, clean, branded Program website with web-to-lead form for customer sign-ups (directly linked to CONSULTANT data management system). Task 2.2 Direct Residential Marketing: CONSULTANT will submit marketing materials to CITY for use in bill inserts, direct mail postcards and detach cards, magazine ads and related marketing channels. TASK 3- PROGRAM IMPLEMENTATION Task 3.1 Program Enrollment: CONSULTANT will implement the marketing plan and enroll customers that have been screened and identified as qualified. CONSULTANT will focus on two areas of efficiency assistance: direct and indirect efficiency activities. While the Program will generate direct energy and Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA water savings through direct installs, the remainder of the phone-based and field- based services will promote energy savings indirectly through educating and engaging customers and encouraging energy saving behaviors and the completion of additional energy upgrade measures in partnership with contractor trade allies. CONSULTANT has designed the Program such that customer copayments are used to cover some of the cost associated with the field-based services, as well increase the customer’s engagement throughout the process. Task 3.2 Phone Advisory Service: CONSULTANT shall set up dedicated phone line with a (650) area code for phone based advising. CONSULTANT will gain customer’s verbal approval and liability release prior to participating in phone advising. Through phone-based services, CONSULTANT Efficiency Advisors will provide proactive, individualized, and ongoing assistance to homeowners with efficiency advice, and will provide registration assistance when requested by customers for the in-home efficiency assessments. Task 3.3 Efficiency Audits: In-Home Advising: Customer enrollment occurs when CONSULTANT gains customer’s signature on the Program Participation Agreement between CONSULTANT and customer. CONSULTANT will claim energy savings from all measures installed by the customer as a result of the recommendations from the efficiency audits conducted by CONSULTANT as part of the Program. While some of these measures are covered under the CITY’s Smart Energy Program, customers participating in the Program are ineligible to apply for rebates for these measures under the City’s Smart Energy Program. This ensures that there will be no double-counting of energy savings between the CONSULTANT program and the Smart Energy Program. CONSULTANT will (a) notify the customer in writing, and in advance of any customer participation in the Program, that customer is not eligible for rebates under the City’s Smart Energy Program, should customer elect to participate in CONSULTANT’s Program. Such notice shall specifically describe the measures and rebates that customer will become ineligible for under the City’s Smart Energy Program upon participation in CONSULTANT’s Program; and (b) obtain a written waiver from the customer acknowledging that customer understands they are ineligible to apply for the Smart Energy Program rebate prior to the home efficiency audit. Where customer elects to participate in the Program, but does not install all measures recommended by CONSULTANT, customer’s eligibility to participate in the City’s Smart Rebate Program will be governed by the City’s existing terms and conditions applicable to the Smart Rebate Program, as the same may be amended from time to time (see cityofpaloalto.or/smartenergy). CONSULTANT will offer customers a range of field-based services, including Efficiency Audits at Level 0-2. The Level 0 Energy Assessment will be a basic consultation at no charge to the customer and will not be advertised; it will be Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA available upon request by CITY for customers with special circumstances (high bill calls, etc.). Renters in multi-family households will only be eligible for the level 0 audit, due to the tenant’s lack of ability to participate in measures in the level 1 and 2 audits. All homeowners will be eligible for all levels of audit. CONSULTANT agrees to offer Efficiency Audits with the basic characteristics outlined in Table B-1 below: Table B-1. Efficiency Audits: Basic Characteristics Level 0 Level 1 Level 2 Installation of all applicable direct install measures to generate immediate energy savings (2 LED lamps, high efficiency showerheads, faucet aerators, toilet flappers, toilet dye tabs, hose nozzles, door weather-stripping) X X X Field-based advising on energy efficiency topics to encourage energy saving behaviors and the completion of additional energy upgrade measures X X X Field-based overview of historical consumption patterns for water, gas and electric services to drive high customer engagement on behalf of the CITY X X X Visual assessment of the efficiency of the HVAC system(s) X X X Visual assessment of the efficiency of the domestic hot water system(s) X X X Visual assessment of insulation (attic, floor, and walls) X X X Visual assessment of lighting efficiency X X X Visual assessment of windows X X X Visual assessment of the age and condition of major appliances X X X Identification of additional energy saving opportunities (e.g. plug loads) X X X Building envelope leakage (blower door) testing and demonstration X X Duct leakage testing and demonstration X Infrared camera (“IR”) scan and demonstration X Energy software modeling X Home Energy Assessment Report X X X Task 3.4 Assessment Reports: The personalized Home Efficiency Assessment Reports (which may vary in content depending on the type of energy assessment) will include pictures of the customers’ home, findings of the home assessment, and recommendations that will serve as a “map” to help customers navigate the home upgrade process. Task 3.5 Post-Audit Support: During the home visit, the field-based Energy Advisor will introduce the customer to their phone-based Energy Advisor, who will follow-up Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA with the customer to guide the customer through the contractor bidding and selection process, financing options, cross-promote additional CITY sustainability programs, personalize the customer experience, answer their questions and, ultimately, hold the homeowner accountable for following through on completing his/her energy upgrades. Task 3.6 Program Referrals: CONSULTANT will provide referrals to relevant complementary CITY sustainability programs. CONSULTANT can drive participation in water conservation programs, waste reduction programs, or community solar projects, etc. CONSULTANT systematically tracks customer referrals to complementary programs to quantify indirect benefits of the Program. Task 3.7 Meetings: CONSULTANT’s Program Manager will meet with the CITY team on a monthly basis and will also be available for a weekly check-in phone call with the CITY team. CONSULTANT will be available as necessary at any time to ensure effective Program implementation. Task 3.8 Long-Term Follow Up: The long-term follow up will generate additional energy savings through increased participation in CITY’s existing residential rebate offerings and other non-rebated energy efficiency measures. The relationship building and unbiased technical support will drive increased customer satisfaction for CITY. Phone-based energy advising will be provided to all Program customers, and to all residential property owners in the CITY territory. TASK 4 - INVOICING AND REPORTING Task 4.1 Data Management: CONSULTANT will utilize its data management system to provide data tracking, analysis, and reporting as well as actionable insights regarding real-time Program performance. In addition to tracking Program impact, CONSULTANT Energy Advisors track detailed customer information such as barriers and motivations for each account, as well as energy upgrade project status and planned upgrades. Task 4.2 Reporting: In addition to the requirements for invoices set forth in Section 5 of the Agreement, CONSULTANT will upload reports into CITY’s reporting database on a monthly basis in order to complete invoicing. CONSULTANT will also report on the level of additional participation or “lift” that is attributable to its Energy Advisors. CONSULTANT will provide CITY with regular monthly and annual reports in the form of spreadsheets and/or dashboard summary charts as desired by CITY, and will also respond to ad-hoc data requests by CITY. Task 4.3 CONSULTANT agrees to work with CITY to respond to CPUC, CEC, or other Federal, State or local data requests or reporting requirements. Task 4.4 Invoicing: CONSULTANT will invoice CITY on a monthly basis consistent with Section 5 of the Agreement, and in accordance with the more specific guidelines set forth in this Exhibit “A” and in Exhibit “C”, “Compensation”. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA TASK 5 - CUSTOMER FEEDBACK Task 5.1 Perform Customer Feedback Surveys: CONSULTANT will address and resolve all customer issues discovered through either survey feedback or other means of customer contact. CONSULTANT will pursue continuous improvements to promote complete customer satisfaction. Customer feedback issues will be tracked by CONSULTANT using the monthly reports, as well as a completed complaint form. CITY retains the right to separately survey Program participants. Task 5.2 If any issues cannot be resolved to the satisfaction of the customer by CONSULTANT within five (5) business days, CONSULTANT shall immediately provide CITY with a detailed description of any such complaint, which will include the name and contact information of the customer and any other information requested by CITY. TASK 6 – PROGRAM TERMINATION Task 6.1 The CONSULTANT will resolve all outstanding jobs in progress, as well as customer complaints. TASK 7 - SUBMIT FINAL PROGRAM REPORT Task 7.1 CONSULTANT will submit a final report which includes a narrative with an overview of the Program and a spreadsheet detailing the budget and actual Program cost. The final report will include Program Achievements, challenges, goals, and lessons learned. CONSULTANT agrees to deliver the final report within 30 days of the end of the Term as such date may be extended at the sole discretion of CITY. Task 7.2 CONSULTANT will maintain electronic copies of invoices for two years as required by CITY. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA EXHIBIT “B” SCHEDULE OF PERFORMANCE CONSULTANT shall perform the Services so as to complete each milestone by due dates as specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the project managers for CONSULTANT and CITY so long as all work is completed within the term of the agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed. Task Timing (Due Date) TASK 1 - PROGRAM RAMP-UP Task 1.1 Within 15 days after contract execution Task 1.2 Within 21 days after contract execution Task 1.3 Within 30 days after contract execution TASK 2 - PROGRAM LAUNCH Task 2.1 Within 60 days after contract execution Task 2.2 Within 60 days after contract execution TASK 3 – PROGRAM IMPLEMENATION Task 3.1 Ongoing Task 3.2 Ongoing Task 3.3 Ongoing Task 3.4 Ongoing Task 3.5 Ongoing Task 3.6 Ongoing Task 3.7 Ongoing Task 3.8 Ongoing TASK 4 - INVOICING AND REPORTING Task 4.1 Ongoing Task 4.2 Ongoing Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA Task 4.3 Ongoing Task 4.4 Ongoing TASK 5 - CUSTOMER FEEDBACK Task 5.1 Ongoing Task 5.2 Ongoing TASK 6 – PROGRAM TERMINATION Task 6.1 30 days prior to contract expiration TASK 7 - SUBMIT FINAL PROGRAM REPORT Task 7.1 Within 30 days after contract expiration Task 7.2 Within 30 days after contract expiration Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA 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 this Exhibit “C”. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit “A” shall NOT EXCEED nine hundred and ten thousand dollars ($910,000) over the Term of the Agreement, which includes the not to exceed amount for Basic Services ($864,500) and the not to exceed amount for Additional Services, if authorized by CITY ($45,500). CONSULTANT agrees to complete all services 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. Total Basic Services: $864,500 Total Additional Services: $ 45,500 Maximum Total Compensation: $910,000 As set forth in Table C-1, CITY will compensate CONSULTANT on either a fixed price or time and materials basis based on the task completed by CONSULTANT and approved by CITY. Table C-1 sets forth the NOT TO EXCEED price per task, and such not to exceed amounts include all of CONSULTANT’s costs, including, without limitation, administrative costs, marketing/outreach costs, and direct implementation (materials and labor) costs. It is the CITY’s expectation that approximately 95% of CONSULTANT’s costs be related to direct implementation, marketing and outreach costs (materials and labor) with only approximately 5% reserved for initial, one-time development and set up costs. 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 either on the rates set forth in Table C-1 or, where not listed rates mutually agreed upon by CITY and CONSULTANT. The Additional Services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the CITY’s Project Manager and CONSULTANT prior to commencement of the Additional Services. Payment for Additional services is subject to all requirements and restrictions in this Agreement, including the not to exceed amount specifically identified in this Exhibit “C”. PAYMENT SCHEDULE As described in Section 5 of the Agreement, CONSULTANT will submit invoices, accompanied by complete and accurate reports on work performed, to CITY on a monthly basis. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA Table C-1: Not to Exceed Compensation, By Task *Fixed fee compensation to be paid by CITY to CONSULTANT upon completion of task. **CONSULTANT will submit price quote(s) to CITY for program collateral costs prior to incurring such costs. CITY shall approve all such costs in advance and will only compensate CONSULTANT for such program collateral costs where CONSULTANT has secured approval of price quotes from CITY in advance. Task Units Rate/Unit Units/Mo nth NTE Monthly NTE FY 2015 & FY 2016 (April 2015- June 2016) NTE FY 2017 (July 2016- June 2017) NTE FY 2018 (July 2017- June 2018) NTE April 2015 - June 2018 NTE DEVELOPMENT Data management system setup and customization*Fixed Cost $ 4,000.00 Energy assessment tool setup and customization*Fixed cost $ 7,500.00 Program Development hours $ 100.00 $ 6,000.00 Initial Marketing hours $ 95.00 $ 9,500.00 Program Material Development - Webpage with web-to-lead form*Fixed Cost $ 7,000.00 Program Material Development - Program Collateral** $ 10,172.50 $ 4,000.00 $ 2,000.00 Total Development Costs $ 50,172.50 TIME AND MATERIALS Labor: Phone-Based Energy Advisor (FY 2015)hours $ 65.00 152.5 $ 9,912.50 $ 29,737.50 Labor: Phone-Based Energy Advisor (FY 2016)hours $ 67.00 152.5 $ 10,217.50 $ 122,610.00 Labor: Phone-Based Energy Advisor (FY 2017)hours $ 68.00 152.5 $ 10,370.00 $ 124,440.00 Labor: Phone-Based Energy Advisor (FY 2018)hours $ 68.00 152.5 $ 10,370.00 $ 124,440.00 Total Labor: Phone-Based Energy Advisor (FY 2015-FY 2018) $ 401,227.50 FIXED FEE Level 0 Energy Assessment per $ 350.00 6 $ 2,100.00 $ 31,500.00 $ 25,200.00 $ 25,200.00 $ 81,900.00 Level 1 Energy Assessment per $ 450.00 8 $ 3,600.00 $ 54,000.00 $ 43,200.00 $ 43,200.00 $ 140,400.00 Level 2 Energy Assessment per $ 550.00 8 $ 4,400.00 $ 66,000.00 $ 52,800.00 $ 52,800.00 $ 171,600.00 Field QC Inspection per $ 400.00 $ 5,600.00 $ 6,400.00 $ 7,200.00 $ 19,200.00 OTHERContingency/Additional Services $ 15,168.00 $ 15,166.00 $ 15,166.00 $ 45,500.00 TOTAL $ 368,788.00 $ 271,206.00 $ 270,006.00 $ 910,000.00 Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA 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 AGGREGAT E 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 Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA 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 SUBCONSULTANTS, 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 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 Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA 1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY 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 MAILED TO: PURCHASING AND CONTRACT ADMINISTRATION CITY OF PALO ALTO P.O. BOX 10250 PALO ALTO, CA 94303 Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA EXHIBIT “E” CONFIDENTIALITY AGREEMENT 1. PURPOSE 1.1 In its performance of Services under this Agreement, CONSULTANT and its directors, officers, partners, managers, members, employees, advisors, agents, sub-contractors and other representatives of CONSULTANT and their subsidiaries and affiliates, including, without limitation, attorneys, accountants, consultants, and financial advisors (collectively, the “Representatives”) may acquire and otherwise gain access to Confidential Information, as defined in Section 1 of this Exhibit “E”, which is exempt from public disclosure under the California Public Records Act, Cal. Gov. Code section 6250 et seq. 1.2 In accordance with the terms and conditions of this Agreement, CONSULTANT agrees to take reasonable precautions to ensure that Confidential Information of CITY, as defined in this Exhibit, is safeguarded against disclosure to unauthorized employees or third parties. 1.3 CITY would not share or disclose any Confidential Information to CONSULTANT but for the legal protections against unauthorized disclosures intended to be afforded by California law and this Agreement, and is relying on this Agreement in disclosing such Confidential Information to CONSULTANT. 2. CONFIDENTIAL INFORMATION, DEFINED 2.1 “Confidential Information” means any and all information which is of a non- public, proprietary or confidential nature, in any form or medium, written or oral, (whether prepared by the CITY, its employees, or agents, and irrespective of the form or means of communication and whether it is labeled or otherwise identified as confidential) that is furnished to CONSULTANT by the CITY. 2.2 Exceptions. “Confidential Information” shall exclude (and the CONSULTANT shall not be under any obligation to maintain in confidence) any information (or any portion thereof) disclosed to CONSULTANT by CITY to the extent that such information: (a) is in the public domain at the time of disclosure; or (b) at the time of or following disclosure, becomes generally known or available through no act or omission on the part of CITY; or (c) is known, or becomes known, to CONSULTANT from a source other than CITY or its Representatives (as defined herein), provided that disclosure by such source is not in breach of a confidentiality agreement CITY; or (d) is independently developed by CONSULTANT without violating any of Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA its obligations under this Agreement or any other agreement between the Parties; or (e) is legally required to be disclosed by judicial or other governmental action; provided, however, that prompt notice of such judicial or other governmental action shall have been first given to CITY, which shall be afforded the opportunity to exhaust all reasonable legal remedies to maintain the Confidential Information in confidence; or (f) is permitted to be disclosed by a formal written agreement executed by and between the Parties. Specific information shall not fall within the exceptions of Sections (a) through (f) above merely because it is embraced by more general information falling within such exceptions. 3. CALIFORNIA PUBLIC RECORDS ACT 3.1 CONSULTANT acknowledges that CITY is a public agency subject to the requirements of the California Constitution, Article 1, Section 3 and California Public Records Act Cal. Gov. Code section 6250 et seq. CONSULTANT acknowledges that CITY may submit to or otherwise provide access to CONSULTANT Confidential Information that CITY or any utility customer of CITY considers to be protected from disclosure pursuant to exemptions granted by applicable California law. 3.2 Whether or not there is a request or demand of any third party not a Party to this Agreement (the “Requestor”) for the production, inspection and/or copying of information designated by CITY as Confidential Information, CONSULTANT shall be solely responsible for taking whatever legal steps CITY deems necessary to protect information deemed by it to be Confidential Information and to prevent release of information to the Requestor (including the release of such information by CONSULTANT). 3.3 Under no circumstances will CONSULTANT be permitted to comply with the Requestor’s demand for disclosure of such Confidential Information that CITY deems confidential and not intended for disclosure to the general public, or otherwise publicly disclose the Confidential Information to any person not authorized by law to receive such information. 4. CONFIDENTIAL INFORMATION DESIGNATION 4.1 As practicable, the Confidential Information shall be marked with the words “Confidential” or “Confidential Material” or with words of similar import. CITY shall instruct CONSULTANT that information of a financial, personal, or proprietary nature being conveyed orally and intended by CITY to be covered by the terms of this Agreement, is deemed Confidential Information. To the extent Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA possible, CITY shall endeavor to mark any electronic document intended to be covered by the terms of this Agreement with the words “Confidential” or similar words, or, if that is not possible or would be exceedingly difficult, CITY shall notify CONSULTANT (for example, by covering e-mail transmitting the electronic document) that the electronic document is Confidential Information. 4.2 CITY’s failure, for whatever reason, to mark any material at the time it is produced to CONSULTANT, or to notify it that oral or electronic material is Confidential Information at the time it is provided, shall not take the material out of the coverage of this Agreement for all time, and CONSULTANT shall treat the material as Confidential Information once CITY has notified it that the material is to be covered by this Agreement. 5. DUTY TO KEEP CONFIDENTIAL 5.1 CONSULTANT agrees to maintain as confidential, to the extent permitted or required by applicable law, all Confidential Information furnished or otherwise made available to the CONSULTANT, or its Representatives by CITY. CONSULTANT acknowledges that the Confidential Information is proprietary and a valuable asset of CITY and agrees that CONSULTANT shall take reasonable precautions to ensure that such Confidential Information is safeguarded against disclosure to unauthorized employees, Representatives or third parties. (a) CONSULTANT shall use the Confidential Information solely as permitted by the Contract and shall not sell Confidential Information or otherwise disclose such Confidential Information under any circumstances and without the prior written consent of CITY. CONSULTANT shall not disclose the Confidential Information, or portions thereof, to any of its Representatives, except to those who need to know such information for the purpose of advising CITY and who agree to the terms of this Agreement. (b) CONSULTANT agrees that any of the Representatives to whom the Confidential Information is disclosed will be informed of the confidential or proprietary nature of such information and of CONSULTANT’s obligations under this Agreement. CONSULTANT is responsible for any use of Confidential Information by any of its Representatives. (c) CONSULTANT shall ensure that: (i) any Representatives with whom CONSULTANT shares such Confidential Information or who acquire knowledge of such Confidential Information from or through CONSULTANT regard and treat such Confidential Information of CITY as strictly confidential and wholly owned by CITY, and Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA (ii) CONSULTANT shall not (and CONSULTANT shall ensure that any Representatives with whom CONSULTANT shares such Confidential Information or who acquire knowledge of such Confidential Information from or through CONSULTANT do not) for any reason, in any fashion, either directly or indirectly, sell, lend, lease, distribute, license, give, transfer, assign, show, disclose, disseminate, or otherwise communicate any such Confidential Information to any third party, or misappropriate, reproduce, copy or use any such Confidential Information, in either case, for any purpose other than in accordance with this Agreement. (d) If CONSULTANT or any of its Representatives are requested or required to disclose any Confidential Information by law, regulation, the applicable rules of any national securities exchange or other market or reporting system, oral questions, interrogatories, requests for information or other documents in legal proceedings, subpoena, civil investigative demand or any other similar process, CONSULTANT shall provide CITY with prompt written notice of any such request or requirement so that CITY has an opportunity to seek a protective order via writ of mandate or other appropriate remedy, or waive compliance with the provisions of this Agreement. (e) If CITY waives compliance with the provisions of this Agreement with respect to a specific request or requirement, CONSULTANT and its Representatives shall disclose only that portion of the Confidential Information that is expressly covered by such waiver and which is necessary to disclose in order to comply with such request or requirement. CONSULTANT and its Representatives shall cooperate in a reasonable manner with CITY in attempting to preserve the confidentiality of the Confidential Information. (f) If (in the absence of a waiver by CITY) CONSULTANT has not secured a protective order or other appropriate remedy despite attempting to do so, and CONSULTANT or one of its Representatives is nonetheless then legally compelled to disclose any Confidential Information, CONSULTANT or such Representative may, without liability hereunder, disclose only that portion of the Confidential Information that is necessary to be disclosed. In the event that disclosure is made in accordance with this subsection, CONSULTANT shall exercise, and cause its Representatives to exercise, reasonable efforts to preserve the confidentiality of the Confidential Information, including obtaining reliable assurance at the sole expense of CONSULTANT that confidential treatment shall be accorded any Confidential Information so furnished. 6.NO LIABILITY, RELEASE, OR OBLIGATION Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA Except as set forth in any formal written agreement executed by and between the parties, neither CONSULTANT nor any of its Representatives shall be entitled to rely on any statement, promise, agreement or understanding, whether written or oral, or any custom, usage of trade, course of dealing or conduct. In addition, each Party understands and acknowledges that neither CITY nor any of its representatives, employees or agents makes any representation or warranty, express or implied, as to the accuracy or completeness of any Confidential Information, and that neither CITY nor any of its representatives, employees or agents shall have any liability whatsoever to CONSULTANT or to any of its Representatives relating to or resulting from the Confidential Information or any errors therein or omissions therefrom. 7. REMEDIES In recognition that an irreparable injury may result to CITY, if any provision of this Exhibit E is violated, CONSULTANT agrees that upon any breach or threatened breach of any provision of this Exhibit E by CONSULTANT or any of its Representatives, that CITY shall be entitled to seek an injunction or specific performance prohibiting such conduct or any other relief as may be permitted by law. 8. RETURN OF CONFIDENTIAL INFORMATION 8.1 CONSULTANT shall have access to the Confidential Information provided by CITY only during the term of this Agreement, and shall return all Confidential Information provided under this Agreement upon its termination, or at any time upon request of CITY, as described in Section 8.2 of this Exhibit E. 8.2 CITY may at any time request that CONSULTANT promptly return to CITY or destroy any or all documents or other materials containing Confidential Information of CITY, and CONSULTANT shall immediately comply with any such request. Notwithstanding the return or destruction of the Confidential Information as contemplated by this section 8 of this Exhibit E, the CONSULTANT and its Representatives will continue to be bound by the terms of this Agreement with respect thereto, including all obligations of confidentiality. 9. SURVIVAL CONSULTANT’s obligations of confidentiality and non-circumvention under this Exhibit E shall survive the termination of this Agreement. 10. OWNERSHIP RIGHTS NOT CREATED The transfer of Confidential Information hereunder shall not be construed as granting a license of any kind or any right of ownership in the Confidential Information to CONSULTANT. 11. NO OBLIGATION TO DISCLOSE Nothing in this Section shall obligate CITY to disclose specific Confidential Information to CONSULTANT. Such disclosures shall be at the CITY’s sole discretion. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA EXHIBIT “F” IDENTITY INFORMATION PROTECTION Identity Information Protection 1.During the term of the contract the CONSULTANT shall not collect, process or store any Private Information (PI) and Personally Identifiable Information (PII), except the name and address of the customer. 2.During the term of the contract the CONSULTANT shall comply with the City’s Information Privacy Policy and the City’s Software as a Service Security and Privacy Terms and Conditions. Personal information (PI) is defined as an individual's first name or first initial and last name in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted: (1) Social security number. (2) Driver's license number or California Identification Card number. (3) Account number, credit or debit card number, in combination with any required security code, access code, or password that would permit access to an individual's financial account, "Personal information" does not include publicly available information that is lawfully made available to the general public from federal, state, or local government records. Personally Identifiable Information (PII), as used in information security, is information that can be used to uniquely identify, contact, or locate a single person or can be used with other sources to uniquely identify a single individual. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA City of Palo Alto Information Security Document Version: V2.5 [11/01/2012] Doc: InfoSec 110 EXHIBIT “G” SOFTWARE AS A SERVICE SECURITY AND PRIVACY TERMS AND CONDITIONS This Exhibit shall be made a part of the City of Palo Alto’s Professional Services Agreement or any other contract entered into by and between the City of Palo Alto (the “City”) and CLEAResult Consulting, Inc. (the “Consultant”) for the provision of Software as a Service services to the City (the “Agreement”). In order to assure the privacy and security of the personal information of the City’s customers and people who do business with the City, including, without limitation, vendors, utility customers, library patrons and other individuals and businesses, who are required to share such information with the City, as a condition of receiving services from the City or selling goods and services to the City, including, without limitation, the Software as a Service services provider (the “Consultant”) and its subcontractors, if any, including, without limitation, any Information Technology (“IT”) infrastructure services provider, shall design, install, provide, and maintain a secure IT environment, described below, while it renders and performs the Services and furnishes goods, if any, described in the Statement of Work, Exhibit B, to the extent any scope of work implicates the confidentiality and privacy of the personal information of the City’s customers. The Consultant shall fulfill the data and information security requirements (the “Requirements”) set forth in Part A below. A “secure IT environment” includes: (a) the IT infrastructure, by which the Services are provided to the City, including connection to the City's IT systems; (b) the Consultant’s operations and maintenance processes needed to support the environment, including disaster recovery and business continuity planning; and (c) the IT infrastructure performance monitoring services to ensure a secure and reliable environment and service availability to the City. “IT infrastructure” refers to the integrated framework, including, without limitation, data centers, computers, and database management devices, upon which digital networks operate. In the event that, after the Effective Date, the Consultant reasonably determines that it cannot fulfill the Requirements, the Consultant shall promptly inform the City of its determination and submit, in writing, one or more alternate countermeasure options to the Requirements (the “Alternate Requirements” as set forth in Part B), which may be accepted or rejected in the reasonable satisfaction of the Information Security Manager (the “ISM”). Part A. Requirements: The Consultant shall at all times during the term of any contract between the City and the Consultant: (a) Appoint or designate an employee, preferably an executive officer, as the security liaison to the City with respect to the Services to be performed under this Agreement. (b) Comply with the City’s Information Privacy Policy: Page 1 of 3 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA City of Palo Alto Information Security Document Version: V2.5 [11/01/2012] Doc: InfoSec 110 (c) Have adopted and implemented information security and privacy policies that are documented, are accessible to the City and conform to ISO 27001/2 – Information Security Management Systems (ISMS) Standards. See the following: http://www.iso.org/iso/home/store/catalogue_tc/catalogue_detail.htm?csnumber=42103 http://www.iso.org/iso/iso_catalogue/catalogue_tc/catalogue_detail.htm?csnumber=50297 (d) Conduct routine data and information security compliance training of its personnel that is appropriate to their role. (e) Develop and maintain detailed documentation of the IT infrastructure, including software versions and patch levels. (f) Develop an independently verifiable process, consistent with industry standards, for performing professional and criminal background checks of its employees that (1) would permit verification of employees’ personal identity and employment status, and (2) would enable the immediate denial of access to the City's confidential data and information by any of its employees who no longer would require access to that information or who are terminated. (g) Provide a list of IT infrastructure components in order to verify whether the Consultant has met or has failed to meet any objective terms and conditions. (h) Implement access accountability (identification and authentication) architecture and support role-base access control (“RBAC”) and segregation of duties (“SoD”) mechanisms for all personnel, systems and software used to provide the Services. “RBAC” refers to a computer systems security approach to restricting access only to authorized users. “SoD” is an approach that would require more than one individual to complete a security task in order to promote the detection and prevention of fraud and errors. (i) Assist the City in undertaking annually an assessment to assure that: (1) all elements of the Services’ environment design and deployment are known to the City, and (2) it has implemented measures in accordance with industry best practices applicable to secure coding and secure IT architecture. (j) Provide and maintain secure intersystem communication paths that would ensure the confidentiality, integrity and availability of the City's information. (k) Deploy and maintain IT system upgrades, patches and configurations conforming to current patch and/or release levels by not later than one (1) week after its date of release. Emergency security patches must be installed within 24 hours after its date of release. (l) Provide for the timely detection of, response to, and the reporting of security incidents, including on-going incident monitoring with logging. (m) Notify the City within one (1) hour of detecting a security incident that results in the unauthorized access to or the misuse of the City's confidential data and information. (n) Inform the City that any third party service provider(s) meet(s) all of the Requirements. (o) Perform security self-audits on a regular basis and not less frequently than on a quarterly basis, and provide the required summary reports of those self-audits to the ISM on the annual anniversary date or any other date agreed to by the Parties. (p) Accommodate, as practicable, and upon reasonable prior notice by the City, the City’s performance of random site security audits at the Consultant’s site(s), including the site(s) of a third party service provider(s), as applicable. The scope of these audits will extend to the Consultant’s and its third party service provider(s)’ awareness of security policies and practices, systems configurations, access authentication and authorization, and incident detection and response. (q) Cooperate with the City to ensure that to the extent required by applicable laws, rules and Page 2 of 3 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA City of Palo Alto Information Security Document Version: V2.5 [11/01/2012] Doc: InfoSec 110 regulations, the Confidential Information will be accessible only by the Consultant and any authorized third party service provider’s personnel. (r) Perform regular, reliable secured backups of all data needed to maximize availability of the Services. (s) Maintain records relating to the Services for a period of three (3) years after the expiration or earlier termination of this Agreement and in a mutually agreeable storage medium. Within thirty (30) days after the effective date of expiration or earlier termination of this Agreement, all of those records relating to the performance of the Services shall be provided to the ISM. (t) Maintain the Confidential Information in accordance with applicable federal, state and local data and information privacy laws, rules and regulations. (u) Encrypt the Confidential Information before delivering the same by electronic mail to the City and or any authorized recipient. (v) Unless otherwise addressed in the Agreement, shall not hold the City liable for any direct, indirect or punitive damages whatsoever including, without limitation, damages for loss of use, data or profits, arising out of or in any way connected with the City’s IT environment, including, without limitation, IT infrastructure communications. Part B. Alternate Requirements: Page 3 of 3 DocuSign Envelope ID: 404915E3-BE14-422E-B943-2A832EE985AA CITY OF PALO ALTO CONTRACT NO. C15159126 AGREEMENT BETWEEN THE CITY OF PALO ALTO AND EAGLE SYSTEMS INTERNATIONAL, INC. DBA SYNERGY COMPANIES FOR PROFESSIONAL SERVICES This Agreement is entered into on this 1st day of June2015 (“Agreement”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and EAGLE SYSTEMS INTERNATIONAL, INC. DBA SYNERGY COMPANIES, a California corporation, located at 28436 Satellite Street, Hayward, CA 94545 ("CONSULTANT"). RECITALS The following recitals are a substantive portion of this Agreement. A. CITY intends to provide direct installation, no-cost energy efficiency services to qualified CITY’s residents based on financial or medical needs (“Project”) and desires to engage a consultant to administer, manager and deliver a direct install energy savings program 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 in Exhibit “A” in accordance with the terms and conditions contained in this Agreement. The performance of all Services shall be to the reasonable satisfaction of CITY. SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through June 30, 2018 unless terminated earlier pursuant to Section 19 of this Agreement. Professional Services Rev. Feb. 2014 1 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB 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. 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 Five Hundred Forty Thousand Dollars ($540,000). No Additional Services or Reimbursable Expenses are contemplated as part of this Agreement. 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, and hourly rates), 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 sub-consultants, 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 and all errors, omissions, or ambiguities in the work product submitted to CITY, provided CITY Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB 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 the CITY’s stated construction budget, CONSULTANT shall make recommendations to the CITY for aligning the Project design with the budget, incorporate CITY approved recommendations, and revise the design to meet the Project budget, at no additional cost to CITY. SECTION 10. INDEPENDENT CONTRACTOR. It is understood and agreed that in 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 the CITY. SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of CONSULTANT are material considerations for this Agreement. CONSULTANT shall not assign or transfer any interest in this Agreement nor the performance of any of 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. Notwithstanding Section 11 above, CITY agrees that subconsultants may be used to complete the Services. The subconsultants authorized by CITY to perform work on this Project are: As set forth in Exhibit A attached to this Agreement. CONSULTANT shall be responsible for directing the work of any subconsultants and for any compensation due to subconsultants. CITY assumes no responsibility whatsoever concerning compensation. CONSULTANT shall be fully responsible to CITY for all acts and omissions of a subconsultant. CONSULTANT shall change or add subconsultants only with the prior approval of the city manager or his designee. SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign David Shallenberger as the project supervisor to have supervisory responsibility for the performance, progress, and execution of the Services 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. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB The City’s project manager is Christine Tam or her designee, Utilities Department, Marketing Services Division, 250 Hamilton Ave, Palo Alto, CA 94303. The project manager will be CONSULTANT’s point of contact with respect to performance, progress and execution of the Services. The CITY may designate an alternate project manager from time to time. SECTION 14. OWNERSHIP OF MATERIALS. Upon delivery, all work product, including without limitation, 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 attorney’s fees, experts fees, court costs and disbursements (“Claims”) resulting from, arising out of or in any manner related to performance or nonperformance by CONSULTANT, its officers, employees, agents or contractors under this Agreement, regardless of whether or not it is caused in part by an Indemnified Party. 16.2. Notwithstanding the above, nothing in this Section 16 shall be construed to require CONSULTANT to indemnify an Indemnified Party from Claims arising from the active negligence, sole negligence or willful misconduct of an Indemnified Party. 16.3. The acceptance of CONSULTANT’s services and duties by CITY shall not operate as a waiver of the right of indemnification. The provisions of this Section 16 shall survive the expiration or early termination of this Agreement. 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, Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB 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 Purchasing Manager 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. 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 Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB 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 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 subconsultants, 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 Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB 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 the 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 the 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 Consultant to City generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double-sided and printed on a minimum of 30% or greater post-consumer content paper, unless otherwiseapproved by the City’s Project Manager. Any submitted materials printed by aprofessional 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 the City shall be purchased inaccordance with the City’s Environmental Purchasing Policy including but notlimited to Extended Producer Responsibility requirements for products and packaging. A copy of this policy is on file at the Purchasing Office. •Reusable/returnable pallets shall be taken back by the Consultant, at no additional cost to the City, for reuse or recycling. Consultant shall provide documentationfrom 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, Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB condition, or provision of this Agreement. SECTION 25. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. 25.1. In its performance of Services under this Agreement, CONSULTANT and its Representatives may acquire and otherwise gain access to Confidential Information, as defined in Exhibit “E”, which is exempt from public disclosure under the California Public Records Act, Cal. Gov. Code section 6250 et seq. CONSULTANT agrees to protect such Confidential Information from disclosure to any third parties, in accordance with the terms and conditions set forth in Exhibit “E” attached to this Agreement. SECTION 26. MISCELLANEOUS PROVISIONS. 26.1. This Agreement will be governed by the laws of the State of California. 26.2. 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. 26.3. 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. 26.4. 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. 26.5. 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. 26.6. 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. 26.7. 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. 26.8 If, pursuant to this contract with CONSULTANT, City shares with CONSULTANT personal information as defined in California Civil Code section 1798.81.5(d) about a California resident (“Personal Information”), CONSULTANT shall maintain reasonable Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB 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. 26.9 All unchecked boxes do not apply to this agreement. 26.10 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. 26.11 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. Attachments: EXHIBIT “A”: SCOPE OF SERVICES EXHIBIT “B”: SCHEDULE OF PERFORMANCE EXHIBIT “C”: COMPENSATION EXHIBIT “D”: INSURANCE REQUIREMENTS EXHIBIT “E”: CONFIDENTIALITY AGREEMENT EXHIBIT “F” IDENTITY INFORMATION PROTECTION CITY OF PALO ALTO ____________________________ City Manager APPROVED AS TO FORM: __________________________ Senior Deputy City Attorney EAGLE SYSTEMS INTERNATIONAL, INC. DBA SYNERGY COMPANIE By:___________________________ Name:_________________________ Title:________________________ Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB Legal Counsel David Shallenberger EXHIBIT “A” SCOPE OF SERVICES CONSULTANT shall administer the Residential Energy Assistance Program (“REAP”, or “Program”) to qualified low-income residential customers for the City of Palo Alto Utilities Department (“Palo Alto” or “CITY”) in accordance with the specifications set forth in this Exhibit A. A. PROGRAM OVERVIEW REAP is designed to provide direct installation, no-cost energy efficiency services to qualified low income households in Palo Alto. In addition to the specific project components identified in Section B “Program Implementation and Delivery” of this Exhibit “A”, CONSULTANT will develop and implement a Marketing Plan, Quality Assurance Plan, and Staffing Plan. Marketing Plan CONSULTANT will carefully develop marketing and outreach plans. CONSULTANT will utilize marketing strategies to garner responses from hard to reach customers, including marketing directly to targeted customer segments and conducting in-person visits by CONSULTANT’s associates and technicians. Additionally, CONSULTANT will develop a relationship with neighborhood associations as deemed appropriate by the CITY. The CITY shall pre-qualify all customers that are eligible for the Program based on financial or medical needs and supply a monthly list of eligible customers to CONSULTANT. Quality Assurance Plan CONSULTANT will maintain a Project Manager to monitor the work performed by each technician to ensure proper installation, and that the work is completed in compliance with CITY requirements, and to coordinate with the owner, property manager and maintenance teams, where applicable. CONSULTANT’s Project Manager will inspect 100% of the work that is completed. CONSULTANT will contact the customer or property managers/owners after work is completed to ensure customer satisfaction and to gain other important information about the work completed. Staffing Plan CONSULTANT agrees to staff the program in accordance with the Staffing Plan set forth in Table A-1. CONSULTANT shall notify the CITY concerning proposed changes to the staffing plan, and all such changes require the prior written consent of the CITY. CITY reserves the right to (i) request CONSULTANT conduct criminal background checks to City’s satisfaction on all CONSULTANT’s staff, contractors or agents that may enter customer property, and (ii) require that any staff, contractor or agent of CONSULTANT that fails the Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB background check shall not be permitted to enter any customer premises. Without limiting Section 16 (Indemnity) of the Agreement, CONSULTANT agrees and understands it is responsible for all costs and damages associated with any theft, vandalism, damage or criminal acts involving or committed by CONSULTANT staff, contractors or agents involving a customer or customer premises. Table A-1. Staffing Plan Staffing Direct Labor Responsibilities % of Total Hours Dave Clark, CEO Administration, Marketing, Production 2 % Steve Shallenberger, President Administration, Marketing, Production, EM&V 2 % David Shallenberger, Engineer Quality Assurance 3% Jim Amos, Program Manager Administration, Marketing, Production, EM&V 11% Russ Jacobson, Controller Administration, EM&V 5 % Dave Millward, Outreach & Business Development Project Manager/ Manager Liaison 14 % Program Dedicated Synergy Liaison Dedicated Palo Alto program admin including any communication with CPAU as desired. 12% Customer Service & Scheduling Staff Administration 8% Quality Assurance Manager Production and EM&V 4% Direct Marketing Manager Marketing, Surveys, Reporting 2 % Crew Chiefs & Technicians Installation of measures and customer service 37% TOTAL 100% B. PROGRAM IMPLEMENTATION AND DELIVERY The following outlines a summary of the Program design and implementation: TASK 1 –PROGRAM RAMP-UP Task 1.1 Program Kick-off Meeting: CONSULTANT will coordinate a program kick-off Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB meeting with CITY’s Program Manager and other CITY staff, as necessary, to discuss project logistics, marketing coordination, evaluation, monitoring and verification coordination, invoicing requirements, scope of work, any contractual issues, and to explore new technologies to enhance energy savings. Task 1.2 Program Data, Invoicing, and Reporting Training: CONSULTANT will train its team and personnel on reporting systems. CONSULTANT agrees to participate in training in order to submit monthly reports into CITY’s tracking system. Task 1.3 Schedule of Activities: CONSULTANT will finalize the schedule of activities that provide a monthly work plan and implementation timeline and submit such plan to CITY for approval. Task 1.4 Marketing Plan: CONSULTANT will finalize a detailed marketing plan (“Marketing Plan”) which will include a discussion of all necessary Program marketing materials. CONSULTANT will submit its marketing plan to the CITY for approval. Task 1.5 Marketing Materials: CONSULTANT will submit to CITY’s Program Manager all marketing collateral materials, as outlined in the Marketing Plan, CONSULTANT will obtain CITY’s approval prior to any distribution, circulation, or publication of all such materials. Task 1.6 Invoice and Reporting Templates: CONSULTANT will submit to CITY a sample of all the reporting templates (i.e., flat files, monthly narrative, quarterly reporting, etc.) that are required (as further outlined herein under Task 5 - Invoicing and Reporting for Completed Jobs). TASK 2 –PROGRAM LAUNCH Task 2.1 CONSULTANT will execute the planned marketing campaign based on the proposed marketing plan. All marketing activities will be coordinated with CITY’s Program Manager. TASK 3 – ENROLL CUSTOMERS Task 3.1 Customer enrollment occurs when CONSULTANT executes a “Program Agreement” with a prequalified customer to receive preliminary program services including energy education, home assessment and insulation check. Task 3.2 CONSULTANT will work with customers to leverage other energy and water efficiency programs available through CITY and other 3rd Party Program implementers. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB TASK 4 – INSTALL ENERGY EFFICIENCY MEASURES Task 4.1 CONSULTANT will deliver energy savings to customers through the installation of energy efficient hardware, upgrades, and services. All work completed by CONSULTANT under this Agreement must comply with the prevailing building and appliance efficiency standards. Only energy savings that are incremental to the minimum energy savings mandated by Title 20 and Title 24 can be counted towards program savings. To that end, the California Municipal Utility Assocaiation Technical Reference Manual (TRM) 2014, as the same may be amended from time to time, should be used as the reference source for determining annual energy savings. If a program measure is not covered by the TRM, the CONSULTANT shall provide the estimated energy savings and workpaper(s) or reference source documenting the savings estimation methodology. At its discretion the CITY reserves the right to request updated energy savings calculations. If customer chooses to upgrade any standard direct install measures (“Upgrade Services”, CONSULTANT may require a copayment from the customer for any value above standard measure value outlined in Exhibit “C”, Compensation. CONSULTANT shall notify CITY of any proposed Upgrade Services and the customer copayment amount. The CITY reserves the right to object to the proposed Upgrade Services on behalf of the customer. Task 4.2 CONSULTANT will inspect and verify (per specification) that all installed measures/projects in the Program are properly installed. Task 4.3 CONSULTANT will have a Project Manager that supervises installations and work completed at each site. This individual will inspect 100% of all jobs completed by CONSULTANT’s technicians. After inspection, CONSULTANT’s the Project Manager will review the completed work with the customer who will pay for applicable Upgrade Services and sign off that the work is acceptable and satisfactory. TASK 5 – INVOICE AND REPORT FOR COMPLETED PROJECTS Task 5.1 In addition to the invoicing and other requirements agreed as part of Task 1, CONSULTANT will submit monthly reports, quarterly reports, and annual reports to CITY. CONSULTANT shall also provide the CITY with the following documentation: a. Narrative Report, according to format as prescribed by CITY; b. Spreadsheet report with budget and energy savings; c. Program information in a format compatible with CITY’s tracking database; Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB a.CONSULTANT will input information directly into the CITY’s database to eliminate duplicative data entry efforts by both the CITY and CONSULTANT. d.The CITY in its sole discretion may determine that entries in the trackingsystem are a substitute for the monthly reports and quarterly reports required under Task 5.1; and e.Such other information reasonably requested by CITY Task 5.2 CONSULTANT agrees to work with CITY to respond to federal, state or local data requests or reporting requirements. TASK 6 – PERFORM CUSTOMER FEEDBACK SURVEYS Task 6.1 CONSULTANT will address and resolve all customer issues discovered through either survey feedback or other means of customer contact. CONSULTANT will seek continuous improvements to increase customer satisfaction. Customer feedback issues will be tracked by CONSULTANT as part of the monthly reports, as well as a completed complaint form filled out by CONSULTANT. CITY retains the right to separately survey program participants. Task 6.2 If any issues arise, CONSULTANT shall immediately notify CITY. If any issues cannot be resolved to the satisfaction of the customer by CONSULTANT within five (5) days, CONSULTANT shall immediately provide CITY with a detailed description of any such complaint, which will include the name and contact information of the customer and any other information requested by CITY. TASK 7 – RAMP-DOWN AND SHUTDOWN PROGRAM Task 7.1 The CONSULTANT will complete and fully resolve all outstanding jobs in progress, and customer complaints. TASK 8 – SUBMIT FINAL PROGRAM REPORT Task 8.1 CONSULTANT will submit a final report which includes a narrative with an overview of the program and a spreadsheet report with budget and energy savings performance from the program. The narrative will also contain a report on quality assurance information. The final report will include Program achievements, challenges, goals, lessons learned, and program improvements. CONSULTANT agrees to deliver the final report within 30 days of the end of the Term; this date may be extended at the sole discretion of the CITY. CONSULTANT will maintain electronic copies of invoices as required by CITY. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB EXHIBIT “B” SCHEDULE OF PERFORMANCE CONSULTANT shall perform the Services so as to complete each milestone within the number of days/weeks specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the project managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed. Task Timing (Due Date) TASK 1 –PROGRAM RAMP-UP Task 1.1 Completed within 15 days from Notice to Proceed Task 1.2 Completed within 15 days from Notice to Proceed Task 1.3 Completed within 15 days from Notice to Proceed Task 1.4 Completed within 30 days from Notice to Proceed Task 1.5 Completed within 30 days from Notice to Proceed Task 1.6 Completed within 30 days from Notice to Proceed TASK 2 –PROGRAM LAUNCH Task 2.1 On going TASK 3 – ENROLL CUSTOMERS Task 3.1 On going Task 3.2 On going TASK 4 – INSTALL EE MEASURES Task 4.1 On going Task 4.2 On going TASK 5 – INVOICE AND REPORT FOR COMPLETED PROJECTS Task 5.1 15th of each month Task 5.2 As needed TASK 6 – PERFORM CUSTOMER FEEDBACK SURVEYS Task 6.1 On going Task 6.2 On going TASK 7 – RAMP-DOWN AND SHUTDOWN PROGRAM Task 7.1 15 days prior to contract expiring TASK 8 – SUBMIT FINAL PROGRAM REPORT Task 8.1 Within 30 days after contract ends Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB 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 this Exhibit C. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit “A” (“Basic Services”) shall not exceed five hundred and forty thousand dollars ($540,000). CONSULTANT agrees to complete all Services 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. CITY will compensate CONSULTANT using a fixed-unit pricing structure. CITY will compensate CONSULTANT a fixed price (the Cost per Unit) per Eligible Measure installed and approved by CITY as set forth in Table C-1. The Cost per Unit for each Eligible Measure set forth in Table C-1 includes all of CONSULTANT’s Costs, including, without limitation, administrative costs, marketing/outreach costs, and direct implementation (materials and labor) costs. It is CITY’s expectation that approximately 85% of CONSULTANT’s costs be related to direct implementation costs (materials and labor) with approximately 15% reserved for marketing/outreach costs and administrative costs respectively. CITY’s compensation to CONSULTANT for Eligible Measures is also subject to the Maximum Quantity per Home limitation set forth in Table C-1. Maximum Total Compensation NOT TO EXCEED AMOUNT for Term of the Agreement = $540,000 Energy Savings Targets and Not To Exceed Amounts for CONSULTANT ENERGY SAVINGS TARGETS CONSULTANT Performance Payment Customer Rebate Payment Maximum Total Compensation NOT TO EXCEED Through end of Term kWh Therms 166,180 25,722 $540,000 $0 $540,000 Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB Table C-1:Eligible Measures – Estimated Savings and Compensation CITY, in its sole discretion by providing written notice to CONSULTANT, retains the right to add, delete, modify or limit the Eligible Measures, Cost per Unit or other characteristics set forth in this Table C-1, including imposing a limit on the maximum number of individual Eligible Measures, per customer or per year, installed by CONSULTANT. # Eligible Measure Description Unit of Measure Maximum Quantity per Home* Cost per Unit Annual kWh savings Annual Therm savings Source 1 AC Diagnostic & Tuneup w/verification Per System 1 $195.00 141.75 0.00 DEER 2014 2 Air Source Heat Pump 1- System (plus permits) Per Unit Permission Only $5,040.00 267.00 0.00 CMUA TRM 2014 Manual 3 Air Source Heat Pump 2- System (plus permits) Per Unit Permission Only $8,040.00 400.50 0.00 CMUA TRM 2014 Manual 4 Attic Access Weather Stripping Per Unit 2 $17.18 3.02 5.24 CMUA TRM 2014 Manual 5 Attic Insulation Batt Insulation - Existing Per Sq.Ft. N/A $1.98 0.03 0.01 CMUA TRM 2014 Manual 6 Attic Insulation Batt Insulation - R0 to R38 Per Sq.Ft. N/A $2.20 0.52 0.17 CMUA TRM 2014 Manual 7 Attic Insulation R-0 to Standard R-38 Per Sq.Ft. N/A $1.45 0.52 0.17 CMUA TRM 2014 Manual 8 Attic Insulation R-12 to Standard R-38 Per Sq.Ft. N/A $1.25 0.03 0.01 CMUA TRM 2014 Manual 9 Attic Venting Per Unit 2 $76.69 3.78 6.55 CMUA TRM 2014 Manual 10 CFL A-19 Bulb when LED not an option Per Unit Permission Only $10.00 28.00 0.00 CMUA TRM 2014 Manual 11 CFL Fixture with lamps Per Unit Permission Only $42.00 56.00 0.00 CMUA TRM 2014 Manual 12 CFL R30 Bulb when LED not an option Per Unit Permission Only $10.00 15.00 0.00 CMUA TRM 2014 Manual 18 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB # Eligible Measure Description Unit of Measure Maximum Quantity per Home* Cost per Unit Annual kWh savings Annual Therm savings Source 13 Carbon Monoxide Alarm Per Unit Permission Only $39.33 0.00 0.00 CMUA TRM 2014 Manual 14 Door Replacement Per Unit 1 $100.00 5.29 9.17 CMUA TRM 2014 Manual 15 Door Sweep Per Unit 1 $29.95 3.02 5.24 CMUA TRM 2014 Manual 16 Door Weatherstripping Per Unit 4 $91.60 2.27 3.93 CMUA TRM 2014 Manual 17 Duct Test & Seal Per Unit 1 $450.00 73.00 19.90 CMUA TRM 2014 Manual 18 Energy Education Per Unit 1 $75.00 0.00 0.00 CMUA TRM 2014 Manual 19 Exterior LED Light Fixture with Sensor Per Unit 1 $67.00 39.00 0.00 CMUA TRM 2014 Manual 20 Faucet Aerators Per Unit 10 $5.90 0.00 4.00 CMUA TRM 2014 Manual 21 Furnace Filter Per Unit 1 $11.00 2.00 0.00 DEER 2014 22 Furnace Replacement (plus permits) Per Unit Permission Only $2,640.00 0.00 16.21 CMUA TRM 2014 Manual 23 Furnace Replacement Wall Furnace Double (plus permits) Per Unit Permission Only $3,050.00 0.00 16.21 CMUA TRM 2014 Manual 24 Furnace Replacement Wall Furnace Single (plus permits) Per Unit Permission Only $1,500.00 0.00 13.82 CMUA TRM 2014 Manual 25 Furnace Replacement with Duct Work (plus permits) Per Unit Permission Only $7,155.00 73.00 36.11 CMUA TRM 2014 Manual 26 Furnace Tune-up Per Unit 1 $155.00 33.60 9.77 DEER 2014 27 HVAC Efficient Fan Control Per Unit 1 $137.00 54.53 28.54 Workpaper 28 Intelligent Power Strip Per Unit 1 $37.00 24.00 0.00 CMUA TRM 2014 Manual 19 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB # Eligible Measure Description Unit of Measure Maximum Quantity per Home* Cost per Unit Annual kWh savings Annual Therm savings Source 29 LED 10-13 W replacing 50 W or greater halogen downlight (Interior) Per Unit 5 $28.00 18.00 0.00 CMUA TRM 2014 Manual 30 LED 10-13 W replacing 50 W or greater halogen downlight (Exterior) Per Unit 5 $28.00 39.00 0.00 CMUA TRM 2014 Manual 31 LED 19-21 W replacing 90 W or greater halogen downlight (Interior) Per Unit 5 $36.00 28.00 0.00 CMUA TRM 2014 Manual 32 LED 19-21 W replacing 90 W or greater halogen downlight (Exterior) Per Unit 5 $36.00 62.00 0.00 CMUA TRM 2014 Manual 33 LED 7 W replacing 50 W MR16 (Exterior) Per Unit 5 $33.00 54.00 0.00 CMUA TRM 2014 Manual 34 LED A Type 10W replacing 60W Incandescent Per Unit 5 $16.50 18.00 0.00 CMUA TRM 2014 Manual 35 LED A Type 8W replacing 40W Incandescent Per Unit 5 $14.00 12.00 0.00 CMUA TRM 2014 Manual 36 LED R30 Bulb Per Unit 5 $28.00 18.00 0.00 CMUA TRM 2014 Manual 37 LED R40 Bulb Per Unit 5 $36.00 28.00 0.00 CMUA TRM 2014 Manual 38 Low-Flow Showerheads Per Unit 4 $39.00 0.00 7.60 CMUA TRM 2014 Manual 39 Max Hourly Rate for Additional Work Per Hour 3 $65.00 0.00 0.00 CMUA TRM 2014 Manual 40 Minor Home Repair - Walls + Materials Per Unit 1 $95.00 0.00 0.00 CMUA TRM 2014 Manual 41 NGAT Testing Per Unit 1 $85.00 0.00 0.00 CMUA TRM 2014 Manual 42 Occupancy Sensors Per Unit 3 $79.00 144.10 0.00 DEER 2014 43 Pipe Insulation Per Ln. Ft. 1 $9.50 0.00 2.20 CMUA TRM 2014 Manual 20 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB # Eligible Measure Description Unit of Measure Maximum Quantity per Home* Cost per Unit Annual kWh savings Annual Therm savings Source 44 Program T-stats (with new HVAC install) Per Unit 1 $73.25 68.80 0.00 CMUA TRM 2014 Manual 45 Refrigerator replacement - 15CF, RHD, WHT, Westinghouse Per Unit 1 $783.00 106.00 0.00 CMUA TRM 2014 Manual 46 Refrigerator replacement - 18CF, RHD, WHT, Westinghouse Per Unit 1 $896.00 121.00 0.00 CMUA TRM 2014 Manual 47 Repair Furnace Per Unit 1 variable, NTE $500 0.00 9.73 CMUA TRM 2014 Manual 48 Repair Refrigerator Per Unit 1 variable, NTE $300 63.60 0.00 CMUA TRM 2014 Manual 49 Repair Water Heater Per Unit 1 variable, NTE $250 0.00 23.00 CMUA TRM 2014 Manual 50 Replace Water Heater (plus permits) Per Unit 1 $1,650.00 0.00 52.00 CMUA TRM 2014 Manual 51 Smoke Detector Alarm Per Unit 1 $39.00 0.00 0.00 CMUA TRM 2014 Manual 52 T8 28W 4F1L (Lamps and Ballast) Per Fixture 4 $52.69 245.00 0.00 CMUA TRM 2014 Manual 53 T8 28W 4F2L (Lamps and Ballast) Per Fixture 4 $61.76 183.00 0.00 CMUA TRM 2014 Manual 54 T8 28W 4F3L (Lamps and Ballast) Per Fixture 4 $80.67 122.00 0.00 CMUA TRM 2014 Manual 55 T8 28W 4F4L (Lamps and Ballast) Per Fixture 4 $83.46 61.00 0.00 CMUA TRM 2014 Manual 56 T8 28W 8F1L (Lamps and Ballast) Per Fixture 4 $75.05 156.00 0.00 CMUA TRM 2014 Manual 57 T8 28W 8F2L (Lamps and Ballast) Per Fixture 4 $84.55 108.00 0.00 CMUA TRM 2014 Manual 58 T8 Delamp - Kitchen, food preparation Per Bulb 4 $27.00 140.65 0.00 CMUA TRM 2014 Manual 21 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB # Eligible Measure Description Unit of Measure Maximum Quantity per Home* Cost per Unit Annual kWh savings Annual Therm savings Source 59 VFD Pool Pump Retrofit (plus permits) Per Unit Permission Only $2,400.00 1,711.00 0.00 CMUA TRM 2014 Manual 22 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB 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: REQUI RED TYPE OF COVERAGE REQUIREMENT MINIMUM LIMITS EACH OCCURREN CE 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 23 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB 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 SUBCONSULTANTS, 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 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 24 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB 1.IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THEEFFECTIVE DATE OF CANCELLATION. 2.IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT OF PREMIUM, THE ISSUINGCOMPANY SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. NOTICES SHALL BE MAILED TO: PURCHASING AND CONTRACT ADMINISTRATION CITY OF PALO ALTO P.O. BOX 10250 PALO ALTO, CA 94303 25 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB EXHIBIT “E” CONFIDENTIALITY AGREEMENT 1.PURPOSE 1.1 In its performance of Services under this Agreement, CONSULTANT and its directors, officers, partners, managers, members, employees, advisors, agents, sub-contractors and other representatives of CONSULTANT and their subsidiaries and affiliates, including, without limitation, attorneys, accountants, consultants, and financial advisors (collectively, the “Representatives”) may acquire and otherwise gain access to Confidential Information, as defined in Section 2 of this Exhibit “J”, which is exempt from public disclosure under the California Public Records Act, Cal. Gov. Code section 6250 et seq. 1.2 In accordance with the terms and conditions of this Agreement, CONSULTANT agrees to take reasonable precautions to ensure that Confidential Information of CITY, as defined in this Exhibit, is safeguarded against disclosure to unauthorized employees or third parties. 1.3 CITY would not share or disclose any Confidential Information to CONSULTANT but for the legal protections against unauthorized disclosures intended to be afforded by California law and this Agreement, and is relying on this Agreement in disclosing such Confidential Information to CONSULTANT. 2.CONFIDENTIAL INFORMATION, DEFINED 2.1 “Confidential Information” means any and all information which is of a non- public, proprietary or confidential nature, in any form or medium, written or oral, (whether prepared by the CITY, its employees, or agents, and irrespective of the form or means of communication and whether it is labeled or otherwise identified as confidential) that is furnished to CONSULTANT by the CITY, including, without limitation, individually identifiable utilities customer information and utility infrastructure data. 2.2 Exceptions. “Confidential Information” shall exclude (and the CONSULTANT shall not be under any obligation to maintain in confidence) any information (or any portion thereof) disclosed to CONSULTANT by CITY to the extent that such information: (a) is in the public domain at the time of disclosure; or (b) at the time of or following disclosure, becomes generally known or available through no act or omission on the part of CITY; or (c) is known, or becomes known, to CONSULTANT from a source other than CITY or its Representatives (as defined herein), provided that disclosure by such source is not in breach of a confidentiality agreement CITY; or 26 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB CERTIFICATE HOLDER © 1988-2010 ACORD CORPORATION. All rights reserved. ACORD 25 (2010/05) AUTHORIZED REPRESENTATIVE CANCELLATION DATE (MM/DD/YYYY)CERTIFICATE OF LIABILITY INSURANCE LOCJECTPRO-POLICY GEN'L AGGREGATE LIMIT APPLIES PER: OCCURCLAIMS-MADE COMMERCIAL GENERAL LIABILITY GENERAL LIABILITY PREMISES (Ea occurrence)$DAMAGE TO RENTED EACH OCCURRENCE $ MED EXP (Any one person) $ PERSONAL & ADV INJURY $ GENERAL AGGREGATE $ PRODUCTS - COMP/OP AGG $ $RETENTIONDED CLAIMS-MADE OCCUR $ AGGREGATE $ EACH OCCURRENCE $ UMBRELLA LIAB EXCESS LIAB DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (Attach ACORD 101, Additional Remarks Schedule, if more space is required) INSRLTR TYPE OF INSURANCE POLICY NUMBER POLICY EFF(MM/DD/YYYY)POLICY EXP(MM/DD/YYYY)LIMITS WC STATU-TORY LIMITS OTH-ER E.L. EACH ACCIDENT E.L. DISEASE - EA EMPLOYEE E.L. DISEASE - POLICY LIMIT $ $ $ ANY PROPRIETOR/PARTNER/EXECUTIVE If yes, describe underDESCRIPTION OF OPERATIONS below (Mandatory in NH)OFFICER/MEMBER EXCLUDED? WORKERS COMPENSATION AND EMPLOYERS' LIABILITY Y / N AUTOMOBILE LIABILITY ANY AUTO ALL OWNED SCHEDULED HIRED AUTOS NON-OWNEDAUTOSAUTOS AUTOS COMBINED SINGLE LIMIT BODILY INJURY (Per person) BODILY INJURY (Per accident) PROPERTY DAMAGE $ $ $ $ THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THISCERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR ADDL WVD SUBR N / A $ $ (Ea accident) (Per accident) THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). The ACORD name and logo are registered marks of ACORD COVERAGES CERTIFICATE NUMBER:REVISION NUMBER: INSURED PHONE(A/C, No, Ext): PRODUCER ADDRESS:E-MAIL FAX(A/C, No): CONTACTNAME: NAIC # INSURER A : INSURER B : INSURER C : INSURER D : INSURER E : INSURER F : INSURER(S) AFFORDING COVERAGE SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. C 1,000,000 GLO3486665 John C Hurley X CHI-003650031-27 1,000,000 1,000,000 16535 1,000,000 of Marsh USA Inc. Attn: RAFFLES Fax (313) 393-6950 N X 2,000,000 04/01/2015 11 04/01/2016 EACH OCCURRENCE N/A 04/01/2016 BAP3486681 A 2,000,000 1,000,000 X 25674 Zurich American Insurance Company 1,000,000 X Officers, Agents, and Employees where required by written contract. X 04/21/2015 04/01/2015 The City of Palo Alto, its City Council Members, Officers, Agents, and Employees are included as an additional insured for general liability as required by written contract or written agreement, per policy terms and conditions. INSURANCE IS PRIMARY AND NON-CONTRIBUTORY WHERE REQUIRED BY WRITTEN CONTRACT FOR GENERAL LIABILITY. Employers's Liability $1,000,000. Workers' Compensation does Palo Alto, CA 94303 Purchasing and Contract Adminstration� N/A not apply to monopolistic states (ND, OH, WA and WY), Puerto Rico or the Virgin Islands. Waiver of Subrogation applies to Workers' Compensation in favor of The City of Palo Alto, its City Council Members, X B Travelers Property Casualty Co. of America 00250 -00251-RAFF-15/16 10,000 04/01/2016 2,000,000 ZUP-10N46991-15-NF 40142 500,000 1,000,000 WC3486664 ONE TOWNE SQUARE, SUITE 1100�MARSH USA INC.� X SOUTHFIELD, MI 48076�� DBA Synergy Companies�Eagle Systems International, Inc.� Hayward, CA 9454528436 Satellite Street� X 04/01/2015 P.O. Box 10250�City of Palo Alto� X 04/01/2015 X B 04/01/2016 American Zurich Insurance Company DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB ACORD 101 (2008/01) The ACORD name and logo are registered marks of ACORD © 2008 ACORD CORPORATION. All rights reserved. THIS ADDITIONAL REMARKS FORM IS A SCHEDULE TO ACORD FORM, FORM NUMBER:FORM TITLE: ADDITIONAL REMARKS ADDITIONAL REMARKS SCHEDULE Page of AGENCY CUSTOMER ID: LOC #: AGENCY CARRIER NAIC CODE POLICY NUMBER NAMED INSURED EFFECTIVE DATE: 22 Detroit WORKERS' COMPENSATION DOES NOT APPLY TO MONOPOLISTIC STATES (ND, OH, WA AND WY), PUERTO RICO OR THE VIRGIN ISLANDS. �� Certificate of Liability Insurance 00250 MARSH USA INC.� DBA Synergy Companies� Eagle Systems International, Inc.� Hayward, CA 94545 28436 Satellite Street� 25 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB (d) is independently developed by CONSULTANT without violating any of its obligations under this Agreement or any other agreement between the Parties; or (e) is legally required to be disclosed by judicial or other governmental action; provided, however, that prompt notice of such judicial or other governmental action shall have been first given to CITY, which shall be afforded the opportunity to exhaust all reasonable legal remedies to maintain the Confidential Information in confidence; or (f) is permitted to be disclosed by a formal written agreement executed by and between the Parties. Specific information shall not fall within the exceptions of Sections (a) through (f) above merely because it is embraced by more general information falling within such exceptions. 3. CALIFORNIA PUBLIC RECORDS ACT 3.1 CONSULTANT acknowledges that CITY is a public agency subject to the requirements of the California Constitution, Article 1, Section 3 and California Public Records Act Cal. Gov. Code section 6250 et seq. CONSULTANT acknowledges that CITY may submit to or otherwise provide access to CONSULTANT Confidential Information that CITY or any utility customer of CITY considers to be protected from disclosure pursuant to exemptions granted by applicable California law. 3.2 Whether or not there is a request or demand of any third party not a Party to this Agreement (the “Requestor”) for the production, inspection and/or copying of information designated by CITY as Confidential Information, CONSULTANT shall be solely responsible for taking whatever legal steps CITY deems necessary to protect information deemed by it to be Confidential Information and to prevent release of information to the Requestor (including the release of such information by CONSULTANT). 3.3 Under no circumstances will CONSULTANT be permitted to comply with the Requestor’s demand for disclosure of such Confidential Information that CITY deems confidential and not intended for disclosure to the general public, or otherwise publicly disclose the Confidential Information to any person not authorized by law to receive such information. 4. CONFIDENTIAL INFORMATION DESIGNATION 4.1 As practicable, the Confidential Information shall be marked with the words “Confidential” or “Confidential Material” or with words of similar import. CITY shall instruct CONSULTANT that information of a financial, personal, or proprietary nature being conveyed orally and intended by CITY to be covered by the terms of this Agreement, is deemed Confidential Information. To the extent possible, CITY shall endeavor to mark any electronic document intended to be 27 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB covered by the terms of this Agreement with the words “Confidential” or similar words, or, if that is not possible or would be exceedingly difficult, CITY shall notify CONSULTANT (for example, by covering e-mail transmitting the electronic document) that the electronic document is Confidential Information. 4.2 CITY’s failure, for whatever reason, to mark any material at the time it is produced to CONSULTANT, or to notify it that oral or electronic material is Confidential Information at the time it is provided, shall not take the material out of the coverage of this Agreement for all time, and CONSULTANT shall treat the material as Confidential Information once CITY has notified it that the material is to be covered by this Agreement. 5. DUTY TO KEEP CONFIDENTIAL 5.1 CONSULTANT agrees to maintain as confidential, to the extent permitted or required by applicable law, all Confidential Information furnished or otherwise made available to the CONSULTANT, or its Representatives by CITY. CONSULTANT acknowledges that the Confidential Information is proprietary and a valuable asset of CITY and agrees that CONSULTANT shall take reasonable precautions to ensure that such Confidential Information is safeguarded against disclosure to unauthorized employees, Representatives or third parties. (a) CONSULTANT shall use the Confidential Information solely as permitted by the Contract and shall not sell Confidential Information or otherwise disclose such Confidential Information under any circumstances and without the prior written consent of CITY. CONSULTANT shall not disclose the Confidential Information, or portions thereof, to any of its Representatives, except to those who need to know such information for the purpose of advising CITY and who agree to the terms of this Agreement. (b) CONSULTANT agrees that any of the Representatives to whom the Confidential Information is disclosed will be informed of the confidential or proprietary nature of such information and of CONSULTANT’s obligations under this Agreement. CONSULTANT is responsible for any use of Confidential Information by any of its Representatives. (c) CONSULTANT shall ensure that: (i) any Representatives with whom CONSULTANT shares such Confidential Information or who acquire knowledge of such Confidential Information from or through CONSULTANT regard and treat such Confidential Information of CITY as strictly confidential and wholly owned by CITY, and (ii) CONSULTANT shall not (and CONSULTANT shall ensure that any Representatives with whom CONSULTANT shares such Confidential Information or who acquire knowledge of such 28 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB Confidential Information from or through CONSULTANT do not) for any reason, in any fashion, either directly or indirectly, sell, lend, lease, distribute, license, give, transfer, assign, show, disclose, disseminate, or otherwise communicate any such Confidential Information to any third party, or misappropriate, reproduce, copy or use any such Confidential Information, in either case, for any purpose other than in accordance with this Agreement. (d) If CONSULTANT or any of its Representatives are requested or required to disclose any Confidential Information by law, regulation, the applicable rules of any national securities exchange or other market or reporting system, oral questions, interrogatories, requests for information or other documents in legal proceedings, subpoena, civil investigative demand or any other similar process, CONSULTANT shall provide CITY with prompt written notice of any such request or requirement so that CITY has an opportunity to seek a protective order via writ of mandate or other appropriate remedy, or waive compliance with the provisions of this Agreement. (e) If CITY waives compliance with the provisions of this Agreement with respect to a specific request or requirement, CONSULTANT and its Representatives shall disclose only that portion of the Confidential Information that is expressly covered by such waiver and which is necessary to disclose in order to comply with such request or requirement. CONSULTANT and its Representatives shall cooperate in a reasonable manner with CITY in attempting to preserve the confidentiality of the Confidential Information. (f) If (in the absence of a waiver by CITY) CONSULTANT has not secured a protective order or other appropriate remedy despite attempting to do so, and CONSULTANT or one of its Representatives is nonetheless then legally compelled to disclose any Confidential Information, CONSULTANT or such Representative may, without liability hereunder, disclose only that portion of the Confidential Information that is necessary to be disclosed. In the event that disclosure is made in accordance with this subsection, CONSULTANT shall exercise, and cause its Representatives to exercise, reasonable efforts to preserve the confidentiality of the Confidential Information, including obtaining reliable assurance at the sole expense of CONSULTANT that confidential treatment shall be accorded any Confidential Information so furnished. 6. NO LIABILITY, RELEASE, OR OBLIGATION Except as set forth in any formal written agreement executed by and between the parties, neither CONSULTANT nor any of its Representatives shall be entitled to rely on any statement, promise, agreement or understanding, whether written or oral, or any custom, usage of trade, course of dealing or conduct. In addition, each Party understands and acknowledges that neither CITY nor any of its representatives, employees or agents makes any representation or warranty, 29 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB express or implied, as to the accuracy or completeness of any Confidential Information, and that neither CITY nor any of its representatives, employees or agents shall have any liability whatsoever to CONSULTANT or to any of its Representatives relating to or resulting from the Confidential Information or any errors therein or omissions therefrom. 7. REMEDIES In recognition that an irreparable injury may result to CITY, if any provision of this Exhibit J is violated, CONSULTANT agrees that upon any breach or threatened breach of any provision of this Exhibit J by CONSULTANT or any of its Representatives, that CITY shall be entitled to seek an injunction or specific performance prohibiting such conduct or any other relief as may be permitted by law. 8. RETURN OF CONFIDENTIAL INFORMATION 8.1 CONSULTANT shall have access to the Confidential Information provided by CITY only during the term of this Agreement, and shall return all Confidential Information provided under this Agreement upon its termination, or at any time upon request of CITY, as described in Section 8.2 of this Exhibit J. 8.2 CITY may at any time request that CONSULTANT promptly return to CITY or destroy any or all documents or other materials containing Confidential Information of CITY, and CONSULTANT shall immediately comply with any such request. Notwithstanding the return or destruction of the Confidential Information as contemplated by this section 8 of this Exhibit J, the CONSULTANT and its Representatives will continue to be bound by the terms of this Agreement with respect thereto, including all obligations of confidentiality. 9. SURVIVAL CONSULTANT’s obligations of confidentiality and non-circumvention under this Exhibit J shall survive the termination of this Agreement. 10. OWNERSHIP RIGHTS NOT CREATED The transfer of Confidential Information hereunder shall not be construed as granting a license of any kind or any right of ownership in the Confidential Information to CONSULTANT. 11. NO OBLIGATION TO DISCLOSE Nothing in this Section shall obligate CITY to disclose specific Confidential Information to CONSULTANT. Such disclosures shall be at the CITY’s sole discretion. 30 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB EXHIBIT “F” IDENTITY INFORMATION PROTECTION Identity Information Protection 1. During the term of the contract the CONSULTANT shall not collect, process or store any Private Information (PI) and Personally Identifiable Information (PII), except the name and address of the customer. 2. During the term of the contract the CONSULTANT shall comply with the City’s Information Privacy Policy and the City’s Software as a Service Security and Privacy Terms and Conditions. Personal information (PI) is defined as an individual's first name or first initial and last name in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted: (1) Social security number. (2) Driver's license number or California Identification Card number. (3) Account number, credit or debit card number, in combination with any required security code, access code, or password that would permit access to an individual's financial account, "Personal information" does not include publicly available information that is lawfully made available to the general public from federal, state, or local government records. Personally Identifiable Information (PII), as used in information security, is information that can be used to uniquely identify, contact, or locate a single person or can be used with other sources to uniquely identify a single individual. 31 DocuSign Envelope ID: 5D4082A4-71CD-483A-8DB6-1E034FE905FB CITY OF PALO ALTO CONTRACT NO. C15159125 AGREEMENT BETWEEN THE CITY OF PALO ALTO AND EAGLE SYSTEMS INTERNATIONAL, INC. DBA SYNERGY COMPANIES FOR PROFESSIONAL SERVICES This Agreement is entered into on this 1st day of June 2015 (“Agreement”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and EAGLE SYSTEMS INTERNATIONAL, INC. DBA SYNERGY COMPANIES, a California corporation, located at 28436 Satellite Street, Hayward, CA 94545 ("CONSULTANT"). RECITALS The following recitals are a substantive portion of this Agreement. A. CITY intends to provide direct installation, no-cost energy efficiency services to CITY’s multi-family residences with 4 or more units (“Project”) and desires to engage a consultant to administer, manager and deliver a direct install energy savings program 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 in Exhibit “A” in accordance with the terms and conditions contained in this Agreement. The performance of all Services shall be to the reasonable satisfaction of CITY. SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through June 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 Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 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. SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A” shall not exceed Four Hundred and Fifty Thousand Dollars ($450,000). No Additional Services or Reimbursable Expenses are contemplated as part of this Agreement. 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, and hourly rates), 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 subconsultants, 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 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 Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 project, CONSULTANT shall submit estimates of probable construction costs at each phase of design submittal. If the total estimated construction cost at any submittal exceeds ten percent (10%) of the CITY’s stated construction budget, CONSULTANT shall make recommendations to the CITY for aligning the Project design with the budget, incorporate CITY approved recommendations, and revise the design to meet the Project budget, at no additional cost to CITY. SECTION 10. INDEPENDENT CONTRACTOR. It is understood and agreed that in 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 the CITY. SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of CONSULTANT are material considerations for this Agreement. CONSULTANT shall not assign or transfer any interest in this Agreement nor the performance of any of 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. Option A: No Subcontractor: CONSULTANT shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of the city manager or designee. Option B: Subcontracts Authorized: Notwithstanding Section 11 above, CITY agrees that subconsultants may be used to complete the Services. The subconsultants authorized by CITY to perform work on this Project are: As set forth in Exhibit A attached to this Agreement. CONSULTANT shall be responsible for directing the work of any subconsultants and for any compensation due to subconsultants. CITY assumes no responsibility whatsoever concerning compensation. CONSULTANT shall be fully responsible to CITY for all acts and omissions of a subconsultant. CONSULTANT shall change or add subconsultants only with the prior approval of the city manager or his designee. SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign David Shallenberger as the project supervisor to have supervisory responsibility for the performance, progress, and execution of the Services 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. The City’s project manager is Christine Tam or her designee, Utilities Department, Marketing Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 Services Division, 250 Hamilton Ave, Palo Alto, CA 94303. The project manager will be CONSULTANT’s point of contact with respect to performance, progress and execution of the Services. The CITY may designate an alternate project manager from time to time. SECTION 14. OWNERSHIP OF MATERIALS. Upon delivery, all work product, including without limitation, 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. [Option B applies to any consultant who does not qualify as a design professional as defined in Civil Code Section 2782.8.] 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 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, Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 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 Purchasing Manager 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. 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. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 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 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 subconsultants, 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 Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 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 the 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 the 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 Consultant to City generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double-sided and printed on a minimum of 30% or greater post-consumer content paper, unless otherwiseapproved by the City’s Project Manager. Any submitted materials printed by aprofessional 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 the City shall be purchased inaccordance with the City’s Environmental Purchasing Policy including but notlimited to Extended Producer Responsibility requirements for products and packaging. A copy of this policy is on file at the Purchasing Office. •Reusable/returnable pallets shall be taken back by the Consultant, at no additional cost to the City, for reuse or recycling. Consultant shall provide documentationfrom 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, Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 condition, or provision of this Agreement. SECTION 25. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. 25.1. In its performance of Services under this Agreement, CONSULTANT and its Representatives may acquire and otherwise gain access to Confidential Information, as defined in Exhibit “E”, which is exempt from public disclosure under the California Public Records Act, Cal. Gov. Code section 6250 et seq. CONSULTANT agrees to protect such Confidential Information from disclosure to any third parties, in accordance with the terms and conditions set forth in Exhibit “E” attached to this Agreement. SECTION 26. MISCELLANEOUS PROVISIONS. 26.1. This Agreement will be governed by the laws of the State of California. 26.2. 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. 26.3. 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. 26.4. 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. 26.5. 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. 26.6. 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. 26.7. 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. 26.8 If, pursuant to this contract with CONSULTANT, City shares with CONSULTANT personal information as defined in California Civil Code section 1798.81.5(d) about a California resident (“Personal Information”), CONSULTANT shall maintain reasonable Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 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. 26.9 All unchecked boxes do not apply to this agreement. / / / / / / / / / / / / / / / / / / / / Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 26.10 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. 26.11 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 ____________________________ City Manager APPROVED AS TO FORM: __________________________ Senior Deputy City Attorney EAGLE SYSTEMS INTERNATIONAL, INC. DBA SYNERGY COMPANIES By:___________________________ Name:_________________________ Title:__________________________ Attachments: EXHIBIT “A”: SCOPE OF SERVICES EXHIBIT “B”: SCHEDULE OF PERFORMANCE EXHIBIT “C”: COMPENSATION EXHIBIT “D”: INSURANCE REQUIREMENTS EXHIBIT “E”: CONFIDENTIALITY AGREEMENT EXHIBIT “F”: IDENTITY INFORMATION PROTECTION Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 Legal Counsel David Shallenberger EXHIBIT “A” SCOPE OF SERVICES CONSULTANT agrees to deliver the Multifamily Residence Plus+ Program (sometimes referred to as the “PROGRAM”) to multifamily residences with 4+ units, including hospices, care centers, rehab facilities, and select small and medium commercial properties for the City of Palo Alto Utilities department (“Palo Alto” or “CITY”) in accordance with the specifications set forth in this Exhibit “A”. a) OVERVIEW This Multifamily Residence Plus+ Program is designed to provide direct installation of energy efficiency (EE) measures at no-cost to targeted customers. The PROGRAM serves Palo Alto’s hard to reach multifamily residences, 4 + units that include apartments, hospices, care centers and rehab facilities. In addition to the specific project components identified in Section B – “Program Implementation and Delivery” of this Exhibit “A”, CONSULTANT will develop and implement a Marketing Plan, Quality Assurance Plan, and Staffing Plan. Target Customers/Markets CONSULTANT’s primary targets for the PROGRAM are residences with 4 or more units, include 4 + apartments, hospices, care centers, rehab facilities, and select small and medium commercial properties in the CITY in accordance with the specifications set forth in this Exhibit “A”. Marketing Plan CONSULTANT will carefully develop marketing and outreach plans. CONSULTANT will utilize marketing strategies to garner high levels of responses and participation, including marketing directly to targeted customers segments via in-person visits by CONSULTANT’s associates and technicians. Additionally, CONSULTANT will develop relationships with home owner associations. Quality Assurance Plan CONSULTANT will maintain a Project Manager that monitors the work performed by each technician to verify the correct installation of work, to ensure that work is completed in compliance with CITY requirements, and to coordinate with the owner, property manager and maintenance teams, where applicable. CONSULTANT’s Project Manager will evaluate 100% of the work that is completed and report to the CITY regarding the same. CONSULTANT will contact property managers/owners and business managers/owners after work is completed to determine satisfaction and to gain other pertinent information about the work completed. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 CONSULTANT agrees to maintain an in-house inspection team that physically inspects 100% of all jobs completed by each technician. Program Staffing Plan CONSULTANT agrees to staff the PROGRAM in accordance with the Staffing Plan set forth in Table A-1. CONSULTANT shall notify the CITY concerning proposed changes to the staffing plan, and all such changes require the prior written consent of the CITY. CITY reserves the right to (i) request CONSULTANT conduct criminal background checks to City’s satisfaction on all CONSULTANT’s staff, contractors or agents that may enter customer property, and (ii) require that any staff, contractor or agent of CONSULTANT that fails the background check shall not be permitted to enter any customer premises. Without limiting Section 16 (Indemnity) of the Agreement, CONSULTANT agrees and understands it is responsible for all costs and damages associated with any theft, vandalism, damage or criminal acts involving or committed by CONSULTANT staff, contractors or agents involving a customer or customer premises. Table A-1. PROGRAM Staffing Plan Staffing Direct Labor Responsibilities % of Total Hours Dave Clark, CEO Administration, Marketing, Production 2 % Steve Shallenberger, President Administration, Marketing, Production, EM&V 2 % David Shallenberger, Engineer Quality Assurance 3% Jim Amos, Program Manager Administration, Marketing, Production, EM&V 8% Russ Jacobson, Controller Administration, EM&V 5 % Dave Millward, Outreach & Business Development Property Owner/ Manager Liaison 30 % Office Staff Administrative 2 % Customer Service & Scheduling Staff Administration 2 % Receptionist & Admin. Staff Administration 1 % Data Entry & Scheduling Staff Administration 5 % Quality Assurance Manager Production and EM&V 8 % Direct Marketing Manager Marketing, Surveys, Reporting 2 % Crew Chiefs & Technicians Installation of measures and customer service 30% TOTAL 100% Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 b) PROGRAM IMPLEMENTATION AND DELIVERY The following outlines a summary of the PROGRAM design and implementation: Task 1 –Program Ramp-up Task 1.1 Program Kick-off Meeting: CONSULTANT will lead a PROGRAM kick-off meeting with the CITY’s Program Manager and other CITY staff, as necessary in order to discuss project logistics, marketing coordination, evaluation, monitoring and verification coordination, invoicing and reporting requirements, scope of work, any contractual issues, and to explore new technologies to enhance energy savings. Task 1.2 Program Data, Invoicing, and Reporting Training: CONSULTANT will train its team and personnel on reporting systems. CONSULTANT agrees to participate in training to learn how to submit monthly reports into CITY’s tracking system as needed. Task 1.3 Schedule of Activities: CONSULTANT will finalize the schedule of activities that provide a monthly work plan and implementation timeline and submit such plan to the CITY, for evaluation of the work plan and timeline. Task 1.4 Marketing Plan: CONSULTANT will finalize a detailed marketing plan (“Marketing Plan”) which will include a discussion of all necessary PROGRAM marketing materials directly involved with PROGRAM implementation or for general customer information. Task 1.5 Marketing Materials: CONSULTANT will submit to the CITY’s Program Manager all marketing collateral materials, as outlined in the Marketing Plan. CONSULTANT will obtain CITY authorization prior to any distribution, circulation, or publication of all such materials. Task 1.6 Invoice and Reporting Tools: CONSULTANT will submit to CITY a sample of all the reporting tools (i.e., flat files, monthly narrative, quarterly reporting, etc.) that are required, as further outlined herein, including under Task 5 - Invoicing and Reporting for Completed Jobs. Task 2 –Program Launch Task 2.1 Implement Marketing Campaign: CONSULTANT will execute the planned marketing campaign based on the proposed marketing plan. All marketing activities will be coordinated with the CITY’s Program Manager. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 Task 3 – Enroll Customers (pre-commitment stage) Task 3.1 Program Agreement: CONSULTANT will implement the Marketing Plan and utilize the marketing materials created to enroll customers. Customer enrollment occurs when CONSULTANT executes a “Program Agreement” with the customer to receive preliminary program services. Task 3.2 Optimize other EE Programs for customer benefit: CONSULTANT will coordinate with CITY to leverage CONSULTANT interactions with participating small and medium sized businesses in order to promote CITY's other energy efficiency, demand response, renewable and water program offerings. Task 4 – Install EE Measures (commitment stage) Task 4.1 Project Installation: CONSULTANT will deliver energy savings to customers through the installation of energy efficient hardware, upgrades, and services. Task 4.2 Inspections: CONSULTANT will inspect and verify (per specification) that all installed measures/projects in the PROGRAM are properly installed. CONSULTANT will have a Project Manager that supervises installations and work completed at each site. This individual will inspect 100% of its jobs as technicians are completing their work. When the work is complete, the CITY’s Program Manager will review work completed with the customer and have the customer sign off that the work is acceptable and satisfactory. Task 5 – Invoicing and Reporting Task 5.1 In addition to the invoicing and other requirements set forth in the Agreement, CONSULTANT will send in monthly report and annual reports to CITY. CONSULTANT shall also provide the CITY with the following documentation: a. Narrative Report, in alignment with format as prescribed by CITY; b. Spreadsheet report with budget and energy savings; c. Program information in a format compatible with CITY’s tracking database; d. Beginning on a date set by CITY’s Program Manager, CONSULTANT will input PROGRAM information into the CITY’s tracking system (if applicable). The CITY in its sole discretion may determine that entries in the tracking system are a substitute for the monthly reports required under Task 5.1; e. Such other information reasonably requested by CITY. Task 5.2 CONSULTANT will evaluate PROGRAM progress with each monthly report. Task 5.3 CONSULTANT agrees to work with CITY to respond to federal, state or local data requests or reporting requirements. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 Task 5.4 Only energy savings that are incremental to the minimum energy savings mandated by Title 20 and Title 24 can be counted towards PROGRAM savings. To that end, the California Municipal Utility Association Technical Reference Manual (TRM), as the same may be amended from time to time, should be used as the reference source for determining annual energy savings. If a PROGRAM measure is not covered by the TRM, the CONSULTANT shall provide, to the CITY’s satisfaction, the estimated energy savings and work paper(s) or reference source documenting the savings estimation methodology. At its discretion, the CITY holds the right to request updated energy savings calculations. Additionally, for projects that involve lighting retrofit installations at nonresidential customer sites, CONSULTANT shall estimate the energy savings using the “TRM Non-Residential lighting energy savings calculator”, or other similar calculators that incorporate the Title 24 and Title 20 baseline for estimating energy savings. If the latter is preferred, CONSULTANT will need to demonstrate, to the CITY’s satisfaction, that the energy savings calculation methodologies and the resultant savings from the TRM energy savings calculator and the CONSULTANT-preferred calculator are equivalent. At CITY’s discretion, CONSULTANT may work with CITY’s EM&V consultant(s) to develop a plan that accurately validates PROGRAM outcomes. Task 6 – Customer Service Task 6.1 CONSULTANT will address and resolve all customer issues discovered through either survey feedback or other means of customer contact. CONSULTANT will pursue continuous improvements to promote complete customer satisfaction. Customer feedback issues will be tracked by CONSULTANT using the monthly reports, as well as a completed complaint form filled out by CONSULTANT. CITY retains the right to separately survey PROGRAM participants. If any issues cannot be resolved to the satisfaction of the customer by CONSULTANT within five (5) days, CONSULTANT shall immediately provide CITY with a detailed description of any such complaint, which will include the name and contact information of the customer and any other information requested by CITY. CONSULTANT will provide a one year warranty to customers for all measures from the date of installation. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 Task 7 – Program Ramp-Down and Shutdown Task 7.1 Program Ramp-down: The CONSULTANT will complete and fully resolve all outstanding jobs in progress and any customer complaints. Task 8 – Submit Final Program Report Task 8.1 CONSULTANT will submit a final report which includes a narrative with an overview of the PROGRAM and a workbook report with budget and energy savings performance from the Program. The narrative will also contain a report on quality assurance information. The final report will include PROGRAM achievements, challenges, goals, lessons learned, and program improvements. Task 8.2 CONSULTANT agrees to deliver the final report within 30 days of the end of the Term as such date may be extended at the sole discretion of the CITY. CONSULTANT will maintains electronic copies of invoices as is required by CITY. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 EXHIBIT “B” SCHEDULE OF PERFORMANCE CONSULTANT shall perform the Services so as to complete each milestone within the number of days/weeks specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the project managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed. Task Timing (Due Date) Task 1 –PROGRAM RAMP-UP Task 1.1 Within 15 days of contract execution date Task 1.2 Within 15 days of contract execution date Task 1.3 Within 30 days of contract execution date Task 1.4 Within 30 days of contract execution date and Ongoing Task 1.5 Within 30 days of contract execution date and Ongoing Task 1.6 Within 30 days of contract execution date and Ongoing Task 2 –PROGRAM LAUNCH Task 2.1 Ongoing over Term of Agreement Task 3 – ENROLL CUSTOMERS (PRE-COMMITMENT STAGE) Task 3.1 Ongoing over Term of Agreement Task 3.2 Ongoing over Term of Agreement Task 4 – INSTALL EE MEASURES (COMMITMENT STAGE) Task 4.1 Ongoing over Term of Agreement Task 4.2 Ongoing over Term of Agreement Task 5 – INVOICING AND REPORTING Task 5.1 15th of each month Task 5.2 15th of each month Task 5.3 Ongoing over Term of Agreement Task 5.4 Ongoing over Term of Agreement TASK 6 – CUSTOMER SERVICE Task 6.1 Ongoing over Term of Agreement Task 7 – RAMP-DOWN AND SHUTDOWN PROGRAM Task 7.1 Ongoing through June 30, 2018 Task 8 – SUBMIT FINAL PROGRAM REPORT Task 8.1 As requested by CITY Program manager Task 8.2. Prior to June 30, 2018 Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 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 this Exhibit C. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit “A” (“Basic Services”) shall not exceed four hundred fifty thousand dollars ($450,000). CONSULTANT compensation shall not exceed one hundred and fifty thousand dollars ($150,000) per year under the Agreement; provided, however, that the CITY in its sole discretion reserves the right to modify the annual compensation limit, with CITY’s advance written approval, as long as the maximum total compensation not to exceed amount for the Term of the Agreement does not exceed four hundred and fifty thousand dollars ($450,000). CONSULTANT agrees to complete all Services 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. CITY will compensate CONSULTANT using a fixed-unit pricing structure. CITY will compensate CONSULTANT a fixed price (the Cost per Unit) per Eligible Measure installed and approved by CITY as set forth in Table C-1. The Cost per Unit for each Eligible Measure set forth in Table C-1 includes all of CONSULTANT’s costs, including, without limitation, administrative costs, marketing/outreach costs, and direct implementation (materials and labor) costs. It is CITY’s expectation that approximately 85% of CONSULTANT’s costs be related to direct implementation costs (materials and labor) with approximately 15% reserved for marketing/outreach costs and administrative costs respectively. Maximum Total Compensation NOT TO EXCEED AMOUNT for Term of the Agreement = $450,000 PROGRAM Energy Saving Target Annual PROGRAM Targets: 295,792 Annual Gross kWh 220 Annual Gross kW Annual PROGRAM Budget: $150,000 including all administration, marketing, implementation and installation Total PROGRAM Targets and Budget FY2015- FY2018 Total Budget: $450,000 Total kWh: 887,376 kWh Total kW: 661 kW Total Therms: 55,322 Therms Table C-1 Multifamily Residence Plus+ Program Eligible Measure Cost Per Unit CITY, in its sole discretion by providing written notice to CONSULTANT retains the right to add, delete, modify or limit the Eligible Measures, Cost per Unit, maximum number of individual Eligible Measures per customer or per year or other characteristics set forth in this Table C-1, installed by CONSULTANT. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 # Eligible Measure Description Unit Of Measure Cost per Unit 1 Attic Insulation R-8 to Standard R-38 Per Sq.Ft. $1.05 2 Attic Insulation R-0 to Standard R-38 Per Sq.Ft. $1.25 3 Occupancy Sensors Per Unit $79.00 4 LED 10-13 W replacing 50 W or greater halogen downlight (Exterior) Per Unit $28.00 5 LED 10-13 W replacing 50 W or greater halogen downlight (Interior) Per Unit $28.00 6 LED 19-21 W replacing 90 W or greater halogen downlight (Exterior) Per Unit $36.00 7 LED 19-21 W replacing 90 W or greater halogen downlight (Interior) Per Unit $36.00 8 LED A Type 10W replacing 60W Incandescent Per Unit $16.50 9 LED A Type 8W replacing 40W Incandescent Per Unit $14.00 10 LED 7 W replacing 50 W MR16 (Exterior) Per Unit $33.00 11 Open Sign LED - Office Per Unit $265.00 12 Open Sign LED - Retail Per Unit $265.00 13 LED Exit Sign - One Sided Per Unit $57.00 14 LED Exit Sign - Two Sided Per Unit $57.00 16 Vending machine controller - cooled Controller $213.00 17 T8 28W replacing T8 32W 4F4L Per Lamp $56.22 18 T8 28W replacing T8 32W 4F3L Per Lamp $46.02 19 T8 28W replacing T8 32W 4F2L Per Lamp $36.65 20 T8 28W replacing T8 32W 4F1L Per Lamp $28.72 21 T8 28W replacing T8 32W 8F2L Per Lamp $38.92 22 T8 28W replacing T8 32W 8F1L Per Lamp $32.15 23 T8 Delamp 1-lamp - Corridors, restrooms, stairs, support areas Per Lamp $27.00 24 T8 Delamp 1-lamp - Kitchen, food preparation Per Lamp $27.00 25 T8 Delamp 1-lamp - Office space < 250 sf Per Lamp $27.00 26 T8 Delamp 1-lamp - Office space > 250 sf Per Lamp $27.00 27 T8 Delamp 1-lamp - Office space, multipurpose <1,000 sf Per Lamp $27.00 28 T8 Delamp 1-lamp - Tenant lease space Per Lamp $27.00 29 T8 Delamp 1-lamp - Waiting area Per Lamp $27.00 30 Hot Water Circulation Pump Sensor Per Sensor $1,650.00 31 VFD Pool Pump Retrofit Per Pump $2,400.00 32 LED 30W Wall Pack replacing 150W fixture Per Fixture $240.00 33 LED 60W Wall Pack replacing 250W fixture Per Fixture $290.00 Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 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 AGGREGAT E 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 Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 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 SUBCONSULTANTS, 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 $5,000 REQUIRE CITY’S PRIOR APPROVAL. II. CONTACTOR MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE. III. ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO “ADDITIONAL INSUREDS” A. PRIMARY COVERAGE WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED, INSURANCE AS AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRIBUTING WITH ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSUREDS. B. CROSS LIABILITY THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS UNDER THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL LIABILITY OF THE COMPANY UNDER THIS POLICY. C. NOTICE OF CANCELLATION Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 1.IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THEEFFECTIVE DATE OF CANCELLATION. 2.IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT OF PREMIUM, THE ISSUINGCOMPANY SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. NOTICES SHALL BE MAILED TO: PURCHASING AND CONTRACT ADMINISTRATION CITY OF PALO ALTO P.O. BOX 10250 PALO ALTO, CA 94303 Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 CERTIFICATE HOLDER © 1988-2010 ACORD CORPORATION. All rights reserved. ACORD 25 (2010/05) AUTHORIZED REPRESENTATIVE CANCELLATION DATE (MM/DD/YYYY)CERTIFICATE OF LIABILITY INSURANCE LOCJECTPRO-POLICY GEN'L AGGREGATE LIMIT APPLIES PER: OCCURCLAIMS-MADE COMMERCIAL GENERAL LIABILITY GENERAL LIABILITY PREMISES (Ea occurrence)$DAMAGE TO RENTED EACH OCCURRENCE $ MED EXP (Any one person) $ PERSONAL & ADV INJURY $ GENERAL AGGREGATE $ PRODUCTS - COMP/OP AGG $ $RETENTIONDED CLAIMS-MADE OCCUR $ AGGREGATE $ EACH OCCURRENCE $ UMBRELLA LIAB EXCESS LIAB DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (Attach ACORD 101, Additional Remarks Schedule, if more space is required) INSRLTR TYPE OF INSURANCE POLICY NUMBER POLICY EFF(MM/DD/YYYY)POLICY EXP(MM/DD/YYYY)LIMITS WC STATU-TORY LIMITS OTH-ER E.L. EACH ACCIDENT E.L. DISEASE - EA EMPLOYEE E.L. DISEASE - POLICY LIMIT $ $ $ ANY PROPRIETOR/PARTNER/EXECUTIVE If yes, describe underDESCRIPTION OF OPERATIONS below (Mandatory in NH)OFFICER/MEMBER EXCLUDED? WORKERS COMPENSATION AND EMPLOYERS' LIABILITY Y / N AUTOMOBILE LIABILITY ANY AUTO ALL OWNED SCHEDULED HIRED AUTOS NON-OWNEDAUTOSAUTOS AUTOS COMBINED SINGLE LIMIT BODILY INJURY (Per person) BODILY INJURY (Per accident) PROPERTY DAMAGE $ $ $ $ THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THISCERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR ADDL WVD SUBR N / A $ $ (Ea accident) (Per accident) THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). The ACORD name and logo are registered marks of ACORD COVERAGES CERTIFICATE NUMBER:REVISION NUMBER: INSURED PHONE(A/C, No, Ext): PRODUCER ADDRESS:E-MAIL FAX(A/C, No): CONTACTNAME: NAIC # INSURER A : INSURER B : INSURER C : INSURER D : INSURER E : INSURER F : INSURER(S) AFFORDING COVERAGE SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. C 1,000,000 GLO3486665 John C Hurley X CHI-003650031-27 1,000,000 1,000,000 16535 1,000,000 of Marsh USA Inc. Attn: RAFFLES Fax (313) 393-6950 N X 2,000,000 04/01/2015 11 04/01/2016 EACH OCCURRENCE N/A 04/01/2016 BAP3486681 A 2,000,000 1,000,000 X 25674 Zurich American Insurance Company 1,000,000 X Officers, Agents, and Employees where required by written contract. X 04/21/2015 04/01/2015 The City of Palo Alto, its City Council Members, Officers, Agents, and Employees are included as an additional insured for general liability as required by written contract or written agreement, per policy terms and conditions. INSURANCE IS PRIMARY AND NON-CONTRIBUTORY WHERE REQUIRED BY WRITTEN CONTRACT FOR GENERAL LIABILITY. Employers's Liability $1,000,000. Workers' Compensation does Palo Alto, CA 94303 Purchasing and Contract Adminstration� N/A not apply to monopolistic states (ND, OH, WA and WY), Puerto Rico or the Virgin Islands. Waiver of Subrogation applies to Workers' Compensation in favor of The City of Palo Alto, its City Council Members, X B Travelers Property Casualty Co. of America 00250 -00251-RAFF-15/16 10,000 04/01/2016 2,000,000 ZUP-10N46991-15-NF 40142 500,000 1,000,000 WC3486664 ONE TOWNE SQUARE, SUITE 1100�MARSH USA INC.� X SOUTHFIELD, MI 48076�� DBA Synergy Companies�Eagle Systems International, Inc.� Hayward, CA 9454528436 Satellite Street� X 04/01/2015 P.O. Box 10250�City of Palo Alto� X 04/01/2015 X B 04/01/2016 American Zurich Insurance Company DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 ACORD 101 (2008/01) The ACORD name and logo are registered marks of ACORD © 2008 ACORD CORPORATION. All rights reserved. THIS ADDITIONAL REMARKS FORM IS A SCHEDULE TO ACORD FORM, FORM NUMBER:FORM TITLE: ADDITIONAL REMARKS ADDITIONAL REMARKS SCHEDULE Page of AGENCY CUSTOMER ID: LOC #: AGENCY CARRIER NAIC CODE POLICY NUMBER NAMED INSURED EFFECTIVE DATE: 22 Detroit WORKERS' COMPENSATION DOES NOT APPLY TO MONOPOLISTIC STATES (ND, OH, WA AND WY), PUERTO RICO OR THE VIRGIN ISLANDS. �� Certificate of Liability Insurance 00250 MARSH USA INC.� DBA Synergy Companies� Eagle Systems International, Inc.� Hayward, CA 94545 28436 Satellite Street� 25 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 EXHIBIT “E” CONFIDENTIALITY AGREEMENT 1.PURPOSE 1.1 In its performance of Services under this Agreement, CONSULTANT and its directors, officers, partners, managers, members, employees, advisors, agents, sub-contractors and other representatives of CONSULTANT and their subsidiaries and affiliates, including, without limitation, attorneys, accountants, consultants, and financial advisors (collectively, the “Representatives”) may acquire and otherwise gain access to Confidential Information, as defined in Section 2 of this Exhibit “J”, which is exempt from public disclosure under the California Public Records Act, Cal. Gov. Code section 6250 et seq. 1.2 In accordance with the terms and conditions of this Agreement, CONSULTANT agrees to take reasonable precautions to ensure that Confidential Information of CITY, as defined in this Exhibit, is safeguarded against disclosure to unauthorized employees or third parties. 1.3 CITY would not share or disclose any Confidential Information to CONSULTANT but for the legal protections against unauthorized disclosures intended to be afforded by California law and this Agreement, and is relying on this Agreement in disclosing such Confidential Information to CONSULTANT. 2.CONFIDENTIAL INFORMATION, DEFINED 2.1 “Confidential Information” means any and all information which is of a non- public, proprietary or confidential nature, in any form or medium, written or oral, (whether prepared by the CITY, its employees, or agents, and irrespective of the form or means of communication and whether it is labeled or otherwise identified as confidential) that is furnished to CONSULTANT by the CITY, including, without limitation, individually identifiable utilities customer information and utility infrastructure data. 2.2 Exceptions. “Confidential Information” shall exclude (and the CONSULTANT shall not be under any obligation to maintain in confidence) any information (or any portion thereof) disclosed to CONSULTANT by CITY to the extent that such information: (a) is in the public domain at the time of disclosure; or (b) at the time of or following disclosure, becomes generally known or available through no act or omission on the part of CITY; or (c) is known, or becomes known, to CONSULTANT from a source other than CITY or its Representatives (as defined herein), provided that disclosure Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 by such source is not in breach of a confidentiality agreement CITY; or (d) is independently developed by CONSULTANT without violating any of its obligations under this Agreement or any other agreement between the Parties; or (e) is legally required to be disclosed by judicial or other governmental action; provided, however, that prompt notice of such judicial or other governmental action shall have been first given to CITY, which shall be afforded the opportunity to exhaust all reasonable legal remedies to maintain the Confidential Information in confidence; or (f) is permitted to be disclosed by a formal written agreement executed by and between the Parties. Specific information shall not fall within the exceptions of Sections (a) through (f) above merely because it is embraced by more general information falling within such exceptions. 3. CALIFORNIA PUBLIC RECORDS ACT 3.1 CONSULTANT acknowledges that CITY is a public agency subject to the requirements of the California Constitution, Article 1, Section 3 and California Public Records Act Cal. Gov. Code section 6250 et seq. CONSULTANT acknowledges that CITY may submit to or otherwise provide access to CONSULTANT Confidential Information that CITY or any utility customer of CITY considers to be protected from disclosure pursuant to exemptions granted by applicable California law. 3.2 Whether or not there is a request or demand of any third party not a Party to this Agreement (the “Requestor”) for the production, inspection and/or copying of information designated by CITY as Confidential Information, CONSULTANT shall be solely responsible for taking whatever legal steps CITY deems necessary to protect information deemed by it to be Confidential Information and to prevent release of information to the Requestor (including the release of such information by CONSULTANT). 3.3 Under no circumstances will CONSULTANT be permitted to comply with the Requestor’s demand for disclosure of such Confidential Information that CITY deems confidential and not intended for disclosure to the general public, or otherwise publicly disclose the Confidential Information to any person not authorized by law to receive such information. 4. CONFIDENTIAL INFORMATION DESIGNATION 4.1 As practicable, the Confidential Information shall be marked with the words “Confidential” or “Confidential Material” or with words of similar import. CITY Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 shall instruct CONSULTANT that information of a financial, personal, or proprietary nature being conveyed orally and intended by CITY to be covered by the terms of this Agreement, is deemed Confidential Information. To the extent possible, CITY shall endeavor to mark any electronic document intended to be covered by the terms of this Agreement with the words “Confidential” or similar words, or, if that is not possible or would be exceedingly difficult, CITY shall notify CONSULTANT (for example, by covering e-mail transmitting the electronic document) that the electronic document is Confidential Information. 4.2 CITY’s failure, for whatever reason, to mark any material at the time it is produced to CONSULTANT, or to notify it that oral or electronic material is Confidential Information at the time it is provided, shall not take the material out of the coverage of this Agreement for all time, and CONSULTANT shall treat the material as Confidential Information once CITY has notified it that the material is to be covered by this Agreement. 5. DUTY TO KEEP CONFIDENTIAL 5.1 CONSULTANT agrees to maintain as confidential, to the extent permitted or required by applicable law, all Confidential Information furnished or otherwise made available to the CONSULTANT, or its Representatives by CITY. CONSULTANT acknowledges that the Confidential Information is proprietary and a valuable asset of CITY and agrees that CONSULTANT shall take reasonable precautions to ensure that such Confidential Information is safeguarded against disclosure to unauthorized employees, Representatives or third parties. (a) CONSULTANT shall use the Confidential Information solely as permitted by the Contract and shall not sell Confidential Information or otherwise disclose such Confidential Information under any circumstances and without the prior written consent of CITY. CONSULTANT shall not disclose the Confidential Information, or portions thereof, to any of its Representatives, except to those who need to know such information for the purpose of advising CITY and who agree to the terms of this Agreement. (b) CONSULTANT agrees that any of the Representatives to whom the Confidential Information is disclosed will be informed of the confidential or proprietary nature of such information and of CONSULTANT’s obligations under this Agreement. CONSULTANT is responsible for any use of Confidential Information by any of its Representatives. (c) CONSULTANT shall ensure that: (i) any Representatives with whom CONSULTANT shares such Confidential Information or who acquire knowledge of such Confidential Information from or through CONSULTANT regard Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 and treat such Confidential Information of CITY as strictly confidential and wholly owned by CITY, and (ii) CONSULTANT shall not (and CONSULTANT shall ensure that any Representatives with whom CONSULTANT shares such Confidential Information or who acquire knowledge of such Confidential Information from or through CONSULTANT do not) for any reason, in any fashion, either directly or indirectly, sell, lend, lease, distribute, license, give, transfer, assign, show, disclose, disseminate, or otherwise communicate any such Confidential Information to any third party, or misappropriate, reproduce, copy or use any such Confidential Information, in either case, for any purpose other than in accordance with this Agreement. (d) If CONSULTANT or any of its Representatives are requested or required to disclose any Confidential Information by law, regulation, the applicable rules of any national securities exchange or other market or reporting system, oral questions, interrogatories, requests for information or other documents in legal proceedings, subpoena, civil investigative demand or any other similar process, CONSULTANT shall provide CITY with prompt written notice of any such request or requirement so that CITY has an opportunity to seek a protective order via writ of mandate or other appropriate remedy, or waive compliance with the provisions of this Agreement. (e) If CITY waives compliance with the provisions of this Agreement with respect to a specific request or requirement, CONSULTANT and its Representatives shall disclose only that portion of the Confidential Information that is expressly covered by such waiver and which is necessary to disclose in order to comply with such request or requirement. CONSULTANT and its Representatives shall cooperate in a reasonable manner with CITY in attempting to preserve the confidentiality of the Confidential Information. (f) If (in the absence of a waiver by CITY) CONSULTANT has not secured a protective order or other appropriate remedy despite attempting to do so, and CONSULTANT or one of its Representatives is nonetheless then legally compelled to disclose any Confidential Information, CONSULTANT or such Representative may, without liability hereunder, disclose only that portion of the Confidential Information that is necessary to be disclosed. In the event that disclosure is made in accordance with this subsection, CONSULTANT shall exercise, and cause its Representatives to exercise, reasonable efforts to preserve the confidentiality of the Confidential Information, including obtaining reliable assurance at the sole expense of CONSULTANT that confidential Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 treatment shall be accorded any Confidential Information so furnished. 6. NO LIABILITY, RELEASE, OR OBLIGATION Except as set forth in any formal written agreement executed by and between the parties, neither CONSULTANT nor any of its Representatives shall be entitled to rely on any statement, promise, agreement or understanding, whether written or oral, or any custom, usage of trade, course of dealing or conduct. In addition, each Party understands and acknowledges that neither CITY nor any of its representatives, employees or agents makes any representation or warranty, express or implied, as to the accuracy or completeness of any Confidential Information, and that neither CITY nor any of its representatives, employees or agents shall have any liability whatsoever to CONSULTANT or to any of its Representatives relating to or resulting from the Confidential Information or any errors therein or omissions therefrom. 7. REMEDIES In recognition that an irreparable injury may result to CITY, if any provision of this Exhibit J is violated, CONSULTANT agrees that upon any breach or threatened breach of any provision of this Exhibit J by CONSULTANT or any of its Representatives, that CITY shall be entitled to seek an injunction or specific performance prohibiting such conduct or any other relief as may be permitted by law. 8. RETURN OF CONFIDENTIAL INFORMATION 8.1 CONSULTANT shall have access to the Confidential Information provided by CITY only during the term of this Agreement, and shall return all Confidential Information provided under this Agreement upon its termination, or at any time upon request of CITY, as described in Section 8.2 of this Exhibit J. 8.2 CITY may at any time request that CONSULTANT promptly return to CITY or destroy any or all documents or other materials containing Confidential Information of CITY, and CONSULTANT shall immediately comply with any such request. Notwithstanding the return or destruction of the Confidential Information as contemplated by this section 8 of this Exhibit J, the CONSULTANT and its Representatives will continue to be bound by the terms of this Agreement with respect thereto, including all obligations of confidentiality. 9. SURVIVAL CONSULTANT’s obligations of confidentiality and non-circumvention under this Exhibit J shall survive the termination of this Agreement. 10. OWNERSHIP RIGHTS NOT CREATED The transfer of Confidential Information hereunder shall not be construed as granting a license of any kind or any right of ownership in the Confidential Information to CONSULTANT. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 11. NO OBLIGATION TO DISCLOSE Nothing in this Section shall obligate CITY to disclose specific Confidential Information to CONSULTANT. Such disclosures shall be at the CITY’s sole discretion. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 EXHIBIT “F” IDENTITY INFORMATION PROTECTION Identity Information Protection 1. During the term of the contract the CONSULTANT shall not collect, process or store any Private Information (PI) and Personally Identifiable Information (PII), except the name and address of the customer. 2. During the term of the contract the CONSULTANT shall comply with the City’s Information Privacy Policy and the City’s Software as a Service Security and Privacy Terms and Conditions. Personal information (PI) is defined as an individual's first name or first initial and last name in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted: (1) Social security number. (2) Driver's license number or California Identification Card number. (3) Account number, credit or debit card number, in combination with any required security code, access code, or password that would permit access to an individual's financial account, "Personal information" does not include publicly available information that is lawfully made available to the general public from federal, state, or local government records. Personally Identifiable Information (PII), as used in information security, is information that can be used to uniquely identify, contact, or locate a single person or can be used with other sources to uniquely identify a single individual. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 0D530662-0519-48E1-ACD0-EF7579D20792 CITY OF PALO ALTO CONTRACT NO. C15159124 AGREEMENT BETWEEN THE CITY OF PALO ALTO AND ECOLOGY ACTION OF SANTA CRUZ FOR PROFESSIONAL SERVICES This Agreement is entered into on this 1st day of June 2015 (“Agreement”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and ECOLOGY ACTION OF SANTA CRUZ, a California corporation, located at 877 Cedar Street, Santa Cruz, CA 95060 ("CONSULTANT"). RECITALS The following recitals are a substantive portion of this Agreement. A. CITY intends to provide turnkey energy efficiency retrofit services to CITY’s small and medium sized businesses (“Project”) and desires to engage a consultant to administer, manager and deliver a commercial energy savings program 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 in Exhibit “A” in accordance with the terms and conditions contained in this Agreement. The performance of all Services shall be to the reasonable satisfaction of CITY. SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through June 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 Professional Services Rev. Feb. 20141 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 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. SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A” shall not exceed One Million, Nine Hundred and Fifty Thousand Dollars ($1,950,000). No Additional Services or Reimbursable Expenses are contemplated as part of this Agreement. 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, and hourly rates), 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. CITY will generally process and pay invoices within thirty (30) days of receipt. SECTION 6. QUALIFICATIONS/STANDARD OF CARE. All of the Services shall be performed by CONSULTANT or under CONSULTANT’s supervision. CONSULTANT represents that it possesses the professional and technical personnel necessary to perform the Services required by this Agreement and that the personnel have sufficient skill and experience to perform the Services assigned to them. CONSULTANT represents that it, its employees and subconsultants, if permitted, have and shall maintain during the term of this Agreement 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 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 Professional Services Rev. Feb. 2014 2 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 design submittal. If the total estimated construction cost at any submittal exceeds ten percent (10%) of the CITY’s stated construction budget, CONSULTANT shall make recommendations to the CITY for aligning the Project design with the budget, incorporate CITY approved recommendations, and revise the design to meet the Project budget, at no additional cost to CITY. SECTION 10. INDEPENDENT CONTRACTOR. It is understood and agreed that in 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 the CITY. SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of CONSULTANT are material considerations for this Agreement. CONSULTANT shall not assign or transfer any interest in this Agreement nor the performance of any of 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. Option A: No Subcontractor: CONSULTANT shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of the city manager or designee. Option B: Subcontracts Authorized: Notwithstanding Section 11 above, CITY agrees that subconsultants may be used to complete the Services. The subconsultants authorized by CITY to perform work on this Project are: As set forth in Exhibit A attached to this Agreement. CONSULTANT shall be responsible for directing the work of any subconsultants and for any compensation due to subconsultants. CITY assumes no responsibility whatsoever concerning compensation. CONSULTANT shall be fully responsible to CITY for all acts and omissions of a subconsultant. CONSULTANT shall change or add subconsultants only with the prior approval of the city manager or his designee. Professional Services Rev. Feb. 2014 3 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Oren Noy as the project supervisor to have supervisory responsibility for the performance, progress, and execution of the Services 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. The CITY’s project manager is Christine Tam or her designee, Utilities Department, Marketing Services Division, 250 Hamilton Ave, Palo Alto, CA 94303. The project manager will be CONSULTANT’s point of contact with respect to performance, progress and execution of the Services. The CITY may designate an alternate project manager from time to time. SECTION 14. OWNERSHIP OF MATERIALS. Upon delivery, all work product, including without limitation, 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. [Option B applies to any consultant who does not qualify as a design professional as defined in Civil Code Section 2782.8.] 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 Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 to require CONSULTANT to indemnify an Indemnified Party from Claims arising from the active negligence, sole negligence or willful misconduct of an Indemnified Party. 16.3. The acceptance of CONSULTANT’s services and duties by CITY shall not operate as a waiver of the right of indemnification. The provisions of this Section 16 shall survive the expiration or early termination of this Agreement. 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 Purchasing Manager 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. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 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 SECTION 21. CONFLICT OF INTEREST. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 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 subconsultants, 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 the 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 the 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 Consultant to City generated from a personalcomputer 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 the City’s Project Manager. Any submitted materials printed by aprofessional 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 the City shall be purchased in accordance with the City’s Environmental Purchasing Policy including but notlimited to Extended Producer Responsibility requirements for products andpackaging. A copy of this policy is on file at the Purchasing Office. •Reusable/returnable pallets shall be taken back by the Consultant, at no additional cost to the City, for reuse or recycling. Consultant shall provide documentation from the facility accepting the pallets to verify that pallets are not being disposed. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 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. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. 25.1. In its performance of Services under this Agreement, CONSULTANT and its Representatives may acquire and otherwise gain access to Confidential Information, as defined in Exhibit “E”, which is exempt from public disclosure under the California Public Records Act, Cal. Gov. Code section 6250 et seq. CONSULTANT agrees to protect such Confidential Information from disclosure to any third parties, in accordance with the terms and conditions set forth in Exhibit “E” attached to this Agreement. SECTION 26. MISCELLANEOUS PROVISIONS. 26.1. This Agreement will be governed by the laws of the State of California. 26.2. 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. 26.3. 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. 26.4. 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. 26.5. 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. 26.6. 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. 26.7. All exhibits referred to in this Agreement and any addenda, appendices, Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 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. 26.8 If, pursuant to this contract with CONSULTANT, City shares with CONSULTANT personal information as defined in California Civil Code section 1798.81.5(d) about a California resident (“Personal Information”), CONSULTANT shall maintain reasonable and appropriate security procedures to protect that Personal Information, and shall inform City immediately upon learning that there has been a breach in the security of the system or in the security of the Personal Information. CONSULTANT shall not use Personal Information for direct marketing purposes without City’s express written consent. 26.9 All unchecked boxes do not apply to this agreement. / / / / / / / / / / / / / / / / / / / / Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 26.10 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. 26.11 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 ____________________________ City Manager APPROVED AS TO FORM: __________________________ Senior Deputy City Attorney ECOLOGY ACTION OF SANTA CRUZ By:___________________________ Name:_________________________ Title:________________________ Attachments: EXHIBIT “A”: SCOPE OF SERVICES EXHIBIT “B”: SCHEDULE OF PERFORMANCE EXHIBIT “C”: COMPENSATION EXHIBIT “D”: INSURANCE REQUIREMENTS EXHIBIT “E”: CONFIDENTIALITY AGREEMENT EXHIBIT “F”: IDENTITY INFORMATION PROTECTION Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 Jim Murphy Executive Director EXHIBIT “A” SCOPE OF SERVICES CONSULTANT will deliver the SMB EnergyEdge Program (sometimes referred to as the “PROGRAM”) to business customers of the City of Palo Alto for the City of Palo Alto Utilities (“CITY” or “Palo Alto”). A. OVERVIEW CONSULTANT will deliver turn-key, multi-measure, comprehensive energy efficiency retrofits for small to medium size businesses and select measures for multifamily buildings with the primary focus of targeting hard-to-reach establishments. The PROGRAM design will balance service, reliability and innovation required to respond to the significant market and regulatory changes in recent years. The SMB EnergyEdge Program will deliver the following benefits to the CITY: (1) cost- effective energy savings, (2) customer service, (3) comprehensiveness, (4) flexible innovation, and (5) specific augmentations for CITY as described herein. Target Markets CONSULTANT’s primary target markets for the PROGRAM include schools and nonprofits, retail/office spaces, convenience/grocery store, restaurants, institutions, hotels, motels, government buildings, small and medium commercial establishments and select multifamily buildings, excluding the CITY’s Key Account Customers. Customer Service CONSULTANT agrees to provide small and medium commercial customers with the necessary customer service support to ensure ease of adoption. CONSULTANT will provide cost-free audits, PROGRAM proposal documents, customer technical assistance, turn-key management of installation Contractors, PROGRAM quality assurance and control, and utility rebate fulfillment. Eligible Measures CONSULTANT’s team will specify, sell, and manage the installation of Eligible Measures, including interior and exterior lighting, HVAC controls and optimizations, pool pumps, vent hood controls, CO2 garage fan motor controls, hot water loop circulation pump controls and all other CITY approved measurers. The CITY will only compensate CONSULTANT for installation of Eligible Measures. The CITY provides CONSULTANT with (1) a list of Pre-Approved Eligible Measures; and (2) a process by which CONSULTANT may suggest, and the CITY may elect to approve, in its sole discretion, integration of New Technology as Eligible Measures. All New Technologies must be approved by CITY as an Eligible Measure in advance of installation in order for CONSULTANT to receive any compensation for such measure. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 CONSULTANT may require customer co-payment for Eligible Measures. On average, CITY expects that the customer co-pay will cover 20-40% of the installed job cost. Customer co-pays are paid directly to the installation contractor installing the Eligible Measure, not to CONSULTANT. Pre-Approved Eligible Measures The list of Pre-Approved Eligible Measures under the PROGRAM are set forth in Table A-1: Table A-1. Pre-Approved Eligible Measures End Use Category Primary Market Applicability Energy Efficiency Measures Lighting and Controls All business types & sizes T8, CFL, LED, Induction, PSMH, Occupancy Sensors, Photocells, Timers, Dimming Ballasts, Daylight Harvesting Control Systems Refrigeration Restaurant, Grocery, Institutional EC Motors, ECM Controls, LED Case Lighting, Anti-Sweat Heater Controls, Door Closers HVAC Retail, Office, Institutional, C&I Guest Room EMS, HVAC Tune-Up, Duct Sealing, Pkg A/C Replace, PTAC/ PTHP Replace, Demand Controlled Ventilation, CO2 Sensors & Controls , Advanced Digital Economizer Control System, Variable Frequency Drives (VFD) Hot Water Comm Laundry, Dry Cleaner, Restaurant, Institutional, Gyms, Multifamily, C&I Ozone Laundry, Steam Traps, DHW Pipe & Tank Insulation, Low-Flow Aerators & Shower Heads, Pool Heaters, Pool Heat Retention, Boiler Replace, Boiler Tune-Up, DHW Demand Recirculation Pump, Boiler Demand Controls Other Gyms, Multifamily, Retail, Office, Institutional, C&I, Restaurants Variable Speed Pool Pumps, Kitchen Hood Vent Demand Ventilation Control, Parking Garage Fan Controls (VFDs, CO sensors) Integration of New Technologies as Eligible Measures Over the Term of the Agreement, CONSULTANT and/or CITY may identify New Technologies as candidates for approval by CITY as Eligible Measures, including, for instance, commercialized efficiency technologies (e.g., LED Lighting, hot water pipe insulation) and early-market emerging technologies (e.g., hot water system recirculation pump controls, advanced HVAC control and optimization). Where CONSULTANT and/or CITY has identified such New Technology, CONSULTANT and/or CITY will suggest integrating the New Technology into CITY’s existing Eligible Measure list (Table A-1). For New Technologies suggested by CONSULTANT, CITY reserves the right to request all information reasonably necessary to evaluate the suitability of the New Technology as an Eligible Measure, including, without limitation CITY-requested testing at CONSULTANT’s expense, information concerning the technology’s performance and energy savings potential, and CONSULTANT work papers. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 CITY reserves the right, in its sole discretion, to decide whether to approve New Technology as an Eligible Measure. All New Technology must be approved as an Eligible Measure by CITY, in advance and in writing, prior to installation in order for CONSULTANT to receive compensation for such New Technology as an Eligible Measure. Where CONSULTANT fails to secure CITY’s advance written approval of a New Technology as an Eligible Measure, CONSULTANT will not receive any compensation for the installation from CITY. Program Staffing CONSULTANT agrees to staff the PROGRAM in accordance with the staffing set forth in Table A-2. CONSULTANT shall notify CITY concerning proposed changes to the staffing plan, and all such changes require the prior written consent of the CITY. CITY reserves the right to (i) request CONSULTANT conduct criminal background checks to CITY’s satisfaction on all CONSULTANT’s staff, contractors or agents that may enter customer property, and (ii) require that any staff, contractor or agent of CONSULTANT that fails the background check shall not be permitted to enter any customer premises. Without limiting Section 16 (Indemnity) of the Agreement, CONSULTANT agrees and understands it is responsible for all costs and damages associated with any theft, vandalism, damage or criminal acts involving or committed by CONSULTANT staff, Contractors or agents involving a customer or customer premises. Table A-2. PROGRAM Staff Contacts Name Title Phone Email Jim Murphy CEO 831-515-1325 jmurphy@ecoact.org Gene Thomas Senior Energy Analyst 831-515-1321 gthomas@ecoact.org Oren Noy Program Manager 415-265-3709 onawi@ecoact.org B. PROGRAM IMPLEMENTATION AND DELIVERY Task 1: PROGRAM Kick-Off, Planning, and Staging CONSULTANT will plan and stage the elements critical to PROGRAM success: stakeholder agreement, market research, establishing workflow systems, and supply chain identification and agreements. CONSULTANT will hold a kick-off meeting with CITY staff to fine-tune PROGRAM design and delivery, confirm communication structures, discuss the phasing of New Technologies as potential Eligible Measures, where appropriate, refine timelines and identify additional CITY needs for the PROGRAM. In the staging process, CONSULTANT will refine its initial market research, develop a customer list and identify individual customer contacts for each market segment. CONSULTANT will also review with CITY the agreements between CONSULTANT and installation Contractors and vendors to assure all proposed measures can be delivered under those contracts. Task 1.1 Agenda for Program Kick-Off Meeting Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 Task 1.2 Coordination with CITY’s other Programs CONSULTANT will coordinate with CITY to leverage CONSULTANT interactions with participating small and medium sized businesses in order to promote CITY's other energy efficiency, demand response, renewable and water program offerings. Task 1.3 Develop Reporting Templates CONSULTANT will coordinate with the CITY to create reporting templates that will correspond with the CITY’s reporting needs. Task 2: Marketing and Outreach CONSULTANT will prepare and present a marketing plan to CITY for the PROGRAM. CONSULTANT will work with CITY to finalize contents, establish time frames, and define deliverables. CONSULTANT will update or refresh the marketing plan upon CITY’s request at no additional cost to CITY. In addition to the other marketing efforts CONSULTANT commits to undertake under this Agreement, CONSULTANT will utilize in person door-to-door sales efforts and enlist the assistance of local affinity groups, including the Palo Alto Chamber of Commerce, the Palo Alto Merchant Association, the Palo Alto Community Environmental Action Partnership (CEAP), and various property management companies to better enable CONSULTANT to serve CITY customers. CONSULTANT will also engage in marketing activities that include CITY-assisted distribution of PROGRAM information, and strategic partnerships with Chamber of Commerce members, trade associations and other groups as CITY requests. Task 2.1 Development of Marketing Material In collaboration with CITY staff, CONSULTANT will develop and utilize brochures, flyers, displays, postcards, targeted letters, demonstration equipment, and press releases, with a CITY specific website and CITY-approved proposal folder on an as needed basis. All marketing material will be reviewed and approved by CITY prior to release. Task 2.2 Development of Customer Forms All of CONSULTANT’s customer and Contractor facing forms will be reviewed and approved by CITY, and modified by CITY as needed to ensure that all work proposed, agreed to, installed, and inspected will have documentation deemed proper and sufficient by CITY. Task 2.3 Building the CITY Brand CONSULTANT agrees to include the CITY’s logo, images and messages in a prominent location on all customer-facing communications and develop a comprehensive and phased plan for branding enhancement, including the following: • Co-present CITY and SMB EnergyEdge logos • Establish CITY-specific PROGRAM website to prominently display CITY logo Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 •Prominently display the CITY logo in PROGRAM documents (proposals, forms, and marketing materials) •Include other CITY program materials in CONSULTANT customer packets •Promote SMB EnergyEdge Program in other CITY distribution channels (e.g., commercial customer bill insert). Task 3 Facility Audits and Customer Enrollment Task 3.1 Energy Survey and Retrofit Job Specification CONSULTANT’s Energy Specialist will make the initial in-person visit to the customer. CONSULTANT Energy Specialist will begin enrollment with this visit by explaining the benefit of the PROGRAM and securing the customer's agreement to complete an audit. CONSULTANT’s Energy Specialist then completes a comprehensive evaluation of the property's existing systems and consults with the decision maker (e.g. property owner and/or tenant) to determine the hours of operation for the facility, including the site’s various sub-areas (e.g., front counter, office, and kitchen). For efficiency measures not covered as Eligible Measures by the PROGRAM, CONSULTANT will refer businesses to other CITY programs as applicable. CONSULTANT’s Energy Specialist will then design a proposal that incorporates Title 24 requirements. This proposal includes a detailed description of work, specification of components, pricing, carbon reduction, financial rebate, amount of customer co-pay, and project payback. CONSULTANT then presents the proposal to the customer and incorporates any customer-requested changes to the proposal. If and when the customer commits to moving forward with the work, CONSULTANT proceeds with the retrofit project as described in Task 4, Work Flow Management and Contractor Management, below. CONSULTANT will ensure the quality of the retrofit design. CONSULTANT field staff will ensure that retrofit designs are as comprehensive and complete as possible within the constraints of PROGRAM not to exceed amounts set forth in Exhibit “C” and customer cost tolerance. Task 4: Work Flow Management and Contractor Management Task 4.1 Pre-Qualified Installation Contractors CONSULTANT maintains contractual agreements with seven (7) qualified and pre- screened installation Contractors (“Contractors”) to complete PROGRAM retrofits. CONSULTANT’s team of approved and pre-screened Contractors will obtain and maintain all necessary licenses, permits and certification and adequate insurance coverage to perform work on behalf of CONSULTANT and adhere to standard equipment specifications, warranty levels (including the provision of all applicable manufacturer’s warranties for equipment installed to customer, providing a minimum of one year limited warranty for parts and labor), installation standards, and project completion deadlines. If the PROGRAM Contractor Participation Agreement between CONSULTANT and contractors is amended over the Term of the Agreement, any Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 changes will be at least as protective, if not more protective of customers. Customers can use their own contractor or self-install as long as they adhere to PROGRAM requirements. In addition, CONSULTANT provides its own 90 day warranty for parts and labor in addition to contractor warranties. Once a customer is enrolled in the PROGRAM, CONSULTANT will assign the customer's job to one or more Contractors from CONSULTANT’s pool of pre-qualified installers. CONSULTANT will utilize several Contractors, each specializing in a different end uses (e.g., separate Contractors for HVAC, refrigeration, lighting). All Contractors are coordinated by CONSULTANT. Contractors and customers enter into a two-party agreement for the upgrade work to be completed. The scope of the agreed work must be identical to that which was previously presented by CONSULTANT and accepted by the customer. The Contractor(s) will visit the site to coordinate the installation logistics with the property or business decision maker(s). All work will be scheduled by the Contractor at a time convenient to the customer. The Contractor is obligated to obtain necessary permit(s) for the installation along with all necessary materials. All equipment handled, stored, transported, removed, disposed of or recycled in connection with the PROGRAM Contractors will be completed in accordance with applicable federal, state and local ordinances. CONSULTANT will have a contract with the Contractors to ensure such a requirement is complied with. Per CONSULTANT’s contract with the Contractors, mercury-containing lamps and PCB-containing ballasts must be recycled through certified handlers (with proper documentation). CITY reserves the right to require CONSULTANT or CONSULTANT’s Contractors as necessary, to carry pollution and professional liability insurance in an amount CITY determines is commensurate with the risks associated with the PROGRAM, in addition to the standard insurance requirements otherwise set forth CITY’s form contract for Professional Services. CONSULTANT and its Contractors shall be deemed to be in exclusive possession and control of all equipment and materials picked up and disposed and/or recycled in connection with this PROGRAM. Consistent with and in addition to indemnification CONSULTANT provides CITY pursuant to section 16 of the Agreement and the specific requirements outlined in this Scope of Work, CONSULTANT is responsible for any damages or injury caused by its handling, transport, disposal, or recycling of appliances and associated equipment and materials in connection with this PROGRAM, including, without limitation any spills, leaks, discharges, improper disposal or recycling, or releases of any metals, substances or other hazardous materials. In the event of any spill, leak, discharge, improper disposal or recycling, or releases CONSULTANT is responsible for: (a) notifying federal, state or local regulatory agencies where such notification is required by law or regulation; (b) remedying, removing, remediating and cleaning up any such spill, leak, discharge, improper disposal or recycling or releases wherever they occur to a level sufficient to receive a “No Further Action Required”, “Closure Letter” or other standard otherwise required by the appropriate regulatory Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 authority. These requirements are applicable to all work performed by CONSULTANT in connection with this PROGRAM. Fixtures are cleaned as required. Contractor will complete, and CONSULTANT will ensure that the installation is completed according to the job specification and at the unit pricing levels established by the PROGRAM. Task 4.2 Fixed Pricing on Labor and Materials All Contractors have agreed with CONSULTANT to a price for labor, materials, and equipment mark-ups that is fixed for the PROGRAM period. CONSULTANT also maintains agreements with manufacturers and local equipment supply houses for fixed materials pricing and stock levels. Prices for the equipment installed in the retrofits will not be higher than those which CONSULTANT has pre-negotiated. In turn, Contractors agree to a maximum equipment markup (currently 25%) above that cost for SMB EnergyEdge customers. Contractor labor rates are fixed and there are fixed allowable time allocations, or unit labor factors, for each task that comprises lighting retrofits. Task 5 Quality Assurance (“QA”) and Quality Control (“QC”) Task 5.1 Quality Assurance (“QA”) and Quality Control (“QC”) CONSULTANT will carry out pre- and post-installation inspections and will promptly remedy customer service and warranty issues. CONSULTANT staff will conduct all inspections. All (100%) of projects are thoroughly inspected by CONSULTANT post installation. In addition, another 10% of jobs are pre-inspected prior to installation by senior CONSULTANT staff to ensure proper specification. If any installation is deemed incomplete or deficient upon inspection by CONSULTANT’s program staff, the Contractor is notified and must perform all services necessary to meet completion requirements at their own expense within five (5) business days of notification of incompleteness. CONSULTANT will thoroughly assess all Contractors and manage them to above-industry standards on workmanship and conduct. Task 6 Rebate Processing and Payment Task 6 Rebate Processing and Payment Following the customer approval and staff inspection of the project, CONSULTANT will issue the rebate directly to the Contractor. CONSULTANT will use in-house systems to process SMB EnergyEdge rebates promptly. Task 7 Data Management and Reporting Task 7 Data Management and Reporting In addition to all invoicing requirements set forth in the Agreement, CONSULTANT will provide additional information and reporting as directed by CITY. CONSULTANT will provide CITY with clear and concise monthly cost and energy savings reports per measure, pre- and post-installation data, both aggregate and per measure kW, kWh and therm impacts, and per measure and aggregate job cost data. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 CONSULTANT will calculate savings and rebate amounts, which feed into monthly reports submitted to CITY. Monthly comprehensive savings and customer data reports and invoices will be submitted to CITY program manager at an agreed upon date. An accompanying monthly narrative will include summaries of the savings achieved to date, in addition to succinct description of PROGRAM accomplishments, work toward deliverables, prospecting list, challenges and remedies. Monthly invoices to CITY will show detailed monthly rebate expenses, kWh and therm savings data, and per unit performance billing, as well as year-to-date program expenses. A final report will summarize PROGRAM impacts (kW, kWh and therms). CONSULTANT will collect all data points required for CITY to conduct Evaluation Measurement & Verification (EM&V) on the PROGRAM. The baseline (pre-retrofit) data points, together with the auditor-specified new equipment to be installed, comprise the dataset needed by CONSULTANT to perform the retrofit job cost, energy savings, and payback analyses. These same data points may be utilized for both internal and external PROGRAM evaluation. At CITY’s discretion, CONSULTANT may work with CITY’s EM&V consultant(s) to develop a plan that accurately validates PROGRAM outcomes, to CITY’s satisfaction. CONSULTANT shall ensure that only energy savings that are incremental to the minimum energy savings mandated by the prevailing building and appliance efficiency standards (Title 20 and Title 24) are counted towards PROGRAM savings. To that end, either the California Municipal Utilities Association Technical Reference Manual (TRM), as the same may be amended from time to time, or a similar tool should be used as the individual reference source for determining annual energy savings. If a PROGRAM measure is not covered by the TRM, the CONSULTANT shall provide the estimated energy savings and work paper(s) or reference source documenting the savings estimation methodology for CITY review and approval. Additionally, for projects that involve lighting retrofit and/or variable frequency drive (VFD) pump and VFD fan installations at nonresidential customer sites. CONSULTANT shall estimate the energy savings using the “TRM Non-Res lighting energy savings calculator” and the “TRM Non-Res pump and fan VFD energy savings calculator”, or other similar calculators that incorporate the Title 24 and Title 20 baseline for estimating energy savings. If the latter is preferred, CONSULTANT will need to demonstrate to CITY’s satisfaction that the energy savings calculation methodologies and the resultant savings from the TRM energy savings calculator and the CONSULTANT-preferred calculator are equivalent. CITY at its own discretion may approve an early retirement methodology on a project basis in place of the Title 24 baseline. Task 8 PROGRAM Ramp-Down and Shut-Down Task 8 PROGRAM Ramp-Down and Shut-Down Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 CONSULTANT’s customer services will continue seamlessly through the Term of the Agreement. During the final 6 months of the PROGRAM the CONSULTANT’s program staff will contact all pending customers who have been presented a proposal but have not made a decision (i.e., "fence sitters"), inform them of the expected close date of the PROGRAM and refer them to other appropriate CITY programs if they elect not to proceed. CONSULTANT will strive to make this referral process as smooth as possible to capitalize on positive customer perception and maximize use of CITY’s portfolio services. CONSULTANT will continue to field any customer warranty calls and refer them to their appropriate Contractor and/or equipment manufacturer and/or make appropriate referrals to CITY's other energy efficiency PROGRAMs for up to 90 days after the expiration of the PROGRAM Agreement. CONSULTANT will deliver the final invoice and final report in formats required by CITY. Program Communication PROGRAM staff will always be available during regular business hours and at other times upon request. Communication between PROGRAM staff and customers will be conducted in‐person, via telephone, fax, text, and email. PROGRAM materials (proposals, signature pages, work orders, equipment list, promotional material, etc.) can be presented electronically or via fax, depending on customer preference. Customers will have the option to submit requests for facility audits through an online interest form submittal portal. Once a customer or utility account manager has submitted a request for assistance via the online portal, email, phone or fax, the Energy Efficiency Specialist assigned to the customer will respond to the request within three business days and schedule and coordinate the initial site visit and efficiency assessment. After the completion of the energy audit, proposal development turnaround time is typically from one day to two weeks but may take longer depending on the complexity of the project, the amount of technical trade partner and engineering staff coordination required, and baseline assessment timeframes associated with fully calculated projects. The Energy Efficiency Specialist will set the customer’s expectation appropriately regarding the anticipated time needed to fully develop the comprehensive customer‐facing proposal. Resolution of Customer Complaints CONSULTANT’s program staff will respond to all questions and/or complaints from customers or CITY within three businesses days. CONSULTANT agrees to record all complaints in writing and present them to CITY’s program manager. All involved parties will discuss complaints that require action in order to identify a mutually agreeable solution and an acceptable timeframe for resolution. CONSULTANT will set aside adequate funds to cover customer service adjustments over the Term of the Agreement. In rare circumstances where resolutions to customer complaints require additional labor and/or additional material costs in order to address the issue, CONSULTANT will utilize customer service adjustment funds to ensure complete customer satisfaction and full installer compensation. If parties cannot agree on a solution and/or an acceptable timeframe, an independent dispute mediation firm will handle the dispute within 30 days of the failure to agree. Complaints will be logged, tracked, and reported in monthly reports. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 EXHIBIT “B” SCHEDULE OF PERFORMANCE CONSULTANT shall perform the Services so as to complete each milestone within the number of days/weeks or timeframe specified below. The time to complete each milestone may be increased or decreased by advanced, mutual written agreement of the project managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of execution of the Agreement, and update such schedule as reasonably requested by CITY. Task Timing (Due Date) Task 1 - PROGRAM Kick-Off, Planning, and Staging Task 1 Agenda within 15 days of contract execution, with additional planning and staging as needed and requested by CITY during contract term. Task 1.1 Ongoing during contract term. Task 1.2 Within 60 days of contract execution and as needed and requested by CITY during contract term. Task 2 – Marketing and Outreach Task 2.1 Within 60 days of contract execution and ongoing during contract term. Task 2.2 Within 45 days of contract execution and ongoing during contract term. Task 2.3 Ongoing during contract term. Task 3 - Facility Audits and Customer Enrollment Task 3.1 Ongoing during contract term. Task 4 - Work Flow Management and Contractor Management Task 4.1 Ongoing during contract term. Task 4.2 Ongoing during contract term. Task 5 - Quality Assurance (“QA”) and Quality Control (“QC”) Task 5 Ongoing during contract term. Task 6 - Rebate Processing and Payments Task 6 Ongoing during contract term. Task 7 – Data Management and Reporting Task 7 Ongoing during contract term on monthly basis or as otherwise agreed in writing with CITY’s Project Manager Task 8 - PROGRAM Ramp-Down and Shut-Down Task 8 Ramp-Down 6 month prior to the end of contract term. Shut-Down 90 days post contract term Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 EXHIBIT “C” COMPENSATION CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement. All CONSULTANT payments under this Agreement are based exclusively on CONSULTANT performance. CITY’s performance-based compensation for properly performed and documented CONSULTANT services will be in the form of: (1) CONSULTANT Performance Payments, made in accordance with the rates set forth in Table C-2; and (2) Customer Rebate Payments, made in accordance with the rates set forth in Table C-3. In order to receive compensation, CONSULTANT performance must satisfy all requirements set forth in the Agreement and Exhibit A attached thereto. CONSULTANT is not entitled to any flat-fee, lump sum or time and materials based payments or compensation. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit “A” (“Services”) is subject to the “NOT TO EXCEED” limits set forth in Table C-1. CONSULTANT agrees to complete all Services within this amount. CITY does not authorize any Additional Services under this Agreement. 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. Reimbursable Expenses and Additional Services are not contemplated as part of this Agreement. CONSULTANT shall perform the tasks and categories of work as outlined and budgeted below. The total compensation for all services under the Agreement shall not exceed one million, nine hundred and fifty thousand dollars ($1,950,000) over the Term of the Agreement. Table C-1. Energy Savings Targets and Not To Exceed Amounts for CONSULTANT over Term ENERGY SAVINGS TARGETS CONSULTANT Performance Payment NOT TO EXCEED Customer Rebate Payment NOT TO EXCEED Maximum Total Compensation NOT TO EXCEED Through end of Term kWh Therms 6,393,141 4,386 $995,762 $954,238 $1,950,000 Maximum Total Compensation NOT TO EXCEED AMOUNT over the Term of the Agreement = $1,950,000 Over the term of this contract, CONSULTANT estimates total PROGRAM energy savings of 6,393,141 kWh and 4,386 therms. CITY, in its sole discretion by providing advanced written notice to CONSULTANT may add, remove, or modify the Pre-Approved Eligible Measures (Table A-1), the Performance Payment Rates set forth in Table C-2, or the Customer Rebate Payment Amounts set forth in Table C-3, including imposing a limit on the maximum number of individual Eligible Measures per customer, per year. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 At CITY's request, and as provided for in Exhibit “A” of this Agreement, CONSULTANT may propose additional measures for CITY consideration and approval as Eligible Measures; provided, however, that CITY has no obligation to compensate CONSULTANT for measures CITY has not approved as Eligible Measures. CONSULTANT PERFORMANCE PAYMENT CONSULTANT will be compensated for performing all Services described as tasks set forth in Exhibit “A” based on Performance Payment rates set forth in Table C-2. CONSULTANT will not be compensated on an individual basis for discrete tasks, separately, in addition to, or other than as provided for in the CONSULTANT Performance Payment. CONSULTANT Performance Payments are in addition to Customer Rebate Payments described in this Exhibit “C”. CONSULTANT will be compensated by CITY at a rate of $0.155/kWh and $1.10/Therm for gross savings CONSULTANT achieves based upon CITY approved engineering estimates and/or deemed savings based upon hours of operation and equipment installed. Such compensation shall only be available to CONSULTANT for Eligible Measures. CITY will not compensate CONSULTANT for savings attributable to a non-Eligible Measure. CITY in its sole discretion may update the energy saving estimates for Eligible Measures. Table C-2. Performance Payment Rates for CONSULTANT Compensation for all Eligible Measures set forth in Exhibit “A” Performance Payment Rate $/kWh $/Therm $0.155 Per kWh $1.10 per Therm CUSTOMER REBATE PAYMENTS CONSULTANT will incorporate a rebate amount into the estimate that CONSULTANT provides to customer at the time Customer agrees to install Eligible Measure(s). Customer pays directly to the contractor(s) installing the Eligible Measures the amount for Eligible Measure(s), less the rebate amount. CONSULTANT pays the rebate amount directly to the installation contractor(s). At the end of each project, when CONSULTANT has submitted an invoice in accordance with Section 5 of the Agreement and CITY has verified such invoice, CITY will compensate CONSULTANT with a Customer Rebate Payment in the amounts set forth in Table C-3 for Eligible Measures installed. CITY will only compensate CONSULTANT for Customer Rebate Payments (1) where CONSULTANT has made actual expenditures to contractors that equal or exceed the rates set forth in Table C-3; and (2) Eligible Measures are installed. CITY will not compensate CONSULTANT for installation of non-Eligible Measures. Customer Rebate Payments are in addition to CONSULTANT Performance Payments described in this Exhibit “C”. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 Table C-3 Customer Rebate Payments End Use Eligible Measure Customer Rebate Payment Not to Exceed Amount Meter Type Li g h t i n g an d C o n t r o l s Interior Lighting and Controls as listed in Table A-1 $0.12/kWh E-2 $0.12/kWh E-4 LED Exterior Lighting $0.15/kWh E-2 $0.15/kWh E-4 Re f r i g e r a t i o n As listed in Table A-1 $0.18/kWh E-2 $0.18/kWh E-4 HV A C As listed in Table A-1 $0.20/kWh E-2 $0.20/kWh E-4 Ot h e r As listed in Table A-1 $0.25/kWh E-2 $0.25/kWh E-4 Ho t W a t e r As listed in Table A-1 $1.05/Therm G-2 $1.05/Therm G-3 Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 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 AGGREGAT E 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 Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 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 SUBCONSULTANTS, 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 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 Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 1.IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THEEFFECTIVE DATE OF CANCELLATION. 2.IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT OF PREMIUM, THE ISSUINGCOMPANY SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. NOTICES SHALL BE MAILED TO: PURCHASING AND CONTRACT ADMINISTRATION CITY OF PALO ALTO P.O. BOX 10250 PALO ALTO, CA 94303 Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 EXHIBIT “E” CONFIDENTIALITY AGREEMENT 1. PURPOSE 1.1 In its performance of Services under this Agreement, CONSULTANT and its directors, officers, partners, managers, members, employees, advisors, agents, sub-contractors and other representatives of CONSULTANT and their subsidiaries and affiliates, including, without limitation, attorneys, accountants, consultants, and financial advisors (collectively, the “Representatives”) may acquire and otherwise gain access to Confidential Information, as defined in Section 2 of this Exhibit “J”, which is exempt from public disclosure under the California Public Records Act, Cal. Gov. Code section 6250 et seq. 1.2 In accordance with the terms and conditions of this Agreement, CONSULTANT agrees to take reasonable precautions to ensure that Confidential Information of CITY, as defined in this Exhibit, is safeguarded against disclosure to unauthorized employees or third parties. 1.3 CITY would not share or disclose any Confidential Information to CONSULTANT but for the legal protections against unauthorized disclosures intended to be afforded by California law and this Agreement, and is relying on this Agreement in disclosing such Confidential Information to CONSULTANT. 2. CONFIDENTIAL INFORMATION, DEFINED 2.1 “Confidential Information” means any and all information which is of a non- public, proprietary or confidential nature, in any form or medium, written or oral, (whether prepared by the CITY, its employees, or agents, and irrespective of the form or means of communication and whether it is labeled or otherwise identified as confidential) that is furnished to CONSULTANT by the CITY, including, without limitation, individually identifiable utilities customer information and utility infrastructure data. 2.2 Exceptions. “Confidential Information” shall exclude (and the CONSULTANT shall not be under any obligation to maintain in confidence) any information (or any portion thereof) disclosed to CONSULTANT by CITY to the extent that such information: (a) is in the public domain at the time of disclosure; or (b) at the time of or following disclosure, becomes generally known or available through no act or omission on the part of CITY; or (c) is known, or becomes known, to CONSULTANT from a source other than CITY or its Representatives (as defined herein), provided that disclosure by such source is not in breach of a confidentiality agreement CITY; or Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 (d) is independently developed by CONSULTANT without violating any of its obligations under this Agreement or any other agreement between the Parties; or (e) is legally required to be disclosed by judicial or other governmental action; provided, however, that prompt notice of such judicial or other governmental action shall have been first given to CITY, which shall be afforded the opportunity to exhaust all reasonable legal remedies to maintain the Confidential Information in confidence; or (f) is permitted to be disclosed by a formal written agreement executed by and between the Parties. Specific information shall not fall within the exceptions of Sections (a) through (f) above merely because it is embraced by more general information falling within such exceptions. 3. CALIFORNIA PUBLIC RECORDS ACT 3.1 CONSULTANT acknowledges that CITY is a public agency subject to the requirements of the California Constitution, Article 1, Section 3 and California Public Records Act Cal. Gov. Code section 6250 et seq. CONSULTANT acknowledges that CITY may submit to or otherwise provide access to CONSULTANT Confidential Information that CITY or any utility customer of CITY considers to be protected from disclosure pursuant to exemptions granted by applicable California law. 3.2 Whether or not there is a request or demand of any third party not a Party to this Agreement (the “Requestor”) for the production, inspection and/or copying of information designated by CITY as Confidential Information, CONSULTANT shall be solely responsible for taking whatever legal steps CITY deems necessary to protect information deemed by it to be Confidential Information and to prevent release of information to the Requestor (including the release of such information by CONSULTANT). 3.3 Under no circumstances will CONSULTANT be permitted to comply with the Requestor’s demand for disclosure of such Confidential Information that CITY deems confidential and not intended for disclosure to the general public, or otherwise publicly disclose the Confidential Information to any person not authorized by law to receive such information. 4. CONFIDENTIAL INFORMATION DESIGNATION 4.1 As practicable, the Confidential Information shall be marked with the words “Confidential” or “Confidential Material” or with words of similar import. CITY shall instruct CONSULTANT that information of a financial, personal, or proprietary nature being conveyed orally and intended by CITY to be covered by Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 the terms of this Agreement, is deemed Confidential Information. To the extent possible, CITY shall endeavor to mark any electronic document intended to be covered by the terms of this Agreement with the words “Confidential” or similar words, or, if that is not possible or would be exceedingly difficult, CITY shall notify CONSULTANT (for example, by covering e-mail transmitting the electronic document) that the electronic document is Confidential Information. 4.2 CITY’s failure, for whatever reason, to mark any material at the time it is produced to CONSULTANT, or to notify it that oral or electronic material is Confidential Information at the time it is provided, shall not take the material out of the coverage of this Agreement for all time, and CONSULTANT shall treat the material as Confidential Information once CITY has notified it that the material is to be covered by this Agreement. 5. DUTY TO KEEP CONFIDENTIAL 5.1 CONSULTANT agrees to maintain as confidential, to the extent permitted or required by applicable law, all Confidential Information furnished or otherwise made available to the CONSULTANT, or its Representatives by CITY. CONSULTANT acknowledges that the Confidential Information is proprietary and a valuable asset of CITY and agrees that CONSULTANT shall take reasonable precautions to ensure that such Confidential Information is safeguarded against disclosure to unauthorized employees, Representatives or third parties. (a) CONSULTANT shall use the Confidential Information solely as permitted by the Contract and shall not sell Confidential Information or otherwise disclose such Confidential Information under any circumstances and without the prior written consent of CITY. CONSULTANT shall not disclose the Confidential Information, or portions thereof, to any of its Representatives, except to those who need to know such information for the purpose of advising CITY and who agree to the terms of this Agreement. (b) CONSULTANT agrees that any of the Representatives to whom the Confidential Information is disclosed will be informed of the confidential or proprietary nature of such information and of CONSULTANT’s obligations under this Agreement. CONSULTANT is responsible for any use of Confidential Information by any of its Representatives. (c) CONSULTANT shall ensure that: (i) any Representatives with whom CONSULTANT shares such Confidential Information or who acquire knowledge of such Confidential Information from or through CONSULTANT regard and treat such Confidential Information of CITY as strictly confidential and wholly owned by CITY, and Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 (ii) CONSULTANT shall not (and CONSULTANT shall ensure that any Representatives with whom CONSULTANT shares such Confidential Information or who acquire knowledge of such Confidential Information from or through CONSULTANT do not) for any reason, in any fashion, either directly or indirectly, sell, lend, lease, distribute, license, give, transfer, assign, show, disclose, disseminate, or otherwise communicate any such Confidential Information to any third party, or misappropriate, reproduce, copy or use any such Confidential Information, in either case, for any purpose other than in accordance with this Agreement. (d) If CONSULTANT or any of its Representatives are requested or required to disclose any Confidential Information by law, regulation, the applicable rules of any national securities exchange or other market or reporting system, oral questions, interrogatories, requests for information or other documents in legal proceedings, subpoena, civil investigative demand or any other similar process, CONSULTANT shall provide CITY with prompt written notice of any such request or requirement so that CITY has an opportunity to seek a protective order via writ of mandate or other appropriate remedy, or waive compliance with the provisions of this Agreement. (e) If CITY waives compliance with the provisions of this Agreement with respect to a specific request or requirement, CONSULTANT and its Representatives shall disclose only that portion of the Confidential Information that is expressly covered by such waiver and which is necessary to disclose in order to comply with such request or requirement. CONSULTANT and its Representatives shall cooperate in a reasonable manner with CITY in attempting to preserve the confidentiality of the Confidential Information. (f) If (in the absence of a waiver by CITY) CONSULTANT has not secured a protective order or other appropriate remedy despite attempting to do so, and CONSULTANT or one of its Representatives is nonetheless then legally compelled to disclose any Confidential Information, CONSULTANT or such Representative may, without liability hereunder, disclose only that portion of the Confidential Information that is necessary to be disclosed. In the event that disclosure is made in accordance with this subsection, CONSULTANT shall exercise, and cause its Representatives to exercise, reasonable efforts to preserve the confidentiality of the Confidential Information, including obtaining reliable assurance at the sole expense of CONSULTANT that confidential treatment shall be accorded any Confidential Information so furnished. 6. NO LIABILITY, RELEASE, OR OBLIGATION Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 Except as set forth in any formal written agreement executed by and between the parties, neither CONSULTANT nor any of its Representatives shall be entitled to rely on any statement, promise, agreement or understanding, whether written or oral, or any custom, usage of trade, course of dealing or conduct. In addition, each Party understands and acknowledges that neither CITY nor any of its representatives, employees or agents makes any representation or warranty, express or implied, as to the accuracy or completeness of any Confidential Information, and that neither CITY nor any of its representatives, employees or agents shall have any liability whatsoever to CONSULTANT or to any of its Representatives relating to or resulting from the Confidential Information or any errors therein or omissions therefrom. 7. REMEDIES In recognition that an irreparable injury may result to CITY, if any provision of this Exhibit J is violated, CONSULTANT agrees that upon any breach or threatened breach of any provision of this Exhibit J by CONSULTANT or any of its Representatives, that CITY shall be entitled to seek an injunction or specific performance prohibiting such conduct or any other relief as may be permitted by law. 8. RETURN OF CONFIDENTIAL INFORMATION 8.1 CONSULTANT shall have access to the Confidential Information provided by CITY only during the term of this Agreement, and shall return all Confidential Information provided under this Agreement upon its termination, or at any time upon request of CITY, as described in Section 8.2 of this Exhibit J. 8.2 CITY may at any time request that CONSULTANT promptly return to CITY or destroy any or all documents or other materials containing Confidential Information of CITY, and CONSULTANT shall immediately comply with any such request. Notwithstanding the return or destruction of the Confidential Information as contemplated by this section 8 of this Exhibit J, the CONSULTANT and its Representatives will continue to be bound by the terms of this Agreement with respect thereto, including all obligations of confidentiality. 9. SURVIVAL CONSULTANT’s obligations of confidentiality and non-circumvention under this Exhibit J shall survive the termination of this Agreement. 10. OWNERSHIP RIGHTS NOT CREATED The transfer of Confidential Information hereunder shall not be construed as granting a license of any kind or any right of ownership in the Confidential Information to CONSULTANT. 11. NO OBLIGATION TO DISCLOSE Nothing in this Section shall obligate CITY to disclose specific Confidential Information to CONSULTANT. Such disclosures shall be at the CITY’s sole discretion. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 EXHIBIT “F” IDENTITY INFORMATION PROTECTION Identity Information Protection 1. During the term of the contract the CONSULTANT shall not collect, process or store any Private Information (PI) and Personally Identifiable Information (PII), except the name and address of the customer. 2. During the term of the contract the CONSULTANT shall comply with the City’s Information Privacy Policy and the City’s Software as a Service Security and Privacy Terms and Conditions. Personal information (PI) is defined as an individual's first name or first initial and last name in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted: (1) Social security number. (2) Driver's license number or California Identification Card number. (3) Account number, credit or debit card number, in combination with any required security code, access code, or password that would permit access to an individual's financial account, "Personal information" does not include publicly available information that is lawfully made available to the general public from federal, state, or local government records. Personally Identifiable Information (PII), as used in information security, is information that can be used to uniquely identify, contact, or locate a single person or can be used with other sources to uniquely identify a single individual. Professional Services Rev Feb. 2014 DocuSign Envelope ID: 40DFDA49-5A68-40E7-A352-DE7B9A5CD7F9 CITY OF PALO ALTO CONTRACT NO. C15155144A AGREEMENT BETWEEN THE CITY OF PALO ALTO AND ECOLOGY ACTION OF SANTA CRUZ FOR PROFESSIONAL SERVICES This Agreement is entered into on this 1st day of June2015 (“Agreement”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and ECOLOGY ACTION OF SANTA CRUZ, a California corporation, located at 877 Cedar Street, Santa Cruz, CA 95060 ("CONSULTANT"). RECITALS The following recitals are a substantive portion of this Agreement. A. CITY intends to provide energy efficiency services to CITY’s large commercial, industrial and institutional customers (“Project”) and desires to engage a consultant to administer, manager and deliver a commercial energy savings program 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 in Exhibit “A” in accordance with the terms and conditions contained in this Agreement. The performance of all Services shall be to the reasonable satisfaction of CITY. SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through June 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 Professional Services Rev. Feb. 20141 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D 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. SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A”, is in an aggregate amount that shall not exceed nine hundred and twenty-five thousand dollars ($925,000) per fiscal year, and in an aggregate amount that shall not exceed two million, seven hundred and seventy-five thousand dollars ($2,775,000) over the Term across a total of three (3) consultant agreements (C15155144A, C15155144B and C15155144C) , of which this is one. The three contracts will be administered by the CITY’s UTILITIES DEPARTMENT to ensure the total aggregate of compensation paid per fiscal year, and over the Term does not exceed the amounts set forth herein. Consultant acknowledges and agrees that the CITY is hiring three (3) consultants, including CONSULTANT, none of whom will be guaranteed or assured of any specific quantity of work to be performed. If the work is performed by any one or more consultants, including CONSULTANT, CITY will ensure that total compensation to all three consultants including CONSULTANT, will not exceed in aggregate, across all three (3) consultant agreements, nine hundred and twenty-five thousand dollars ($925,000) per fiscal year, and will not exceed in aggregate two million, seven hundred and seventy-five thousand dollars ($2,775,000) over the Term across all three (3) consultant agreements. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit A are subject to a Maximum Total Compensation “NOT TO EXCEED” amount of $2,775,000 during the term of the Agreement. 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. No Additional Services or Reimbursable Expenses are contemplated as part of this Agreement. 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, and hourly rates), 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 subconsultants, 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 Professional Services Rev. Feb. 2014 2 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D 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 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 the CITY’s stated construction budget, CONSULTANT shall make recommendations to the CITY for aligning the Project design with the budget, incorporate CITY approved recommendations, and revise the design to meet the Project budget, at no additional cost to CITY. SECTION 10. INDEPENDENT CONTRACTOR. It is understood and agreed that in 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 the CITY. SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of CONSULTANT are material considerations for this Agreement. CONSULTANT shall not assign or transfer any interest in this Agreement nor the performance of any of 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. Professional Services Rev. Feb. 2014 3 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D Option B: Subcontracts Authorized: Notwithstanding Section 11 above, CITY agrees that subconsultants may be used to complete the Services. The subconsultants authorized by CITY to perform work on this Project are: As set forth in Exhibit A attached to this Agreement. CONSULTANT shall be responsible for directing the work of any subconsultants and for any compensation due to subconsultants. CITY assumes no responsibility whatsoever concerning compensation. CONSULTANT shall be fully responsible to CITY for all acts and omissions of a subconsultant. CONSULTANT shall change or add subconsultants only with the prior approval of the city manager or his designee. SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Michelle Morales as the project supervisor to have supervisory responsibility for the performance, progress, and execution of the Services 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. The City’s project manager is Christine Tam or her designee, Utilities Department, Marketing Services Division, 250 Hamilton Ave, Palo Alto, CA 94303. The project manager will be CONSULTANT’s point of contact with respect to performance, progress and execution of the Services. The CITY may designate an alternate project manager from time to time. SECTION 14. OWNERSHIP OF MATERIALS. Upon delivery, all work product, including without limitation, 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. [Option B applies to any consultant who does not qualify as a design professional as Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D defined in Civil Code Section 2782.8.] 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 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 Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D 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 Purchasing Manager 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. 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: Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D To CITY: Office of the City Clerk City of Palo Alto Post Office Box 10250 Palo Alto, CA 94303 With a copy to the Purchasing Manager To CONSULTANT: Attention of the project director at the address of CONSULTANT recited above SECTION 21. CONFLICT OF INTEREST. 21.1. In accepting this Agreement, CONSULTANT covenants that it presently has no interest, and will not acquire any interest, direct or indirect, financial or otherwise, which would conflict in any manner or degree with the performance of the Services. 21.2. CONSULTANT further covenants that, in the performance of this Agreement, it will not employ subconsultants, 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 the 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 the 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 Consultant to City generated from a personal Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D 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 the 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 the City shall be purchased in accordance with the 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 Office. • Reusable/returnable pallets shall be taken back by the Consultant, at no additional cost to the City, for reuse or recycling. Consultant shall provide documentation from the facility accepting the pallets to verify that pallets are not being disposed. SECTION 24. NON-APPROPRIATION. 24.1. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion 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. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. 25.1. In its performance of Services under this Agreement, CONSULTANT and its Representatives may acquire and otherwise gain access to Confidential Information, as defined in Exhibit “E”, which is exempt from public disclosure under the California Public Records Act, Cal. Gov. Code section 6250 et seq. CONSULTANT agrees to protect such Confidential Information from disclosure to any third parties, in accordance with the terms and conditions set forth in Exhibit “E” attached to this Agreement. SECTION 26. MISCELLANEOUS PROVISIONS. 26.1. This Agreement will be governed by the laws of the State of California. 26.2. 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. 26.3. 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 Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D parties. 26.4. 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. 26.5. 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. 26.6. 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. 26.7. 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. 26.8 If, pursuant to this contract with CONSULTANT, City shares with CONSULTANT personal information as defined in California Civil Code section 1798.81.5(d) about a California resident (“Personal Information”), CONSULTANT shall maintain reasonable and appropriate security procedures to protect that Personal Information, and shall inform City immediately upon learning that there has been a breach in the security of the system or in the security of the Personal Information. CONSULTANT shall not use Personal Information for direct marketing purposes without City’s express written consent. 26.9 All unchecked boxes do not apply to this agreement. 26.10 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. 26.11 This Agreement may be signed in multiple counterparts, which shall, when executed by all the parties, constitute a single binding agreement // // // // // // // Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D 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 ____________________________ City Manager APPROVED AS TO FORM: __________________________ Senior Deputy City Attorney ECOLOGY ACTION OF SANTA CRUZ By:___________________________ Name:_________________________ Title:________________________ Attachments: EXHIBIT “A”: SCOPE OF SERVICES EXHIBIT “B”: SCHEDULE OF PERFORMANCE EXHIBIT “C”: COMPENSATION EXHIBIT “D”: INSURANCE REQUIREMENTS EXHIBIT “E”: CONFIDENTIALITY AGREEMENT EXHIBIT “F” IDENTITY INFORMATION PROTECTION Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D Executive Director Jim Murphy EXHIBIT “A” SCOPE OF SERVICES A. OVERVIEW CONSULTANT agrees to provide the City of Palo Alto (“CITY” or “CPAU”) with the C&I EnergyEdge Program (the “Program”). The Program will encourage the CITY’s Key Account customers to optimize building energy performance through implementation of building infrastructure improvements, energy efficient (“EE”) equipment upgrades, and retro commissioning of building energy systems. CONSULTANT will coordinate with CPAU’s Key Account representatives to meet with customers and obtain the customer’s agreement to perform an Initial Site Assessment to identify potential EE measures, estimated energy savings, project cost and payback. Upon a customer’s approval, CONSULTANT will perform a detailed evaluation of the selected EE measures and develop a Detailed Evaluation Report. Based on the detailed evaluation report, a customer will then decide which measures to implement and the customer can elect to sign a Project Installation Agreement (the “PIA”). The PIA provides details on equipment specifications and installation requirements in order for the customer to qualify for CPAU incentives for EE projects. CONSULTANT may either offer full turnkey service to the customer, or serve as technical advisor during the customer’s project implementation phase. Upon completion of the project, CONSULTANT will ensure that customer’s project meets the specifications described in the PIA and prepare a Final Measurement and Verification Report to submit to CITY. CONSULTANT will also assist the customer to separately apply for CPAU incentives. In connection with the Program, CONSULTANT will focus on three types of EE projects: (a) control setting changes, (b) hardware repair and (c) installation of new equipment. In addition to the general services described above, CONSULTANT agrees to offer EE expertise at no cost to the participating customer as part of the Program, including, but not limited to: •Dedicated Staff: A full-time, dedicated Consultant staff member to assist programparticipants through the program process. •Turnkey Measures and Custom Measures: A blend of Turnkey Measures (“TM”) and custom measures suitable for the specific needs of the customer and building. •Initial Site Assessment: A detailed report of EE measure recommendations includingassociated energy savings, cost savings, payback, incentive opportunities, and carbon reduction. Program and engineering staff will present these results to the customer to ensure the customer's understanding and comfort level with the recommendations. •Technical assistance to support the implementation process. CONSULTANT’s staff canadvise customers on tasks such as requesting a scope of work, selecting a contractor, acquiring building permits, etc. •Post-installation verification of realized savings. This not only helps CPAU confirm actualenergy savings, but also helps customers feel more comfortable investing in the recommended solutions. Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D Target Markets Program will target CPAU Key Account customers in the government, institutional and private sectors within the CITY. Target buildings include schools, office buildings, High Tech facilities, manufacturing facilities, lab buildings, retail buildings, hospitality buildings (hotel and resorts), and hospitals. Energy Savings Targets Program’s energy savings targets for the term of the Agreement are as provided in Table 1. Table 1. Program Energy Savings Targets Gross kW Gross kWh Gross Therms FY 2015- FY2016 564 2,812,500 63,920 FY 2017 451 2,250,000 51,136 FY2018 451 2,250,000 51,136 Totals 1,467 7,312,500 166,193 Program Staffing CONSULTANT agrees to staff the Program in accordance with the staffing set forth in Table 2. CONSULTANT shall notify the CITY concerning proposed changes to the staffing plan, and all such changes require the prior written consent of the CITY. CITY reserves the right to (i) request CONSULTANT conduct criminal background checks to City’s satisfaction on all CONSULTANT’s staff, contractors or agents that may enter customer property, and (ii) require that any staff, contractor or agent of CONSULTANT that fails the background check shall not be permitted to enter any customer premises. Without limiting Section 16 (Indemnity) of the Agreement, CONSULTANT agrees and understands it is responsible for all costs and damages associated with any theft, vandalism, damage or criminal acts involving or committed by CONSULTANT staff, contractors or agents involving a customer or customer premises. Table 2. CONSULTANT’s Staff Contacts Name Title Phone Email Jim Murphy CEO 831-515-1325 jmurphy@ecoact.org Chris Vance VP of Engineering 831-515-1351 cvance@ecoact.org Michelle Morales Senior Program Manager 831-515-1306 mmorales@ecoact.org Gene Thomas Senior Energy Analyst 831-515-1321 gthomas@ecoact.org Oren Noy Program Manager 415-265-3709 onawi@ecoact.org B. PROGRAM WORK PLAN Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D Task 1 – PROGRAM INITIATION MEETING (PROGRAM DEVELOPMENT) CONSULTANT shall organize a Program Initiation Meeting with CPAU staff to review roles, timelines, and priorities in the delivery of the Program. The meeting will also cover Program plan updates (see Task 2 below) including logistics, marketing, coordination, evaluation, monitoring and verification activities, invoicing requirements, scope of work, and any remaining contractual questions. Task 1.1 Meeting agenda and minutes. Task 2 – UPDATE PROGRAM PLAN AND DOCUMENTS (PROGRAM DEVELOPMENT) Following the Program Initiation Meeting, CONSULTANT will edit, update, and revise as necessary all Program plans and documents to incorporate CPAU staffs feedback. These Program Plans and documents shall include, without limitation, the following: • Program Policies and Procedures • Quality Assurance and Quality Control Plan • Marketing Plan • Marketing Materials • Coordination Plan • Program Participation Agreement • Project Installation Agreement • Project and Program Report Templates • Customer Complaint Resolution Procedures Task 2.1 Draft Program Documents. Task 2.2 Final Program Documents. Task 3 – LAUNCH PROGRAM AND IMPLEMENT MARKETING CAMPAIGN (PROGRAM DELIVERY) Task 3.1 Provide Training to CPAU Staff On an as needed basis CONSULTANT shall provide in-person training on the Program process, eligibility requirements, and incentives as well as a high-level overview of typical energy efficiency measures and their applications to requested CPAU staff. In addition, CONSULTANT’s representative shall be available to assist all CPAU representatives on an on-going basis to answer any questions related to the program and to determine if specific customers are eligible for program participation. Task 3.2 Implement Marketing Campaign CONSULTANT shall execute the planned marketing campaign based on the approved Marketing Plan. All marketing activities will be approved and coordinated with CPAU staff. Task 3.3 Implement Marketing Campaign Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D CONSULTANT shall present at marketing events and perform one-on-one customer marketing as needed. Task 4 – ENROLL CUSTOMERS AND DEVELOP ENERGY PROJECTS Task 4.1 Program Participation Agreement Only Key Account customers are qualified to participate in this Program. Customer enrollment occurs when the customer executes a Program Participation Agreement and submits it to CONSULTANT. After the Program Participation Agreement is executed by the customer, the customer becomes eligible to receive an initial site assessment. Task 4.2 Initial Site Assessment Once a signed Program Participation Agreement has been received by CONSULTANT, CONSULTANT will perform an Initial Site Assessment. CONSULTANT with agreement from CITY may also elect to proceed directly to the Detailed Evaluation Report stage if it becomes apparent that the customer is ready to move forward with one or more eligible EE measures. During the Initial Site Assessment, CONSULTANT will determine what potential EE measures exist at the facility and CONSULTANT will calculate energy savings using rule of thumb estimates and high level assumptions for potential energy savings, greenhouse gas reductions, project cost, incentives, and payback for each EE measure category. CONSULTANT will develop an Initial Site Assessment Report for each eligible facility. CONSULTANT will submit the Initial Site Assessment Report, which will provide descriptions of the each EE measure category identified, to the Customer and CPAU. After the Initial Site Assessment Report is submitted, CONSULTANT will review the opportunities to deploy Turnkey Measures, which are measures that CONSULTANT can directly implement at customer facilities. Examples of Turnkey Measures include lighting retrofit and VFD pump/fan installations. For other non-Turnkey Measures, or custom measures, CONSULTANT will call engineers in for a detailed evaluation of such measures. Task 4.3 Detailed Evaluation Reports CONSULTANT will conduct a detailed evaluation which may consist of onsite spot measurements and/or monitoring of energy consuming equipment. CONSULTANT’s detailed evaluation will use pre-developed energy analysis tools and custom calculations. CONSULTANT shall prepare a Detailed Evaluation Report that describes in detail each EE measure (Turnkey Measure or custom measure), estimate of potential energy savings, implementation cost, CPAU incentive and payback for each EE measure. CONSULTANT will present the Detailed Evaluation Report to the customer and CPAU. Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D Task 4.4 Energy Savings Calculations CONSULTANT will provide energy savings calculations that are incremental to the prevailing building and appliance efficiency standards (Title 20 and Title 24) and can be counted towards program savings. To that end, the California Municipal Utilities Association (CMUA) Technical Reference Manual (TRM), as the same may be amended from time to time, should be used as the reference source for determining annual energy savings. For projects that involve lighting retrofit and/or variable frequency drive (VFD) pump and VFD fan installations, CONSULTANT shall estimate the energy savings using the “TRM nonresidential lighting energy savings calculator” and the “TRM nonresidential pump and fan VFD energy savings calculator”, or other similar calculators that incorporate the prevailing Title 24 and Title 20 baseline for estimating energy savings. If the latter is preferred, CONSULTANT will need to demonstrate that the energy savings calculation methodologies and the resultant savings from the TRM energy savings and the CONSULTANT-preferred calculator are equivalent. If a program measure is not covered by the TRM, CONSULTANT shall provide the estimated energy savings and work paper(s) or reference source documenting the savings estimation methodology for CITY review and approval. The CITY at its own discretion may approve an early retirement methodology on a project basis in place of the Title 24 baseline. Task 5 – IMPLEMENT AND VERIFY ENERGY PROJECTS (PROGRAM DELIVERY) Task 5.1 Project Installation Agreement Upon completion of the Detailed Evaluation Report, CONSULTANT shall supply the Customer with a Project Installation Agreement (“PIA”) that specifies the EE measures selected by the customer for implementation. By signing the PIA, the customer is able to reserve the specified incentive. The incentive amounts specified in the PIA are estimates only and may vary based on the final installed equipment and verified energy savings. The PIA shall provide details on the equipment specifications and installation requirements that will need to be met in order to receive the agreed to incentive amounts. Task 5.2 Implementation Support The identified EE measures will be installed by a contractor chosen by the customer; provided, however, that if Turnkey Measures are involved, the customer may choose to use CONSULTANT’s preapproved contractors. CONSULTANT will work with the customer, as required, to identify implementation paths for the EE measures. If the customer elects to use a contractor other than CONSULTANT’s preapproved contractors, then CONSULTANT shall provide technical assistance, as required, regarding equipment specifications and installation criteria to the contractor chosen by the customer to implement the work. CONSULTANT will attend meetings, as Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D required, with contractors to explain project scope and installation requirements as needed. CONSULTANT will review project purchase orders, final invoices, and all applicable technical equipment cut-sheets to verify that the equipment purchased and installed meets the specifications and performance requirements outlined in the Detailed Evaluation Report. CONSULTANT shall complete a pre- and post- implementation inspection for all projects. Task 5.3 Measurement and Verification (M&V) Following the completion of the project installation, CONSULTANT will perform a post-installation inspection of the installation, collecting and verifying facility data and performing industry standard practice measurement and monitoring, as performed during the pre-installation inspection. CONSULTANT will compare the performance data against what was projected in the Detailed Evaluation Report, and generate a list documenting completed EE measures as well as any measures that are incomplete or incorrectly implemented. After completion of the post-installation inspection, CONSULTANT will document and describe in detail the measures that have been implemented. CONSULTANT will prepare a Final Measurement and Verification Report with all EE measures specifying the ones that were implemented and those that were not. Task 5.4 Post Installation Support CONSULTANT will work with Customer and installation contractor(s) to ensure that the customer’s facility operation staff receive training and all necessary operations and maintenance manuals for installed measures, and that the customer is satisfied with the installation. If an installation or customer satisfaction issue should arise with the customer’s installed measures, CONSULTANT shall promptly remedy it only if the measures are Turnkey Measures installed by CONSULTANT’s contractors. CONSULTANT shall respond to any customer questions or complaints within twenty-four (24) hours by telephone and will include the equipment manufacture on the call, if necessary, to provide immediate guidance, service, or corrective work. CONSULTANT shall have trained respondents on the call to rapidly respond to field issues, as needed, and will maintain a customer service log to track such customer calls and the service that was provided. If any complaint cannot be resolved to the satisfaction of the customer within five (5) days, CONSULTANT shall immediately provide CPAU with a detailed description of any such complaint, which shall include the name and the contact information of the customer complaining and any other information requested by CPAU. As part of the Program documents, CONSULTANT shall include Customer Complaint Resolution Procedures to be followed by Program staff. Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D Task 5.5 Customer Complaint Log Task 6 – INVOICE AND REPORT (PROGRAM DELIVERY) Task 6.1 Monthly Invoices As described in section 5 of the Agreement, CONSULTANT shall submit a monthly invoice to CPAU for Program accomplishments and installations performed in the preceding calendar month. As noted in Task 4.4 of this Exhibit “A”, only energy savings that are incremental to the minimum energy savings mandated by the prevailing building and efficiency standards (Title 20 and Title 24) can be counted towards program savings. The monthly invoice should include the performance payments as described in Exhibit “C”. CONSULTANT should submit its monthly invoice in conjunction with the Monthly Report and other documentation required by CPAU herein. Task 6.2 Monthly Report and supporting documentation CONSULTANT will submit a Monthly Report to CPAU for Program accomplishments and installations performed in the preceding calendar month. The Monthly Report must include information on the prior month’s activities, accomplishments and expenditures related to the Program. At a minimum, the Monthly Report must contain: •Program Cost Data •Program Energy Savings (Committed and Installed) •Program Changes / New Program Information •Program Expenditures Data •Program Narrative •Committed Projects •Any other requirements as determined by the CPAU Task 6.3 Final Program Report At the end of the Term of this Agreement, CONSULTANT shall submit a final comprehensive Program Report to the CITY that will provide an evaluation of the Program. At a minimum, the Report shall include the following: •Program Achievements •Program Challenges •Goal Attainment •Lessons Learned •Program Improvement Recommendations Task 7 – PERFORM CUSTOMER FEEDBACK SURVEYS (PROGRAM DELIVERY) CONSULTANT shall provide a customer feedback survey form to obtain customer feedback on the Program’s services, equipment, and the value of the Program. Survey topics shall range from the customer’s perceived convenience of the Program and notification of other EE programs available, to customer’s overall satisfaction with the implementation of the Program. CONSULTANT shall submit draft customer feedback surveys to CPAU for review and approval. Surveys shall be delivered to the customer upon project completion with instructions Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D for completion online and via ground mail. For mail surveys, CONSULTANT shall include a postage-paid addressed envelope for collection. Consultant shall request feedback surveys for 100% of projects. CONSULTANT shall augment form surveys with telephone surveys as needed to gain a higher percentage of responses to the survey. Task 7.1 Draft Customer Feedback Survey Template. Task 7.2 Final Customer Feedback Survey Template. Task 7.3 Customer Feedback Summary. Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D EXHIBIT “B” SCHEDULE OF PERFORMANCE CONSULTANT shall perform the Services so as to complete each milestone within the number of days/weeks or timeframe specified below. The time to complete each milestone may be increased or decreased by advanced, mutual written agreement of the project managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of execution of the Agreement, and update such schedule as reasonably requested by CITY. Task Timing (Due Date) Task 1 - PROGRAM INITIATION MEETING (PROGRAM DEVELOPMENT) Task 1.1 Agenda within 15 days of Agreement execution; Minutes within 5 business days of meeting Task 2 - UPDATE PROGRAM PLAN AND DOCUMENTS (PROGRAM DEVELOPMENT) Task 2.1 Within 30 days of Program Initiation Meeting. Task 2.2 Within 15 days of CPAU Program Manger Comments. Task 3 - LAUNCH PROGRAM AND IMPLEMENT MARKETING CAMPAIGN (PROGRAM DELIVERY) Task 3.1 Ongoing, and as needed Task 3.2 Ongoing Task 3.3 Ongoing Task 4 - ENROLL CUSTOMERS AND DEVELOP ENERGY PROJECTS Task 4.1 Ongoing Task 4.2 Ongoing Task 4.3 Ongoing and within 15 days of CPAU Program Manger Comments Task 4.4 Ongoing Task 5 - IMPLEMENT AND VERIFY ENERGY PROJECTS (PROGRAM DELIVERY) Task 5.1 Ongoing Task 5.2 Ongoing Task 5.3 Ongoing and within 15 days of CPAU Program Manger Comments Task 5.4 Ongoing Task 5.5 Ongoing as part of the Monthly Report Task 6 - INVOICE AND REPORT (PROGRAM DELIVERY) Task 6.1 15th day of each month for work completed the preceding month Task 6.2 15th day of each month for work completed the preceding month Task 6.3 90 days following the end of the Term of the Agreement Task 7 - PERFORM CUSTOMER FEEDBACK SURVEYS Task 7.1 Within 90 days following Agreement execution Task 7.2 Within 15 days of CPAU Program Manger Comments Task 7.3 45 days following the completion of each quarter, as part of the Monthly Report Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D EXHIBIT “C” COMPENSATION The CITY agrees to compensate CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement using the Performance Payments outlined herein. CONSULTANT’S compensation under this Agreement is entirely based on CONSULTANT performance. Reimbursable Expenses and Additional Services are not authorized under this Agreement. In order to receive compensation, CONSULTANT’S performance must satisfy all requirements set forth in the Agreement and Exhibit “A” attached there to. CONSULTANT’S compensation under this Agreement is subject to the specific NOT TO EXCEED requirements and limits set forth in Section 4 of this Agreement. Performance Payments CITY will compensate CONSULTANT in Performance Payments, to be paid in two installments; 50% upon execution of the PIA (based on estimated energy savings), and 100% minus any installment one payment after the EE measures have been installed and verified (based on installed and verified savings). CONSULTANT shall not be entitled to any additional compensation beyond the Performance Payments outlined herein. More specifically, compensation shall be paid by the CITY to the CONSULTANT as follows: (a) Calculation of Project Performance Payment Amount: The Project Performance Payment will be calculated by multiplying annual energy savings over the first year by the Incentive Rate Multiplier. Estimated savings should be used for Installment One, and Actual installed and verified savings should be used for Installment Two. The Project Performance Payment Amount for any customer project is capped at one hundred percent (100%) of the incremental project cost. CITY expects, but does not guarantee, that incentives will typically cover approximately 20-60% of incremental project cost. Energy savings are only eligible for input into the calculation of the Project Performance Payment Amount where they satisfy the requirements set forth in Task 4.4 of Exhibit “A”. Incentive Rate Multiplier: $0.135 per gross kWh saved $0.908 per gross therm saved (b) Installment One: Upon execution of a PIA with a customer, CONSULTANT may invoice CITY as an advance for fifty percent (50%) of the estimated total Project Performance Payment Amount (the “Commitment Advance”) based on CONSULTANT’s estimate of energy savings. CITY agrees to pay CONSULTANT in accordance with the timelines for invoice payment set forth in section 5 of the Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D Agreement. (c) Installment Two: Following CONSULTANT’s post-installation inspection and upon CITY’s receipt and approval of the final Measurement and Verification Report for a customer, CONSULTANT may invoice the CITY for one hundred percent (100%) of the actual Project Performance Payment Amount, less the amount of any prior Commitment Advance paid to CONSULTANT in Installment One. (d) Final Incentive Release Form: CONSULTANT will draft, sign and secure customer’s signature on a Final Incentive Release. The Final Incentive Release Form shall indicate the final savings and incentives amounts, as well as confirm the designated payee and corresponding taxpayer information. CITY will not compensate CONSULTANT until such Final Incentive Release form is submitted to the CITY. (e) Customer Rebates: Customer rebates are separate and distinct from the Performance Payments made to CONSULTANT under this Agreement. Customer rebates are paid by CITY directly to customers, or a customer-appointed payee through the Commercial Advantage Program custom rebate process or other process determined by CITY. CITY does not compensate CONSULTANT in any manner for Customer rebates, and as such, any customer rebates paid by CITY to customer are not subject to the not-to-exceed amounts set forth in the Agreement. (f) Delayed Customer Projects. In the event that a customer project, or a portion thereof, does not complete on schedule and fails to show progress toward completion, within 12 months of date the CITY provides CONSULTANT with a Commitment Advance, the CITY may, in its sole discretion, request that the project be closed out and verified on a timetable acceptable to CITY. The CITY may, in its sole discretion extend the project completion date. If the verified savings result in a final performance payment that is less than its prior Commitment Advance, a credit will be due to CPAU for the amount of the difference. CITY may use this credit towards future performance payments to CONSULTANT. (g) Final True Up: At the end of the contract term CONSULTANT will reimburse the CITY for any remaining credit balances. Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D 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 AGGREGAT E 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 Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D 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 SUBCONSULTANTS, 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 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 Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D 1.IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THEEFFECTIVE DATE OF CANCELLATION. 2.IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT OF PREMIUM, THE ISSUINGCOMPANY SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. NOTICES SHALL BE MAILED TO: PURCHASING AND CONTRACT ADMINISTRATION CITY OF PALO ALTO P.O. BOX 10250 PALO ALTO, CA 94303 Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D EXHIBIT “E” CONFIDENTIALITY AGREEMENT 1.PURPOSE 1.1 In its performance of Services under this Agreement, CONSULTANT and its directors, officers, partners, managers, members, employees, advisors, agents, sub-contractors and other representatives of CONSULTANT and their subsidiaries and affiliates, including, without limitation, attorneys, accountants, consultants, and financial advisors (collectively, the “Representatives”) may acquire and otherwise gain access to Confidential Information, as defined in Section 2 of this Exhibit “J”, which is exempt from public disclosure under the California Public Records Act, Cal. Gov. Code section 6250 et seq. 1.2 In accordance with the terms and conditions of this Agreement, CONSULTANT agrees to take reasonable precautions to ensure that Confidential Information of CITY, as defined in this Exhibit, is safeguarded against disclosure to unauthorized employees or third parties. 1.3 CITY would not share or disclose any Confidential Information to CONSULTANT but for the legal protections against unauthorized disclosures intended to be afforded by California law and this Agreement, and is relying on this Agreement in disclosing such Confidential Information to CONSULTANT. 2.CONFIDENTIAL INFORMATION, DEFINED 2.1 “Confidential Information” means any and all information which is of a non-public, proprietary or confidential nature, in any form or medium, written or oral, (whether prepared by the CITY, its employees, or agents, and irrespective of the form or means of communication and whether it is labeled or otherwise identified as confidential) that is furnished to CONSULTANT by the CITY, including, without limitation, individually identifiable utilities customer information and utility infrastructure data. 2.2 Exceptions. “Confidential Information” shall exclude (and the CONSULTANT shall not be under any obligation to maintain in confidence) any information (or any portion thereof) disclosed to CONSULTANT by CITY to the extent that such information: (a) is in the public domain at the time of disclosure; or (b) at the time of or following disclosure, becomes generally known or available through no act or omission on the part of CITY; or (c) is known, or becomes known, to CONSULTANT from a source other than CITY or its Representatives (as defined herein), provided that disclosure by such source is not in breach of a confidentiality agreement CITY; or Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D (d) is independently developed by CONSULTANT without violating any of its obligations under this Agreement or any other agreement between the Parties; or (e) is legally required to be disclosed by judicial or other governmental action; provided, however, that prompt notice of such judicial or other governmental action shall have been first given to CITY, which shall be afforded the opportunity to exhaust all reasonable legal remedies to maintain the Confidential Information in confidence; or (f) is permitted to be disclosed by a formal written agreement executed by and between the Parties. Specific information shall not fall within the exceptions of Sections (a) through (f) above merely because it is embraced by more general information falling within such exceptions. 3. CALIFORNIA PUBLIC RECORDS ACT 3.1 CONSULTANT acknowledges that CITY is a public agency subject to the requirements of the California Constitution, Article 1, Section 3 and California Public Records Act Cal. Gov. Code section 6250 et seq. CONSULTANT acknowledges that CITY may submit to or otherwise provide access to CONSULTANT Confidential Information that CITY or any utility customer of CITY considers to be protected from disclosure pursuant to exemptions granted by applicable California law. 3.2 Whether or not there is a request or demand of any third party not a Party to this Agreement (the “Requestor”) for the production, inspection and/or copying of information designated by CITY as Confidential Information, CONSULTANT shall be solely responsible for taking whatever legal steps CITY deems necessary to protect information deemed by it to be Confidential Information and to prevent release of information to the Requestor (including the release of such information by CONSULTANT). 3.3 Under no circumstances will CONSULTANT be permitted to comply with the Requestor’s demand for disclosure of such Confidential Information that CITY deems confidential and not intended for disclosure to the general public, or otherwise publicly disclose the Confidential Information to any person not authorized by law to receive such information. 4. CONFIDENTIAL INFORMATION DESIGNATION 4.1 As practicable, the Confidential Information shall be marked with the words “Confidential” or “Confidential Material” or with words of similar import. CITY shall instruct CONSULTANT that information of a financial, personal, or Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D proprietary nature being conveyed orally and intended by CITY to be covered by the terms of this Agreement, is deemed Confidential Information. To the extent possible, CITY shall endeavor to mark any electronic document intended to be covered by the terms of this Agreement with the words “Confidential” or similar words, or, if that is not possible or would be exceedingly difficult, CITY shall notify CONSULTANT (for example, by covering e-mail transmitting the electronic document) that the electronic document is Confidential Information. 4.2 CITY’s failure, for whatever reason, to mark any material at the time it is produced to CONSULTANT, or to notify it that oral or electronic material is Confidential Information at the time it is provided, shall not take the material out of the coverage of this Agreement for all time, and CONSULTANT shall treat the material as Confidential Information once CITY has notified it that the material is to be covered by this Agreement. 5. DUTY TO KEEP CONFIDENTIAL 5.1 CONSULTANT agrees to maintain as confidential, to the extent permitted or required by applicable law, all Confidential Information furnished or otherwise made available to the CONSULTANT, or its Representatives by CITY. CONSULTANT acknowledges that the Confidential Information is proprietary and a valuable asset of CITY and agrees that CONSULTANT shall take reasonable precautions to ensure that such Confidential Information is safeguarded against disclosure to unauthorized employees, Representatives or third parties. (a) CONSULTANT shall use the Confidential Information solely as permitted by the Contract and shall not sell Confidential Information or otherwise disclose such Confidential Information under any circumstances and without the prior written consent of CITY. CONSULTANT shall not disclose the Confidential Information, or portions thereof, to any of its Representatives, except to those who need to know such information for the purpose of advising CITY and who agree to the terms of this Agreement. (b) CONSULTANT agrees that any of the Representatives to whom the Confidential Information is disclosed will be informed of the confidential or proprietary nature of such information and of CONSULTANT’s obligations under this Agreement. CONSULTANT is responsible for any use of Confidential Information by any of its Representatives. (c) CONSULTANT shall ensure that: (i) any Representatives with whom CONSULTANT shares such Confidential Information or who acquire knowledge of such Confidential Information from or through CONSULTANT regard Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D and treat such Confidential Information of CITY as strictly confidential and wholly owned by CITY, and (ii) CONSULTANT shall not (and CONSULTANT shall ensure that any Representatives with whom CONSULTANT shares such Confidential Information or who acquire knowledge of such Confidential Information from or through CONSULTANT do not) for any reason, in any fashion, either directly or indirectly, sell, lend, lease, distribute, license, give, transfer, assign, show, disclose, disseminate, or otherwise communicate any such Confidential Information to any third party, or misappropriate, reproduce, copy or use any such Confidential Information, in either case, for any purpose other than in accordance with this Agreement. (d) If CONSULTANT or any of its Representatives are requested or required to disclose any Confidential Information by law, regulation, the applicable rules of any national securities exchange or other market or reporting system, oral questions, interrogatories, requests for information or other documents in legal proceedings, subpoena, civil investigative demand or any other similar process, CONSULTANT shall provide CITY with prompt written notice of any such request or requirement so that CITY has an opportunity to seek a protective order via writ of mandate or other appropriate remedy, or waive compliance with the provisions of this Agreement. (e) If CITY waives compliance with the provisions of this Agreement with respect to a specific request or requirement, CONSULTANT and its Representatives shall disclose only that portion of the Confidential Information that is expressly covered by such waiver and which is necessary to disclose in order to comply with such request or requirement. CONSULTANT and its Representatives shall cooperate in a reasonable manner with CITY in attempting to preserve the confidentiality of the Confidential Information. (f) If (in the absence of a waiver by CITY) CONSULTANT has not secured a protective order or other appropriate remedy despite attempting to do so, and CONSULTANT or one of its Representatives is nonetheless then legally compelled to disclose any Confidential Information, CONSULTANT or such Representative may, without liability hereunder, disclose only that portion of the Confidential Information that is necessary to be disclosed. In the event that disclosure is made in accordance with this subsection, CONSULTANT shall exercise, and cause its Representatives to exercise, reasonable efforts to preserve the confidentiality of the Confidential Information, including obtaining reliable assurance at the sole expense of CONSULTANT that confidential Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D treatment shall be accorded any Confidential Information so furnished. 6. NO LIABILITY, RELEASE, OR OBLIGATION Except as set forth in any formal written agreement executed by and between the parties, neither CONSULTANT nor any of its Representatives shall be entitled to rely on any statement, promise, agreement or understanding, whether written or oral, or any custom, usage of trade, course of dealing or conduct. In addition, each Party understands and acknowledges that neither CITY nor any of its representatives, employees or agents makes any representation or warranty, express or implied, as to the accuracy or completeness of any Confidential Information, and that neither CITY nor any of its representatives, employees or agents shall have any liability whatsoever to CONSULTANT or to any of its Representatives relating to or resulting from the Confidential Information or any errors therein or omissions therefrom. 7. REMEDIES In recognition that an irreparable injury may result to CITY, if any provision of this Exhibit J is violated, CONSULTANT agrees that upon any breach or threatened breach of any provision of this Exhibit J by CONSULTANT or any of its Representatives, that CITY shall be entitled to seek an injunction or specific performance prohibiting such conduct or any other relief as may be permitted by law. 8. RETURN OF CONFIDENTIAL INFORMATION 8.1 CONSULTANT shall have access to the Confidential Information provided by CITY only during the term of this Agreement, and shall return all Confidential Information provided under this Agreement upon its termination, or at any time upon request of CITY, as described in Section 8.2 of this Exhibit J. 8.2 CITY may at any time request that CONSULTANT promptly return to CITY or destroy any or all documents or other materials containing Confidential Information of CITY, and CONSULTANT shall immediately comply with any such request. Notwithstanding the return or destruction of the Confidential Information as contemplated by this section 8 of this Exhibit J, the CONSULTANT and its Representatives will continue to be bound by the terms of this Agreement with respect thereto, including all obligations of confidentiality. 9. SURVIVAL CONSULTANT’s obligations of confidentiality and non-circumvention under this Exhibit J shall survive the termination of this Agreement. 10. OWNERSHIP RIGHTS NOT CREATED The transfer of Confidential Information hereunder shall not be construed as granting a license of any kind or any right of ownership in the Confidential Information to CONSULTANT. 11. NO OBLIGATION TO DISCLOSE Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D Nothing in this Section shall obligate CITY to disclose specific Confidential Information to CONSULTANT. Such disclosures shall be at the CITY’s sole discretion. Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D EXHIBIT “F” IDENTITY INFORMATION PROTECTION Identity Information Protection 1. During the term of the contract the CONSULTANT shall not collect, process or store any Private Information (PI) and Personally Identifiable Information (PII), except the name and address of the customer. 2. During the term of the contract the CONSULTANT shall comply with the City’s Information Privacy Policy and the City’s Software as a Service Security and Privacy Terms and Conditions. Personal information (PI) is defined as an individual's first name or first initial and last name in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted: (1) Social security number. (2) Driver's license number or California Identification Card number. (3) Account number, credit or debit card number, in combination with any required security code, access code, or password that would permit access to an individual's financial account, "Personal information" does not include publicly available information that is lawfully made available to the general public from federal, state, or local government records. Personally Identifiable Information (PII), as used in information security, is information that can be used to uniquely identify, contact, or locate a single person or can be used with other sources to uniquely identify a single individual. Professional Services Rev Feb. 2014 DocuSign Envelope ID: A45E0202-694D-4782-8BE9-9DB0E845435D CITY OF PALO ALTO CONTRACT NO. C15155144B AGREEMENT BETWEEN THE CITY OF PALO ALTO AND ENOVITY INC. FOR PROFESSIONAL SERVICES This Agreement is entered into on this 1st day of June 2015 (“Agreement”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and ENOVITY INC., a California corporation, located at 100 Montgomery Street, Suite 600, San Francisco, CA 94104 ("CONSULTANT"). RECITALS The following recitals are a substantive portion of this Agreement. A. CITY intends to provide energy efficiency services to CITY’s large commercial, industrial and institutional customers (“Project”) and desires to engage a consultant to administer, manager and deliver a commercial energy savings program 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 in Exhibit “A” in accordance with the terms and conditions contained in this Agreement. The performance of all Services shall be to the reasonable satisfaction of CITY. SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through June 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 Professional Services Rev. Feb. 20141 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 not preclude recovery of damages for delay if the extension is required due to the fault of CONSULTANT. SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A”, is in an aggregate amount that shall not exceed nine hundred and twenty-five thousand dollars ($925,000) per fiscal year, and in an aggregate amount that shall not exceed two million, seven hundred and seventy- five thousand dollars ($2,775,000) over the Term across a total of three (3) consultant agreements (C15155144A, C15155144B, and C15155144C) , of which this is one. The three contracts will be administered by the CITY’s UTILITIES DEPARTMENT to ensure the total aggregate of compensation paid per fiscal year, and over the Term does not exceed the amounts set forth herein. Consultant acknowledges and agrees that the CITY is hiring three (3) consultants, including CONSULTANT, none of whom will be guaranteed or assured of any specific quantity of work to be performed. If the work is performed by any one or more consultants, including CONSULTANT, CITY will ensure that total compensation to all three consultants including CONSULTANT, will not exceed in aggregate, across all three (3) consultant agreements, nine hundred and twenty-five thousand dollars ($925,000) per fiscal year, and will not exceed in aggregate two million, seven hundred and seventy-five thousand dollars ($2,775,000) over the Term across all three (3) consultant agreements. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit A are subject to a Maximum Total Compensation “NOT TO EXCEED” amount of $2,775,000 during the term of the Agreement. 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. No Additional Services or Reimbursable Expenses are contemplated as part of this Agreement. 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, and hourly rates), 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 subconsultants, 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. Professional Services Rev. Feb. 2014 2 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 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 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 the CITY’s stated construction budget, CONSULTANT shall make recommendations to the CITY for aligning the Project design with the budget, incorporate CITY approved recommendations, and revise the design to meet the Project budget, at no additional cost to CITY. SECTION 10. INDEPENDENT CONTRACTOR. It is understood and agreed that in 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 the CITY. SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of CONSULTANT are material considerations for this Agreement. CONSULTANT shall not assign or transfer any interest in this Agreement nor the performance of any of 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. Professional Services Rev. Feb. 2014 3 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 Option B: Subcontracts Authorized: Notwithstanding Section 11 above, CITY agrees that subconsultants may be used to complete the Services. The subconsultants authorized by CITY to perform work on this Project are: As set forth in Exhibit A attached to this Agreement. CONSULTANT shall be responsible for directing the work of any subconsultants and for any compensation due to subconsultants. CITY assumes no responsibility whatsoever concerning compensation. CONSULTANT shall be fully responsible to CITY for all acts and omissions of a subconsultant. CONSULTANT shall change or add subconsultants only with the prior approval of the city manager or his designee. SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Jonathan Soper as the project supervisor to have supervisory responsibility for the performance, progress, and execution of the Services 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. The City’s project manager is Christine Tam or her designee, Utilities Department, Marketing Services Division, 250 Hamilton Ave, Palo Alto, CA 94303. The project manager will be CONSULTANT’s point of contact with respect to performance, progress and execution of the Services. The CITY may designate an alternate project manager from time to time. SECTION 14. OWNERSHIP OF MATERIALS. Upon delivery, all work product, including without limitation, 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. [Option B applies to any consultant who does not qualify as a design professional as defined in Civil Code Section 2782.8.] 16.1. To the fullest extent permitted by law, Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 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 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 Purchasing Manager during the entire term of this Agreement. Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 18.4. The procuring of such required policy or policies of insurance will not be construed to limit CONSULTANT's liability hereunder nor to fulfill the indemnification provisions of this Agreement. Notwithstanding the policy or policies of insurance, CONSULTANT will be obligated for the full and total amount of any damage, injury, or loss caused by or directly arising as a result of the Services performed under this Agreement, including such damage, injury, or loss arising after the Agreement is terminated or the term has expired. SECTION 19. TERMINATION OR SUSPENSION OF AGREEMENT OR SERVICES. 19.1. The City Manager may suspend the performance of the Services, in whole or in part, or terminate this Agreement, with or without cause, by giving ten (10) days prior written notice thereof to CONSULTANT. Upon receipt of such notice, CONSULTANT will immediately discontinue its performance of the Services. 19.2. CONSULTANT 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 Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 Palo Alto, CA 94303 With a copy to the Purchasing Manager To CONSULTANT: Attention of the project director at the address of CONSULTANT recited above SECTION 21. CONFLICT OF INTEREST. 21.1. In accepting this Agreement, CONSULTANT covenants that it presently has no interest, and will not acquire any interest, direct or indirect, financial or otherwise, which would conflict in any manner or degree with the performance of the Services. 21.2. CONSULTANT further covenants that, in the performance of this Agreement, it will not employ subconsultants, 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. Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 SECTION 23. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO WASTE REQUIREMENTS. CONSULTANT shall comply with the City’s Environmentally Preferred Purchasing policies which are available at the City’s Purchasing Department, incorporated by reference and may be amended from time to time. CONSULTANT shall comply with waste reduction, reuse, recycling and disposal requirements of the 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 Consultant to City generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double-sided and printed on a minimum of 30% or greater post-consumer content paper, unless otherwise approved by the 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 the City shall be purchased in accordance with the 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 Office. • Reusable/returnable pallets shall be taken back by the Consultant, at no additional cost to the City, for reuse or recycling. Consultant shall provide documentation from the facility accepting the pallets to verify that pallets are not being disposed. SECTION 24. NON-APPROPRIATION. 24.1. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion 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. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. 25.1. In its performance of Services under this Agreement, CONSULTANT and its Representatives may acquire and otherwise gain access to Confidential Information, as defined in Exhibit “E”, which is exempt from public disclosure under the California Public Records Act, Cal. Gov. Code section 6250 et seq. CONSULTANT agrees to protect such Confidential Information from disclosure to any third parties, in accordance with the terms and conditions set forth in Exhibit “E” attached to this Agreement. SECTION 26. MISCELLANEOUS PROVISIONS. 26.1. This Agreement will be governed by the laws of the State of California. 26.2. In the event that an action is brought, the parties agree that trial of such Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 action will be vested exclusively in the state courts of California in the County of Santa Clara, State of California. 26.3. 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. 26.4. 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. 26.5. 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. 26.6. 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. 26.7. 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. 26.8 If, pursuant to this contract with CONSULTANT, City shares with CONSULTANT personal information as defined in California Civil Code section 1798.81.5(d) about a California resident (“Personal Information”), CONSULTANT shall maintain reasonable and appropriate security procedures to protect that Personal Information, and shall inform City immediately upon learning that there has been a breach in the security of the system or in the security of the Personal Information. CONSULTANT shall not use Personal Information for direct marketing purposes without City’s express written consent. 26.9 All unchecked boxes do not apply to this agreement. / / / / / / / / / / 26.10 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. Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 26.11 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. Attachments: EXHIBIT “A”: SCOPE OF SERVICES EXHIBIT “B”: SCHEDULE OF PERFORMANCE EXHIBIT “C”: COMPENSATION EXHIBIT “D”: INSURANCE REQUIREMENTS EXHIBIT “E”: CONFIDENTIALITY AGREEMENT EXHIBIT “F”: IDENTITY INFORMATION PROTECTION CITY OF PALO ALTO ____________________________ City Manager APPROVED AS TO FORM: __________________________ Senior Deputy City Attorney ENOVITY INC. By:___________________________ Name:_________________________ Title:________________________ Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 Principal Jonathan Soper EXHIBIT “A” SCOPE OF SERVICES A. OVERVIEW Consultant agrees to provide the City of Palo Alto (“CITY” or “CPAU”) with the Commercial and Industrial Energy Efficiency Program (“Program”), which is an incentive program to encourage commercial and industrial sector customers to optimize building energy performance through implementation of building system infrastructure improvements, boiler energy efficiency upgrades, and HVAC system improvements and control tune-up measures. The Program targets gas and electric savings. The Program will encourage the CITY’s Key Account customers to optimize building energy performance through implementation of building infrastructure improvements, energy efficient (“EE”) equipment upgrades, and retrocommissioning of building energy systems. Consultant will coordinate with CPAU’s Key Account representatives to meet with customers and obtain the customer’s agreement to perform an Initial Site Assessment to identify potential EE measures, estimated energy savings, project cost and payback. Upon a customer’s approval, Consultant’s program administrator will perform a detailed evaluation of the selected EE measures and develop a Detailed Evaluation Report. Based on the detailed evaluation report, a customer will then decide which measures to implement and the customer can elect to sign a Project Installation Agreement (the “PIA”). The PIA provides details on equipment specifications and installation requirements in order for the customer to qualify for CPAU incentives for EE projects. Consultant may either offer full turnkey service to the customer, or serve as technical advisor during the customer’s project implementation phase. Upon completion of the project, Consultant will ensure that customer’s project meets the specifications described in the PIA and prepare a Final Measurement and Verification Report . Consultant will also assist the customer to separately apply for CPAU incentives. Target Markets Program will target CPAU Key Account customers in the government, institutional and private sectors within the CITY. Target buildings include schools, office buildings, High Tech facilities, manufacturing facilities, lab facilities, retail buildings, hospitality buildings (hotel and resorts), and hospitals. Energy Savings Targets Program’s energy savings targets for the term of the Agreement are provided in Table 1. Table 1. Program Energy Savings Targets Gross KW Gross kWh Gross Therms FY 2015-16 251 2,854,500 25,881 FY 2017 251 2,854,500 25,881 FY 2018 251 2,854,500 25,881 Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 Program Staffing CONSULTANT agrees to staff the Program in accordance with the staffing set forth in Table 2, and shall notify the CITY concerning proposed changes to the staffing plan. All such changes require the prior written consent of CITY. CITY reserves the right to (i) request CONSULTANT conduct criminal background checks to City’s satisfaction on all CONSULTANT’s staff, contractors or agents that may enter customer property, and (ii) require that any staff, contractor or agent of CONSULTANT that fails the background check shall not be permitted to enter any customer premises. Without limiting Section 16 (Indemnity) of the Agreement, CONSULTANT agrees and understands it is responsible for all costs and damages associated with any theft, vandalism, damage or criminal acts involving or committed by CONSULTANT staff, Contractors or agents involving a customer or customer premises. Table 2. CONSULTANT’s Staff Contacts Name Title Phone Email Jonathan Soper Principal (415) 974-0390 JSoper@enovity.com Jeff Guild Program Director (408) 454-8453 JGuild@enovity.com Tim Huang Program Manager (415) 983-3615 xhuang@enovity.com B. PROGRAM WORK PLAN Task 1 – Project Initiation Meeting CONSULTANT shall organize with the CPAU Program Manager a Program Kick-Off Meeting. The meeting shall include CPAU staff to establish roles, timelines, and priorities in the delivery of the Program. The meeting will also cover Program logistics, marketing, coordination, evaluation, monitoring and verification activities, invoicing requirements, reports and any remaining contractual issues. • Task 1.1 Deliverable: Meeting agenda and meeting minutes. Task 2 –Develop Program Plan In coordination with CPAU staff, CONSULTANT shall develop the following documents: (a) Internal Policies and Procedures Manual CONSULTANT shall develop, adhere to and document its compliance with Policies and Procedures Manual in the implementation of the Program, including those related to the identification, evaluation, implementation and verification of EE measures. The Policies and Procedures Manual shall also include a Quality Assurance and Quality Control Plan, a Program Plan, and Implementation Timeline. Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 • Task 2.1 Deliverable: Draft Internal Policies and Procedures Manual • Task 2.2 Deliverable: Final Internal Policies and Procedures Manual (b) External Policies and Procedures Manual CONSULTANT shall develop, adhere to an External Policies and Procedures Manual for the Program, which shall include the terms and conditions for participating in the Program, the process for participating in the Program and the process for receiving incentive funds, and a customer complaint and resolution plan. CONSULTANT will post the External Policies and Procedures Manual to the Program website (also to be developed by CONSULTANT). CONSULTANT shall also use the website it develops as a communication tool for contractors, customers and CPAU staff to avoid confusion and maintain customer satisfaction. • Task 2.3 Deliverable: Draft External Policies and Procedures Manual • Task 2.4 Deliverable: Final External Policies and Procedures Manual • Task 2.5 Deliverable: Develop website (c) Marketing Plan CONSULTANT shall develop a Marketing Plan that outlines pre-planned marketing activities including a description of the activity, date and location of the any activity, target audience, estimated reach, and marketing material that will be distributed. The Marketing Plan will also address the proposed brand-identity for the Program. It shall also address how the CONSULTANT will market the Program to reach its target audience and how it will promote the Program and how it may provide technical training to building owners and operators, equipment suppliers/vendors, mechanical and maintenance contractors, and mechanical engineers. CONSULTANT shall develop marketing material in conjunction with CPAU and its design firm. • Task 2.6 Deliverable: Draft Marketing Plan • Task 2.7 Deliverable: Final Marketing Plan (d) Coordination Plan CONSULTANT shall develop a Coordination Plan that will provide details on how CONSULTANT will coordinate the efforts and actions of this Program with other existing internal CPAU energy efficiency, water conservation, and renewable energy programs as well as any other potential third-party programs. • Task 2.8 Deliverable: Draft Coordination Plan • Task 2.9 Deliverable: Final Coordination Plan Task 3 – Develop Program Documents CONSULTANT shall develop documents necessary for implementation of the Program. All documents related to the Program shall be submitted to CPAU for approval prior to any distribution, circulation, or publication. CONSULTANT shall revise and/or produce new documents as needed to effectively implement and promote the Program. Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 (a) Program Participation Agreement CONSULTANT shall create a Program Participation Agreement that shall be used to collect basic information from the customer including facility contact information, financial requirements. The Program Participation Agreement will also act as a Site Access Agreement for the Program. • Task 3.1 Deliverable: Draft Program Participation Agreement • Task 3.2 Deliverable: Final Program Participation Agreement (b) Project Installation Agreement CONSULTANT shall develop a template Program Installation Agreement for committing owners to install the identified EE measures. The Program Installation Agreement shall detail the measure installation and eligibility requirements needed to receive an incentive from the program. The Project Installation Agreement, once fully executed, shall reserve the specified incentive funds for the Customer. • Task 3.3 Deliverable: Draft Project Installation Agreement • Task 3.4 Deliverable: Final Project Installation Agreement (c) Site Assessment Form CONSULTANT shall develop a Site Assessment Form which will be used to collect standardized facility data and metrics for determining if a facility meets the Program eligibility requirements and for collecting standard data inputs based on system equipment and functionality. The Site Assessment Form shall be maintained in the facility’s electronic project file. • Task 3.5 Deliverable: Draft Site Assessment Form • Task 3.6 Deliverable: Final Site Assessment Form (d) Reporting Template CONSULTANT shall create standard reporting template including templates for the Initial Site Assessment Report, Detailed Evaluation Report, as well as the Final Measurement and Verification Report. These templates shall be sent to CPAU for review and approval prior to use. • Task 3.7 Deliverable: Draft Report Templates • Task 3.8 Deliverable: Final Report Templates (e) Energy Analysis Tools CONSULTANT shall develop energy analysis tools to quantify energy savings for measures covered under the program. Only energy savings that are incremental to the prevailing building and appliance efficiency standards (Title 20 and Title 24) can be counted towards program savings. To that end, the California Municipal Utilities Association (CMUA) Technical Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 Reference Manual (TRM) should be used as a reference source for determining annual energy savings. For projects that involve lighting retrofit and/or variable frequency drive (VFD) pump and VFD fan installations, CONSULTANT shall estimate the energy savings using the “TRM nonres lighting energy savings calculator” and the “TRM nonres pump and fan VFD energy savings calculator”, or other similar calculators that incorporate the prevailing Title 24 and Title 20 baseline for estimating energy savings. If the latter is preferred, CONSULTANT will need to demonstrate that the energy savings calculation methodologies and the resultant savings from the TRM energy savings and the CONSULTANT-preferred calculator are equivalent. Energy analysis tools developed by the CONSULTANT shall be sent to CPAU for review and approval. New energy analysis calculation tools shall be developed as needed during the Program cycle. • Task 3.9 Deliverable: Draft Energy Analysis Tools • Task 3.10 Deliverable: Final Energy Analysis Tools Task 4 - Develop Invoicing and Program Reporting Tools CONSULTANT will submit to CPAU a sample of all the reporting tools that will be used to meet CPAU reporting requirements for CPAU’s review and approval for use under the Agreement. This will include but not limited to: (a) Monthly Narrative (b) Monthly Invoice (c) Yearly Report (d) Customer Data Export File (e) Customer Summary Report (f) Program Savings Report • Task 4.1 Deliverable: Draft Invoicing and Reporting Tools • Task 4.2 Deliverable: Final Invoice and Reporting Tools Task 5 – Launch Program (a) Program Information CONSULTANT shall provide CPAU with a Program Presentation, Technical Presentation, and a Frequently Asked Questions document on the Program. • Task 5.1 Deliverable: Program Presentation, Technical Presentation and Frequently Asked Questions Document (b) Training CONSULTANT shall provide in person training on the Program process, eligibility requirements, and incentive as well as high level overview of typical EE measures and their applications to requested CPAU staff. In addition, a Program representative shall be available to assist all CPAU representatives on an on-going basis to answer any questions related to the Program and to determine if specific customers are eligible for the Program participation. • Task 5.2 Deliverable: In person Training on Program to CPAU Staff • Task 5.3 Deliverable: Ongoing training and assistance for CPAU Staff (c) Implement Marketing Campaign CONSULTANT shall execute the planned marketing campaign based on the approved detailed Marketing Plan. All marketing activities will be coordinated with CPAU. Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 • Task 5.4 Deliverable: Draft Program Marketing Materials as shall be outlined in the Final Marketing Plan • Task 5.5 Deliverable: Final Program Marketing Materials as shall be outlined in the Final Marketing Plan • Task 5.6 Deliverable: Present at marketing events and perform one-on-one customer marketing as needed. Task 6 – Enroll Customer (Pre-Commitment Stage) (a) Attain Signed Program Participation Agreement Key Account customers are qualified to participate in this Program. Customer enrollment occurs when the customer executes a signed Program Participation Agreement, and submits it to CONSULTANT. After the Program Participation Agreement is executed by the customer, the customer becomes eligible to receive an initial site assessment. • Task 6.1 Deliverable: Signed Program Participation Agreement (b) Perform Initial Site Assessments Once a signed Program Participation Agreement has been received by CONSULTANT, CONSULTANT shall perform an Initial Site Assessment. During the Initial Site Assessment, CONSULTANT will determine what potential EE measures exist at the facility and will calculate using rule of thumb estimates and high level assumptions, potential energy savings, greenhouse gas reductions, project cost, incentives, and paybacks for each EE measure. An Initial Site Assessment Report will be developed for each facility that qualifies for the Program services. The Site Assessment Report shall be submitted to the Customer and CPAU. The Report will provide descriptions of the EE measures identified, and will also include analysis of 12 months of electricity and gas data. • Task 6.2 Deliverable: Initial Site Assessment Report (c) Perform Detailed Evaluations If, based on review of the Initial Site Assessment Report, EE measures are selected for further evaluation by the Customer and CONSULTANT, CONSULTANT shall perform a Detailed Evaluation of the selected EE measures. It is expected that Detailed Evaluations shall be performed on at least 70% of the sites where Initial Site Assessments were performed. The Detailed Evaluations shall include onsite spot measurements and/or monitoring of facilities energy consuming equipment. CONSULTANT shall conduct an independent analysis to determine the potential energy savings and calculate the incentive for the customer. Only energy savings that are incremental to the minimum energy savings mandated by the prevailing building and appliance standards can be counted toward program savings. CONSULTANT shall prepare a Detailed Evaluation Report that describes in detail each EE measure, estimate of potential energy savings, implementation cost, CPAU incentive and payback for each EE measure. This will be presented to the customer. For any sites that have modern building automation DDC system and where customer cooperation can be obtained, an appropriate fault diagnostic toolset may be installed at this stage. CONSULTANT staff shall perform technical services provided by the program including surveys, measurements and analysis, and calculate potential energy savings. The customer shall procure the implementation services with CONSULTANT providing technical support throughout the implementation process; CONSULTANT may also offer the customer turnkey implementation services. Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 • Task 6.3 Deliverable: Draft Detailed Evaluation Report • Task 6.4 Deliverable: Final Detailed Evaluation Report Task 7 – Install Energy Efficient Hardware and Projects (a) Project Installation Agreement Upon completion of the Detailed Evaluation Report, CONSULTANT shall supply the Customer with a Project Installation Agreement that will be executed for the measures selected by the customer for implementation. By signing the Project Installation Agreement, the customer is able to reserve the specified incentive and make the monies unavailable to others. The incentive amounts specified in the Project Installation Agreement shall be estimates only and may vary based on the final and verified savings amounts. The Project Installation Agreement shall provide details on the equipment specifications and installation requirements that will need to be met in order to receive the agreed to incentive amount. • Task 7.1 Deliverable: Signed Project Installation Agreement (b) Project Installation The identified EE measures shall be installed by the contractor chosen by the customer. CONSULTANT shall work with the customer to identify implementation paths for the EE measures. Consultant may offer full turnkey services to the customer. If the customer elects to use a contractor other than the CONSULTANT, then CONSULTANT shall provide technical assistance regarding equipment specifications and installation criteria to the contractor chosen by the customer to implement the work. CONSULTANT shall attend meetings with contractors to explain project scope and installation requirements as needed. • Task 7.2 Deliverable: Technical assistance and contractor meetings (c) Inspections CONSULTANT shall review 100% of project purchase orders, final invoices, and technical equipment cut-sheets to verify that the equipment purchased and installed meets the specifications and performance requirements outlined in the Detailed Evaluation Report. CONSULTANT shall perform on-site inspections preceeding and following completion of work by the contractor for all EE measures. Following the installation of the measures by the contractor, CONSULTANT shall perform a post-installation inspection of the installation, collecting and verifying facility data and performing typical measurement and monitoring, as performed during the pre-installation inspection. CONSULTANT shall compare the performance data against what was projected during the Detailed Evaluation. CONSULTANT shall generate a list documenting completed EE measures and those that are incomplete or incorrectly installed or adjusted. After completion of EE measures installation, CONSULTANT shall document and describe in detail the measures that have been implemented. CONSULTANT shall prepare a Final Measurement and Verification Report with all EE measures specifying the ones that were implemented and those that were not. • Task 7.3 Deliverable: Draft Measurement and Verification Report • Task 7.4 Deliverable: Final Measurement and Verification Report (d) Post Installation Support CONSULTANT shall ensure the facility operation staff has received training and all necessary Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 operations and maintenance manuals and that the customer is satisfied with the installation. If an installation or customer satisfaction issues should arise, CONSULTANT shall promptly remedy it. CONSULTANT shall respond to any customer question or complaint within twenty-four (24) hours by telephone and will include the equipment manufacture on the call, if necessary, to provide immediate guidance, service, or corrective work. CONSULTANT shall have trained respondents on the call to rapidly respond to field issues, as needed, and will maintain a customer service log to track such customer calls and the service that was provided. If any complaint cannot be resolved to the satisfaction of the customer within five (5) days, CONSULTANT shall immediately provide CPAU with a detailed description of any such complaint, which shall include the name and the contact information of the customer complaining and any other information requested by CPAU, as well as a complete form. As part of the Program’s External Policies and Procedures Manual, CONSULTANT shall provide contact information for a Program Representative that will be responsible for fielding customer complaints and will describe the complaint resolution process. As part of the Program’s Internal Policies and Procedures Manual, CONSULTANT shall outline specific complaint resolution procedures to be followed by Program staff. • Task 7.5 Deliverable: Customer Complaint log Task 8 – Reporting CONSULTANT shall provide ongoing scheduled reports to CPAU. Only energy savings that are incremental to the minimum energy savings mandated by the prevailing building and efficiency standards (Title 20 and Title 24) can be counted towards program savings. (a) Monthly Report CONSULTANT shall submit a Monthly Report to CPAU for Program accomplishments and installations performed in the preceding calendar month. The monthly Report shall include information on the prior month’s activities, accomplishments and expenditures related to the Program. At a minimum, the Monthly report shall contain: 1) Program Cost Data 2) Program Impacts Data 3) Program Changes / New Program Information 4) Any other requirements as determined by CPAU • Task 8.1 Deliverable: Monthly Report and supporting documentation (b) Yearly Report CONSULTANT shall submit a Yearly Report to CPAU for Program accomplishments and installations performed in the preceding calendar month. The Yearly Report shall include information on the year’s activities, accomplishments and expenditures related to the Program. At a minimum, the Yearly Report shall contain: 1) Program Expenditures Data 2) Program Narrative for the Year 3) Program Results 4) Any Changes to the Program Plan or any Program Design changes • Task 8.2 Deliverable: Yearly Report and supporting documentation (c) Final Program Report Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 At the end of the term of this Agreement, CONSULTANT shall submit a final comprehensive Program Report that will provide an evaluation of the Program. At the minimum, the Report shall include the following: 1. Program Achievements 2. Program Challenges 3. Goals Attainment 4. Lessons Learned 5. Program Improvement Recommendations 6. Program Next Step Proposed (i.e. Continue Program, End Program, etc.) • Task 8.3 Deliverable: Final Program Report Task 9 – Perform Customer Feedback Surveys CONSULTANT shall provide a customer feedback survey form to obtain customer feedback on the Program’s services, equipment and the value. Surveys topics shall range from the customer’s perceived convenience of the program and notification of other EE programs available, to customer’s overall satisfaction with the implementation of the Program. CONSULTANT shall submit draft customer feedback surveys to CPAU for review and approval. Surveys shall be delivered to the customer upon project completion with instructions for completion online on via ground mail. For Mail surveys, CONSULTANT shall include a postage-paid addressed envelope for collection. CONSULTANT shall request feedback surveys for 100% of projects. CONSULTANT shall augment form surveys with telephone surveys as needed to gain a higher percentage of responses to the survey. • Task 9.1 Deliverable: Draft Customer Feedback Surveys Template • Task 9.2 Deliverable: Final Customer Feedback Surveys Template • Task 9.3 Deliverable: Customer Feedback Summary Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 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 the CITY so long as all the work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed. Task Timing (Due Date) Task 1 - Program Initiation Meeting Task 1.1 Within 15 days of Agreement execution Task 2 - Develop Program Plan (a) Internal Policies and Procedures Manual Task 2.1 Within 30 days of Agreement execution Task 2.2 Within 15 days of CPAU Program Manager comments (b) External Policies and Procedures Manual Task 2.3 Within 45 days of Agreement execution Task 2.4 Within 15 days of CPAU Program Manager comments Task 2.5 Ongoing (c) Marketing Plan Task 2.6 Within 30 days of Agreement execution Task 2.7 Within 15 days of CPAU Program Manager comments (d) Coordination Plan Task 2.8 Within 45 days of Agreement execution Task 2.9 Within 15 days of CPAU Program Manager comments Task 3 – Develop Program Documents (a) Program Participation Agreement Task 3.1 Within 30 days of Agreement execution Task 3.2 Within 15 days of CPAU Program Manager comments (b) Project Installation Agreement Task 3.3 Within 60 days of Agreement execution Task 3.4 Within 15 days of CPAU Program Manager comments (c) Site Assessment Form Task 3.5 Within 45 days of Agreement execution Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 Task 3.6 Within 15 days of CPAU Program Manager comments (d) Reporting Template Task 3.7 Within 45 days of Agreement execution Task 3.8 Ongoing and within 15 days of CPAU Program Manager comments (e) Energy Analysis Tools Task 3.9 Within 45 days of Agreement execution Task 3.10 Within 15 days of CPAU Program Manager comments Task 4 - Develop Invoicing and Program Reporting Tools Task 4.1 Within 30 days of Agreement execution Task 4.2 Within 15 days of CPAU Program Manager comments Task 5 – Launch Program (a) Program Information Task 5.1 Within 30 days of Agreement execution (b) Training Task 5.2 Within 60 days of Agreement execution Task 5.3 Ongoing (c) Implement Marketing Campaign Task 5.4 Within 45 days of Agreement execution Task 5.5 Within 15 days of CPAU Program Manager comments Task 5.6 Ongoing Task 6 – Enroll Customer (Pre-Commitment Stage) (a) Attain Signed Program Participation Agreement Task 6.1 Ongoing (b) Perform Initial Site Assessments Task 6.2 Ongoing (c) Perform Detailed Evaluations Task 6.3 Ongoing Task 6.4 Ongoing and within 15 days of CPAU Program Manager Comments Task 7- Install Energy Efficient Hardware and Projects (a) Project Installation Agreement Task 7.1 Ongoing (b) Project Installation Task 7.2 Ongoing as necessary Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 (c) Inspections Task 7.3 Ongoing Task 7.4 Ongoing and within 15 days of CPAU Program Manager Comments (d) Post Installation Support Task 7.5 Ongoing as part of the Monthly Report Task 8- Reporting (a) Monthly Report Task 8.1 The 15th day of each month for the work completed the preceding month (b) Yearly Report Task 8.2 45 days following the end of the year (c) Final Program Report Task 8.3 90 days following the end of the term of the Agreement Task 9 – Perform Customer Feedback Surveys Task 9.1 Within 90 days following Agreement execution Task 9.2 Within 15 days of CPAU Program Manager Comments Task 9.3 45 days following the completion of each Yearly Report Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 EXHIBIT “C” COMPENSATION The CITY agrees to compensate CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement using the Performance Payments outlined herein. CONSULTANT’S compensation under this Agreement is entirely based on CONSULTANT performance. Reimbursable Expenses and Additional Services are not authorized under this Agreement. In order to receive compensation, CONSULTANT’S performance must satisfy all requirements set forth in the Agreement and Exhibit “A” attached there to. CONSULTANT’S compensation under this Agreement is subject to the specific NOT TO EXCEED requirements and limits set forth in Section 4 of this Agreement. Performance Payments CITY will compensate Consultant in Performance Payments, to be paid in two installments; 50% upon execution of the PIA (based on estimated energy savings) and 100% minus any installment one payment after the EE measures have been installed and verified (based on installed and verified savings). Consultant shall not be entitled to any additional compensation beyond the Performance Payments outlined herein. More specifically, Compensation shall be paid by the CITY to the CONSULTANT as follows: (a) Calculation of Project Performance Payment Amount: The Project Performance Payment will be calculated by multiplying annual energy savings over the first year by the Incentive Rate Multiplier. Estimated savings should be used for Installment One, and Actual installed and verified savings should be used for Installment Two. The Project Performance Payment Amount for any customer project is capped at one hundred percent (100%) of the incremental project cost. CITY expects, but does not guarantee, that incentives will typically cover approximately 20-60% of incremental project cost. Energy savings are only eligible for input into the calculation of the Project Performance Payment Amount where they satisfy the requirements set forth in Task 4.4 of Exhibit “A”. Incentive Rate Multiplier: $0.135 per gross kWh saved $0.908 per gross therm saved (b) Installment One: Upon execution of a PIA with a customer, Consultant may invoice CITY as an advance for the fifty percent (50%) of the estimated total Project Performance Payment Amount (the “Commitment Advance”) based on Consultant’s estimate of energy savings. CITY agrees to pay Consultant in accordance with the timelines for invoice payment set forth in section 5 of the Agreement. Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 (c) Installment Two: Following Consultant’s post-installation inspection and upon CITY’s receipt and approval of the final Measurement and Verification Report for a customer, Consultant may invoice the CITY for one hundred percent (100%) of the actual Project Performance Payment Amount, less the amount of any prior Commitment Advance paid to Consultant in Installment One. (d) Final Incentive Release Form: Consultant will draft, sign and secure customer’s signature on a Final Incentive Release. The Final Incentive Release Form shall indicate the final savings and incentives amounts, as well as confirm the designated payee and corresponding taxpayer information. CITY will not compensate Consultant until such Final Incentive Release form is submitted to the CITY. (e) Customer Rebates: Customer rebates are separate and distinct from the Performance Payments made to Consultant under this Agreement. Customer rebates are paid by CITY directly to customers, or a customer-appointed payee through the Commercial Advantage Program custom rebate process or other process determined by CITY. CITY does not compensate Consultant in any manner for Customer rebates, and as such, any customer rebates paid by CITY to customer are not subject to the not-to-exceed amounts set forth in the Agreement. (f) Delayed Customer Projects. In the event that a customer project, or a portion thereof, does not complete on schedule and fails to show progress toward completion, within 12 months of date the CITY provides Consultant with a Commitment Advance, the CITY may, in its sole discretion, request that the project be closed out and verified on a timetable acceptable to CITY. The CITY may, in its sole discretion extend the project completion date. If the verified savings result in a final performance payment that is less than its prior Commitment Advance, a credit will be due to CPAU for the amount of the difference. CITY may use this credit towards future performance payments to CONSULTANT. (g) Final True Up: At the end of the contract term CONSULTANT will reimburse the CITY for any remaining credit balances. Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 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 AGGREGAT E 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 Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 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 SUBCONSULTANTS, 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 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 Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 1.IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THEEFFECTIVE DATE OF CANCELLATION. 2.IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT OF PREMIUM, THE ISSUINGCOMPANY SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. NOTICES SHALL BE MAILED TO: PURCHASING AND CONTRACT ADMINISTRATION CITY OF PALO ALTO P.O. BOX 10250 PALO ALTO, CA 94303 Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 EXHIBIT “E” CONFIDENTIALITY AGREEMENT 1.PURPOSE 1.1 In its performance of Services under this Agreement, CONSULTANT and its directors, officers, partners, managers, members, employees, advisors, agents, sub-contractors and other representatives of CONSULTANT and their subsidiaries and affiliates, including, without limitation, attorneys, accountants, consultants, and financial advisors (collectively, the “Representatives”) may acquire and otherwise gain access to Confidential Information, as defined in Section 2 of this Exhibit “J”, which is exempt from public disclosure under the California Public Records Act, Cal. Gov. Code section 6250 et seq. 1.2 In accordance with the terms and conditions of this Agreement, CONSULTANT agrees to take reasonable precautions to ensure that Confidential Information of CITY, as defined in this Exhibit, is safeguarded against disclosure to unauthorized employees or third parties. 1.3 CITY would not share or disclose any Confidential Information to CONSULTANT but for the legal protections against unauthorized disclosures intended to be afforded by California law and this Agreement, and is relying on this Agreement in disclosing such Confidential Information to CONSULTANT. 2.CONFIDENTIAL INFORMATION, DEFINED 2.1 “Confidential Information” means any and all information which is of a non- public, proprietary or confidential nature, in any form or medium, written or oral, (whether prepared by the CITY, its employees, or agents, and irrespective of the form or means of communication and whether it is labeled or otherwise identified as confidential) that is furnished to CONSULTANT by the CITY, including, without limitation, individually identifiable utilities customer information and utility infrastructure data. 2.2 Exceptions. “Confidential Information” shall exclude (and the CONSULTANT shall not be under any obligation to maintain in confidence) any information (or any portion thereof) disclosed to CONSULTANT by CITY to the extent that such information: (a) is in the public domain at the time of disclosure; or (b) at the time of or following disclosure, becomes generally known or available through no act or omission on the part of CITY; or (c) is known, or becomes known, to CONSULTANT from a source other than CITY or its Representatives (as defined herein), provided that disclosure by such source is not in breach of a confidentiality agreement CITY; or Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 (d) is independently developed by CONSULTANT without violating any of its obligations under this Agreement or any other agreement between the Parties; or (e) is legally required to be disclosed by judicial or other governmental action; provided, however, that prompt notice of such judicial or other governmental action shall have been first given to CITY, which shall be afforded the opportunity to exhaust all reasonable legal remedies to maintain the Confidential Information in confidence; or (f) is permitted to be disclosed by a formal written agreement executed by and between the Parties. Specific information shall not fall within the exceptions of Sections (a) through (f) above merely because it is embraced by more general information falling within such exceptions. 3. CALIFORNIA PUBLIC RECORDS ACT 3.1 CONSULTANT acknowledges that CITY is a public agency subject to the requirements of the California Constitution, Article 1, Section 3 and California Public Records Act Cal. Gov. Code section 6250 et seq. CONSULTANT acknowledges that CITY may submit to or otherwise provide access to CONSULTANT Confidential Information that CITY or any utility customer of CITY considers to be protected from disclosure pursuant to exemptions granted by applicable California law. 3.2 Whether or not there is a request or demand of any third party not a Party to this Agreement (the “Requestor”) for the production, inspection and/or copying of information designated by CITY as Confidential Information, CONSULTANT shall be solely responsible for taking whatever legal steps CITY deems necessary to protect information deemed by it to be Confidential Information and to prevent release of information to the Requestor (including the release of such information by CONSULTANT). 3.3 Under no circumstances will CONSULTANT be permitted to comply with the Requestor’s demand for disclosure of such Confidential Information that CITY deems confidential and not intended for disclosure to the general public, or otherwise publicly disclose the Confidential Information to any person not authorized by law to receive such information. 4. CONFIDENTIAL INFORMATION DESIGNATION 4.1 As practicable, the Confidential Information shall be marked with the words “Confidential” or “Confidential Material” or with words of similar import. CITY shall instruct CONSULTANT that information of a financial, personal, or proprietary nature being conveyed orally and intended by CITY to be covered by the terms of this Agreement, is deemed Confidential Information. To the extent possible, CITY shall endeavor to mark any electronic document intended to be Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 covered by the terms of this Agreement with the words “Confidential” or similar words, or, if that is not possible or would be exceedingly difficult, CITY shall notify CONSULTANT (for example, by covering e-mail transmitting the electronic document) that the electronic document is Confidential Information. 4.2 CITY’s failure, for whatever reason, to mark any material at the time it is produced to CONSULTANT, or to notify it that oral or electronic material is Confidential Information at the time it is provided, shall not take the material out of the coverage of this Agreement for all time, and CONSULTANT shall treat the material as Confidential Information once CITY has notified it that the material is to be covered by this Agreement. 5. DUTY TO KEEP CONFIDENTIAL 5.1 CONSULTANT agrees to maintain as confidential, to the extent permitted or required by applicable law, all Confidential Information furnished or otherwise made available to the CONSULTANT, or its Representatives by CITY. CONSULTANT acknowledges that the Confidential Information is proprietary and a valuable asset of CITY and agrees that CONSULTANT shall take reasonable precautions to ensure that such Confidential Information is safeguarded against disclosure to unauthorized employees, Representatives or third parties. (a) CONSULTANT shall use the Confidential Information solely as permitted by the Contract and shall not sell Confidential Information or otherwise disclose such Confidential Information under any circumstances and without the prior written consent of CITY. CONSULTANT shall not disclose the Confidential Information, or portions thereof, to any of its Representatives, except to those who need to know such information for the purpose of advising CITY and who agree to the terms of this Agreement. (b) CONSULTANT agrees that any of the Representatives to whom the Confidential Information is disclosed will be informed of the confidential or proprietary nature of such information and of CONSULTANT’s obligations under this Agreement. CONSULTANT is responsible for any use of Confidential Information by any of its Representatives. (c) CONSULTANT shall ensure that: (i) any Representatives with whom CONSULTANT shares such Confidential Information or who acquire knowledge of such Confidential Information from or through CONSULTANT regard and treat such Confidential Information of CITY as strictly confidential and wholly owned by CITY, and (ii) CONSULTANT shall not (and CONSULTANT shall ensure that any Representatives with whom CONSULTANT shares such Confidential Information or who acquire knowledge of such Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 Confidential Information from or through CONSULTANT do not) for any reason, in any fashion, either directly or indirectly, sell, lend, lease, distribute, license, give, transfer, assign, show, disclose, disseminate, or otherwise communicate any such Confidential Information to any third party, or misappropriate, reproduce, copy or use any such Confidential Information, in either case, for any purpose other than in accordance with this Agreement. (d) If CONSULTANT or any of its Representatives are requested or required to disclose any Confidential Information by law, regulation, the applicable rules of any national securities exchange or other market or reporting system, oral questions, interrogatories, requests for information or other documents in legal proceedings, subpoena, civil investigative demand or any other similar process, CONSULTANT shall provide CITY with prompt written notice of any such request or requirement so that CITY has an opportunity to seek a protective order via writ of mandate or other appropriate remedy, or waive compliance with the provisions of this Agreement. (e) If CITY waives compliance with the provisions of this Agreement with respect to a specific request or requirement, CONSULTANT and its Representatives shall disclose only that portion of the Confidential Information that is expressly covered by such waiver and which is necessary to disclose in order to comply with such request or requirement. CONSULTANT and its Representatives shall cooperate in a reasonable manner with CITY in attempting to preserve the confidentiality of the Confidential Information. (f) If (in the absence of a waiver by CITY) CONSULTANT has not secured a protective order or other appropriate remedy despite attempting to do so, and CONSULTANT or one of its Representatives is nonetheless then legally compelled to disclose any Confidential Information, CONSULTANT or such Representative may, without liability hereunder, disclose only that portion of the Confidential Information that is necessary to be disclosed. In the event that disclosure is made in accordance with this subsection, CONSULTANT shall exercise, and cause its Representatives to exercise, reasonable efforts to preserve the confidentiality of the Confidential Information, including obtaining reliable assurance at the sole expense of CONSULTANT that confidential treatment shall be accorded any Confidential Information so furnished. 6. NO LIABILITY, RELEASE, OR OBLIGATION Except as set forth in any formal written agreement executed by and between the parties, neither CONSULTANT nor any of its Representatives shall be entitled to rely on any statement, promise, agreement or understanding, whether written or oral, or any custom, usage of trade, course of dealing or conduct. In addition, each Party understands and acknowledges that neither CITY nor any of its representatives, employees or agents makes any representation or warranty, Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 express or implied, as to the accuracy or completeness of any Confidential Information, and that neither CITY nor any of its representatives, employees or agents shall have any liability whatsoever to CONSULTANT or to any of its Representatives relating to or resulting from the Confidential Information or any errors therein or omissions therefrom. 7. REMEDIES In recognition that an irreparable injury may result to CITY, if any provision of this Exhibit J is violated, CONSULTANT agrees that upon any breach or threatened breach of any provision of this Exhibit J by CONSULTANT or any of its Representatives, that CITY shall be entitled to seek an injunction or specific performance prohibiting such conduct or any other relief as may be permitted by law. 8. RETURN OF CONFIDENTIAL INFORMATION 8.1 CONSULTANT shall have access to the Confidential Information provided by CITY only during the term of this Agreement, and shall return all Confidential Information provided under this Agreement upon its termination, or at any time upon request of CITY, as described in Section 8.2 of this Exhibit J. 8.2 CITY may at any time request that CONSULTANT promptly return to CITY or destroy any or all documents or other materials containing Confidential Information of CITY, and CONSULTANT shall immediately comply with any such request. Notwithstanding the return or destruction of the Confidential Information as contemplated by this section 8 of this Exhibit J, the CONSULTANT and its Representatives will continue to be bound by the terms of this Agreement with respect thereto, including all obligations of confidentiality. 9. SURVIVAL CONSULTANT’s obligations of confidentiality and non-circumvention under this Exhibit J shall survive the termination of this Agreement. 10. OWNERSHIP RIGHTS NOT CREATED The transfer of Confidential Information hereunder shall not be construed as granting a license of any kind or any right of ownership in the Confidential Information to CONSULTANT. 11. NO OBLIGATION TO DISCLOSE Nothing in this Section shall obligate CITY to disclose specific Confidential Information to CONSULTANT. Such disclosures shall be at the CITY’s sole discretion. EXHIBIT “F” IDENTITY INFORMATION PROTECTION Identity Information Protection Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 1. During the term of the contract the CONSULTANT shall not collect, process or store any Private Information (PI) and Personally Identifiable Information (PII), except the name and address of the customer. 2. During the term of the contract the CONSULTANT shall comply with the City’s Information Privacy Policy and the City’s Software as a Service Security and Privacy Terms and Conditions. Personal information (PI) is defined as an individual's first name or first initial and last name in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted: (1) Social security number. (2) Driver's license number or California Identification Card number. (3) Account number, credit or debit card number, in combination with any required security code, access code, or password that would permit access to an individual's financial account, "Personal information" does not include publicly available information that is lawfully made available to the general public from federal, state, or local government records. Personally Identifiable Information (PII), as used in information security, is information that can be used to uniquely identify, contact, or locate a single person or can be used with other sources to uniquely identify a single individual. Professional Services Rev Feb. 2014 DocuSign Envelope ID: DD2EDC69-A34D-4CCF-A3FE-A2C6FBBA60A0 CITY OF PALO ALTO CONTRACT NO. C15155144C AGREEMENT BETWEEN THE CITY OF PALO ALTO AND BASE ENERGY, INC. FOR PROFESSIONAL SERVICES This Agreement is entered into on this 1st day of June 2015 (“Agreement”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and BASE ENERGY, INC., a California corporation, located at 5 Third Street, Suite 630, San Francisco, CA 94103 ("CONSULTANT"). RECITALS The following recitals are a substantive portion of this Agreement. A. CITY intends to provide energy efficiency services to CITY’s large commercial, industrial and institutional customers (“Project”) and desires to engage a consultant to administer, manager and deliver a commercial energy savings program 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 in Exhibit “A” in accordance with the terms and conditions contained in this Agreement. The performance of all Services shall be to the reasonable satisfaction of CITY. SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through June 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 Professional Services Rev. Feb. 2014 1 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 not preclude recovery of damages for delay if the extension is required due to the fault of CONSULTANT. SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A”, is in an aggregate amount that shall not exceed nine hundred and twenty-five thousand dollars ($925,000) per fiscal year, and in an aggregate amount that shall not exceed two million, seven hundred and seventy- five thousand dollars ($2,775,000) over the Term across a total of three (3) consultant agreements (C15155144A, C15155144B, and C15155144C) , of which this is one. The three contracts will be administered by the CITY’s UTILITIES DEPARTMENT to ensure the total aggregate of compensation paid per fiscal year, and over the Term does not exceed the amounts set forth herein. Consultant acknowledges and agrees that the CITY is hiring three (3) consultants, including CONSULTANT, none of whom will be guaranteed or assured of any specific quantity of work to be performed. If the work is performed by any one or more consultants, including CONSULTANT, CITY will ensure that total compensation to all three consultants including CONSULTANT, will not exceed in aggregate, across all three (3) consultant agreements, nine hundred and twenty-five thousand dollars ($925,000) per fiscal year, and will not exceed in aggregate two million, seven hundred and seventy-five thousand dollars ($2,775,000) over the Term across all three (3) consultant agreements. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit A are subject to a Maximum Total Compensation “NOT TO EXCEED” amount of $2,775,000 during the term of the Agreement. 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. No Additional Services or Reimbursable Expenses are contemplated as part of this Agreement. 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, and hourly rates), 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 subconsultants, 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. Professional Services Rev. Feb. 2014 2 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 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 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 the CITY’s stated construction budget, CONSULTANT shall make recommendations to the CITY for aligning the Project design with the budget, incorporate CITY approved recommendations, and revise the design to meet the Project budget, at no additional cost to CITY. SECTION 10. INDEPENDENT CONTRACTOR. It is understood and agreed that in 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 the CITY. SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of CONSULTANT are material considerations for this Agreement. CONSULTANT shall not assign or transfer any interest in this Agreement nor the performance of any of 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. Option B: Subcontracts Authorized: Notwithstanding Section 11 above, CITY agrees that subconsultants may be used to complete the Services. The subconsultants authorized by CITY to perform work on this Project are: As set forth in Exhibit A attached to this Agreement. CONSULTANT shall be responsible for directing the work of any subconsultants and for any compensation due to subconsultants. CITY assumes no responsibility whatsoever concerning compensation. CONSULTANT shall be fully responsible to CITY for all acts and omissions of a Professional Services Rev. Feb. 2014 4 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 subconsultant. CONSULTANT shall change or add subconsultants only with the prior approval of the city manager or his designee. SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Ahmad R Ganji as the project supervisor to have supervisory responsibility for the performance, progress, and execution of the Services 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. The City’s project manager is Christine Tam or her designee, Utilities Department, Marketing Services Division, 250 Hamilton Ave, Palo Alto, CA 94303. The project manager will be CONSULTANT’s point of contact with respect to performance, progress and execution of the Services. The CITY may designate an alternate project manager from time to time. SECTION 14. OWNERSHIP OF MATERIALS. Upon delivery, all work product, including without limitation, 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. [Option B applies to any consultant who does not qualify as a design professional as defined in Civil Code Section 2782.8.] 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 Professional Services Rev. Feb. 2014 5 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 in part by an Indemnified Party. 16.2. Notwithstanding the above, nothing in this Section 16 shall be construed to require CONSULTANT to indemnify an Indemnified Party from Claims arising from the active negligence, sole negligence or willful misconduct of an Indemnified Party. 16.3. The acceptance of CONSULTANT’s services and duties by CITY shall not operate as a waiver of the right of indemnification. The provisions of this Section 16 shall survive the expiration or early termination of this Agreement. 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 Purchasing Manager 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, Professional Services Rev. Feb. 2014 5 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 including such damage, injury, or loss arising after the Agreement is terminated or the term has expired. SECTION 19. TERMINATION OR SUSPENSION OF AGREEMENT OR SERVICES. 19.1. The City Manager may suspend the performance of the Services, in whole or in part, or terminate this Agreement, with or without cause, by giving ten (10) days prior written notice thereof to CONSULTANT. Upon receipt of such notice, CONSULTANT will immediately discontinue its performance of the Services. 19.2. CONSULTANT 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 Professional Services Rev. Feb. 2014 6 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 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 subconsultants, 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 the 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 the 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 Consultant to City generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double-sided and printed on a minimum of 30% or greater post-consumer content paper, unless otherwise approved by the 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 the City shall be purchased in accordance with the 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 Office. • Reusable/returnable pallets shall be taken back by the Consultant, at no additional cost to the City, for reuse or recycling. Consultant shall provide documentation Professional Services Rev. Feb. 2014 7 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 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. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. 25.1. In its performance of Services under this Agreement, CONSULTANT and its Representatives may acquire and otherwise gain access to Confidential Information, as defined in Exhibit “E”, which is exempt from public disclosure under the California Public Records Act, Cal. Gov. Code section 6250 et seq. CONSULTANT agrees to protect such Confidential Information from disclosure to any third parties, in accordance with the terms and conditions set forth in Exhibit “E” attached to this Agreement. SECTION 26. MISCELLANEOUS PROVISIONS. 26.1. This Agreement will be governed by the laws of the State of California. 26.2. 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. 26.3. 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. 26.4. 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. 26.5. 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. 26.6. 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. Professional Services Rev. Feb. 2014 8 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 26.7. 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. 26.8 If, pursuant to this contract with CONSULTANT, City shares with CONSULTANT personal information as defined in California Civil Code section 1798.81.5(d) about a California resident (“Personal Information”), CONSULTANT shall maintain reasonable and appropriate security procedures to protect that Personal Information, and shall inform City immediately upon learning that there has been a breach in the security of the system or in the security of the Personal Information. CONSULTANT shall not use Personal Information for direct marketing purposes without City’s express written consent. 26.9 All unchecked boxes do not apply to this agreement. / / / / / / / / / / / / / / / / / / / / Professional Services Rev. Feb. 2014 9 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 26.10 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. 26.11 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. Attachments: EXHIBIT “A”: SCOPE OF SERVICES EXHIBIT “B”: SCHEDULE OF PERFORMANCE EXHIBIT “C”: COMPENSATION EXHIBIT “D”: INSURANCE REQUIREMENTS EXHIBIT “E”: CONFIDENTIALITY AGREEMENT EXHIBIT “F”: IDENTITY INFORMATION PROTECTION CITY OF PALO ALTO ____________________________ City Manager APPROVED AS TO FORM: __________________________ Senior Deputy City Attorney BASE ENERGY, INC. By:___________________________ Name:_________________________ Title:________________________ Professional Services Rev. Feb. 2014 10 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 Ahmad R. Ganji Principal EXHIBIT “A” SCOPE OF SERVICES A. OVERVIEW CONSULTANT agrees to provide the City of Palo Alto (“CITY” or “CPAU”) with the Industrial and Commercial Efficiency (ICE) Program (“Program”), which is an incentive program to encourage commercial and industrial sector customers to optimize building energy performance through implementation of building system infrastructure improvements, boiler energy efficiency upgrades, and HVAC system improvements and control tune-up measures. The Program targets gas and electric savings. The Program will encourage the CITY’s Key Account customers to optimize building energy performance through implementation of building infrastructure improvements, energy efficient (“EE”) equipment upgrades, and retrocommissioning (RCx) of building energy systems. CONSULTANT will coordinate with CPAU’s Key Account representatives to meet with customers and obtain the customer’s agreement to perform an Initial Site Assessment to identify potential EE measures, estimated energy savings, project cost and payback. Upon a customer’s approval, CONSULTANT’s program administrator will perform a detailed evaluation of the selected EE measures and develop a Detailed Evaluation Report. Based on the detailed evaluation report, a customer will then decide which measures to implement and the customer can elect to sign a Project Installation Agreement (the “PIA”). The PIA provides details on equipment specifications and installation requirements in order for the customer to qualify for CPAU incentives for EE projects. CONSULTANT’s program administrator may either offer full turnkey service to the customer, or serve as technical advisor during the customer’s project implementation phase. Upon completion of the project, CONSULTANT will ensure that customer’s project meets the specifications described in the PIA and prepare a Final Measurement and Verification Report. CONSULTANT will also assist the customer to separately apply for CPAU incentives. In addition to the general services described above, customers, at their discretion, will have the option to contract directly with Swinerton to help them manage the project implementation phase. CONSULTANT will closely work with Swinerton, or the Customer’s preferred contractor, to provide technical assistance to help answer any questions and perform reviews related to the project during the implementation phase. Additionally, for selected RCx projects, such as reprogramming of controls or set point changes, CONSULTANT’s engineers will help the Customer implement recommended changes at no extra cost. Target Markets Program will target CPAU Key Account customers in the government, institutional and private sectors within the CITY. Target buildings include schools, office buildings, High Tech facilities, manufacturing facilities, lab facilities, retail buildings, hospitality buildings (hotel and resorts), and hospitals. Energy Savings Targets Professional Services Rev. Feb. 2014 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 Program’s energy savings targets for the term of the Agreement are provided in Table 1. Table 1. Program Energy Savings Targets Gross KW Gross kWh Gross Therms FY 2015-16 79 455,400 8,280 FY 2017 378 2,185,920 39,744 FY 2018 329 1,912,680 34,776 Program Staffing CONSULTANT agrees to staff the Program in accordance with the staffing set forth in Table 2, and shall notify the CITY concerning proposed changes to the staffing plan. All such changes require the prior written consent of CITY. CITY reserves the right to (i) request CONSULTANT conduct criminal background checks to City’s satisfaction on all CONSULTANT’s staff, contractors or agents that may enter customer property, and (ii) require that any staff, contractor or agent of CONSULTANT that fails the background check shall not be permitted to enter any customer premises. Without limiting Section 16 (Indemnity) of the Agreement, CONSULTANT agrees and understands it is responsible for all costs and damages associated with any theft, vandalism, damage or criminal acts involving or committed by CONSULTANT staff, Contractors or agents involving a customer or customer premises. Table 2. CONSULTANT’s Staff Contacts Name Title Phone Email Ahmad Ganji Principal 415-543-1600 x 27 arg@baseco.com Ricardo A. Sfeir Senior Engineer 415-543-1600 rsfeir@baseco.com Sandra Chow Lead Engineer 415-543-1600 schow@baseco.com B. PROGRAM WORK PLAN Task 1 – Project Initiation Meeting CONSULTANT shall organize with the CPAU Program Manager a Program Kick-Off Meeting. The meeting shall include CPAU staff to establish roles, timelines, and priorities in the delivery of the Program. The meeting will also cover Program logistics, marketing, coordination, evaluation, monitoring and verification activities, invoicing requirements, reports and any remaining contractual issues. • Task 1.1 Deliverable: Meeting agenda and meeting minutes. Task 2 –Develop Program Plan In coordination with CPAU staff, CONSULTANT shall develop the following documents: (a) Internal Policies and Procedures Manual CONSULTANT shall develop, adhere to and document its compliance with Policies and Procedures Manual in the implementation of the Program, including those related to the identification, evaluation, implementation and verification of EE measures. The Policies and Professional Services Rev. Feb. 2014 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 Procedures Manual shall also include a Quality Assurance and Quality Control Plan, a Program Plan, and Implementation Timeline. • Task 2.1 Deliverable: Draft Internal Policies and Procedures Manual • Task 2.2 Deliverable: Final Internal Policies and Procedures Manual (b) External Policies and Procedures Manual CONSULTANT shall develop, adhere to an External Policies and Procedures Manual for the Program, which shall include the terms and conditions for participating in the Program, the process for participating in the Program and the process for receiving incentive funds, and a customer complaint and resolution plan. CONSULTANT will post the External Policies and Procedures Manual to the Program website (also to be developed by CONSULTANT). CONSULTANT shall also use the website it develops as a communication tool for contractors, customers and CPAU staff to avoid confusion and maintain customer satisfaction. • Task 2.3 Deliverable: Draft External Policies and Procedures Manual • Task 2.4 Deliverable: Final External Policies and Procedures Manual • Task 2.5 Deliverable: Develop website (c) Marketing Plan CONSULTANT shall develop a Marketing Plan that outlines pre-planned marketing activities including a description of the activity, date and location of the any activity, target audience, estimated reach, and marketing material that will be distributed. The Marketing Plan will also address the proposed brand-identity for the Program. It shall also address how the CONSULTANT will market the Program to reach its target audience and how it will promote the Program and how it may provide technical training to building owners and operators, equipment suppliers/vendors, mechanical and maintenance contractors, and mechanical engineers. CONSULTANT shall develop marketing material in conjunction with CPAU and its design firm. • Task 2.6 Deliverable: Draft Marketing Plan • Task 2.7 Deliverable: Final Marketing Plan (d) Coordination Plan CONSULTANT shall develop a Coordination Plan that will provide details on how CONSULTANT will coordinate the efforts and actions of this Program with other existing internal CPAU energy efficiency, water conservation, and renewable energy programs as well as any other potential third-party programs. • Task 2.8 Deliverable: Draft Coordination Plan • Task 2.9 Deliverable: Final Coordination Plan Task 3 – Develop Program Documents CONSULTANT shall develop documents necessary for implementation of the Program. All documents related to the Program shall be submitted to CPAU for approval prior to any distribution, circulation, or publication. CONSULTANT shall revise and/or produce new documents as needed to effectively implement and promote the Program. (a) Program Participation Agreement CONSULTANT shall create a Program Participation Agreement that shall be used to collect basic information from the customer including facility contact information, financial requirements, and which will act as a Site Access Agreement for the Program Professional Services Rev. Feb. 2014 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 • Task 3.1 Deliverable: Draft Program Participation Agreement • Task 3.2 Deliverable: Final Program Participation Agreement (b) Project Installation Agreement CONSULTANT shall develop a template Program Installation Agreement for committing owners to install the identified EE measures. The Program Installation Agreement shall detail the measure installation and eligibility requirements needed to receive an incentive from the program. The Project Installation Agreement, once fully executed, shall reserve the specified incentive funds for the Customer. • Task 3.3 Deliverable: Draft Project Installation Agreement • Task 3.4 Deliverable: Final Project Installation Agreement (c) Site Assessment Form CONSULTANT shall develop a Site Assessment Form which will be used to collect standardized facility data and metrics for determining if a facility meets the Program eligibility requirements and for collecting standard data inputs based on system equipment and functionality. The Site Assessment Form shall be maintained in the facility’s electronic project file. • Task 3.5 Deliverable: Draft Site Assessment Form • Task 3.6 Deliverable: Final Site Assessment Form (d) Reporting Template CONSULTANT shall create standard reporting template including templates for the Initial Site Assessment Report, Detailed Evaluation Report, as well as a Measurement and Verification Report. These templates shall be sent to CPAU for review and approval prior to use. • Task 3.7 Deliverable: Draft Initial Technical Memorandum “Tech Memo” and Measurement and Verification Report Templates • Task 3.8 Deliverable: Final Initial Technical Memorandum “Tech Memo” and Measurement and Verification Report Templates (e) Energy Analysis Tools CONSULTANT shall develop energy analysis tools to quantify energy savings for measures covered under the program. Only energy savings that are incremental to the prevailing building and appliance efficiency standards (Title 20 and Title 24) can be counted towards program savings. To that end, the California Municipal Utilities Association (CMUA) Technical Reference Manual (TRM) should be used as a reference source for determining annual energy savings. For projects that involve lighting retrofit and/or variable frequency drive (VFD) pump and VFD fan installations, CONSULTANT shall estimate the energy savings using the “TRM nonres lighting energy savings calculator” and the “TRM nonres pump and fan VFD energy savings calculator”, or other similar calculators that incorporate the prevailing Title 24 and Title 20 baseline for estimating energy savings. If the latter is preferred, CONSULTANT will need to demonstrate that the energy savings calculation methodologies and the resultant savings from the TRM energy savings and the CONSULTANT-preferred calculator are equivalent. Energy analysis tools developed by the CONSULTANT shall be sent to CPAU for review and approval. New energy analysis calculation tools shall be developed as needed during the Program cycle. • Task 3.9 Deliverable: Draft Energy Analysis Tools Professional Services Rev. Feb. 2014 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 • Task 3.10 Deliverable: Final Energy Analysis Tools Task 4 - Develop Invoicing and Program Reporting Tools CONSULTANT will submit to CPAU a sample of all the reporting tools that will be used to meet CPAU reporting requirements for CPAU’s review and approval for use under the Agreement. This will include but not limited to: (a) Monthly Narrative (b) Monthly Invoice (c) Yearly Report (d) Customer Data Export File (e) Customer Summary Report (f) Program Savings Report • Task 4.1 Deliverable: Draft Invoicing and Reporting Tools • Task 4.2 Deliverable: Final Invoice and Reporting Tools Task 5 – Launch Program (a) Program Information CONSULTANT shall provide CPAU with a Program Presentation, Technical Presentation, and a Frequently Asked Questions document on the Program. • Task 5.1 Deliverable: Program Presentation, Technical Presentation and Frequently Asked Questions Document (b) Training CONSULTANT shall provide in person training on the Program process, eligibility requirements, and incentive as well as high level overview of typical EE measures and their applications to requested CPAU staff. In addition, a Program representative shall be available to assist all CPAU representatives on an on-going basis to answer any questions related to the Program and to determine if specific customers are eligible for the Program participation. • Task 5.2 Deliverable: In person Training on Program to CPAU Staff • Task 5.3 Deliverable: Ongoing training and assistance for CPAU Staff (c) Implement Marketing Campaign CONSULTANT shall execute the planned marketing campaign based on the approved detailed Marketing Plan. All marketing activities will be coordinated with CPAU. • Task 5.4 Deliverable: Draft Program Marketing Materials as shall be outlined in the Final Marketing Plan • Task 5.5 Deliverable: Final Program Marketing Materials as shall be outlined in the Final Marketing Plan • Task 5.6 Deliverable: Present at marketing events and perform one-on-one customer marketing as needed. Task 6 – Enroll Customer (Pre-Commitment Stage) (a) Attain Signed Program Participation Agreement Only Key Account customers are qualified to participate in this Program. Customer enrollment occurs when the customer executes a signed Program Participation Agreement, and submits it to CONSULTANT. After the Program Participation Agreement is Professional Services Rev. Feb. 2014 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 executed by the customer, the customer becomes eligible to receive an initial site assessment. • Task 6.1 Deliverable: Signed Program Participation Agreement (b) Perform Initial Site Assessments Once a signed Program Participation Agreement has been received by CONSULTANT, CONSULTANT shall perform an Initial Site Assessment. During the Initial Site Assessment CONSULTANT will determine what potential EE measures exist at the facility and will calculate using rule of thumb estimates and high level assumptions, potential energy savings, greenhouse gas reductions, project cost, incentives, and paybacks for each EE measure. A Technical Memorandum, or “Tech Memo”, will be developed for each facility that qualifies for the Program services. The Tech Memo shall be submitted to the Customer and CPAU. The Tech Memo will provide descriptions of the EE measures identified, and will also include analysis of 12 months of electricity and gas data. • Task 6.2 Deliverable: Tech Memo (c) Perform Detailed Evaluations If, based on review of the Tech Memo, EE measures are selected for further evaluation by the Customer and CONSULTANT, CONSULTANT shall perform a Detailed Evaluation of the selected EE measures. It is expected that Detailed Evaluations shall be performed on at least 50% of the sites where Initial Site Assessments were performed. The Detailed Evaluations shall include onsite spot measurements and/or monitoring of facilities energy consuming equipment. CONSULTANT shall conduct an independent analysis to determine the potential energy savings and calculate the incentive for the customer. Only energy savings that are incremental to the minimum energy savings mandated by the prevailing building and appliance standards can be counted toward program savings. CONSULTANT shall prepare a Detailed Evaluation Report that describes in detail each EE measure, estimate of potential energy savings, implementation cost, CPAU incentive and payback for each EE measure. This will be presented to the customer. For any sites that have modern building automation DDC system and where customer cooperation can be obtained, an appropriate fault diagnostic toolset (i.e. data loggers) shall be installed at this stage. CONSULTANT staff shall perform technical services provided by the program including surveys, measurements and analysis, and calculate potential energy savings. The customer shall procure the implementation services with CONSULTANT providing technical support throughout the implementation process; CONSULTANT shall also offer the customer turnkey implementation services. • Task 6.3 Deliverable: Draft Detailed Evaluation Report • Task 6.4 Deliverable: Final Detailed Evaluation Report Task 7 – Install Energy Efficient Hardware and Projects (a) Project Installation Agreement Upon completion of the Detailed Evaluation Report, CONSULTANT shall supply the Customer with a Project Installation Agreement that will be executed for the measures selected by the customer for implementation. By signing the Project Installation Agreement, the customer is able to reserve the specified incentive and make the monies unavailable to others. The incentive Professional Services Rev. Feb. 2014 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 amounts specified in the Project Installation Agreement shall be estimates only and may vary based on the final and verified savings amounts. The Project Installation Agreement shall provide details on the equipment specifications and installation requirements that will need to be met in order to receive the agreed to incentive amount. • Task 7.1 Deliverable: Signed Project Installation Agreement (b) Project Installation The identified EE measures shall be installed by the contractor chosen by the customer. CONSULTANT shall work with the customer to identify implementation paths for the EE measures. Consultant shall offer full turnkey services to the customer. If the customer elects to use a contractor other than the CONSULTANT, then CONSULTANT shall provide technical assistance regarding equipment specifications and installation criteria to the contractor chosen by the customer to implement the work. CONSULTANT shall attend meetings with contractors to explain project scope and installation requirements as needed. • Task 7.2 Deliverable: Technical assistance and contractor meetings (c) Inspections CONSULTANT shall review 100% of project purchase orders, final invoices, and technical equipment cut-sheets to verify that the equipment purchased and installed meets the specifications and performance requirements outlined in the Detailed Evaluation Report. CONSULTANT shall perform on-site inspections preceeding and following completion of work by the contractor for all EE measures. Following the installation of the measures by the contractor, CONSULTANT shall perform a post-installation inspection of the installation, collecting and verifying facility data and performing typical measurement and monitoring, as performed during the pre-installation inspection. CONSULTANT shall compare the performance data against what was projected during the Detailed Evaluation. CONSULTANT shall generate a list documenting completed EE measures and those that are incomplete or incorrectly installed or adjusted. After completion of EE measures installation, CONSULTANT shall document and describe in detail the measures that have been implemented. CONSULTANT shall prepare a Final Measurement and Verification Report with all EE measures specifying the ones that were implemented and those that were not. • Task 7.3 Deliverable: Draft Measurement and Verification Report • Task 7.4 Deliverable: Final Measurement and Verification Report (d) Post Installation Support CONSULTANT shall ensure the facility operation staff has received training and all necessary operations and maintenance manuals and that the customer is satisfied with the installation. If an installation or customer satisfaction issues should arise, CONSULTANT shall promptly remedy it only if the CONSULTANT provides turnkey services to customer. CONSULTANT shall respond to any customer question or complaint within twenty-four (24) hours by telephone and will include the equipment manufacture on the call, if necessary, to provide immediate guidance, service, or corrective work. CONSULTANT shall have trained respondents on the call to rapidly respond to field issues, as needed, and will maintain a customer service log to track such customer calls and the service that was provided. If any complaint cannot be resolved to the satisfaction of the customer within five (5) days, CONSULTANT shall immediately provide CPAU with a detailed description of any such Professional Services Rev. Feb. 2014 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 complaint, which shall include the name and the contact information of the customer complaining and any other information requested by CPAU, as well as a complete form. As part of the Program’s External Policies and Procedures Manual, CONSULTANT shall provide contact information for a Program Representative that will be responsible for fielding customer complaints and will describe the complaint resolution process. As part of the Program’s Internal Policies and Procedures Manual, CONSULTANT shall outline specific complaint resolution procedures to be followed by Program staff. • Task 7.5 Deliverable: Customer Complaint log Task 8 – Reporting CONSULTANT shall provide ongoing scheduled reports to CPAU. For measures that trigger Title 20 and/ or Title 24 standards, only energy savings that are incremental to the minimum energy savings mandated by the prevailing building and efficiency standards (Title 20 and Title 24) can be counted towards program savings. (a) Monthly Report CONSULTANT shall submit a Monthly Report to CPAU for Program accomplishments and installations performed in the preceding calendar month. The monthly Report shall include information on the prior month’s activities, accomplishments and expenditures related to the Program. At a minimum, the Monthly report shall contain: 1) Program Cost Data 2) Program Impacts Data 3) Program Changes / New Program Information 4) Any other requirements as determined by CPAU • Task 8.1 Deliverable: Monthly Report and supporting documentation (b) Yearly Report CONSULTANT shall submit a Yearly Report to CPAU for Program accomplishments and installations performed in the preceding calendar month. The Yearly Report shall include information on the year’s activities, accomplishments and expenditures related to the Program. At a minimum, the Yearly Report shall contain: 1) Program Expenditures Data 2) Program Narrative for the Year 3) Program Results 4) Any Changes to the Program Plan or any Program Design changes • Task 8.2 Deliverable: Yearly Report and supporting documentation (c) Final Program Report At the end of the term of this Agreement, CONSULTANT shall submit a final comprehensive Program Report that will provide an evaluation of the Program. At the mtinimum, the Report shall include the following: 1. Program Achievements 2. Program Challenges 3. Goals Attainment 4. Lessons Learned Professional Services Rev. Feb. 2014 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 5. Program Improvement Recommendations 6. Program Next Step Proposed (i.e. Continue Program, End Program, etc.) • Task 8.3 Deliverable: Final Program Report Task 9 – Perform Customer Feedback Surveys CONSULTANT shall provide a customer feedback survey form to obtain customer feedback on the Program’s services, equipment and the value. Surveys topics shall range from the customer’s perceived convenience of the program and notification of other EE programs available, to customer’s overall satisfaction with the implementation of the Program. CONSULTANT shall submit draft customer feedback surveys to CPAU for review and approval. Surveys shall be delivered to the customer upon project completion with instructions for completion online on via ground mail. For Mail surveys, CONSULTANT shall include a postage-paid addressed envelope for collection. CONSULTANT shall request feedback surveys for 100% of projects. CONSULTANT shall augment form surveys with telephone surveys as needed to gain a higher percentage of responses to the survey. • Task 9.1 Deliverable: Draft Customer Feedback Surveys Template • Task 9.2 Deliverable: Final Customer Feedback Surveys Template • Task 9.3 Deliverable: Customer Feedback Summary Professional Services Rev. Feb. 2014 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 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 the CITY so long as all the work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed. Task Timing (Due Date) Task 1 - Program Initiation Meeting Task 1.1 Within 15 days of Agreement execution Task 2 - Develop Program Plan (a) Internal Policies and Procedures Manual Task 2.1 Within 30 days of Agreement execution Task 2.2 Within 15 days of CPAU Program Manager comments (b) External Policies and Procedures Manual Task 2.3 Within 45 days of Agreement execution Task 2.4 Within 15 days of CPAU Program Manager comments Task 2.5 Ongoing (c) Marketing Plan Task 2.6 Within 30 days of Agreement execution Task 2.7 Within 15 days of CPAU Program Manager comments (d) Coordination Plan Task 2.8 Within 45 days of Agreement execution Task 2.9 Within 15 days of CPAU Program Manager comments Task 3 – Develop Program Documents (a) Program Participation Agreement Task 3.1 Within 30 days of Agreement execution Task 3.2 Within 15 days of CPAU Program Manager comments (b) Project Installation Agreement Task 3.3 Within 60 days of Agreement execution Task 3.4 Within 15 days of CPAU Program Manager comments (c) Site Assessment Form Professional Services Rev Feb. 2014 18 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 Task 3.5 Within 45 days of Agreement execution Task 3.6 Within 15 days of CPAU Program Manager comments (d) Reporting Template Task 3.7 Within 45 days of Agreement execution Task 3.8 Ongoing and within 15 days of CPAU Program Manager comments (e) Energy Analysis Tools Task 3.9 Within 45 days of Agreement execution Task 3.10 Within 15 days of CPAU Program Manager comments Task 4 Develop Invoicing and Reporting Tools Task 4.1 Within 30 days of Agreement execution Task 4.2 Within 15 days of CPAU Program Manager comments Task 5 Launch Program (a) Program Information Task 5.1 Within 30 days of Agreement execution (b) Training Task 5.2 Within 60 days of Agreement execution Task 5.3 Ongoing (c) Implement Marketing Plan Task 5.4 Within 45 days of Agreement execution Task 5.5 Within 15 days of CPAU Program Manager comments Task 5.6 Ongoing Task 6 Enroll Customer (Pre-Commitment Stage) (a) Attain Signed Program Participation Agreement Task 6.1 Ongoing (b) Perform Initial Site Assessments Task 6.2 Ongoing (c) Perform Detailed Evaluations Task 6.3 Ongoing Task 6.4 Ongoing and within 15 days of CPAU Program Manager Comments Task 7- Install Energy Efficient Hardware and Projects (a) Project Installation Agreement Professional Services Rev Feb. 2014 19 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 Task 7.1 Ongoing (b) Project Installation Task 7.2 Ongoing as necessary (c) Inspections Task 7.3 Ongoing Task 7.4 Ongoing and within 15 days of CPAU Program Manager Comments (e) Post Installation Support Task 7.5 Ongoing as part of the Monthly Report Task 8- Reporting (a) Monthly Report Task 8.1 The 15th day of each month for the work completed the preceding month (b) Yearly Report Task 8.2 45 days following the end of the year (c) Final Program Report Task 8.3 90 days following the end of the term of the Agreement Task 9 – Perform Customer Feedback Surveys Task 9.1 Within 90 days following Agreement execution Task 9.2 Within 15 days of CPAU Program Manager Comments Task 9.3 45 days following the completion of each Yearly Report Professional Services Rev Feb. 2014 20 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 EXHIBIT “C” COMPENSATION The CITY agrees to compensate CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement using the Performance Payments outlined herein. CONSULTANT’S compensation under this Agreement is entirely based on CONSULTANT performance. Reimbursable Expenses and Additional Services are not authorized under this Agreement. In order to receive compensation, CONSULTANT’S performance must satisfy all requirements set forth in the Agreement and Exhibit “A” attached there to. CONSULTANT’S compensation under this Agreement is subject to the specific NOT TO EXCEED requirements and limits set forth in Section 4 of this Agreement. Performance Payments CITY will compensate CONSULTANT in Performance Payments, to be paid in two installments; 50% upon execution of the PIA (based on estimated energy savings) and 100% minus any installment one payment after the EE measures have been installed and verified (based on installed and verified savings). CONSULTANT shall not be entitled to any additional compensation beyond the Performance Payments outlined herein. More specifically, Compensation shall be paid by the CITY to the CONSULTANT as follows: (a) Calculation of Project Performance Payment Amount: The Project Performance Payment will be calculated by multiplying annual energy savings over the first year by the Incentive Rate Multiplier. Estimated savings should be used for Installment One, and Actual installed and verified savings should be used for Installment Two. The Project Performance Payment Amount for any customer project is capped at one hundred percent (100%) of the incremental project cost. CITY expects, but does not guarantee, that incentives will typically cover approximately 20-60% of incremental project cost. Energy savings are only eligible for input into the calculation of the Project Performance Payment Amount where they satisfy the requirements set forth in Task 4.4 of Exhibit “A”. Incentive Rate Multiplier: $0.106 per gross kWh saved $1.00 per gross therm saved (b) Installment One: Upon execution of a PIA with a customer, CONSULTANT may invoice CITY as an advance for the fifty percent (50%) of the estimated total Project Performance Payment Amount (the “Commitment Advance”) based on CONSULTANT’s estimate of energy savings. CITY agrees to pay CONSULTANT in accordance with the timelines for invoice payment set forth in section 5 of the Professional Services Rev Feb. 2014 21 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 Agreement. (c) Installment Two: Following CONSULTANT’s post-installation inspection and upon CITY’s receipt and approval of the final Measurement and Verification Report for a customer, CONSULTANT may invoice the CITY for one hundred percent (100%) of the actual Project Performance Payment Amount, less the amount of any prior Commitment Advance paid to CONSULTANT in Installment One. (d) Final Incentive Release Form: CONSULTANT will draft, sign and secure customer’s signature on a Final Incentive Release. The Final Incentive Release Form shall indicate the final savings and incentives amounts, as well as confirm the designated payee and corresponding taxpayer information. CITY will not compensate CONSULTANT until such Final Incentive Release form is submitted to the CITY. (e) Customer Rebates: Customer rebates are separate and distinct from the Performance Payments made to CONSULTANT under this Agreement. Customer rebates are paid by CITY directly to customers, or a customer-appointed payee through the Commercial Advantage Program custom rebate process or other process determined by CITY. CITY does not compensate CONSULTANT in any manner for Customer rebates, and as such, any customer rebates paid by CITY to customer are not subject to the not-to-exceed amounts set forth in the Agreement. (f) Delayed Customer Projects. In the event that a customer project, or a portion thereof, does not complete on schedule and fails to show progress toward completion, within 12 months of date the CITY provides CONSULTANT with a Commitment Advance, the CITY may, in its sole discretion, request that the project be closed out and verified on a timetable acceptable to CITY. The CITY may, in its sole discretion extend the project completion date. If the verified savings result in a final performance payment that is less than its prior Commitment Advance, a credit will be due to CPAU for the amount of the difference. CITY may use this credit towards future performance payments to CONSULTANT. (g) Final True Up: At the end of the contract term CONSULTANT will reimburse the CITY for any remaining credit balances. Professional Services Rev Feb. 2014 22 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 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 AGGREGAT E 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 Professional Services Rev Feb. 2014 23 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 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 SUBCONSULTANTS, 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 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 Professional Services Rev Feb. 2014 24 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY 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 MAILED TO: PURCHASING AND CONTRACT ADMINISTRATION CITY OF PALO ALTO P.O. BOX 10250 PALO ALTO, CA 94303 Professional Services Rev Feb. 2014 25 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 EXHIBIT “E” CONFIDENTIALITY AGREEMENT 1. PURPOSE 1.1 In its performance of Services under this Agreement, CONSULTANT and its directors, officers, partners, managers, members, employees, advisors, agents, sub-contractors and other representatives of CONSULTANT and their subsidiaries and affiliates, including, without limitation, attorneys, accountants, consultants, and financial advisors (collectively, the “Representatives”) may acquire and otherwise gain access to Confidential Information, as defined in Section 2 of this Exhibit “J”, which is exempt from public disclosure under the California Public Records Act, Cal. Gov. Code section 6250 et seq. 1.2 In accordance with the terms and conditions of this Agreement, CONSULTANT agrees to take reasonable precautions to ensure that Confidential Information of CITY, as defined in this Exhibit, is safeguarded against disclosure to unauthorized employees or third parties. 1.3 CITY would not share or disclose any Confidential Information to CONSULTANT but for the legal protections against unauthorized disclosures intended to be afforded by California law and this Agreement, and is relying on this Agreement in disclosing such Confidential Information to CONSULTANT. 2. CONFIDENTIAL INFORMATION, DEFINED 2.1 “Confidential Information” means any and all information which is of a non-public, proprietary or confidential nature, in any form or medium, written or oral, (whether prepared by the CITY, its employees, or agents, and irrespective of the form or means of communication and whether it is labeled or otherwise identified as confidential) that is furnished to CONSULTANT by the CITY, including, without limitation, individually identifiable utilities customer information and utility infrastructure data. 2.2 Exceptions. “Confidential Information” shall exclude (and the CONSULTANT shall not be under any obligation to maintain in confidence) any information (or any portion thereof) disclosed to CONSULTANT by CITY to the extent that such information: (a) is in the public domain at the time of disclosure; or (b) at the time of or following disclosure, becomes generally known or available through no act or omission on the part of CITY; or (c) is known, or becomes known, to CONSULTANT from a source other than Professional Services Rev Feb. 2014 26 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 CITY or its Representatives (as defined herein), provided that disclosure by such source is not in breach of a confidentiality agreement CITY; or (d) is independently developed by CONSULTANT without violating any of its obligations under this Agreement or any other agreement between the Parties; or (e) is legally required to be disclosed by judicial or other governmental action; provided, however, that prompt notice of such judicial or other governmental action shall have been first given to CITY, which shall be afforded the opportunity to exhaust all reasonable legal remedies to maintain the Confidential Information in confidence; or (f) is permitted to be disclosed by a formal written agreement executed by and between the Parties. Specific information shall not fall within the exceptions of Sections (a) through (f) above merely because it is embraced by more general information falling within such exceptions. 3. CALIFORNIA PUBLIC RECORDS ACT 3.1 CONSULTANT acknowledges that CITY is a public agency subject to the requirements of the California Constitution, Article 1, Section 3 and California Public Records Act Cal. Gov. Code section 6250 et seq. CONSULTANT acknowledges that CITY may submit to or otherwise provide access to CONSULTANT Confidential Information that CITY or any utility customer of CITY considers to be protected from disclosure pursuant to exemptions granted by applicable California law. 3.2 Whether or not there is a request or demand of any third party not a Party to this Agreement (the “Requestor”) for the production, inspection and/or copying of information designated by CITY as Confidential Information, CONSULTANT shall be solely responsible for taking whatever legal steps CITY deems necessary to protect information deemed by it to be Confidential Information and to prevent release of information to the Requestor (including the release of such information by CONSULTANT). 3.3 Under no circumstances will CONSULTANT be permitted to comply with the Requestor’s demand for disclosure of such Confidential Information that CITY deems confidential and not intended for disclosure to the general public, or otherwise publicly disclose the Confidential Information to any person not authorized by law to receive such information. 4. CONFIDENTIAL INFORMATION DESIGNATION Professional Services Rev Feb. 2014 27 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 4.1 As practicable, the Confidential Information shall be marked with the words “Confidential” or “Confidential Material” or with words of similar import. CITY shall instruct CONSULTANT that information of a financial, personal, or proprietary nature being conveyed orally and intended by CITY to be covered by the terms of this Agreement, is deemed Confidential Information. To the extent possible, CITY shall endeavor to mark any electronic document intended to be covered by the terms of this Agreement with the words “Confidential” or similar words, or, if that is not possible or would be exceedingly difficult, CITY shall notify CONSULTANT (for example, by covering e-mail transmitting the electronic document) that the electronic document is Confidential Information. 4.2 CITY’s failure, for whatever reason, to mark any material at the time it is produced to CONSULTANT, or to notify it that oral or electronic material is Confidential Information at the time it is provided, shall not take the material out of the coverage of this Agreement for all time, and CONSULTANT shall treat the material as Confidential Information once CITY has notified it that the material is to be covered by this Agreement. 5. DUTY TO KEEP CONFIDENTIAL 5.1 CONSULTANT agrees to maintain as confidential, to the extent permitted or required by applicable law, all Confidential Information furnished or otherwise made available to the CONSULTANT, or its Representatives by CITY. CONSULTANT acknowledges that the Confidential Information is proprietary and a valuable asset of CITY and agrees that CONSULTANT shall take reasonable precautions to ensure that such Confidential Information is safeguarded against disclosure to unauthorized employees, Representatives or third parties. (a) CONSULTANT shall use the Confidential Information solely as permitted by the Contract and shall not sell Confidential Information or otherwise disclose such Confidential Information under any circumstances and without the prior written consent of CITY. CONSULTANT shall not disclose the Confidential Information, or portions thereof, to any of its Representatives, except to those who need to know such information for the purpose of advising CITY and who agree to the terms of this Agreement. (b) CONSULTANT agrees that any of the Representatives to whom the Confidential Information is disclosed will be informed of the confidential or proprietary nature of such information and of CONSULTANT’s obligations under this Agreement. CONSULTANT is responsible for any use of Confidential Information by any of its Representatives. (c) CONSULTANT shall ensure that: Professional Services Rev Feb. 2014 28 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 (i) any Representatives with whom CONSULTANT shares such Confidential Information or who acquire knowledge of such Confidential Information from or through CONSULTANT regard and treat such Confidential Information of CITY as strictly confidential and wholly owned by CITY, and (ii) CONSULTANT shall not (and CONSULTANT shall ensure that any Representatives with whom CONSULTANT shares such Confidential Information or who acquire knowledge of such Confidential Information from or through CONSULTANT do not) for any reason, in any fashion, either directly or indirectly, sell, lend, lease, distribute, license, give, transfer, assign, show, disclose, disseminate, or otherwise communicate any such Confidential Information to any third party, or misappropriate, reproduce, copy or use any such Confidential Information, in either case, for any purpose other than in accordance with this Agreement. (d) If CONSULTANT or any of its Representatives are requested or required to disclose any Confidential Information by law, regulation, the applicable rules of any national securities exchange or other market or reporting system, oral questions, interrogatories, requests for information or other documents in legal proceedings, subpoena, civil investigative demand or any other similar process, CONSULTANT shall provide CITY with prompt written notice of any such request or requirement so that CITY has an opportunity to seek a protective order via writ of mandate or other appropriate remedy, or waive compliance with the provisions of this Agreement. (e) If CITY waives compliance with the provisions of this Agreement with respect to a specific request or requirement, CONSULTANT and its Representatives shall disclose only that portion of the Confidential Information that is expressly covered by such waiver and which is necessary to disclose in order to comply with such request or requirement. CONSULTANT and its Representatives shall cooperate in a reasonable manner with CITY in attempting to preserve the confidentiality of the Confidential Information. (f) If (in the absence of a waiver by CITY) CONSULTANT has not secured a protective order or other appropriate remedy despite attempting to do so, and CONSULTANT or one of its Representatives is nonetheless then legally compelled to disclose any Confidential Information, CONSULTANT or such Representative may, without liability hereunder, disclose only that portion of the Confidential Information that is necessary to be disclosed. In the event that disclosure is made in accordance with this subsection, CONSULTANT shall exercise, and cause its Representatives to exercise, reasonable efforts to preserve the Professional Services Rev Feb. 2014 29 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 confidentiality of the Confidential Information, including obtaining reliable assurance at the sole expense of CONSULTANT that confidential treatment shall be accorded any Confidential Information so furnished. 6. NO LIABILITY, RELEASE, OR OBLIGATION Except as set forth in any formal written agreement executed by and between the parties, neither CONSULTANT nor any of its Representatives shall be entitled to rely on any statement, promise, agreement or understanding, whether written or oral, or any custom, usage of trade, course of dealing or conduct. In addition, each Party understands and acknowledges that neither CITY nor any of its representatives, employees or agents makes any representation or warranty, express or implied, as to the accuracy or completeness of any Confidential Information, and that neither CITY nor any of its representatives, employees or agents shall have any liability whatsoever to CONSULTANT or to any of its Representatives relating to or resulting from the Confidential Information or any errors therein or omissions therefrom. 7. REMEDIES In recognition that an irreparable injury may result to CITY, if any provision of this Exhibit J is violated, CONSULTANT agrees that upon any breach or threatened breach of any provision of this Exhibit J by CONSULTANT or any of its Representatives, that CITY shall be entitled to seek an injunction or specific performance prohibiting such conduct or any other relief as may be permitted by law. 8. RETURN OF CONFIDENTIAL INFORMATION 8.1 CONSULTANT shall have access to the Confidential Information provided by CITY only during the term of this Agreement, and shall return all Confidential Information provided under this Agreement upon its termination, or at any time upon request of CITY, as described in Section 8.2 of this Exhibit J. 8.2 CITY may at any time request that CONSULTANT promptly return to CITY or destroy any or all documents or other materials containing Confidential Information of CITY, and CONSULTANT shall immediately comply with any such request. Notwithstanding the return or destruction of the Confidential Information as contemplated by this section 8 of this Exhibit J, the CONSULTANT and its Representatives will continue to be bound by the terms of this Agreement with respect thereto, including all obligations of confidentiality. 9. SURVIVAL CONSULTANT’s obligations of confidentiality and non-circumvention under this Exhibit J shall survive the termination of this Agreement. 10. OWNERSHIP RIGHTS NOT CREATED Professional Services Rev Feb. 2014 30 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 The transfer of Confidential Information hereunder shall not be construed as granting a license of any kind or any right of ownership in the Confidential Information to CONSULTANT. 11. NO OBLIGATION TO DISCLOSE Nothing in this Section shall obligate CITY to disclose specific Confidential Information to CONSULTANT. Such disclosures shall be at the CITY’s sole discretion. Professional Services Rev Feb. 2014 31 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 EXHIBIT “F” IDENTITY INFORMATION PROTECTION Identity Information Protection 1. During the term of the contract the CONSULTANT shall not collect, process or store any Private Information (PI) and Personally Identifiable Information (PII), except the name and address of the customer. 2. During the term of the contract the CONSULTANT shall comply with the City’s Information Privacy Policy and the City’s Software as a Service Security and Privacy Terms and Conditions. Personal information (PI) is defined as an individual's first name or first initial and last name in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted: (1) Social security number. (2) Driver's license number or California Identification Card number. (3) Account number, credit or debit card number, in combination with any required security code, access code, or password that would permit access to an individual's financial account, "Personal information" does not include publicly available information that is lawfully made available to the general public from federal, state, or local government records. Personally Identifiable Information (PII), as used in information security, is information that can be used to uniquely identify, contact, or locate a single person or can be used with other sources to uniquely identify a single individual. Professional Services Rev Feb. 2014 32 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 oiQo^\-'-CERTIFICATE OF LIABILITY INSURANCE DATE (MM/DD/YYYY) 8 / 7L/ 2Ot4 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE UOI.OCN, TTIISCERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIESBELOW. THIS CERTIFICATE Ol: INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE |SSU|NG TNSURER(S), AUTHORTZEDREPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: lf the certificate holder is a bject tothe terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to thecertificate holder in lieu of such endorsement(s). PRODUCER aSan Francisco Insurance CenterLicense No. 0589950 44 Montgomery St., 1?th FI. San Francisco CA 94!04 ixf,lii"'Lena Stevens ifi8.nfi..ot, (ar5) 957-0600 | liA r.,. (41s) esz-osz? i-DifiEss. I stevens G mocins . com INSURER(SI AFFORDING COVERAGE NAIC # rNsuRERAAmco Insurance Companv L9l_00INSURED BASE ENERGY :TNC 5 3RD ST STE 630 SAtl ERANCISCO CA 94103-3206 TNSURERB:Rockhi1l fns Co 180s3 INSURER C : INSURER D : INSURER E : INSURER F CERTIFICATE HOLDER ACORD 25 (2010/05) lNSO25 r:nroosr nr CERTIFICATE NUMBER:2014-401s GL,AI Prof.REVISION NUMBER: CANCELLATION o 1988-2010 ACORD CORPORATTON. Tha AliOPh nama anr{ l^dn.ra ronicfarar{ markc nf AnOFln THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POUCYTEF'i6INDICATED. NOTWITHSTANDING ANY REQUIREMENT. TERIV OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIScERrlFlcArE MAY BE lssuED oR lvlAY PERTAIN, rHE TNSuRANcE AFFoRDED By rHE polrctEs DEscRtBED HERETN ts suBJEcr ro nLL iiii'"#r|ili]EXCLUSIONS AND CONDITIONS OF SUCH POLICIES LIIVITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS COiJMERCIAL GENERAL LIABILITY .LATMS-MADE Ixl o""r* GEN'L AGGREGATE LIMIT APPLIES PER ACP?882297L23 AUTOMOBILE LIABILITY ANY AUTO ALL OWNED SCHEDULEDAUTOS AUTOSAUTOS AUTOS HTREDAUTos I x_l 13153**t' LCP18A2297r23 BODILY INJURY (Per person) BODILY INJURY (Per accident) OCCUR CLAIIVIS-IV]ADE ANDEMPLOYERS'LrABrLrrY Y/NANY PROPRIETOFVPARTNER/EXECUTIVE -OFFICER/MEI\4BER EXCLUDED?(Mandatory in NH) Addr6d.+6 Ea. Prof. Services linit /L/2OLs $2,000,000 $1,000,000Eachctaim $5,000 Ded. DESCRIPTION OF OPERA I1ONS / LOCATIONS / VEHICLES (Attach ACORD 101, Additional Remarks Schedule, if more space is required)The Certificate Holder is an Additional Insured but onJ-y iii iespecitG-ifalifity arsing out of the workperformed on ttreif behalf, by written contract with the Named Insured as per attached Additional Insuredendorsement forn PB 50 04 04 11 (Prinary wording attahed as per form pB 25OO (01-01)*1O-Days Notice of Cancell-ation for Non-pay:nent of premium aspp1ies* Carolynn . BissettG Cityofpal City of Palo Al-toAttn: Carolynn BissettP.O. Box 10250Palo AIto, CA 94303 SHOULD ANY OF THE ABOVE OESCRIBED POLICIES BE CANCELLED EIEFORETHE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED INACCORDANCE WITH THE POLICY PROVISIONS. AUTHORIZED REPRESENTATIVE Stevens/DHA All rights reserved. DocuSign Envelope ID: FC89AFF0-9736-488A-A70C-8740E2EC5E57 City of Palo Alto (ID # 5716) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/18/2015 City of Palo Alto Page 1 Summary Title: Modifications to Electric Special Project Reserve Guidelines Title: Utilities Advisory Commission Recommendation to Adopt a Resolution Modifying the Electric Special Project Reserve Guidelines From: City Manager Lead Department: Utilities Recommendation Staff and the Utilities Advisory Commission (UAC) recommend City Council adopt a resolution (Attachment A) modifying the Electric Special Project Reserve Guidelines as follows: 1. Change the date by which the funds must be committed to the end of FY 2017, instead of by the end of FY 2015; and 2. Change the date by which any uncommitted ESP Reserve funds will be transferred to the Electric Supply Operation Reserve and the ESP Reserve closed to the end of FY 2022, instead of FY 2020. Executive Summary The Calaveras Reserve was first established in 1983 to help defray costs associated with the Calaveras Hydroelectric Project. Since its inception, Council has changed the purpose of the reserve several times, always ensuring that the funds must be used for the benefit of the City of Palo Alto Utilities (CPAU) electric ratepayers. In November 2011 Council changed the name of the Calaveras Reserve to the Electric Special Project (ESP) Reserve and adopted ESP Reserve Guidelines to ensure the reserve funds were spent to benefit electric ratepayers. The guidelines established a goal of designating how the ESP Reserve funds were to be spent by end of FY 2015. Since the guidelines were developed in 2011, staff has made progress towards the development of two substantial projects: smart grid deployment and transmission upgrades to improve reliability. Both projects are potentially good candidates for use of the ESP Reserve funds, however neither project is developed sufficiently for staff to recommend committing the ESP Reserve funds at this time. More time is needed to determine merits of those, or other, projects to benefit electric ratepayers. Therefore, the UAC and staff recommend a two-year City of Palo Alto Page 2 extension to the timing in the ESP Reserve Guidelines for identifying and committing ESP Reserve funds, to ensure sufficient time to fully evaluate projects that may be candidates for funding from the reserve. Background The Calaveras Reserve was first established in 1983 to offset costs associated with the Calaveras Hydroelectric Project. Council changed the purpose of the Calaveras Reserve in 1996 (CMR:214:96), and authorized collecting funds from electric ratepayers to cover the amount that certain electric assets’ costs were projected to be above their value, or “stranded”, in anticipation of electric deregulation in 1998 and the possibility of “direct access” (i.e., electric customers could receive commodity services from another energy supplier). Additionally, Council approved a new Calaveras Reserve policy linking the reserve balance to an amount sufficient to cover potential stranded costs. When the Calaveras Reserve balance reached $71 million in 1999, stranded costs were deemed fully collected and Council ceased the collection of funds for these stranded costs and established the Calaveras Reserve Guidelines (CMR 222:99). The guidelines included a schedule to draw down the funds through the end of FY 2033 so that each year’s stranded costs were transferred into the electric fund’s operating budget. On June 15, 2009, Council approved new guidelines to manage the Calaveras Reserve (CMR:275:09) which included setting the minimum transfer to the electric utility’s operating budget based on an annual calculation of short-term stranded costs. In addition, the updated guidelines stated that any funds in excess of long-term stranded costs should be used for projects that benefit electric ratepayers. In 2011, the potential that Palo Alto would have stranded costs as a result of direct access was over and Council expressed concerns about the rate at which the funds were being depleted, given the prospect of several capital intensive projects facing electric ratepayers—including the possibility of spending $20 million to fund smart grid initiatives and $30 million or more in transmission investments to improve the reliability of electric supply for Palo Alto. In November 2011, Council adopted Resolution 9206 which: 1) Changed the purpose of the Calaveras Reserve from partially funding above market electric costs and partially funding projects that benefit electric ratepayers, to entirely funding projects that benefit electric ratepayers; 2) Renamed the Calaveras Reserve as the Electric Special Project (ESP) Reserve; and 3) Set the following ESP Reserve guidelines: a) The purpose of the ESP Reserve is to fund projects that benefit electric ratepayers; b) ESP Reserve funds are to be used for projects of significant impact; c) Projects proposed for funding must demonstrate a need and/or value to electric ratepayers. The projects must have verifiable value and not be speculative, or risky in nature; City of Palo Alto Page 3 d) Projects proposed for funding must be substantial in size, requiring funding of at least $1 million; e) Set a goal to commit funds by end of FY 2015; and f) Any uncommitted funds remaining at the end of FY 2020 will be transferred to the Electric Supply Operation Reserve and the ESP Reserve will be closed. When the ESP Reserve Guidelines were adopted, the ESP Reserve balance was approximately $50 million. This included a $2 million transfer made in 2009 to fund a four-year pilot program for zero-interest energy efficiency loans for commercial customers. Demand for the pilot program was low and after four years the program was terminated. Approximately $1.5 million has since been returned to the ESP Reserve. The current balance in the ESP Reserve is $51.8 million. Discussion The ESP Reserve Guidelines approved by Council in 2011 were established to guide in the evaluation of projects and set deadlines for committing the funds, to ensure progress was made in expending the funds and returning benefits to the electric ratepayers. Consistent with the guidelines, funds have been used for several initiatives including funding studies and pilot programs in support of bigger initiatives. Staff continues to evaluate the merits of smart grid deployment and transmission line upgrades. Both of these initiatives are complicated and require long lead times to develop. The exact costs and benefits are not currently known; however, the two projects combined are expected to cost more than $50 million. At the opportune time in the coming years, staff will provide an assessment and recommendation outlining the costs, benefits and requirements for each project. An update on the current status of the two projects follows. Implementation of Smart Grid Systems A consultant study, The Assessment of Smart Grid Applications Relevant to Palo Alto, was undertaken to look at smart grid applications specific to Palo Alto. Key findings from the study presented in February 2012 (Staff Report 2443) include: 1. Advanced meter-based sensors can provide granular and timely energy and water consumption information to customers to more optimally use utility services, and enables CPAU to offer varied retail rates to customers based on individual needs. 2. Voltages sensed by the advanced meters enable the electric utility to manage the distribution system voltage at a more optimal level and enables CPAU to detect and respond to electricity outages faster. 3. Deployment of sensor technology in the electric distribution system enables better utilization of distribution system assets to optimally facilitate a greater adoption of electrification technologies such as electric vehicle and distributed generation technologies, including photovoltaics. City of Palo Alto Page 4 The 2012 assessment also found the benefit stream associated with such a large capital investment was not compelling enough, and the technology not mature enough, to warrant a full scale deployment at that time. Based on the consultant’s recommendation, staff has instead undertaken a number of pilot scale projects to better assess the costs, benefits and hurdles associated with smart grid deployment and to provide advanced meters to CPAU’s “early adopter” type customers. Early results from the pilot projects and technology advancements in the past 3 years now suggest full implementation of smart grid systems will be economical for Palo Alto. As a first step in this regard, CPAU along with the City’s Information Technology Department is considering a new Utilities Customer Information System (CIS) to store and process the increased amount of data associated with the advanced meter sensors. This initiative is being undertaken in conjunction with the City’s effort to migrate to a new Enterprise Resource Planning (ERP) system. Expectations are that a new ERP/CIS system will be implemented in the 2018-2020 timeline with full implementation of a smart grid system, if found to be cost- effective, to begin immediately thereafter. The assessment estimated the cost of implementing smart grid systems at $20-$25 million. The portion of the cost attributed to the gas and water utilities is approximately $5 million with the remaining $20 million attributed to the electric utility. Transmission Upgrades Staff continues its efforts to diversify the transmission routes to the City to improve the reliability of electric power delivery to the City. Currently the City’s power is delivered over Pacific Gas and Electric’s (PG&E) transmission system at its Colorado substation near Highway 101. PG&E uses three 115 kilovolt (kV) transmission lines to serve CPAU, but all three lines run in a common corridor on the bay side of the City. These lines are susceptible to single events that can affect all three lines, as happened in February of 2010 when a small aircraft hit the power lines resulting in a city-wide power outage. Since 2010, the City has been actively involved in the regional transmission planning efforts conducted by the California Independent System Operator (CAISO). This has resulted in two alternatives to diversify the transmission routes to the City that are currently under consideration. One alternative is an electric transmission interconnection between the City and the SLAC National Accelerator Laboratory (SLAC). The project would construct a new transmission line from SLAC’s substation to one of the City’s distribution substations. This project would increase reliability of service for SLAC and the City by providing redundant transmission; it would also reduce the City’s cost of transmission service by avoiding low voltage transmission charges, since the new connection to the transmission grid would be at 230kV. Preliminary project cost estimates are around $45 million. Staff has been involved in discussions and negotiations with the key stakeholders, including SLAC, Stanford, the Department of Energy (DOE), and the CAISO for the past few years. Currently Stanford and the City are waiting for the results of further studies, which are anticipated to be completed this spring. City of Palo Alto Page 5 The second alternative for diversifying the transmission routes to the City is for PG&E to build a new transmission access point extending from the City’s receiving station to a PG&E site at NASA Ames within the same bay side electric transmission system as the City’s existing access point. Under this plan the City’s share of the cost has yet to be determined, but should be limited to the incremental costs of upgrades on the City’s side of the connection. While this alternative would improve reliability for the City at a lower initial cost, it will not provide long- term transmission cost relief to the City and is a less diverse electric source from the corridor on the western side of the Peninsula. The preferred alternative will be contingent upon feasibility, cost, reliability, diversity, and agreement between stakeholders. Staff anticipates that a final decision will occur by the end of 2015. Should the City move forward on the SLAC project, construction may take from 3-5 years after a decision is made. A project of this size will require environmental review followed by engineering design, manufacture of specialized equipment and, finally, construction. Recommendation Not designating the ESP Reserve funds at this time to specific projects will allow staff to continue to evaluate the two projects identified above, while also evaluating alternative projects. Additionally, staff and the UAC recommend extending the dates provided for in the existing ESP Reserve Guidelines by two years. Provided Council approves the recommended changes, the ESP Reserve Guidelines shall be modified to read as follows: a. The purpose of the ESP Reserve is to fund projects that benefit electric ratepayers; b. ESP Reserve funds are to be used for projects of significant impact; c. Projects proposed for funding must demonstrate a need and/or value to electric ratepayers. The projects must have verifiable value and not be speculative, or risky in nature; d. Projects proposed for funding must be substantial in size, requiring funding of at least $1 million; e. Set a goal to commit funds by end of FY 2017; and f. Any uncommitted funds remaining at the end of FY 2022 will be transferred to the Electric Supply Operation Reserve and the ESP Reserve will be closed. Alternatives Alternatives to the recommendation to delay the deadlines in the ESP Reserve guidelines by two years include the following: 1. Designate the $51.8 million in the Electric Special Project (ESP) Reserve by the end of 2015, as follows: a. Use up to $20 million for smart grid deployment initiatives; b. Use remaining funds of approximately $32 million for transmission upgrades 2. Close the ESP Reserve effective immediately, and transfer the current balance of the ESP Reserve to the Electric Supply Operation Reserve. City of Palo Alto Page 6 The first alternative is staff’s original recommendation to the UAC. While the recommendation meets the Council approved guidelines and provides some level of certainty for how these projects may be funded, allocating the funds to the projects now is premature as the projects have not yet been sufficiently evaluated. The second alternative, transfer the ESP Reserve funds to the operating reserve now, would defer electric rate increases planned for the next two to three years, thus providing immediate benefit to electric ratepayers in the form of rate relief. Should a substantial project materialize and the funds were no longer available, staff would need to seek rate increases and/or bond financing to pay for the projects at that time. Staff recommends against using reserves to defer addressing long-term structural financial issues. Reserves are generally ineffective at deferring structural deficits more than a few years, and the deferred rate increases are typically higher. Other alternatives may exist, including reexamining how to use ESP Reserves outside the context of the current Council-approved guidelines. One option is to leave the funds in the reserve in anticipation of Council’s adoption of a broader set of reserve guidelines. Examination of this alternative would require extensive review and discussion with the UAC and Council, and is not recommended at this time. Commission Review and Recommendations At the April 1, 2015 UAC meeting, staff recommended designating reserve funds to smart grid initiatives and transmission line upgrades as described in the first alternative above. Staff’s intent was: 1) to be consistent with the ESP guidelines, which require that ESP Reserve funds be dedicated by June 2015; and 2) to set aside ESP Reserve funds for the two projects while recognizing that ultimate commitment of the funds would be subject to a complete review of the merits of the two projects, assessment of funding mechanism alternatives, and Council approval. The UAC rejected staff’s recommendation on the basis that there was not sufficient information about the merits of the two projects; therefore earmarking the funds to those projects now is premature. The UAC voted unanimously (6-0 with Commissioner Chang absent) to recommend that Council: 1. Not designate the funds for specific projects now; 2. Change the ESP guidelines to defer the date by which the funds must be committed to the end of FY 2017, instead of by the end of FY 2015; and 3. Change the ESP guidelines so that uncommitted funds be returned to the Electric Supply Operation Reserve and the ESP Reserve be closed be the end of FY 2022, instead of FY 2020. Staff agrees with the UAC’s logic and subsequently amended its recommendation accordingly. The excerpted draft notes from the UAC’s April 1 meeting are provided as Attachment B. City of Palo Alto Page 7 Resource Impact Changing the ESP Reserve funds to extend the dates for commitment and expenditure of funds will not impact resources. Resource impacts will be identified as projects are proposed for funding from the ESP Reserve. Policy Implications The City’s electric ratepayers have been the source of the funds since Council established the Reserve in 1983. In 1996, California’s electric industry deregulation law, AB 1890, authorized both investor-owned and municipal utilities to collect a Competition Transition Charge (CTC), on electric customer bills. The City opted to collect the CTC from electric ratepayers and further fund the Calaveras Reserve. The City Attorney’s Office has advised that Calaveras funds continue to be spent to benefit those who contributed: the City’s electric ratepayers. The recommendation modifies the Council-adopted ESP Reserve Guidelines and meets the intended use of the original Calaveras Reserve to benefit Palo Alto’s electric ratepayers. Environmental Review Amending the Electric Special Project Reserve Guidelines does not meet the definition of a project pursuant to Public Resources Code Section 21065, thus no California Environmental Quality Act review is required. Attachments:  Attachment A: Resolution to Modify the Electric Special Project Reserve Guidelines (PDF)  Attachment B: Excerpted Draft Minutes of April 1, 2015 UAC Meeting (PDF) *****NOT YET APPROVED***** Resolution No.____ Resolution of the Council of the City of Palo Alto Modifying the Electric Special Project Reserve Guidelines A. In 1983 the City of Palo Alto (“City”) first established the Calaveras Reserve to help defray cost associated with the Calaveras Hydroelectric Project. B. In 1997 Council authorized the collection of a competitive transition surcharge from the City’s electric customers to cover stranded costs in the event customers elected to receive electric supply services from other providers. C. In 1999 Council stopped the collection of the competitive transition surcharge as the Calaveras Reserve was fully funded at $71 million, and established the Calaveras Reserve Target and Guidelines with a schedule to draw down funds. D. In 2009 Council approved new Calaveras Reserve guidelines which required the annual calculation of short-term stranded costs to determine the minimum transfer to the electric utility’s operating budget based on the annual calculation of the electric utility’s long-term stranded costs, and the identification of funds available for special projects to the benefit of electric ratepayers. E. In 2011 (Resolution 9206) Council changed the name of the Calaveras Reserve to the Electric Special Project (ESP) Reserve and the purpose from partially funding above market electric costs and partially funding projects that benefit electric ratepayers, to entirely funding projects that benefit electric ratepayers. New ESP Reserve Guidelines were also approved, including a provision to commit the funds for preferred projects by end of FY 2015. F. At the end of FY 2015, the ESP Reserve balance is expected to be approximately $51.8 million, with no commitments yet identified for the use of funds. G. The ESP Reserve Guidelines set a goal to commit the funds by the end of FY 2015 and to return any uncommitted funds to the Electric Operating Reserve and close the ESP Reserve by the end of FY 2020. H. Staff has determined that several projects, including smart grid deployment efforts and transmission related reliability upgrades are good candidates for future funding from the ESP Reserve, but the projects have not been sufficiently evaluated to recommend committing the funds to those projects at this time. 150420 sdl 6053281A 1 ATTACHMENT A *****NOT YET APPROVED***** I. At the April 1, 2015 Utilities Advisory Commission (UAC) meeting, the UAC voted unanimously (6-0 with Commissioner Chang absent) to recommend that the Council not designate the funds for specific projects now and that the ESP Reserve Guidelines be changed to defer the date by which the funds must be committed to the end of FY 2017, instead of by the end of FY 2015, and to defer the date for which uncommitted funds are returned to the Electric Supply Operating Reserve and the ESP Reserve is closed to FY 2022, instead of FY 2020. The Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. Council hereby amends the Electric Special Project Reserve Guidelines, codified in Subpart 3 of Section 1 of Resolution 9206, adopted by Council on November 1, 2011, to extend the deadlines to commit funds and close the ESP Reserve, as follows: A. The purpose of the ESP Reserve is to fund projects that benefit electric ratepayers; B. ESP Reserve funds are to be used for projects of significant impact; C. Projects proposed for funding must demonstrate a need and/or value to electric ratepayers. The projects must have verifiable value and not be speculative, or risky in nature; D. Projects proposed for funding must be substantial in size, requiring funding of at least $1 million; E. Set a goal to commit funds by end of FY 2017; and F. Any uncommitted funds remaining at the end of FY 2022 will be transferred to the Electric Supply Operation Reserve and the ESP Reserve will be closed. SECTION 2: While Council has, via its adoption of this resolution, modified the ESP Reserve Guidelines, Staff will seek Council approval for specific projects only after staff’s complete assessment and recommendation on the costs, benefits and requirements for any project. Any expenditure of ESP Reserves shall require Council approval as part of the annual operating budget approval process. / / / / / / / / / / 150420 sdl 6053281A 2 *****NOT YET APPROVED***** SECTION 3: The Council finds that the adoption of this resolution modifying the ESP Reserve Guidelines does not meet the California Environmental Quality Act’s definition of a “project” under Public Resources Code Section 21065, thus no environmental review is required. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ___________________________ ___________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ _______________________________ Senior Deputy City Attorney Utilities Director 150420 sdl 6053281A 3 EXCERPTED DRAFT MINUTES OF THE APRIL 1, 2015 UTILITIES ADVISORY COMMISSION MEETING ITEM 3: ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend that the City Council Adopt a Resolution Identifying Projects to be Funded by the Electric Special Project Reserve Senior Resource Planner Monica Padilla provided a brief history of the Electric Special Projects (ESP) Reserve, which was originally named the Calaveras Reserve and then used to collect stranded costs associated with certain assets including the Calaveras Hydroelectric Project. In 2011, Council changed the name to the ESP Reserve and changed the purpose to fund large projects. Padilla stated that the ESP Reserve has about $52 million and staff recommends that the funds be earmarked for smart grid and transmission upgrades. She noted that these projects would return to the UAC and Council prior to committing the funds to those projects and that they would not be funded if they did not make sense. Commissioner Melton asked if there would be an impact from changing the guidelines to move out the dates. Padilla said that would not be much different from the recommendation in terms of flexibility as to how the money could be used, but that the staff recommendation is consistent with the Council-approved guidelines. Commissioner Melton said that if we earmark funds now to the two projects, and one came to fruition, and the other had not yet, how easy would it be to make a change if the funds are earmarked. He asked if we would be able to move funds from one project to another, of add a third project. Padilla said that any expenditure of the funds would require Council approval and it could change depending on the merits of the projects. Public Comment Resident Jeff Hoel preferred that the dates be pushed out rather than the funds being earmarked for projects that haven't yet been proven to be cost-effective. He suggested another alternative that the funds be there perpetually for projects that may be needed and that the funds could be borrowed (and paid back to the fund) when needed. He said that before any money is earmarked for smart grid, there needs to be a report to explain exactly what the money will pay for and the same logic is true for a transmission line. Resident Herb Borack does not support earmarking the funds for projects that have not yet been shown to be beneficial. He said that there may be other projects that may prove to be more beneficial and it may be difficult to change the projects if they are not earmarked. He noted that the transmission line cost is unclear and the smart grid project may not make sense ATTACHMENT B without fiber-to-the-premise if the point is to affect peoples' behavior in their use of energy. He said that earmarking $20 million for smart grid without knowing how much the project may cost is ill advised. Commissioner Hall says that although the two projects identified sound pretty good, the UAC has not had the opportunity to evaluate either of the projects and he suggested deferring the decision until the end of FY 2017, rather than FY 2015. Commissioner Eglash commended staff for trying to be faithful to the deadlines in the guidelines, but did not agree with staff’s recommendation and noted that we should not commit the funds to projects that have not yet been evaluated. He said that, completely irrespective of whether smart grid is a good idea now or in the future, and regardless of whether you think an alternative transmission line is a good idea, we don’t know enough now to make a recommendation for either project. Commissioner Cook prefers that the funds in the reserve remain uncommitted at this time and he doesn't support committing the funds now to the two projects recommended. Commissioner Eglash supports pushing out the date to commit funds, or even to remove the deadline altogether. Commissioner Foster wondered if there was support to not have a deadline or to use the funds as a loan source for many projects that arise. Commissioner Eglash supported establishing a timeline to be consistent with the idea of eventually returning these funds to ratepayers rather than removing the deadline altogether. Commissioner Melton said that we should stick with the original plan to have a deadline, but supported pushing out the timeline to commit funds for a few years when more information on the projects will be available. He said that he likes the alternate transmission project, but making no designation now and pushing the respective deadlines that were set previously out two years and giving these big, important projects time to gel is the right thing to do. ACTION: Commissioner Hall made a motion that the UAC recommend that the Council change the ESP guidelines by: 1) changing the date when commitment of funds must be determined to the end of FY 2017 (instead of the end of FY 2015); and 2) changing the date when any uncommitted funds remaining will be transferred to the Electric Supply Operation Reserve and the ESP Reserve to the end of FY 2022 (instead of the end of FY 2020). Commissioner Cook seconded the motion. Commissioner Eglash offered a friendly amendment to add that the UAC recommends that Council not designate the funds for specific projects now. He said that this amendment would make clear that not just the dates in the guidelines should be changed, but that the funds not be earmarked for any projects at this time. Commissioners Hall and Cook (maker and seconder of the motion) accepted the amendment. The motion carried unanimously (6-0 with Commissioners Cook, Eglash, Hall, Melton, Foster, and Waldfogel voting yes and Commissioner Chang absent). City of Palo Alto (ID # 5735) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/18/2015 City of Palo Alto Page 1 Summary Title: User Fee Cost Recovery Level Policy Adoption Title: Adoption of the User Fee Cost Recovery Level Policy From: City Manager Lead Department: Administrative Services Recommendation Staff recommends that the City Council adopt the User Fee Cost Recovery Level Policy. Executive Summary In Fiscal Year 2013, staff embarked on an ambitious effort to study the City’s fees, fee structure, and services. After several meetings with the Finance Committee, at its November 5, 2013 meeting, the Finance Committee approved a motion directing Staff to bring forward to the City Council a draft User Fee Cost Recovery Level Policy for Council discussion. On April 6, 2015, staff engaged the City Council in discussion regarding the draft policy. Based on Council feedback, staff recommends that Council adopt the attached policy as presented on April 6, 2015. Starting in Fiscal Year 2016, staff committed to bring forward to the Finance Committee specific groups of fees in the context of the policy and recommendations to align these fee groups with the policy. Background In Fiscal Year 2013, staff started to study the City’s fees, fee structure, and services. After several meetings with the Finance Committee, at its November 5, 2013 meeting, the Finance Committee approved a motion directing Staff to bring forward to the City Council a draft User Fee Cost Recovery Level Policy for Council discussion. Based on the discussion the policy was updated and a final version was discussed with the City Council on April 6, 2015 as part of a Study Session regarding cost of services. Discussion On April 6, 2015, staff sought input from the City Council regarding the attached User Fee Cost Recovery Level Policy. Based on Council discussion, staff recommends adoption of the policy as presented on April 6, 2015 with the five policy statements summarized below. 1. Community-wide vs. Private Benefit: Funding services such as Police patrol services only City of Palo Alto Page 2 through taxpayer dollars is appropriate for services that benefit the entire community. When the service or program provides a benefit to specific individuals or businesses such as the issuance of building permits, it is expected that individuals or businesses receiving that benefit pay for all of the cost of that service. 2. Service Recipient vs. Community Benefit: For regulated activities such as development review and regulatory permits, it is appropriate that the service recipient such as an applicant of a building permit or a Pushcart Vendor permit pay for the permit although the community at large benefits from the regulation. 3. Consistency with City Goals and Policies: City policies and Council goals related to the community’s quality of life are factors in setting cost recovery levels. For example, fee levels can be set to promote healthy habits, facilitate environmental stewardship, or discourage certain actions (e.g. false alarms). 4. Elasticity of Demand for Services: The level of cost recovery can affect the demand for services. A higher level of cost recovery could ensure the City is providing services such as recreational classes or summer camps for children and youth without over stimulating a market with artificially low prices. Such low prices, which are a reflection of a high General Fund subsidy, may result in huge waiting lists and attract participants from other cities; however, high cost recovery levels could negatively impact the demand for such services from low income individuals, special needs individuals, and seniors. 5. Availability of Services from the Private Sector: High cost recovery levels are generally sought in situations where the service is available from other sources in order to preserve taxpayer funds for other General Fund funded City services. Conversely, services that are not available from other sources and are typically delivered when residents experience an emergency basis typically have low or zero cost recovery levels. Summary of Council Discussion and Next Steps The table below summarizes Council discussion at the April 6 Study Session as well as staff’s response. Topic Staff Response City Manager authority of waiving certain planning fees when the applicant is a non- profit organization and the application would fulfill a public purpose Staff intends to bring forward a recommendation for such a waiver as part of the adoption of the FY 2016 Municipal Fee Schedule Review of fee groups after adoption of the User Fee Cost Recovery Level Policy Staff intends to bring forward specific fee groups in FY 2016 and thereafter to the Finance Committee for review Fees and Fee Exemptions for the Alma Plaza Policy and Services Committee (P&S) discussed this matter at their 9/23/14 City of Palo Alto Page 3 meeting. Through the discussion, P&S unanimously agreed that the existing Co- Sponsorship Policy that allows for fee exemptions for a variety of activities for use of community rooms including neighborhood meetings was adequate and no policy change was recommended. Low Income Community Garden fee Current Community Garden Fees are $0.75 per square foot. The City provides a Fee Reduction Program that allows for up to 50% fee reduction for low income seniors and youth, and for all people with a disability. The Fee Reduction Program is available for all CSD programs including the Community Gardens. If the Council desires to extend the fee reduction program to low income adults, the Council may as part of adoption of the Fiscal Year 2016 Municipal Fee Schedule include a motion to change the fee reduction program. Impact Fee review As discussed during the Study Session, the Planning and Community Environment Department is currently undertaking a Housing Nexus study which will determine the housing impact fees. The Fiscal Year 2016 Proposed Operating Budget includes a funding recommendation for a Traffic Impact Fee Study. This study will evaluate the possibility to charge new developments additional development impact fees related to future transportation investments. All other development impact fees have either been recently studied or, according to the City’s consultant, are set appropriately based on previous studies. In general, Council has the option to revisit these and any other Development Impact Fees in the coming years, given any significant new information, and potentially adjust fee levels. Next Steps Starting in Fiscal Year 2016, staff committed to bring forward to the Finance Committee specific groups of fees in the context of the policy and recommendations to align these fee groups with the policy. Further, after adoption of the User Fee Cost Recovery Level Policy staff will review City of Palo Alto Page 4 the Community Services Department Class Cost Recovery Policy to ensure that the two policies are in alignment and bring forward to the Finance Committee recommendations for amendments, if any. Resource Impact After approval of the attached policy, staff will review each fee and assign a target cost recovery level (low, medium, high). In fall 2016, staff intends to bring forward the results of the Planning and Community Environment fee study to the Finance Committee. As part of the annual budget process, staff intends to bring forward adjustment to fees to align them with the policy. Some adjustment may be phased in over several fiscal years. Attachments:  Attachment A: User Fee Cost Recovery Level Policy (DOC)  Attachment B: Cost of Services Update and Draft User Fee Cost Recovery Level Policy CMR April 6, 2015 (PDF)  Attachment C: 04-06-2015 CCM Excerpt Number 1 (PDF) Attachment A Page 1 of 2 USER FEE COST RECOVERY LEVEL POLICY BACKGROUND The City provides a variety of services to the public which benefit the entire community or individual residents or businesses. For certain services such as regulatory fees, arts and science classes, or recreational activities, the City traditionally has recovered partially or fully the cost for providing these services, which would have been otherwise paid from the General Fund. Propositions 13, 218, and 26 have placed both substantive and procedural limits on cities’ ability to impose fees and charges. Collectively these constitutional amendments provide safeguards against taxes being imposed without a vote of the people. POLICY STATEMENT It is the policy of the City of Palo Alto to set Municipal Fees based on cost recovery levels in lieu of fully subsidizing fee-related activities with General Fund dollars. The cost recovery levels are reflective of the following policy statements. 1. Community-wide vs. Private Benefit: Funding services such as Police patrol services only through taxpayer dollars is appropriate for services that benefit the entire community. When the service or program provides a benefit to specific individuals or businesses such as the issuance of building permits, it is expected that individuals or businesses receiving that benefit pay for all of the cost of that service. 2. Service Recipient vs. Community Benefit: For regulated activities such as development review and Police issued permits, it is appropriate that the service recipient such as an applicant of a building permit or a Pushcart Vendor permit pay for the permit although the community at large benefits from the regulation. 3. Consistency with City Goals and Policies: City policies and Council goals related to the community’s quality of life are factors in setting cost recovery levels. For example, fee levels can be set to promote healthy habits, facilitate environmental stewardship, or discourage certain actions (e.g. false alarms). 4. Elasticity of Demand for Services: The level of cost recovery can affect the demand for services. A higher level of cost recovery could ensure the City is providing services such as recreational classes or summer camps for children and youth without over stimulating a market with artificially low prices. Such low prices, which are a reflection of a high General Fund subsidy, may result in huge waiting lists and attract participants from other cities; however, high cost recovery levels could negatively impact the demand for such services from low income individuals, special needs individuals, and seniors. 5. Availability of Services from the Private Sector: High cost recovery levels are generally sought Attachment A Page 2 of 2 in situations where the service is available from other sources in order to preserve taxpayer funds for other General Fund funded City services. Conversely, services that are not available from other sources and are typically delivered when residents experience an emergency basis typically have low or zero cost recovery levels. Based on these policy statements, the table below overlays certain cost recovery levels grouped in low (0-30%), medium (30.1% to 70%), and high (70.1% to 100%) cost recovery percentage ranges. It is important to note that these groupings provide policy guidance and are not absolute. Some policy statements may weigh more heavily than others, which may result in a different cost recovery level grouping for particular fees. For example, fees for recreational activities are expected to be set in general at the medium cost recovery level. However, fees for recreational activities for which there is a high demand may have a high cost recovery level due to high enrollment levels per class. It is important to note that Municipal fees will be reviewed annually by the Finance Committee and subsequently by the City Council as part of approval of the Municipal Fee Schedule. Cost Recovery Level Group Cost Recovery Percentage Range Policy Considerations Low 0% - 30%  No intended relationship between the amount paid and the benefit received  Fee collection would not be cost effective and/or would discourage compliance with regulatory requirements  No intent to limit the use of the service  Public at large benefits even if they are not the direct users of the service  Affordability of service to low-income residents Medium 30.1% - 70%  Services which promote healthy activities and educational enrichment to the community  Services having factors associated with the low and high cost recovery levels High 70.1% - 100%  Individual users or participants receive most or all of the benefit of the service  Other private or public sector alternatives provide the service  The use of the service is specifically discouraged  The service is regulatory in nature City of Palo Alto (ID # 4966) City Council Staff Report Report Type: Study Session Meeting Date: 4/6/2015 City of Palo Alto Page 1 Summary Title: Cost of Services Update and Draft User Fee Cost Recovery Level Policy Discussion Title: Cost of Services Update and Draft User Fee Cost Recovery Level Policy Discussion From: City Manager Lead Department: Administrative Services Recommendation This study session updates the City Council regarding ongoing Cost of Services study efforts and provides an opportunity for individual Council members to provide input on the draft User Fee Cost Recovery Level Policy. No formal action is requested. Executive Summary In Fiscal Year 2013, staff embarked on an ambitious effort to study the City’s fees, fee structure, and services. After several meetings with the Finance Committee, at its November 5, 2013 meeting, the Finance Committee approved a motion directing Staff to bring forward to the City Council a draft User Fee Cost Recovery Level Policy for Council discussion and to update the Council on the cost of services study. This report provides an update of the cost of services effort; the methodology used to determine City fees; and transmits the draft User Fee Cost Recovery Level Policy for Council review and discussion. Background In July 2012, staff presented to the Finance Committee an overview of the process for conducting the analysis of the City’s fee related services (Attachment A) as part of a broader cost of services study. At this meeting, the Finance Committee requested that staff provide additional information about the methodologies utilized in the study and provide examples that illustrate how the full cost, and cost recovery levels, are determined. In order to analyze the City’s fees, the City retained the services of MGT America (MGT). In March 2013, staff returned to the Finance Committee with a detailed presentation of methodologies utilized in addition to a follow-up regarding MGT's progress towards completion of the study (Attachment B). In August 2013, MGT submitted their findings to staff for review and a formal report was submitted to the Finance Committee in September 2013 (Attachment C). MGT’s fee analysis, City of Palo Alto Page 2 which followed best practices, assessed staff time worked and hourly cost of providing a particular service. This analysis was based on actual data from Fiscal Year 2012 to determine current cost recovery levels and General Fund subsidies for various services. It is important to note that only Public Works (Engineering), Police, Animal Services, Fire (except for Emergency Medical Response activities), and Community Services fees were included in the analysis. Planning & Community Environment fees, which included fees for the newly created Development Services Department, were excluded from the analysis until a full costing of activities was completed. After discussion of staff’s user fee cost recovery policy considerations, the Finance Committee also directed staff to return with a draft User Fee Cost Recovery Level Policy for review and discussion. In November 2013, staff presented the draft User Fee Cost Recovery Level Policy to the Finance Committee for review and consideration of City Council approval (Attachment D). The draft policy includes five policy statements to determine the appropriate level of General Fund subsidy for various fees for City services. These policy statements will, in turn, inform the levels of cost recovery using a three-tiered system of low (0%-30% cost recovery), medium (30.1% to 70% cost recovery), and high (70.1% to 100% cost recovery). As captured in the minutes, during the November 2013 Finance Committee Meeting, committee members provided valuable feedback and input to the policy (Attachment D). Although the Finance Committee agreed with the policy statements - with some additional considerations - committee members sought to understand the policy statements in the context of current cost recovery levels. In response, staff proposed to present to the Finance Committee information on cost recovery levels for some of the City’s 1,000 municipal fees during the Fiscal Year 2015 Budget hearings. As part of the Fiscal Year 2015 Finance Committee Budget hearings, staff provided an initial set of cost recovery level ranges as depicted in Table 1 below (see Discussion section of this report). Further, as part of preparation of this report, staff reviewed the Government Finance Officers Association (GFOA) recommendations for the establishment of government charges and fees (Attachment E). The User Fee Cost Recovery Level Policy is consistent with GFOA recommendations. As part of the City’s ongoing efforts to review cost of services, funds were included in the Fiscal Year 2015 Adopted Budget to engage in a review of planning and some development services related fee activity. To that end, in July 2014, the City issued a Request for Proposals (RFP) to review all Planning and Community Environment fees in addition to some Development Services fees. A more detailed update on the scope and timing of this study is provided under the Discussion section of this report. In parallel to the effort of studying and assessing the cost recovery levels of City fees, staff also researched numerous approaches to advancing the broader cost of services discussion. In the Discussion section below, staff proposes to move forward with a programmatic organizational analysis during Fiscal Year 2016. City of Palo Alto Page 3 Discussion This report is intended to provide the Council with an update of the cost of services study efforts and request input from the Council on a draft User Fee Cost Recovery Level Policy. As part of the discussion of the policy, the report includes information on the methodology for calculating municipal fees and cost recovery levels for most municipal fees except those related to the Planning & Community Environment Department, Development Services Department, and some Community Services Department fees. Cost of Services Study Update During the last few years, the City has reviewed various services and, where appropriate, brought recommendations for alternative service delivery forward for City Council consideration. For example, the City outsourced parks maintenance, golf course maintenance, custodial services, and, most recently, street sweeping services. Due to fluctuations in workload, the City has also employed hybrid models to address the timely provisioning of services. For example, in the Development Services Department, in-house personnel provide baseline services related to plan check and building inspections, which are often supplemented by contracting for specialty services and peak workloads. On a separate track, during the last few years, staff has implemented various technology enhancements which have created capacity for existing staff to focus on higher value activities related to service enhancements and cost reductions. For example, the Community Services Department implemented a new class registration system to enhance customer service and the Administrative Services Department is in the process of implementing a new banking services contract, which will streamline the accounts payable process for City vendors at a lower overall cost to the City. Staff continues to be committed to reviewing existing services and determining whether the private or non-profit sector can provide an existing service at the same or better level of service at a lower or equal cost to the taxpayer. Currently, staff is exploring potential partnerships with non-profits for Animal Services and the Palo Alto Junior Museum and Zoo. Although the City continuously reviews alternative service delivery models and has brought forward to the Council consideration of changing the service delivery for certain programs or functions, the City has not systematically reviewed service delivery models at a programmatic level. Therefore, as part of the FY 2016 Proposed Budget process, staff intends to request funding for consultant services to assist the City with a programmatic assessment of all services provided to the public as well as internal support services. Municipal Fee Cost Recovery Level Analysis During the November 2013 Finance Committee Meeting, committee members reviewed the draft User Fee Cost Recovery Level Policy (Attachment D). In general, the Finance Committee agreed with the policy statements with some additional considerations. As part of the discussion, the Finance Committee sought to understand the policy statements in the context City of Palo Alto Page 4 of current cost recovery levels. In response, staff proposed to present to the Finance Committee information on cost recovery levels for some of the City’s 1,000 municipal fees as part of the Fiscal Year 2015 Proposed Municipal Fee Schedule. During the Fiscal Year 2015 budget presentation to the Finance Committee, staff provided cost recovery level ranges for fees charged by certain departments/divisions. A summary of that information is listed below in Table 1. Table 1: Fiscal Year 2015 Municipal Fees Cost Recovery Levels Department/Division Lowest Highest ASD – Documents 40% 100% ASD – Real Estate 100% 100% Development Services – Fire Prevention 13% 100% Development Services – Public Works 23% 100% Police Department 18% 100% Public Works Department 11% 100% The table above demonstrates that cost recovery levels for fee-related activities can range widely for some departments. For example, an Encroachment Permit is charged by the Public Works Department to construction companies, developers, or home owners needing to encroach on the City right-of-way. The Encroachment Permit for fences is $153 and has a cost recovery level of 11 percent. Another example is Police Department fees for Pushcart vendors. The Pushcart fee for a new permit is $293 and has a cost recovery level of 18 percent. The Pushcart renewal fee is $98 and has a cost recovery level of 91 percent. As a next step in determining cost recovery levels, during the last few months, staff worked on determining average cost recovery levels of Community Service Department (CSD) as they relate to activities of the Arts & Sciences and Recreation divisions, which include camps and classes, based on Fiscal Year 2015 budget data. To better understand cost recovery levels, staff provided relevant enrollment data for Fiscal Year 2014, the most recent year available. Due to the wide range of fees charged for classes, camps, and other offerings, staff calculated an average cost recovery level versus cost recovery ranges based on the calculation of individual fees. The actual cost recovery level for a particular activity may vary depending on the total cost of producing the activity and the number of attendees. Also, overall program cost recovery is not solely correlated to enrollment. Within the Arts & Sciences division, there are revenue based educational instruction contracts with the school district, audience participation, and exhibition visitors. In Fiscal Year 2014, youth enrollment in Arts & Sciences classes and camps was 4,671 and adult enrollment was 921 for a total of 5,592. There were 346 youth Arts & Science classes and camps offered and 96 adult classes for a total of 442 classes and camps. Fees for Arts & Sciences classes and camps range from $33 - $600. Table 2 below provides summary City of Palo Alto Page 5 information for Arts & Sciences activities which include Fiscal Year 2015 cost recovery percentages at the program level as well as Fiscal Year 2014 enrollment data. Consistent with the cost recovery levels reported at the May 2014 Finance Committee Budget hearings; these costs include direct costs for instructors and materials as well as the indirect costs to support these programs. Table 2: Arts & Sciences Division Cost Recovery Level by Program Program Cost Recovery Percentage (FY 2015) Number of Enrollees (FY 2014)* Number of Classes (FY 2014) Children’s Theatre (Theatre, Music & Dance) 32% 1,314 143 Junior Museum & Zoo 24% 1,476 96 Art Center (Exhibitions & Visual Arts) 23% 2,802 203 Public Art, Concerts, & Art Partnerships 1% n/a n/a TOTAL 25% 5,592 442 * Enrollment does not include contracted instruction with school district. Although the Junior Museum & Zoo primarily targets youth participation, the Children’s Theatre—which also has high youth participation—also includes Music & Dance activities for both youth and adults, and has a total cost recovery of 32 percent. Taken separately, the Children’s Theatre has a cost recovery of 26 percent along with a Fiscal Year 2014 class and camp enrollment of 806 youth for 63 offerings, an average of 12.8 participants per class or camps. Children’s Theatre activities in Fiscal Year 2014 also included 243 performances that included 2,258 participants which drew an attendance of 33,593. Visual Arts activities at the Art Center have a cost recovery level of 47 percent for youth and 61 percent for adults. Reviewing the Fiscal Year 2014 enrollment data for Visual Arts, 122 youth classes and camps were offered totaling 1,957 enrollees or an average enrollment of 16 per class or camp. In comparison, for adult Visual Arts, 81 classes were offered with an enrollee count 845 or 10.4 enrollees per class. With the average attendance for youth classes and camps higher than for adult classes and this data driven analysis, it has become apparent that the General Fund subsidy for youth and adult classes for the Visual Arts program are quite different. Like for Arts & Sciences, Recreation cost recovery levels were also reviewed by youth and adult activities where data was available. For Recreation Classes/Camps, the cost recovery level for adults is 38 percent, teens are 16 percent, youth is 90 percent, and special needs are 11 percent. The total number of enrollees for adult Recreation Classes/Camps is 813 with 77 City of Palo Alto Page 6 classes/camps offered for an average attendance of 10.5. Conversely, the total number of enrollees for youth, teen, and special needs Recreation Classes/Camps is 2,127 with 152 classes/camps offered for an average attendance of 13.9. Regardless of adult vs. youth classes, Table 3 below shows the full cost recovery, direct and indirect, at the program level for various CSD programs. Table 3: Recreation Division Cost Recovery Level by Program Program Cost Recovery Percentage (FY 2015) Number of Enrollees (FY 2014) Number of Classes (FY 2014) Aquatics 57% 1,666 46 Middle School Athletics 60% 1,443 n/a Recreation Classes/Camps 45% 2,940 229 Special Events 8% n/a n/a TOTAL 48% 6,049 275 Planning and Community Environment Fees In July 2014, the City issued a Request for Proposals (RFP) for consultant services to review all Planning and Community Environment (PCE) fees. In August 2014, the City received four responses to the RFP and in September 2014 selected Capital Accounting Partners, LLC to accomplish this review. The goal of the fee study is to review and update PCE fees. In addition, the consultant was tasked with reviewing the fee marketplace to ensure that PCE is recovering revenue for services rendered where a fee does not currently exist. In context of the draft User Fee Cost Recovery Level Policy, PCE and Development Services fees should fall within the high range (70.1% to 100%) because individual users are the primary recipient of the benefit or the service received is regulatory in nature. There will be some exceptions to this, and some fees such as appeal fees that will be set at the low end of the range to avoid placing a barrier on appeals. Some transportation fees, such as parking fees, may also be set at the lower end of the range, with the understanding that revenues from parking citations also support program delivery, and parking programs benefit neighborhood quality of life and are not always designed to be revenue neutral. In addition, the Council should consider whether there is the need for a policy allowing the City Manager to waive certain planning fees on occasion when the applicant is a non-profit organization and their application would fulfill a public purpose. Such a policy could include criteria to ensure its infrequent use, and could require a report to the City Council. This policy could address situations like a recent example, in which the City’s use permit fee was cited in the newspaper as a barrier to establishment of a temporary homeless shelter. Staff anticipates that the consultant study of PCE fees will be completed during spring 2015 and City of Palo Alto Page 7 will demonstrate a current cost recovery level of around 50% for many fees. While incremental adjustments to PCE fees will be included in the FY16 budget process, the cost of services study and resulting recommendations—including a schedule for more significant PCE fee adjustments—will be provided brought forward to the City Council no later than the FY 2017 budget process. Draft User Fee Cost Recovery Level Policy As part of the Fiscal Year 2015 budget process, staff increased most municipal fees with the average salary and benefits cost increase of about 5.85 percent in order to maintain the current cost recovery level. However, as identified through the discussion above, there are many fees which are not at 100 percent cost recovery and staff seeks City Council input regarding the draft User Fee Cost Recovery Level policy. At the direction and input of the Finance Committee, staff has prepared a draft User Fee Cost Recovery Level Policy (Attachment F). This policy is framed based on various policy statements as listed below. 1. Community-wide vs. Private Benefit: Funding services such as Police patrol services only through taxpayer dollars is appropriate for services that benefit the entire community. When the service or program provides a benefit to specific individuals or businesses such as the issuance of building permits, it is expected that individuals or businesses receiving that benefit pay for all of the cost of that service. 2. Service Recipient vs. Community Benefit: For regulated activities such as development review and regulatory permits, it is appropriate that the service recipient such as an applicant of a building permit or a Pushcart Vendor permit pay for the permit although the community at large benefits from the regulation. 3. Consistency with City Goals and Policies: City policies and Council goals related to the community’s quality of life are factors in setting cost recovery levels. For example, fee levels can be set to promote healthy habits, facilitate environmental stewardship, or discourage certain actions (e.g. false alarms). 4. Elasticity of Demand for Services: The level of cost recovery can affect the demand for services. A higher level of cost recovery could ensure the City is providing services such as recreational classes or summer camps for children and youth without over stimulating a market with artificially low prices. Such low prices, which are a reflection of a high General Fund subsidy, may result in huge waiting lists and attract participants from other cities; however, high cost recovery levels could negatively impact the demand for such services from low income individuals, special needs individuals, and seniors. 5. Availability of Services from the Private Sector: High cost recovery levels are generally sought in situations where the service is available from other sources in order to preserve taxpayer funds for other General Fund funded City services. Conversely, services that are not available from other sources and are typically delivered when residents experience an City of Palo Alto Page 8 emergency basis typically have low or zero cost recovery levels. Based on these policy statements, Table 4 below overlays certain cost recovery levels grouped in low (0-30%), medium (30.1% to 70%), and high (70.1% to 100%) cost recovery percentage ranges. It is important to note that these groupings provide policy guidance and are not absolute. Some policy statements may weigh more heavily than others, which may result in a different cost recovery level grouping for particular fees. For example, fees for recreational activities are expected to be set in general at the medium cost recovery level. However, if certain recreation classes have a high demand, a high cost recovery level may be appropriate. It is important to note that municipal fees will be reviewed annually by the Finance Committee and subsequently by the City Council as part of approval of the Municipal Fee Schedule. Table 4: Cost Recovery Level Grouping by Policy Considerations Cost Recovery Levels Cost Recovery Percentage Range Policy Considerations Low 0% - 30%  No intended relationship between the amount paid and the benefit received  Fee collection would not be cost effective and/or would discourage compliance with regulatory requirements  No intent to limit the use of the service  Public at large benefits even if they are not the direct users of the service  Affordability of service to low-income residents Medium 30.1% - 70%  Services which promote healthy activities and educational enrichment to the community  Services having factors associated with the low and high cost recovery levels High 70.1% - 100%  Individual users or participants receive most or all of the benefit of the service  Other private or public sector alternatives provide the service  The use of the service is specifically discouraged  The service is regulatory in nature Starting with the Fiscal Year 2017 budget process, assuming City Council approval of the User Fee Cost Recovery Level Policy during calendar year 2015, as part of the annual budget process, each fee will be evaluated based upon current level of cost recovery and its corresponding cost recovery range. Based on this analysis and the various policy statements and considerations, City of Palo Alto Page 9 during the annual Finance Committee budget hearings, staff will bring forward any fee increases or decreases with changed cost recovery levels and/or a substantially increased cost recovery percentage. For example, most fees will be adjusted annually for general salary and benefit increases. Other fees may be adjusted as a result of market studies that staff intends to perform on a periodic basis every 3 to 4 years or as warranted. For fees which fall within the draft policy cost recovery levels, staff intends to maintain the existing cost recovery level range. As identified in this report, there are some fees which may require significant increases to align with cost recovery levels as identified in this policy. For these fees, staff intends to phase-in fee increases over several years and seeks Finance Committee review and City Council approval of such increases. Table 5 below provides examples of fees for which cost recovery levels would be changed based upon the draft User Fee Cost Recovery Level Policy once approved by the City Council. Table 5: Cost Recovery Level Policy Application Fee Current Percentage Cost Recovery Current Cost Recovery Percentage Range Potential Cost Recovery Percentage Range Policy Consideration Background Check Renewal (Police) 60% Medium High Individual users or participants receive most or all of the benefit of the service Fire Hydrant Installation (Fire) 56% Medium High The service is regulatory in nature Storm Water Inspection Fee (Public Works) 29% Low High Individual users receive most or all of the benefit of the service Storm Water Plan Check Fee (Public Works) 23% Low High Individual users receive most or all of the benefit of the service Development Services Fees As part of the aforementioned Planning and Community Environment (PCE) fee study, some Development Services fees were also studied such as a Green Building fee or Landscape review fee. As part of the Fiscal Year 2016 Proposed Budget, staff intends to recommend funding for a consultant study to comprehensively review all Development Services fees. After review of all Development Services fees, the City will have studied all municipal fees and their respective cost recovery levels. City of Palo Alto Page 10 Fee Calculation Methodology At the November 2013 Finance Committee meeting, the Finance Committee asked staff to inform the Council on the direct and indirect cost components included in municipal fees. To calculate the appropriate fee amount, three cost components are taken into consideration: (1) salary and benefits, including compensated absences; (2) overhead rates, also referred to as indirect costs (which includes departmental and citywide overhead charges); and (3) non-salary costs directly related to a particular fee. In addition, some fees are assessed a 5 percent technology surcharge, as approved by Council as part of the adoption of the Fiscal Year 2013 Municipal Fee Schedule, to lessen the fiscal burden on the General Fund for technology initiatives. As part of the annual budget development process, salary and benefits are reviewed citywide and adjusted to reflect current wage and benefit costs in order to determine the fully burdened cost. For Fiscal Year 2015, the average citywide increase was 5.85 percent. By classification, the fully burdened cost is then divided by 2,080 (annual full-time equivalent hours) to determine the fully burdened average hourly rate for a position. Departments then determine which positions are responsible for providing a given service and apply the number of hours by position to determine the total salary and benefit costs for fee-related activities such as processing a permit. In addition, the City applies a compensated absence rate to the salary and benefits costs of approximately 23 percent to account for average leave time, breaks, attendance of meetings, and other work not directly related to fee activities. The second component included in the calculation of fees is overhead or indirect costs, which are intended to recuperate services provided by support departments such as Finance, People Strategy and Operations, or Council Appointees. For example, the People Strategy and Operations Department allocates its cost based on the number of full-time equivalents in an operating department to recuperate the cost of supporting departments with hiring staff, disciplining staff, or processing personnel action forms. In Public Works, facility maintenance and custodial services are allocated based on the square footage of office space occupied by operating departments. Department overhead rates, which are typically calculated by taking the total administrative cost of a division or department and dividing it by the total labor cost of the same division or department, are also allocated to programs and services, and are included in the fee cost recovery analysis. The third component, non-salary costs, such as materials and supplies attributable to a specific fee activity are allocated. In addition, as previously mentioned a 5 percent technology surcharge is also added to some fees to provide funding for technology initiatives and reduce the financial burden to the General Fund. Next Steps Based on Council discussion, staff will bring the policy for approval to the Finance Committee and the City Council or directly to the City Council. After approval of the User Fee Cost City of Palo Alto Page 11 Recovery Level Policy, staff will review the Community Services Department Class Cost Recovery Policy, which was approved by the City Council in 2007. This policy categorizes classes into four cost recovery level groups (Attachment G). The Community Services Department Class Cost Recovery Policy sets minimum and target cost recovery levels driven primarily by whether the benefit received provides a personal or community benefit or some combination thereof. As stated above, all Planning & Community Environment and select Development Services fees are currently under outside study and review. It is anticipated that this work will be completed in spring 2015. As part of the Fiscal Year 2016 Proposed Budget, staff intends to seek funding approval for a comprehensive Development Services fee study. As part of the City’s ongoing efforts to provide quality services at a lower cost to taxpayers, staff intends to undergo a programmatic organizational analysis pending approval of consultant funding as part of the Fiscal Year 2016 budget process. This programmatic organizational analysis will help facilitate the city-wide review of service delivery. In the mean-time the City will continue to work on developing partnerships with private and non-profit sector groups similar to current partnerships efforts with the Junior Museum and Zoo (JMZ). On September 23, 2014, Community Services staff presented information to the Policy & Services Committee in response to Council direction from the Fiscal Year 2015 budget hearings about the policy issue of charging use fees for the privately-developed Alma Plaza Community Room, and the waiver of rental fees for community center rooms and fees under the provisions of the City’s Co-Sponsorship Policy. After extensive discussion, the Policy & Services Committee did not make recommendations to Council for changes to the Co-Sponsorship Policy or for procedures related to the reservation and use of the Alma Plaza Community Room, the Committee asked staff to return to Policy & Services with additional information on the use of various Community Services rooms and how fees might be set for particular rooms or facilities to maximize usage of the facility. Staff believes that the issue of fee setting for City facility rentals is closely connected to this policy discussion and the fees are approved annually as part of the Municipal Fee Schedule adoption. Therefore, staff intends to return to the Policy & Services Committee with responses to the questions raised in context of the user fee cost recovery level policy. Resource Impact Depending on the discussion with the City Council, staff intends to bring the User Fee Cost Recovery Level Policy for approval to the Finance Committee and the City Council or directly to the City Council. Once the Policy is approved, staff will review each fee and assign a target cost recovery level (low, medium, high) as part of the annual budget process starting with the Fiscal Year 2017 budget. Those fees which fall outside the target range will be recommended for adjustment as part of the annual budget process. Some adjustments may be phased in over several fiscal years. Attachments: City of Palo Alto Page 12  Attachment: Attachment A: Discussion of Scope of Work and Methodology Utilized for the Cost of Services Study, Finance Committee July 2012 and Minutes (PDF)  Attachment: Attachment B: Cost of Services Study Follow Up Finance Committee March 19, 2013 and Minutes (PDF)  Attachment: Attachment C: Cost of Services Study Draft Report Finance Committee Sept. 17, 2013 and Minutes (PDF)  Attachment: Attachment D: Draft User Fee Cost Recovery Level Policy Finance Committee Nov. 5, 2013 and Minutes (PDF)  Attachment: Attachment E: GFOA Best Practices - Establishing Government Charges and Fees (PDF)  Attachment: Attachment F: Draft User Fee Cost Recovery Level Policy March 2015 (DOC)  Attachment: Attachment G: Community Services Department Class Cost Recovery Policy November 2007 (PDF) City of Palo Alto (ID # 2991) Finance Committee Staff Report Report Type: Action ItemsMeeting Date: 7/3/2012 July 03, 2012 Page 1 of 6 (ID # 2991) Summary Title: Cost of Services Study Title: Discussion of Scope of Work and Methodology Utilized for the Cost of Services Study From: City Manager Lead Department: Administrative Services Recommendation: This report is provided for background purposes. In addition, Staff will be available to respond to questions at the July 3, 2012 meeting. Background: The City recently retained the services of MGT of America (“MGT”) to assist in the preparation of a full cost of fee related services study. It is important to note that the scope of MGT’s analysis is limited to fee-related services. The costs of services that are not fee-related, including the majority of public safety services, are not included in the scope of this particular study. However, some analyses have been conducted on these other services and additional studies will be conducted in the future. In addition, the City has hired a separate consultant to review and update the City’s development impact fees. The Fiscal Year 2013 Adopted Budget reflects $133.4 million of General Fund revenue, of which $20.3 million (approximately 15%) is generated from user fees. The study of fee-related services is expected to be completed this summer and the findings and recommendations will be presented in Fall 2012. During the May 29, 2012 Finance Committee meeting, staff was asked to return to the Committee in advance of the Fall presentation to discuss the methodology that is being used to complete this analysis. This report will outline the scope of work for this analysis, methodologies utilized to develop costs and fees, and issues related to cost recovery levels. Discussion: Attachment A July 03, 2012 Page 2 of 6 (ID # 2991) User fees are charged to recover some or all costs incurred in providing a service from which one or more individuals obtain a benefit. In California, the ability to impose fees has been significantly curtailed by a series of voter approved initiatives as well as other statutory schemes and related court rulings. In general, public agencies can establish fees to recover up to 100% of the estimated reasonable cost of providing the service(s). Any amount of a particular fee that is more than 100% of the cost is considered a special tax and, by law, requires approval by two-thirds of the electorate. Please note that rental charges for rooms or facilities, fines, penalties and late charges are not technically user fees and are not required to be based on actual costs. Instead, these types of charges are more typically governed by market rates, reasonableness and other policy driven factors. Prior to the passage of Proposition 13 in 1978, local government agencies had the option of increasing property taxes to offset the cost of providing services. Proposition 13 and subsequent initiatives, including Propositions 4 and 218, significantly limited the extent to which California cities and counties could generate revenue to pay for critical public services. In addition, city and county tax revenues have been negatively impacted in recent years by a number of actions taken by the state to address its deteriorating financial status. Given the financial challenges that most cities and counties face, many agencies are re- evaluating the costs of providing services, including fee-related services. The full cost of providing a particular service, less the revenue derived from the fee(s) charged for that service, is referred to as the subsidized portion of the cost. Historically many cities, including Palo Alto, have not passed on the full cost of service to the users. The extent to which services that primarily benefit the user are subsidized by general tax revenue is largely a policy matter. However, there are some common factors used by other agencies to evaluate “who benefits and who pays”. The latter part of this report provides a general overview of this issue in order to provide data to facilitate informed decision-making processes. Scope of Work: MGT was retained to provide the following deliverables for a not to exceed total cost of $61,000: Estimated total cost (direct and indirect) for all fee related services- either at the activity or program level - and current cost recovery levels Comparable fees as available, charged in eight other Bay Area cities Recommendations for changes to the City's cost plan and user fees - including new or changed fees - based on best practices, industry standards and all applicable rules and regulations Alternative approaches and methodologies for future fee adjustments Attachment A July 03, 2012 Page 3 of 6 (ID # 2991) Models and templates that City staff can use to update cost of services calculations based on changes in costs, revenues, time and/or volume estimates This study does not analyze the following: The cost of services that are not fee related (e.g. most public safety services, library services, advanced planning, etc.). Staff will review and report separately on these services. Development Impact Fees – the City has retained a separate consultant to review and update the City’s Planning related impact fees. The cost of utility services Potential cost savings, operational efficiencies, alternative service models or performance outcomes (although the cost of services study will provide useful information for City staff to use in these types of analyses) MGT is utilizing data provided by City staff to quantify the total costs incurred in providing a particular service (or category of service) as well as the revenues derived in relation to those services through the imposition of user fees. For purposes of conducting this study, MGT was provided with Fiscal Year 2012 adopted expense and revenue information. The City will retain the model programs developed by MGT and staff will be able to update financial information as well as time and volume estimates in the future. Methodology: The standard approach for analyzing the cost of providing fee-related services is commonly referred to as a “bottom up” approach. With the exception of recreational fees, this is the approach that was utilized for all fees. Recreational fees will be discussed later in this report. A general description of the “bottom up” approach is as follows: 1. Identify all direct staff time spent on the fee related activity or service MGT has had a series of meetings with staff from Public Works, PCE, Police, Fire, CSD and the Library to identify every employee, by classification, who performs work directly in support of a fee related service. Direct staff costs are incurred by employees who are “on the front line” and most visible to the customers (e.g. planners, park rangers, building inspectors, etc.). Once all direct staff are identified, the departments provided estimates of how much time each of those employees spends, on average, working on that particular service or program. Developing time estimates for fee related services can be challenging and departments should be commended for the time and effort they put into this. Although MGT provided Attachment A July 03, 2012 Page 4 of 6 (ID # 2991) departments with templates and other tools to assist them in developing average or “typical” time estimates, these calculations were necessarily developed by the subject matter experts in each operating department. 2. Calculate direct cost of the staff time for each fee using productive hourly rates Productive hourly rates are used to support full cost recovery. A full-time employee typically has 2,080 paid hours per year. However, cost studies reduce that number to account for non-productive hours (sick leave, vacation, holidays, training, meetings, participation in non-core services, etc.). MGT calculated the productive hourly rate for each classification based on the salary and benefit information provided by the City and an industry standard of 1,600 productive hours. 3. Determine any other operational costs (i.e. other than personnel costs) that can readily be traced to a specific fee-related service as a direct cost Professional services contracts are an example of an expense that can often be traced to a specific service or program. 4. Determine indirect or “overhead” costs Indirect costs include department and citywide overhead. Department overhead costs include managers, supervisors and support staff as well as other operational costs that are incurred for a common purpose and not readily assigned to a particular service or program. Typically, these costs are allocated based on either the number of full time equivalent employees in the department or expenditures per division or cost center. Citywide overhead costs include expenses incurred by departments that provide services to all City departments (Auditor, City Clerk, City Attorney, City Manager, Administrative Services, Human Resources and Public Works/Facilities Maintenance). These departments are also referred to as central services departments. Citywide overhead costs are allocated to each operating department via cost plan charges. The State Controller’s Office guidelines stress the importance of allocating citywide overhead costs in a way that “equitably reflect the value of service” provided to the department receiving the service(s). The bases for allocating citywide overhead costs can vary but must demonstrate a causal relationship between the allocation methodology and the costs allocated to the operating department. In most cases, industry standards utilize one of the following methodologies for allocating citywide overhead: Attachment A July 03, 2012 Page 5 of 6 (ID # 2991) Number of full-time equivalent staff in the operating department Total operating department expenditures, excluding fixed assets, pass through funds and large purchases (e.g. energy purchases) Actual or estimates of time spent in support of the operating department based on documented procedures The scope of work with MGT includes an analysis of the City’s current methodology for allocating citywide overhead (or cost plan charges). Cost plans must conform with Generally Accepted Accounting Principles (GAAP) as well as federal and state cost recovery guidelines. MGT’s comments and recommendations in relation to the City’s cost plan will be incorporated into the City’s Fiscal Year 2014 cost plan. Once total costs are calculated, volume data is used to determine cost per service or activity. Finally, revenue data provided by the departments is used to determine current cost recovery levels. Please note that recreational fees are typically calculated at the program levels (e.g. swimming programs, classroom programs, etc.) for several reasons, including: a. Programs and activities change in size and scope from one season or year to another, rendering a consistent fee schedule many times impractical; b. Many recreational or facility fees are set at comparable venue or service rates; c. The cost to calculate some fees at a more granular level could be outweighed by any realistic revenue offset, especially in light of the first two reasons above. So, for example, costs and revenues for classroom registrations are reported, but the scope of work for this study did not include itemization of costs and revenues by type of class (e.g. story acting class). 5. Crossover Support from other departments. Where applicable, direct and indirect costs associated with external departmental assistance in the user fee process is an additional cost component of fee-for-service activities. For example, a set of building plans may be routed to PCE, Public Works and Fire staff for review and comment. If these departments do not charge their own plan review fees, their costs are appropriately considered as an additional cost component to the fee charged by the “home” department. General Parameters for Setting Fees: Attachment A July 03, 2012 Page 6 of 6 (ID # 2991) In setting fee levels, the primary guiding principle is that the charge cannot be greater than the cost incurred in providing the service. In addition, fees cannot be set higher than costs in one area in order to subsidize another program or service. Beyond that, fee setting is largely a policy matter typically focused on who benefits from - and who pays for - the service. Certain core municipal services clearly benefit the community as a whole (e.g. police patrol) and are typically funded 100% by General Fund revenues. Other services primarily benefit the individual (e.g. building and development, certain recreational services, etc.) and, as such, fees for these services can appropriately be set at full cost recovery. However, many services fall between 100% community benefit (no cost recovery) and 100% individual benefit (full cost recovery). For the latter, the level of cost recovery is driven by a number of factors including a particular jurisdictions’ goals and priorities, fairness and equity, competing needs, and impact on demand. In the end, however, every dollar used to subsidize a service that primarily provides a private benefit is a dollar that is not available to fund other community public services. The focus of the July 3rd Finance Committee meeting is the methodology used to complete the study. The report that will be provided in the Fall will assist in policy setting decisions such as cost recovery levels, level of services provided, method of service delivery and opportunities to develop public-private partnerships. Staff will provide a wider view of the process and timeline as well as examples of user fee policies used in other agencies as part of the Fall report. Attachments: Attachment A-Scope of Work (DOCX) Prepared By: Gail Wilcox, Management Specialist Department Head: Lalo Perez, Chief Financial Officer City Manager Approval: ____________________________________ James Keene, City Manager Attachment A ATTACHMENT A SCOPE OF SERVICES - MGT OF AMERICA Project #1: OMB A-87 and Full Cost Allocation Plans 1. Provide the City with a list of financial and operational data requirements for the study. 2. Review and comment on the City’s current methodologies and processes for collecting, calculating and allocating direct and indirect costs. 3. Meet with staff from the Office of Management and Budget (OMB) to discuss critical issues surrounding development and implementation of the cost allocation plan. 4. Conduct a kick off meeting with departments heads and designated staff to discuss the purpose, scope, requirements and timeline for the project, followed by meetings with each central service department or division to identify the primary services or functions provided, the recipients of those services, and both gross and net cost for each service. 5. Recommend, based on applicable laws and regulations, industry guidelines and best practices, the bases for allocating these costs to their benefitting funds, departments, cost centers and/or activities. 6. Draft an OMB A-87 compliant and a full cost recovery plan consistent with Generally Accepted Accounting Principles (GAAP) using MS Windows 7 based software that the City can adapt and continuously update to reflect financial and organizational changes. 7. In addition to the draft plans, provide: a) A narrative of changes and results b) A schedule comparing total allocated costs between fiscal years, to receiving departments defined criteria (e.g. a variance greater than 5% or $10,000) c) A schedule documenting unit costs of identified support activities such as the cost of payroll per employee or the cost per purchase order d) A schedule documenting unit costs of identified support activities such as the cost of payroll per employee or the cost per purchase order e) A self-auditing schedule that reconciles the sum of all central service department expenditures to the sum of allocated costs 8. Meet with each central service department and OMB staff to present and discuss the draft plans and make modifications as directed by the Administrative Services Director/CFO. 9. Prepare supplemental schedules, management reports, compliance verbiage and certifications as necessary or requested. 10. At the request of the Administrative Services Director/CFO, participate in one presentation of the final plans to the City’s Finance Committee. 11. Assist City staff in integrating the cost plans into the City’s existing financial and operating systems and provide one training class for City staff. 12. Consult with City staff, should the need arise, to defend the cost allocation plans as a result of audits or other challenges. Attachment A Project #2: Comprehensive Review of the Municipal “User” Fee Schedule 1. Review the City’s municipal code and all existing fees. 2. Provide the City with a list of all financial and operating data requirements for the study. 3. Meet with designated OMB staff to solidify parameters and timeframe for the study and discuss issues that could impact the study. 4. Conduct a kick off meeting with department heads and designated staff to define the purpose, scope, requirements and timeline for the project, followed by meetings with individual departments to assess current methodologies for calculating costs and current recovery levels. 5. Ensure 100% of available staff hours are identified to fee or non-fee related services and calculate productive hourly rates for all employee classifications contributing to fee related services. 6. Conduct a full cost analysis using fully burdened rates. 7. Prepare a draft FY 2013 municipal fee schedule that reflects best practices and conforms to all applicable laws, statutes, rules and regulations governing the collection of fees, rates and charges by public agencies including, but not limited to, Proposition 218 and Proposition 26. 8. Identify any factors such as statutory limitations, market conditions or other potential policy and service level considerations which prevent, or could prevent, full cost recovery. 9. Prepare a narrative explanation of the basis for the recommended fees. 10. Prepare a financial analysis of projected revenue impacts and changes associated with the recommended fees. 11. Meet with City staff to discuss the draft fee schedule and make agreed upon revisions with final approval from the Administrative Services Director/CFO. 12. Prepare a Final FY 2013 municipal fee schedule, including estimated costs, revenues and cost recovery levels for each fee. 13. Prepare and deliver one presentation to the City’s Finance Committee or the City Council to facilitate their understanding of the fee study and its implications for the City. This presentation will be at the guidance and discretion of the Administrative Services Director/CFO. 14. Provide the municipal fee schedule and models written in MS Excel to the City so the City can adapt and continuously update these to reflect financial and organizational changes. 15. Consult with City staff, should the need arise, to defend the City’s fees as a result of any legal or other challenges. Project #3: Survey of Comparable Agencies (Optional at City’s discretion) 1. Conduct a benchmark survey of comparable public agencies 2. Work with City staff to identify common fees charged in comparable agencies and develop a matrix to illustrate comparable fees. Attachment A Attachment A Finance Committee MINUTES Page 1 of 16 Special Meeting July 3, 2012 ROLL CALL Chairperson Shepherd called the meeting to order at 6:04 p.m. in the Council Conference Room, 250 Hamilton Avenue, Palo Alto, California. Present: Burt, Scharff, Shepherd (Chair) Absent: Price ORAL COMMUNICATIONS None AGENDA ITEMS 1. Review of FY2012 Third Quarter Financial Report. David Ramberg, Assistant Director of Administrative Services provided a presentation overview of the third quarter financial report and noted Attachment A was missing a page but was presented as an at-place item for review. Fiscal year 2012 continued to see a stable budget which meant Staff was staying on target for what was presented during the mid-year. The retiree medical update was presented in May which provided a year-end close projection for fiscal year 2012. The goal for the year-end close in December was to have a Budget Stabilization Reserve contribution from the General Fund. There were potential increased revenues beyond what was listed in the third quarter report so Staff was cautiously optimistic. The incurred but not yet realized costs for the Workers Compensation and General Liability actual costs were not known until the receipt of the Actuarial report in the August timeframe and could have an impact on the final year end close. The permits and licenses category was 28 percent higher in fiscal year 2011 as were the Transient Occupancy Tax (TOT) revenues. Public safety overtime was ahead of budget as was not unusual for this time of year; fire was exceeding the overtime budget by 29 percent and the police by 28 percent. The overage was primarily driven by vacancies Attachment A MINUTES Page 2 of 16 Finance Committee Special Meeting 7/3/12 in both departments. The unused salary savings in fiscal year 2012 were expected to cover the overages. Council Member Burt said the TOT showed increased revenue of 7.3 percent from 2011. He calculated a 20 plus percent increase and asked Staff where the difference was. Mr. Ramberg said the 7.3 percent was reflective of the total TOT for the overall year so for 2011 the total year for the TOT was $8 million and to date in the 2012 budget year the TOT was registering at $8.6 million. Council Member Burt said the Staff Report reflected the TOT revenue was $4.9 million through the third quarter which meant the TOT revenue for the fourth quarter alone was $3 million. Lalo Perez, Director of Administrative Services requested time for Staff to reevaluate the numbers and return with an explanation. Council Member Burt asked if there was a sense of how to anticipate the impact as time progressed for employees moving towards the newer two tier pension system. He estimated there was little impact in the public safety employees going from 2.7 percent at 50 to 2.7 percent at 55. Mr. Perez said in discussions with John Bartell, the Actuarial firm used by the City, he believed there would be little impact from the public safety shift as there would be from the miscellaneous employees who went from 2.7 percent at 55 to two percent at 60. There was a gradual savings and the reason was CalPERS did their actuary two years in the rears so an employee entering the City under the new tier was not recognized until the end of their second year of employment. Vice Mayor Scharff asked for clarification that on Attachment A the adopted budget was what Council had adopted for fiscal year 2012 and the adjusted budget was what Staff was projecting to be the fourth quarter results. Mr. Perez stated yes with some changes. There was a line item called encumbrances and reappropriations where the previous year’s commitments were carried forward which was added to the budget number creating an illusion of a growing expenditure. Vice Mayor Scharff asked if those numbers were not revenues. Mr. Perez said they reflected as inflated revenues and expenditures so when the budget numbers were being compared to the adjusted budget removing Attachment A MINUTES Page 3 of 16 Finance Committee Special Meeting 7/3/12 that line item would balance out. There were mid-year changes the Council approved during the second quarter that were also embedded. Vice Mayor Scharff said the report showed a $3,750,000 deficit but the loan to the Refuse Fund did not actually occur, is that correct. Mr. Perez clarified the amount was going to be reversed back out, rendering the budget in a positive position. Staff had recently heard from the state on the sales tax, the county on the property tax, and the hotel taxes all indicating the numbers were increasing better than what Staff had projected. Vice Mayor Scharff said by not providing the loan to the Refuse Fund plus the state, county, and hotel taxes meant there were more funds coming in which balanced out. Mr. Perez stated there was more money coming in and there was savings from the vacancies. At the end of the year Staff was scheduled to have an informed discussion with the Finance Committee as to where the City wanted to position themselves beyond the 18.5 percent in reserves which was the previous target. Vice Mayor Scharff asked where Staff expected the reserves to be as a percentage. Mr. Ramberg noted the expected rate was at 21 percent for the Budget Stabilization Reserve as a percentage of total use of funds. Vice Mayor Scharff said roughly 21 percent and the target was 18.5 percent. He asked what the dollar difference was between 21 and 18.5 percent. Mr. Perez said approximately $4 million. Mr. Ramberg explained during fiscal year 2011 the TOT revenues by quarter were first at $1.9 million, second at $1.8 million, third at $1.9, and the fourth was $2.4 million. Council Member Burt said the third quarter of 2011 reflected $4.9 million but the numbers calculated for the cumulative three quarters was $5.6 million. Mr. Ramberg agreed there appeared to be a discrepancy and Staff would look into it. NO ACTION TAKEN Attachment A MINUTES Page 4 of 16 Finance Committee Special Meeting 7/3/12 2. Discussion of Scope of Work and Methodology Utilized for the Cost of Services Study Lalo Perez, Director of Administrative Services explained that the Cost of Service Study (Study) was performed about every five years. There was a desire to repair the structural and financial imbalance, along with the expense reductions. The Study showed the Finance Committee and Council where cost recovery for fees and services had revenue. Some services were without fees; these were reviewed separately for changes. The goal was to achieve greater efficiency and utilize available technology to do so; the Information Technology Director was involved in this part of the process. Staff was aware of probable service level changes with the completion of the Study. Previous Cost of Service Studies, such as the utilities studies, did not provide many options for the Council; this years’ Study presented options and different courses of possible actions that were taken within the limitations of the law. He introduced Management Specialist Gail Wilcox who presented the scope of work and the methodology used for the Cost of Services Study. Gail Wilcox, Management Specialist said the fiscal year 2013 budget included revenue that consisted of $20 million of user fees, which was approximately 15 percent of the total General Funds revenue. $8.1 million of those funds came from Planning and Community Environment, $6.7 million from the Community Services Division, with $3 million from Golf, $4.2 million from Fire, $2 million from paramedics fees, $600,000 from Public Works, and $300,000 from Police. The purpose of the Study was to determine the cost for providing services and to determine how much of those costs were to be recovered through user fees. The consulting firm, MGT of America (MGT), was selected through the Request for Proposal (RFP) process to complete the Study. Staff was expecting to receive the completed reports from MGT in August, with a presentation to the Finance Committee at some point thereafter. She noted the Study did not include the development impact fees or the AB1600 fees, but noted a separate consultant was looking into those fees and services. The method utilized by MGT was to begin looking at the fees from the bottom up, which meant MGT was receiving the data from City Staff, but the templates and tools were being provided by the consultant. They calculated the fully loaded cost by adding the direct Staff cost, plus the department and Citywide overhead. The front line Staff were the employees that had the most interactions with the customers, such as Building Inspectors, Planners, and the Park Rangers, were considered direct costs. Department and Citywide expenses were considered indirect costs. Departmental overhead was usually management, secondary support Staff, and any other operational expense that was not easily traced to the activity. Citywide overhead was referred to as the Cost Allocation Plan, which included the services for all of the central services departments; City Attachment A MINUTES Page 5 of 16 Finance Committee Special Meeting 7/3/12 Manager, City Auditor, City Attorney’s Office, City Clerk’s Office, Administrative Services, Human Resources, and Facilities maintenance. The method for allocating costs varied by department, for example, the Human Resources department’s costs were based on the number of Full Time Employees (FTE). MGT also provided a listing of the City’s fixed assets for the purposes of allocating depreciation because currently the City did not include the depreciation in the Cost Allocation Plan. For example Recreational fees were treated differently. The methodology was that they examined things from top to bottom. A recreational study required an analysis that was so detailed that the benefit was disproportionate to the cost. There was a recreational cost service performed but at a higher level based on the market and comparable venue rates. MGT provided the City with price differentials for non-residents who used the services. Cost recovery was considered the subsidizing portion of the cost. Cost recovery was a policy issue. The main question was how much of the tax dollars were used to pay for services that provided a unique or special benefit for a single individual. When Staff returned in the fall timeframe, the discussion was to be focused on community wide benefits and services, such as police patrol because it was funded by tax revenues versus services that provided a private benefit. Mr. Perez noted that direct and indirect costs were broken down to show the level of recovery for each item examined. For example, Golf Maintenance Services were contracted out, which saved several hundred thousand dollars. When Staff allocated the indirect overhead, they based it on Full Time Equivalents (FTE). When the majority of the FTE’s went away, the majority of the overhead went away from the golf course. The results reflected that expense line for the golf course was lower, which meant the fee for golf needed to be changed. Vice Mayor Scharff asked if golf services were charged at the market rate. Ms. Wilcox said the golf fee was not more than the full cost recover fee, or there would be a tax assessment. Chair Shepherd said any amount of a particular fee that was more than 100 percent of cost was considered a special tax. By law that required approval of two-thirds. She asked if that rule applied to other fees, such as swimming and tennis. Mr. Perez stated there was a need for replacement of infrastructure but the fees shown were only of the current costs, not the future costs for replacement. There was room to adjust for future cost recovery based on the policy decisions that were set. Attachment A MINUTES Page 6 of 16 Finance Committee Special Meeting 7/3/12 Vice Mayor Scharff recalled a discussion with the City Attorney regarding fees being different depending on what they were. Some fees were not charged higher than their cost recovery but he believed there were recreation fees that were. Ms. Wilcox said that was true for the facilities fees, not the service fees. Chair Shepherd clarified the rental fees were reflective of a fee higher than cost recovery. Vice Mayor Scharff asked Staff to clarify what was to be done and if the fees needed to remain cost recovery only. Mr. Perez wanted to have legal Staff guide them on the direction of legal constraints. Vice Mayor Scharff asked if the broader cost of recovery approach was included in the upcoming infrastructure needs. Mr. Perez felt Staff needed to provide examples of what that approach looked like before deciding it was the appropriate approach. He did not want to place the cost of the program at a price people were not willing to pay. Vice Mayor Scharff asked why Palo Alto was put at a disadvantage. They charged less than the full cost recovery because it did not make sense to charge a fee higher than the market rate. Mr. Perez wanted to clarify that if the summer camp counselors spent 15 percent of their time in a facility preparing for the day’s events, 15 percent of the replacement cost of the facility was part of the cost allocation. Vice Mayor Scharff asked if the Study showed what the market rate was for the items in Palo Alto. Ms. Wilcox stated the market rates reflected of the eight surrounding cities; Cupertino, Fremont, Menlo Park, Mountain View, Redwood City, San Mateo, Santa Clara, & Sunnyvale. Chair Shepherd asked about private sectors. Ms. Wilcox said Staff could utilize private sector facility rental fees. Mr. Perez said he checked with other departments who had more knowledge of outside facilities fees and acknowledged it was not fiscally responsible to pay the consultant to research that type of information. Attachment A MINUTES Page 7 of 16 Finance Committee Special Meeting 7/3/12 Chair Shepherd confirmed Staff retrieved outside facility rental information and said it was included as a part of the Study. Mr. Perez said yes, the information was included. Council Member Burt said historically the golf course had a bond debt service. That depended on the year there was a deficit or a surplus, after paying the debt service. The maintenance was privatized, which saved direct and overhead dollars, making way for the possibility of consistent surplus from the golf course. Mr. Perez said that was correct. Council Member Burt mentioned there was a review for golf course redesigns, which had the potential to generate significant revenue. The revenue was used to renovate and upgrade the course. He asked if the City benefited from the upgrade and whether the City was prohibited from the surplus dollars going towards other community service functions. Mr. Perez said the program was giving current cost recovery but not future cost recovery; he was going to verify his answer with Legal Staff. He did not believe it was out of line to build reserves for future replacement. Council Member Burt clarified that some of the surplus funds went towards significant ongoing maintenance. The model showed the City was able to liberate land for playing fields, upgrade the course, and as a result of the upgrade, drive more rounds and higher green fees. He noted most of the rounds played were not by Palo Alto residents. Mr. Perez said in conversations with residents and onsite visits to the facility, there were a number of capital needs and it was evident the City was not funding these needs. Council Member Burt recognized there was a number of ways the dollars were reinvested into a greater golf complex. He asked if the golf course was the only place the surplus dollars could be used. Vice Mayor Scharff said golf courses were considered recreational facilities so that a criterion was met and there was a return on investment or utilities. If there was a return on utilities, which was more highly regulated than other areas, he found it was difficult to understand, since the General Fund paid to build the golf course, for which there was no return investment. Attachment A MINUTES Page 8 of 16 Finance Committee Special Meeting 7/3/12 Council Member Burt said there was a question of consistency because there were a lot of facilities where the same argument could be made. Chair Shepherd said those were policy questions. Mr. Perez mentioned he did not have a great deal of information in front of him but he was aware other agencies made the golf course an Enterprise. Vice Mayor Scharff believed there were areas where being conservative was beneficial, but this was not one of those areas. Council Member Burt agreed the Enterprise route was a good solution. He asked if the methodology was going to discuss private and public communities. Ms. Wilcox said yes, it was community wide. Council Member Burt asked if the consultant was going to identify what a hybrid was and what the balance was between private and communitywide benefits. Ms. Wilcox said yes, the consultant provided examples from other cities that showed a range by percentage of rates and from that information, the City made policy decisions on how to proceed. Council Member Burt said his questions were centered on the value basis and how to identify them. For example a City priority was Youth Well Being and there were programs that were serving that priority. There was a direct benefit to the youth participating in the program, and an indirect benefit to those who experience the youth’s participation. He wanted to be sure there was a City value system put into place before the consultant depicted the rate schedules. Ms. Wilcox noted the main focus of the Study was to identify the full costs and current recovery levels. From there, the process was based on ranges commonly seen in other cities. Council Member Burt asked if the Finance Committee saw samples early on in the process so they would know the direction things were moving. Ms. Wilcox agreed and said Staff could provide that information. Vice Mayor Scharff agreed with that sentiment and wished to see the same information. Attachment A MINUTES Page 9 of 16 Finance Committee Special Meeting 7/3/12 Mr. Perez stated a key piece was identifying the number of benefactors. Vice Mayor Scharff asked what determined a private versus a public benefit. Ms. Wilcox said if a developer pulled a permit to build a project to make money, it was considered a private benefit. Vice Mayor Scharff clarified that even if only five people attended a program, it was considered a community benefit. Ms. Wilcox said at the outmost extreme, 100 percent community benefits were considered fully paid by tax dollars, as in patrol and Advanced Planning. Parks and Recreational Programs were typically funded with a combination of tax dollars and user fees and were considered a societal benefit mentally, emotionally, and physically. Council Member Burt asked what the Summer Concert Series was considered because there was no entry fee and some attended regularly, while some never attended. Mr. Perez said yes, that was classified as a community benefit, while a course for guitar lessons was classified as private. Chair Shepherd struggled with how to quantify services provided by the City. A suggestion was a location where a person purchased a home and sold it for more than the purchase price. She felt community services added to that value and noted how the City changed childcare when they placed childcare availability on campuses for Palo Alto Unified School District (PAUSD). Council Member Burt said under the scenario where there was afterschool childcare onsite, it cleared up child drop-off traffic, there was less emissions, and it increased safety for children not having to move to a secondary location. Chair Shepherd noted that childcare convenience was provided by a Human Services Resource Allocation Process (HSRAP) grant; which made it difficult to capture and place into a module. Mr. Perez expressed the difficulty for a city’s inner working because each city held varied policies and value systems. Sustainability and safety were key values because this was the level at which the City chose to recover costs. These were factors the Council wanted to consider when they made decisions about cost recovery levels. Attachment A MINUTES Page 10 of 16 Finance Committee Special Meeting 7/3/12 Chair Shepherd asked if the Study included sports programs offered through PAUSD middle schools. Mr. Perez said those were different levels of contractual agreements between the City and the PAUSD. Chair Shepherd asked if those agreements raised the City’s resources because of necessary hiring’s. Mr. Perez saw these as services provided where there was no fee charged. Chair Shepherd confirmed the answer was no. Mr. Perez said MGT was providing the first analyses, whereas Staff was likely performing the latter two. Chair Shepherd mentioned the City of San Carlos was exporting their recreational activities to Half Moon Bay and asked if San Carlos was part of the eight benchmark cities. Mr. Perez stated he was in contact with the Finance Director for San Carlos and was told there were interesting matters that they had realized as a result of the structural changes they had made. He noted, as with Palo Alto, that outsourcing of park maintenance had a saving factor. Chair Shepherd said, along with the cost savings, it was easier to manage as well. Mr. Perez said it was easier to manage one person, as opposed to an entire staff, yes. San Carlos outsourced for Police and Fire as well. Chair Shepherd asked how San Carlos charged Half Moon Bay. Mr. Perez said the presentation given to the Finance Directors’ shared an example of the swimming program; they rented the high school pool and hired part-time non-benefited personnel to travel to Half Moon Bay to run the programs. They also changed the telephone answering procedures to announce Parks & Recreation without mentioning the City name. Chair Shepherd asked why the shift was done. Mr. Perez said the amount of funds collected from Half Moon Bay covered their costs because the program was already established. Chair Shepherd asked if they could subsidize. Attachment A MINUTES Page 11 of 16 Finance Committee Special Meeting 7/3/12 Mr. Perez said they were not subsidizing, they were recovering the full costs. Vice Mayor Scharff said sharing the recreation program lowered the fixed cost. Chair Shepherd said it was more about the economy of these cities and their abilities to scale and fully employ swim instructors. Mr. Perez said that was correct. Chair Shepherd asked what the consequences were, with respect to the golf course, if there was a boom in rounds and the City inadvertently made a profit. She suggested the pieces of the Study be brought to full Council incrementally, in an effort to have a better understanding and to discuss each section. Mr. Perez asked if the request was for a draft report to be presented to the full Council to discuss and critique prior to the release of the final report because if the golf course activity increased, there were expenses not accounted for that the additional funds were used towards. Chair Shepherd said the pension costs were assigned as part of the Cost Study, so the legacy was loaded. Mr. Perez expressed the pension portion was part of the dilemma because the costs were being allocated by Full Time Employees (FTE) for pension, retirement, and medical. Additionally, programs contracted out their expenses and shifted to other departments because there were no longer FTE’s associated with the program. Council Member Burt clarified that prior to the maintenance being contracted out there were FTE’s and managers overseeing them with administrative costs for the manager; there were overhead costs under that scenario. The maintenance was contracted out with a minimal amount of work done to administer. The administrator ensured the contractor was providing the level of quality of work, in theory, the management for the Community Services Department (CSD) went down by that percentage. Chair Shepherd noted the report showed 1600 hours was full time due to the floater holidays. She said full time was usually 2000 hours with two weeks of time off. They needed to have this discussion about the 400 hours and who was paying for that. She asked how the City made money if they chose the Enterprise route or considered a public/private partnership with a private entity. Attachment A MINUTES Page 12 of 16 Finance Committee Special Meeting 7/3/12 Mr. Perez said the scenario he had seen played out was a city turning their entire operation to a private industry, the golf course, pro shops, and grounds. Then he saw it receiving a contracted annual sum. That was the type of situation Staff was interested in researching for Palo Alto. Chair Shepherd asked if that city was bound by the same fee binding as Palo Alto. Council Member Burt said the scenario mentioned was different and Staff needed to research the circumstances for today’s applicableness. Mr. Perez noted the golf course industry in the Bay Area had a severe downturn over the last few years. He surmised Palo Alto did not add enough for the cost because the retired employees of the golf course were vested. The City was still responsible for their pension and retiree medical but those expenses were not included. Chair Shepherd understood the City projected cash flow from the golf course, which was in the projections for the Long Term Financial Forecast. Mr. Perez said that was correct. Chair Shepherd understood it was not a large sum of money but it was better than a deficit. Mr. Perez said, in reviewing the 2009 budget, when employees were in place, the year ended with a negative $326,000. They made changes and the year closed with a positive $76,000. The City gained by contracting the services and ended in the mid $75,000. Rob De Geus, the Division Manager for Golf projected the 2012 budget at $228,000 for the adopted budget. There were significant changes in gain from contracting the services. Chair Shepherd said the funds were banked into the books so it could change the anticipated scenario. Mr. Perez had discussions with CSD. They requested the leftover funds be returned to the golf course for upgrades and renovations. Vice Mayor Scharff said there was a significant savings in budget by contracting services. Mr. Perez agreed. Attachment A MINUTES Page 13 of 16 Finance Committee Special Meeting 7/3/12 Vice Mayor Scharff said by executing the contacted services other departments were being charged more as their fixed costs rose because the golf course was no longer taking part of those fixed costs. Mr. Perez clarified it was within the departments. Vice Mayor Scharff said within CSD. Mr. Perez said that was correct. He noted that was true but wanted to validate that before he confirmed. Vice Mayor Scharff said if that was true, he felt the entire methodology was flawed because there was money being saved and it was driving costs higher in the departments that were unrelated. He felt that was wrong. Council Member Burt thought that was true, provided there was not an overall adjustment to the overhead commensurate, with less staffing than the overhead was serving. In the long run it worked but in the short run there was an issue. If the golf maintenance was five percent of the employees but no longer served them with the overhead, there would not be an immediate adjustment in management. If it was a 25 percent difference, there was a need for an immediate adjustment. Mr. Perez clarified 78 positions were eliminated over the last few years. He agreed the model needed to be changed and he expressed why it was a positive exercise to meet and go over the process. Chair Shepherd asked if the entire golf course processes was exported out, was the legacy assigned to the incoming revenue to offset in order to make it whole. Council Member Burt noted the golf course contract was recently renewed so the entire golf course was not being outsourced in the foreseeable future. Chair Shepherd believed using the golf course was a good way to apply the theory on how to come to policy. Mr. Perez acknowledged the details for the direct and indirect costs needed to be presented because issues surfaced during this type of discussion. Distribution of the legacy costs were embedded in the direct and indirect costs. Council Member Burt requested that the Finance Committee direct Staff to return with a draft report and examples. Attachment A MINUTES Page 14 of 16 Finance Committee Special Meeting 7/3/12 Vice Mayor Scharff concurred that seeing examples in stages was beneficial. Mr. Perez worked with MGT to complete a draft report to bring before the Finance Committee. Vice Mayor Scharff recommended a check-in prior to the draft report to prevent Council from being surprised. He did not want false methodology driving policy decisions. Council Member Burt did not want the community to respond to something that was only partially vetted. Mr. Perez asked the Committee if they wanted legal Staff and the consultant to be in attendance for the release of the draft report and the vetting process. Council Member Burt asked where the consultant was traveling from and what the expense was e to have them in attendance. Mr. Perez said they were traveling from Sacramento at a minimal expense but the contract needed to be amended. Council Member Burt agreed there was a value for the consultant to be in attendance but the goal was to arrange it so they did not need to travel to multiple meetings. Vice Mayor Scharff felt that in order for the consultant to attend he needed to be far enough along to have a meaningful discussion. Mr. Perez agreed to use the consultants time wisely. Chair Shepherd said Staff did not request action be taken on this item so she wanted to know how Colleagues were going to be brought up to date on the progress. Mr. Perez acknowledged the item had no required action. He noted it was a Finance Committee item and there were no future plans to expand the item until the Committee approved it and forwarded it the full Council. Staff received a request from the Mayor to be available for those Council Member’s not on the Finance Committee. He agreed that input received from other Council Member’s was shared to ensure everyone had the same questions and answers. Chair Shepherd said it appeared there was at least two more sessions with the Finance Committee on the matter prior to a recommendation for full Attachment A MINUTES Page 15 of 16 Finance Committee Special Meeting 7/3/12 Council. She asked if there was going to be an interim going to full Council to avoid a battle of ideas prior to the final report. Mr. Perez felt once the Finance Committee reviewed the first draft report there was going to be a good sense of direction for the policy making. He mentioned a component to the process was a community outreach program. Chair Shepherd wanted to see a road map of the process. Mr. Perez believed in producing the draft report first, then laying out the process and issues. NO ACTION TAKEN FUTURE MEETINGS AND AGENDAS Lalo Perez, Director of Administrative Services noted the next scheduled meeting was July 17, 2102. Reappropriations were items Staff had identified as budgets for specific projects and were carried from fiscal year 2012 to 2013. He informed the Committee he was out of the office on that date but David Ramberg, the Assistant Director was going to be in attendance. The first meeting after the Council break was schedule for September 4th but was cancelled because of a Special City Council meeting. The next scheduled meeting after Council returned was September 18th. Chair Shepherd noted neither she nor Vice Mayor Scharff were in town on September 4th. David Ramberg, Assistant Director of Administrative Services verified the Hotel Tax for the 4th quarter of fiscal year of 2011 and noted there were quite a bit of accruals, which calculated to $3.1 million. He said the City was on pace to complete $3.5 million in the 4th quarter of fiscal year 2012. Council Member Burt asked why there were accruals in the Transient Occupancy Tax (TOT). Mr. Perez explained the receipts came in at the close of the fiscal year, which accrued for the month of July and part of August. Council Member Burt said the process was running at more than 20 percent ahead of fiscal year 2011 and for this year they projected being seven percent ahead. Mr. Perez felt it was better if Staff provided the detailed numbers for the month. Attachment A MINUTES Page 16 of 16 Finance Committee Special Meeting 7/3/12 Council Member Burt felt the seven percent was an overly conservative number. Vice Mayor Scharff asked how the TOT worked and who the hotel paid. Mr. Perez explained the hotel received funds from the individuals renting the rooms and they remitted directly to the City. Vice Mayor Scharff said the remittance took up to 45 days. Mr. Perez said once the month ended the hotel had 30 to 34 days to remit. Vice Mayor Scharff asked if the time table was generated by a City Ordinance. Mr. Perez said that was correct, it was in the Municipal Code and there was a penalty for not complying within the specified time. Vice Mayor Scharff mentioned the state had moved their TOT process to an online remittance. He asked if the City considered that change and was it beneficial. Mr. Perez said from a cash flow perspective, an online remittance process was beneficial but Staff needed to research the burden it placed on the hotels. ADJOURNMENT: Meeting adjourned at 7:46 p.m. Attachment A City of Palo Alto (ID # 3151) Finance Committee Staff Report Report Type: Action Items Meeting Date: 3/19/2013 City of Palo Alto Page 1 Summary Title: Cost of Service Study Follow Up Title: Cost of Service Study Follow Up From: City Manager Lead Department: Administrative Services Recommendation This report is provided for informational purposes. Background Last year, the City retained the services of MGT of America (“MGT”) to assist staff in determining the full cost of providing General Fund services for which user fees are charged (or could be charged). The analysis will depict current cost recovery levels as well as potential areas for increasing revenues. User fees and permits currently generate approximately $22.4 million annually, which is approximately 15.4 percent of all General Fund revenue. The user fee analysis will facilitate more informed decision-making processes and provide the framework for setting fees, level of service, service delivery modes and prioritizing services that will meet the City’s fiscal and policy goals. In July 2012, staff presented the Finance Committee with an overview of the process for conducting this analysis. The Finance Committee requested that, prior to bringing MGT’s draft report back for consideration, staff provide additional information about the methodologies utilized in this study and some examples that illustrate how the full costs and cost recovery levels are developed. Several issues have delayed completion of MGT’s analysis, including staff turnover and competing priorities in departments, data reconciliation and personnel changes within MGT. Staff expects to have the full report and findings to the Finance Committee before the end of the current fiscal year. Discussion Propositions 13, 218 and 26 have placed both substantive and procedural limits on cities’ ability Attachment B City of Palo Alto Page 2 to impose fees and charges. Collectively these constitutional amendments provide safeguards against taxes being imposed without a vote of the people. Proposition 26 contains a more general articulation of the cost of service principle and includes a requirement that the local government bear the burden of proof that “a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to recover the reasonable costs of the government activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burden on , or benefits received from, the governmental activity.” (Cal. Const. art. XIII C, § (e).) The approach MGT and other consultants utilize to analyze cost recovery levels is relatively standardized. Most fees are analyzed by building the costs of providing that particular service from the bottom up. In some cases, however, the cost of developing the analysis at the granular level is outweighed by the benefits for reasons that will be outlined later in this report. For these services, consultants utilize a top down approach to developing full costs and cost recovery levels. Both approaches require the identification of direct and indirect costs, defined as follows: Direct Costs are those that can be identified specifically with a cost objective (in this case, service or program). Direct costs include “front line” staff such as building attendants, program producers and inspectors. Their time – and compensation costs – can usually be readily assigned to a particular fee activity or program. Any non-personnel related costs that are incurred specifically in relation to a particular fee activity can also be classified as a direct cost. In many cases, however, non-personnel related costs are not readily assigned to one particular fee activity so these costs are frequently allocated as an indirect cost. Indirect Costs are those that are a) incurred for a common or joint purpose benefitting more than one cost objective, and b) not readily assignable to the specific cost objective (fee service) without effort disproportionate to the results achieved. The federal Office of Management and Budget (OMB) guidelines for cost allocation state that indirect costs should be distributed or allocated to the benefitting cost objective “on bases that will produce an equitable result in consideration of relative benefits received”. Indirect costs include citywide overhead, which are also referred to as “cost plan charges”. The methodology for allocating citywide overhead varies by and within each “sender” department (ASD, Human Resources, City Attorney, City Auditor, City Manager, City Council, City Clerk and Public Works/Facilities Maintenance). For example, Human Resources costs are allocated based on the number of full-time equivalent positions in each of the receiving departments. ASD’s OMB division costs are allocated based on operating expenses in each of the receiving departments. In some cases, time estimates or item count from the sender department are Attachment B City of Palo Alto Page 3 used to allocate costs. MGT recommends that the City include a use allowance in the cost plan to allocate costs for capital assets. The City does not currently incorporate an allowance into cost plan charges. MGT utilized the cost principles outlined in the federal OMB Circular A-87 to allocate these costs. To sum: 1. The computation of the use allowance is based on the acquisition cost and useful life of the assets involved. 2. The use allowance for buildings and improvements is computed based on a useful life of 50 years. Thus 2 percent of the acquisition cost can be included as an annual cost. 3. The use allowance for equipment that costs $5,000 or more is computed based on a useful life of 15 years. Thus, 6.66 percent of the acquisition costs can be included as an annual cost. OMB A-87 does not allow agencies that receive federal funds to include land acquisition in the use allowance. Inclusion of a use allowance in the full cost calculation for the Golf, Aquatics and Children’s Theatre programs increased the total costs for those programs by 2%, 9% and 1%, respectively. Other indirect costs include department/division administration (managers, support staff, etc.) and any other cost incurred for a common purpose or not easily traced to a specific fee activity. These type of indirect costs will require policy decisions as part of the full report discussion. Description of Methodologies Utilized in Study Most fees were analyzed as follows (“bottom up” or fee level):  Identify and allocate staff time spent directly to support specific activities or services for which the user fee is charged (e.g. building inspectors, plan checkers).  Based on compensation data provided by the City, calculate direct staff costs for each fee related activity or service. The hourly rate of compensation is then converted to a productive hourly rate in order to recover costs associated with paid leave, meetings, training and other time not spent directly in the provision of a particular service or activity. Productive time varies for each individual based on availability and utilization of paid leave and other factors. For purposes of this analysis, MGT assumed 1,600 productive hours. The range in other agencies is typically 1,500 -1,700 hours.  Compile all indirect costs and integrate with the productive hourly rate to create a “fully burdened” hourly rate. Attachment B City of Palo Alto Page 4  The fully burdened hourly rate is then applied to time estimates provided by City staff to develop the full cost.  Cost recovery and subsidy levels are calculated based on volume estimates provided by City staff and revenue receipts. For example, if the full cost of providing any particular fee service is $100 and the fees paid by the individual benefitting from the service are $80, the cost recovery rate is 80 percent and general taxpayer funds are subsidizing 20 percent of the service. In some cases, the potential benefits of conducting a bottom up analysis of a particular fee are outweighed by the expense that would be incurred in developing this information. This is almost universally the case with recreational programs, which are typically analyzed at the program level instead of the fee level. For example, we have developed the full cost of golf services at the program level to illustrate current cost recovery and subsidization levels. Staff also identified the percentage of direct costs that are currently recovered, the percentage of direct costs and CSD department overhead recovered and as well as the percentage of full costs (i.e. direct and all indirect costs, including citywide overhead). However, a substantial amount of effort would be required to identify and track costs at the individual fee level (e.g. weekday daily fee, twilight, super twilight, primetime rates). The cost of conducting such a detailed analysis would outweigh the value of this information, in particular because elasticity of demand and local policy goals are typically factors that are evaluated when establishing recreational fees. The “top down” or program level analysis is conducted as follows:  Identify all direct costs (staff, supplies and materials, contracts, general expenses, etc.) for the program. For purposes of capturing full costs, non-operating costs such as debt service are included as a direct cost when applicable.  Allocate division, department and citywide overhead (indirect) costs. MGT allocated these indirect costs as follows: o Division overhead is allocated to each program within the division based on the ratio of program direct expenses to division direct expense. For example, direct expenses for Golf are approximately 29.5 percent of the total direct expenses for the Open Space/Parks/Golf division. Thus, 29.5 percent of the division overhead was allocated to the Golf program. o Department overhead is allocated to each program based on the ratio of program direct expenses to total department direct expenses. Direct expenses for the Golf Attachment B City of Palo Alto Page 5 program represent approximately 6.6 percent of the total direct expenses for CSD. Thus, 6.6 percent of the department overhead was allocated to the Golf program. o Citywide overhead expenses (“cost plan charges”) are allocated using three different methodologies. Public Works’ custodial and facilities maintenance costs are allocated based on square footage. Central service department costs (CAOs, Human Resources, ASD,) are allocated using the same percentage basis used to allocate department overhead to individual programs. And the use allowance for capital expenses is assigned to each program based on assets acquired in support of that program (e.g. the cost of acquiring pool heaters is assigned to the Aquatics program)  Once full costs (all direct and indirect) are calculated, cost recovery levels are presented in a manner to depict percent of direct costs recovered as well as percent of direct and indirect (full) costs. Attached are three examples that illustrate the process for calculating full costs and cost recovery levels at the program level. Fees for Use of Government Property Unlike fees for services rendered, fees charged for the use of government property, including park and recreational facilities, are exempt from Proposition 26 (“No Hidden Taxes”). As a result, public agencies are permitted to set fees for use of these facilities as well as equipment rentals at any price the market will bear. This exemption applies to green fees, cart and other equipment rental fees for Golf services. Timeline/Next Steps MGT’s complete draft report will be presented to the Finance Committee for discussion before the end of the current fiscal year. Staff will also be conducting separate cost analyses on non- fee related services, such as Human Services and “back room” operations (finance and human resources). Once preparation of the FY 2014 Operating Budget is complete, staff will develop a scope of work, tentative timeframes and any resource impact analysis for each of those studies and return to the Finance Committee for discussion. Staff is requesting feedback on the three examples and approach to incorporate into the final draft report. Attachments:  Attachment A: Cost of Service Study Follow Up Samples (PDF) Attachment B ATTACHMENT "A" GOLF FY 2012 Adopted FY 2012 Actuals Difference DIRECT COSTS Operating: S&B - .97 FTE (1)$139,203 $129,586 -$9,617 Contract (2)$1,552,863 $1,431,868 -$120,995 Misc. (3)$399,295 $327,645 -$71,650 Non-Operating: Debt Service $559,539 $499,074 -$60,465 GF Loan Repay $94,849 $0 -$94,849 TOTAL DIRECT COSTS $2,745,749 $2,388,173 -$357,576 INDIRECT COSTS CSD Division Overhead (4)$0 $60,325 $60,325 CSD Dept Overhead (5)$0 $194,493 $194,493 Citywide Overhead (6) General $41,455 $210,654 $169,199 Citywide Overhead (7) Custodial/Fac Maint $0 $73,025 $73,025 Facility/Use Allowance (8)$0 $58,567 $58,567 TOTAL INDIRECT COSTS $41,455 $597,064 $555,609 TOTAL FULL COSTS $2,787,204 $2,985,237 $198,033 REVENUES Fee Revenues $2,857,850 $2,624,748 -$233,102 Other Revenues (9)$157,320 $95,393 -$61,927 TOTAL REVENUES $3,015,170 $2,720,141 -$295,029 Net Profit/ Loss 227,966$ (265,096)$ (493,062)$ PERCENT COST RECOVERED Direct Cost 110%114%n/a Direct Cost + Division/Dept OH n/a 103%n/a Full Cost (Direct + All Indirect)n/a 91%n/a (1) .60 FTE Regular; .37 FTE Temporary/Hourly (2) Golf maintenance, management fees, credit card fees, cart/club rentals (3) Allocated charges, rents/leases, water, supplies/materials, general expenses (4) Allocated based on ratio of Golf direct expenses to total direct expenses for OS/Parks/Golf Division (5) Allocated based on ratio of Golf direct expenses to total direct expenses for the Department (6) Allocated based on ratio of Golf direct expenses to total direct expenses for the Department (7) Custodial/Maintenance cost plan charges allocated based on square footage (8) Calculated based on acquisition cost and useful life of asset (9) Proshop & restaurant lease, restaurant utilities, interest income (debt service) Attachment B FY 2012 Adopted FY 2012 Actuals Difference DIRECT COSTS Operating: S&B - 11.34 FTE (1)$418,794 $458,518 $39,724 Contracts $15,000 $11,903 -$3,097 Supplies, Materials, and General (2)$38,500 $42,093 $3,593 Misc. $0 $2,188 $2,188 TOTAL DIRECT COSTS $472,294 $514,702 $42,408 INDIRECT COSTS CSD Division Overhead (3)0 $30,577 $30,577 CSD Dept Overhead (4)$0 $40,316 $40,316 Citywide Overhead (5) General $0 $43,666 $43,666 Citywide Overhead (6) Custodial/Fac Maint $0 $35,211 $35,211 Facility/Use Allowance (7)$0 $62,153 $62,153 TOTAL INDIRECT COSTS $0 $211,923 $211,923 TOTAL FULL COSTS $472,294 $726,625 -$254,331 REVENUES Fee Revenues $400,550 $501,164 $100,614 Other Revenues $0 $0 $0 TOTAL REVENUES $400,550 $501,164 $100,614 Net Profit/ Loss (71,744)$ (225,461)$ (153,717)$ PERCENT COST RECOVERED Direct Cost 85%97%n/a Direct Cost + Division/Dept OH n/a 86%n/a Full Cost (Direct + All Indirect)n/a 69%n/a (1) 1.24 FTE Regular; 10.1 FTE Temporary/Hourly Based on 50 year useful life (2) Rescue and training equipment, safety supplies, uniforms, minor facility maintenance , etc. (3) Allocated based on ratio of Aquatics direct expenses to total direct expenses for the Recreation Division (4) Allocated based on ratio of Aquatics direct expenses to total direct expenses for the Department (5) Allocated based on ratio of Aquatics direct expenses to total direct expenses for the Department (6) Custodial/Maintenance cost plan charges allocated based on square footage (7) Calculated based on acquisition cost and useful life of asset Aquatics Attachment B FY 2012 Adopted FY 2012 Actuals Difference DIRECT COSTS Operating: S&B - 9.79 FTE (1)837,005$ 864,834$ 27,829$ Contracts (2)131,679$ 225,554$ 93,875$ Supplies, Materials, and General 194,789$ 112,168$ (82,621)$ Misc. 2,762$ 32,490$ 29,728$ TOTAL DIRECT COSTS 1,166,235$ 1,235,046$ 68,811$ INDIRECT COSTS CSD Dept Overhead (3)-$ 48,241$ 48,241$ CSD Dept Overhead (4)-$ 96,740$ 96,740$ Citywide Overhead (5) General -$ 104,779$ 104,779$ Citywide Overhead (6) Custodial/Fac Maint -$ 207,998$ 207,998$ Facility/Use Allowance (7)-$ 16,768$ 16,768$ TOTAL INDIRECT COSTS -$ 474,526$ 474,526$ TOTAL FULL COSTS 1,166,235$ 1,709,572$ 543,337$ REVENUES Fee Revenues 330,100$ 360,304$ 30,204$ Other Revenues (8)-$ 80,000$ 80,000$ TOTAL REVENUES 330,100$ 440,304$ 110,204$ Net Profit/ Loss (836,135)$ (1,269,268)$ (433,133)$ PERCENT COST RECOVERED Direct Cost 28%36%n/a Direct Cost + Division/Dept OH n/a 32%n/a Full Cost (Direct + All Indirect)n/a 26%n/a (1) 6.05 FTE Regular; 3.74 FTE Temporary/Hourly (2) Costumes, stage set building materials, show royalties, equipment, rental fees, etc. (3) Allocated based on ratio of Childrens Theatre direct expenses to total direct expenses for Arts & Sciences Division (4) Allocated based on ratio of Childrens Theatre direct expenses to total direct expenses for the Department (5) Allocated based on ratio of Childrens Theatre direct expenses to total direct expenses for the Department (6) Custodial/Maintenance cost plan charges allocated based on square footage (7) Calculated based on acquisition cost and useful life of asset (8) Donations / Contributions Children's Theatre Attachment B FINANCE COMMITTEE MINUTES Page 1 of 22 Regular Meeting Tuesday, March 19, 2013 Council Member Burt called the meeting to order at 7:01 P.M. in the Council Chambers, 250 Hamilton Avenue, Palo Alto, California. Present: Burt (Chair), Schmid, Shepherd Absent: Berman Agenda Items 1. Utilities Options for Cost Savings Modifications to Palo Alto's Street Sweeping Phil Bobel, Assistant Director of Environmental Services recalled the Finance Committee (Committee) discussed street sweeping during the 2012 Budget cycle. The Administrative Services Department (ASD) analyzed options for street sweeping. Ron Arp, Solid Waste Manager reported a crew within the Public Works Department was responsible for sweeping all streets, most parking lots, and cleaning Downtown sidewalks. The analysis was based solely on the street- sweeping portion of the overall Public Works Department Budget. The cost for five fulltime street sweeper operators and large sweepers was $980,000 annually, or slightly more than 40 percent of the sweeping Budget. Staff did not evaluate savings for other tasks, such as sweeping and cleaning bike paths, medians, parking lots, sidewalks, and garages, picking up leaves and debris and transporting them to the Smart Station’s, or cleaning homeless encampments. Cost savings was realized in the sweeping Budget without significant impacts to residents and businesses. Staff recommended reducing the frequency of sweeping in residential and light commercial areas during the eight months of the non-leaf season. Weekly sweeping during non-leaf season had limited value in protecting the environment. He said contracting some of the work could save costs. Option One was the City's current program of sweeping all public streets on a weekly basis year round, with the exception of the Downtown area, which was swept three times per week. The Budget cost was $980,000 annually. Approximately half of costs Attachment B MINUTES Page 2 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 were Staff costs and the other half were equipment costs. Palo Alto was the only City of those surveyed that swept weekly during the non-leaf season in residential areas. ASD calculated a future cost for pension and healthcare liability under Option One of $339,000 per year. Option Two was contracting all street-sweeping tasks. He mentioned that contracting eliminated five Full-Time Employee’s (FTE) and some equipment. Also, in Option Two, streets in residential areas were swept every other week during the non-leaf season. He said the Downtown area would still be swept three times per week. The cost of contracting all street sweeping was $441,000 annually, a savings of more than $500,000 per year. The disadvantage of contracting street sweeping was the City's inability to respond to emergency events. In Option Three, Staff's recommendation was a mixture of Options One and Two where in-house crews swept streets every other week year round. A contractor supplemented in-house crews by sweeping streets weekly during the leaf season. All Downtown street sweeping was contracted, and occurred three times per week year round. Option Three eliminated two FTE’s and two machines, and was going to cost approximately $675,000, with a savings of $305,000; Option Three retained the City's emergency response ability. Staff recommended a pilot program to sweep selected residential areas every other week beginning in late spring through early fall 2013. Staff intended to return to the Committee with recommendations in late 2013, with a goal of full implementation in Fiscal Year (FY) 2015. Staff did not request the Committee approve any of the one Option’s; rather Staff requested input regarding feasibility of the plan and direction to proceed with a pilot program. Chair Burt requested Staff provide context for emergency event response. Mr. Arp explained street sweeping crews were called out monthly to remove mud from streets caused by water main breaks and the Police Department occasionally called out street sweepers to remove debris from automobile accidents. Council Member Schmid clarified that the Committee would not recommend one of the Options, just discuss issues and recommend implementation of a pilot program. Mr. Bobel agreed with his assessment. Council Member Schmid inquired whether increased parking reduced the effectiveness of street sweeping. Steve Banks, Manager of Maintenance Operations agreed that increased parking was a problem. Permanently posted signs in the Northern Downtown area allowed a clean sweep along the curb. In other areas, Staff Attachment B MINUTES Page 3 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 posted temporary signs four to five times a year. If residents provided information regarding debris underneath parked vehicles, Staff would post those areas as well. Council Member Schmid asked if the frequency of street sweeping changed in the past to every other week, only to return to weekly. Mr. Bobel was not aware of that. To the best of his recollection, the City always swept weekly. Council Member Schmid felt the City's previous outsourcing experiences were satisfactory, and requested Staff comment on the effectiveness of outsourcing other services. Lalo Perez, Director of Administrative Services reported outsourcing worked out extremely well at the Golf Course. Effectiveness of outsourcing depended on Staff clearly structuring the scope of services and punitive clauses for nonperformance, and clearly establishing the level of performance. The City had some issues with the parks contract, but Staff was resolving those. For the most part, outsourcing was successful. Staff needed to negotiate with labor groups if street sweeping was outsourced. Council Member Schmid assumed Staff discussed positive and negative aspects of outsourcing with other cities that used contractors. Mr. Perez indicated Staff talked with other cities and mentioned that the list on Attachment B reported results of Staff's survey. Council Member Schmid inquired whether emergency response was the responsibility of the Public Works Department. Mr. Bobel answered yes. If the City contracted street sweeping services, then Public Works Staff had less ability to meet their responsibilities. Council Member Schmid asked if street cleaning was the only issue affected by contracting sweeping services. Mr. Bobel responded yes, only street sweeping. Council Member Schmid noted street sweeping Staff had other job responsibilities during the weeks they were not sweeping streets, and asked if this was a new work program. Mr. Bobel indicated these were not new work items, and asked if Council Member Schmid meant during the pilot program. Attachment B MINUTES Page 4 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 Council Member Schmid meant during the pilot program and under Option Three. Mr. Bobel reported Staff would restructure job responsibilities so that all cleaning functions continued. No new functions were to be added. Council Member Schmid inquired whether the number of Staff would be reduced by sweeping every other week. Mr. Bobel explained reducing the frequency of sweeping under Option Three reduced Staff by two FTE’s. Reasons for implementing a pilot program were to ensure Staff could maintain efficiency and to determine resident’s reaction. Council Member Schmid stated the pilot program needed to be large enough to provide good data, yet he noted to Staff that the City needed excess personnel during the pilot program. He mentioned that the Refuse Fund had its own source of revenue, and asked whether Refuse rates or the General Fund paid for street sweeping costs. Mr. Bobel explained the Refuse Fund was an Enterprise Fund, and its structure was the same as the Electric Fund. Refuse rates funded the Refuse Fund, of which approximately $2 million was spent on street sweeping. The street sweeping program under discussion comprised approximately of $1 million of the total street sweeping Budget. Vice Mayor Shepherd favored a pilot program. She thought a contract for street sweeping should include a charge for wear and tear on City streets by street sweepers. She asked if residents in the pilot program would receive a reduced fee for the reduced frequency of street sweeping. Mr. Bobel explained the current Refuse Fund fee was $6.66. Vice Mayor Shepherd believed the Refuse Fund fee and Household Hazardous Waste fee totaled $10. Mr. Bobel agreed $10 was the fixed portion of the refuse bill. He mentioned that most likely, Staff would not recommend a reduced fee because costs continued to rise in other areas. As the City reduced expenses, hopefully the fee would not increase. Vice Mayor Shepherd confirmed the fee would remain stable and inquired whether the Public Works Department responded to toxic spills. Mr. Arp reported a contractor cleaned larger toxic spills. The Public Works Department cleaned small spills if they knew what the substance was. Attachment B MINUTES Page 5 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 Mr. Bobel explained $1 million of the total $2 million Street Sweeping Budget was utilized for the cleaning of special problems. Vice Mayor Shepherd was excited by the opportunity to stabilize rates and to reduce the impact of vehicles on streets. She requested additional information regarding emergency response at a future discussion. Mr. Bobel said he would provide that information and added that common emergencies were when residents requested special attention in a specific area. Those emergencies were typically handled by a street sweeper. Vice Mayor Shepherd believed emergency response was included in the bid. Chair Burt assumed the topic would be contentious before reviewing the Staff Report. Approximately half of surveyed cities contracted street sweeping. He asked how other cities responded to irregular events. Mr. Arp reported some cities utilized Public Works crews; others contracted at an hourly rate for contractor response. The next phase of analysis was to gather more details regarding emergency response. Chair Burt inquired whether the City reduced General Fund employees by 14 percent without layoffs. Mr. Perez stated the reduction was approximately 13 percent, including frozen positions. The City laid-off approximately seven to eight positions of the 80 positions reduced. Chair Burt asked if Staff planned to reassign employees. Mr. Banks reported the Department was probably not able to accommodate the two FTEs; during the pilot program, the FTEs were accommodated though. Mr. Perez suggested Staff leadership search for positions in other Departments for reassignment of the FTE’s. Chair Burt recalled Staff achieved reductions with minimal layoffs. Mr. Perez indicated Staff would strive to do the same once results of the pilot program were known. Chair Burt was interested in a hybrid of Options Two and Three. He assumed half of the street sweeping Staff was needed for irregular events. He said one FTE and three outsourced employees was the ideal balance for Attachment B MINUTES Page 6 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 handling irregular events while minimizing costs; perhaps Staff was able to include that in their evaluation. Mr. Bobel believed Staff would include that information because Staff wanted to perform more analysis and include information from the pilot program. The California Department of Transportation (Caltrans) contracted with the City to sweep El Camino Real. If the City contracted street sweeping, it did not need to contract with Caltrans to sweep El Camino Real. Staff was reviewing compliance issues with the Caltrans contract. Street sweeping was a measure in the required Storm Water Permit. In the commercial areas, Staff ensured the City was meeting those requirements. Staff wanted to return to the Committee with more information for outsourcing street sweeping. Vice Mayor Shepherd felt contracting with Caltrans increased staffing and financial responsibilities. MOTION: Vice Mayor Shepherd moved, seconded by Council Member Schmid to direct Staff to 1) conduct a pilot program to modify sweeping frequency of residential and light industrial routes from weekly service to bi- weekly service in the late spring through early fall 2013, 2) direct Staff to finalize the cost savings analysis in the late 2013, allowing time to implement Council-approved modifications and any resulting contracts in Fiscal Year 2015. Council Member Schmid was enthusiastic about the pilot program. It provided an opportunity to explore alternatives. MOTION PASSED: 3-0, Berman absent 2. Utilities Advisory Commission Recommendation that Council Adopt a Resolution to Increase Water Fund Revenues by $2.4 Million per year Effective July 1, 2013 and Amend Water Utility Rate Schedules W-1, W-2, W-3, W-4 and W-7. Eric Keniston, Resource Planner reported the two main cost drivers for rate increases were Purchase Costs of water from Hetch Hetchy and Construction Costs. Purchase Cost estimates decreased over the prior year. One construction project scheduled for Fiscal Year (FY) 2013 was delayed to FY 2014, and projects were moved out in successive years. Because of these changes, Staff predicted no rate increase in FY 2014, with reserves near the minimum requirement. He noted that in FY 2015, the rate increase could possibly be 16 percent. Staff suggested a seven percent rate increase in FY 2014 and FY 2015. In future years, construction costs were expected to Attachment B MINUTES Page 7 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 remain relatively flat, while water supply costs were expected to increase. With the return of Capital Improvement Program (CIP) funds in FY 2013, the Rate Stabilization Reserves were at the upper end of the required level. If costs and revenues remained in line with projections, the Rate Stabilization Reserve was at the lower end of the required level. Overall rates increased five to seven percent. The first rate tier increased by $0.45, and the second rate tier increased by $0.52. Smaller customers saw a slightly larger bill impact because of the increased monthly customer service charge. The bill impact for a median customer was projected at 2.4 percent, or slightly less than $6. In order to increase water rates by July 1, 2013, a notice needed to be mailed out by the middle of April 2013. A public hearing for water rate increases was scheduled for June 2013. Council Member Schmid noted Hetch Hetchy rebuilding costs increased rates for the next five years, and he wished to spread that among as many users as possible. With more users using more water, the cost per unit was expected to decrease. Instead, proposed rates were increasing, and the burden fell more on the small residential user. He inquired why the small users were paying more. Debra Lloyd, Senior Resource Planner explained rates were driven by the Cost of Service Model. The percentage increase was slightly larger for tier one usage; however, the actual dollar impact was larger for tier two users. Council Member Schmid believed conservation was taking place on the residential side rather than the large commercial group. Mr. Keniston did not see that level of conservation yet and said conservation seemed equal across all groups. Council Member Schmid asked why the small user had a higher percentage increase. Mr. Keniston indicated the meter charge was increasing by seven percent, and that was a large component of the residential bill. For a commercial customer, the fixed component was much smaller. Chair Burt asked why the monthly service charge was increasing more for small users. Ms. Lloyd noted the fixed charge was based on meter size, and was comprised of a greater component of the total bill. When the fixed charge increased, it had a greater impact on the total bill for the smaller user. There was a slightly higher percentage increase on tier one users. The ratio Attachment B MINUTES Page 8 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 between tier one and tier two users was decreasing slightly with this rate increase. Chair Burt inquired whether the fixed charge was embedded in tier one pricing or if it was a separate line item. Ms. Lloyd indicated it was separate. Chair Burt believed the public would find the rate per gallon a more useful metric. He requested an explanation for the Utility User Tax (UUT) increasing by 3.6 percent, while the bill increase was 2.4 percent. Mr. Keniston explained the UUT was five percent of electric, gas, and water charges. Chair Burt asked if electric, gas, and water rates were increasing by 3.6 percent. Mr. Keniston stated they increased on an aggregate level by 3.6 percent. Chair Burt inquired whether CIP costs would decrease because the underground reservoir project costs were below budget. Mr. Keniston reported quite a bit of funds remained from the reservoir project, and those funds could be utilized for related projects. MOTION: Vice Mayor Shepherd moved, seconded by Council Member Schmid to accept the recommendation by Staff to 1) increase overall retail water rates and annual revenues for the Water Fund by 7.0 percent, or $2.4 million per year, effective July 1, 2013; and 2) Amend Utility Rate Schedules W-1, W-2, W-3, W-4, and W-7. MOTION PASSED: 3-0, Berman Absent 3. Cost of Service Study Follow Up Lalo Perez, Administrative Services Director recalled the Finance Committee (Committee) requested Staff return with samples. Staff expected to have a report to the Committee by June 2013. The City utilized a multi-prong approach to stabilize long-term financial viability. One prong was the Cost of Services. Three components of Costs of Services were: 1) services with associated fees; 2) services without fees; and 3) administration costs. Gail Wilcox, Management Specialist said the report was one of three analyses performed to determine the full cost of providing services. The primary goals of this analysis was to calculate all direct and indirect costs of Attachment B MINUTES Page 9 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 providing fee-related services, and to determine the cost recovery level based on revenue generated from fees. The City retained MGT of America, a firm used to assist with this analysis. The majority of data utilized in this analysis was provided by Staff. The City had approximately 1,000 fees. Staff expected to submit a full report to the Committee by the end of Fiscal Year (FY) 2013. In FY 2012, $21.7 million was generated from user fees, approximately 15 percent of all General Fund revenues. Planning and Community Environment Department had fee revenue of $9 million, which represented 42 percent of all fee revenues in FY 2012. Community Services Department (CSD) generated fee revenues of $5.7 million. Of that amount, $2.6 million in fees were generated from the Golf Program. Fire Department fees generated approximately $5 million, approximately half of that from paramedic fees. The Public Works Department generated fee revenues of approximately $1 million. The Police Department and all other fees comprised the remaining $1 million of fee revenues. Overhead Costs were also referred to as Indirect Costs. Indirect Costs were a significant factor in the calculation of full costs. City-wide Overhead or Cost Plan Charges were generally allocated to Centralized Administrative Support Departments. There were no mandated methodologies for allocating City-wide Overheard Costs. The State Controller and Federal Office of Management and Budget indicated the methodology for allocating costs needed to reflect the benefit the receiving department received. It was common practice for the Human Resources Department costs to be allocated to the Operating Departments, based on the number of Full-Time Employee (FTE) positions in the Operating Department. Facility maintenance and Custodial Services provided by the Public Works Department were allocated based on square footage of each department. MGT's analysis incorporated a use allowance to capture the costs of capital and fixed assets. Department and division overhead were part of cost analysis. A productive hourly rate was utilized to recover the cost of paid leave and other time when employees were not engaged in delivering a particular service. Actual productive hours varied significantly between each employee; therefore, MGT utilized 1,600 as an average number of productive hours. The industry range was typically 1,500 to 1,700. MGT used two basic methodologies in the analysis. The first was the top-down or program-level approach, which was almost universally used for recreational programs. The second methodology was the bottom-up or fee- level approach. The program-level analysis was a combination of program direct expenses, division overhead, department overhead, and City-wide overhead. Jeff Wakefield, MGT of America explained the bottom-up or fee-level approach was used for the majority of Departments. The first steps were to acquire the class of employee for each fee category, and then identify tasks associated with each service. For each Staff member, MGT identified the Attachment B MINUTES Page 10 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 average number of minutes involved in each task. This determined the estimated time for each fee category. The time figures were applied against the fully burdened labor rates. The product of the average time multiplied by the fully burdened labor rates resulted in the summary figures. Ms. Wilcox stated Staff provided general information and recommendations for new or changed fees so that the Council was able to set policy. Staff conducted a survey of similar fees charged in eight surrounding cities, and would provide that information. CSD was collecting utilization data regarding the number of patrons, a breakdown of resident versus non- resident usage, and comparable facility rental rates. Council Member Schmid inquired whether the only State mandate was not to charge more than 100 percent of costs without community election. Mr. Wakefield answered yes. Council Member Schmid inquired whether the Council could set fees between 0 and 100 percent at its discretion. Ms. Wilcox responded yes. Council Member Schmid noted the Indirect Cost was the major change with substantial numbers. The ratio of Direct Costs to Indirect Costs was interesting. He asked if Staff was requesting that Council make an explicit decision regarding services with no fees. James Keene, City Manager stated the Council would make an informed choice regarding use of a standard or custom fee’s. Staff needed to provide more clarity regarding costs and revenue. The Council had discretion to determine who paid or how the City collected revenue. Council Member Schmid inquired whether the Council received an analysis point for each fee. Ms. Wilcox reported that for the program-level analysis, CSD produced one analysis for each program. Staff then presented a summary worksheet indicating the current fee, total costs, total revenues, and cost recovery amounts. MGT made a recommendation in terms of industry standards. Council Member Schmid inquired whether Staff was reviewing the fee schedule for CSD only, or were they reviewing the whole fee schedule. Ms. Wilcox answered the whole fee schedule. Council Member Schmid asked if analysis included everything. Attachment B MINUTES Page 11 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 Ms. Wilcox responded correct. Council Member Schmid noted service providers could question whether they were receiving value for all the Indirect Costs, and asked if the City was providing them with an option for outsourcing. Mr. Perez believed if the City provided a good service, then the demand would be there. The process demonstrated the level of recovery, which Indirect Costs included, variations of methodology, it showed who benefited from services, who paid for services, it included additional methods to deliver services, levels of service, creation of efficiencies, and opportunities for public-private partnerships and regionalization. Staff recommended some type of outreach, which included surveys. Council Member Schmid noted that Golf and Aquatics Departments had high recovery rates, which were characterized by outsourcing and hourly workers. He was startled to see that the rate of productive hours was assumed at 1,600 hours. He assumed that in outsourcing services, Staff looked for higher rates of productive hours from contractors. Mr. Perez found that to be the case when outsourcing services at the Golf Course. It depended on the contractor's structure with regard to benefit packages. The number of productive hours ranged from 1,500 to 1,700. Council Member Schmid assumed the number of productive hours was much higher in the private sector. Mr. Wakefield had no specific knowledge regarding contractors. MGT excluded holiday time, sick time, vacation time, breaks, and leave. Council Member Schmid clarified 1,600 productive hours was assumed for public sector employees. Vice Mayor Shepherd asked if the example of the Golf Course was a top- down approach. Mr. Wilcox reported City-wide Overhead was allocated to the Departments by different methodologies depending on the Department. If the Golf Course represented a total of 6.67 percent of all direct expenses for CSD, then it received 6.6 percent of City-wide Overhead allocated to CSD. Vice Mayor Shepherd suggested all costs of the Administrative Services Department (ASD) and the City Manager's Office be completely expensed across all services at the allocated percentage. Mr. Keene presumed the analysis utilized 2,080 hours. Attachment B MINUTES Page 12 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 Vice Mayor Shepherd indicated hours started at 2,080, and then leave was subtracted. Mr. Keene stated many employees did not work 2,080 hours; therefore, the overheard rate was undercharged. Vice Mayor Shepherd believed residents paying for services with cash subsidized residents paying with credit cards, and inquired whether the City had a surcharge for use of credit cards. Mr. Perez reported State law did not allow the City to implement a surcharge for credit card use. Vice Mayor Shepherd asked if that law pertained to municipalities only, and asked if the City could implement a cash discount. Mr. Perez stated the law was a municipality restriction. Staff was reviewing other modes of payment that potentially lowered the cost. Technology was available; however, vendors and users had to participate. Vice Mayor Shepherd inquired whether the cost for pensioners was included in the expense for each Department. Mr. Perez responded yes. The recommended methodologies for Council consideration accounted for those types of expenses. There were conflicting impacts as a result of a particular methodology, and Staff discussed that when making recommendations to full Council. Vice Mayor Shepherd indicated the Council would need to review methodology service-by-service. Mr. Perez reported similar situations occurred under the old formula. Vice Mayor Shepherd stated ASD had a multiplier effect based on all activities. Mr. Perez noted the City reduced Staff as it moved from purchase requests to procurement cards. Lighter workloads had impacts throughout the administrative departments. Vice Mayor Shepherd was unsure how to navigate an increase of Staff to support new services. The Council deliberately added services that gave value to the community, but needed an analysis of when a new service required more Staff. Attachment B MINUTES Page 13 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 Mr. Perez reported Staff's goal was to identify issues and concerns as they surfaced. He viewed the process as continual because Council could move in a different direction then was recommended by Staff. Vice Mayor Shepherd inquired whether the Committee would be utilizing the information to make difficult Budget decisions. Mr. Keene reported sorting the status quo versus reducing costs or raising revenue would be challenging. It was good government to pursue this information. The question of what to do with the information remained. This sort of information was valuable in budget discussions and informed a continuous improvement process. It allowed the Council to deepen review and to inform potential changes. He suggested that Council review a few services each year for deeper discussion. Mr. Perez also believed it was good governance to reassess and understand the City's portfolio of services. He thought this exercise could inform policy decisions. Mr. Keene felt the analyses informed continuous improvement of services and efficiencies. Vice Mayor Shepherd asked when the Committee would be reviewing the information. Mr. Perez reported the Committee could review analyses in May 2013, but mostly likely Staff would wait to present the completed study. Vice Mayor Shepherd liked the concept of reviewing Overhead Costs because reducing Overhead Costs for services decreased subsidies. Chair Burt stated performing analysis required time and costs. He inquired whether there was any value in performing both bottom-up and top-down analyses to allow comparison of outcomes. Mr. Wakefield indicated it was very difficult to perform a top-down analysis on all fees, and said it would probably quintuple the amount of time he used. Chair Burt clarified he meant performing both analyses on a small sample of services. Mr. Wakefield said he had not performed that exercise but said the general wisdom in the industry was that the bottom-up method was used for most fee-related services provided and offered more accuracy. Whenever possible, MGT utilized the bottom-up analysis. Attachment B MINUTES Page 14 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 Chair Burt was interested in another point of comparison between other cities. This information was a method for informing decisions and increasing transparency and deliberateness. Ms. Wilcox reported there were not many similar comparisons among cities because cities bundled services differently. Chair Burt asked how much of City outsourcing was paid by the hour and how much was paid based on performance. Mr. Perez said there was a hybrid because Custodial Services had hourly rates; whereas, for Parks, there was a mixture. Chair Burt believed the City was not concerned with how many hours were required to provide a certain quality of service. The City wanted highly productive contractors who met performance standards. Mr. Perez noted a good example was refuse collection. Robert De Geus, Division Manager reported Golf Course contracts contained performance standards and expectations that required a minimum number of maintenance Staff. Chair Burt inquired whether Staff would be concerned if a contractor met performance standards while utilizing fewer people. Mr. De Geus indicated Staff was concerned primarily with performance; however, having managed the Golf Course in-house, Staff wanted to understand how the contractor could do the work with fewer employees. Chair Burt stated Staff wanted the contractor to be transparent about how it intended to meet performance goals, but Staff did not want to stipulate that. Mr. De Geus agreed. Chair Burt indicated Staff would scrutinize whether a contractor had a good plan, but would not manage the plan or determine it in advance. He suggested a Study Session regarding best practices in competitiveness. Mr. Keene noted managed competition was the state-of-the-art term for that process. Vice Mayor Shepherd did not believe the Committee requested Staff to change its methodology for analyses. Attachment B MINUTES Page 15 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 Chair Burt reported the information was a tool for informing decisions. He wanted to make that clear so there were not a variety of expectations as to how the information was used. NO ACTION REQUIRED Break from 9:05 to 9:13 4. Fiscal Years 2013 to 2023 Long Range Financial Forecast (Continued From March 5, 2013) Lalo Perez, Administrative Services Director wanted to provide Staff with feedback to the Finance Committee's (Committee) comments at the end of the prior discussion, and to receive input for discussion with the Council. The Mayor indicated he wanted the Long Range Financial Forecast (LRFF) to be an Action Item on the Council Agenda. The first comment concerned tax revenue associated with hotels currently under construction, and earmarking those funds as revenue streams for infrastructure expense; He said Staff could include that in the LRFF. The second comment concerned calculating the pension savings from the third tier pension benefits. Staff suggested hiring an actuary firm to assist in calculating those savings because the alternative scenario contained an approximate $50 million impact between the years of 2017 and 2023. He remarked that the $50 million impact should be offset by savings. The third comment requested further clarification on the CalPERS pension rate estimates included in the base model. Staff suggested utilizing the actuary firm to validate their application of the CalPERS estimates. With regard to the fourth comment from the previous meeting, Staff requested clarification. With regard to the fifth comment, Staff was comfortable with their estimates for sales and Documentary Transfer Taxes. If the Committee had concerns, Staff would note them in documentation to the Council and in the model. Chair Burt indicated the Committee needed to decide whether to make the first comment a recommendation to the Council. MOTION: Vice Mayor Shepherd moved, seconded by Council Member Schmid to have Staff put the related tax revenue associated with hotels currently under construction in the Long Range Financial Forecast. Chair Burt noted the comment also contained a provision to earmark revenue streams for infrastructure expense. Vice Mayor Shepherd did not want to earmark revenue for infrastructure expense. Attachment B MINUTES Page 16 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 Council Member Schmid did not recommend earmarking funds at this time. Chair Burt wanted to earmark funds for infrastructure. He asked if Staff needed a Motion. James Keene, City Manager suggested the Committee move the separate items. MOTION RECAPPED: Vice Mayor Shepherd moved, seconded by Council Member Schmid to include Transient Occupancy Tax for hotels currently under construction in the Long Range Financial Forecast. SUBSTITUTE MOTION: Council Member Burt moved to have Council consider earmarking revenue streams for infrastructure expense. SUBSTITUTE MOTION FAILED DUE TO LACK OF A SECOND. Vice Mayor Shepherd did not object to the Committee asking the Council to hold a policy discussion regarding earmarking funds. Chair Burt inquired whether the City had other definable new revenue sources. Mr. Perez could not recall any new revenue sources. There were some implied such as the Utility Users Tax (UUT). Chair Burt stated a change in the Cubberley lease could be a new revenue source. Vice Mayor Shepherd reported discussion from the Infrastructure Committee meeting indicated a bond may not be needed. Chair Burt suggested the Finance Committee recommend that full Council consider whether discrete new revenue streams needed to be earmarked for specific purposes such as infrastructure. Vice Mayor Shepherd requested Chair Burt make a suggestion that was separate from the Motion to prevent confusion. Chair Burt agreed. MOTION PASSED: 3-0, Berman Absent MOTION: Council Member Burt moved, seconded by Vice Mayor Shepherd that the Finance Committee recommend the Council hold a discussion on Attachment B MINUTES Page 17 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 whether discrete new revenue streams be identified for specific purposes, such as infrastructure use. Council Member Schmid felt the Motion was a policy change when the Committee was considering amendments to the LRFF. Chair Burt explained potential new revenues would have a multi-year impact on the LRFF. Council Member Schmid believed defining new revenue sources for infrastructure was separate from review and approval of the LRFF. Chair Burt stated budgeting one or two new revenue streams was a part of the LRFF. Vice Mayor Shepherd indicated a Committee could hold a broader discussion. She wanted the Infrastructure Committee to develop new revenue streams; however, she thought this would be a good conversation for the Council. MOTION PASSED: 2-1, Schmid no, Berman absent Chair Burt recalled the next topic was calculation of the pension savings for third tier employees. Staff wished to hire an actuary. He inquired whether Staff needed a Motion for Staff to hire an actuary. Mr. Perez answered no and said hiring an actuary was within the City Manager's authority. Vice Mayor Shepherd inquired whether this work was within the scope of work for Bartel Associates. Mr. Perez replied no. The previous work was regarding retiree medical. Vice Mayor Shepherd asked if this work could be added to Bartel Associates' scope of work for the next cycle. Mr. Perez reported the City had not engaged Bartel Associates for pension services. Given the significant impact of Staff estimates, it was beneficial for an actuarial firm to validate Staff's calculations. Vice Mayor Shepherd wanted to understand the importance of the information at the current time. Mr. Perez felt it was important because Staff wanted to ensure they were making sound decisions based on sound information and said data was based on actual demographics; however, some assumptions were based on Attachment B MINUTES Page 18 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 California Public Employees' Retirement System (CalPERS) experience. He said a pattern could develop in the next five to ten years that would shift because the City will have savings from new employees moving into the third tier. Vice Mayor Shepherd wanted to ensure Staff worked efficiently. Chair Burt clarified that the actuary would project the number of employees in the third tier and the point in time that would impact City liabilities. Mr. Perez reported the actuary would make assumptions regarding employees' retirement dates and the likelihood of employees being in tier two, versus being in tier three. Chair Burt inquired if the impact was many millions of dollars. Mr. Perez answered yes. The unknown factor was when the impact would occur. Chair Burt acknowledged that the actuary could only provide a best estimate. At the current time Staff did not include any estimate, and it was a significant change. Mr. Perez indicated Bartel Associates performed the same analysis for other agencies. Council Member Schmid stated the difference between tier two and tier three was savings; however, CalPERS reform opened the possibility of losses for the City. Mr. Perez explained the two percent at age 60 could move to 2.418 percent at age 63. In tier three, a cap on the maximum pension allowance an employee could earn was tied to the Social Security limit. The question was how many employees would go to in tier two. Chair Burt stated the Committee did not need to take action on the request to hire an actuary, and continued to the third topic. Mr. Perez reported Staff was comfortable with their estimates. He said an actuary could validate those estimates to ensure Staff's calculations were sound. Vice Mayor Shepherd said she had no confidence in CalPERS' rate of return. She hoped the LRFF would include the effect of each 1/4 percent rate change. Attachment B MINUTES Page 19 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 Chair Burt did not believe this was a point of contention. Mr. Keene indicated Staff could include a note and some calculations in the LRFF. Vice Mayor Shepherd wanted to ensure that was included. Chair Burt indicated the third topic required no action by the Committee. With regard to the fourth topic, he was concerned about projecting the prior anticipated utility increases for the future. While capital expenditures continued to increase for various utilities, the commodity costs on gas and electric might not rise at historic rates. Experts in the industry were reexamining those historic trends and escalations, and suggesting the escalations may not occur at the same rate. Renewables and non- renewables were experiencing market changes, which could be new trends. He requested Staff discuss with Utilities Staff any anticipated trends that should be factored in. Mr. Perez indicated Staff would do so. Council Member Schmid agreed that Staff should review that. Vice Mayor Shepherd noted Utilities did not provide the majority of revenues. Chair Burt inquired whether the Report included a breakdown of revenues from different streams. Joe Saccio, Assistant Director of Administrative Services reported the last LRFF included a compound annual growth of approximately 2.9 percent for UUT. The historical 20-year compound annual growth was 3.8 percent, and the prior ten years was 5.3 percent. Chair Burt suggested the adjustment was included. Mr. Saccio noted Staff had lowered the projected annual growth. It was incumbent on Utilities to explain their forecasts in terms of prices of commodities and capital. Chair Burt inquired about the percentage of the Budget. Vice Mayor Shepherd stated the sales tax had been erratic. Chair Burt recalled the final topic was long-term projections for sales and Documentary Transfer Taxes. The concern was that the 20-year Attachment B MINUTES Page 20 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 compounded growth was 2.07 percent, the 10-year compounded growth was one percent, and the forward projection was 3.38 percent for sales tax. Mr. Saccio explained Staff reviewed the forecast and assumptions. Those were reasonable growth rates for the next few years. Comparing the four quarters of calendar year 2012 to the four quarters of calendar year 2011 resulted in a 12.4 percent increase. Chair Burt felt that information was not relevant in projecting a 10-year forecast. He requested Staff's rationale for projecting 3.4 percent growth when the prior growth was only one or two percent. Mr. Saccio said Staff considered the first couple of years when preparing the LRFF. Chair Burt indicated the LRFF did not appear to include a recession. Mr. Saccio recalled the Committee's prior instructions were to review the prior 20 years and include all the recessions in those 20 years in order to determine a rate of growth. Chair Burt asked how Staff moved from 2.0 percent growth to a projected 3.38 percent growth. Mr. Perez reported Staff was comfortable with the projected growth for the next five years. Staff reviewed the final five years, and either made adjustments or stated the Committee was uncomfortable with Staff's long- term projections for sales tax. Council Member Schmid felt the general economic outlook as stated on pages three and four was optimistic. He thought it would be good to have a section about persisting economic problems. Vice Mayor Shepherd inquired whether Staff relied on any new source of sales tax. Mr. Saccio responded no and said the Amazon tax would go to the jurisdictions where warehouses were located. Vice Mayor Shepherd indicated the Amazon tax would be ZIP code specific, and was projected to provide $2.5 billion to the State of California. Mr. Saccio stated the State of California would receive its share of the sales tax, but the one percent of sales tax for local jurisdictions went to the local jurisdictions where the Amazon warehouse is located. Attachment B MINUTES Page 21 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 Vice Mayor Shepherd asked if the City would receive funds from the Amazon sales tax. Mr. Saccio replied no. Staff relied on sales tax from Hewlett Packard; however, that had not occurred. Vice Mayor Shepherd inquired whether Staff could resolve the higher projection for sales tax. Mr. Perez stated Staff would review the second of the five years of the LRFF and would provide more detail. If Staff did not change their opinion, they needed to provide an explanation. Vice Mayor Shepherd asked if Staff preferred to present the LRFF to the Council or if they preferred returning to the Committee. Mr. Perez suggested that was preferable in light of Budget hearings beginning in May. Mr. Saccio noted that the major taxes over the past five years had a cumulative growth rate of 4.1 percent. The forecast contained 4.2 percent growth. Every year some taxes did not meet projections and others exceeded projections. In totality, projections were close to the trend in historical growth. Chair Burt stated the LRFF should be as close to correct as possible. The Amazon issue raised the question of how much Staff considered trends of internet sales and their impact on 10 and 20-year trend. He noted that changes in tax law could change that. FUTURE MEETINGS AND AGENDAS Lalo Perez, Administrative Services Director noted there was not a meeting on April 2, 2013. The Agenda for the meeting on April 16, 2013 included Recommendations for Community Development Block Grants (CDBG), Golf Course Reconfiguration, the Wastewater Collection Utility Financial Projection, the Electric Utility Financial Projection, the Gas Utility Financial Projection, Fiber Optic Fund Financial Projection, and the Annual Rate Schedule Increase for Storm Drains. He noted that the Finance Committee should consider beginning its meeting at 6:00 P.M. to cover all items. Chair Burt stated the April 16, 2013 meeting would be a Special Meeting beginning at 6:00 P.M. Vice Mayor Shepherd suggested sending a letter to State Representatives explaining there was no Amazon sales tax that affected Palo Alto. Attachment B MINUTES Page 22 of 22 Finance Committee Regular Meeting Minutes 3/19/2013 Mr. Perez said he would refer that to the City Manager's Office because there was a concern that Community Development Block Grant funding could be eliminated. 4/2/2013 - canceled 4/16/2013 ADJOURNMENT: Meeting adjourned at 10:01 P.M. Attachment B City of Palo Alto (ID # 3900) Finance Committee Staff Report Report Type: Action Items Meeting Date: 9/17/2013 City of Palo Alto Page 1 Summary Title: Cost of Services Study Title: Cost of Services Study - Draft Report From: City Manager Lead Department: Administrative Services Recommendation: Staff recommends that the Finance Committee: 1) Accept this report and MGT’s draft report 2) Provide input on user fee cost recovery policy considerations 3) Direct Staff to bring forward to the City Council in November a draft user fee cost recovery policy, which will guide the development of the FY 2015 Proposed Municipal Fee Schedule Executive Summary: As reported at the July 2012 and March 2013 Finance Committee Meetings, the City hired a consultant to assist the City with a Cost of Services Study. This report transmits MGT’s draft report, recommends considerations for a user fee cost recovery policy, responds to previous Finance Committee information requests, and outlines next steps in the Cost of Services Study. Background: Propositions 13, 218 and 26 have placed both substantive and procedural limits on cities’ ability to impose fees and charges. Collectively these constitutional amendments provide safeguards against taxes being imposed without a vote of the people. Proposition 26 contains a more general articulation of the cost of service principle and includes a requirement that the local government bear the burden of proof that “a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to recover the reasonable costs of the government activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burden on , or benefits received from, the governmental activity.” (Cal. Const. art. XIII C, § (e).). It is important to note that rental charges for rooms or facilities, fines, penalties and late charges are not technically user fees and are not Attachment C City of Palo Alto Page 2 required to be based on actual costs. Instead, these types of charges are more typically governed by market rates, reasonableness and other policy driven factors. As discussed at the July 2012 and March 2013 Finance Committee meetings, the City retained the services of MGT of America (“MGT”) to assist staff in determining the full cost of providing General Fund services for which fees are charged based on FY 2012 actual data. User fees, permits and rental charges generated approximately $22.2 million in fiscal year 2012, which was approximately 15 percent of total General Fund revenues. The following is a breakdown of General Fund fee revenues by department:  Planning and Community Environment (PCE) $9.0 million  Community Services Department (CSD) $6.2 million  Fire Department $5.0 million  Public Works $1.0 million  Police/Animal Services $0.7 million  All Other $0.3 million In March 2013, staff presented an overview of the methodology MGT used for this analysis to the Finance Committee along with examples of specific fee calculations (link to report: https://www.cityofpaloalto.org/civicax/filebank/documents/33539). MGT’s fee analysis, which follows best practices, assesses the staff time worked and the staff’s hourly cost of providing a particular service such as processing a permit or inspecting a fire sprinkler system. Then, indirect expenses are added to recover costs for departmental administrative support, city-wide support department costs, and compensated absences. Discussion: This section of the report provides a summary of the draft MGT report, recommends policy considerations for a forthcoming User Fee Cost Recovery Policy, and responds to previous Finance Commmittee information requests. MGT Report Attachment A is MGT’s draft report dated August 1, 2013. MGT’s report was based on FY 2012 actual data. Given the actual FY 2012 activity level, fee charged, and cost, the report provides the various cost- recovery levels for fees and General Fund subsidies related to Public Works (Engineering), Police, Animal Services, Fire (except for Emergency Medical Reponse activities), and Community Services. It does not include the fee calculations for the Planning and Community Environment (PCE) Department as well as some development related fees charged by other departments. Currently, these services are provided by staff in PCE, Fire, Public Work and Utilities and, as such, costs related to these services are being incurred in a multitude of cost centers across departments. The analysis of these services will be completed once the cost for Development Services activities is analyzed in each affected department. Attachment C City of Palo Alto Page 3 Any changes resulting from this analysis will be brought forward to the Finance Committee as part of the FY 2015 Proposed Budget process. Overall, MGT’s analysis indicates that the City recovered approximately 35 percent of the full cost of providing fee related services in FY 2012 for the departments mentioned above. Thus, the City’s General Fund subsidized 65% percent, or approximately $20 million, of the cost of these services. As expected, cost recovery levels varied quite a bit between departments and programs. Based on that analysis, MGT also identified that 34 of the approximately 650 fees analyzed generated a cost recovery level above 100%. In order to ensure that the City does not charge users fees with a cost recovery level above 100% based on estimated FY 2014 activity levels, adopted fees, and budgeted costs, staff is in the process of reviewing these fees.. Staff intends to return to the Finance Committee in November if this analysis indicates reductions to FY 2014 Adopted Fees are required to bring them to a 100% cost recovery level. Fees Charged in Other Cities Staff reviewed fees charged by seven other cities (Mountain View, Sunnyvale, Cupertino, Menlo Park, Santa Clara, San Mateo and Fremont) in order to understand how Palo Alto’s fees place in comparison to these agencies (see Attachment B). It is important to note that conclusions that can be drawn from comparisons of fee levels across the surveyed cities are fairly limited due to agencies’ differences in defining and structuring their respective fees. For example, certain services included in fees may be combined in some cities but separated in others; fees in other cities may be based on historical or other subjective factors unrelated to costs; and fees are also affected by differences in cost factors such as cost allocations of indirect support costs, employee benefit costs, and service efficiencies (the overall time necessary to complete a particular service or activity). User Fee Cost Recovery Policy Considerations MGT’s report also includes policy considerations for setting cost recovery levels. Based on MGT’s report and a review of other cities’ User Fee Cost Recovery policies, the following policy considerations are presented to the Finance Committee for discussion. Based on the Committee’s review and discussion, staff recommends presenting a draft User Fee Cost Recovery policy to the City Council in November. Such a policy will then inform the development of the FY 2015 Proposed Municipal Fee Schedule. 1. Community-wide vs. Private Benefit: The use of taxpayer dollars is appropriate for services that benefit the community as a whole such as police patrol services. When the service or program provides a benefit to specific individuals or groups such as the issuance of building permits, it is common for the individual(s) receiving that benefit to pay for all of the cost of that service. 2. Service Recipient vs. Service Driver: The concept of the service recipient vs. service driver is particularly important for regulated activities such as development review and Police issued permits. Although the community primarily benefits, 100% cost recovery from the “driver“ of the need for service is appropriate such as a building permit or a Massage establishment permit applicant. 3. Consistency with City Goals and Policies: City policies and Council goals related to the community’s quality of life may also be factors in setting cost recovery levels. For example, fee levels can be set Attachment C City of Palo Alto Page 4 to promote healthy habits, facilitate environmental stewardship, or discourage certain actions (e.g. false alarms). 4. Elasticity of Demand for Services: The level of cost recovery can affect the demand for services. A higher level of cost recovery could ensure the City is providing services such as recreational classes or summer camps for children and youth for without overly-stimulating a market by artificially low prices. Such low prices, which are a reflection of a high General Fund subsidy, may attract participants from other Cities. It should be noted, that the current Municipal Fee Schedule for recreational services includes a lower rate for Palo Alto residents than residents living outside of Palo Alto. However, high cost recovery levels could negatively impact the demand for such services to low income individuals, children, or seniors. 5. Availability of Services from the Private Sector: High cost recovery levels are generally sought in situations where the service is available from other sources in order to preserve taxpayer funds for core City services. Conversely, services that are not available from other sources and are typically delivered when residents experience an emergency basis typically have low or zero cost recovery levels. Based on these policy considerations, the table below overlays certain cost recovery levels grouped in low (0-30%), medium (30.1% to 70%), and high (70.1% to 100%) cost recovery percentage ranges. It is important to note that these groupings provide guidance and are not absolute. Some policy considerations may weigh more heavily than others, which will be considered in the development of the FY 2015 Proposed Municipal Fee Schedule. For example, fees for recreational activities should be set in general at the Medium cost recovery level. However, fees for seniors or low income residents may be at the low cost recovery level. Alternatively, permits and development activity should be set at close to 100% cost recovery level. Attachment C City of Palo Alto Page 5 Cost Recovery Levels Cost Recovery Percentage Range Policy Considerations Low 0% - 30%  No intended relationship between the amount paid and the benefit received  Fee collection would not be cost effective and/or would discourage compliance with regulatory requirements  No intent to limit the use of the service  Public at large benefits even if they are not the direct users of the service  Affordability of service to low-income residents Medium 30.1% - 70%  Services having factors associated with the low and high cost recovery levels High 70.1% - 100%  Individual users or participants receives most or all of the benefit of the service  Other private or public sector alternatives provide the service  The use of the service is specifically discouraged  The service is regulatory in nature With the exception of fees for classes offered through the Community Services Department (CSD), the City currently has no formal policies in place governing cost recovery targets for user fee services. The CSD’s class cost recovery guidelines are included in Attachment C. They are consistent with the policy considerations recommended and overlay a process for continuously evaluating the programs offered by CSD. However, CSD’s full costs and cost recovery factors have not been updated in six years. Once the Committee has provided input to the User Fee Cost Recovery Policy considerations, staff will review the attached CSD Class Cost Recovery Policy and bring forward recommendations for City Council consideration, as necessary. Since demand for services are factors to consider when evaluating fees charged by the Community Services Department, the Finance Committee asked staff to provide utilization data for these programs where available. Attachment D includes that data as well as information CSD staff compiled related to facility rental rates. The utilization data reflects FY 2012 actual usage while the facility rental rates represent charges as of spring 2013. Resource Impact: As discussed, based on FY 2012 data, MGT identified that 34 of the approximately 650 fees analyzed generated a cost recovery level above 100%. In order to ensure that the City does not charge users fees Attachment C City of Palo Alto Page 6 with a cost recovery level above 100% based on estimated FY 2014 activity levels, adopted fees, and budgeted costs, staff is in the process of reviewing these fees. Staff intends to return to the Finance Committee in November if this analysis indicates reductions to FY 2014 Adopted Fees are required to bring them to a 100% cost recovery level. Any such reduction in fees may result in downward adjustments to the FY 2014 fee revenue estimate. Once the City Council approves the User Fee Cost Recovery Policy, staff will develop the FY 2015 Proposed Municipal Fee Schedule. Depending on the approved policy and the FY 2015 Base Budget expenditures for activities related to Municipal Fees, the estimated fee revenue for FY 2015 may decrease, increase, or remain approximately equivalent to the FY 2014 estimated fee revenue level. Next Steps: As mentioned in this report and previous Committee reports, by the end of the calendar year and fiscal year, staff has to accomplish several milestones related to the Cost of Services Study. Review of certain FY 2014 Adopted Fees MGT’s methodology for assessing the cost related to Municipal Fees is rather complex. Therefore, staff from the Office of Management and Budget (OMB) developed a simpler, albeit still labor intensive, process to collect cost information and estimated fee activity levels from departments. Additionally, indirect expenses are added to recover costs for departmental administrative support, city-wide support department costs, and compensated absences. This cost assessment will not include costs for using City facilities, since such a methodology still requires further analysis. This methodology will be used to review these FY 2014 Adopted Fees, which have been identified in MGT’s report with a higher than 100% cost recovery level based on FY 2012 actual data. If this review determines that FY 2014 Adopted Fees are above full cost-recovery levels, staff will bring forward recommendations to adjust these fees downward in November 2013. User Fee Cost Recovery Policy Based on input from the Finance Committee, staff recommends bringing forward to the City Council a User Fee Cost Recovery Policy. This policy will guide and inform the development of the FY 2015 Proposed Municipal Fee Schedule. As part of the transmission of the FY 2015 Municipal Fee Schedule, staff intends to present to the City Council the cost recovery percentages for fees and/or group of fees. Due to the changing benefits structure of classic versus new employees, staff intends to analyze the cost for fee activities annually and set fees in accordance with the forthcoming User Fee Cost Recovery Policy as part of the annual budget process. Once the User Fee Cost Recovery Policy is approved by the City Council, the Community Services Department Class Cost Recovery Policy will be reviewed and updated. Cost of Services Studies for Internal Support Functions As presented in the March 2013 Finance Committee Meeting report, staff has been reviewing internal support functions to more effectively provide such services to direct services departments such as Public Safety, CSD, or Utilities. Since the majority of internal support functions are either mandated by law (e.g. financial reporting in accordance with Generally Accepted Accounting Principles) or rather complex in comparison to similar private sector activities (e.g.: benefits and payroll for various employee groups with different special pay and benefit levels within the employee groups), the initial review has not led Attachment C City of Palo Alto Page 7 to further analysis yet. Staff intends to continue the analysis and present the findings to the Committee by the end of the calendar year. Attachments:  Attachment A: MGT's Palo Alto User Fee Report (PDF)  Attachment B: Seven Cities Fee Comparison (PDF)  Attachment C: Community Services Department Class Cost Recovery Policy (PDF)  Attachment D: Cost of Services (PDF) Attachment C Attachment AAttachment AAttachment AAttachment A City of Palo Alto Draft User Fee Study Findings August 1, 2013 2001 P Street, Suite 200 Sacramento, CA 95811 Attachment C Table of ContentsTable of ContentsTable of ContentsTable of Contents Page Executive Summary Introduction 2 Scope and Objectives 2 Economic and Policy Considerations 4 Methodology 5 Study Findings 9 User Fee Summaries by Department: Public Works - Engineering 12 Police 14 Animal Services 18 Fire 19 Community Services 24 Attachment C EXECUTIVE SUMMARY Introduction MGT of America (MGT) is pleased to present the City of Palo Alto (City) with this summary of findings for the user fee study. The City has not undertaken a comprehensive analysis of its user fees since the 2002/03 fiscal year. Since that time, the City has adjusted fees on an annual basis, largely via a CPI adjustment factor. The City is now interested in knowing the current full cost of providing user fee-related services, and exploring the options of modifying current fees to better reflect Council priorities. In 2012, the City contracted with MGT to perform this cost analysis using fiscal year 2012 expenditures, staffing and operational information. MGT was also tasked with recommending fee adjustments for each department based on industry best-practices. This report is the culmination of the past fifteen months of work between MGT and City management and staff. MGT would like to take this opportunity to acknowledge all management and staff who participated on this project for their efforts and coordination. Their responsiveness and continued interest in the outcome of this study contributed greatly to the success of this study. Study Scope and Objectives This study included a review of fee-for service activities within the following departments/divisions: Public Works (Engineering) Police Animal Services Fire Community Services At the request of the City, the analysis of fees charged by the Planning and Community Environment (PCE) Department and other development related fees was deferred pending a comprehensive review of all costs related to development services. Currently, development related services are provided by staff in the PCE, Public Works, Fire and Utilities Departments. Once all development related costs are consolidated into one budget, the full cost of development services will be determined. The study was performed under the general direction of the Office of Management and Budget with the participation of representatives from each department. The primary goals of the study were to: Page 2 Attachment C Define what it costs the city to provide various fee-related services. Recommend fee adjustments based on industry best practices, practices of comparable agencies and MGT’s professional opinion. Develop revenue projections based on recommended increases (or decreases) to fees. Compile information regarding fees charged by the following neighboring cities: Cupertino, Fremont, Menlo Park, Mountain View, San Mateo, Santa Clara and Sunnyvale. Provide user fee models and templates to City staff enabling staff to update the study results in future years and incorporate new fees as they occur. The industry standard is to conduct a comprehensive review of fees every three to five years and make annual adjustments based on an inflation index. However, given the increasing cost of public sector employee benefits, agencies may incorporate those cost increases into the annual fee adjustments. The information summarized in this report addresses each of these issues and provides the City with the tools necessary to make informed decisions about any proposed fee adjustments and the resulting impact on general fund revenues. The following is a list of legal, economic and policy issues that governmental agencies typically take into consideration when determining cost recovery levels. State Law – In California user fees are limited to the “estimated reasonable cost of providing a service” by Government Code section 66014(a) and other supplementary legislation. Proposition 26 was approved by California voters in November of 2010 and clarified which charges are considered user fees and which are considered taxes. The significance of this distinction is that user fees may be raised by Council action up to the limit of actual cost, whereas taxes may not be increased without a majority vote of the public. None of the fee adjustments recommended by MGT are considered taxes per Proposition 26 guidelines. It should be noted that fees charged for the use of government property are exempt from Proposition 26. These include fees for parks and facility rentals as well as green fees, cart and other equipment rental fees for golf services. All of these fees may be set at any price the market will bear. Economic barriers - It may be a desired policy to establish fees at a level that permits lower income groups to use services that they might not otherwise be able to afford. Page 3 Attachment C Community benefit - If a user fee service benefits the community as a whole to some extent, it is appropriate to subsidize a portion of the fee. Many community services fees have very moderate cost recovery levels. Some programs are provided free of charge or for a minimal fee regardless of cost. Youth and senior programs tend to have the lowest recovery levels (15%-50%). Miscellaneous classes tend to have the moderate cost recovery levels (50%-85%) and adult sport programs typically have higher cost recovery levels (60%-100%). Private benefit – If a user fee primarily benefits the fee payer, the fee is typically set at, or close to 100% full cost recovery. Development- related fees generally fall into this category, however exceptions are sometimes made for services such as appeal fees or fees charged exclusively to residential applicants. Service driver - In conjunction with the third point above, the issue of who is the service recipient versus the service driver should also be considered. For example, code enforcement activities benefit the community as a whole, but the service is driven by the individual or business owner that violates city code. Managing demand - Elasticity of demand is a factor in pricing certain city services; increasing the price may result in a reduction of demand for those services, and vice versa. For most cities recreation services are highly elastic. Due to Palo Alto’s demographics, this may not necessarily be the case for Palo Alto’s recreational programs. It should be noted that Palo Alto provides a much wider array of services to its community than are found in other cities. Consequently, a significant number of non-residents participate in Palo Alto’s recreational programs and services. Competition - Certain services, such as recreation classes, may be provided by neighboring communities or the private sector, and therefore demand for these services can be highly dependent on what else may be available at lower prices. Furthermore, if the City’s fees are too low, demand enjoyed by private-sector competitors could be adversely affected. Incentives – Fees can be set low to encourage participation in a service, such as water heater permitting or youth sports activities. Disincentives – Penalties can be instituted to discourage undesirable behavior. Examples include fines for constructing without a building permit and fines for excessive false alarms within a one-year period. The flow chart below helps illustrate the economic and policy considerations listed above. Page 4 Attachment C Who Benefits Public Mostly taxes & some fees Youth sports Private Private / Public Public / Private Type of Service Individual benefit only Primarily the individual with some community- wide benefits Primarily the individual with some community benefits Community Police patrol services Example Services Mostly fees & some taxes 100% fees 100% taxes Tax vs. Fees Policy Development services Code enforcement services DECISION-MAKING FLOW CHART Methodology The standard approach for analyzing the cost of providing fee-related services is commonly referred to as a “bottom up” approach. The bottom up approach was used for all user fees except Community Services and Animal Services fees. Community Services and Animal Services fees will be discussed later in this report. A general description of the “bottom up” approach is as follows: 1. Identify all direct staff time spent on the fee related activity or service MGT conducted a series of meetings with staff from Public Works, Police, Animal Services and the Fire Department to identify every employee, Page 5 Attachment C by classification, who performs work directly in support of a fee related service. Direct staff costs are incurred by employees who are “on the front line” and most visible to the customers (e.g. park rangers, fire inspectors, etc.). Once all direct staff were identified, departments estimated how much time those employees spend, on average, working on each particular service or program. Developing time estimates for fee related services can be challenging and departments should be commended for the time and effort they put into this. Although MGT provided departments with templates and other tools to assist them in developing average or “typical” time estimates, these calculations were necessarily developed by the subject matter experts in each operating department. 2. Calculate direct cost of the staff time for each fee using productive hourly rates Productive hourly rates are used to support full cost recovery. A full-time employee typically has 2,080 paid hours per year. However, cost studies reduce that number to account for non-productive hours (sick leave, vacation, holidays, training, meetings, etc.). MGT calculated the productive hourly rate for each classification based on the salary and benefit information provided by the City and an analysis of annual productive hours by classification. 3. Determine any other operational costs (i.e. other than personnel costs) that can readily be traced to a specific fee-related service as a direct cost Professional services contracts are an example of an expense that can often be traced to a specific service or program. 4. Determine indirect or “overhead” costs Generally there are two types of indirect costs: departmental and citywide overhead. These indirect costs are allocated across user fee services in order to capture the full cost of providing the service. . If a department performs non-fee related services, a commensurate amount of indirect cost is segregated and not allocated to the fee related services. Departmental overhead costs – these costs include managers, supervisors and support staff as well as other operational costs, such as materials and supplies that are incurred for a common purpose and not readily assigned to a particular service or program. Citywide overhead costs – each department and fund within the city receives an allocation of cost from the city’s various central service departments. Central service departments are those whose main function is to support other city departments and funds. Such departments include the Auditor, Clerk, Attorney, City Manager, Administrative Services, Human Resources and Public Works/Facilities Maintenance. The methods for allocating central service costs can vary but must demonstrate a causal relationship between the allocation methodology and the costs allocated to the operating department. The State Controller’s Office guidelines Page 6 Attachment C stress the importance of allocating citywide overhead costs in a way that “equitably reflect the value of service” provided to the department receiving the service(s). In most cases, industry standards call for one of the following methodologies for allocating central services costs: Number of full-time equivalent staff in the operating department Total operating department expenditures, excluding fixed assets, pass through funds and large purchases (e.g. energy purchases) Actual or estimates of time spent in support of the operating department based on documented procedures 5. Compare total costs to the current fee schedule. Once all direct, indirect and crossover costs are calculated, MGT compared the total cost for each fee-related service to the fee currently charged to the public. In most cases we found the total cost of providing a service exceeded the fee charged. In these instances, the fee can be increased to recover these subsidies. However, there were a number of services for which the total calculated cost was less than the fee charged. In these cases the fee must be lowered to comply with State law. 6. Annual volume figures are incorporated. Up to this point we have calculated fee costs and revenues on a per-unit basis. By incorporating annual volume estimates provided by each department into the analysis, we extrapolate the per-unit results into annual cost and annual revenue information. This annualization of results accomplishes two primary benefits: Management information: the annualized results give management an estimate of the fiscal impact of any fee adjustments. Because annual volume will change from one year to the next, these figures are estimates only. Actual revenue will depend on future demand level and collection rates, which for some services can be less than 100%. Cross checks and reasonableness tests: by annualizing the results we also annualize the time spent by staff on each service. These annualized results will surface any instances of over or under estimation of time. In these cases we review these results with staff and resolve any anomalies. All staff hours were identified to either fee or non-fee related services. Page 7 Attachment C 7. Recommend fee adjustments. MGT provides fee adjustment recommendations based on industry best practices and practices of comparable agencies. Of course MGT’s recommendations are advisory in nature only – ultimately Council must decide what fee levels are appropriate for Palo Alto. Methodology – Community Services and Animal Services fees In some cases, the potential benefits of conducting a bottom up analysis of a particular fee are outweighed by the expense that would be incurred in developing this information. This is almost universally the case with recreational and animal service programs, where a substantial amount of effort would be required to identify and track costs at the individual fee level. For example, it is difficult to estimate city staff time related to an individual participating in a karate class. The cost of conducting such a detailed analysis would outweigh the value of this information, in particular because elasticity of demand and local policy goals are typically factors that are evaluated when establishing recreational and animal service fees. Accordingly, we have analyzed Community Service and Animal Service fees at the program level using a “top down” approach. In this approach we identify the direct 2012 expenditures for each program and incorporate division, departmental and citywide overhead in a manner similar to the “bottom up” approach. We then compare the resulting full cost against 2012 program revenues to calculate the cost recovery level for each program. Page 8 Attachment C Study Findings The study's primary objective is to provide the City's decision-makers with the basic data needed to make informed pricing decisions. This report details the full cost of services and presents recommended fee adjustments and their fiscal impact. Recommendations are based on careful consideration of the results of the cost analysis, industry best practices and market comparisons. Although there are opportunities to increase fees and cost recovery levels for Animal Control and Community Services, these fees are typically set based on local elasticity of demand considerations and/or each jurisdiction’s goals and priorities. The results of the study identified that overall, most departments recover much less than the actual cost of providing services. Accordingly, there is an opportunity to raise additional funds through fee adjustments. There are several possible reasons for the current subsidy levels: During the 2003 comprehensive fee analysis, Council may have intentionally subsidized certain services. Subsequently, even if these fees were adjusted annually to keep pace with increasing city costs, these fees would still be below actual cost. It is likely the City’s practice of adjusting fees annually via a CPI factor did not keep pace with actual governmental service costs. Over the past decade, government sector costs have outpaced general inflation. Many user fee related processes have changed over the past decade. Often this is the result of increasing service-level demands by the general public. Also, the State has mandated many additional inspections and reviews that add to the City’s cost structure within the development-related departments, including Public Works Engineering. Restructuring of fees. We found that several of the City’s fees could be more equitably charged via a different fee structure. This is particularly true with for the Engineering fees. For example, Construction in the Right of Way fees: these fees are currently assessed on a flat 5% of the cost of construction. Discussion with Engineering staff and subsequent analysis of time estimate responses indicated that economies of scale exist with these services. Accordingly, we restructured these fees into a declining percentage sliding scale structure. Comparison analysis. A component of our analysis included a survey of user fees charged by neighboring cities. This survey gives City management a picture of the market environment for city services. This survey is imprecise in that a fee with the same name may involve slightly different services among the various cities surveyed. Some cities lump several services into one fee category, whereas other cities break fees down into a high level of specificity. Accordingly the purpose of this comparison analysis is to impart a sense of how Palo Alto’s fees levels compare with neighboring jurisdictions. The comparison analysis is provided under a separate cover. The exhibit on the following page displays the summary of costs and revenues for each department/division analyzed: Page 9 Attachment C City of Palo Alto User Fee Revenue AnalysisUser Fee Revenue AnalysisUser Fee Revenue AnalysisUser Fee Revenue Analysis Actual 2012 RecommendedRecommendedRecommendedRecommended Costs, UserCosts, UserCosts, UserCosts, User CurrentCurrentCurrentCurrent General FundGeneral FundGeneral FundGeneral Fund Cost RecoveryCost RecoveryCost RecoveryCost Recovery IncreasedIncreasedIncreasedIncreased Department/DivisionDepartment/DivisionDepartment/DivisionDepartment/Division Fee Services (A)Fee Services (A)Fee Services (A)Fee Services (A) Revenue (B )Revenue (B )Revenue (B )Revenue (B ) Subsidy (C )Subsidy (C )Subsidy (C )Subsidy (C ) Policy (D)Policy (D)Policy (D)Policy (D) Revenue (E)Revenue (E)Revenue (E)Revenue (E) Public Work Public Work Public Work Public Work ---- EngineeringEngineeringEngineeringEngineering $1,108,780 $816,846 74% $291,934 $1,108,780 100% $291,934 PolicePolicePolicePolice $443,545 $338,389 76% $105,156 $443,545 100% $105,156 Animal ControlAnimal ControlAnimal ControlAnimal Control $1,969,171 $1,008,427 51% $960,744 $1,008,427 51% $0 FireFireFireFire $1,553,690 $886,140 57% $667,550 $1,553,690 100% $667,550 Community ServicesCommunity ServicesCommunity ServicesCommunity Services $25,525,449 $7,645,996 30% $17,879,453 $7,645,996 30% $0 Grand Total:Grand Total:Grand Total:Grand Total: $30,600,635 $10,695,798 35% $19,904,837 $11,760,438 38% $1,064,640 Column A, User Fee Costs –––– The full cost of the services we analyzed was approximately $30.6 million. The vast majority of these costs were incurred providing fee-related services. However, because the analyses for Animal Control and Community Services were done at the program level, the full cost for those analyses includes non-fee related expenses. For example, costs for maintaining open space are included in the Community Services Department and costs for field operations are included in Animal Control. Column B, Current Revenues –––– Based on current individual fee levels, the City generates fee related revenues of $10.69 million and is experiencing a 35% cost recovery level. Within each department, cost recovery levels fluctuate significantly. Several Police and Fire fees are currently set above actual cost. MGT recommends the City review employee benefit and other cost increases that have occurred since FY 2012 to determine if these fees will need to be reduced. The analyses of individual fees are presented in subsequent sections of this report. Again, since Animal Control and Community Services were analyzed at the program level, some of the revenues for these programs are not derived from user fees. For example, Animal Control revenues include approximately $600,000 in reimbursements for services provided to other cities. Column C, General Fund Subsidy –––– Current fee levels recover 35% of full cost, leaving 65% or $19,904,837 to be funded by other funding sources. This represents a “window of opportunity” for the City to increase fees and general fund revenues, with a corresponding decrease in the subsidization of services by the general General Fund subsidy. Please note, however, that approximately $17.9 million of this $19.6 million represents historically subsidized programs within the Community Services Department. Page 10 Attachment C Column D, Recommend Recovery –––– It is estimated that adoption of the recommended cost recovery policy would generate fee revenues of $11,760,438. This would bring the overall cost recovery level up to 38.%. Column E, Increased Revenue –––– Increasing fees to recover full costs in the Fire, Police and Public Works Departments would generate approximately $1,064,640 in additional revenue. This represents a 10% increase over revenue currently being collected for these activities by the City on an annual basis. Please note that the above information does not include costs or cost recovery levels for development-related services. As stated earlier in this report, the analysis of those fees will be completed once the Development Services budget is established. Department Summary Charts The subsequent pages display the results of our individual fee analysis. Because Community Services and Animal Services were analyzed on a program level, their results reflect cost and revenue on a program basis only. For all other departments, the current charge, total cost and recommended fee are listed for each fee-related service. The summaries are in the following order: Public Works (Engineering) Police Animal Services Fire Community Services Page 11 Attachment C Public Work – Engineering Attachment C User Fee Study Summary Sheet Service Name Fee Description Annual Volum e Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy 1 Certificate of Compliance/ Correction/ Map Amendment 14 $3,000 80%80%80%80% $3,731 $52,239 $42,000 $10,239 100%$3,731 $52,239 $10,239 4 Street Cut - Excellent Pavement per sq ft 5,200 $15 68%68%68%68%$22 $115,001 $78,000 $37,001 100%$22 $115,001 $37,001 5 Street Cut - Good Pavement per sq ft 4,700 $10 54%54%54%54%$18 $86,319 $47,000 $39,319 100%$18 $86,319 $39,319 6 Street Cut - Fair Pavement per sq ft 3,200 $8 51%51%51%51%$15 $46,770 $24,000 $22,770 100%$15 $46,770 $22,770 7 Street Cut - Poor Pavement per sq ft 3,900 $5 46%46%46%46%$11 $42,376 $19,500 $22,876 100%$11 $42,376 $22,876 8 Service Lateral Connection 305 $1,000 87%87%87%87% $1,151 $350,930 $305,000 $45,930 100%$1,151 $350,930 $45,930 9 Encr - Dumpster, Container 30 $135 64%64%64%64% $211 $6,317 $4,050 $2,267 100%$211 $6,317 $2,267 10 Encr - Fence 5 $135 23%23%23%23% $596 $2,982 $675 $2,307 100%$596 $2,982 $2,307 11 Encr - Non-residential Long Term > 5 days 30 $850 103%103%103%103% $825 $24,754 $25,500 -$746 100%$825 $24,754 -$746 12 Encr - Residential $400 61%61%61%61% $660 100%$660 n/a n/a 13 Encr - Non-residential Short Term < 5 days 15 $425 102%102%102%102% $416 $6,240 $6,375 -$135 100%$416 $6,240 -$135 14 Encr - Non-residential 1 Day 30 $200 61%61%61%61% $330 $9,902 $6,000 $3,902 100%$330 $9,902 $3,902 15 Encr - VTA Bus Shelters' Installation/Relocation $315 12%12%12%12% $2,713 100%$2,713 n/a n/a Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Public Works - EngineeringPublic Works - EngineeringPublic Works - EngineeringPublic Works - Engineering 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations 16 Encr - Flood variance fee Cost + 15% n/an/an/an/a t&m n/a n/a n/a 100%t&m n/a n/a 17 Grading:101-1,000 cubic yards 20 $130 per 100 cy 67%67%67%67% $576 $11,525 $7,723 $3,802 100% $215 per 100 cy $11,525 $3,802 18 Grading: 1,001-10,000 cubic yards 20 $1,310 plus $130 each addl 1000 cy 67%67%67%67% $2,155 $43,097 $29,027 $14,070 100% $2,155 plus $253 each addl 1000 cy $43,097 $14,070 19 Grading: 10,001 cubic yards or more 5 $2,485 plus $130 each addl 10,000 cy 62%62%62%62% $4,435 $22,175 $13,725 $8,450 100% $4,435 plus $200 each addl 10k cy $22,175 $8,450 20 Flood Zone Determination Letter $55 30%30%30%30% $181 100%$181 n/a n/a 21 Temporary Elevation Benchmarks 1 $270 54%54%54%54% $501 $501 $270 $231 100%$501 $501 $231 22 Temporary Discharge to Storm Drain from Construction Site Dewatering.10 $135 + $80/month n/an/an/an/a $133 $1,334 $133 $1,201 100% $135 + $135/month $1,334 $1,201 23 Storm Plan Check 10 $350 48%48%48%48% $726 $7,259 $3,500 $3,759 100%$726 $7,259 $3,759 24 Storm Inspection Fee + Hrly 25 $320 60%60%60%60% $534 $13,344 $8,000 $5,344 100%$534 $13,344 $5,344 25 Construction and Repair Per Hour 10 $86 85%85%85%85% $102 $1,017 $864 $153 100%$102 $1,017 $153 Page 12 Attachment C User Fee Study Summary Sheet Service Name Fee Description Annual Volum e Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Public Works - EngineeringPublic Works - EngineeringPublic Works - EngineeringPublic Works - Engineering 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations 26 Sweeping Services Per Hour 5 $89 50%50%50%50% $176 $880 $443 $438 100%$176 $880 $438 27 Traffic Control/Graffiti Services Per Hour 15 $79 85%85%85%85%$93 $1,397 $1,182 $215 100%$93 $1,397 $215 28 Tree Services Per Hour 15 $73 53%53%53%53% $137 $2,056 $1,091 $965 100%$137 $2,056 $965 29 Supervision Per Hour 2 $85 63%63%63%63% $135 $270 $170 $100 100%$135 $270 $100 30 Newsrack Impoundment Fee $50 +$3/day n/an/an/an/a $125 100%$125 n/a n/a 31 Street trees-new trees for subdivisions $100 ---------- Delete ----------n/a n/a n/a 100%n/a n/a n/a 32 Tree Removal addl for damage 2 $100/ inch of trunk n/an/an/an/a $100/ inch of trunk $2,000 $2,000 100% $100/ inch of trunk $2,000 33 Tree Inspection for private development change to flat fee 200 $105 / insp 41%41%41%41% $494 $98,851 $41,000 $57,851 100%$494 $98,851 $57,851 34 Construction in ROW: $1-$5k % of const. cost 37 $240 or 5% of contract 58%58%58%58% $413 $15,296 $8,880 $6,416 100% 10.3% of const. cost $15,296 $6,416 35 Construction in ROW: $5-$25k % of const. cost 80 $240 or 5% of contract 56%56%56%56% $1,077 $86,193 $48,000 $38,193 100% 9% of const. cost $86,193 $38,193 36 Construction in ROW: $26-$100k % of const. cost 13 $240 or 5% of contract 151%151%151%151% $1,992 $25,896 $39,000 -$13,104 100% 3.3% of const. cost $25,896 -$13,104 37 Construction in ROW: $101k + % of const. cost 5 $240 or 5% of contract 190%190%190%190% $4,874 $24,369 $46,250 -$21,881 100% 2.6% of const. cost $24,369 -$21,881 38 Improvement Plan Review: $1-$25k 2 t&m n/an/an/an/a $814 $1,628 $1,628 100% 3.3% of const. cost $1,628 39 Improvement Plan Review: $26-$100k 2 t&m n/an/an/an/a $1,628 $3,256 $3,256 100% 1.6% of const. cost $3,256 40 Improvement Plan Review: $101k +1 t&m n/an/an/an/a $2,605 $2,605 $2,605 100% 0.9% of const. cost $2,605 Total User Fees $1,108,780 $816,846 $291,934 $1,108,780 $291,934 % of Full Cost 74% 26%100% 36% Page 13 Attachment C Police Attachment C Service Name Fee Descriptio n Annual Volum e Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy 1 Adult Entertainment Estb - business location change Flat $810 81%81%81%81%$996 100% $996 2 Adult Entertainment Estb - new (non-refundable application fee) Flat $1,790 83%83%83%83%$2,152 100% $2,152 3 Adult Entertainment Estb - renewal Flat $810 81%81%81%81% $996 100% $996 4 Billiard Room (non-refundable application fee)Flat $810 n/an/an/an/a n/a 5 Bingo Establishment Flat 1 $50 n/an/an/an/a n/a 6 Bingo employee (Does not include DOJ Fingerprint and Rolling Processing Fee)Flat 2 $70 n/an/an/an/a n/a 7 Bingo employee renewal (Does not include DOJ Fingerprint and Rolling Processing Fee)Flat $53 n/an/an/an/a n/a 8 Bowling Alley (non-refundable application fee)Flat $120 n/an/an/an/a n/a 9 Carnival Flat $2,250 n/an/an/an/a n/a 10 Circus Flat $2,250 n/an/an/an/a n/a 11 Closing out sale Flat $61 56%56%56%56% $109 100% $109 12 Closing out sale - renewal (maximum of 2)Flat $61 56%56%56%56%$109 100% $109 13 Firearms Dealer Master Permit – New Flat $2,100 100%$2,100 14 Firearms Dealer Master Permit – Renewal Flat $800 100%$800 15 Background Investigation - new each owner, officer, agent employee Flat $136 80%80%80%80% $169 100% $169 16 Background Investigation - renewal, each owner, officer, agent employee Flat $53 42%42%42%42% $126 100% $126 17 Helicopter Landing Fee Flat 5 $240 885%885%885%885% $27 $136 $1,200 -$1,064 100% $27 $136 -$1,064 18 Hot tub/sauna business location change Flat $810 n/an/an/an/a n/a 19 Hot tub/sauna employee (Does not include DOJ Fingerprint and Rolling Fee)Flat $81 n/an/an/an/a n/a 20 Hot tub/sauna new (non-refundable application fee)Flat $1,790 n/an/an/an/a n/a 21 Hot tub/sauna - renewal Flat $810 n/an/an/an/a n/a 22 Hot tub/sauna sale or transfer of interest Flat $122 n/an/an/an/a n/a 23 Massage estb - new establishment (non-refundable application fee) Flat $1,790 n/an/an/an/a n/a 100% $1,790 24 Massage estb - sale or transfer of interest Flat $122 n/an/an/an/a n/a 100% $122 Re-evaluate massage establishment fees once the new program and program guidelines are implemented Delete from fee schedule - covered by fees #1 - #3 Delete from fee schedule - covered by fees #1 - #3 Delete from fee schedule - covered by fees #1 - #3 Delete from fee schedule - covered by fees #1 - #3 Delete from fee schedule - covered by fees #1 - #3 no data no data Delete from fee schedule - covered by fees #1 - #3 Delete from fee schedule - covered by fees #1 - #3 Delete from fee schedule - covered by fees #1 - #3 Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Delete from fee schedule - covered by fees #1 - #3 Delete from fee schedule - covered by fees #1 - #3 Delete from fee schedule - covered by fees #1 - #3 City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Police Police Police Police 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Delete from fee schedule - covered by fees #1 - #3 Page 14 Attachment C Service Name Fee Descriptio n Annual Volum e Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Police Police Police Police 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual 25 Massageg estb - renewal Flat $810 n/an/an/an/a n/a 100% $810 26 Massage estb - business location change Flat $810 n/an/an/an/a n/a 100% $810 27 Massage Tech - New (Does not include DOJ or FBI Fingerprint and Rolling Fee.)Flat 200 $81 179%179%179%179% $45 $9,042 $16,200 -$7,158 100% $45 $9,042 -$7,158 28 Massage Tech - Renewal Flat $63 100% 29 Mechanical Amusement Device Establishment Flat 1 $74 68%68%68%68%$109 $109 $74 $35 100% $109 $109 $35 30 Noise Exception Permit Flat 108 $250 137%137%137%137% $182 $19,656 $27,000 -$7,344 100% $182 $19,656 -$7,344 31 Push Cart Vendor - New license (Does not include DOJ Fingerprint and Rolling Fee.)Flat $244 19%19%19%19% $1,302 100% $1,302 32 Push Cart Vendor - Renewal Flat $86 79%79%79%79% $109 100% $109 33 Push Cart Vendor - Each additional cart Flat $244 675%675%675%675%$36 100% $36 34 Push Cart Vendor - Location change and/or cart change Flat $163 100%$163 35 Push Cart Employee - New license (Does not include DOJ Fingerprint and Rolling Fee.)Flat $81 100% $81 36 Push Cart Employee - Renewal Flat $63 100% $63 37 Soliciting information for commercial purpose (Does not include DOJ Fingerprint and Rolling Fee.)Flat $2,250 100% $2,250 38 Solicitor/Peddler Master License (Does not include DOJ Fingerprint and Rolling Fee.) - day Flat $81 224%224%224%224% $36 100% $36 39 Solicitor/Peddler Master License (Does not include DOJ Fingerprint and Rolling Fee.) - quarter Flat $122 337%337%337%337% $36 100% $36 40 Solicitor/Peddler Master License (Does not include DOJ Fingerprint and Rolling Fee.) - year Flat 2 $365 1009%1009%1009%1009% $36 $72 $730 -$658 100% $36 $72 -$658 41 Each employee operating under Master License (Does not include DOJ Fingerprint and Rolling Fee.)Flat 20 $81 224%224%224%224% $36 $723 $1,620 -$897 100% $36 $723 -$897 42 Taxi/Pub Transp Vehicle - Each Vehicle-Inspection/permit Flat 200 $61 169%169%169%169%$36 $7,234 $12,200 -$4,966 100% $36 $7,234 -$4,966 43 Taxi/Public Transp Vehicle - Master License-Application/certificate Flat 2 $1,750 61%61%61%61%$2,890 $5,781 $3,500 $2,281 100% $2,890 $5,781 $2,281 44 Taxi/Pub Transp Vehicle - Master License-Annual renewal Flat 3 $810 75%75%75%75%$1,085 $3,255 $2,430 $825 100% $1,085 $3,255 $825 45 Taxicab/Public Transportation/Vehicle Service Driver (Does not include DOJ Fingerprint and Rolling Fee.) new and renewal Flat 200 $81 299%299%299%299% $27 $5,425 $16,200 -$10,775 100% $27 $5,425 -$10,775 no data Re-evaluate massage establishment fees once the new program and program guidelines are implemented no data no data no data Page 15 Attachment C Service Name Fee Descriptio n Annual Volum e Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Police Police Police Police 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual 46 Taxi/Pub Transp Veh - Transfer fee Flat 12 $40 88%88%88%88% $45 $543 $480 $63 100% $45 $543 $63 47 Temp Street Closure - Class A: Parades, Runs, Street Fair, etc. Varies 10 $100 - $1,260 n/an/an/an/a $486 $4,855 $4,855 100% Hourly $4,855 48 Traveling Show Flat 2 $2,250 n/an/an/an/a n/a 49 Permit Inspection Fee Flat 2 $90 25%25%25%25% $364 $728 $180 $548 100% $364 $728 $548 50 Permit Inspection Fee 201-400 attendees Flat 1 $110 26%26%26%26%$425 $425 $110 $315 100% $425 $425 $315 51 Permit Inspection Fee 401-600 attendees Flat $125 26%26%26%26%$486 100% $486 52 Permit Inspection Fee each additional 200 attendees Flat $20 33%33%33%33%$61 100% $61 53 Report Copy Fee Flat 1400 $10 37%37%37%37% $27 $38,277 $14,000 $24,277 100% $27 $38,277 $24,277 54 Clearance Letter Flat 130 $30 111%111%111%111% $27 $3,508 $3,900 -$392 100% $27 $3,508 -$392 55 Photo Reprint, color or black and white Flat 10 $35 74%74%74%74%$47 $473 $350 $123 100% $47 $473 $123 56 Research Fee (includes audio and video taping)hourly 100% 57 Subpoena Copy Fee Statute 100% 58 Location Crime Statistics Fee Flat 15 $39 39%39%39%39% $101 $1,518 $585 $933 100% $101 $1,518 $933 59 Parenting Project Program Flat 25 $120 49%49%49%49% $243 $6,069 $3,000 $3,069 100% $243 $6,069 $3,069 60 Parenting Project Materials Flat 5 $35 58%58%58%58% $61 $303 $175 $128 100% $61 $303 $128 61 Vehicle Impound Fee Flat 260 $125 46%46%46%46% $274 $71,174 $32,500 $38,674 100% $274 $71,174 $38,674 62 Vehicle Reposession Receipt Flat 25 $15 55%55%55%55% $27 $684 $375 $309 100% $27 $684 $309 63 Audio copy request Flat $120 100%$120 64 Alarm registration - new Flat 286 $35 129%129%129%129% $27 $7,758 $10,010 -$2,252 100% $27 $7,758 -$2,252 65 Alarm registration - renewal Flat 2145 $35 194%194%194%194% $18 $38,791 $75,075 -$36,284 100% $18 $38,791 -$36,284 66 Attendant Lot Parking Fee Structure 67 0-1 hours no charge 68 1-3 hours flat $2 n/an/an/an/a n/a n/a n/a n/a n/a n/a n/a n/a 69 3-4 hours flat $4 n/an/an/an/a n/a n/a n/a n/a n/a n/a n/a n/a 70 Over 4 hours flat $8 n/an/an/an/a n/a n/a n/a n/a n/a n/a n/a n/a 71 Daily Maximum flat $8 n/an/an/an/a n/a n/a n/a n/a n/a n/a n/a n/a 72 Emergency Response Fee actual cost $50-$12,000 n/an/an/an/a n/a n/a n/a n/a 100% hourly rates n/a n/a Delete from fee schedule - covered by fees #1 - #3 Page 16 Attachment C Service Name Fee Descriptio n Annual Volum e Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Police Police Police Police 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual 73 Fingerprints 74 DOJ Fed rate $52 n/an/an/an/a n/a n/a n/a n/a n/a n/a n/a n/a 75 FBI Fed rate $24 n/an/an/an/a n/a n/a n/a n/a n/a n/a n/a n/a 76 False Alarm Response Fees - Excessive 77 3rd Residential False Alarm Flat 313 $100 47%47%47%47% $211 $66,056 $31,300 $34,756 100% $211 $66,056 $34,756 78 3rd Bank/Commercial False Alarm Flat 157 $100 27%27%27%27%$372 $58,353 $15,700 $42,653 100% $372 $58,353 $42,653 79 4th False Alarm Flat $150 100% 150% of 3rd 80 5th and each Subsequent False Alarm Flat $200 100%200% of 3rd 81 Police Service Fees 82 Community Service Officer hourly 200 $68 78%78%78%78% $87 $17,363 $13,600 $3,763 100% $87 $17,363 $3,763 83 Police Agent hourly 100 $131 58%58%58%58% $226 $22,642 $13,100 $9,542 100% $226 $22,642 $9,542 84 Police Officer hourly 200 $121 76%76%76%76% $160 $31,957 $24,200 $7,757 100% $160 $31,957 $7,757 85 Police Reserve hourly 100 $51 84%84%84%84% $61 $6,062 $5,100 $962 100% $61 $6,062 $962 86 Police Sergeant hourly 60 $144 59%59%59%59% $243 $14,565 $8,640 $5,925 100% $243 $14,565 $5,925 Total User Fees $443,545 $338,389 $105,156 $443,545 $105,156 % of Full Cost 76% 24%100% 31% Fees#82 thru 86) for events where less than 80% of the proceeds go directly to a "non-profit" organization, a 20% discount shall apply. For events where 80% or more of the proceeds go directly to a "non-profit" organization; or events declared as co-sponsored by the City of Palo Alto, a 25% discount shall apply. Page 17 Attachment C Animal Services Attachment C Program Fee Description Annual Cost Current Recovery Annual Revenue Annual Subsidy Recovery Level Range Revenue at Current Rate Recommended Subsidy 1 Adoptions Varies $147,104 52%52%52%52% $77,137 $69,967 50-70% $77,137 $69,967 2 Animal Boarding Varies $46,771 72%72%72%72%$33,732 $13,039 16-90% $33,732 $13,039 3 Disposal of Dead Owned Animals/Euthanasia Varies $128,706 74%74%74%74%$94,821 $33,885 50-90% $94,821 $33,885 4 Impoundment Varies $221,460 68%68%68%68%$151,114 $70,346 50-90% $151,114 $70,346 5 Licenses and Pet Identification Varies $112,964 90%90%90%90%$101,956 $11,008 100% $101,956 $11,008 6 Miscellaneous Sales, Pet Supplies Varies $52,572 86%86%86%86%$45,291 $7,281 80-100% $45,291 $7,281 7 Veterinary Services Varies $98,435 65%65%65%65%$64,404 $34,031 50-100% $64,404 $34,031 8 Annual Permits Varies $34,481 46%46%46%46%$15,877 $18,603 14-80% $15,877 $18,603 9 Spay and Neuter Clinic Varies $344,714 82%82%82%82%$284,161 $60,552 80-100% $284,161 $60,552 12 Animal Testing Varies $33,963 0%0%0%0%$0 $33,963 60-80%$0 $33,963 13 Vaccinations/Microchip Varies $98,261 71%71%71%71%$69,580 $28,681 100% $69,580 $28,681 14 Trap Rental/Home Quarantine Inspection Varies $38,693 61%61%61%61%$23,602 $15,091 8-60% $23,602 $15,091 15 Cremations Services Varies $30,738 87%87%87%87%$26,639 $4,099 73% $26,639 $4,099 16 Field Services Varies $580,309 3%3%3%3%$20,112 $560,197 0-10% $20,112 $560,197 Total User Fees $1,969,171 $1,008,427 $960,744 $1,008,427 $960,744 % of Full Cost 51% 49%51%49% City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Police Department - Animal ServicesPolice Department - Animal ServicesPolice Department - Animal ServicesPolice Department - Animal Services 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations AnnualAnnualAnnualAnnual AnnualAnnualAnnualAnnual Page 18 Attachment C Fire Attachment C Service Name Fee Description Annual Volume Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy 1 Automatic fire sprinkler installation/modification (per building)Flat 225 $300 27%27%27%27% $1,108 $249,380 $67,500 $181,880 100% $1,108 $249,380 $181,880 $0 2 Automatic fire sprinkler installation/modification (per building)Per head 30000 $1.50 54%54%54%54% $2.78 $83,523 $45,000 $38,523 100% $3 $83,523 $38,523 $0 3 Other automatic fire extinguishing systems (hood and duct, FM200, Inergen, CO2) NOTE: If system has a release panel, Fire Alarm fees apply as well.Flat 12 $300 27%27%27%27% $1,108 $13,300 $3,600 $9,700 100% $1,108 $13,300 $9,700 $0 4 Other automatic fire extinguishing systems (hood and duct, FM200, Inergen, CO2) NOTE: If system has a release panel, Fire Alarm fees apply as well.Per nozzle 350 $6.50 54%54%54%54% $12.07 $4,226 $2,275 $1,951 100% $12 $4,226 $1,951 $0 5 Fire Alarm Systems; install/modify (per building)Flat 140 $300 27%27%27%27% $1,108 $155,170 $42,000 $113,170 100% $1,108 $155,170 $113,170 $0 6 Fire Alarm Systems; install/modify (per building)Per device 5000 $6.50 114%114%114%114% $5.73 $28,627 $32,500 -$3,873 100% $6 $28,627 -$3,873 $0 7 Standpipe system wet, dry or combination, per riser Flat 12 $175 23%23%23%23% $752 $9,029 $2,100 $6,929 100% $752 $9,029 $6,929 $0 8 Hydrants private on-site; install/modify Flat 1 $220 25%25%25%25% $889 $889 $220 $669 100% $889 $889 $669 $0 9 Hydrants private on-site; install/modify Per hydrant 3 $50 50%50%50%50% $101 $303 $150 $153 100% $101 $303 $153 $0 10 Underground fire service line (includes inspection and re-inspection - 1 each occurrence)Flat 11 $300 27%27%27%27% $1,108 $12,192 $3,300 $8,892 100% $1,108 $12,192 $8,892 $0 11 Temporary Certificate of Occupancy Flat 4 $300 36%36%36%36% $844 $3,375 $1,200 $2,175 100% $844 $3,375 $2,175 $0 15 Verification of Fire Protection System Maintenance and Certification Flat 300 $75 45%45%45%45% $167 $49,950 $22,500 $27,450 100% $167 $49,950 $27,450 $0 16 A Level I Facility - Minimal Storage (defined as having no hazardous materials over CFC Permit amounts as specified in CFC section 105)Flat 87 $230 71%71%71%71% $324 $28,208 $20,010 $8,198 100% $324 $28,208 $8,198 $0 B Level II Facility - Quantities exceeding CFC permit threshold, but less than 50 gal., City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Fire PreventionFire PreventionFire PreventionFire Prevention 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual 17 B Level II Facility - Quantities exceeding CFC permit threshold, but less than 50 gal., 500 lbs. Or 200 cu. Ft. Category also includes Dry Cleaning, Fixed Medical Gas, Auto or Aircraft Repair and Service Stations Flat 140 $470 97%97%97%97% $487 $68,122 $65,800 $2,322 100% $487 $68,122 $2,322 $0 18 C Level III Facility - Quantities exceed 50 gal., 500 lbs. Or 200 cu. Ft. and not categorized as Level II Flat 200 $825 95%95%95%95% $865 $172,939 $165,000 $7,939 100% $865 $172,939 $7,939 $0 19 D Business Plan (HMBP) Flat 251 $285 93%93%93%93% $307 $77,024 $71,535 $5,489 100% $307 $77,024 $5,489 $0 20 E Petroleum Abovegroung Storage Tank Flat 16 $500 58%58%58%58% $858 $13,721 $8,000 $5,721 100% $858 $13,721 $5,721 $0 21 E Provisional (6 month term)Delete 0 $165 n/a n/a 22 F Additional approval for permit to construct, temporary closure, permanent closure, otherwise modify a Hazardous Materials storage/use facility. (See CEQA for additional fees.)Flat 47 $300 37%37%37%37% $816 $38,370 $14,100 $24,270 100% $816 $38,370 $24,270 $0 23 F Additional approval for permit to construct, temporary closure, permanent closure, otherwise modify a Hazardous Materials storage/use facility. Additional hours over 2 Per hour 30 $150 84%84%84%84% $179 $5,379 $4,500 $879 100% $179 $5,379 $879 $0 24 Late Fee for Hazardous Materials Storage Permits Fine 0 25% of haz mat fee n/an/an/an/a n/a 100% 25% of haz mat fee Page 19 Attachment C Service Name Fee Description Annual Volume Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Fire PreventionFire PreventionFire PreventionFire Prevention 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual 25 Fees charged for additional re-inspections after the first re-inspection.Flat 12 $300 81%81%81%81% $368 $4,421 $3,600 $821 100% $368 $4,421 $821 $0 26 Fees charged for additional re-inspections after the first re-inspection - each hour over 2 Per hour 6 $150 45%45%45%45% $334 $2,004 $900 $1,104 100% $334 $2,004 $1,104 $0 27 After hours inspection fee (before or after normal business hours; weekends and holidays included, and is to be paid in advance of inspection)Per hour 100 $165 48%48%48%48% $344 $34,381 $16,500 $17,881 100% $344 $34,381 $17,881 $0 28 Christmas Tree Lot/Pumpkin Patch Flat 5 $150 25%25%25%25% $603 $3,013 $750 $2,263 100% $603 $3,013 $2,263 $0 29 Care Facility (including community, child day care and residential care for the elderly) Fire and Safety Inspections (CFC 111.4). Excludes residential elderly care facilities with six or fewer persons. Flat 91 $150 27%27%27%27% $546 $49,676 $13,650 $36,026 100% $546 $49,676 $36,026 $0 30 Care Facility Inspection including fire clearance 7-25 clients Delete 0 $65 n/a n/a 31 Care Facility Inspection including fire clearance >25 clients Delete 0 $125 n/a n/a 32 Outside Cooking Booths Flat 11 $165 30%30%30%30% $546 $6,005 $1,815 $4,190 100% $546 $6,005 $4,190 $0 33 Use and Occupancy Fire Inspection Flat 100 $125 23%23%23%23% $537 $53,743 $12,500 $41,243 100% $537 $53,743 $41,243 $0 34 Standby fire watch or after-hours at fire or incident scene Per hour 0 $165 49%49%49%49% $334 $0 $0 $0 100% $334 $0 $0 $0 High Rise Building; certificate of compliance inspection for each high rise building which is required by State law to be inspected and certified annually as meeting minimum compliance with applicable State of California fire and life safety standards for existing high rise buildings. (CFC 35 California fire and life safety standards for existing high rise buildings. (CFC 111.4.3)Flat 7 $600 36%36%36%36% $1,670 $11,689 $4,200 $7,489 100% $1,670 $11,689 $7,489 $0 36 High Rise Building; certificate of compliance inspection for each high rise building which is required by State law to be inspected and certified annually as meeting minimum compliance with applicable State of California fire and life safety standards for existing high rise buildings. (CFC 111.4.3) - each hour after 4 Per hour 3 $150 45%45%45%45% $334 $1,002 $450 $552 100% $334 $1,002 $552 $0 37 Consultation fee Per hour 0 $150 45%45%45%45% $334 $0 $0 $0 100% $334 $0 $0 $0 38 Alternate Means and Methods Application Flat 1 $300 28%28%28%28% $1,073 $1,073 $300 $773 100% $1,073 $1,073 $773 $0 39 Hazardous Materials investigation Per hour 0 $150 84%84%84%84% $179 $0 $0 $0 100% $179 $0 $0 $0 40 Appeals to decisions Per hour 0 $250 75%75%75%75% $334 $0 $0 $0 100% $334 $0 $0 $0 41 Additional hours over plan review/inspection (hourly minimum to be billed)Per hour 0 $150 45%45%45%45% $334 $0 $0 $0 100% $334 $0 $0 $0 42 Site Disaster Planning Per hour 250 $150 45%45%45%45% $334 $83,495 $37,500 $45,995 100% $334 $83,495 $45,995 $0 43 Hydrant Flow Fee Flat 0 $200 59%59%59%59% $341 $0 $0 $0 100% $341 $0 $0 $0 Page 20 Attachment C Service Name Fee Description Annual Volume Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Fire PreventionFire PreventionFire PreventionFire Prevention 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual 44 Hazardous Materials Data Entry Fee Per hour 50 $65 36%36%36%36% $179 $8,964 $3,250 $5,714 100% $179 $8,964 $5,714 $0 45 Aerosol Products Flat 0 $255 209%209%209%209% $122 $0 $0 $0 100% $122 $0 $0 $0 46 Amusement buildings Flat 0 $365 76%76%76%76% $481 $0 $0 $0 100% $481 $0 $0 $0 47 Automobile Wrecking Yard or Junk Yard Flat 0 $170 80%80%80%80% $212 $0 $0 $0 100% $212 $0 $0 $0 48 Bowling alley and pin refinishing involving the use of flammable liquids Flat 0 $170 80%80%80%80% $212 $0 $0 $0 100% $212 $0 $0 $0 49 Candles and open flames in assembly areas Flat 114 $135 44%44%44%44% $306 $34,901 $15,390 $19,511 100% $306 $34,901 $19,511 $0 50 Carnivals and fairs Flat 0 $170 80%80%80%80% $212 $0 $0 $0 100% $212 $0 $0 $0 51 Cellulose nitrate storage/nitrate film Flat 0 $255 209%209%209%209% $122 $0 $0 $0 100% $122 $0 $0 $0 52 Confined Space Flat 0 $125 10%10%10%10% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 53 Combustible fiber/material storage Flat 0 $170 80%80%80%80% $212 $0 $0 $0 100% $212 $0 $0 $0 54 Dust producing devices Flat 0 $105 8%8%8%8% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 55 Excavate within 10 feet of flammable or combustible pipeline Flat 0 $75 6%6%6%6% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 56 Explosive or blasting agents Flat 2 $255 209%209%209%209% $122 $244 $510 -$266 100% $122 $244 -$266 $0 57 Fireworks display Flat 0 $525 80%80%80%80% $660 $0 $0 $0 100% $660 $0 $0 $0 58 High-piled combustible storage Flat 1 $255 209%209%209%209% $122 $122 $255 -$133 100% $122 $122 -$133 $0 59 Hot Work (Welding and Cutting) operations Flat 53 $170 80%80%80%80% $212 $11,226 $9,010 $2,216 100% $212 $11,226 $2,216 $0 60 Liquid or gas-fueled vehicles or equipment in assembly buildings Flat 33 $255 209%209%209%209%$122 $4,032 $8,415 -$4,383 100%$122 $4,032 -$4,383 $060Liquid or gas-fueled vehicles or equipment in assembly buildings Flat 33 $255 209%209%209%209% $122 $4,032 $8,415 -$4,383 100% $122 $4,032 -$4,383 $0 61 Malls, Covered Flat 0 $255 209%209%209%209% $122 $0 $0 $0 100% $122 $0 $0 $0 62 B Place of public assembly (temporary)Flat 0 $200 16%16%16%16% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 63 C Open flame/flame producing devices Flat 4 $75 6%6%6%6% $1,268 $5,071 $300 $4,771 100% $1,268 $5,071 $4,771 $0 64 D Liquid or gas-fueled powered equipment Flat 0 $75 6%6%6%6% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 65 Magnesium working Flat 0 $255 209%209%209%209% $122 $0 $0 $0 100% $122 $0 $0 $0 66 Occupant load increase (temporary public assembly)Flat 0 $200 16%16%16%16% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 67 Open burning Flat 0 $200 16%16%16%16% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 68 Operate a tank vehicle to transport flammable/combustible liquids Flat 0 $255 209%209%209%209% $122 $0 $0 $0 100% $122 $0 $0 $0 69 Organic coatings Flat 0 $170 80%80%80%80% $212 $0 $0 $0 100% $212 $0 $0 $0 70 Ovens, industrial baking or drying Flat 4 $255 209%209%209%209% $122 $489 $1,020 -$531 100% $122 $489 -$531 $0 71 Parade Float Per hour 0 $95 7%7%7%7% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 72 Place of public assembly (annual or each occurrence)Flat 196 $200 34%34%34%34% $594 $116,516 $39,200 $77,316 100% $594 $116,516 $77,316 $0 Page 21 Attachment C Service Name Fee Description Annual Volume Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Fire PreventionFire PreventionFire PreventionFire Prevention 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual 73 Pyrotechnical special effects material Flat 0 $170 523%523%523%523% $33 $0 $0 $0 100% $33 $0 $0 $0 74 Refrigeration Equipment Flat 0 $170 80%80%80%80% $212 $0 $0 $0 100% $212 $0 $0 $0 75 Spraying/Dipping Flat 18 $170 80%80%80%80% $212 $3,813 $3,060 $753 100% $212 $3,813 $753 $0 76 Tent or air-supported structure having an area in excess of 200 square feet; or canopies in excess of 400 square feet (includes a public assembly permit of $125.00 for all tents)Flat 30 $365 61%61%61%61% $603 $18,080 $10,950 $7,130 100% $603 $18,080 $7,130 $0 77 Tire recapping/tire storage Flat 0 $480 38%38%38%38% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 78 Corrosives Flat 62 $255 153%153%153%153% $167 $10,354 $15,810 -$5,456 100% $167 $10,354 -$5,456 $0 79 Cryogenic Fluids Flat 49 $255 153%153%153%153% $167 $8,183 $12,495 -$4,312 100% $167 $8,183 -$4,312 $0 80 Flammable and Combustible Liquids Flat 181 $255 153%153%153%153% $167 $30,226 $46,155 -$15,929 100% $167 $30,226 -$15,929 $0 81 Flammable Solids Flat 0 $255 153%153%153%153% $167 $0 $0 $0 100% $167 $0 $0 $0 82 Compressed Gas (inert)Flat 32 $255 153%153%153%153% $167 $5,344 $8,160 -$2,816 100% $167 $5,344 -$2,816 $0 83 Flammable Gas Flat 29 $255 153%153%153%153% $167 $4,843 $7,395 -$2,552 100% $167 $4,843 -$2,552 $0 84 Oxidizing Gas Flat 35 $255 153%153%153%153% $167 $5,845 $8,925 -$3,080 100% $167 $5,845 -$3,080 $0 85 Pyrophoric Gas Flat 2 $255 153%153%153%153% $167 $334 $510 -$176 100% $167 $334 -$176 $0 86 Toxic, highly toxic, moderately toxic, health hazard Gas Flat 12 $255 153%153%153%153% $167 $2,004 $3,060 -$1,056 100% $167 $2,004 -$1,056 $0 87 Unstable Reactive Gas Flat 0 $255 153%153%153%153%$167 $0 $0 $0 100%$167 $0 $0 $087Unstable Reactive Gas Flat 0 $255 153%153%153%153%$167 $0 $0 $0 100%$167 $0 $0 $0 88 Health Hazard (liquids & solids)Flat 0 $255 153%153%153%153% $167 $0 $0 $0 100% $167 $0 $0 $0 89 Organic Peroxides Flat 1 $255 153%153%153%153% $167 $167 $255 -$88 100% $167 $167 -$88 $0 90 Oxidizers (liquids & solids)Flat 19 $255 153%153%153%153% $167 $3,173 $4,845 -$1,672 100% $167 $3,173 -$1,672 $0 91 Pyrophoric Materials (liquids & solids)Flat 6 $255 153%153%153%153% $167 $1,002 $1,530 -$528 100% $167 $1,002 -$528 $0 92 Radioactive Materials Flat 29 $255 153%153%153%153% $167 $4,843 $7,395 -$2,552 100% $167 $4,843 -$2,552 $0 93 Toxic, highly toxic, health hazard materials (includes pesticides, fumigants, and etiologic agents)Flat 45 $255 153%153%153%153% $167 $7,515 $11,475 -$3,960 100% $167 $7,515 -$3,960 $0 94 Unstable Reactive Materials (liquids & solids)Flat 1 $255 153%153%153%153% $167 $167 $255 -$88 100% $167 $167 -$88 $0 95 Water Reactive Materials (liquids & solids)Flat 0 $255 153%153%153%153% $167 $0 $0 $0 100% $167 $0 $0 $0 96 Liquefied Petroleum Gases Flat 12 $255 153%153%153%153% $167 $2,004 $3,060 -$1,056 100% $167 $2,004 -$1,056 $0 97 Emergency Response Fee (Hazmat -PAMC 17.24.050)Sliding 0 $1,080 0%0%0%0% $0 $0 $0 $0 hourly 98 Engine Company Second Re-inspection (After inspection and re-inspection only) Per hour 0 $195 0%0%0%0% $0 $0 $0 $0 hourly Page 22 Attachment C Service Name Fee Description Annual Volume Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Fire PreventionFire PreventionFire PreventionFire Prevention 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual 99 Installation or Closure without approved plans and/or permits (Fire Protection/HazMat; double original fee)Penatly 0 $725 n/a $725 100 Preventable False Alarm (CFC 401.3.1)Penatly 0 $180 n/a $180 Total User Fees $1,553,690 $886,140 $667,550 $1,553,690 $667,550 $0 % of Full Cost 57% 43%100% 43% 0% Page 23 Attachment C Community Services Attachment C Total Direct Expense Total Indirect Expense Total Full Cost Total Fee Revenue Total Other Revenue Total Revenue Total General Fund Subsidy Direct Costs % Recovery Full Cost % Recovery Children's Theatre 1,235,046$ 515,804$ 1,750,850$ 360,304$ 80,000$ 440,304$ 1,310,546$ 36%25% JMZ-Sciences 767,528$ 239,633$ 1,007,161$ 500,698$ -$ 500,698$ 506,463$ 65%50% JMZ-Exhibits & Zoo 408,874$ 180,183$ 589,057$ 6,721$ 3,000$ 9,721$ 579,336$ 2%2% Art in Public Places 105,629$ 45,124$ 150,753$ 2,625$ -$ 2,625$ 148,128$ 2%2% Community Theatre 29,460$ 522,435$ 551,895$ -$ 18,449$ 18,449$ 533,446$ 63%3% Summer Concerts 73,270$ 18,849$ 92,119$ -$ 2,000$ 2,000$ 90,119$ 3%2% Visual Arts-Youth 293,085$ 75,397$ 368,482$ 200,074$ 38,000$ 238,074$ 130,408$ 81%65% Visual Arts - Adults 169,697$ 43,655$ 213,352$ 61,694$ -$ 61,694$ 151,658$ 36%29% Art Exhibitions 135,481$ 34,853$ 170,334$ -$ -$ -$ 170,334$ 0%0% Music & Dance - Youth 56,845$ 14,624$ 71,469$ 62,864$ -$ 62,864$ 8,605$ 111%88% Music & Dance - Adults 61,895$ 15,923$ 77,818$ 24,314$ -$ 24,314$ 53,504$ 39%31% Arts Facilities 842,882$ 506,476$ 1,349,358$ -$ 15,802$ 15,802$ 1,333,556$ 2%1% Total Arts and Sciences 4,179,693$ 2,212,956$ 6,392,649$ 1,219,294$ 157,251$ 1,376,545$ 5,016,104$ 33%22% Aquatics 514,702$ 224,132$ 738,834$ 501,164$ -$ 501,164$ 237,670$ 97%68% MSA 326,515$ 110,157$ 436,672$ 289,391$ -$ 289,391$ 147,281$ 89%66% Recreation - Adults 278,827$ 98,389$ 377,216$ 187,686$ -$ 187,686$ 189,530$ 67%50% Recreation - Teens 306,622$ 76,472$ 383,094$ 114,540$ -$ 114,540$ 268,554$ 37%30% Program Publication 100,807$ 24,874$ 125,681$ -$ -$ -$ 125,681$ 0%0% Recreation - Youth 614,001$ 151,508$ 765,509$ 754,294$ 754,294$ 11,215$ 123%99% Rec - Special Needs 56,072$ 13,836$ 69,908$ 6,942$ 1,500$ 8,442$ 61,466$ 15%12% Recreation - Facilities 1,025,410$ 296,684$ 1,322,094$ 431,955$ -$ 431,955$ 890,139$ 42%33% Special Events 92,289$ 22,773$ 115,062$ 15,821$ 15,821$ 99,241$ 17%14% Total Recreation 3,315,245$ 1,018,825$ 4,334,070$ 2,301,793$ 1,500$ 2,303,293$ 2,030,777$ 69%53% Golf 2,388,173$ 542,126$ 2,930,299$ 2,624,748$ 95,393$ 2,720,141$ 210,158$ 114%93% Open Space 1,724,555$ 421,921$ 2,146,476$ 34,630$ 9,135$ 43,765$ 2,102,711$ 3%2% Parks 4,398,314$ 1,203,052$ 5,601,366$ 25,639$ 336,538$ 362,177$ 5,239,189$ 8%6% Total OS/Parks/Golf 8,511,043$ 2,167,099$ 10,678,142$ 2,685,017$ 441,066$ 3,126,083$ 7,552,059$ 37%29% Total Cubberley 1,349,431$ 1,064,354$ 2,413,785$ -$ 840,075$ 840,075$ 1,573,710$ 62%35% Total Human Services 1,278,249$ 428,554$ 1,706,803$ -$ -$ -$ 1,706,803$ 0%0% TOTAL CSD 18,633,661$ 6,891,788$ 25,525,449$ 6,206,104$ 1,439,892$ 7,645,996$ 17,879,453$ 41%30% Page 24 Attachment C ANIMAL SERVICES Fee Palo Alto Cupertino (Humane Society of SV) Fremont Menlo Park (Peninsula Humane) Mountain View (SVACA) San Mateo (Peninsula Humane) Santa Clara (SVACA) Sunnyvale (Humane Society SV) Adoptions ‐ Dogs $125 pp $; Adult: $175; Companion prices if adopt 2 $171‐$175 Under 7‐$120; 7+ ‐ $75; under 6 mos ‐ $135 $150 Under 7‐$120; 7+ ‐ $75; under 6 mos ‐ $135 $150 Puppies: $350; Adult: $175; Companion prices if adopt 2 Adoptions ‐ Cats $125 Kittens: $175; Cats: Currently waived $124‐$136 Under 7 ‐ $80; 7+ ‐ $50; under 6 mos ‐ $105 Under 6 mos ‐ $150; All Other ‐ $100 Under 7 ‐ $80; 7+ ‐ $50; under 6 mos ‐ $105 Under 6 mos ‐ $150; All Other ‐ $100 Kittens: $175; Cats: Currently waived Impound Dog ‐ Licensed $30 (1st offense) up to $165 (11th+ offense) Altered: $90; Unaltered: $95 (1st); $110 (2nd); $160 (3rd); $92 (1st offense); $184 (2nd offense); $276 (3rd offense) $35 (Altered/1st offense); $100 (Unaltered/1st offense); $125‐ $205 (subsequent offenses) $35 (Altered/1st offense); $100 (Unaltered/1st offense); $125‐$205 (subsequent offenses) Altered: $90; Unaltered: $95 (1st); $110 (2nd); $160 (3rd); Impound Dog ‐ Unlicensed $50 (1st offense) up to $200 (11th+ offense) $30 (1st offense) up to $165 (11th+ offense) $92 (1st offense); $184 (2nd offense); $276 (3rd offense) $35 (Altered/1st offense); $100 (Unaltered/1st offense); $125‐ $205 (subsequent offenses) $35 (Altered/1st offense); $100 (Unaltered/1st offense); $125‐$205 (subsequent offenses) Altered: $90; Unaltered: $95 (1st); $110 (2nd); $160 (3rd); Impound Cat $30 (1st offsense); $45 (2nd offense); $60 (third offense) Altered: $90; Unaltered: $95 (1st); $110 (2nd); $160 (3rd); $92 (1st offense); $184 (2nd offense); $276 (3rd offense) $35 (Altered/1st offense); $100 (Unaltered/1st offense); $125‐ $205 (subsequent offenses) $35 (Altered/1st offense); $100 (Unaltered/1st offense); $125‐$205 (subsequent offenses) Altered: $90; Unaltered: $95 (1st); $110 (2nd); $160 (3rd); 1 9/9/2013 Attachment C ANIMAL SERVICES Fee Palo Alto Cupertino (Humane Society of SV) Fremont Menlo Park (Peninsula Humane) Mountain View (SVACA) San Mateo (Peninsula Humane) Santa Clara (SVACA) Sunnyvale (Humane Society SV) License ‐ Dog/Neutered $20 (12 mos); $30 (24 mos); $40 (36 mos) $20 (12 mos); $30 (24 mos); $40 (36 mos) $12 (12 mos); $17 (24 mos); $21 (36 mos) $20 (12 mos); $55 (36 mos) $22 (12 mos); $32 (24 mos); $42 (36 mos) $20 (12 mos); $55 (36 mos) $22 (12 mos); $32 (24 mos); $42 (36 mos) $20 (12 mos); $30 (24 mos); $40 (36 mos) License ‐ Dog/Spayed $20 (12 mos); $30 (24 mos); $40 (36 mos) $20 (12 mos); $30 (24 mos); $40 (36 mos) $12 (12 mos); $17 (24 mos); $21 (36 mos) $20 (12 mos); $55 (36 mos) $22 (12 mos); $32 (24 mos); $42 (36 mos) $20 (12 mos); $55 (36 mos) $22 (12 mos); $32 (24 mos); $42 (36 mos) $20 (12 mos); $30 (24 mos); $40 (36 mos) License ‐ Dog/ Unaltered $40 (12 mos); $60 (24 mos); $80 (36 mos)$150 (12 mos) $25 (12 mos); $35 (24 mos); $42 (36 mos) $50 (12 mos); $145 (36 mos) $100 (12 mos) $50 (12 mos); $145 (36 mos) $100 (12 mos) $150 (12 mos) Neuter Dog ‐ Resident $100‐$250 based on weight $110‐$130 based on weight $110‐$130 based on weight Neuter Dog ‐ Regular or Non‐ Resident $135‐$325 based on weight $85‐$135 based on weight $91 $80‐$140+ based on weight $135‐$155 based on weight $80‐$140+ based on weight $135‐$155 based on weight $85‐$135 based on weight Spay Dog ‐ Resident $120‐$270 based on weight $120‐$140 based on weight $120‐$140 based on weight Spay Dog ‐ Regular or Non‐ Resident $160‐$345 based on weight $110‐$170 based on weight $91 $90‐$150+ based on weight $145‐$165 based on weight $90‐$150+ based on weight $145‐$165 based on weight $110‐$170 based on weight Neuter Cat ‐ Resident $65 $60 $60 Neuter Cat ‐ Regular or Non‐ Resident $90 $60 $54 $50 $75 $50 $75 $60 Spay Cat ‐ Resident $95 $70 $70 Spay Cat ‐ Regular or Non‐ Resident $130 $95 $54 $60 $85 $60 $85 $95 2 9/9/2013 Attachment C COMMUNITY SERVICES DEPT Fee Palo Alto Cupertino Fremont Menlo Park Mountain View San Mateo Santa Clara Sunnyvale Classes/Camps Residents: $6‐ $865; Non‐ Residents: Fee plus up to 50% Fees are formula driven based on instructor's hrly rate, number of classes, min. number of participants, indirect and equipment/supply costs, add 20% for non‐residents Not in fee schedule. Fees are published in each Activities schedule. Fees are set to cover all direct costs including instructors, materials, contracted services, City's costs of arranging programs, use of facilities and "necessary overhead". $5 additional charge for non‐residents Varies ‐ City has independent contract agreements with instructors who provides guaranteed income to the course Fees for most classes/activities are set based on targeted cost recovery of direct and/or indirect costs for each class/activity Not included in Muni Fee schedule ‐ Priced in each Rec Activity Guide; Higher fees for non‐ residents Set administratively by Parks/Rec Director; non‐ residents pay lower of 25% or $50 more per class than residents Tennis Primetime: Residents ‐ $9/hr; Non‐resident ‐ $11/hr; Non‐Primetime: $8/hr. Yearly Key ‐ Residents: $50; Non‐residents: $100 $8 Resident ‐ $6/hour; Non‐ resident ‐ $8/hour Aquatics ‐ Lap Swim Set by Director Daily : Non‐ Resident $4‐$6 $5 Daily: Non‐Resident $4‐$6 $6 10 Swim: Resident $40 10 Swim: Non‐ Resident $60 25 Swim: Resident $87.50 25 Swim: Non‐ Resident $109 25 Swim: Sr./Resident $30 25 Swim: Sr./Non‐ Resident $38 3 9/9/2013 Attachment C COMMUNITY SERVICES DEPT Fee Palo Alto Cupertino Fremont Menlo Park Mountain View San Mateo Santa Clara Sunnyvale Aquatics ‐ Recreational Swim Varies by pool, activities and residency Set by Director Child ≤2$0‐$4 Spectator $3 Child ‐ Resident $2,50‐$5 $3 $3 Child ‐ Non‐ Resident $2.50‐$6 $4 $4 Adult ‐ Resident $3‐$6 $4 $5 Adult ‐ Non‐ Resident $3‐$8 $5 $6 Family ‐ Resident $10 $139‐$180 Family ‐ Non‐ Resident $18 $174‐$220 4 9/9/2013 Attachment C COMMUNITY SERVICES DEPT Fee Palo Alto Cupertino Fremont Menlo Park Mountain View San Mateo Santa Clara Sunnyvale GOLF ‐ 18 Holes Wkday: Resident $36‐$40 Up to $31 $33 $25 $35 Wkday ‐ Regular or Non‐Resident $38‐$42 Up to $38 $38 $37 $35 Wkday ‐ Resident/Sr. $27‐$30 Up to $21 $27 Wkday ‐ Jr.(≤ 17) $12‐$16 after 1pm Sept 1‐April 30 Up to $16 $14/ resident only Wkend/Holiday ‐ Resident $46‐$51 Up to $47 $45 $34 $44 Wkend/Holiday ‐ Regular $48‐$53 Up to $54 $53 $50 $48 Wkend/Holiday ‐ Resident/Sr. Wkend/Holiday ‐ Jr.(≤ 17) $15‐$18 after 1 pm Sept 1‐April 30 $17/resident only GOLF‐ 9 Holes Wkday: Resident $23‐$25 $15 $15 Wkday ‐ Regular or Non‐Resident $23‐$25 $17 $15 Wkday ‐ Resident/Sr.$14‐$16 Wkday ‐ Jr.(≤ 17) $11‐$13 Wkend/Holiday ‐ Resident $26‐$29 $17 $17 Wkend/Holiday ‐ Regular or Non‐ Resident $26‐$29 $19 $19 Wkend/Holiday ‐ Resident/Sr.$17‐$19 5 9/9/2013 Attachment C FIRE Fee Palo Alto Cupertino Fremont Menlo Park Mountain View San Mateo Santa Clara Sunnyvale Fire Flow Test $215 $250 $211 Fire Suppression/ Sprinkler Inpection $325 plus sprinkler heads Varies by type of facility $96/hour plus fee based on sprinkler heads Varies by type of facility $85/hour; 3 hour min. Varies by type of facility $535‐$1,474 depending on facility & sprinkler heads Varies by facility/size Preventable False Alarm $195‐ $1,622/hour ‐ charged after 2 in 12 month period After second incident: Engine ‐ $508; Inspector ‐ $332 $134 for 3rd and subsequent occurences $385 $253 ‐ After 3rd time in 180 day period 3rd‐4th: $200; 5th‐7th:$350; 8th‐10th: $500; 11th+: $750 Fireworks $565 each occurrence $96/hour $1,084 $154/hour $292 per occurrence plus standby personnel at time of show $571 each occurrence $229 Licensed Community Care, Residential or Child Day Care Inspections $160/annual or each license renewal Based on assessed risk level Pre‐license Inspection: $164 plus $368‐$484 based on occupancy $154/hour $100 per inspection $134‐$404 depending on max occupancy Haz Mat Emergency Response Up to $1,170 each incident or 100% full cost recovery Job cost based on employees' salary plus overhead Hourly rates Hourly rates for personnel/engine Hourly rates for personnel and equipment Hourly rates for personnel/truck company Actual costs 6 9/9/2013 Attachment C POLICE Fee Palo Alto Cupertino Fremont Menlo Park Mountain View San Mateo Santa Clara Sunnyvale Massage Estab. ‐ New $750 $395 includes fingerprint $300 plus background Sole proprietor ‐ $135 plus background $900 $444 plus hrly rate for personnel Sole proprietor $313 $924 Massage Estab. ‐ Renew $450 $93 $150 Sole proprietor ‐ $135 plus background $450 $74 biyearly Sole proprietor ‐ $210 $857 Massage Therapist ‐ New $300 $298 includes fingerprint $60 plus background $450 $336 plus hourly rate for personnel $209 Massage Therapist ‐ Renew $150 $62 $30 $98 biyearly $45 False Alarm Registration: $38; 3rd alarm: $108; 4th: $162; 5th+: $216 $160 Registration: $40 (new); Permit renew: $20; $60 fine if more than 3 alarms in 120 days or 5 in 365 days Registration: $25; Standard: $175; High Risk: $350 Registration: Residential ‐ $20; Commercial ‐ $80; 2nd alarm: $100; 3rd alarm: $150; 4th alarm: $250; 5th+ alarm: $500 2nd and subsequent: $104 Registration: $24; Fines: $63 (3rd); $90 (4th); $115 (5th +); additional for bank hold up alarm Registration: Residential ‐ $35; Business ‐ $70; 3rd‐4th alarm: $200; 5th‐7th alarm: $350; 8th‐ 10th alarm: $500; 11th+ alarm: $750 Taxi Driver ‐ Permit $88/up to 4 years, plus fingerprint $323, includes fingerprint $306 $75, including fingerprint $180 $90 $160 $205 Taxi Driver ‐ Renewal $194 $108 $50 $130 $37 $144 Taxi ‐ Vehicle Inspection $66/year $28 $200 (biennial) $108 $53 $116 Fingerprinting DOJ and FBI established fees $52 plus DOJ/FBI $45 plus DOJ and other agency fees City's cost plus DOJ/FBI $72 $32 plus DOJ/FBI $66 7 9/9/2013 Attachment C POLICE Vehicle ‐ Impound Release $135 $196 Vehicle Code Infraction: $200; Misdeameanor or Felony: $300 $150 plus additional $120 if misdemeanor or felony and addiitonal $150 if repeat offender (within 12 mos) Impound: $76; Stored: $76 $52 $238 7 9/9/2013 Attachment C PUBLIC WORKS Fee Palo Alto Cupertino Fremont Menlo Park Mountain View San Mateo Santa Clara Sunnyvale Encroach Residential: $430; Non‐residential: $460‐$920 Major: $488; Minor: $244 Varies based on type and size Major: $825 plus 3% of cost; Minor: $470; Residential: $1,069; Non‐ residential: $1,955 $312 plus 6% of project cost Processing Fee ‐ $186; engineering and inspection ‐ higher of $179 or 8% of construction cost Varies based on size/duration Cert of Correct/ Compliance $3,240 $1,620 Deposit/Actual Cost Correction: First 3 sheets: $750; Each Addl: $100; Compliance: $900 Compliance: $700 $107/hour Correction ‐ $2,509 per certificate; Compliance ‐ staff salary X 2.25 Correction: $301; Compliance: $534 Bldg construct/ street impact Higher of $240 or 5% of contract work .58% of project valuation Flat rate plus % of construction costs (% varies based on dollar amount)$910 Flat rate plus % of construction costs (% varies based on dollar amount) Street Trees $100 15 gallon: $155; 24" box: $330 $85 15 gallon tree: $100 15 gallon: $11.07/linear ft. 24" box: $350 $155 $251 Street Cuts Service lateral connection: $1,080/ trench; $5‐ $16/sq.ft of trench depending on pavement condition Minor ‐ $609; Major: $1,583; Over 15 days or $30K = 5% of project Costs Deposit plus fee based on linear ft. Fees based on staff hourly billing rates Varies based on sq.footage $312 deposit; $107/hour Varies based on sq.ft. and thickness of asphalt Deposit plus fee based on linear ft. 8 9/9/2013 Attachment C ATTACHMENT C Community Services Department Class Cost Recovery Policy The Community Services Department (CSD) offers a variety of programs within its various divisions such as recreational activities, arts and sciences classes, and open space interpretive programs. The following Class Cost Recovery Policy is to be used as a guideline to establish cost recovery targets for fee-based classes and camps within the divisions of Recreation & Golf, Arts & Sciences, and Open Space & Parks. Included in CSD’s Strategic Plan is an initiative to “focus energy and (budgetary) resources on sustaining and enhancing core services”. Through implementation of this Class Cost Recovery Policy, the department aims to establish cost recovery levels while providing core services and meeting the social needs of the community. Policy The policy takes into consideration: (1) minimum level of acceptable cost recovery, (2) target level of cost recovery, and (3) fee setting considerations. Cost recovery levels are inclusive of direct and indirect costs. Indirect costs include both department and City overhead. Although each program has set minimum and target cost recovery levels, other fee setting considerations may factor into the pricing of registration fees. Fee setting considerations may either increase or decrease fees and place cost recovery outside of the minimum and target levels. These factors include, but are not limited to, market rates, programs for those with special needs, new programs still being established, and population served. However, within each of the three divisions offering fee-based classes, the division-wide cost recovery should meet minimum cost recovery levels. Once a program is determined to be within the purview of the Class Cost Recovery Policy, program fees are to be established using the Class Cost Recovery Model and adjusted as needed. The model is included in the pages to follow. Each fee-based class or camp is placed in one of four Cost Recovery Groups. The groups range from Community Benefit to Personal Benefit, representing opposite ends of a cost recovery spectrum. Programs rated as Community Benefit will cost recover less, while programs rated as Personal Benefit will cost recover more. This cost structure is in line with the department’s mission statement: “Engaging individuals and families to create a strong and healthy community, through parks, open space, recreation, social service, arts, and sciences.” The four Cost Recovery Groups are: • Group I: Community Benefit • Group II: Majority Community Benefit • Group III: Equal Community Benefit and Personal Benefit • Group IV: Majority Personal Benefit Attachment C Division managers, along with input from program coordinators and supervisors, determine the value of a class or camp for placement within one of the four groups. Each group has a cost recovery range inclusive of a minimum cost recovery and a target cost recovery level. This detail is reflected in pages to follow. On an annual basis, programs are to be reviewed to ensure the established cost recovery levels are met and adjustments made. Recovered Costs Direct costs are expenses incurred in correlation to a class being offered. These costs would not be incurred if a class were not offered. Typical direct costs are instructor fees and supplies and materials. Department indirect costs cover overhead costs incurred by the department for administrative support, program supervision, utilities, and some maintenance. Some of these costs would probably be incurred regardless whether a class is offered or not. City indirect costs encompass citywide overhead, administrative, and facility maintenance costs. Some of these costs would probably be incurred regardless of whether a class is offered or not. Department indirect cost is estimated to be 15% of direct cost while both department and City indirect costs are estimated to be 35% of direct cost. These estimates are subject to change as programs are reviewed and to reflect changing overhead costs. Attachment C Class Cost Recovery Model This model is to be used by Program Coordinators, Supervisors, and Division Managers to plan, evaluate program cost recovery, and determine expenses, revenues, and course registration fees. Attachment C Class Cost Recovery Guidelines In conjunction with the Cost Recovery Model, the following guidelines are to be used to place classes and camps into one of the four Cost Recovery Groups. Process: 1) Set a cost recovery range for each Cost Recovery Group, with minimum and target recovery levels. 2) Evaluate and place each existing program in a Cost Recovery Group. 3) Determine guidelines to be used to place future new programming into a Cost Recovery Group. Parameters: 1) Apply to fee-based class and camp programs. 2) Generally, cost recovery for children’s programs will be less than adult programs. 3) Some programs may cost recover less than the minimum level. However, other programs will need to make up for the difference. 4) Approximately 15% above Direct Costs covers Department Overhead, subject to adjustment. 5) Approximately 35% above Direct Costs covers both Department and City Overhead, subject to adjustment. 6) Other fee considerations should be taken into account, such as, but not limited to, market pricing, competition from other service providers, new program being established, and population served. Cost Recovery Groups, Cost Recovery Minimum, and Cost Recovery Targets: Group I: Community Benefit • Cost Recovery Minimum: Less than Direct Cost • Cost Recovery Target: Direct Cost Group II: Majority Community benefit • Cost Recovery Minimum: Direct Cost • Cost Recovery Target: 115% Direct Cost Group III: Equal Community and Personal Benefit • Cost Recovery Minimum: 115% Direct Cost • Cost Recovery Target: Up to 135% Direct Cost Group IV: Majority Personal Benefit • Cost Recovery Minimum: 135% Direct Cost • Cost Recovery Target: 135% Direct Cost Attachment C Characteristics of Community Benefit vs. Personal Benefit programs The four Cost Recovery Groups represent a cost recovery “spectrum”. Programs classified as being of Community Benefit will cost recover less than programs classified as being of Personal Benefit. Division managers, along with input from program coordinators and supervisors, determine the value of a class or camp for placement within one of the four cost recovery groups. • Group I: Community Benefit • Group II: Majority Community Benefit • Group III: Equal Community Benefit and Personal Benefit • Group IV: Majority Personal Benefit Below are characteristics to define Community and Personal benefit, opposite ends of a cost recovery “spectrum”. The opposite ends are represented by Group I and IV. As most programs have aspects of both benefits, they are placed within the spectrum in either Group II or III. Community Benefit Characteristics Personal Benefit Characteristics Youth and Teen Development Leisure Time Experiences Safety Financial Enhancement Early Childhood Development Stress Reduction Environmental Stewardship Mental / Physical Health for adults Fitness/Healthy Lifestyle for youth Professional Development Connecting / Involving People w/ Community Competitive Sports for adults Service Back to Community Personal Enhancement Encourages Volunteerism Weight Loss Cultural Understanding Fitness for adults Cross-Generational Understanding Fashion/Beauty/Personal Enhancement Unique Experiences not provided by other organizations Classes already provided by other organizations for adults Life Skills for Self Independence Life-Long Learning Diversity of Experience Skill Building Community Policing – Public Involvement Social Networking / Contacts for personal gain Sustaining our Resources Attachment C Attachment D CSD DEPARTMENT WIDE TOTAL Resident % when available or applicable Non‐Resident % when available or applicable Number of classes and camps offered Adult 203 Child 582 Total 785 Enrollments in classes and camps Adult 2,688 76%24% Child 12,062 90%10% Total 14,750 89%11% ARTS &SCIENCES DIVISION Children's Theatre: ▪Show Attendance 27,907 ▪Show Participants 1,087 Community Theatre: ▪Show Attendance 45,635 ▪Number of Performances 175 ▪Enrollments in Music and Dance 941 Jr. Museum & Zoo: ▪Enrollments in classes and camps 2,575 87%13% ▪School Outreach Classes ‐ Est. # of Children 9,701 Art Center: ▪Total Attendance 62,055 ▪Exhibition Visitors 29,717 OPEN SPACE, PARKS, GOLF ▪Total visitors at Foothills Park 171,413 ▪Hours of Athletic Field Use 44,226 ▪Gardening Program Participants 292 100% 0% ▪Rounds of Golf 65,653 12% 88% RECREATION CLASS ENROLLMENTS ▪Dance 886 ▪Aquatics 196 ▪Middle School Athletics 1,455 95%5% ▪Private Tennis Lessons 240 ▪Other Recreation 3,532 CUBBERLEY ▪Total Number of Hours Rented 29,282 ▪Total Number of Rental Bookings 9,348 92%8% Community Services Department (CSD) Recreational Activities Participant Data Fiscal Year 2012 Page 1 of 2 Attachment C Attachment D City Location Room Sq. Ft. Resident Non-Resident Palo Alto Lucie Stern Center Ballroom 2,800 $152/hr $228/hr Menlo Park Arrillaga Family Center Sequoia 2,378 $125 - $170/hr $170 - $230/hr Mountain View Senior Center Social Hall $115 - $231/hr $289 - $405/hr Mountain View Community Center Auditorium $114 - $120/hr $182 - $197/hr Palo Alto Lucie Stern Center Community Room 1,125 $110/hr $165/hr Menlo Park Arrillaga Family Center Juniper 1,085 $55 - $75/hr $75 - $100/hr Mountain View Senior Center Multi A $75 - $150/hr $174 - $289/hr Palo Alto Lucie Stern Center Fireside Room 650 $88/hr $132/hr Menlo Park Arrillaga Family Center Willow 680 $35 - $50/hr $50 - $70/hr Mountain View Senior Center Multi B $23.25 - $46/hr $93 - $127/hr Palo Alto Lucie Stern Center Patio 6,300 $90/hr $135/hr Menlo Park Arrillaga Family Center Large Patio $125 - $170/hr $170 - $230/hr Palo Alto Lucie Stern Center Kitchen $32/hr $48/hr Menlo Park Arrillaga Family Center Kitchen 480 $25 - $40/hr $50 - $70/hr Palo Alto Cubberley Center Dance Studio 1,650 $47/hr $47/hr Menlo Park Arrillaga Family Center Maple Dance Studio 2,030 $75 - $100/hr $100 - $135/hr Mountain View Community Center Room 3 (Dance) $38 - $48.50/hr $113 - $131/hr Palo Alto Cubberley Center Gymnasium A $92/hr $92/hrPalo Alto Cubberley Center Gymnasium B $110/hr $110/hr Menlo Park Onetta Harris Center Gymnasium 6,732 $59/hr $76/hr Mountain View MV Sports Pavilion Gymnasium $110/hr $139/hr Mountain View Whisman Sports Center Gymnasium $110/hr $139/hr Palo Alto Rinconada & Mitchell ParksGroup Picnic Sites $43 - $119/day Not Available Menlo Park Various Parks Group Picnic Sites $5/hr $10/hr Mountain View Various Parks Group Picnic Sites $103/day Not Available Youth All others Palo Alto Various locations Athletic Fields $3 - $27/hr $46 - $216/hr Menlo Park Various locations Athletic Fields $8 - $34/hr $22 - $100/hr Mountain View Various locations Athletic Fields $2/hr $25 - $88/hr Facility Rental Rates Comparison (Fiscal Year 2013) Page 2 of 2 Attachment C FINANCE COMMITTEE MINUTES Page 1 of 17 Regular Meeting Tuesday, September 17, 2013 Chairperson Burt called the meeting to order at 7:00 P.M. in the Council Chambers, 250 Hamilton Avenue, Palo Alto, California. Present: Berman, Burt (Chair), Schmid, Shepherd Absent: ORAL COMMUNICATIONS None AGENDA ITEMS 1. Library Bond Oversight Committee Quarterly Reports. Lalo Perez, Director of Administrative Services, reviewed the directions to Staff from a prior Finance Committee (Committee). The Library Bond Oversight Committee (LBOC) was concerned about the cost increases associated with the Mitchell Park Library and Community Center reaching the bond threshold of $76 million. Council Member Schmid inquired whether the LBOC was a Brown Act Committee. Mr. Perez stated he would check. Council Member Schmid felt the report provided insufficient information and asked if the LBOC merely reviewed payments or discussed payments as accomplishing a goal. Mr. Perez did not personally attend meetings; therefore, he could not provide a summary of the discussion at prior LBOC meetings. Staff could re- agendize the item for an in-depth discussion of LBOC meetings. Attachment C MINUTES Page 2 of 17 Finance Committee Regular Meeting Final Minutes 9/17/2013 Chair Burt recalled that the Council requested regular detailed reports regarding LBOC activities and questioned the role of the LBOC. The LBOC was not tasked with scrutinizing and challenging policy decisions. Council Member Schmid believed an Ordinance required an oversight committee for each major bond issue. If the Council issued another bond and formed an oversight committee, the Council should indicate the benefit it would receive from an oversight committee. Mr. Perez agreed that the role of the LBOC was limited and defined. Public Works and Administrative Services Departments had internal controls for payments and transactions with regard to the bond. The LBOC was a Brown Act Committee. Council Member Schmid suggested holding a discussion about the role of an oversight committee. Chair Burt agreed. Vice Mayor Shepherd noted Municipal Code 2.16 was not specific to the LBOC. She inquired whether change orders with respect to LEED green buildings for both the Mitchell Park and Downtown Libraries were bondable. Mr. Perez reported bond counsel generally directed that fixed and permanent parts of the structure were bondable. Vice Mayor Shepherd requested Staff determine whether roof replacement was a maintenance item. Mr. Perez would review that item. He was unaware whether the roof replacement was associated with work being redone or a separate item. Vice Mayor Shepherd did not believe bond funds were being utilized for fixed equipment at Mitchell Park Library. Chair Burt felt furniture and fixtures were outside the use of bond funds. Vice Mayor Shepherd was unsure what fixed equipment in the amount of $1.7 million encompassed. She wanted to ensure that items were properly segregated for payment with capital improvement funds or bond funds. Mr. Perez would review and respond to those items. Attachment C MINUTES Page 3 of 17 Finance Committee Regular Meeting Final Minutes 9/17/2013 2. Approval of Fiscal Year 2013 Re-Appropriation Requests to be Carried Forward into Fiscal Year 2014. Walter Rossmann, Director of Office of Management and Budget, reported Staff requested the Finance Committee (Committee) recommend to the Council to carry forward funds for various projects. There were various reasons for re-appropriation requests including delays in and sequencing of projects. Staff requested approval to carry forward Management and Professional Development funds across various departments in order to fund training in Fiscal Year (FY) 2014. During the mid-year Budget process, Staff would present a plan to appropriate those funds. Approximately $600,000 in the General Fund and $2.3 million in all funds were proposed to be carried forward. In FY 2012 the Council approved carrying forward approximately $1 million in the General Fund and approximately $9 million in all funds. Council Member Schmid asked if operating transfers in and operating transfers out were part of the re-appropriations. Mr. Rossmann explained that the re-appropriated funds were not reflected in the Budget as adopted by the Council. They were funds from the FY 2013 Budget that Staff requested be carried forward to the FY 2014 Budget. Council Member Schmid inquired whether the re-appropriated funds would be included in the FY 2014 Budget as operating transfers in. Mr. Rossmann stated the funds would not be indicated as a transfer. The funds would be placed in the specific funds in which they were originally budgeted. It was not a transfer of funds, but a re-appropriation of funds from one fiscal year to the next. Vice Mayor Shepherd asked if the funds were re-appropriated because the funds were not spent in FY 2013. Mr. Rossmann answered yes. Chair Burt inquired whether re-appropriated funds moved from the expense side of the FY 2013 Budget to the expense side of the FY 2014 Budget. Mr. Rossmann explained that the funds were not shown as an expenditure because they had not been expended. Technically, unspent funds moved to the unrestricted ending fund balance, and then carried forward for the same purpose in the next fiscal year. When the funds were spent, then they would be shown as an expenditure. Attachment C MINUTES Page 4 of 17 Finance Committee Regular Meeting Final Minutes 9/17/2013 Council Member Schmid inquired whether re-appropriated funds would be shown on the revenue side for FY 2014 as an operating transfer in. Lalo Perez, Director of Administrative Services, reported that the first quarter report would have a line item for re-appropriations. The specific expenditures would be shown in the specific department categories. Chair Burt asked if re-appropriated funds would move over on both the revenue and expense sides to the FY 2014 Budget. Mr. Rossmann replied yes. Chair Burt noted the Police Utilization Study was carried over because of competing work demands, and inquired about the cause of and a solution for the competition. Mr. Perez indicated the Police Department had a significant amount of vacancies which caused difficulties with completing the study. Management Staff suggested the study be included as a re-appropriation so it could be included in the work plan in FY 2014. Chair Burt understood the study had not been initiated. Mr. Perez agreed. Chair Burt inquired about the date for releasing a bid and completing the study. Mr. Perez indicated a bid could be released in three to four months depending on the amount of time needed to complete the scope of services. Ian Hagerman, Senior Management Analyst, reported a Request for Proposal (RFP) had not been drafted. The Police Department was interested in performing the study, but the priority for the study was lower than two larger, more significant projects. Chair Burt suggested the study would not occur in FY 2014. Mr. Hagerman did not expect the project to be completed in FY 2014, but hoped it would be initiated in FY 2014. Chair Burt asked if the study would be initiated once the two larger projects were completed. Attachment C MINUTES Page 5 of 17 Finance Committee Regular Meeting Final Minutes 9/17/2013 Mr. Hagerman stated it was possible to begin the project once one of the larger projects was completed; however, it would be difficult. Chair Burt asked which department initiated the study. Mr. Perez responded that the City Manager's Office directed Staff to perform the study. Chair Burt could accept the timeline for initiating and completing the study; however, he requested a report on the timelines and actions needed for the three major projects. Mr. Hagerman noted other Police Department projects included replacement of mobile audio and video in police cars, outfitting of seven new police cruisers, replacement of TASERs, and investigation of body cameras. A number of significant technology projects needed to be prioritized in the context of the study. Chair Burt agreed that the various technology improvements were important; however, the Council should see the list of competing projects and priorities in order to understand that the study was not forgotten. Mr. Hagerman suggested Staff include a schedule of projects and timelines when the item was presented to the Council. MOTION: Council Member Schmid moved, seconded by Council Member Berman to recommend the City Council approve the Fiscal Year 2013 Re- appropriations to be carried forward into Fiscal Year 2014. MOTION PASSED: 4-0 3. Cost of Services Study - Draft Report. Walter Rossmann, Director of Office of Management and Budget, reported that MGT of America (MGT) updated fees, incorporated the full cost of administrative services and calculated the cost recovery percentage based on activity level. The report did not include any fees related to the Planning and Community Environment Department. MGT reviewed approximately 650 of the City's 1,000 fees. Cost recovery considerations include private versus public benefit, service recipient versus service driver, consistency with City goals and policies, elasticity of demand, and availability of services from the private sector. At the low cost recovery level of 30 percent, the City only recovered some cost for services. The majority of fees overall were within the medium range. MGT identified certain fees in the 2009 Attachment C MINUTES Page 6 of 17 Finance Committee Regular Meeting Final Minutes 9/17/2013 report which were above the cost recovery level. Staff was reviewing those fees to determine a process to identify costs and related revenues. If it is determined that any fees generated revenue above the costs for providing the service, staff will return to the Finance Committee (Committee) in November 2013 to recommend adjusting these fees. Also in November 2013, Staff would present information regarding the first responder fee. Based on the Committee's input, Staff planned to present a User Fee Cost Recovery Policy to the City Council in November 2013. In December 2013 Staff would begin working with departments to set fees for Fiscal Year (FY) 2015. Staff's recommendations were for the Committee to accept the report as presented including MGT's draft report, to provide input regarding the User Fee Cost Recovery Policy and to direct Staff to present a policy for user fee cost recovery to the Council in November 2013. Vice Mayor Shepherd liked the report's description of the method for considering different services. She inquired about field services under Animal Services. Mr. Rossmann explained that field services was work Animal Services Staff performed in the community such as checking on an abandoned animal. Council Member Berman stated it was logical to break up the services provided. Council Member Schmid indicated the diagram on page 63 provided a sense of Staff's recommendations working differently by department. The gap between the amount charged and the amount that should be charged for Police, Fire and Public Works Departments was substantial. He questioned the need to raise fees for services performed by those departments, because an increased fee could discourage residents from obtaining City services. Mr. Rossmann did not propose increasing fees in one year. Large substantial increases should be phased in over a number of years. Fees for those departments should be at a recovery level of 70 percent to 100 percent. The policy framework was that fees should be high, but not necessarily at 100 percent cost recovery. MGT's recommendations reflected actions taken in other cities. Council Member Schmid agreed with implementing fee increases over time. Lalo Perez, Director of Administrative Services, recalled that the Committee wanted to review the draft MGT recommendations and report before receiving a final report. Attachment C MINUTES Page 7 of 17 Finance Committee Regular Meeting Final Minutes 9/17/2013 Council Member Schmid noted the report did not recommend increasing fees for Animal Services and Community Services Department (CSD). The report contained a rationale for charging different fees for some CSD services such as children's and seniors' programs. The vast majority of program users were middle-class City residents. He requested Staff comment on the rationale. Mr. Rossmann stated the average cost recovery levels for those type of programs were approximately 30 percent. There were many variations within programs. The City addressed the disabled, senior, low-income and youth populations with separate programs. In the prior fiscal year, the City subsidized an additional $30,000 to allow those populations to access services at a lower cost. Council Member Schmid indicated the percentage of cost recovery for CSD programs ranged from less than 5 percent to 68 percent. Those percentages did not support the rationale. Mr. Rossmann suggested the Committee consider percentages for groupings of CSD programs rather than overall percentages. When Staff presented the proposed fee schedule for FY 2015, they would present cost recovery levels for groups of activities within a department so the Committee could see the amount the General Fund subsidized services. Council Member Schmid commented that the attendance and enrollment figures showed a benefit beyond the number of participants enrolled in a program. He suggested Staff integrate the attendance and enrollment figures into an assessment of the impact on the community. Mr. Perez added that other components for consideration were public-private partnerships and community surveys regarding programs. Council Member Schmid felt the number of participants and amount of contributions were good indicators of the community's desire for the service. Mr. Perez reported that the Council could identify certain core services as part of the fabric of the community and state that those services would be subsidized. Council Member Schmid indicated that one of the criteria for a survey should be whether services were provided throughout the community. The situation with Cubberley Community Center should be considered when analyzing that data. Attachment C MINUTES Page 8 of 17 Finance Committee Regular Meeting Final Minutes 9/17/2013 Mr. Perez agreed that the situation with Cubberley would influence recommendations for fees. For example, if some Cubberley facilities were renovated, there could be a cost sharing component with tenants. Rhyena Halpern, Assistant Director of Community Services, reported the closing of the Art Center reduced revenue to 1 percent. In FY 2013 the Art Center was open eight months and exceeded the revenue generated the last year it was fully open. The Council decided not to charge a pay for play at the Children's Theatre. The Junior Museum and Zoo did not have a ticket at the gate, resulting in lower revenue. Art in Public Places currently did not generate revenue. The Council decided not to subsidize the three Community Theatre partners, also resulting in lower revenue. Chair Burt asked who the Community Theatre partners were. Ms. Halpern responded TheatreWorks, Palo Alto Players and West Bay Opera. The Council continued to support summer concerts. Class programs under visual arts for both youth and adults continued to do well. The gallery space at Art Exhibitions did not charge admission; therefore, it did not have any revenue. Vice Mayor Shepherd commented that Art Exhibitions was not open. Ms. Halpern indicated the music and dance programs could expand considerably if more physical space was available. The opening of Mitchell Park Community Center would provide additional space for programs and additional revenue through facility rental. Council Member Berman noted the total indirect expenses were astronomically higher than the total direct expenses for Community Theatre, and inquired about the indirect expenses. Ms. Halpern reported the 1.5 Full Time Equivalent (FTE) at the Community Theatre was reduced to 0.34 FTE, causing the direct expense to be low. The indirect expense was high because of maintenance of the facility. Council Member Berman inquired whether the maintenance cost was ongoing or a one-time expense. Gail Wilcox, Management Specialist, explained that Public Works maintenance and custodial charges were allocated based on square footage. Maintenance and custodial charges were approximately $400,000 for Community Theatre. Attachment C MINUTES Page 9 of 17 Finance Committee Regular Meeting Final Minutes 9/17/2013 Council Member Berman believed a survey regarding community needs and desires for services would influence the cost recovery data. Mr. Perez reported the Committee could retain the item for additional in- depth discussion, because Staff's timeline for the item was a suggestion only. The FY 2015 Budget projection indicated a balanced budget; therefore, there was not a fiscal driver to present the item to the Council. Chair Burt inquired whether the Committee should recommend Staff present a draft User Fee Cost Recovery Policy to the Council in November 2013. Mr. Perez answered no. The Committee could provide Staff with guidelines for the content of the draft User Fee Cost Recovery Policy, which could then be returned to the Committee or presented to the Council. Chair Burt preferred to review the policy before recommending it to the Council. Mr. Perez indicated Staff suggested presenting a draft policy to the Council in November in order to meet the timeline of the Budget process. Chair Burt felt the Committee should spend more time discussing issues. Hopefully the Council could reflect community values in the policy by receiving broad community input. The community deeply valued services and assumed services would continue without change. Mr. Rossmann stated the Council should review fees and cost recovery annually. The Committee could direct Staff to gradually phase in any kind of fee increase and to give advance notice of fee increases. In the past the City increased fees by the Consumer Price Index (CPI) and increased the technology fee by 5 percent. Chair Burt indicated the concept of phasing in fee increases reduced his concerns, but did not eliminate them. Staff recommended the Committee present to the Council a policy, which the Committee would need to consider at length. The Committee should consider the many consequences of any policy, and accept and anticipate the community's reaction to a revision of the fee policy. Mr. Perez mentioned that internal discussions coupled the Municipal Fee Schedule with the Budget process; however, fees could be incorporated at any point in the fiscal year. Removing the tie with the Budget process would allow for community input. Attachment C MINUTES Page 10 of 17 Finance Committee Regular Meeting Final Minutes 9/17/2013 Chair Burt felt it was a good idea to consider fees before the Budget process began. He recalled that the Committee wanted to have an extensive period of time for discussion. Mr. Rossmann noted that the Budget assumed a certain amount of revenue from fees. Once the Budget was set at that revenue level, fees needed to be considered to have a balanced Budget. Chair Burt suggested it would be relatively easy to change fees for some programs. Vice Mayor Shepherd agreed that the Committee needed to review the policy in depth. The report provided a good discussion of integrating fee increases with community acceptance. She wanted to compare some fees with the fees charged in other communities. Chair Burt did not believe the Committee had a good sense of the policy's implications. The Committee needed to model the policy on a number of areas and ensure it was appropriate for implementation. Vice Mayor Shepherd felt the Council should be aware of the material in the MGT report, and the Committee should notify the Council that it would continue to discuss individual fee changes. Chair Burt indicated the Committee should determine whether the policy recommendations appeared to match ramifications before recommending it to the Council. If Staff returned to the Committee with a proposed policy, then the Committee could schedule an entire meeting to review the policy in detail. He questioned whether the Council should adopt a policy prior to fully understanding its implications. Vice Mayor Shepherd wanted the Council to agree with the methodology for handling indirect costs prior to the Committee reviewing fees in depth. Chair Burt stated indirect costs were probably the easier portion of the discussion. Vice Mayor Shepherd noted Staff had calculated indirect costs for fees, and the Committee should review the fees for irregularities. Chair Burt believed the contentious part of the discussion would be moving from concept to reality. Attachment C MINUTES Page 11 of 17 Finance Committee Regular Meeting Final Minutes 9/17/2013 Mr. Rossmann reported that the MGT report looked backward in using actual data, actual activity and actual cost. Staff would look forward in setting fees, reviewing budgeted costs and estimating activity levels. Based on the fee setting, Staff could determine revenue and then the cost recovery percentage. The challenge was understanding the consequences of the policy framework. He suggested the Committee approve guidelines rather than a policy. When Staff developed the FY 2015 fee schedule, they would review fees with these guidelines in mind and any significant fee changes above customary increases would be identified for the Committee. To allow in-depth discussion of policy and specifics, Staff could present the Municipal Fee Schedule including cost recovery levels. With that information, the Committee could see the framework and determine whether and how much to increase fees. Council Member Schmid felt the Committee should focus on a policy framework. At the policy level, the consultant made the point effectively that increases in CPI sometimes did not align with the cost basis. If indirect costs were associated with policy, then fees would increase by 5-6 percent. In a few years City services might not be competitive. The policy should engage the question of how important these types of services were to building a community and whether they should be based on the tax base of the community. Perhaps some subsidy from the tax base could be used to build services. A policy should indicate that fees be set around a CPI increase, and the General Fund's subsidy would increase slightly each year. A policy that utilized direct and indirect costs and City overhead would not be viable if fees were increased based on a CPI rate. The heart of the dilemma was City services and their value. Vice Mayor Shepherd mentioned that in the prior year fees increased by 8 percent, and inquired whether the increase affected participation. Mr. Perez responded no; however, fees had not been increased for a while. Vice Mayor Shepherd noted the MGT report allowed the Council to consider a discount for some fees. Mr. Perez reported the Council made decisions years ago about the value of services, and it was time for the community to review those decisions. The Council would need a logical explanation for raising some fees and not others. Good outreach would allow the community to understand the rationale for raising some fees. Chair Burt believed the process brought more and better information; however, the Committee needed to reconcile the data with values. Attachment C MINUTES Page 12 of 17 Finance Committee Regular Meeting Final Minutes 9/17/2013 Adjusting fees for accounting methods, CPI and indirect costs resulted in major cost increases for programs and significantly less General Fund subsidy. He wanted the Committee to consider the level of increase in expenses for all programs as the result of better accounting. Vice Mayor Shepherd indicated the Information Technology (IT) fee was included in indirect costs and expensed to the different departments. She inquired whether that was presented to the Council. Mr. Perez replied no. Chair Burt asked if Staff inadequately attributed IT expenses to various services or incorrectly attributed IT expenses to specific services. Mr. Perez reported that Staff wanted to reflect the cost based on the different methodologies of all overhead expenses throughout the organization. This exercise captured the costs and reflected them throughout programs. Chair Burt inquired whether allocation of costs was consistently standardized through that process. Mr. Perez was attempting to standardize allocation of costs. In some situations the Council could decide that fees for some programs would not be increased. In those situations, Staff would utilize guidelines to set fees with exceptions in some areas. Chair Burt believed that was a form of standardization with discretion. Mr. Perez remarked that the Council might not agree with Staff's recommendation regarding allocation of costs. Vice Mayor Shepherd wanted to ensure the Council was aware of the methodology for allocation of costs prior to the Committee reviewing the individual fees. Mr. Rossmann indicated the 2014 fees were not set with overhead expenses. Chair Burt asked if the IT overhead expenses were allocated less systematically or under-allocated prior to the IT adjustment. Mr. Perez believed Staff allocated expenses in a proper manner to the funds. Staff was currently reviewing programs and allocating expenses to the specific programs. Attachment C MINUTES Page 13 of 17 Finance Committee Regular Meeting Final Minutes 9/17/2013 Chair Burt understood that the dollar amount allocated to the programs did not change, but the method and detail of allocating expenses changed. Mr. Perez was attempting to add more standardization. Staff utilized obvious methodologies in some areas, but identified a different methodology for subjective areas. Chair Burt suggested Staff present a high-level summary in layman's language of the methodology for allocating expenses. Vice Mayor Shepherd noted there were different methods to allocate expenses, and the methodology was changing again to consider fees. Staff should inform the Council about those methodologies, and then the Committee could review individual fees. Chair Burt indicated at the next Committee meeting Staff would present a summary of changes to the methodology of IT allocations. Vice Mayor Shepherd felt the issue was overhead expenses, not IT expenses. Mr. Rossmann stated the technology fee was a direct allocation of capital expenditures within the IT Fund rather than the expenses of operating the IT Department. Based on the internal services provided, different cost allocation basis are used to recuperate the cost for internal services. Chair Burt stated Staff would provide a summary of changes to the methodologies used for overhead allocations to specific services. Vice Mayor Shepherd believed the Committee needed to explain the allocation of costs. Council Member Schmid asked if allocation of costs was embedded in the FY 2014 Budget. Mr. Perez asked if Council Member Schmid was referring to the 5 percent IT fee. Council Member Schmid noted in the Budget the IT Department had a decline in expenditures because of an allocation to other departments. He inquired whether the allocation processes were embedded in the current Budget. Attachment C MINUTES Page 14 of 17 Finance Committee Regular Meeting Final Minutes 9/17/2013 Mr. Perez answered yes. The draft guidelines were not utilized in the FY 2014 numbers. Chair Burt questioned the impact of the Committee accepting MGT's report in that MGT recommended certain recovery levels. He inquired whether Staff recommended the City implement those recovery levels. Mr. Rossmann replied no. The Committee would acknowledge receipt of the MGT report. That did not mean the Committee accepted MGT's recommendations. Chair Burt suggested a Motion should clarify that the Committee accepted receipt of the MGT report. Vice Mayor Shepherd noted both reports would be addressed at the next Committee meeting. Chair Burt felt the Committee should articulate the intellectual foundation for the value of a benefit accruing to an individual versus an entity. A number of the value-based overlays were aligned with community values. The Committee should discuss the rationale for one group being more important to subsidize than another group. Mr. Perez agreed. The discussion would become more challenging when considering the Development Impact Fee. In some instances, Staff utilized the State system to set fees. Staff identified those services utilizing the State system. Chair Burt indicated at one level the primary purpose of some beneficiaries' existence was financial gain. There was not a clear dividing line for beneficiaries, but there were distinctions among beneficiaries. Council Member Berman noted within the category of residents were renters and homeowners. Chair Burt stated not all residents would receive the same impact. An open discussion would allow the Committee to reflect on and identify sound rationales. Council Member Schmid believed some services provided by CSD and Animal Services benefited all residents and should not be included in categories. MOTION: Vice Mayor Shepherd moved, seconded by Chair Burt to direct Staff to return to the next Finance Committee meeting no later than Attachment C MINUTES Page 15 of 17 Finance Committee Regular Meeting Final Minutes 9/17/2013 November with a summary of changes to methodology of overhead allocations for specific services, return with a draft User Fee Cost Recovery Policy, and the Finance Committee accepts receipt of the Staff report and MGT draft report. Vice Mayor Shepherd inquired whether the Motion allowed the Committee to have a detailed discussion regarding fees after the Council agreed with the methodology for allocation of costs. Chair Burt explained that the Motion did not capture next steps. The policy would return to the Committee for full review of policy implications. Mr. Rossmann requested time for Staff to consider timing, process and the FY 2015 schedule. Staff could provide a draft policy as part of the November recommendation. Vice Mayor Shepherd agreed with Staff including Cubberley Community Center in the discussion. Council Member Schmid felt the title User Fee Cost Recovery Policy held a connotation that the goal was to recover costs. He understood the discussion was that fees might contain costs other than cost recovery. He suggested Municipal Fee Policy Statement as a substitute. Cost recovery was a goal but should not be the single goal. Vice Mayor Shepherd indicated the policy varied among categories. Chair Burt did not want to imply that the intention was full cost recovery. Mr. Perez suggested recovery levels. Chair Burt agreed with the intent of User Fee Recovery Level Policy. Mr. Rossmann suggested User Fee Cost Recovery Level Policy. The intent was not to fully recover the cost of services. He inquired whether the Motion should read "specific indirect services" rather than "specific services allocation." Chair Burt intended for the Motion to state indirect costs to specific services. Chair Burt referenced Packet page 48 regarding consistency with City goals and policies. The statement was not limited to Council Priorities or goals, policies and programs in the Comprehensive Plan. The Committee should Attachment C MINUTES Page 16 of 17 Finance Committee Regular Meeting Final Minutes 9/17/2013 consider how to describe the values and Guiding Principles encompassed by this statement.. Mr. Rossmann reported the statement was intended to capture not only current Council policy but also future policy. It was a catchall statement to allow future Council policy decisions. Council Member Berman hoped the Council would have that discussion prior to the item returning to the Committee in November. Mr. Perez would review the timing of the update with the City Manager. Chair Burt noted the cost recovery for CSD youth programs was two or three times the cost recovery rate for adult programs. The City was subsidizing adult programs at a much higher rate in those categories. The Committee should have that type of in-depth discussion. Vice Mayor Shepherd indicated one of the factors was market rates. Chair Burt suggested the Committee consider additional factors for community benefit characteristics and personal benefit characteristics. He was unsure what diversity of experience under community benefit meant. It could mean the value of social, economic, and ethnic diversity in the community or the experience of programs. Mental and physical health benefits for adults could be personal or community benefits. Some programs would not be easily categorized. Perhaps the chart needed a third category. MOTION PASSED: 4-0 FUTURE MEETINGS AND AGENDAS Lalo Perez, Director of Administrative Services, announced there was no meeting scheduled for October 1, 2013. On October 15, 2013, the Agenda included the audit of contract oversight for the trenching and installation of electric substructures. Vice Mayor Shepherd indicated she would not be present on October 15. Chair Burt wished to ensure the presence of as many Committee Members as possible for important Agenda Items. Mr. Perez stated the only Agenda Item was the audit of contract oversight for the trenching and installation of electric substructures. Staff could poll Attachment C MINUTES Page 17 of 17 Finance Committee Regular Meeting Final Minutes 9/17/2013 for a special meeting or continue the item to the November 5 meeting which had only one Agenda Item. Chair Burt suggested polling for October 8 or 22 as alternative dates. Mr. Perez noted the Policy and Services Committee was scheduled for a meeting on October 8, 2013. Chair Burt requested Staff poll for a meeting. Mr. Perez reported that Staff would present the Development Impact Fee at the November 5, 2013 meeting. The first component was to present the list of infrastructure needs. The consultant would present the process and next steps. Agenda Items for the November 19 meeting included the year-end financial report and the year-end Capital Improvement Program status report. The Agenda for the December 3, 2013 meeting included the first quarter financial information. ADJOURNMENT: Meeting adjourned at 9:12 P.M. Attachment C City of Palo Alto (ID # 4237) Finance Committee Staff Report Report Type: Action Items Meeting Date: 11/5/2013 City of Palo Alto Page 1 Summary Title: Draft User Fee Cost Recovery Level Policy Title: Draft User Fee Cost Recovery Level Policy From: City Manager Lead Department: Administrative Services Recommendation: Staff recommends that the Finance Committee direct Staff to bring forward to the City Council the attached draft User Fee Cost Recovery Level Policy for City Council discussion. Executive Summary: As directed by the Finance Committee at the September 17 meeting, this report presents a Draft User Fee Cost Recovery Level Policy for Finance Committee review (see Attachment A), summarizes the cost components for fee-related activities, and transmits the September 17 Finance Committee report on the Cost of Service Study (see Attachment B). Background: At the September 17 Finance Committee Meeting, staff transmitted a consultant report regarding the cost of services study for fees not related to development services activities and presented policy considerations for a forthcoming User Fee Cost Recovery Level Policy (see Attachment B). At that meeting, Committee Members expressed concern with approving a User Fee Cost Recovery Policy without understanding its application to the City’s Municipal Fee Schedule and its implications to the values of the community. To address this concern, staff shared with the Committee that the FY 2015 Proposed Municipal Fee Schedule will include a cost recovery level percentage as an indicator regarding the General Fund subsidy for fee-related activities and proposed to return to the Finance Committee with a draft User Fee Cost Recovery Level Policy in November. After extensive discussion, the Finance Committee asked staff to return in November with a draft Policy and a summary of the cost components for setting municipal fees for final Finance Committee review and recommendation to forward the draft policy and this report to the City Council. Discussion: As directed, a draft User Fee Cost Recovery Level Policy is attached (see Attachment A). Staff Attachment D City of Palo Alto Page 2 recommends that the Finance Committee forward the draft policy to the City Council for policy discussion. After receiving input from the City Council and after review and approval of the Fiscal Year 2015 Proposed Municipal Fee Schedule, staff will review and potentially update the draft policy and submit a final version for Finance Committee review and approval in fall 2015. As discussed at the September 17 Finance Committee meeting, as part of the development of the FY 2015 Proposed Municipal Fee Schedule, staff will document the staff time to provide services for over 1,000 Municipal Fees and calculate the full cost for these fees including the cost components summarized in the table below. As part of the publication of the FY 2015 Proposed Municipal Fee Schedule, staff will include the average cost recovery level for grouped fees such as arts and science classes, golf fees, or Hazmat Inspection fees, which will indicate the General Fund subsidy provided for such fee-related activities. Cost Component Description Salary and Benefits by Classification Captures the hourly (or portions thereof) cost of employees by average classification costs who provide the service Compensated Absences Cost Captures the cost for vacation or sick time as well as time spent working, which cannot be allocated to specific fees (e.g.: time spent in meetings or trainings) Departmental Administrative Support Cost Captures the portion of cost of administrative units in a Department (e.g.: staff spending time on policy direction, analysis, and department oversight) City-wide Support Department Costs Captures the portion of cost of internal support departments (e.g.: People Strategy and Operations, Purchasing, or Payroll) Non-Salary Costs Any non-salary costs directly related to the fees (e.g.: paper or forms) It is important to note, that the cost for facilities is not included as a cost component. Including facility costs would require the measurement of office space related to the employees providing fee activity services and allocate these costs over the time an employee spends on a particular fee. Based on a preliminary analysis, the potential revenue from this cost component outweighs the cost for collecting the data. Resource Impact: With the review of this draft User Fee Cost Recovery Level Policy, no resource impact is anticipated. However, to keep up with increasing salary and fringe cost, staff is evaluating increasing all FY 2014 Adopted Fees by 3 – 4 % as part of the FY 2015 Proposed Budget. This will ensure that the General Fund subsidy for fee-related activity will not increase and that the same cost recovery level will be maintained. Attachment D City of Palo Alto Page 3 Next Steps: If approved by the Finance Committee, staff intends to bring forward the draft User Fee Cost Recovery Level Policy for City Council discussion in December or January. Attachments:  Attachment A - Draft User Fee Cost Recovery Level Policy (PDF)  Attachment B - Sept17 Finance Committee Cost of Services Study Report (PDF) Attachment D Page 1 of 2 USER FEE COST RECOVERY LEVEL POLICY BACKGROUND The City provides a variety of services to the public which benefit the entire community or individual residents or businesses. For certain services such as regulatory fees, arts and science classes, or recreational activities, the City traditionally has recovered partially or fully the cost for providing these services, which would have been otherwise paid from the General Fund. Propositions 13, 218, and 26 have placed both substantive and procedural limits on cities’ ability to impose fees and charges. Collectively these constitutional amendments provide safeguards against taxes being imposed without a vote of the people. POLICY STATEMENT It is the policy of the Palo Alto City Council to assess the cost recovery level of over 1,000 Municipal Fees in lieu of subsidizing fee‐related activities with General Fund dollars based on the following Policy Statements. 1. Community‐wide vs. Private Benefit: Funding services such as police patrol services only through taxpayer dollars is appropriate for services that benefit the entire community. When the service or program provides a benefit to specific individuals or groups such as the issuance of building permits, it is common for the individual(s) receiving that benefit to pay for all of the cost of that service. 2. Service Recipient vs. Service Driver: The concept of the service recipient vs. service driver is particularly important for regulated activities such as development review and Police issued permits. Although the community primarily benefits, 100% cost recovery from the “driver“ of the need for service is appropriate such as a building permit or a Massage establishment permit applicant. 3. Consistency with City Goals and Policies: City policies and Council goals related to the community’s quality of life may also be factors in setting cost recovery levels. For example, fee levels can be set to promote healthy habits, facilitate environmental stewardship, or discourage certain actions (e.g.: false alarms). 4. Elasticity of Demand for Services: The level of cost recovery can affect the demand for services. A higher level of cost recovery could ensure the City is providing services such as recreational classes or summer camps for children and youth without overly‐stimulating a market by artificially low prices. Such low prices, which are a reflection of a high General Fund subsidy, may attract participants from other Cities. However, high cost recovery levels could negatively impact the demand for such services to low income individuals, children, or seniors. 5. Availability of Services from the Private Sector: High cost recovery levels are generally sought in situations where the service is available from other sources in order to preserve taxpayer funds for core City services. Conversely, services that are not available from other sources and are typically Attachment D Page 2 of 2 delivered when residents experience an emergency basis typically have low or zero cost recovery levels. Based on these policy statements, the table below overlays certain cost recovery levels grouped in low (0‐30%), medium (30.1% to 70%), and high (70.1% to 100%) cost recovery percentage ranges with the Policy statements. It is important to note that these groupings provide policy guidance and are not absolute. Some policy considerations may weigh more heavily than others, which will be considered in the annual development of the Proposed Municipal Fee Schedule. The Proposed Municipal Fee Schedule is reviewed and approved by the Finance Committee and subsequently by the City Council. For example, fees for recreational activities should be set in general at the Medium cost recovery level. However, fees for seniors or low income residents may be at the low cost recovery level. Alternatively, permits and development activity should be set at close to 100% cost recovery level. Cost Recovery Levels Cost Recovery Percentage Range Policy Considerations Low 0% ‐ 30%  No intended relationship between the amount paid and the benefit received  Fee collection would not be cost effective and/or would discourage compliance with regulatory requirements  No intent to limit the use of the service  Public at large benefits even if they are not the direct users of the service  Affordability of service to low‐income residents Medium 30.1% ‐ 70%  Services having factors associated with the low and high cost recovery levels High 70.1% ‐ 100%  Individual users or participants receive most or all of the benefit of the service  Other private or public sector alternatives provide the service  The use of the service is specifically discouraged  The service is regulatory in nature Attachment D City of Palo Alto (ID # 3900) Finance Committee Staff Report Report Type: Action Items Meeting Date: 9/17/2013 City of Palo Alto Page 1 Summary Title: Cost of Services Study Title: Cost of Services Study - Draft Report From: City Manager Lead Department: Administrative Services Recommendation: Staff recommends that the Finance Committee: 1) Accept this report and MGT’s draft report 2) Provide input on user fee cost recovery policy considerations 3) Direct Staff to bring forward to the City Council in November a draft user fee cost recovery policy, which will guide the development of the FY 2015 Proposed Municipal Fee Schedule Executive Summary: As reported at the July 2012 and March 2013 Finance Committee Meetings, the City hired a consultant to assist the City with a Cost of Services Study. This report transmits MGT’s draft report, recommends considerations for a user fee cost recovery policy, responds to previous Finance Committee information requests, and outlines next steps in the Cost of Services Study. Background: Propositions 13, 218 and 26 have placed both substantive and procedural limits on cities’ ability to impose fees and charges. Collectively these constitutional amendments provide safeguards against taxes being imposed without a vote of the people. Proposition 26 contains a more general articulation of the cost of service principle and includes a requirement that the local government bear the burden of proof that “a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to recover the reasonable costs of the government activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burden on , or benefits received from, the governmental activity.” (Cal. Const. art. XIII C, § (e).). It is important to note that rental charges for rooms or facilities, fines, penalties and late charges are not technically user fees and are not Attachment D City of Palo Alto Page 2 required to be based on actual costs. Instead, these types of charges are more typically governed by market rates, reasonableness and other policy driven factors. As discussed at the July 2012 and March 2013 Finance Committee meetings, the City retained the services of MGT of America (“MGT”) to assist staff in determining the full cost of providing General Fund services for which fees are charged based on FY 2012 actual data. User fees, permits and rental charges generated approximately $22.2 million in fiscal year 2012, which was approximately 15 percent of total General Fund revenues. The following is a breakdown of General Fund fee revenues by department:  Planning and Community Environment (PCE) $9.0 million  Community Services Department (CSD) $6.2 million  Fire Department $5.0 million  Public Works $1.0 million  Police/Animal Services $0.7 million  All Other $0.3 million In March 2013, staff presented an overview of the methodology MGT used for this analysis to the Finance Committee along with examples of specific fee calculations (link to report: https://www.cityofpaloalto.org/civicax/filebank/documents/33539). MGT’s fee analysis, which follows best practices, assesses the staff time worked and the staff’s hourly cost of providing a particular service such as processing a permit or inspecting a fire sprinkler system. Then, indirect expenses are added to recover costs for departmental administrative support, city-wide support department costs, and compensated absences. Discussion: This section of the report provides a summary of the draft MGT report, recommends policy considerations for a forthcoming User Fee Cost Recovery Policy, and responds to previous Finance Commmittee information requests. MGT Report Attachment A is MGT’s draft report dated August 1, 2013. MGT’s report was based on FY 2012 actual data. Given the actual FY 2012 activity level, fee charged, and cost, the report provides the various cost- recovery levels for fees and General Fund subsidies related to Public Works (Engineering), Police, Animal Services, Fire (except for Emergency Medical Reponse activities), and Community Services. It does not include the fee calculations for the Planning and Community Environment (PCE) Department as well as some development related fees charged by other departments. Currently, these services are provided by staff in PCE, Fire, Public Work and Utilities and, as such, costs related to these services are being incurred in a multitude of cost centers across departments. The analysis of these services will be completed once the cost for Development Services activities is analyzed in each affected department. Attachment D City of Palo Alto Page 3 Any changes resulting from this analysis will be brought forward to the Finance Committee as part of the FY 2015 Proposed Budget process. Overall, MGT’s analysis indicates that the City recovered approximately 35 percent of the full cost of providing fee related services in FY 2012 for the departments mentioned above. Thus, the City’s General Fund subsidized 65% percent, or approximately $20 million, of the cost of these services. As expected, cost recovery levels varied quite a bit between departments and programs. Based on that analysis, MGT also identified that 34 of the approximately 650 fees analyzed generated a cost recovery level above 100%. In order to ensure that the City does not charge users fees with a cost recovery level above 100% based on estimated FY 2014 activity levels, adopted fees, and budgeted costs, staff is in the process of reviewing these fees.. Staff intends to return to the Finance Committee in November if this analysis indicates reductions to FY 2014 Adopted Fees are required to bring them to a 100% cost recovery level. Fees Charged in Other Cities Staff reviewed fees charged by seven other cities (Mountain View, Sunnyvale, Cupertino, Menlo Park, Santa Clara, San Mateo and Fremont) in order to understand how Palo Alto’s fees place in comparison to these agencies (see Attachment B). It is important to note that conclusions that can be drawn from comparisons of fee levels across the surveyed cities are fairly limited due to agencies’ differences in defining and structuring their respective fees. For example, certain services included in fees may be combined in some cities but separated in others; fees in other cities may be based on historical or other subjective factors unrelated to costs; and fees are also affected by differences in cost factors such as cost allocations of indirect support costs, employee benefit costs, and service efficiencies (the overall time necessary to complete a particular service or activity). User Fee Cost Recovery Policy Considerations MGT’s report also includes policy considerations for setting cost recovery levels. Based on MGT’s report and a review of other cities’ User Fee Cost Recovery policies, the following policy considerations are presented to the Finance Committee for discussion. Based on the Committee’s review and discussion, staff recommends presenting a draft User Fee Cost Recovery policy to the City Council in November. Such a policy will then inform the development of the FY 2015 Proposed Municipal Fee Schedule. 1. Community-wide vs. Private Benefit: The use of taxpayer dollars is appropriate for services that benefit the community as a whole such as police patrol services. When the service or program provides a benefit to specific individuals or groups such as the issuance of building permits, it is common for the individual(s) receiving that benefit to pay for all of the cost of that service. 2. Service Recipient vs. Service Driver: The concept of the service recipient vs. service driver is particularly important for regulated activities such as development review and Police issued permits. Although the community primarily benefits, 100% cost recovery from the “driver“ of the need for service is appropriate such as a building permit or a Massage establishment permit applicant. 3. Consistency with City Goals and Policies: City policies and Council goals related to the community’s quality of life may also be factors in setting cost recovery levels. For example, fee levels can be set Attachment D City of Palo Alto Page 4 to promote healthy habits, facilitate environmental stewardship, or discourage certain actions (e.g. false alarms). 4. Elasticity of Demand for Services: The level of cost recovery can affect the demand for services. A higher level of cost recovery could ensure the City is providing services such as recreational classes or summer camps for children and youth for without overly-stimulating a market by artificially low prices. Such low prices, which are a reflection of a high General Fund subsidy, may attract participants from other Cities. It should be noted, that the current Municipal Fee Schedule for recreational services includes a lower rate for Palo Alto residents than residents living outside of Palo Alto. However, high cost recovery levels could negatively impact the demand for such services to low income individuals, children, or seniors. 5. Availability of Services from the Private Sector: High cost recovery levels are generally sought in situations where the service is available from other sources in order to preserve taxpayer funds for core City services. Conversely, services that are not available from other sources and are typically delivered when residents experience an emergency basis typically have low or zero cost recovery levels. Based on these policy considerations, the table below overlays certain cost recovery levels grouped in low (0-30%), medium (30.1% to 70%), and high (70.1% to 100%) cost recovery percentage ranges. It is important to note that these groupings provide guidance and are not absolute. Some policy considerations may weigh more heavily than others, which will be considered in the development of the FY 2015 Proposed Municipal Fee Schedule. For example, fees for recreational activities should be set in general at the Medium cost recovery level. However, fees for seniors or low income residents may be at the low cost recovery level. Alternatively, permits and development activity should be set at close to 100% cost recovery level. Attachment D City of Palo Alto Page 5 Cost Recovery Levels Cost Recovery Percentage Range Policy Considerations Low 0% - 30%  No intended relationship between the amount paid and the benefit received  Fee collection would not be cost effective and/or would discourage compliance with regulatory requirements  No intent to limit the use of the service  Public at large benefits even if they are not the direct users of the service  Affordability of service to low-income residents Medium 30.1% - 70%  Services having factors associated with the low and high cost recovery levels High 70.1% - 100%  Individual users or participants receives most or all of the benefit of the service  Other private or public sector alternatives provide the service  The use of the service is specifically discouraged  The service is regulatory in nature With the exception of fees for classes offered through the Community Services Department (CSD), the City currently has no formal policies in place governing cost recovery targets for user fee services. The CSD’s class cost recovery guidelines are included in Attachment C. They are consistent with the policy considerations recommended and overlay a process for continuously evaluating the programs offered by CSD. However, CSD’s full costs and cost recovery factors have not been updated in six years. Once the Committee has provided input to the User Fee Cost Recovery Policy considerations, staff will review the attached CSD Class Cost Recovery Policy and bring forward recommendations for City Council consideration, as necessary. Since demand for services are factors to consider when evaluating fees charged by the Community Services Department, the Finance Committee asked staff to provide utilization data for these programs where available. Attachment D includes that data as well as information CSD staff compiled related to facility rental rates. The utilization data reflects FY 2012 actual usage while the facility rental rates represent charges as of spring 2013. Resource Impact: As discussed, based on FY 2012 data, MGT identified that 34 of the approximately 650 fees analyzed generated a cost recovery level above 100%. In order to ensure that the City does not charge users fees Attachment D City of Palo Alto Page 6 with a cost recovery level above 100% based on estimated FY 2014 activity levels, adopted fees, and budgeted costs, staff is in the process of reviewing these fees. Staff intends to return to the Finance Committee in November if this analysis indicates reductions to FY 2014 Adopted Fees are required to bring them to a 100% cost recovery level. Any such reduction in fees may result in downward adjustments to the FY 2014 fee revenue estimate. Once the City Council approves the User Fee Cost Recovery Policy, staff will develop the FY 2015 Proposed Municipal Fee Schedule. Depending on the approved policy and the FY 2015 Base Budget expenditures for activities related to Municipal Fees, the estimated fee revenue for FY 2015 may decrease, increase, or remain approximately equivalent to the FY 2014 estimated fee revenue level. Next Steps: As mentioned in this report and previous Committee reports, by the end of the calendar year and fiscal year, staff has to accomplish several milestones related to the Cost of Services Study. Review of certain FY 2014 Adopted Fees MGT’s methodology for assessing the cost related to Municipal Fees is rather complex. Therefore, staff from the Office of Management and Budget (OMB) developed a simpler, albeit still labor intensive, process to collect cost information and estimated fee activity levels from departments. Additionally, indirect expenses are added to recover costs for departmental administrative support, city-wide support department costs, and compensated absences. This cost assessment will not include costs for using City facilities, since such a methodology still requires further analysis. This methodology will be used to review these FY 2014 Adopted Fees, which have been identified in MGT’s report with a higher than 100% cost recovery level based on FY 2012 actual data. If this review determines that FY 2014 Adopted Fees are above full cost-recovery levels, staff will bring forward recommendations to adjust these fees downward in November 2013. User Fee Cost Recovery Policy Based on input from the Finance Committee, staff recommends bringing forward to the City Council a User Fee Cost Recovery Policy. This policy will guide and inform the development of the FY 2015 Proposed Municipal Fee Schedule. As part of the transmission of the FY 2015 Municipal Fee Schedule, staff intends to present to the City Council the cost recovery percentages for fees and/or group of fees. Due to the changing benefits structure of classic versus new employees, staff intends to analyze the cost for fee activities annually and set fees in accordance with the forthcoming User Fee Cost Recovery Policy as part of the annual budget process. Once the User Fee Cost Recovery Policy is approved by the City Council, the Community Services Department Class Cost Recovery Policy will be reviewed and updated. Cost of Services Studies for Internal Support Functions As presented in the March 2013 Finance Committee Meeting report, staff has been reviewing internal support functions to more effectively provide such services to direct services departments such as Public Safety, CSD, or Utilities. Since the majority of internal support functions are either mandated by law (e.g. financial reporting in accordance with Generally Accepted Accounting Principles) or rather complex in comparison to similar private sector activities (e.g.: benefits and payroll for various employee groups with different special pay and benefit levels within the employee groups), the initial review has not led Attachment D City of Palo Alto Page 7 to further analysis yet. Staff intends to continue the analysis and present the findings to the Committee by the end of the calendar year. Attachments:  Attachment A: MGT's Palo Alto User Fee Report (PDF)  Attachment B: Seven Cities Fee Comparison (PDF)  Attachment C: Community Services Department Class Cost Recovery Policy (PDF)  Attachment D: Cost of Services (PDF) Attachment D Attachment AAttachment AAttachment AAttachment A City of Palo Alto Draft User Fee Study Findings August 1, 2013 2001 P Street, Suite 200 Sacramento, CA 95811 Attachment D Table of ContentsTable of ContentsTable of ContentsTable of Contents Page Executive Summary Introduction 2 Scope and Objectives 2 Economic and Policy Considerations 4 Methodology 5 Study Findings 9 User Fee Summaries by Department: Public Works - Engineering 12 Police 14 Animal Services 18 Fire 19 Community Services 24 Attachment D EXECUTIVE SUMMARY Introduction MGT of America (MGT) is pleased to present the City of Palo Alto (City) with this summary of findings for the user fee study. The City has not undertaken a comprehensive analysis of its user fees since the 2002/03 fiscal year. Since that time, the City has adjusted fees on an annual basis, largely via a CPI adjustment factor. The City is now interested in knowing the current full cost of providing user fee-related services, and exploring the options of modifying current fees to better reflect Council priorities. In 2012, the City contracted with MGT to perform this cost analysis using fiscal year 2012 expenditures, staffing and operational information. MGT was also tasked with recommending fee adjustments for each department based on industry best-practices. This report is the culmination of the past fifteen months of work between MGT and City management and staff. MGT would like to take this opportunity to acknowledge all management and staff who participated on this project for their efforts and coordination. Their responsiveness and continued interest in the outcome of this study contributed greatly to the success of this study. Study Scope and Objectives This study included a review of fee-for service activities within the following departments/divisions: Public Works (Engineering) Police Animal Services Fire Community Services At the request of the City, the analysis of fees charged by the Planning and Community Environment (PCE) Department and other development related fees was deferred pending a comprehensive review of all costs related to development services. Currently, development related services are provided by staff in the PCE, Public Works, Fire and Utilities Departments. Once all development related costs are consolidated into one budget, the full cost of development services will be determined. The study was performed under the general direction of the Office of Management and Budget with the participation of representatives from each department. The primary goals of the study were to: Page 2 Attachment D Define what it costs the city to provide various fee-related services. Recommend fee adjustments based on industry best practices, practices of comparable agencies and MGT’s professional opinion. Develop revenue projections based on recommended increases (or decreases) to fees. Compile information regarding fees charged by the following neighboring cities: Cupertino, Fremont, Menlo Park, Mountain View, San Mateo, Santa Clara and Sunnyvale. Provide user fee models and templates to City staff enabling staff to update the study results in future years and incorporate new fees as they occur. The industry standard is to conduct a comprehensive review of fees every three to five years and make annual adjustments based on an inflation index. However, given the increasing cost of public sector employee benefits, agencies may incorporate those cost increases into the annual fee adjustments. The information summarized in this report addresses each of these issues and provides the City with the tools necessary to make informed decisions about any proposed fee adjustments and the resulting impact on general fund revenues. The following is a list of legal, economic and policy issues that governmental agencies typically take into consideration when determining cost recovery levels. State Law – In California user fees are limited to the “estimated reasonable cost of providing a service” by Government Code section 66014(a) and other supplementary legislation. Proposition 26 was approved by California voters in November of 2010 and clarified which charges are considered user fees and which are considered taxes. The significance of this distinction is that user fees may be raised by Council action up to the limit of actual cost, whereas taxes may not be increased without a majority vote of the public. None of the fee adjustments recommended by MGT are considered taxes per Proposition 26 guidelines. It should be noted that fees charged for the use of government property are exempt from Proposition 26. These include fees for parks and facility rentals as well as green fees, cart and other equipment rental fees for golf services. All of these fees may be set at any price the market will bear. Economic barriers - It may be a desired policy to establish fees at a level that permits lower income groups to use services that they might not otherwise be able to afford. Page 3 Attachment D Community benefit - If a user fee service benefits the community as a whole to some extent, it is appropriate to subsidize a portion of the fee. Many community services fees have very moderate cost recovery levels. Some programs are provided free of charge or for a minimal fee regardless of cost. Youth and senior programs tend to have the lowest recovery levels (15%-50%). Miscellaneous classes tend to have the moderate cost recovery levels (50%-85%) and adult sport programs typically have higher cost recovery levels (60%-100%). Private benefit – If a user fee primarily benefits the fee payer, the fee is typically set at, or close to 100% full cost recovery. Development- related fees generally fall into this category, however exceptions are sometimes made for services such as appeal fees or fees charged exclusively to residential applicants. Service driver - In conjunction with the third point above, the issue of who is the service recipient versus the service driver should also be considered. For example, code enforcement activities benefit the community as a whole, but the service is driven by the individual or business owner that violates city code. Managing demand - Elasticity of demand is a factor in pricing certain city services; increasing the price may result in a reduction of demand for those services, and vice versa. For most cities recreation services are highly elastic. Due to Palo Alto’s demographics, this may not necessarily be the case for Palo Alto’s recreational programs. It should be noted that Palo Alto provides a much wider array of services to its community than are found in other cities. Consequently, a significant number of non-residents participate in Palo Alto’s recreational programs and services. Competition - Certain services, such as recreation classes, may be provided by neighboring communities or the private sector, and therefore demand for these services can be highly dependent on what else may be available at lower prices. Furthermore, if the City’s fees are too low, demand enjoyed by private-sector competitors could be adversely affected. Incentives – Fees can be set low to encourage participation in a service, such as water heater permitting or youth sports activities. Disincentives – Penalties can be instituted to discourage undesirable behavior. Examples include fines for constructing without a building permit and fines for excessive false alarms within a one-year period. The flow chart below helps illustrate the economic and policy considerations listed above. Page 4 Attachment D Who Benefits Public Mostly taxes & some fees Youth sports Private Private / Public Public / Private Type of Service Individual benefit only Primarily the individual with some community- wide benefits Primarily the individual with some community benefits Community Police patrol services Example Services Mostly fees & some taxes 100% fees 100% taxes Tax vs. Fees Policy Development services Code enforcement services DECISION-MAKING FLOW CHART Methodology The standard approach for analyzing the cost of providing fee-related services is commonly referred to as a “bottom up” approach. The bottom up approach was used for all user fees except Community Services and Animal Services fees. Community Services and Animal Services fees will be discussed later in this report. A general description of the “bottom up” approach is as follows: 1. Identify all direct staff time spent on the fee related activity or service MGT conducted a series of meetings with staff from Public Works, Police, Animal Services and the Fire Department to identify every employee, Page 5 Attachment D by classification, who performs work directly in support of a fee related service. Direct staff costs are incurred by employees who are “on the front line” and most visible to the customers (e.g. park rangers, fire inspectors, etc.). Once all direct staff were identified, departments estimated how much time those employees spend, on average, working on each particular service or program. Developing time estimates for fee related services can be challenging and departments should be commended for the time and effort they put into this. Although MGT provided departments with templates and other tools to assist them in developing average or “typical” time estimates, these calculations were necessarily developed by the subject matter experts in each operating department. 2. Calculate direct cost of the staff time for each fee using productive hourly rates Productive hourly rates are used to support full cost recovery. A full-time employee typically has 2,080 paid hours per year. However, cost studies reduce that number to account for non-productive hours (sick leave, vacation, holidays, training, meetings, etc.). MGT calculated the productive hourly rate for each classification based on the salary and benefit information provided by the City and an analysis of annual productive hours by classification. 3. Determine any other operational costs (i.e. other than personnel costs) that can readily be traced to a specific fee-related service as a direct cost Professional services contracts are an example of an expense that can often be traced to a specific service or program. 4. Determine indirect or “overhead” costs Generally there are two types of indirect costs: departmental and citywide overhead. These indirect costs are allocated across user fee services in order to capture the full cost of providing the service. . If a department performs non-fee related services, a commensurate amount of indirect cost is segregated and not allocated to the fee related services. Departmental overhead costs – these costs include managers, supervisors and support staff as well as other operational costs, such as materials and supplies that are incurred for a common purpose and not readily assigned to a particular service or program. Citywide overhead costs – each department and fund within the city receives an allocation of cost from the city’s various central service departments. Central service departments are those whose main function is to support other city departments and funds. Such departments include the Auditor, Clerk, Attorney, City Manager, Administrative Services, Human Resources and Public Works/Facilities Maintenance. The methods for allocating central service costs can vary but must demonstrate a causal relationship between the allocation methodology and the costs allocated to the operating department. The State Controller’s Office guidelines Page 6 Attachment D stress the importance of allocating citywide overhead costs in a way that “equitably reflect the value of service” provided to the department receiving the service(s). In most cases, industry standards call for one of the following methodologies for allocating central services costs: Number of full-time equivalent staff in the operating department Total operating department expenditures, excluding fixed assets, pass through funds and large purchases (e.g. energy purchases) Actual or estimates of time spent in support of the operating department based on documented procedures 5. Compare total costs to the current fee schedule. Once all direct, indirect and crossover costs are calculated, MGT compared the total cost for each fee-related service to the fee currently charged to the public. In most cases we found the total cost of providing a service exceeded the fee charged. In these instances, the fee can be increased to recover these subsidies. However, there were a number of services for which the total calculated cost was less than the fee charged. In these cases the fee must be lowered to comply with State law. 6. Annual volume figures are incorporated. Up to this point we have calculated fee costs and revenues on a per-unit basis. By incorporating annual volume estimates provided by each department into the analysis, we extrapolate the per-unit results into annual cost and annual revenue information. This annualization of results accomplishes two primary benefits: Management information: the annualized results give management an estimate of the fiscal impact of any fee adjustments. Because annual volume will change from one year to the next, these figures are estimates only. Actual revenue will depend on future demand level and collection rates, which for some services can be less than 100%. Cross checks and reasonableness tests: by annualizing the results we also annualize the time spent by staff on each service. These annualized results will surface any instances of over or under estimation of time. In these cases we review these results with staff and resolve any anomalies. All staff hours were identified to either fee or non-fee related services. Page 7 Attachment D 7. Recommend fee adjustments. MGT provides fee adjustment recommendations based on industry best practices and practices of comparable agencies. Of course MGT’s recommendations are advisory in nature only – ultimately Council must decide what fee levels are appropriate for Palo Alto. Methodology – Community Services and Animal Services fees In some cases, the potential benefits of conducting a bottom up analysis of a particular fee are outweighed by the expense that would be incurred in developing this information. This is almost universally the case with recreational and animal service programs, where a substantial amount of effort would be required to identify and track costs at the individual fee level. For example, it is difficult to estimate city staff time related to an individual participating in a karate class. The cost of conducting such a detailed analysis would outweigh the value of this information, in particular because elasticity of demand and local policy goals are typically factors that are evaluated when establishing recreational and animal service fees. Accordingly, we have analyzed Community Service and Animal Service fees at the program level using a “top down” approach. In this approach we identify the direct 2012 expenditures for each program and incorporate division, departmental and citywide overhead in a manner similar to the “bottom up” approach. We then compare the resulting full cost against 2012 program revenues to calculate the cost recovery level for each program. Page 8 Attachment D Study Findings The study's primary objective is to provide the City's decision-makers with the basic data needed to make informed pricing decisions. This report details the full cost of services and presents recommended fee adjustments and their fiscal impact. Recommendations are based on careful consideration of the results of the cost analysis, industry best practices and market comparisons. Although there are opportunities to increase fees and cost recovery levels for Animal Control and Community Services, these fees are typically set based on local elasticity of demand considerations and/or each jurisdiction’s goals and priorities. The results of the study identified that overall, most departments recover much less than the actual cost of providing services. Accordingly, there is an opportunity to raise additional funds through fee adjustments. There are several possible reasons for the current subsidy levels: During the 2003 comprehensive fee analysis, Council may have intentionally subsidized certain services. Subsequently, even if these fees were adjusted annually to keep pace with increasing city costs, these fees would still be below actual cost. It is likely the City’s practice of adjusting fees annually via a CPI factor did not keep pace with actual governmental service costs. Over the past decade, government sector costs have outpaced general inflation. Many user fee related processes have changed over the past decade. Often this is the result of increasing service-level demands by the general public. Also, the State has mandated many additional inspections and reviews that add to the City’s cost structure within the development-related departments, including Public Works Engineering. Restructuring of fees. We found that several of the City’s fees could be more equitably charged via a different fee structure. This is particularly true with for the Engineering fees. For example, Construction in the Right of Way fees: these fees are currently assessed on a flat 5% of the cost of construction. Discussion with Engineering staff and subsequent analysis of time estimate responses indicated that economies of scale exist with these services. Accordingly, we restructured these fees into a declining percentage sliding scale structure. Comparison analysis. A component of our analysis included a survey of user fees charged by neighboring cities. This survey gives City management a picture of the market environment for city services. This survey is imprecise in that a fee with the same name may involve slightly different services among the various cities surveyed. Some cities lump several services into one fee category, whereas other cities break fees down into a high level of specificity. Accordingly the purpose of this comparison analysis is to impart a sense of how Palo Alto’s fees levels compare with neighboring jurisdictions. The comparison analysis is provided under a separate cover. The exhibit on the following page displays the summary of costs and revenues for each department/division analyzed: Page 9 Attachment D City of Palo Alto User Fee Revenue AnalysisUser Fee Revenue AnalysisUser Fee Revenue AnalysisUser Fee Revenue Analysis Actual 2012 RecommendedRecommendedRecommendedRecommended Costs, UserCosts, UserCosts, UserCosts, User CurrentCurrentCurrentCurrent General FundGeneral FundGeneral FundGeneral Fund Cost RecoveryCost RecoveryCost RecoveryCost Recovery IncreasedIncreasedIncreasedIncreased Department/DivisionDepartment/DivisionDepartment/DivisionDepartment/Division Fee Services (A)Fee Services (A)Fee Services (A)Fee Services (A) Revenue (B )Revenue (B )Revenue (B )Revenue (B ) Subsidy (C )Subsidy (C )Subsidy (C )Subsidy (C ) Policy (D)Policy (D)Policy (D)Policy (D) Revenue (E)Revenue (E)Revenue (E)Revenue (E) Public Work Public Work Public Work Public Work ---- EngineeringEngineeringEngineeringEngineering $1,108,780 $816,846 74% $291,934 $1,108,780 100% $291,934 PolicePolicePolicePolice $443,545 $338,389 76% $105,156 $443,545 100% $105,156 Animal ControlAnimal ControlAnimal ControlAnimal Control $1,969,171 $1,008,427 51% $960,744 $1,008,427 51% $0 FireFireFireFire $1,553,690 $886,140 57% $667,550 $1,553,690 100% $667,550 Community ServicesCommunity ServicesCommunity ServicesCommunity Services $25,525,449 $7,645,996 30% $17,879,453 $7,645,996 30% $0 Grand Total:Grand Total:Grand Total:Grand Total: $30,600,635 $10,695,798 35% $19,904,837 $11,760,438 38% $1,064,640 Column A, User Fee Costs –––– The full cost of the services we analyzed was approximately $30.6 million. The vast majority of these costs were incurred providing fee-related services. However, because the analyses for Animal Control and Community Services were done at the program level, the full cost for those analyses includes non-fee related expenses. For example, costs for maintaining open space are included in the Community Services Department and costs for field operations are included in Animal Control. Column B, Current Revenues –––– Based on current individual fee levels, the City generates fee related revenues of $10.69 million and is experiencing a 35% cost recovery level. Within each department, cost recovery levels fluctuate significantly. Several Police and Fire fees are currently set above actual cost. MGT recommends the City review employee benefit and other cost increases that have occurred since FY 2012 to determine if these fees will need to be reduced. The analyses of individual fees are presented in subsequent sections of this report. Again, since Animal Control and Community Services were analyzed at the program level, some of the revenues for these programs are not derived from user fees. For example, Animal Control revenues include approximately $600,000 in reimbursements for services provided to other cities. Column C, General Fund Subsidy –––– Current fee levels recover 35% of full cost, leaving 65% or $19,904,837 to be funded by other funding sources. This represents a “window of opportunity” for the City to increase fees and general fund revenues, with a corresponding decrease in the subsidization of services by the general General Fund subsidy. Please note, however, that approximately $17.9 million of this $19.6 million represents historically subsidized programs within the Community Services Department. Page 10 Attachment D Column D, Recommend Recovery –––– It is estimated that adoption of the recommended cost recovery policy would generate fee revenues of $11,760,438. This would bring the overall cost recovery level up to 38.%. Column E, Increased Revenue –––– Increasing fees to recover full costs in the Fire, Police and Public Works Departments would generate approximately $1,064,640 in additional revenue. This represents a 10% increase over revenue currently being collected for these activities by the City on an annual basis. Please note that the above information does not include costs or cost recovery levels for development-related services. As stated earlier in this report, the analysis of those fees will be completed once the Development Services budget is established. Department Summary Charts The subsequent pages display the results of our individual fee analysis. Because Community Services and Animal Services were analyzed on a program level, their results reflect cost and revenue on a program basis only. For all other departments, the current charge, total cost and recommended fee are listed for each fee-related service. The summaries are in the following order: Public Works (Engineering) Police Animal Services Fire Community Services Page 11 Attachment D Public Work – Engineering Attachment D User Fee Study Summary Sheet Service Name Fee Description Annual Volum e Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy 1 Certificate of Compliance/ Correction/ Map Amendment 14 $3,000 80%80%80%80% $3,731 $52,239 $42,000 $10,239 100%$3,731 $52,239 $10,239 4 Street Cut - Excellent Pavement per sq ft 5,200 $15 68%68%68%68%$22 $115,001 $78,000 $37,001 100%$22 $115,001 $37,001 5 Street Cut - Good Pavement per sq ft 4,700 $10 54%54%54%54%$18 $86,319 $47,000 $39,319 100%$18 $86,319 $39,319 6 Street Cut - Fair Pavement per sq ft 3,200 $8 51%51%51%51%$15 $46,770 $24,000 $22,770 100%$15 $46,770 $22,770 7 Street Cut - Poor Pavement per sq ft 3,900 $5 46%46%46%46%$11 $42,376 $19,500 $22,876 100%$11 $42,376 $22,876 8 Service Lateral Connection 305 $1,000 87%87%87%87% $1,151 $350,930 $305,000 $45,930 100%$1,151 $350,930 $45,930 9 Encr - Dumpster, Container 30 $135 64%64%64%64% $211 $6,317 $4,050 $2,267 100%$211 $6,317 $2,267 10 Encr - Fence 5 $135 23%23%23%23% $596 $2,982 $675 $2,307 100%$596 $2,982 $2,307 11 Encr - Non-residential Long Term > 5 days 30 $850 103%103%103%103% $825 $24,754 $25,500 -$746 100%$825 $24,754 -$746 12 Encr - Residential $400 61%61%61%61% $660 100%$660 n/a n/a 13 Encr - Non-residential Short Term < 5 days 15 $425 102%102%102%102% $416 $6,240 $6,375 -$135 100%$416 $6,240 -$135 14 Encr - Non-residential 1 Day 30 $200 61%61%61%61% $330 $9,902 $6,000 $3,902 100%$330 $9,902 $3,902 15 Encr - VTA Bus Shelters' Installation/Relocation $315 12%12%12%12% $2,713 100%$2,713 n/a n/a Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Public Works - EngineeringPublic Works - EngineeringPublic Works - EngineeringPublic Works - Engineering 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations 16 Encr - Flood variance fee Cost + 15% n/an/an/an/a t&m n/a n/a n/a 100%t&m n/a n/a 17 Grading:101-1,000 cubic yards 20 $130 per 100 cy 67%67%67%67% $576 $11,525 $7,723 $3,802 100% $215 per 100 cy $11,525 $3,802 18 Grading: 1,001-10,000 cubic yards 20 $1,310 plus $130 each addl 1000 cy 67%67%67%67% $2,155 $43,097 $29,027 $14,070 100% $2,155 plus $253 each addl 1000 cy $43,097 $14,070 19 Grading: 10,001 cubic yards or more 5 $2,485 plus $130 each addl 10,000 cy 62%62%62%62% $4,435 $22,175 $13,725 $8,450 100% $4,435 plus $200 each addl 10k cy $22,175 $8,450 20 Flood Zone Determination Letter $55 30%30%30%30% $181 100%$181 n/a n/a 21 Temporary Elevation Benchmarks 1 $270 54%54%54%54% $501 $501 $270 $231 100%$501 $501 $231 22 Temporary Discharge to Storm Drain from Construction Site Dewatering.10 $135 + $80/month n/an/an/an/a $133 $1,334 $133 $1,201 100% $135 + $135/month $1,334 $1,201 23 Storm Plan Check 10 $350 48%48%48%48% $726 $7,259 $3,500 $3,759 100%$726 $7,259 $3,759 24 Storm Inspection Fee + Hrly 25 $320 60%60%60%60% $534 $13,344 $8,000 $5,344 100%$534 $13,344 $5,344 25 Construction and Repair Per Hour 10 $86 85%85%85%85% $102 $1,017 $864 $153 100%$102 $1,017 $153 Page 12 Attachment D User Fee Study Summary Sheet Service Name Fee Description Annual Volum e Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Public Works - EngineeringPublic Works - EngineeringPublic Works - EngineeringPublic Works - Engineering 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations 26 Sweeping Services Per Hour 5 $89 50%50%50%50% $176 $880 $443 $438 100%$176 $880 $438 27 Traffic Control/Graffiti Services Per Hour 15 $79 85%85%85%85%$93 $1,397 $1,182 $215 100%$93 $1,397 $215 28 Tree Services Per Hour 15 $73 53%53%53%53% $137 $2,056 $1,091 $965 100%$137 $2,056 $965 29 Supervision Per Hour 2 $85 63%63%63%63% $135 $270 $170 $100 100%$135 $270 $100 30 Newsrack Impoundment Fee $50 +$3/day n/an/an/an/a $125 100%$125 n/a n/a 31 Street trees-new trees for subdivisions $100 ---------- Delete ----------n/a n/a n/a 100%n/a n/a n/a 32 Tree Removal addl for damage 2 $100/ inch of trunk n/an/an/an/a $100/ inch of trunk $2,000 $2,000 100% $100/ inch of trunk $2,000 33 Tree Inspection for private development change to flat fee 200 $105 / insp 41%41%41%41% $494 $98,851 $41,000 $57,851 100%$494 $98,851 $57,851 34 Construction in ROW: $1-$5k % of const. cost 37 $240 or 5% of contract 58%58%58%58% $413 $15,296 $8,880 $6,416 100% 10.3% of const. cost $15,296 $6,416 35 Construction in ROW: $5-$25k % of const. cost 80 $240 or 5% of contract 56%56%56%56% $1,077 $86,193 $48,000 $38,193 100% 9% of const. cost $86,193 $38,193 36 Construction in ROW: $26-$100k % of const. cost 13 $240 or 5% of contract 151%151%151%151% $1,992 $25,896 $39,000 -$13,104 100% 3.3% of const. cost $25,896 -$13,104 37 Construction in ROW: $101k + % of const. cost 5 $240 or 5% of contract 190%190%190%190% $4,874 $24,369 $46,250 -$21,881 100% 2.6% of const. cost $24,369 -$21,881 38 Improvement Plan Review: $1-$25k 2 t&m n/an/an/an/a $814 $1,628 $1,628 100% 3.3% of const. cost $1,628 39 Improvement Plan Review: $26-$100k 2 t&m n/an/an/an/a $1,628 $3,256 $3,256 100% 1.6% of const. cost $3,256 40 Improvement Plan Review: $101k +1 t&m n/an/an/an/a $2,605 $2,605 $2,605 100% 0.9% of const. cost $2,605 Total User Fees $1,108,780 $816,846 $291,934 $1,108,780 $291,934 % of Full Cost 74% 26%100% 36% Page 13 Attachment D Police Attachment D Service Name Fee Descriptio n Annual Volum e Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy 1 Adult Entertainment Estb - business location change Flat $810 81%81%81%81%$996 100%$996 2 Adult Entertainment Estb - new (non-refundable application fee) Flat $1,790 83%83%83%83% $2,152 100%$2,152 3 Adult Entertainment Estb - renewal Flat $810 81%81%81%81% $996 100% $996 4 Billiard Room (non-refundable application fee)Flat $810 n/an/an/an/a n/a 5 Bingo Establishment Flat 1 $50 n/an/an/an/a n/a 6 Bingo employee (Does not include DOJ Fingerprint and Rolling Processing Fee)Flat 2 $70 n/an/an/an/a n/a 7 Bingo employee renewal (Does not include DOJ Fingerprint and Rolling Processing Fee)Flat $53 n/an/an/an/a n/a 8 Bowling Alley (non-refundable application fee)Flat $120 n/an/an/an/a n/a 9 Carnival Flat $2,250 n/an/an/an/a n/a 10 Circus Flat $2,250 n/an/an/an/a n/a 11 Closing out sale Flat $61 56%56%56%56% $109 100% $109 12 Closing out sale - renewal (maximum of 2)Flat $61 56%56%56%56% $109 100%$109 13 Firearms Dealer Master Permit – New Flat $2,100 100% $2,100 14 Firearms Dealer Master Permit – Renewal Flat $800 100% $800 15 Background Investigation - new each owner, officer, agent employee Flat $136 80%80%80%80% $169 100% $169 16 Background Investigation - renewal, each owner, officer, agent employee Flat $53 42%42%42%42% $126 100% $126 17 Helicopter Landing Fee Flat 5 $240 885%885%885%885% $27 $136 $1,200 -$1,064 100% $27 $136 -$1,064 18 Hot tub/sauna business location change Flat $810 n/an/an/an/a n/a 19 Hot tub/sauna employee (Does not include DOJ Fingerprint and Rolling Fee)Flat $81 n/an/an/an/a n/a 20 Hot tub/sauna new (non-refundable application fee)Flat $1,790 n/an/an/an/a n/a 21 Hot tub/sauna - renewal Flat $810 n/an/an/an/a n/a 22 Hot tub/sauna sale or transfer of interest Flat $122 n/an/an/an/a n/a 23 Massage estb - new establishment (non-refundable application fee)Flat $1,790 n/an/an/an/a n/a 100%$1,790 24 Massage estb - sale or transfer of interest Flat $122 n/an/an/an/a n/a 100%$122 Re-evaluate massage establishment fees once the new program and program guidelines are implemented Delete from fee schedule - covered by fees #1 - #3 Delete from fee schedule - covered by fees #1 - #3 Delete from fee schedule - covered by fees #1 - #3 Delete from fee schedule - covered by fees #1 - #3 Delete from fee schedule - covered by fees #1 - #3 no data no data Delete from fee schedule - covered by fees #1 - #3 Delete from fee schedule - covered by fees #1 - #3 Delete from fee schedule - covered by fees #1 - #3 Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Delete from fee schedule - covered by fees #1 - #3 Delete from fee schedule - covered by fees #1 - #3 Delete from fee schedule - covered by fees #1 - #3 City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Police Police Police Police 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Delete from fee schedule - covered by fees #1 - #3 Page 14 Attachment D Service Name Fee Descriptio n Annual Volum e Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Police Police Police Police 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual 25 Massageg estb - renewal Flat $810 n/an/an/an/a n/a 100% $810 26 Massage estb - business location change Flat $810 n/an/an/an/a n/a 100%$810 27 Massage Tech - New (Does not include DOJ or FBI Fingerprint and Rolling Fee.)Flat 200 $81 179%179%179%179% $45 $9,042 $16,200 -$7,158 100% $45 $9,042 -$7,158 28 Massage Tech - Renewal Flat $63 100% 29 Mechanical Amusement Device Establishment Flat 1 $74 68%68%68%68% $109 $109 $74 $35 100% $109 $109 $35 30 Noise Exception Permit Flat 108 $250 137%137%137%137% $182 $19,656 $27,000 -$7,344 100% $182 $19,656 -$7,344 31 Push Cart Vendor - New license (Does not include DOJ Fingerprint and Rolling Fee.)Flat $244 19%19%19%19% $1,302 100% $1,302 32 Push Cart Vendor - Renewal Flat $86 79%79%79%79% $109 100% $109 33 Push Cart Vendor - Each additional cart Flat $244 675%675%675%675%$36 100%$36 34 Push Cart Vendor - Location change and/or cart change Flat $163 100% $163 35 Push Cart Employee - New license (Does not include DOJ Fingerprint and Rolling Fee.)Flat $81 100%$81 36 Push Cart Employee - Renewal Flat $63 100%$63 37 Soliciting information for commercial purpose (Does not include DOJ Fingerprint and Rolling Fee.)Flat $2,250 100% $2,250 38 Solicitor/Peddler Master License (Does not include DOJ Fingerprint and Rolling Fee.) - day Flat $81 224%224%224%224% $36 100% $36 39 Solicitor/Peddler Master License (Does not include DOJ Fingerprint and Rolling Fee.) - quarter Flat $122 337%337%337%337% $36 100% $36 40 Solicitor/Peddler Master License (Does not include DOJ Fingerprint and Rolling Fee.) - year Flat 2 $365 1009%1009%1009%1009% $36 $72 $730 -$658 100% $36 $72 -$658 41 Each employee operating under Master License (Does not include DOJ Fingerprint and Rolling Fee.)Flat 20 $81 224%224%224%224% $36 $723 $1,620 -$897 100% $36 $723 -$897 42 Taxi/Pub Transp Vehicle - Each Vehicle-Inspection/permit Flat 200 $61 169%169%169%169% $36 $7,234 $12,200 -$4,966 100% $36 $7,234 -$4,966 43 Taxi/Public Transp Vehicle - Master License-Application/certificate Flat 2 $1,750 61%61%61%61% $2,890 $5,781 $3,500 $2,281 100% $2,890 $5,781 $2,281 44 Taxi/Pub Transp Vehicle - Master License-Annual renewal Flat 3 $810 75%75%75%75% $1,085 $3,255 $2,430 $825 100% $1,085 $3,255 $825 45 Taxicab/Public Transportation/Vehicle Service Driver (Does not include DOJ Fingerprint and Rolling Fee.) new and renewal Flat 200 $81 299%299%299%299% $27 $5,425 $16,200 -$10,775 100% $27 $5,425 -$10,775 no data Re-evaluate massage establishment fees once the new program and program guidelines are implemented no data no data no data Page 15 Attachment D Service Name Fee Descriptio n Annual Volum e Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Police Police Police Police 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual 46 Taxi/Pub Transp Veh - Transfer fee Flat 12 $40 88%88%88%88% $45 $543 $480 $63 100% $45 $543 $63 47 Temp Street Closure - Class A: Parades, Runs, Street Fair, etc. Varies 10 $100 - $1,260 n/an/an/an/a $486 $4,855 $4,855 100% Hourly $4,855 48 Traveling Show Flat 2 $2,250 n/an/an/an/a n/a 49 Permit Inspection Fee Flat 2 $90 25%25%25%25% $364 $728 $180 $548 100% $364 $728 $548 50 Permit Inspection Fee 201-400 attendees Flat 1 $110 26%26%26%26% $425 $425 $110 $315 100% $425 $425 $315 51 Permit Inspection Fee 401-600 attendees Flat $125 26%26%26%26% $486 100%$486 52 Permit Inspection Fee each additional 200 attendees Flat $20 33%33%33%33% $61 100%$61 53 Report Copy Fee Flat 1400 $10 37%37%37%37% $27 $38,277 $14,000 $24,277 100% $27 $38,277 $24,277 54 Clearance Letter Flat 130 $30 111%111%111%111% $27 $3,508 $3,900 -$392 100% $27 $3,508 -$392 55 Photo Reprint, color or black and white Flat 10 $35 74%74%74%74% $47 $473 $350 $123 100% $47 $473 $123 56 Research Fee (includes audio and video taping)hourly 100% 57 Subpoena Copy Fee Statute 100% 58 Location Crime Statistics Fee Flat 15 $39 39%39%39%39% $101 $1,518 $585 $933 100% $101 $1,518 $933 59 Parenting Project Program Flat 25 $120 49%49%49%49% $243 $6,069 $3,000 $3,069 100% $243 $6,069 $3,069 60 Parenting Project Materials Flat 5 $35 58%58%58%58% $61 $303 $175 $128 100% $61 $303 $128 61 Vehicle Impound Fee Flat 260 $125 46%46%46%46% $274 $71,174 $32,500 $38,674 100% $274 $71,174 $38,674 62 Vehicle Reposession Receipt Flat 25 $15 55%55%55%55% $27 $684 $375 $309 100% $27 $684 $309 63 Audio copy request Flat $120 100% $120 64 Alarm registration - new Flat 286 $35 129%129%129%129% $27 $7,758 $10,010 -$2,252 100% $27 $7,758 -$2,252 65 Alarm registration - renewal Flat 2145 $35 194%194%194%194% $18 $38,791 $75,075 -$36,284 100% $18 $38,791 -$36,284 66 Attendant Lot Parking Fee Structure 67 0-1 hours no charge 68 1-3 hours flat $2 n/an/an/an/a n/a n/a n/a n/a n/a n/a n/a n/a 69 3-4 hours flat $4 n/an/an/an/a n/a n/a n/a n/a n/a n/a n/a n/a 70 Over 4 hours flat $8 n/an/an/an/a n/a n/a n/a n/a n/a n/a n/a n/a 71 Daily Maximum flat $8 n/an/an/an/a n/a n/a n/a n/a n/a n/a n/a n/a 72 Emergency Response Fee actual cost $50-$12,000 n/an/an/an/a n/a n/a n/a n/a 100% hourly rates n/a n/a Delete from fee schedule - covered by fees #1 - #3 Page 16 Attachment D Service Name Fee Descriptio n Annual Volum e Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Police Police Police Police 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual 73 Fingerprints 74 DOJ Fed rate $52 n/an/an/an/a n/a n/a n/a n/a n/a n/a n/a n/a 75 FBI Fed rate $24 n/an/an/an/a n/a n/a n/a n/a n/a n/a n/a n/a 76 False Alarm Response Fees - Excessive 77 3rd Residential False Alarm Flat 313 $100 47%47%47%47% $211 $66,056 $31,300 $34,756 100% $211 $66,056 $34,756 78 3rd Bank/Commercial False Alarm Flat 157 $100 27%27%27%27% $372 $58,353 $15,700 $42,653 100% $372 $58,353 $42,653 79 4th False Alarm Flat $150 100%150% of 3rd 80 5th and each Subsequent False Alarm Flat $200 100% 200% of 3rd 81 Police Service Fees 82 Community Service Officer hourly 200 $68 78%78%78%78% $87 $17,363 $13,600 $3,763 100% $87 $17,363 $3,763 83 Police Agent hourly 100 $131 58%58%58%58% $226 $22,642 $13,100 $9,542 100% $226 $22,642 $9,542 84 Police Officer hourly 200 $121 76%76%76%76% $160 $31,957 $24,200 $7,757 100% $160 $31,957 $7,757 85 Police Reserve hourly 100 $51 84%84%84%84% $61 $6,062 $5,100 $962 100% $61 $6,062 $962 86 Police Sergeant hourly 60 $144 59%59%59%59% $243 $14,565 $8,640 $5,925 100% $243 $14,565 $5,925 Total User Fees $443,545 $338,389 $105,156 $443,545 $105,156 % of Full Cost 76% 24%100% 31% Fees#82 thru 86) for events where less than 80% of the proceeds go directly to a "non-profit" organization, a 20% discount shall apply. For events where 80% or more of the proceeds go directly to a "non-profit" organization; or events declared as co-sponsored by the City of Palo Alto, a 25% discount shall apply. Page 17 Attachment D Animal Services Attachment D Program Fee Description Annual Cost Current Recovery Annual Revenue Annual Subsidy Recovery Level Range Revenue at Current Rate Recommended Subsidy 1 Adoptions Varies $147,104 52%52%52%52% $77,137 $69,967 50-70% $77,137 $69,967 2 Animal Boarding Varies $46,771 72%72%72%72% $33,732 $13,039 16-90% $33,732 $13,039 3 Disposal of Dead Owned Animals/Euthanasia Varies $128,706 74%74%74%74% $94,821 $33,885 50-90% $94,821 $33,885 4 Impoundment Varies $221,460 68%68%68%68% $151,114 $70,346 50-90% $151,114 $70,346 5 Licenses and Pet Identification Varies $112,964 90%90%90%90% $101,956 $11,008 100% $101,956 $11,008 6 Miscellaneous Sales, Pet Supplies Varies $52,572 86%86%86%86% $45,291 $7,281 80-100% $45,291 $7,281 7 Veterinary Services Varies $98,435 65%65%65%65% $64,404 $34,031 50-100% $64,404 $34,031 8 Annual Permits Varies $34,481 46%46%46%46% $15,877 $18,603 14-80% $15,877 $18,603 9 Spay and Neuter Clinic Varies $344,714 82%82%82%82%$284,161 $60,552 80-100% $284,161 $60,552 12 Animal Testing Varies $33,963 0%0%0%0%$0 $33,963 60-80%$0 $33,963 13 Vaccinations/Microchip Varies $98,261 71%71%71%71% $69,580 $28,681 100% $69,580 $28,681 14 Trap Rental/Home Quarantine Inspection Varies $38,693 61%61%61%61% $23,602 $15,091 8-60% $23,602 $15,091 15 Cremations Services Varies $30,738 87%87%87%87% $26,639 $4,099 73% $26,639 $4,099 16 Field Services Varies $580,309 3%3%3%3% $20,112 $560,197 0-10% $20,112 $560,197 Total User Fees $1,969,171 $1,008,427 $960,744 $1,008,427 $960,744 % of Full Cost 51% 49%51%49% City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Police Department - Animal ServicesPolice Department - Animal ServicesPolice Department - Animal ServicesPolice Department - Animal Services 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations AnnualAnnualAnnualAnnual AnnualAnnualAnnualAnnual Page 18 Attachment D Fire Attachment D Service Name Fee Description Annual Volume Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy 1 Automatic fire sprinkler installation/modification (per building)Flat 225 $300 27%27%27%27% $1,108 $249,380 $67,500 $181,880 100% $1,108 $249,380 $181,880 $0 2 Automatic fire sprinkler installation/modification (per building)Per head 30000 $1.50 54%54%54%54% $2.78 $83,523 $45,000 $38,523 100% $3 $83,523 $38,523 $0 3 Other automatic fire extinguishing systems (hood and duct, FM200, Inergen, CO2) NOTE: If system has a release panel, Fire Alarm fees apply as well.Flat 12 $300 27%27%27%27% $1,108 $13,300 $3,600 $9,700 100% $1,108 $13,300 $9,700 $0 4 Other automatic fire extinguishing systems (hood and duct, FM200, Inergen, CO2) NOTE: If system has a release panel, Fire Alarm fees apply as well.Per nozzle 350 $6.50 54%54%54%54% $12.07 $4,226 $2,275 $1,951 100% $12 $4,226 $1,951 $0 5 Fire Alarm Systems; install/modify (per building)Flat 140 $300 27%27%27%27% $1,108 $155,170 $42,000 $113,170 100% $1,108 $155,170 $113,170 $0 6 Fire Alarm Systems; install/modify (per building)Per device 5000 $6.50 114%114%114%114% $5.73 $28,627 $32,500 -$3,873 100% $6 $28,627 -$3,873 $0 7 Standpipe system wet, dry or combination, per riser Flat 12 $175 23%23%23%23% $752 $9,029 $2,100 $6,929 100% $752 $9,029 $6,929 $0 8 Hydrants private on-site; install/modify Flat 1 $220 25%25%25%25% $889 $889 $220 $669 100% $889 $889 $669 $0 9 Hydrants private on-site; install/modify Per hydrant 3 $50 50%50%50%50% $101 $303 $150 $153 100% $101 $303 $153 $0 10 Underground fire service line (includes inspection and re-inspection - 1 each occurrence)Flat 11 $300 27%27%27%27% $1,108 $12,192 $3,300 $8,892 100% $1,108 $12,192 $8,892 $0 11 Temporary Certificate of Occupancy Flat 4 $300 36%36%36%36% $844 $3,375 $1,200 $2,175 100% $844 $3,375 $2,175 $0 15 Verification of Fire Protection System Maintenance and Certification Flat 300 $75 45%45%45%45% $167 $49,950 $22,500 $27,450 100% $167 $49,950 $27,450 $0 16 A Level I Facility - Minimal Storage (defined as having no hazardous materials over CFC Permit amounts as specified in CFC section 105)Flat 87 $230 71%71%71%71% $324 $28,208 $20,010 $8,198 100% $324 $28,208 $8,198 $0 B Level II Facility - Quantities exceeding CFC permit threshold, but less than 50 gal., City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Fire PreventionFire PreventionFire PreventionFire Prevention 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual 17 B Level II Facility - Quantities exceeding CFC permit threshold, but less than 50 gal., 500 lbs. Or 200 cu. Ft. Category also includes Dry Cleaning, Fixed Medical Gas, Auto or Aircraft Repair and Service Stations Flat 140 $470 97%97%97%97% $487 $68,122 $65,800 $2,322 100% $487 $68,122 $2,322 $0 18 C Level III Facility - Quantities exceed 50 gal., 500 lbs. Or 200 cu. Ft. and not categorized as Level II Flat 200 $825 95%95%95%95% $865 $172,939 $165,000 $7,939 100% $865 $172,939 $7,939 $0 19 D Business Plan (HMBP) Flat 251 $285 93%93%93%93% $307 $77,024 $71,535 $5,489 100% $307 $77,024 $5,489 $0 20 E Petroleum Abovegroung Storage Tank Flat 16 $500 58%58%58%58% $858 $13,721 $8,000 $5,721 100% $858 $13,721 $5,721 $0 21 E Provisional (6 month term)Delete 0 $165 n/a n/a 22 F Additional approval for permit to construct, temporary closure, permanent closure, otherwise modify a Hazardous Materials storage/use facility. (See CEQA for additional fees.)Flat 47 $300 37%37%37%37% $816 $38,370 $14,100 $24,270 100% $816 $38,370 $24,270 $0 23 F Additional approval for permit to construct, temporary closure, permanent closure, otherwise modify a Hazardous Materials storage/use facility. Additional hours over 2 Per hour 30 $150 84%84%84%84% $179 $5,379 $4,500 $879 100% $179 $5,379 $879 $0 24 Late Fee for Hazardous Materials Storage Permits Fine 0 25% of haz mat fee n/an/an/an/a n/a 100% 25% of haz mat fee Page 19 Attachment D Service Name Fee Description Annual Volume Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Fire PreventionFire PreventionFire PreventionFire Prevention 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual 25 Fees charged for additional re-inspections after the first re-inspection.Flat 12 $300 81%81%81%81% $368 $4,421 $3,600 $821 100% $368 $4,421 $821 $0 26 Fees charged for additional re-inspections after the first re-inspection - each hour over 2 Per hour 6 $150 45%45%45%45% $334 $2,004 $900 $1,104 100% $334 $2,004 $1,104 $0 27 After hours inspection fee (before or after normal business hours; weekends and holidays included, and is to be paid in advance of inspection)Per hour 100 $165 48%48%48%48% $344 $34,381 $16,500 $17,881 100% $344 $34,381 $17,881 $0 28 Christmas Tree Lot/Pumpkin Patch Flat 5 $150 25%25%25%25% $603 $3,013 $750 $2,263 100% $603 $3,013 $2,263 $0 29 Care Facility (including community, child day care and residential care for the elderly) Fire and Safety Inspections (CFC 111.4). Excludes residential elderly care facilities with six or fewer persons. Flat 91 $150 27%27%27%27% $546 $49,676 $13,650 $36,026 100% $546 $49,676 $36,026 $0 30 Care Facility Inspection including fire clearance 7-25 clients Delete 0 $65 n/a n/a 31 Care Facility Inspection including fire clearance >25 clients Delete 0 $125 n/a n/a 32 Outside Cooking Booths Flat 11 $165 30%30%30%30% $546 $6,005 $1,815 $4,190 100% $546 $6,005 $4,190 $0 33 Use and Occupancy Fire Inspection Flat 100 $125 23%23%23%23% $537 $53,743 $12,500 $41,243 100% $537 $53,743 $41,243 $0 34 Standby fire watch or after-hours at fire or incident scene Per hour 0 $165 49%49%49%49% $334 $0 $0 $0 100% $334 $0 $0 $0 High Rise Building; certificate of compliance inspection for each high rise building which is required by State law to be inspected and certified annually as meeting minimum compliance with applicable State of California fire and life safety standards for existing high rise buildings. (CFC 35 California fire and life safety standards for existing high rise buildings. (CFC 111.4.3)Flat 7 $600 36%36%36%36% $1,670 $11,689 $4,200 $7,489 100% $1,670 $11,689 $7,489 $0 36 High Rise Building; certificate of compliance inspection for each high rise building which is required by State law to be inspected and certified annually as meeting minimum compliance with applicable State of California fire and life safety standards for existing high rise buildings. (CFC 111.4.3) - each hour after 4 Per hour 3 $150 45%45%45%45% $334 $1,002 $450 $552 100% $334 $1,002 $552 $0 37 Consultation fee Per hour 0 $150 45%45%45%45% $334 $0 $0 $0 100% $334 $0 $0 $0 38 Alternate Means and Methods Application Flat 1 $300 28%28%28%28% $1,073 $1,073 $300 $773 100% $1,073 $1,073 $773 $0 39 Hazardous Materials investigation Per hour 0 $150 84%84%84%84% $179 $0 $0 $0 100% $179 $0 $0 $0 40 Appeals to decisions Per hour 0 $250 75%75%75%75% $334 $0 $0 $0 100% $334 $0 $0 $0 41 Additional hours over plan review/inspection (hourly minimum to be billed)Per hour 0 $150 45%45%45%45% $334 $0 $0 $0 100% $334 $0 $0 $0 42 Site Disaster Planning Per hour 250 $150 45%45%45%45% $334 $83,495 $37,500 $45,995 100% $334 $83,495 $45,995 $0 43 Hydrant Flow Fee Flat 0 $200 59%59%59%59% $341 $0 $0 $0 100% $341 $0 $0 $0 Page 20 Attachment D Service Name Fee Description Annual Volume Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Fire PreventionFire PreventionFire PreventionFire Prevention 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual 44 Hazardous Materials Data Entry Fee Per hour 50 $65 36%36%36%36% $179 $8,964 $3,250 $5,714 100% $179 $8,964 $5,714 $0 45 Aerosol Products Flat 0 $255 209%209%209%209% $122 $0 $0 $0 100% $122 $0 $0 $0 46 Amusement buildings Flat 0 $365 76%76%76%76% $481 $0 $0 $0 100% $481 $0 $0 $0 47 Automobile Wrecking Yard or Junk Yard Flat 0 $170 80%80%80%80% $212 $0 $0 $0 100% $212 $0 $0 $0 48 Bowling alley and pin refinishing involving the use of flammable liquids Flat 0 $170 80%80%80%80% $212 $0 $0 $0 100% $212 $0 $0 $0 49 Candles and open flames in assembly areas Flat 114 $135 44%44%44%44% $306 $34,901 $15,390 $19,511 100% $306 $34,901 $19,511 $0 50 Carnivals and fairs Flat 0 $170 80%80%80%80% $212 $0 $0 $0 100% $212 $0 $0 $0 51 Cellulose nitrate storage/nitrate film Flat 0 $255 209%209%209%209% $122 $0 $0 $0 100% $122 $0 $0 $0 52 Confined Space Flat 0 $125 10%10%10%10% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 53 Combustible fiber/material storage Flat 0 $170 80%80%80%80% $212 $0 $0 $0 100% $212 $0 $0 $0 54 Dust producing devices Flat 0 $105 8%8%8%8% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 55 Excavate within 10 feet of flammable or combustible pipeline Flat 0 $75 6%6%6%6% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 56 Explosive or blasting agents Flat 2 $255 209%209%209%209% $122 $244 $510 -$266 100% $122 $244 -$266 $0 57 Fireworks display Flat 0 $525 80%80%80%80% $660 $0 $0 $0 100% $660 $0 $0 $0 58 High-piled combustible storage Flat 1 $255 209%209%209%209% $122 $122 $255 -$133 100% $122 $122 -$133 $0 59 Hot Work (Welding and Cutting) operations Flat 53 $170 80%80%80%80% $212 $11,226 $9,010 $2,216 100% $212 $11,226 $2,216 $0 60 Liquid or gas-fueled vehicles or equipment in assembly buildings Flat 33 $255 209%209%209%209%$122 $4,032 $8,415 -$4,383 100%$122 $4,032 -$4,383 $060Liquid or gas-fueled vehicles or equipment in assembly buildings Flat 33 $255 209%209%209%209% $122 $4,032 $8,415 -$4,383 100% $122 $4,032 -$4,383 $0 61 Malls, Covered Flat 0 $255 209%209%209%209% $122 $0 $0 $0 100% $122 $0 $0 $0 62 B Place of public assembly (temporary)Flat 0 $200 16%16%16%16% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 63 C Open flame/flame producing devices Flat 4 $75 6%6%6%6% $1,268 $5,071 $300 $4,771 100% $1,268 $5,071 $4,771 $0 64 D Liquid or gas-fueled powered equipment Flat 0 $75 6%6%6%6% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 65 Magnesium working Flat 0 $255 209%209%209%209% $122 $0 $0 $0 100% $122 $0 $0 $0 66 Occupant load increase (temporary public assembly)Flat 0 $200 16%16%16%16% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 67 Open burning Flat 0 $200 16%16%16%16% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 68 Operate a tank vehicle to transport flammable/combustible liquids Flat 0 $255 209%209%209%209% $122 $0 $0 $0 100% $122 $0 $0 $0 69 Organic coatings Flat 0 $170 80%80%80%80% $212 $0 $0 $0 100% $212 $0 $0 $0 70 Ovens, industrial baking or drying Flat 4 $255 209%209%209%209% $122 $489 $1,020 -$531 100% $122 $489 -$531 $0 71 Parade Float Per hour 0 $95 7%7%7%7% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 72 Place of public assembly (annual or each occurrence)Flat 196 $200 34%34%34%34% $594 $116,516 $39,200 $77,316 100% $594 $116,516 $77,316 $0 Page 21 Attachment D Service Name Fee Description Annual Volume Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Fire PreventionFire PreventionFire PreventionFire Prevention 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual 73 Pyrotechnical special effects material Flat 0 $170 523%523%523%523% $33 $0 $0 $0 100% $33 $0 $0 $0 74 Refrigeration Equipment Flat 0 $170 80%80%80%80% $212 $0 $0 $0 100% $212 $0 $0 $0 75 Spraying/Dipping Flat 18 $170 80%80%80%80% $212 $3,813 $3,060 $753 100% $212 $3,813 $753 $0 76 Tent or air-supported structure having an area in excess of 200 square feet; or canopies in excess of 400 square feet (includes a public assembly permit of $125.00 for all tents)Flat 30 $365 61%61%61%61% $603 $18,080 $10,950 $7,130 100% $603 $18,080 $7,130 $0 77 Tire recapping/tire storage Flat 0 $480 38%38%38%38% $1,268 $0 $0 $0 100% $1,268 $0 $0 $0 78 Corrosives Flat 62 $255 153%153%153%153% $167 $10,354 $15,810 -$5,456 100% $167 $10,354 -$5,456 $0 79 Cryogenic Fluids Flat 49 $255 153%153%153%153% $167 $8,183 $12,495 -$4,312 100% $167 $8,183 -$4,312 $0 80 Flammable and Combustible Liquids Flat 181 $255 153%153%153%153% $167 $30,226 $46,155 -$15,929 100% $167 $30,226 -$15,929 $0 81 Flammable Solids Flat 0 $255 153%153%153%153% $167 $0 $0 $0 100% $167 $0 $0 $0 82 Compressed Gas (inert)Flat 32 $255 153%153%153%153% $167 $5,344 $8,160 -$2,816 100% $167 $5,344 -$2,816 $0 83 Flammable Gas Flat 29 $255 153%153%153%153% $167 $4,843 $7,395 -$2,552 100% $167 $4,843 -$2,552 $0 84 Oxidizing Gas Flat 35 $255 153%153%153%153% $167 $5,845 $8,925 -$3,080 100% $167 $5,845 -$3,080 $0 85 Pyrophoric Gas Flat 2 $255 153%153%153%153% $167 $334 $510 -$176 100% $167 $334 -$176 $0 86 Toxic, highly toxic, moderately toxic, health hazard Gas Flat 12 $255 153%153%153%153% $167 $2,004 $3,060 -$1,056 100% $167 $2,004 -$1,056 $0 87 Unstable Reactive Gas Flat 0 $255 153%153%153%153%$167 $0 $0 $0 100%$167 $0 $0 $087Unstable Reactive Gas Flat 0 $255 153%153%153%153%$167 $0 $0 $0 100%$167 $0 $0 $0 88 Health Hazard (liquids & solids)Flat 0 $255 153%153%153%153% $167 $0 $0 $0 100% $167 $0 $0 $0 89 Organic Peroxides Flat 1 $255 153%153%153%153% $167 $167 $255 -$88 100% $167 $167 -$88 $0 90 Oxidizers (liquids & solids)Flat 19 $255 153%153%153%153% $167 $3,173 $4,845 -$1,672 100% $167 $3,173 -$1,672 $0 91 Pyrophoric Materials (liquids & solids)Flat 6 $255 153%153%153%153% $167 $1,002 $1,530 -$528 100% $167 $1,002 -$528 $0 92 Radioactive Materials Flat 29 $255 153%153%153%153% $167 $4,843 $7,395 -$2,552 100% $167 $4,843 -$2,552 $0 93 Toxic, highly toxic, health hazard materials (includes pesticides, fumigants, and etiologic agents)Flat 45 $255 153%153%153%153% $167 $7,515 $11,475 -$3,960 100% $167 $7,515 -$3,960 $0 94 Unstable Reactive Materials (liquids & solids)Flat 1 $255 153%153%153%153% $167 $167 $255 -$88 100% $167 $167 -$88 $0 95 Water Reactive Materials (liquids & solids)Flat 0 $255 153%153%153%153% $167 $0 $0 $0 100% $167 $0 $0 $0 96 Liquefied Petroleum Gases Flat 12 $255 153%153%153%153% $167 $2,004 $3,060 -$1,056 100% $167 $2,004 -$1,056 $0 97 Emergency Response Fee (Hazmat -PAMC 17.24.050)Sliding 0 $1,080 0%0%0%0% $0 $0 $0 $0 hourly 98 Engine Company Second Re-inspection (After inspection and re-inspection only) Per hour 0 $195 0%0%0%0% $0 $0 $0 $0 hourly Page 22 Attachment D Service Name Fee Description Annual Volume Current Fee Current Recovery %Full Cost Annual Cost Annual Revenue Annual Subsidy Recovery Level Fee @ Policy Level Annual Revenue Increased Revenue Subsidy City of Palo AltoCity of Palo AltoCity of Palo AltoCity of Palo Alto Fire PreventionFire PreventionFire PreventionFire Prevention 2012201220122012 CurrentCurrentCurrentCurrent RecommendationsRecommendationsRecommendationsRecommendations Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual Per UnitPer UnitPer UnitPer Unit AnnualAnnualAnnualAnnual 99 Installation or Closure without approved plans and/or permits (Fire Protection/HazMat; double original fee)Penatly 0 $725 n/a $725 100 Preventable False Alarm (CFC 401.3.1)Penatly 0 $180 n/a $180 Total User Fees $1,553,690 $886,140 $667,550 $1,553,690 $667,550 $0 % of Full Cost 57% 43%100% 43% 0% Page 23 Attachment D Community Services Attachment D Total Direct Expense Total Indirect Expense Total Full Cost Total Fee Revenue Total Other Revenue Total Revenue Total General Fund Subsidy Direct Costs % Recovery Full Cost % Recovery Children's Theatre 1,235,046$ 515,804$ 1,750,850$ 360,304$ 80,000$ 440,304$ 1,310,546$ 36%25% JMZ-Sciences 767,528$ 239,633$ 1,007,161$ 500,698$ -$ 500,698$ 506,463$ 65%50% JMZ-Exhibits & Zoo 408,874$ 180,183$ 589,057$ 6,721$ 3,000$ 9,721$ 579,336$ 2%2% Art in Public Places 105,629$ 45,124$ 150,753$ 2,625$ -$ 2,625$ 148,128$ 2%2% Community Theatre 29,460$ 522,435$ 551,895$ -$ 18,449$ 18,449$ 533,446$ 63%3% Summer Concerts 73,270$ 18,849$ 92,119$ -$ 2,000$ 2,000$ 90,119$ 3%2% Visual Arts-Youth 293,085$ 75,397$ 368,482$ 200,074$ 38,000$ 238,074$ 130,408$ 81%65% Visual Arts - Adults 169,697$ 43,655$ 213,352$ 61,694$ -$ 61,694$ 151,658$ 36%29% Art Exhibitions 135,481$ 34,853$ 170,334$ -$ -$ -$ 170,334$ 0%0% Music & Dance - Youth 56,845$ 14,624$ 71,469$ 62,864$ -$ 62,864$ 8,605$ 111%88% Music & Dance - Adults 61,895$ 15,923$ 77,818$ 24,314$ -$ 24,314$ 53,504$ 39%31% Arts Facilities 842,882$ 506,476$ 1,349,358$ -$ 15,802$ 15,802$ 1,333,556$ 2%1% Total Arts and Sciences 4,179,693$ 2,212,956$ 6,392,649$ 1,219,294$ 157,251$ 1,376,545$ 5,016,104$ 33%22% Aquatics 514,702$ 224,132$ 738,834$ 501,164$ -$ 501,164$ 237,670$ 97%68% MSA 326,515$ 110,157$ 436,672$ 289,391$ -$ 289,391$ 147,281$ 89%66% Recreation - Adults 278,827$ 98,389$ 377,216$ 187,686$ -$ 187,686$ 189,530$ 67%50% Recreation - Teens 306,622$ 76,472$ 383,094$ 114,540$ -$ 114,540$ 268,554$ 37%30% Program Publication 100,807$ 24,874$ 125,681$ -$ -$ -$ 125,681$ 0%0% Recreation - Youth 614,001$ 151,508$ 765,509$ 754,294$ 754,294$ 11,215$ 123%99% Rec - Special Needs 56,072$ 13,836$ 69,908$ 6,942$ 1,500$ 8,442$ 61,466$ 15%12% Recreation - Facilities 1,025,410$ 296,684$ 1,322,094$ 431,955$ -$ 431,955$ 890,139$ 42%33% Special Events 92,289$ 22,773$ 115,062$ 15,821$ 15,821$ 99,241$ 17%14% Total Recreation 3,315,245$ 1,018,825$ 4,334,070$ 2,301,793$ 1,500$ 2,303,293$ 2,030,777$ 69%53% Golf 2,388,173$ 542,126$ 2,930,299$ 2,624,748$ 95,393$ 2,720,141$ 210,158$ 114%93% Open Space 1,724,555$ 421,921$ 2,146,476$ 34,630$ 9,135$ 43,765$ 2,102,711$ 3%2% Parks 4,398,314$ 1,203,052$ 5,601,366$ 25,639$ 336,538$ 362,177$ 5,239,189$ 8%6% Total OS/Parks/Golf 8,511,043$ 2,167,099$ 10,678,142$ 2,685,017$ 441,066$ 3,126,083$ 7,552,059$ 37%29% Total Cubberley 1,349,431$ 1,064,354$ 2,413,785$ -$ 840,075$ 840,075$ 1,573,710$ 62%35% Total Human Services 1,278,249$ 428,554$ 1,706,803$ -$ -$ -$ 1,706,803$ 0%0% TOTAL CSD 18,633,661$ 6,891,788$ 25,525,449$ 6,206,104$ 1,439,892$ 7,645,996$ 17,879,453$ 41%30% Page 24 Attachment D ANIMAL SERVICES Fee Palo Alto Cupertino (Humane Society of SV) Fremont Menlo Park (Peninsula Humane) Mountain View (SVACA) San Mateo (Peninsula Humane) Santa Clara (SVACA) Sunnyvale (Humane Society SV) Adoptions ‐ Dogs $125 pp $; Adult: $175; Companion prices if adopt 2 $171‐$175 Under 7‐$120; 7+ ‐ $75; under 6 mos ‐ $135 $150 Under 7‐$120; 7+ ‐ $75; under 6 mos ‐ $135 $150 Puppies: $350; Adult: $175; Companion prices if adopt 2 Adoptions ‐ Cats $125 Kittens: $175; Cats: Currently waived $124‐$136 Under 7 ‐ $80; 7+ ‐ $50; under 6 mos ‐ $105 Under 6 mos ‐ $150; All Other ‐ $100 Under 7 ‐ $80; 7+ ‐ $50; under 6 mos ‐ $105 Under 6 mos ‐ $150; All Other ‐ $100 Kittens: $175; Cats: Currently waived Impound Dog ‐ Licensed $30 (1st offense) up to $165 (11th+ offense) Altered: $90; Unaltered: $95 (1st); $110 (2nd); $160 (3rd); $92 (1st offense); $184 (2nd offense); $276 (3rd offense) $35 (Altered/1st offense); $100 (Unaltered/1st offense); $125‐ $205 (subsequent offenses) $35 (Altered/1st offense); $100 (Unaltered/1st offense); $125‐$205 (subsequent offenses) Altered: $90; Unaltered: $95 (1st); $110 (2nd); $160 (3rd); Impound Dog ‐ Unlicensed $50 (1st offense) up to $200 (11th+ offense) $30 (1st offense) up to $165 (11th+ offense) $92 (1st offense); $184 (2nd offense); $276 (3rd offense) $35 (Altered/1st offense); $100 (Unaltered/1st offense); $125‐ $205 (subsequent offenses) $35 (Altered/1st offense); $100 (Unaltered/1st offense); $125‐$205 (subsequent offenses) Altered: $90; Unaltered: $95 (1st); $110 (2nd); $160 (3rd); Impound Cat $30 (1st offsense); $45 (2nd offense); $60 (third offense) Altered: $90; Unaltered: $95 (1st); $110 (2nd); $160 (3rd); $92 (1st offense); $184 (2nd offense); $276 (3rd offense) $35 (Altered/1st offense); $100 (Unaltered/1st offense); $125‐ $205 (subsequent offenses) $35 (Altered/1st offense); $100 (Unaltered/1st offense); $125‐$205 (subsequent offenses) Altered: $90; Unaltered: $95 (1st); $110 (2nd); $160 (3rd); 1 9/9/2013 Attachment D ANIMAL SERVICES Fee Palo Alto Cupertino (Humane Society of SV) Fremont Menlo Park (Peninsula Humane) Mountain View (SVACA) San Mateo (Peninsula Humane) Santa Clara (SVACA) Sunnyvale (Humane Society SV) License ‐ Dog/Neutered $20 (12 mos); $30 (24 mos); $40 (36 mos) $20 (12 mos); $30 (24 mos); $40 (36 mos) $12 (12 mos); $17 (24 mos); $21 (36 mos) $20 (12 mos); $55 (36 mos) $22 (12 mos); $32 (24 mos); $42 (36 mos) $20 (12 mos); $55 (36 mos) $22 (12 mos); $32 (24 mos); $42 (36 mos) $20 (12 mos); $30 (24 mos); $40 (36 mos) License ‐ Dog/Spayed $20 (12 mos); $30 (24 mos); $40 (36 mos) $20 (12 mos); $30 (24 mos); $40 (36 mos) $12 (12 mos); $17 (24 mos); $21 (36 mos) $20 (12 mos); $55 (36 mos) $22 (12 mos); $32 (24 mos); $42 (36 mos) $20 (12 mos); $55 (36 mos) $22 (12 mos); $32 (24 mos); $42 (36 mos) $20 (12 mos); $30 (24 mos); $40 (36 mos) License ‐ Dog/ Unaltered $40 (12 mos); $60 (24 mos); $80 (36 mos)$150 (12 mos) $25 (12 mos); $35 (24 mos); $42 (36 mos) $50 (12 mos); $145 (36 mos) $100 (12 mos) $50 (12 mos); $145 (36 mos) $100 (12 mos) $150 (12 mos) Neuter Dog ‐ Resident $100‐$250 based on weight $110‐$130 based on weight $110‐$130 based on weight Neuter Dog ‐ Regular or Non‐ Resident $135‐$325 based on weight $85‐$135 based on weight $91 $80‐$140+ based on weight $135‐$155 based on weight $80‐$140+ based on weight $135‐$155 based on weight $85‐$135 based on weight Spay Dog ‐ Resident $120‐$270 based on weight $120‐$140 based on weight $120‐$140 based on weight Spay Dog ‐ Regular or Non‐ Resident $160‐$345 based on weight $110‐$170 based on weight $91 $90‐$150+ based on weight $145‐$165 based on weight $90‐$150+ based on weight $145‐$165 based on weight $110‐$170 based on weight Neuter Cat ‐ Resident $65 $60 $60 Neuter Cat ‐ Regular or Non‐ Resident $90 $60 $54 $50 $75 $50 $75 $60 Spay Cat ‐ Resident $95 $70 $70 Spay Cat ‐ Regular or Non‐ Resident $130 $95 $54 $60 $85 $60 $85 $95 2 9/9/2013 Attachment D COMMUNITY SERVICES DEPT Fee Palo Alto Cupertino Fremont Menlo Park Mountain View San Mateo Santa Clara Sunnyvale Classes/Camps Residents: $6‐ $865; Non‐ Residents: Fee plus up to 50% Fees are formula driven based on instructor's hrly rate, number of classes, min. number of participants, indirect and equipment/supply costs, add 20% for non‐residents Not in fee schedule. Fees are published in each Activities schedule. Fees are set to cover all direct costs including instructors, materials, contracted services, City's costs of arranging programs, use of facilities and "necessary overhead". $5 additional charge for non‐residents Varies ‐ City has independent contract agreements with instructors who provides guaranteed income to the course Fees for most classes/activities are set based on targeted cost recovery of direct and/or indirect costs for each class/activity Not included in Muni Fee schedule ‐ Priced in each Rec Activity Guide; Higher fees for non‐ residents Set administratively by Parks/Rec Director; non‐ residents pay lower of 25% or $50 more per class than residents Tennis Primetime: Residents ‐ $9/hr; Non‐resident ‐ $11/hr; Non‐Primetime: $8/hr. Yearly Key ‐ Residents: $50; Non‐residents: $100 $8 Resident ‐ $6/hour; Non‐ resident ‐ $8/hour Aquatics ‐ Lap Swim Set by Director Daily : Non‐ Resident $4‐$6 $5 Daily: Non‐Resident $4‐$6 $6 10 Swim: Resident $40 10 Swim: Non‐ Resident $60 25 Swim: Resident $87.50 25 Swim: Non‐ Resident $109 25 Swim: Sr./Resident $30 25 Swim: Sr./Non‐ Resident $38 3 9/9/2013 Attachment D COMMUNITY SERVICES DEPT Fee Palo Alto Cupertino Fremont Menlo Park Mountain View San Mateo Santa Clara Sunnyvale Aquatics ‐ Recreational Swim Varies by pool, activities and residency Set by Director Child ≤2$0‐$4 Spectator $3 Child ‐ Resident $2,50‐$5 $3 $3 Child ‐ Non‐ Resident $2.50‐$6 $4 $4 Adult ‐ Resident $3‐$6 $4 $5 Adult ‐ Non‐ Resident $3‐$8 $5 $6 Family ‐ Resident $10 $139‐$180 Family ‐ Non‐ Resident $18 $174‐$220 4 9/9/2013 Attachment D COMMUNITY SERVICES DEPT Fee Palo Alto Cupertino Fremont Menlo Park Mountain View San Mateo Santa Clara Sunnyvale GOLF ‐ 18 Holes Wkday: Resident $36‐$40 Up to $31 $33 $25 $35 Wkday ‐ Regular or Non‐Resident $38‐$42 Up to $38 $38 $37 $35 Wkday ‐ Resident/Sr. $27‐$30 Up to $21 $27 Wkday ‐ Jr.(≤ 17) $12‐$16 after 1pm Sept 1‐April 30 Up to $16 $14/ resident only Wkend/Holiday ‐ Resident $46‐$51 Up to $47 $45 $34 $44 Wkend/Holiday ‐ Regular $48‐$53 Up to $54 $53 $50 $48 Wkend/Holiday ‐ Resident/Sr. Wkend/Holiday ‐ Jr.(≤ 17) $15‐$18 after 1 pm Sept 1‐April 30 $17/resident only GOLF‐ 9 Holes Wkday: Resident $23‐$25 $15 $15 Wkday ‐ Regular or Non‐Resident $23‐$25 $17 $15 Wkday ‐ Resident/Sr.$14‐$16 Wkday ‐ Jr.(≤ 17) $11‐$13 Wkend/Holiday ‐ Resident $26‐$29 $17 $17 Wkend/Holiday ‐ Regular or Non‐ Resident $26‐$29 $19 $19 Wkend/Holiday ‐ Resident/Sr.$17‐$19 5 9/9/2013 Attachment D FIRE Fee Palo Alto Cupertino Fremont Menlo Park Mountain View San Mateo Santa Clara Sunnyvale Fire Flow Test $215 $250 $211 Fire Suppression/ Sprinkler Inpection $325 plus sprinkler heads Varies by type of facility $96/hour plus fee based on sprinkler heads Varies by type of facility $85/hour; 3 hour min. Varies by type of facility $535‐$1,474 depending on facility & sprinkler heads Varies by facility/size Preventable False Alarm $195‐ $1,622/hour ‐ charged after 2 in 12 month period After second incident: Engine ‐ $508; Inspector ‐ $332 $134 for 3rd and subsequent occurences $385 $253 ‐ After 3rd time in 180 day period 3rd‐4th: $200; 5th‐7th:$350; 8th‐10th: $500; 11th+: $750 Fireworks $565 each occurrence $96/hour $1,084 $154/hour $292 per occurrence plus standby personnel at time of show $571 each occurrence $229 Licensed Community Care, Residential or Child Day Care Inspections $160/annual or each license renewal Based on assessed risk level Pre‐license Inspection: $164 plus $368‐$484 based on occupancy $154/hour $100 per inspection $134‐$404 depending on max occupancy Haz Mat Emergency Response Up to $1,170 each incident or 100% full cost recovery Job cost based on employees' salary plus overhead Hourly rates Hourly rates for personnel/engine Hourly rates for personnel and equipment Hourly rates for personnel/truck company Actual costs 6 9/9/2013 Attachment D POLICE Fee Palo Alto Cupertino Fremont Menlo Park Mountain View San Mateo Santa Clara Sunnyvale Massage Estab. ‐ New $750 $395 includes fingerprint $300 plus background Sole proprietor ‐ $135 plus background $900 $444 plus hrly rate for personnel Sole proprietor $313 $924 Massage Estab. ‐ Renew $450 $93 $150 Sole proprietor ‐ $135 plus background $450 $74 biyearly Sole proprietor ‐ $210 $857 Massage Therapist ‐ New $300 $298 includes fingerprint $60 plus background $450 $336 plus hourly rate for personnel $209 Massage Therapist ‐ Renew $150 $62 $30 $98 biyearly $45 False Alarm Registration: $38; 3rd alarm: $108; 4th: $162; 5th+: $216 $160 Registration: $40 (new); Permit renew: $20; $60 fine if more than 3 alarms in 120 days or 5 in 365 days Registration: $25; Standard: $175; High Risk: $350 Registration: Residential ‐ $20; Commercial ‐ $80; 2nd alarm: $100; 3rd alarm: $150; 4th alarm: $250; 5th+ alarm: $500 2nd and subsequent: $104 Registration: $24; Fines: $63 (3rd); $90 (4th); $115 (5th +); additional for bank hold up alarm Registration: Residential ‐ $35; Business ‐ $70; 3rd‐4th alarm: $200; 5th‐7th alarm: $350; 8th‐ 10th alarm: $500; 11th+ alarm: $750 Taxi Driver ‐ Permit $88/up to 4 years, plus fingerprint $323, includes fingerprint $306 $75, including fingerprint $180 $90 $160 $205 Taxi Driver ‐ Renewal $194 $108 $50 $130 $37 $144 Taxi ‐ Vehicle Inspection $66/year $28 $200 (biennial) $108 $53 $116 Fingerprinting DOJ and FBI established fees $52 plus DOJ/FBI $45 plus DOJ and other agency fees City's cost plus DOJ/FBI $72 $32 plus DOJ/FBI $66 7 9/9/2013 Attachment D POLICE Vehicle ‐ Impound Release $135 $196 Vehicle Code Infraction: $200; Misdeameanor or Felony: $300 $150 plus additional $120 if misdemeanor or felony and addiitonal $150 if repeat offender (within 12 mos) Impound: $76; Stored: $76 $52 $238 7 9/9/2013 Attachment D PUBLIC WORKS Fee Palo Alto Cupertino Fremont Menlo Park Mountain View San Mateo Santa Clara Sunnyvale Encroach Residential: $430; Non‐residential: $460‐$920 Major: $488; Minor: $244 Varies based on type and size Major: $825 plus 3% of cost; Minor: $470; Residential: $1,069; Non‐ residential: $1,955 $312 plus 6% of project cost Processing Fee ‐ $186; engineering and inspection ‐ higher of $179 or 8% of construction cost Varies based on size/duration Cert of Correct/ Compliance $3,240 $1,620 Deposit/Actual Cost Correction: First 3 sheets: $750; Each Addl: $100; Compliance: $900 Compliance: $700 $107/hour Correction ‐ $2,509 per certificate; Compliance ‐ staff salary X 2.25 Correction: $301; Compliance: $534 Bldg construct/ street impact Higher of $240 or 5% of contract work .58% of project valuation Flat rate plus % of construction costs (% varies based on dollar amount)$910 Flat rate plus % of construction costs (% varies based on dollar amount) Street Trees $100 15 gallon: $155; 24" box: $330 $85 15 gallon tree: $100 15 gallon: $11.07/linear ft. 24" box: $350 $155 $251 Street Cuts Service lateral connection: $1,080/ trench; $5‐ $16/sq.ft of trench depending on pavement condition Minor ‐ $609; Major: $1,583; Over 15 days or $30K = 5% of project Costs Deposit plus fee based on linear ft. Fees based on staff hourly billing rates Varies based on sq.footage $312 deposit; $107/hour Varies based on sq.ft. and thickness of asphalt Deposit plus fee based on linear ft. 8 9/9/2013 Attachment D ATTACHMENT C Community Services Department Class Cost Recovery Policy The Community Services Department (CSD) offers a variety of programs within its various divisions such as recreational activities, arts and sciences classes, and open space interpretive programs. The following Class Cost Recovery Policy is to be used as a guideline to establish cost recovery targets for fee-based classes and camps within the divisions of Recreation & Golf, Arts & Sciences, and Open Space & Parks. Included in CSD’s Strategic Plan is an initiative to “focus energy and (budgetary) resources on sustaining and enhancing core services”. Through implementation of this Class Cost Recovery Policy, the department aims to establish cost recovery levels while providing core services and meeting the social needs of the community. Policy The policy takes into consideration: (1) minimum level of acceptable cost recovery, (2) target level of cost recovery, and (3) fee setting considerations. Cost recovery levels are inclusive of direct and indirect costs. Indirect costs include both department and City overhead. Although each program has set minimum and target cost recovery levels, other fee setting considerations may factor into the pricing of registration fees. Fee setting considerations may either increase or decrease fees and place cost recovery outside of the minimum and target levels. These factors include, but are not limited to, market rates, programs for those with special needs, new programs still being established, and population served. However, within each of the three divisions offering fee-based classes, the division-wide cost recovery should meet minimum cost recovery levels. Once a program is determined to be within the purview of the Class Cost Recovery Policy, program fees are to be established using the Class Cost Recovery Model and adjusted as needed. The model is included in the pages to follow. Each fee-based class or camp is placed in one of four Cost Recovery Groups. The groups range from Community Benefit to Personal Benefit, representing opposite ends of a cost recovery spectrum. Programs rated as Community Benefit will cost recover less, while programs rated as Personal Benefit will cost recover more. This cost structure is in line with the department’s mission statement: “Engaging individuals and families to create a strong and healthy community, through parks, open space, recreation, social service, arts, and sciences.” The four Cost Recovery Groups are: • Group I: Community Benefit • Group II: Majority Community Benefit • Group III: Equal Community Benefit and Personal Benefit • Group IV: Majority Personal Benefit Attachment D Division managers, along with input from program coordinators and supervisors, determine the value of a class or camp for placement within one of the four groups. Each group has a cost recovery range inclusive of a minimum cost recovery and a target cost recovery level. This detail is reflected in pages to follow. On an annual basis, programs are to be reviewed to ensure the established cost recovery levels are met and adjustments made. Recovered Costs Direct costs are expenses incurred in correlation to a class being offered. These costs would not be incurred if a class were not offered. Typical direct costs are instructor fees and supplies and materials. Department indirect costs cover overhead costs incurred by the department for administrative support, program supervision, utilities, and some maintenance. Some of these costs would probably be incurred regardless whether a class is offered or not. City indirect costs encompass citywide overhead, administrative, and facility maintenance costs. Some of these costs would probably be incurred regardless of whether a class is offered or not. Department indirect cost is estimated to be 15% of direct cost while both department and City indirect costs are estimated to be 35% of direct cost. These estimates are subject to change as programs are reviewed and to reflect changing overhead costs. Attachment D Class Cost Recovery Model This model is to be used by Program Coordinators, Supervisors, and Division Managers to plan, evaluate program cost recovery, and determine expenses, revenues, and course registration fees. Attachment D Class Cost Recovery Guidelines In conjunction with the Cost Recovery Model, the following guidelines are to be used to place classes and camps into one of the four Cost Recovery Groups. Process: 1) Set a cost recovery range for each Cost Recovery Group, with minimum and target recovery levels. 2) Evaluate and place each existing program in a Cost Recovery Group. 3) Determine guidelines to be used to place future new programming into a Cost Recovery Group. Parameters: 1) Apply to fee-based class and camp programs. 2) Generally, cost recovery for children’s programs will be less than adult programs. 3) Some programs may cost recover less than the minimum level. However, other programs will need to make up for the difference. 4) Approximately 15% above Direct Costs covers Department Overhead, subject to adjustment. 5) Approximately 35% above Direct Costs covers both Department and City Overhead, subject to adjustment. 6) Other fee considerations should be taken into account, such as, but not limited to, market pricing, competition from other service providers, new program being established, and population served. Cost Recovery Groups, Cost Recovery Minimum, and Cost Recovery Targets: Group I: Community Benefit • Cost Recovery Minimum: Less than Direct Cost • Cost Recovery Target: Direct Cost Group II: Majority Community benefit • Cost Recovery Minimum: Direct Cost • Cost Recovery Target: 115% Direct Cost Group III: Equal Community and Personal Benefit • Cost Recovery Minimum: 115% Direct Cost • Cost Recovery Target: Up to 135% Direct Cost Group IV: Majority Personal Benefit • Cost Recovery Minimum: 135% Direct Cost • Cost Recovery Target: 135% Direct Cost Attachment D Characteristics of Community Benefit vs. Personal Benefit programs The four Cost Recovery Groups represent a cost recovery “spectrum”. Programs classified as being of Community Benefit will cost recover less than programs classified as being of Personal Benefit. Division managers, along with input from program coordinators and supervisors, determine the value of a class or camp for placement within one of the four cost recovery groups. • Group I: Community Benefit • Group II: Majority Community Benefit • Group III: Equal Community Benefit and Personal Benefit • Group IV: Majority Personal Benefit Below are characteristics to define Community and Personal benefit, opposite ends of a cost recovery “spectrum”. The opposite ends are represented by Group I and IV. As most programs have aspects of both benefits, they are placed within the spectrum in either Group II or III. Community Benefit Characteristics Personal Benefit Characteristics Youth and Teen Development Leisure Time Experiences Safety Financial Enhancement Early Childhood Development Stress Reduction Environmental Stewardship Mental / Physical Health for adults Fitness/Healthy Lifestyle for youth Professional Development Connecting / Involving People w/ Community Competitive Sports for adults Service Back to Community Personal Enhancement Encourages Volunteerism Weight Loss Cultural Understanding Fitness for adults Cross-Generational Understanding Fashion/Beauty/Personal Enhancement Unique Experiences not provided by other organizations Classes already provided by other organizations for adults Life Skills for Self Independence Life-Long Learning Diversity of Experience Skill Building Community Policing – Public Involvement Social Networking / Contacts for personal gain Sustaining our Resources Attachment D Attachment D CSD DEPARTMENT WIDE TOTAL Resident % when available or applicable Non‐Resident % when available or applicable Number of classes and camps offered Adult 203 Child 582 Total 785 Enrollments in classes and camps Adult 2,688 76%24% Child 12,062 90%10% Total 14,750 89%11% ARTS &SCIENCES DIVISION Children's Theatre: ▪Show Attendance 27,907 ▪Show Participants 1,087 Community Theatre: ▪Show Attendance 45,635 ▪Number of Performances 175 ▪Enrollments in Music and Dance 941 Jr. Museum & Zoo: ▪Enrollments in classes and camps 2,575 87%13% ▪School Outreach Classes ‐ Est. # of Children 9,701 Art Center: ▪Total Attendance 62,055 ▪Exhibition Visitors 29,717 OPEN SPACE, PARKS, GOLF ▪Total visitors at Foothills Park 171,413 ▪Hours of Athletic Field Use 44,226 ▪Gardening Program Participants 292 100% 0% ▪Rounds of Golf 65,653 12% 88% RECREATION CLASS ENROLLMENTS ▪Dance 886 ▪Aquatics 196 ▪Middle School Athletics 1,455 95%5% ▪Private Tennis Lessons 240 ▪Other Recreation 3,532 CUBBERLEY ▪Total Number of Hours Rented 29,282 ▪Total Number of Rental Bookings 9,348 92%8% Community Services Department (CSD) Recreational Activities Participant Data Fiscal Year 2012 Page 1 of 2 Attachment D Attachment D City Location Room Sq. Ft. Resident Non-Resident Palo Alto Lucie Stern Center Ballroom 2,800 $152/hr $228/hr Menlo Park Arrillaga Family Center Sequoia 2,378 $125 - $170/hr $170 - $230/hr Mountain View Senior Center Social Hall $115 - $231/hr $289 - $405/hr Mountain View Community Center Auditorium $114 - $120/hr $182 - $197/hr Palo Alto Lucie Stern Center Community Room 1,125 $110/hr $165/hr Menlo Park Arrillaga Family Center Juniper 1,085 $55 - $75/hr $75 - $100/hr Mountain View Senior Center Multi A $75 - $150/hr $174 - $289/hr Palo Alto Lucie Stern Center Fireside Room 650 $88/hr $132/hr Menlo Park Arrillaga Family Center Willow 680 $35 - $50/hr $50 - $70/hr Mountain View Senior Center Multi B $23.25 - $46/hr $93 - $127/hr Palo Alto Lucie Stern Center Patio 6,300 $90/hr $135/hr Menlo Park Arrillaga Family Center Large Patio $125 - $170/hr $170 - $230/hr Palo Alto Lucie Stern Center Kitchen $32/hr $48/hr Menlo Park Arrillaga Family Center Kitchen 480 $25 - $40/hr $50 - $70/hr Palo Alto Cubberley Center Dance Studio 1,650 $47/hr $47/hr Menlo Park Arrillaga Family Center Maple Dance Studio 2,030 $75 - $100/hr $100 - $135/hr Mountain View Community Center Room 3 (Dance) $38 - $48.50/hr $113 - $131/hr Palo Alto Cubberley Center Gymnasium A $92/hr $92/hrPalo Alto Cubberley Center Gymnasium B $110/hr $110/hr Menlo Park Onetta Harris Center Gymnasium 6,732 $59/hr $76/hr Mountain View MV Sports Pavilion Gymnasium $110/hr $139/hr Mountain View Whisman Sports Center Gymnasium $110/hr $139/hr Palo Alto Rinconada & Mitchell ParksGroup Picnic Sites $43 - $119/day Not Available Menlo Park Various Parks Group Picnic Sites $5/hr $10/hr Mountain View Various Parks Group Picnic Sites $103/day Not Available Youth All others Palo Alto Various locations Athletic Fields $3 - $27/hr $46 - $216/hr Menlo Park Various locations Athletic Fields $8 - $34/hr $22 - $100/hr Mountain View Various locations Athletic Fields $2/hr $25 - $88/hr Facility Rental Rates Comparison (Fiscal Year 2013) Page 2 of 2 Attachment D FINANCE COMMITTEE Page 1 of 39 Regular Meeting Tuesday, November 5, 2013 Chairperson Burt called the meeting to order at 7:00 P.M. in the Council Conference Room at 250 Hamilton Avenue, Palo Alto, California. Present: Berman, Burt (Chair), Schmid, Shepherd Absent: Chair Burt announced that Agenda Item Number 1 would be heard last and Agenda Item Number 3 would be heard first. Oral Communications None Agenda Items 1. (Former Agenda Item Number 3) Draft User Fee Cost Recovery Level Policy. Walter Rossmann, Director of the Office of Management and Budget reported on policy considerations for a Draft User Fee Policy and a report from the consultant regarding the Cost Recovery Levels of fees in September 2013. The Finance Committee (Committee) directed Staff to return in November 2013 with a Draft User Fee Cost Recovery Level Policy, which was attached to the report. There were no updates to the Draft Policy since September 2013. The Committee also requested Staff discuss the cost components for fees. He mentioned that the Council would establish those fees as part of the Fiscal Year (FY) 2015 proposed Municipal Fee Schedule. In calculating the amount of a fee, Staff reviewed the salary and benefits schedule and considered the amount of Staff time required to complete an activity. Next Staff added a percentage for compensated absences, and then added the overhead for the department. Non-salary costs, if any, were also added to the calculation. The Cost Recovery Level was the cost for the service versus the fee for the service. The Committee requested Staff provide that information prior to presenting a final User Fee Cost Recovery Level Policy. The Committee was able to see the entire context of fees and Cost Recovery Attachment D MINUTES Page 2 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Levels when Staff presented the final User Fee Cost Recovery Level Policy in the summer of 2014. Fees above Cost Recovery Levels still needed to be adjusted. As part of the Budget process, Staff needed to determine the costs to the City and how to implement any changes. A potential consideration for cost was to increase all fees across the board. Staff was able to modify the Draft User Fee Cost Recovery Level Policy, as directed by the Committee, and then request that the Committee make a recommendation to the Council. Council Member Berman noted the final version of the Policy would be presented to the Committee for review and approval in the fall of 2015. Mr. Rossmann said the report should state the fall of 2014. Council Member Berman asked if Staff recommended the Committee review the User Fee Cost Recovery Level Policy and decide whether it was sufficient to send to the full Council for discussion. Mr. Rossmann answered yes. Council Member Berman requested Staff comment on the difference between Service Recipient and Service Driver in the report. Mr. Rossmann utilized the example of a resident remodeling his home. The Service Recipient was a resident who applied for a building permit. The Driver per se was the Building Code. The Building Code provided safe construction and fire protection through construction requirements. The recipient benefited from the Building Code. Council Member Berman inquired about the meaning of a “false alarm” within the context of discouraging certain actions. Mr. Rossmann explained that police and fire responses to false alarms cost the City money. The City wanted to restrict that behavior and build other safeguards into the systems. MOTION: Council Member Berman moved, seconded by Vice Mayor Shepherd to direct Staff to bring forward to the City Council the Draft User Fee Cost Recovery Level Policy for Council discussion. Council Member Berman felt the Policy was incredibly helpful toward the context of different fees to be recovered from the community. The groupings provided policy guidance without being absolute. Modifications were able to be made toward fees for different services. Attachment D MINUTES Page 3 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Vice Mayor Shepherd noted that the Council did not establish Core Values. The community wanted to provide subsidies for some activities and, therefore, wanted to analyze fees for those activities. She requested removal of the example on page 56, Item Number 2, regarding a massage establishment permit applicant. She agreed with not including square footage as a cost component on page 54. Mr. Rossmann clarified that the actual work space and persons working in that space were components. Vice Mayor Shepherd indicated the City was not charging for square footage and often times community centers did not provide modern technology; however, having community centers was part of the common good. Council Member Schmid noted retiree health costs were not included in the components listed, and asked how they were included in the Cost Recovery calculation. Mr. Rossmann distributed the cost over each salary as a benefit to recapture the cost. Council Member Schmid inquired whether retiree health costs were allocated to current employees. Lalo Perez, Director of Administrative Services and Chief Financial Officer explained that the salary was multiplied by the percentage of the first pension rate to determine the cost. The portion of retiree healthcare costs to be collected was part of the policy decision. Council Member Schmid requested Number Two of the Cost Recovery Policy Statement be revised for clarity purposes because none of the five bullets under Community Services adequately described Community Services' goals. He suggested another bullet be added to capture the flavor of Community Services' goals. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add a suggestion such as “the widespread participation of a diverse community in healthy activities or educational activities” as a Policy consideration. Council Member Berman stated most of Community Services programs appeared to fall within the 0 to 30 percent Cost Recovery Level. Attachment D MINUTES Page 4 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Council Member Schmid indicated the average Cost Recovery for Community Services programs was 30 percent. Mr. Rossmann added that the summary information included rent of facilities during the time that the facility was partially closed. Realistically, the Cost Recovery Level was probably between 30 percent and 70 percent. The report was slightly misleading in the way data was presented by the consultant and was correct with respect to individual programs; however, some facts were hidden in the report which decreased the Cost Recovery Level. Community Services in general fell into the middle range. Council Member Schmid wanted the statement to provide the positive sense of Community Services. Mr. Rossmann said he would revise the statement. Council Member Schmid commented that the policy did not explain why recovery levels for Community Services programs varied from 1-99 percent. Mr. Rossmann explained that Cost Recovery Levels were calculated by groupings and provided a method for addressing that issue. Staff was struggling with the lack of complete and old information from FY 2012, which contained certain assumptions. Council Member Schmid stated the Committee's objective was to revise or correct the Policy Statement before it was applied. Mr. Rossmann wanted to incorporate the Committee's considerations into the staff report to the City Council so that the Council was aware of those considerations. Mr. Perez added that the Committee could direct Staff to perform surveys to determine the community's value of each program. Chair Burt felt the process should be repeated to reach the goal between scoping the policy and reviewing examples to determine whether they were consistent with the prospective policy. He questioned the Community Value Decision to highly subsidize adult Arts and Recreation Programs, not youth Arts and Recreation Programs. On the other hand, other programs specifically for youth were highly subsidized. The totality of youth services in the community was not tilted as badly. Within particular categories it was tilted in an odd way. The Committee requested Staff attempt to capture the values that the Council wanted to embrace under these categories, in particular around Community Services. Attachment D MINUTES Page 5 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Mr. Rossmann reported that Staff wanted to prospectively determine fees by reviewing costs and estimating activity levels, especially in the classroom environment. A class with 20 students provided a lower cost per student than a class with 10 students. Typically the level of youth participation in classes was much higher than adult participation; higher participation led to higher revenue. The Cost Recovery Level was also higher because the cost was constant. Chair Burt understood the Cost Recovery Level for youth programs was lower. Mr. Rossmann indicated it was 80 percent. Chair Burt agreed that higher participation led to a higher Cost Recovery Level. Mr. Rossmann explained that Staff determined fees by prospectively reviewing budgeted costs and the estimated activity level. The report was very useful and provided insight; however, he was hesitant to use it as the guiding factor from a Cost Recovery Level perspective. Chair Burt agreed the report would inform rather than stipulate how the Committee set the structures. MOTION PASSED: 4-0 2. Development Impact Fees: Approval of List of Public Facilities Capital Needs. Lalo Perez, Director of Administrative Services and Chief Financial Officer reported that Development Impact Fees (DIF) were designed to allow agencies to recapture the additional cost of services required as a result of new development. A DIF was only applied to Capital Costs. A Nexus Study was required to demonstrate that the proposed fee was appropriately scaled to match the likely increase in cost. Staff proposed two new fees: a Public Safety Fee and a General Government Facility Fee. Only Transportation Fees were updated because other Development Fees were at the appropriate levels within the preliminary review. The Capital Needs List was to be used to calculate and update proposed new fees. The Finance Committee (Committee) needed to review and approve the Capital Needs List. Council approval of the Capital Needs List was not required; however, the Committee was able to recommend the Council review it. The Capital Needs List contained more projects than the Infrastructure Committee Project List Attachment D MINUTES Page 6 of 39 Finance Committee Regular Meeting Minutes 11/5/13 because the Infrastructure Committee focused on projects that were prioritized but had no funding. The Committee was able to include projects that could conceivably be performed within the designated time period. The List included projects funded primarily through the Capital Improvements Program (CIP) Budget on a pay-as-you-go basis. The cost of a project was able to be reduced by any revenue identified for that project. If a project was partially funded through the five-year plan, then the Capital Needs List contained only the delta. If the City received new funding for projects included on the Capital Needs List, the project cost needed to be adjusted at a later point in time. Nate Perez, Vice President, David Taussig and Associates (DTA), explained that DIF’s were not utilized to cure existing deficiencies or for operations and maintenance. They were only utilized for Capital Projects. The standard for projects was a useful life of five years or longer. DIF’s were a function of California Law, which demanded a certain level of proportionality and nexus. The methodologies proposed for the Nexus Study could be difficult, but the nexus depended on the given fee category being analyzed. Chair Burt requested Mr. Nate Perez comment on the voluntary aspect of fees. Mr. Nate Perez indicated the term "voluntary" was a term used to mean art. The exactions were made legal by Assembly Bill (AB) 1600. The Bill was oriented to the development community. Vice Mayor Shepherd asked if the collection of DIF’s were voluntary for the City. Mr. Nate Perez replied yes. Chair Burt asked if “voluntary” applied to the City or to those paying the fees. Mr. Nate Perez stated the voluntary comment referred to the development community, who were responsible for paying the fees in order to obtain a building permit. Staff requested DTA provide a comparative survey of peer cities in the South Bay Area. Cities preferred to charge DIF’s at an average level; however, none committed to reducing fees to an average level. Among South Bay cities, fees averaged between $30,000 and $40,000 for a single-family dwelling unit. He felt that the City's fees did not inhibit the City's attractiveness to the development community; a small change in any one of the fees changed that. The City's fees were slightly high, but were manageable. The Water Fee was a significant amount and negatively Attachment D MINUTES Page 7 of 39 Finance Committee Regular Meeting Minutes 11/5/13 impacted the City. Vice Mayor Shepherd requested clarification of Water Fee. Mr. Nate Perez meant the Water Sewer Hookup Fee for new homes. Impact Fees typically included Housing Fees, Transportation Fees, Water and Sewer Fees, and Capital Facilities Fees. The City was very competitive with respect to Capital Facilities Fees. Vice Mayor Shepherd asked why the Affordable Housing Fee was not included in the list of fees. Mr. Nate Perez explained that it was an In-lieu Fee. A developer who constructed one single-family home was not necessarily conditioned to pay an Affordable Housing Fee. Vice Mayor Shepherd understood developers paid the fee when they built homes. Mr. Nate Perez indicated cities had different triggers for fees. Some cities required fees for each project, some required fees for projects of more than 50 parcels. Chair Burt recommended information from Santa Clara not be included in the presentation, as it skewed the data. Vice Mayor Shepherd inquired about the process for collecting Capital Facility Fees. Mr. Nate Perez stated that was similar to the General Government Fee he proposed for a Municipal Services Building. He thought that would be a good fee for the City to begin collecting. Chair Burt requested Staff comment on the drivers for the amount of the Water Sewer Hookup Fee. Mr. Lalo Perez did not have specific details, but recalled the Council reviewed it approximately five years ago to establish the range and accept the percentage. Chair Burt wanted the City to have Park Fees comparable to Park Fees collected by other cities and not be inhibited by a High Water Hookup Fee. Mr. Nate Perez suspected that the high cost of the new water system and Attachment D MINUTES Page 8 of 39 Finance Committee Regular Meeting Minutes 11/5/13 the extension of water pipes was a driver of the fee. Perhaps some elements of the City were not served quite as well as other elements. Mr. Lalo Perez believed the cost resulted from building up the reservoirs, but he said he would review the matter. Chair Burt felt the City had two major capital categories: rebuilding the Hetch-Hetchy system and emergency water supplies. Mr. Lalo Perez noted the City did not have funding when the fee was established. Chair Burt asked if the City could charge new hookups for an existing system. Mr. Nate Perez replied no. The allocation occurred in the setting of the fee level because the numerator was the cost of the new system, and the denominator was the number of new homes or new nonresidential square footage. Chair Burt inquired whether the City could charge for the new system after it being built. Mr. Nate Perez reported once the system was built, the City could charge the homes and the demographics contained within the study. The projections within the study were based upon the number of homes and nonresidential square footage. Chair Burt asked if the City could implement a fee if construction of the system was based upon a future projected need. Mr. Nate Perez answered yes. Mr. Lalo Perez requested time to confirm the correct information regarding the hookup fee, given the amount of the fee. Vice Mayor Shepherd asked Staff to explain the Fire Facility Fee charged by Menlo Park. Mr. Nate Perez assumed it was utilized for additional fire capital improvements. Vice Mayor Shepherd inquired whether the fee would be used for capital improvements to Menlo Park's fire stations. Attachment D MINUTES Page 9 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Mr. Nate Perez responded yes. Vice Mayor Shepherd indicated Palo Alto did not charge that fee. Mr. Lalo Perez proposed a General Government Fee that could capture those types of things. Vice Mayor Shepherd asked if the fee was used for development. Mr. Nate Perez replied that the fee could only be utilized for new development. In light of Palo Alto's unique nature, he was suggesting maximum fees. The City Council always retained the authority to charge lower fees. The Citywide Transportation Fee, approximately $3,000 per single family home, was able to be slightly increased. He suggested two new fee categories to help cover some costs of capital improvements. He said a Public Safety Fee could be utilized for a new Public Safety Building, some new fire stations, some new rescue vans, and things such as that. A General Government Fee was utilized for a Municipal Service Center. Funds generated by those fees were able to be used to assist the City in meeting some costs. Vice Mayor Shepherd inquired if the proposed increase to the Community Facility Fee could be used to pay for some fire and police capital improvements. Mr. Lalo Perez answered no. It was meant for community centers. Mr. Nate Perez was not comfortable putting municipal buildings in the Community Facility category. Vice Mayor Shepherd noted funds generated by fees would be appropriated and then used for the CIP Budget. She asked if those funds were differentiated from General Fund dollars allocated to CIP. Mr. Lalo Perez responded yes because Staff identified the source of funding that came from a fee. Mr. Nate Perez reported some communities did not have as many fees as others. The draft Capital Needs List was meant to be expansive and inclusive and was prepared using the best information Staff had. If there were no projects on the Capital Needs List, then there could be no fees. As circumstances changed, projects had the potential to be removed from and added to the Capital Needs List. Attachment D MINUTES Page 10 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Council Member Berman thought it was better for the Capital Needs List to be as inclusive as possible Mr. Nate Perez was not able to target a fee level and then work backwards to determine funding for improvement projects. He tried to be inclusive of projects, calculated some draft fees, and circulated draft fees to the Committee for its impressions. Council Member Berman stated fees would not provide sufficient funds to build a new Municipal Services Center or Public Safety Building; yet, the two projects were being considered in determining the amount of fees. He inquired about the process for setting fees. Mr. Nate Perez explained that the bottom line numbers were the numerator, and the number of shared new homes and nonresidential square feet over the next 20 years was the denominator. He thought fees should be controlled, mitigated, and moderately increased to provide more revenue without jeopardizing the City's relationship with the development community. Chair Burt wanted to consider setting a fee level that would cause new development to pay for its proportionate share of the cost of the additional capital improvements needed to sustain the community. That was the fair framework and was the objective discussion. Mr. Lalo Perez reported that was the Council's practice in the past. There were different discussions as to having a percentage of the fee be the fee itself, and that depended on the type of fee. Chair Burt recalled that the discussion of a Park Impact Fee was based on two acres per 1,000 people, and that was embedded in the Comprehensive Plan as an objective. The Council was not able to have a Policy Objective of what they thought was correct for the community. He thought a 10 percent increase in car trips could cause a 20 or 30 percent increase in congestion. The question then became whether new developments paid for 10 percent of the total number of car trips or for the 30 percent increase in congestion. The guidance was that the City could not charge fees based on the 30 percent of congestion. He was interested in framing the levels of fees in that manner. Mr. Nate Perez indicated the Transportation Fee would be reviewed for trips and congestion. The City currently based its Park Impact Fee on five acres per 1,000 people and the Parkland Dedication Fee was technically different Attachment D MINUTES Page 11 of 39 Finance Committee Regular Meeting Minutes 11/5/13 than the Park Impact Fee. He noted that one or the other could be charged. Vice Mayor Shepherd asked if funds from a Parkland Dedication Fee were utilized to purchase parkland, rather than maintenance of parks. Mr. Nate Perez explained a developer above 50 parcels paid the Dedication Fee or gave up the land. An individual homeowner paid the Park Impact Fee. For Capital Facilities and General Government Fees, the Nexus Study reviewed the increase in persons served and calls for service from police and fire. Chair Burt noted the Committee's Agenda Item was to review the Capital Needs List. Council Member Berman inquired about the lack of new police vehicles under police facilities. The category contained only the Public Safety Building, while the fire category contained multiple projects. Mr. Lalo Perez reported the majority of police vehicles were embedded in fleet replacement. The amount of funds estimated at the time fire vehicles were enrolled in fleet replacement did not align with the cost. Council Member Berman asked if the cost of replacing police vehicles was contained within the Budget. Chair Burt assumed the City retained fire trucks far longer than police vehicles. Mr. Lalo Perez indicated fire engines were typically retained 15 years, as opposed to three years for police vehicles. Chair Burt stated projects enduring less than five years did not qualify under the capital definition. Vice Mayor Shepherd noted the Capital Needs List contained only one parking garage, when many parking improvements were needed to reduce neighborhood overflow. Mr. Lalo Perez clarified that the Capital Needs List contained two parking garages. Staff did not have a study to verify the number of garages needed; therefore, they used the best information they had. Vice Mayor Shepherd inquired whether the City could collect a fee to construct a Public Safety Building when the amount of fees generated would Attachment D MINUTES Page 12 of 39 Finance Committee Regular Meeting Minutes 11/5/13 not pay to construct it. Mr. Lalo Perez reported the Capital Needs List could not contain items that the Council knew would not be constructed. The City needed a Public Safety Building; he thought it could be funded through other means and Staff had a reasonable cost estimate. Vice Mayor Shepherd referenced the $16 million cost for the Civic Center plaza deck, and inquired whether the Capital Needs List included a project to seismically retrofit the building. Mr. Eggleston indicated Staff was not planning a project to seismically retrofit the building. Mr. Lalo Perez understood the building was retrofitted through the elevator shafts in the early 1990s. He was unaware of additional requirements since that occurred. Chair Burt remarked that a higher level of seismic retrofitting was required for buildings providing essential services than for buildings providing general services. Mr. Lalo Perez believed the work in the 1990s took care of the tower but not necessarily the wing. Vice Mayor Shepherd asked if the retrofit included City Hall. Mr. Lalo Perez did not believe so, but said he would have to check on that. Chair Burt felt there were two possible thresholds. One was whether the upgrade in the 1990s met the current requirements for general services. The second threshold was whether the upgrade met the highest seismic standard for essential services. Mr. Lalo Perez said he would review construction records. Chair Burt was interested in including seismic retrofitting as a long-term capital need. Mr. Lalo Perez agreed it would be a reasonable project to include if an additional retrofit was needed to meet current standards. Mr. Nate Perez stated new residents would obviously benefit from that project. Attachment D MINUTES Page 13 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Council Member Schmid referenced the quote from the Act regarding inclusion of public improvements and public services; however, Mr. Nate Perez indicated the Council could only utilize funds for capital investments. He requested clarification. Mr. Nate Perez reported a category of public services under water and sewer would qualify for the DIFs. For the City's purposes, public services were not able to be included on the list. Council Member Schmid noted that the Staff Report did not state that public services were excluded. Vice Mayor Shepherd questioned the inclusion of $750,000 for computers. Council Member Schmid reiterated that the Act included public services. Mr. Nate Perez stated use of DIFs was restricted to capital improvements. Council Member Schmid asked why grade crossings were not included on the Capital Needs List. The Council voted to fund a detailed study. Chair Burt indicated the Council did not make a policy decision to include grade crossings in long-term capital plans at the current time. Council Member Schmid remarked that the Capital Needs List was inclusive to 2035. Chair Burt explained that the Capital Needs List was inclusive of work identified as a prospective project. Council Member Schmid felt grade crossings could become a viable project before the Nexus Study was presented in the spring of 2014. Chair Burt agreed the Council could move the grade separation issue from a possibility to an intention. He expected that at that point in time, it would be included in the Capital Needs List. Council Member Schmid believed development would enhance the need for the program. He requested Staff review the timeline. Vice Mayor Shepherd questioned the inclusion of computers on the Capital Needs List. Attachment D MINUTES Page 14 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Mr. Nate Perez reported Information Technology (IT) upgrades were identified as projects. Vice Mayor Shepherd noted the Item was listed as an acquisition of new computers, not IT upgrades, and asked if the description needed to be changed. Mr. Lalo Perez stated that he would work on that. If the Committee preferred to refer the Item to the Council, it could probably be presented to the Council in January 2014. He mentioned that David Taussig and Associates and Staff could present the Nexus Study to the Council or return to the Committee. If the Nexus Study returned to the Committee, then Staff needed to implement a faster track. The final study was to be presented to the Council for approval in April 2014. Next, Staff was going to discuss how to incorporate DIFs into the proposed 2015 Budget process during the Budget hearings in May 2014. DIFs were to be presented to the Council in June 2014 and implemented in July. Council Member Schmid expressed concern about the focus on the Capital Needs List rather than on the elements of the nexus that were apparent in Attachment A. A number of critical questions needed discussion. The Council discussed that the assessment of four workers per 1,000 square feet could be a misstatement. That assessment was a critical part of the nexus study. The study had a tremendous impact on parking structures, roadways, and transportation. Chair Burt asked to which study Council Member Schmid was referring. Council Member Schmid commented that the Transportation Fee and Traffic Impact Fee implied certain assumptions about development. Vice Mayor Shepherd believed Council Member Schmid was referring to a study to change the assessment of four workers per 1,000 square foot. Council Member Schmid referenced the Planning Director's statement in January 2013 that the City needed to update the Traffic and Parking Study because the numbers were outdated. Chair Burt was unclear to which study he was referring as the Planning Director's statement was a specific study in a specific timeframe. He agreed there was an issue. He understood the City historically framed Impact Fees as dollars per square foot. The Council was not sure that was the correct metric. If the Council implemented a Business License Tax linked to number of employees, then businesses with differing employees per square foot Attachment D MINUTES Page 15 of 39 Finance Committee Regular Meeting Minutes 11/5/13 needed to pay the same amount per square foot but would suffer radically different impacts. Council Member Schmid reported the table contained four or five assumptions about things that had tremendous impacts on the nexus. He asked when the Council would have an opportunity to discuss that within the timeline. Mr. Nate Perez requested updated demographics from the Planning Department three times. He mentioned that the demographics would be front and center in the Nexus Study. He had competing demographic data sources, which he vetted and adjusted to reflect Council Member Schmid's concerns. He noted that he could provide a review of demographics as well. Council Member Schmid expressed an interest in an actual number and a methodology to vet that number. Mr. Lalo Perez noted DTA recommended updating the Citywide Transportation Fee. He inquired whether Council Member Schmid's concern would be part of the Nexus Study review, even though Staff did not propose updating all fees. Mr. Nate Perez indicated Council Member Schmid was concerned that utilizing the existing Transportation Fee Study with new demographics would result in a different fee without changing the improvements. Council Member Schmid was asking DTA to review both the improvements and the demographics. Council Member Schmid inquired whether that would be part of the March 2014 presentation to the Council. Mr. Lalo Perez indicated that was the Committee's decision. The intent of the timeline was to update the Capital Needs List as soon as possible to be able to collect fees from projects creating incremental impacts. The Committee was able to direct Staff with respect to a different timeline. Council Member Schmid was concerned that the information would be overshadowed by the proposed Budget. Chair Burt concurred that there was an issue. He asked if the Nexus Study could be presented to the Committee before the Council. Mr. Lalo Perez indicated Staff could present it to the Committee prior to the Council. Attachment D MINUTES Page 16 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Chair Burt wanted the Committee to review the Nexus Study without delaying the timeline. Mr. Lalo Perez needed to ensure Staff could meet the timeline and would notify the Committee in the January 2014 update. Mr. Nate Perez noted that providing a Capital Needs List before the Nexus Study seemed bizarre. Chair Burt expressed concern with respect to new residents versus commercial space and employees. He was not able to recall whether certain fees were apportioned. Public Safety and Transportation Fees were able to be fully apportioned to new employees. He thought new employees living outside Palo Alto would probably not utilize parks, community centers, and libraries as much as residents. Utilizing the same ratio between Residential and Commercial Fees most likely did not apply equally for each category. Mr. Nate Perez concurred that the same ratio did not always apply equally. Vice Mayor Shepherd asked if Staff recommended the Committee to approve the Capital Needs List. Mr. Lalo Perez answered yes. Vice Mayor Shepherd felt the Item should be presented to the Council on the Consent Calendar to make the Council aware of the Capital Needs List and its contents. She asked if the Capital Needs List would be final when it was presented to the Council. Mr. Lalo Perez reported the Capital Needs List would be final once the Council approved it. Vice Mayor Shepherd inquired whether projects could be added to the Capital Needs List once the Council approved it. Mr. Lalo Perez believed the timeline would be delayed if projects were added to the Capital Needs List. Chair Burt noted the Staff recommendation implied it would be presented to the Council. Vice Mayor Shepherd asked if Staff wanted to present the Item to the Council as an Action Item. Attachment D MINUTES Page 17 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Mr. Lalo Perez indicated that was the Committee's decision. If it was a Consent Item, the Council could provide Staff with comments or remove it from Consent Calendar. Chair Burt explained that if the Committee voted unanimously, the Item would be placed on the Consent Calendar; although, the Mayor and City Manager were able to move it to an Action Item. Council Member Schmid felt the Item was too important for the Consent Calendar and that the Council needed to review the list to prepare for the Nexus Study. MOTION: Council Member Schmid moved, seconded by Vice Mayor Shepherd to recommend the City Council approve, on the Action Agenda, the Development Impact Fee Capital Needs List. Vice Mayor Shepherd suggested the Staff Report to the Council feature the proposed new fees. Chair Burt referenced the fact that the City had not charged fees for major remodels. The definition of major remodel was revised a few years ago. He wished to have a valid distinction made for remodeling. Vice Mayor Shepherd understood an Impact Fee applied to a new family building a new place to live in Palo Alto. Chair Burt indicated that was not a definition, but it was useful for discussion. He noted the comparisons to other cities did not include a percentage of the value of the constructed property. That was a better indication of whether fees were at or below the mean. He inquired whether that metric would be appropriate for comparing fees. Mr. Nate Perez added that he could utilize the appraised value to provide that information. MOTION PASSED: 4-0 3a. (Formerly Agenda Item Number 1) Audit of Contract Oversight: Trenching and the Installation of Electric Substructure. Houman Boussina, Acting City Auditor reviewed the Utilities Department's $1.9 million contract with Casey Construction to determine if the Utilities Department effectively managed its contract in accordance with contract Attachment D MINUTES Page 18 of 39 Finance Committee Regular Meeting Minutes 11/5/13 terms, the Municipal Code, and relevant policies and procedures. Contracting was an important area that could be high risk if adequate controls were not implemented for all phases of the procurement process. The audit found the City did not appropriately award the contract to Casey Construction because the Utilities Department and the Administrative Services Department (ASD) did not effectively address a significant variance between the City's estimated cost and the selected contractor's flawed bid, which may have resulted in additional costs of approximately $281,000. In the estimate it was assumed that another contractor would have performed a similar amount of work during the given period of time. While the City awarded the contract to the lowest bidder, it did not award the contract to the lowest responsible and responsive bidder, as defined by the Municipal Code. The Auditor did not feel Staff accurately communicated to the Council why Casey's Construction bid was significantly lower than other submitted bids, including being lower than the City's estimate. Staff attributed the difference between its estimate of contract costs and Casey's Construction bid to be a lack of demand for construction projects. After the City opened bids, Casey Construction realized it made a mistake in the bid. Casey Construction initially wished to retract its bid and was willing to forfeit a $71,000 bid bond. According to Casey Construction, City Staff gave Casey Construction assurance to proceed with the contract by indicating that Casey Construction could utilize optional time-and-material line items. Casey Construction billed the City primarily utilizing those optional bid line items. The primary bid line items were lump-sum or unit-priced items and were intended to be the main method for pricing all work under the contract. The contract was not appropriately reevaluated or renewed. In 2009 the Utilities Department and ASD entered into a one-year contract for $652,000. The City paid Casey Construction approximately $1.9 million during the three- year period of August 2009 through August 2012, including approximately $1.7 million without a valid contract. The City did not formally execute a new contract document for each extension year as required by the contract. There was no evidence that Staff had formally assessed the performance or the contract compliance of Casey Construction. The Utilities Department did not enforce contract billing terms that were the basis for awarding the contract to Casey Construction and the Auditor found significant variances between contract estimates and actual costs. Only 19 percent, or $365,000 of $1.9 million was based on the contract's primary bid line items; 74 percent of contract billings was based on the contract's optional bid line items. Staff authorized payment of invoices even though these line items were not intended to be the main method of pricing work. Additionally, Staff authorized payment of seven percent of contract charges for items not identified by any line item in the contract. The Utilities Department did not appropriately manage the contract to ensure the City's projects were completed in accordance with plans and cost estimates. There was no Attachment D MINUTES Page 19 of 39 Finance Committee Regular Meeting Minutes 11/5/13 documentation showing quotes were reasonable and consistent with contract terms that were appropriately approved. The Utilities Department's Staff reviewed invoices but the review process did not ensure compliance with contract terms. The Utilities Department did not maintain documentation indicating the billings were consistent with quotes. The Utilities Department did not maintain documentation indicating projects were appropriately inspected and closed out, evidencing approval and completion of planned work. The audit had six recommendations addressed to the Utilities Department and/or ASD. Most recommendations called for implementation of policies and procedures to correct deficiencies noted. James Keene, City Manager suggested the Finance Committee (Committee) first ask questions of the Auditor. Chair Burt requested Staff respond to the Auditor's findings and then the Committee would question both the Auditor and Staff. Lalo Perez, Director of Administrative Services and Chief Financial Officer accepted the recommendations and said formalizing recommendations into policies and procedures were appropriate. In accepting proposals, there was a great deal of complexity. Vendor's pricing methods were cyclical and there was a large difference between the lowest bidder and the second lowest bidder. During the time period the contract was awarded, the economy declined and Staff reported bids were 20 to 30 percent lower than Staff estimates. He said the magnitude of the difference between the lowest and second lowest bids was not an issue and an admission of error was a concern that needed to be discussed and resolved. One problem was that ASD did not document discussions with Casey Construction. It was resolved that Casey Construction would honor the bid, which was stated in a memo from Casey Construction. Additional information surfaced regarding the implementation of time and material usage; however, he needed to review the information and determine when that occurred. He felt ASD should have followed up with the Utilities Department. Typically ASD turned the contract over to the Utilities Department for management once the bid was awarded. He agreed with the Auditor's recommendation on that point. Valerie Fong, Utilities Director reported that the Casey Construction contract was unusual in that it was dependent on services, and actual work performed was not defined in advance. The Utilities Department Staff reviewed other existing contracts and did not find the same procedural gaps. The Utilities Department Staff established new processes for checks and balances to manage requests for work from customers, contractor estimates, contractor performances, and contractor invoicing. In addition, the Utilities Department centralized retention of documents and was increasing Staff. In Attachment D MINUTES Page 20 of 39 Finance Committee Regular Meeting Minutes 11/5/13 addition, she met with engineering and operations Staff to impress upon them the importance of contract management. Employee training was implemented with respect to Requests for Proposals (RFP) and project management. Mr. Keene agreed that the issues were due to awarding and managing contracts. ASD acknowledged that additional elements needed review. He thought this was more of an issue of contract management than contract award. The Auditor's Office indicated a preference for the Purchasing Department within the Utilities Department to exercise more control over the award. The environment for contracts in 2009 and 2010 was unique because of the economy. The Auditor's Office indulged in possibilities of alternatives without basing those alternatives on fact. Staff was not able to refute those possibilities because they did not follow an appropriate accountable process. Staff also failed to manage and document the contract because the contract was awarded on one-time basis and implemented on another basis, which was inexcusable. Council Member Berman felt Staff needed a policy such that when the lowest bid was a certain percentage below the second lowest bid, it was reviewed more closely. If a bidder did not have the expertise to submit an accurate bid, then it did not have the expertise to perform the work. Casey Construction seemed to have problems understanding the project from the beginning, which should have alerted Staff. Staff needed to be more candid about information when asked by Council to approve a contract. He noted Staff's response indicated Staff did review Casey's Construction performance. However, the audit indicated there was no evidence of formal assessment of performance or contract compliance. He inquired whether Staff had any evidence of a review. Ms. Fong relayed that Staff requested a great deal of work from the contractor and they performed well. Tom Ting, Electric Engineering Manager reported Staff most likely held a verbal discussion of whether to renew the contract. Council Member Berman asked if a contract performance review would be written in the future. Mr. Ting indicated the Utilities Department Staff would work with the Purchasing Department to formalize a process to review a contractor and to ensure they meet all expectations in the future. Mr. Perez wanted to standardize the review process across the organization Attachment D MINUTES Page 21 of 39 Finance Committee Regular Meeting Minutes 11/5/13 with a checklist and a requirement for documentation. Chair Burt requested an explanation of the contract renewal process. Mr. Ting did not have any documentation of the process and discussions. Chair Burt asked the amount of the contract renewal. Mr. Ting stated the total contract amount was $1.9 million. The first year of the contract amounted to $652,000, and the second year was approximately the same amount. Chair Burt calculated a renewal amount of approximately $1.3 million. Mr. Keene added that the contract was paid over a two year period. Chair Burt inquired about the length of time Staff investigated the contract. Ms. Fong indicated the audit was conducted over the past few months. Chair Burt asked if the problem was brought to the Utilities Department's attention in that same timeframe. Ms. Fong answered yes. Chair Burt wanted to understand how the review was performed. Ms. Fong reported the difficulty was that the Utilities Department Staff involved with the contract had retired or left the City's employ. The Utilities Department Staff contacted former employees, who recalled that a second invitation for bid (IFB) was developed but not issued because of contract terms. Vice Mayor Shepherd asked if Staff had any documentation. Mr. Perez explained that the purchase request became the purchase order because the contract was approved by the Council. Vice Mayor Shepherd inquired whether auditors were able to review the documents. Mr. Boussina reported that the auditors did not find evidence that there was an effort to formally renew the contract at the anniversary dates. Attachment D MINUTES Page 22 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Vice Mayor Shepherd asked if City files contained any documents. David Ramberg, Assistant Director of Administrative Services Department said once a department selected a bidder, then they entered a purchase requisition into the Systems, and Applications, Products and Data Processing (SAP). The requisition then moved to the Purchasing Department’s work queue, where the Purchasing Department turned the purchase requisition into a purchase order. The purchase order affected the renewal of the contract. Next, the purchase order was printed and placed in the contract file. The Casey Construction contract file included the City Manager Report (CMR), all bid documents leading to the selection of Casey Construction, and renewal documents. The Purchasing Department did not complete a request for a refresh of the bond certificate. Other SAP transactions were completed to produce the purchase order, which effected renewal of the contract based on the Council’s authority for three years. The process usually occurred prior to the anniversary of the contract. The months of May and June were extremely busy for Staff in processing these types of documents because many contracts were renewed at the end of the fiscal year. Chair Burt noted that Staff suggested the problem occurred because of some Staff leaving the City's employ; while news reports indicated new employees were the cause of that problem. He requested clarification of that point. Ms. Fong said the engineering person who retired recalled drafting an IFB to rebid the contract and the agreement to honor the original bid. New Staff managed the contract. The Utilities Department continued to have Staff turnover. Chair Burt asked who handled the contract renewal. Mr. Ting stated the current Contract Manager was employed at the time of the renewal. The engineering manager who helped the Contract Manager retired. Chair Burt reiterated that the Contract Manager remained employed with the City while the Engineering Manager who supervised the Contract Manager retired. Ms. Fong added that Staff on the operations side of the Utilities Department also had some lapses. Chair Burt inquired whether the project manager knew how the contract was renewed. Attachment D MINUTES Page 23 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Mr. Ting said yes and that Staff typically did not have a single meeting to discuss a contract. Engineering Staff discussed contractors with operations Staff throughout the year to determine if the contractor was performing and if Staff wished to renew a contract. Chair Burt noted the contractor's quality of performance was good. Staff did not provide an explanation of the decision to move from a fixed-price contract on a project with an undefined scope of work to a time-and- materials contract. Council Member Berman remarked that the Staff response indicated fixed cost items were utilized during the first six months of the contract. When that method of invoicing became difficult, Staff decided to change to time- and-materials pricing. He recalled a statement that the City used fixed cost and time and materials; he asked if utilizing fixed costs was difficult. Mr. Ting indicated the prior contract was a time-and-materials contract. As mentioned in the audit, it was difficult to keep a contractor motivated to work on a time-and-materials contract. Staff attempted to utilize a fixed price by developing bid items to define generic types of work. He thought the contract would price out many of the bid items. In most cases the contractor priced work as if the work was in a green field installation, meaning there were no other utilities. In a typical project the contractor had a defined scope of work and they priced the work out. The Casey Construction contract was meant to be used as a blanket contract for any project involving customer service, the Capital Improvement Program (CIP), or for emergency and maintenance work. Engineering and Operation Managers were able to call the contractor for a price estimate for some type of work. The difficulty was having Staff request a contractor to provide a price for work performed in different situations. Under the Casey Construction contract and the circumstances, Staff negotiated time-and- materials prices for additional work with Casey Construction. Chair Burt wanted to know the process for renewing the contract and how the nature changed. Vice Mayor Shepherd wanted to know when the nature changed. Council Member Berman noted the basis changed apparently six months into the contract. Mr. Keene stated the six-month statement was uncertain. Chair Burt asked when the basis changed. Attachment D MINUTES Page 24 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Mr. Ting reported the basis changed prior to the renewal, during the first year of the contract. As Staff worked with the contractor, they had issues working with fixed bid items. Ms. Fong indicated those difficulties prompted the former engineering manager to reissue an IFB on a time-and-materials basis. At that point, she understood the contractor agreed to honor its original bid. Council Member Schmid inquired about ASD's involvement in the contract renewal; they wanted to know what happened once the basis changed. Mr. Perez explained that in the current process ASD was not involved in contract renewal unless an issue arose. Council Member Schmid asked if ASD was aware of the change in the contract. Mr. Perez stated ASD was not informed that there were issues with the contract. Mr. Ting remarked that it was the Utilities Department's responsibility to return to a bid. Time-and-materials pricing was an option within the initial bid. In hindsight, the Utilities Department needed to bid on the contract on a time-and-materials basis. Mr. Keene reported the Utilities Department acknowledged that someone made a determination not to perform under the conditions of the bid award and to change to a time-and-materials contract. Staff did not comply with the terms of the bid, and the Auditor's point was legitimate. When there were opportunities at renewal to clarify the point, it did not happen. Ms. Fong added that Staff replaced the contract with a time-and-materials contract. Council Member Schmid noted a bid line contract was not a fixed contract. The contractor performed a unit of work, but in any project the unit of work was going to be different. Therefore, a bid line contract had flexibility. Mr. Boussina concurred and said the contract specifically contained unit- priced line items. Unit price contracts are a variation of fixed price contracts. The contract was not a fixed price contract in the sense that there would be a total cost for an entire project. Attachment D MINUTES Page 25 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Chair Burt asked if the bid line contract was a formula for billing the City. Council Member Schmid inquired whether the contract had flexibility throughout the term of the project. Mr. Boussina replied yes. The contract accounted for the different types of work. There were many different types of unit prices and many bid line items. Many of these items were unit-price or fixed-price line items because the contract attempted to cover many different types of work. Council Member Schmid asked if the estimated loss of $281,000 accounted for variations in the project. Mr. Boussina reported the estimated $281,000 assumed that the next bidder would have billed the City in the same way and would have performed the same amount of work in the same period of time. That was the best estimate the Auditor could determine. If the documentation was available, then it would allow the Auditor to redirect all billing performed to retrospectively estimate the cost using unit price line items and the Auditor would be able to provide that data to the Committee. Vice Mayor Shepherd said Staff was trying a new system in an effort to control costs and believed it was typical for the City to have an engineer's estimate. She asked if the contract was the first one between the City and Casey Construction. Ms. Fong indicated the City had other contracts with Casey Construction. Vice Mayor Shepherd was unsure whether Staff made a decision not to utilize time-and-materials billings. She inquired about the City's job file and whether inspectors signed off on invoices. Mr. Perez explained that Staff had two steps for contracts. Mr. Ting clarified that the document Vice Mayor Shepherd had was not an invoice; it was an estimate from the contractor. Staff provided a contractor with a scope of work and requested an estimate for the work. Vice Mayor Shepherd did not believe a quote was needed under a contract, and asked how a quote became involved. Mr. Ting reported the contract was not typical because there was not a fixed scope of work. The contract was used for several different projects as they arose. Attachment D MINUTES Page 26 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Vice Mayor Shepherd noted the report did not contain a copy of the contract. Chair Burt asked if Staff received a quote for each project based upon the formula in the bid, even if the contract was properly handled under the bid line scenario. Ms. Fong responded yes. If Staff had a better defined list of bid items, they could have used the bid items in that way. Chair Burt inquired whether the contractor would have provided a quote for each project. Vice Mayor Shepherd added that a contract had phases and dates. Chair Burt explained that Staff provided the volume of work and said the contactor bid was based on a metric system as a means of rating. The quote needed to be articulated in a way that was consistent with the fixed bid. He asked if his explanation was accurate. Mr. Boussina answered yes and said he understood that projects were not defined at the beginning of the contract. He added that the contract specified a process of submitting quotes and receiving approval. Vice Mayor Shepherd inquired whether Staff had an invoice to match the quote. She also asked if Staff received invoices prior to issuing payment. Mr. Boussina responded yes and said finding four indicated the Auditor was not able to match the work performed with approved quotes and added that a much higher level of detailed controls was needed, especially for a time- and-materials contract. David Yuan, Contract Manager for Utilities reported that a sample bill reflected the work order, the street address of the work, the time cards of contractor employees, and the billing hours charged. Throughout the contract, Staff received more than 200 work orders. Staff had documents and time cards for each work order. Mr. Ting explained that each engineer utilizing the contract had their own job file and each estimator could have his own job file. Staff changed the process such that the Contract Manager would have one centralized file. Mr. Perez indicated that the Utilities Department deemed an invoice ready for payment and entered it into SAP. SAP determined whether the contract Attachment D MINUTES Page 27 of 39 Finance Committee Regular Meeting Minutes 11/5/13 was valid and whether funds were available to pay the invoice; then Staff paid the invoice. Vice Mayor Shepherd felt Staff should have a quote for each invoice. Mr. Perez stated that the accounts payable division did not have a copy of the contract. The Utilities Department and ASD each needed a copy of the contract. He expected the Utilities Department to determine whether the invoice complied with the contract and was ready for payment. Vice Mayor Shepherd felt it was important for the Utilities Department to approve the invoice. Mr. Yuan added that the IFB contained 69 line items. Forty-three line items were fixed price, and the remaining 26 line items were time and materials. It was a hybrid contract. Chair Burt inquired whether the fixed bid line items totaled 90 percent of the dollar amount. Mr. Boussina answered yes. Mr. Yuan explained that the contract allowed for both fixed and time-and- materials items. Chair Burt requested that the Auditor explain his contention regarding the 90 percent of funds being paid for with fixed bid line items, even though the number of line items was 70 percent. Mr. Boussina reported the IFB document clearly stated bid items 1-43 were the primary method of pricing all work as a result of the bid. The bid was constructed with estimates in terms of linear foot and how much work the City wanted. The estimates for fixed price line items were multiplied by the bid submitted. Mr. Keene asked if he meant for all bidders. Mr. Boussina replied yes. He stated that time-and-materials line items based on one hour resulted in a minimal effect on the total amount of the bid. Chair Burt inquired whether 90 percent of bid funds were expended for fixed line bids, even though 30 percent of the line items were time-and-materials bids. Attachment D MINUTES Page 28 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Mr. Ting noted the time-and-materials items were meant to enhance fixed line items. Chair Burt did not believe the percentage of line items related to time and materials was relevant. From a dollar standpoint, 90 percent of funds paid for fixed line items. The contract estimated the number of total feet for the year. If the estimation of feet was different, then the amount charged increased or decreased. The original Staff cost estimate was $1 million, and $800,000 was the amount presented to the Council. He asked what caused the estimate to change because he suspected the change in the estimated cost was related to the estimated amount of work, as opposed to the dollars per metric. Mr. Ting explained that the original $1 million estimate was based on historical expenditures. Between releasing the bid and preparing the CMR for the Council, there was a change in the amount of work. Mr. Perez reported Staff should have told the Council the contract was bid at $1 million, but Staff expected to expend only $800,000 based on activity. Ms. Fong recalled Staff instituted different contract management practices wherein anyone who requested payment had to double check the invoice against the contract. Mr. Ting indicated the Utilities Department Staff worked with engineers to ensure they were familiar with contracts, bid items, and time-and-material items. When engineers requested an estimate from the contractor, they checked it against the contract for accuracy. The City now paid the actual cost of doing the work. Vice Mayor Shepherd inquired whether Staff audited current contracts and whether any contracts were noncompliant in accordance to the manner they were presented to the Council for approval. Mr. Ting answered no. Chair Burt asked if Staff reviewed current contracts. Mr. Ting replied yes, Staff began to review all projects. Vice Mayor Shepherd asked if all contracts were compliant with CMRs. Mr. Keene asked if Vice Mayor Shepherd was referring to all Utilities Attachment D MINUTES Page 29 of 39 Finance Committee Regular Meeting Minutes 11/5/13 contracts approved by the Council. Vice Mayor Shepherd noted the Council approved a CMR with a contract, and inquired about the number of active contracts. Ms. Fong reported Utilities had approximately 200 active contracts. Chair Burt stated the Casey Construction contract was an irregularity; he asked how many other fixed-line bid contracts were in existence and whether Staff reviewed them. Mr. Yuan indicated the Casey Construction contract was the only fixed line bid contract with a time-and-materials option. Vice Mayor Shepherd explained that typically all contractors had a time-and- materials item at the bottom of fixed-bid contracts to capture miscellaneous items. She wondered whether Staff reviewed all active contracts and determined that contracts functioned in the manner they were presented to the Council for approval through the CMR process. Mr. Yuan remarked that Staff reviewed all construction contracts, not all contracts. Ms. Fong added that the Utilities Department also had commodities contracts and energy efficiency contracts. Mr. Keene explained that the Casey Construction contract was bid as a fixed- bid contract. The audit and Staff's response made it clear that the contract was not executed as a fixed-bid contract. The contract was paid as a time- and-materials contract over a three-year period for a total of approximately $1.9 million. The initial question was whether the change to a time-and- materials contract was fair to other bidders. The second question was whether the City received real value and whether the contractor delivered on the work performed. Council Member Berman referenced the handwritten note, “ok to pay,” on the invoice provided as a sample and inquired about the process for determining whether the invoice was acceptable and whether there was documentation to support that acceptance. Mr. Ting reported that the engineer project manager received the invoice, checked it against the scope of work, and reviewed it with operations. The operations supervisor ensured that the work was performed and that inspectors checked the work and the invoice against contractor time cards. Attachment D MINUTES Page 30 of 39 Finance Committee Regular Meeting Minutes 11/5/13 The Operations Department signed off on it and returned it to engineering to review the invoice against the scope of work and the quote. Council Member Berman asked if Staff had a paper trail of those steps. Mr. Ting indicated operations had a paper trail and engineering had another. The Utilities Department did not have a central location for all drawings, scopes of works, estimates, and invoices at that time. Vice Mayor Shepherd asked if Staff now had paperwork to support each line item in an invoice. Mr. Ting stated the invoice should have the service order attached to it. The service order package needed to have associated drawings and the scope of work attached to it. Council Member Schmid asked if the projects were all development projects. Mr. Ting reported the majority were customer service projects. Other projects involved maintenance and CIP projects. Council Member Schmid indicated a good number of projects were paid by developers who had the option of performing the work themselves or having the City perform it. Developers placed confidence in the City to operate at an efficient and effective level. Chair Burt recalled that prior to the financial crisis, the City had a consistent pattern of receiving bids higher than City estimates. After the financial crisis began, the pattern changed to bids being significantly lower than City estimates. The Council discussed whether to take advantage of the lower bids in order to accelerate projects. A very low bid was a cause for further scrutiny to ensure contractors did not make up the low bid over the course of the contract. He asked how the City lost approximately $281,000, when the bid was so much lower than other bids. Mr. Boussina explained Casey Construction admitted they made a mistake in the bid. Vice Mayor Shepherd understood the timing of the Casey Construction admission bid was different. Mr. Perez clarified that Casey Construction made the admission prior to the contract being awarded. Attachment D MINUTES Page 31 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Mr. Keene asked if Staff knew why Casey Construction made the admission. Mr. Boussina stated that notes indicated Casey Construction misunderstood certain line items. In one instance, Casey Construction thought the City was building a parking lot; the bid was below estimates because of certain line items. Mr. Keene inquired whether Casey Construction had knowledge of the other bids when it made the admission. Mr. Boussina presumed Casey Construction did not because they learned that they made a mistake when the bids were opened and their bid was significantly less than other bids. Mr. Keene needed to know how Casey's Construction was informed to think they made a mistake and how that determined whether Staff should have rejected the bid. Chair Burt requested an explanation of the additional cost of $281,000 once Casey Construction agreed to honor its bid. Mr. Boussina explained that the analysis was retrospective, meaning they used line items that Casey Construction chose to bill the City with because they billed the City using line items that were more expensive than the second lowest bidder. Casey Construction was minimal in using, or did not use line items that were significantly below the second bidder. Mr. Keene took issue with this part of the audit because it involved estimation. The analysis presumed that the second bidder would have remained static in the same environment. He said the second bidder could have utilized different pricing if they had won the bid. Chair Burt inquired whether Casey's Construction bid could have resulted in up to $281,000, as the Auditor did not know what the other bidders would have invoiced. Mr. Boussina agreed and said if Casey Construction had billed the City based on unit price items, the result would have been different. The $281,000 was the best estimate he could provide given the available information. Council Member Schmid inquired whether the Committee was ready to proceed to suggested actions. Vice Mayor Shepherd asked if the Committee should discuss each finding. Attachment D MINUTES Page 32 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Chair Burt responded yes. Vice Mayor Shepherd asked if the Committee would then discuss the City Manager's Action Plan. Chair Burt inquired about the best way to discuss those topics. Mr. Boussina said the narrative response contained a great deal of background information. Council Member Berman inquired about the process for follow-up discussion regarding implementation of the City Manager’s Action Plan. Chair Burt explained that typically the Committee only discussed items that either the Auditor or the Committee had specific issues with. Mr. Perez discussed Finding 1.1, which says: “Auditor Recommendation: The Utilities Department and ASD should implement policies and procedures to appropriately address significant variances between City estimates and contractor bids before awarding contracts, in order to ensure staff awards contracts to the lowest responsible and responsive bidder, as required by the Municipal Code. City Manager’s Action Plan: When there are significant differences between the lowest bid and staff estimates or other bids, City Staff will set up a meeting with the lowest bidder to ensure that its bid is correct, that it can perform the work as described, and to ensure compliance with Municipal Code 2.30.440. Staff will document this discussion with the bidder to include: 1) date of the meeting; 2) attendees at the meeting; 3) description of the questions related to the bidders' submittals; 4) summary of the discussion; 5) staff and contractor agreement/resolution of questions; and 6) next steps.” Staff was not aware of a specific percentage to utilize when monitoring the difference between the lowest and second lowest bids. He asked if the Auditor was aware of a standard percentage. Mr. Boussina replied no. He was aware of various procedures and flow charts. Mr. Perez said he would inquire further regarding a standard percentage. Different rules applied for different types of contracts. Council Member Berman requested clarification of that statement. Mr. Perez planned on developing a standard and presenting Staff's actions to the Committee. In construction contracts, a self-check mechanism was the Attachment D MINUTES Page 33 of 39 Finance Committee Regular Meeting Minutes 11/5/13 ability to file a protest. The Municipal Code provided a process for protests that led to the City Council. Council Member Berman asked who filed a protest. Mr. Perez responded other bidders. A protest had to be filed within seven days with the Purchasing Manager, and the Purchasing Manager provided a response. If bidders disagreed with the Purchasing Manager's response, then the protest moved to him within ten days of the Purchasing Manager's response. He then reviewed and responded to the protest. If bidders disagreed with his response, then the protest was presented to the Council. Council Member Berman did not recommend relying on the market to determine the decision of a responsible bid. Mr. Perez wanted to implement a formal process. In addition to the proposed next steps, Staff was implementing an independent review by a firm that specialized in best practices for purchasing. During the Budget process, Staff eliminated funding for training programs regarding contract project management. Training needed to be reinstituted, and Staff requested resources to implement those processes. Council Member Schmid noted issues were raised with respect to bids in at least three projects. Creating a standard was going to be difficult. Mr. Perez added that contractors admitted to making mistakes in bids, and those mistakes cost the contractors. The contractors hoped to make up the loss on the next project. Council Member Berman felt Casey Construction did not agree to accept a loss on the contract. Chair Burt was unsure whether the Committee heard the whole scenario. Mr. Perez indicated Staff did not have documentation to demonstrate whether or not Casey Construction agreed to accept a loss. Staff needed to formalize steps for contractor discussions. Council Member Schmid inquired whether ASD accepted responsibility for Finding 1. Mr. Perez answered yes. Mr. Keene added that ASD would establish criteria to signal problems that Attachment D MINUTES Page 34 of 39 Finance Committee Regular Meeting Minutes 11/5/13 needed to be investigated to ensure the City received a responsible bid. Mr. Perez reported Staff would establish a threshold for elevating concerns to him, and then he would refer potential problems to the City Attorney or the City Manager. That process was currently in place; however, it was not a formal process. Vice Mayor Shepherd discussed Finding 1.2, “Auditor Recommendation: The Utilities Department and ASD should ensure the accuracy of key information stated in staff reports submitted to City Council, including those which request authorization for the award of contracts. City Manager’s Action Plan: The Utilities Department prepares the staff report based on the most current information that is available including notation of any changes of staff estimates. ASD reviews staff reports requesting award of Utility contracts. As part of this review ASD validates the summary of solicitation information. ASD will continue to perform this function and will put an extra emphasis as a result of this finding to match key figures in the solicitation summary to the actual solicitation documents.” Having the engineer's estimate, bids and Staff comments were useful to the Council in discussing the awarding of bids. She inquired whether Staff routinely provided that information to the Council. Mr. Perez reported Staff's goal was to provide all information to the Council. At times information was omitted because of Staff turnover or lack of training. The key was to emphasize that detail in training. Vice Mayor Shepherd suggested Council Members request the information if it was not provided. Ms. Fong noted that the City Attorney Staff reviewed most of Staff's memoranda. The City Manager read the information and requested additional information, clarification, or revisions. She also read the information and requested clarification or revisions. Utilities Staff wanted to be transparent. Council Member Schmid noted contracts were usually presented on the Consent Calendar and inquired whether the Auditor was satisfied with the Council's oversight of awarding contracts. Chair Burt did not believe that was a fair question for the Auditor as it was a policy decision. The Council made the decision whether to remove an Item from the Consent Calendar. Council Member Schmid asked the Auditor whether during the audit he was Attachment D MINUTES Page 35 of 39 Finance Committee Regular Meeting Minutes 11/5/13 satisfied with the process of Council oversight. Mr. Boussina was not able to comment on the Council's processes. It was difficult for the Council to recognize all challenges and pitfalls of a contract. In this particular audit, he felt the Staff Report was not accurate and transparent in order to provide the Council with an opportunity to raise concerns about the contract. Molly Stump, City Attorney explained that City Attorney Staff was in the queue to review all CMR’s with respect to legal issues, enforceability, and compliance with laws. She did not wish to give the impression that the Attorney's Office reviewed factual matters presented by a department. City Attorney Staff relied on other Staff in the work process for review of certain items. Mr. Perez noted an online system directed CMR’s to the City Attorney for review. Purchasing was not a mandatory reviewer. The departments needed to designate Purchasing as part of the review of a contract. Mr. Perez discussed Finding 1.3, “Auditor Recommendation: ASD should prioritize implementing a system to electronically record and track vendor bids as part of any future system implementation for ASD Purchasing. City Manager’s Action Plan: Staff is in the early phase of reviewing online bid options and will issue a request for proposal for such a service.” He agreed with the Finding. The Chief Information Officer was a member of the Task Force and identified additional tools for the bid process. Vice Mayor Shepherd asked how Staff would reconcile the finding of a weak Scope of Services. Mr. Perez indicated that was a difficult challenge. For the most part, ASD relied on technical experts to prepare the Scope of Service for a contract. Mr. Perez discussed Finding 2.4, “Auditor Recommendation: The Utilities Department and ASD should review existing policies, implement new policies, and develop procedures to ensure the City’s contracts are appropriately re‐evaluated and renewed in accordance with applicable contract terms and the Municipal Code. City Manager’s Action Plan: Policies and procedures will be reviewed, revised, and implemented to evaluate contractor work every 12 months, at a minimum. This may include periodic meetings with the contractor during the year to discuss issues with performance, contract compliance, or invoicing. The evaluation criteria shall include: 1) Performance; 2) Compliance with the contract; 3) Responsiveness to work scheduling; 4) Accuracy of estimates; 5) Accuracy Attachment D MINUTES Page 36 of 39 Finance Committee Regular Meeting Minutes 11/5/13 of invoicing; and 6) Responsiveness to City issues. ASD staff will create a contract monitoring checklist to aid in regular contract administration. The checklist will prompt for review of contract terms, contractor deliverables, project milestones, payments, and overall performance. The information collected via the checklist will aid in performance review when contract renewal is sought.” Staff said they would create a monitoring checklist and sets of criteria for contracts. Council Member Berman recommended Staff emphasize contract compliance. He noted that the contractor's performance may have been good; however, the contract was obsolete at the moment the basis changed to time and materials. The contract did not need to be renewed because it was not the contract approved by the Council. Performance did not overshadow contract compliance. Ms. Fong said she would more closely monitor compliance. Chair Burt inquired whether that was adequately captured in the Action Plan. Mr. Perez said he could expand the definition of Contract Compliance. Mr. Keene explained that Staff would return to the Committee to provide an update regarding implementation of the Action Plan. There were opportunities for additional follow-up discussions. Mr. Perez reported that this step would accomplish the accountability process. Ms. Fong discussed Finding 3.5, “Auditor Recommendation: The Utilities Department should work with ASD to review existing contract performance management policies and develop procedures to ensure staff appropriately administers the City’s contracts. Procedures should address the following areas: 1) Monitoring of contractor billings to ensure, 2) accuracy and compliance with contract terms, and 3) Ensuring contracts are appropriately and timely modified, if required. City Manager’s Action Plan: Utilities staff is formalizing the process by which work is requested of the contractor, approved, inspected, reviewed for completion, and invoices reviewed and approved for payment including: 1) Roles and Responsibilities for Substructure Contract; and 2) Flow Chart Diagram. Utilities is in the process of hiring a Coordinator Utilities Project to assist Engineering in administrating contracts, verifying invoices and processing payments. Utilities will be requesting similar positions in Operations and Customer Support Services in the 2014 mid‐year budget. Utilities will also develop a tracking mechanism to monitor contractor work, reconcile invoices, and verify payments which Attachment D MINUTES Page 37 of 39 Finance Committee Regular Meeting Minutes 11/5/13 includes: 1) Service Order number; 2) Scope of work and link to project as‐ built drawings; 3) Contractor work estimates; 4) Project change orders and explanations; 5) Invoices and payments; 6) Explanations for estimate/actual cost variances; 7) Name of project engineer; 8) Name of project inspector; 9) Name of contractor crew foreman; 10) Comments on project issues or contractor; and 11) Performance. ASD will conduct a review of the entire purchasing process citywide to review current best practices and lay out a plan for improvement to align with current best practices where needed. This review may include a third party. The departments will collaborate to bring contract management training to appropriate staff. This training will be rolled out to all departments.” She also discussed Finding 4.6 “Auditor Recommendation: The Utilities Department should work with ASD to review existing contract performance management policies and develop procedures to ensure staff appropriately administers the City’s contracts. Procedures should address the following areas: 1) Roles and responsibilities for the Contract Administrator and any additional training requirements for staff; 2) Monitoring of contractor performance; 3) Ensuring payments are made only for services and materials included in the contract scope; and 4) Ensuring there is an adequate process and documentation to show planned work has been completed. City Manager’s Action Plan: Recommendation 5 & 6 are similar. See response to recommendation 5.” She did not believe the Auditor took issue with some of the proposed steps. Utilities Staff was formalizing a process and determining the roles and responsibilities with respect to implementation of contract terms. She was in the process of hiring a Contract Utilities Administrator, identifying contract administration positions in operations and customer support service areas and developing better tracking mechanisms to monitor contractor work. She was developing procedures to explain cost variances and to document discussions with contractors. Council Member Schmid asked if Staff would have a centralized file for records. Ms. Fong reported Utilities Staff would maintain complete files for projects and the Purchasing Department would maintain invoices and payments. Mr. Perez was reviewing the need for a resource to perform spot checks. Staff was exploring the cost of additional controls and would provide a recommendation. Council Member Schmid inquired whether the City Manager could obtain documents from departments to answer any questions he might have. Mr. Perez wanted to ensure all departments maintained centralized files so Attachment D MINUTES Page 38 of 39 Finance Committee Regular Meeting Minutes 11/5/13 that records were available. Training would teach Staff which documents should be retained in a file. Council Member Schmid asked if ASD would be responsible for departments reaching the same standards as those being implemented for the Utilities Department. Mr. Keene indicated the Task Force was designed to respond to problems across the organization. Staff wanted an integrated online system that would allow ASD to view Utilities files. Until a system was identified and implemented, Staff would develop practices to routinize the channels and connections. Vice Mayor Shepherd was happy to see the changes. If systems and operations worked smoothly, the time between approval and payment of invoices was expected to be short. She inquired whether the Purchasing Department would have the authority to return invoices to departments. Mr. Perez answered no. The Purchasing Department did not have information to determine whether an invoice was appropriate for payment. Ms. Fong reported the Utilities Department would have the responsibility of ensuring invoices were accurate. Vice Mayor Shepherd felt there was a needed to be a process for the Purchasing Department to validate whether or not an invoice was accurate. Mr. Perez indicated the Purchasing Department would not know if the invoice complied with the contract terms. Ms. Fong reiterated that Utilities was responsible for contract compliance. Vice Mayor Shepherd asked if there was an initialing system to indicate an invoice was approved and checked against the contract. Ms. Fong replied yes. Mr. Perez agreed that Purchasing could check for initialing. Mr. Keene reported quality control was the department's responsibility. Ms. Fong remarked that ASD had to rely on the experts for development of a Scope of Service. Utilities Staff was improving with respect to development of scopes of service. Attachment D MINUTES Page 39 of 39 Finance Committee Regular Meeting Minutes 11/5/13 Mr. Keene did not want anyone with oversight responsibility to feel they were disempowered from asking questions. Staff expected to discuss aspects of contracts, bids, invoices and such. Mr. Perez indicated ASD had an oversight role and fulfilled it. Vice Mayor Shepherd wanted invoices approved in such a manner that Staff knew who approved it. MOTION: Council Member Schmid moved, seconded by Chair Burt to recommend the City Council accept the Contract Oversight Audit: Trenching and Electric Substructure. Chair Burt felt Staff's responses were significant. He said implementation of those policies and procedures would provide better systems. MOTION PASSED: 4-0 Future Meetings and Agendas Lalo Perez, Director of Administrative Services and Chief Financial Officer announced the next meeting was scheduled for November 19, 2013. Agenda Items included the Comprehensive Annual Financial Report with the external auditor, Status of the Capital Program at Year End and Adoption of Changes to the Municipal Fee Schedule to Comply with Propositions 26 and 218. The Agenda for the December 3, 2013 meeting included the First Quarterly Financial Results for 2014, results of the Palo Alto Street Sweeping, and Cleaning Pilot Program. Tentative Agenda Items were the Long Range Financial Forecast and the Inventory Management Audit. ADJOURNMENT: Meeting adjourned at 10:50 P.M. Attachment D GFOA Best Practice   Attachment G Attachment E Page 1 of 3          Attachment E Page 2 of 3 Attachment E Page 3 of 3 Attachment F Page 1 of 2 Presented on Nov. 17, 2014 to the City Council USER FEE COST RECOVERY LEVEL POLICY March 2015 BACKGROUND The City provides a variety of services to the public which benefit the entire community or individual residents or businesses. For certain services such as regulatory fees, arts and science classes, or recreational activities, the City traditionally has recovered partially or fully the cost for providing these services, which would have been otherwise paid from the General Fund. Propositions 13, 218, and 26 have placed both substantive and procedural limits on cities’ ability to impose fees and charges. Collectively these constitutional amendments provide safeguards against taxes being imposed without a vote of the people. POLICY STATEMENT It is the policy of the City of Palo Alto to set Municipal Fees based on cost recovery levels in lieu of fully subsidizing fee-related activities with General Fund dollars. The cost recovery levels are reflective of the following policy statements. 1. Community-wide vs. Private Benefit: Funding services such as Police patrol services only through taxpayer dollars is appropriate for services that benefit the entire community. When the service or program provides a benefit to specific individuals or businesses such as the issuance of building permits, it is expected that individuals or businesses receiving that benefit pay for all of the cost of that service. 2. Service Recipient vs. Community Benefit: For regulated activities such as development review and Police issued permits, it is appropriate that the service recipient such as an applicant of a building permit or a Pushcart Vendor permit pay for the permit although the community at large benefits from the regulation. 3. Consistency with City Goals and Policies: City policies and Council goals related to the community’s quality of life are factors in setting cost recovery levels. For example, fee levels can be set to promote healthy habits, facilitate environmental stewardship, or discourage certain actions (e.g. false alarms). 4. Elasticity of Demand for Services: The level of cost recovery can affect the demand for services. A higher level of cost recovery could ensure the City is providing services such as recreational classes or summer camps for children and youth without over stimulating a market with artificially low prices. Such low prices, which are a reflection of a high General Fund subsidy, may result in huge waiting lists and attract participants from other cities; however, high cost recovery levels could negatively impact the demand for such services from low income individuals, special needs individuals, and seniors. Attachment F Page 2 of 2 Presented on Nov. 17, 2014 to the City Council 5. Availability of Services from the Private Sector: High cost recovery levels are generally sought in situations where the service is available from other sources in order to preserve taxpayer funds for other General Fund funded City services. Conversely, services that are not available from other sources and are typically delivered when residents experience an emergency basis typically have low or zero cost recovery levels. Based on these policy statements, the table below overlays certain cost recovery levels grouped in low (0-30%), medium (30.1% to 70%), and high (70.1% to 100%) cost recovery percentage ranges. It is important to note that these groupings provide policy guidance and are not absolute. Some policy statements may weigh more heavily than others, which may result in a different cost recovery level grouping for particular fees. For example, fees for recreational activities are expected to be set in general at the medium cost recovery level. However, fees for recreational activities for which there is a high demand may have a high cost recovery level due to high enrollment levels per class. It is important to note that Municipal fees will be reviewed annually by the Finance Committee and subsequently by the City Council as part of approval of the Municipal Fee Schedule. Cost Recovery Level Group Cost Recovery Percentage Range Policy Considerations Low 0% - 30%  No intended relationship between the amount paid and the benefit received  Fee collection would not be cost effective and/or would discourage compliance with regulatory requirements  No intent to limit the use of the service  Public at large benefits even if they are not the direct users of the service  Affordability of service to low-income residents Medium 30.1% - 70%  Services which promote healthy activities and educational enrichment to the community  Services having factors associated with the low and high cost recovery levels High 70.1% - 100%  Individual users or participants receive most or all of the benefit of the service  Other private or public sector alternatives provide the service  The use of the service is specifically discouraged  The service is regulatory in nature 1 Adopted by Council 11/26/07 CMR 421:07 Community Services Department Class Cost Recovery Policy The Community Services Department (CSD) offers a variety of programs within its various divisions such as recreational activities, arts and sciences classes, and open space interpretive programs. The following Class Cost Recovery Policy is to be used as a guideline to establish cost recovery targets for fee-based classes and camps within the divisions of Recreation & Golf, Arts & Sciences, and Open Space & Parks. Included in CSD’s Strategic Plan is an initiative to “focus energy and (budgetary) resources on sustaining and enhancing core services”. Through implementation of this Class Cost Recovery Policy, the department aims to establish cost recovery levels while providing core services and meeting the social needs of the community. Policy The policy takes into consideration: (1) minimum level of acceptable cost recovery, (2) target level of cost recovery, and (3) fee setting considerations. Cost recovery levels are inclusive of direct and indirect costs. Indirect costs include both department and City overhead. Although each program has set minimum and target cost recovery levels, other fee setting considerations may factor into the pricing of registration fees. Fee setting considerations may either increase or decrease fees and place cost recovery outside of the minimum and target levels. These factors include, but are not limited to, market rates, programs for those with special needs, new programs still being established, and population served. However, within each of the three divisions offering fee-based classes, the division-wide cost recovery should meet minimum cost recovery levels. Once a program is determined to be within the purview of the Class Cost Recovery Policy, program fees are to be established using the Class Cost Recovery Model and adjusted as needed. The model is included in the pages to follow. Each fee-based class or camp is placed in one of four Cost Recovery Groups. The groups range from Community Benefit to Personal Benefit, representing opposite ends of a cost recovery spectrum. Programs rated as Community Benefit will cost recover less, while programs rated as Personal Benefit will cost recover more. This cost structure is in line with the department’s mission statement: “Engaging individuals and families to create a strong and healthy community, through parks, open space, recreation, social service, arts, and sciences.” The four Cost Recovery Groups are: • Group I: Community Benefit • Group II: Majority Community Benefit • Group III: Equal Community Benefit and Personal Benefit • Group IV: Majority Personal Benefit Attachment G 2 Adopted by Council 11/26/07 CMR 421:07 Division managers, along with input from program coordinators and supervisors, determine the value of a class or camp for placement within one of the four groups. Each group has a cost recovery range inclusive of a minimum cost recovery and a target cost recovery level. This detail is reflected in pages to follow. On an annual basis, programs are to be reviewed to ensure the established cost recovery levels are met and adjustments made. Recovered Costs Direct costs are expenses incurred in correlation to a class being offered. These costs would not be incurred if a class were not offered. Typical direct costs are instructor fees and supplies and materials. Department indirect costs cover overhead costs incurred by the department for administrative support, program supervision, utilities, and some maintenance. Some of these costs would probably be incurred regardless whether a class is offered or not. City indirect costs encompass citywide overhead, administrative, and facility maintenance costs. Some of these costs would probably be incurred regardless of whether a class is offered or not. Department indirect cost is estimated to be 15% of direct cost while both department and City indirect costs are estimated to be 35% of direct cost. Theses estimates are subject to change as programs are reviewed and to reflect changing overhead costs. Attachment G 3 Adopted by Council 11/26/07 CMR 421:07 Class Cost Recovery Model This model is to be used by Program Coordinators, Supervisors, and Division Managers to plan, evaluate program cost recovery, and determine expenses, revenues, and course registration fees. Attachment G 4 Adopted by Council 11/26/07 CMR 421:07 Class Cost Recovery Guidelines In conjunction with the Cost Recovery Model, the following guidelines are to be used to place classes and camps into one of the four Cost Recovery Groups. Process: 1) Set a cost recovery range for each Cost Recovery Group, with minimum and target recovery levels. 2) Evaluate and place each existing program in a Cost Recovery Group. 3) Determine guidelines to be used to place future new programming into a Cost Recovery Group. Parameters: 1) Apply to fee-based class and camp programs. 2) Generally, cost recovery for children’s programs will be less than adult programs. 3) Some programs may cost recover less than the minimum level. However, other programs will need to make up for the difference. 4) Approximately 15% above Direct Costs covers Department Overhead, subject to adjustment. 5) Approximately 35% above Direct Costs covers both Department and City Overhead, subject to adjustment. 6) Other fee considerations should be taken into account, such as, but not limited to, market pricing, competition from other service providers, new program being established, and population served. Cost Recovery Groups, Cost Recovery Minimum, and Cost Recovery Targets: Group I: Community Benefit • Cost Recovery Minimum: Less than Direct Cost • Cost Recovery Target: Direct Cost Group II: Majority Community benefit • Cost Recovery Minimum: Direct Cost • Cost Recovery Target: 115% Direct Cost Group III: Equal Community and Personal Benefit • Cost Recovery Minimum: 115% Direct Cost • Cost Recovery Target: Up to 135% Direct Cost Group IV: Majority Personal Benefit • Cost Recovery Minimum: 135% Direct Cost • Cost Recovery Target: 135% Direct Cost Attachment G 5 Adopted by Council 11/26/07 CMR 421:07 Characteristics of Community Benefit vs. Personal Benefit programs The four Cost Recovery Groups represent a cost recovery “spectrum”. Programs classified as being of Community Benefit will cost recover less than programs classified as being of Personal Benefit. Division managers, along with input from program coordinators and supervisors, determine the value of a class or camp for placement within one of the four cost recovery groups. • Group I: Community Benefit • Group II: Majority Community Benefit • Group III: Equal Community Benefit and Personal Benefit • Group IV: Majority Personal Benefit Below are characteristics to define Community and Personal benefit, opposite ends of a cost recovery “spectrum”. The opposite ends are represented by Group I and IV. As most programs have aspects of both benefits, they are placed within the spectrum in either Group II or III. Community Benefit Characteristics Personal Benefit Characteristics Youth and Teen Development Leisure Time Experiences Safety Financial Enhancement Early Childhood Development Stress Reduction Environmental Stewardship Mental / Physical Health for adults Fitness/Healthy Lifestyle for youth Professional Development Connecting / Involving People w/ Community Competitive Sports for adults Service Back to Community Personal Enhancement Encourages Volunteerism Weight Loss Cultural Understanding Fitness for adults Cross-Generational Understanding Fashion/Beauty/Personal Enhancement Unique Experiences not provided by other organizations Classes already provided by other organizations for adults Life Skills for Self Independence Life-Long Learning Diversity of Experience Skill Building Community Policing – Public Involvement Social Networking / Contacts for personal gain Sustaining our Resources Attachment G CITY OF PALO ALTO CITY COUNCIL DRAFT MINUTES Page 1 of 8 Regular Meeting April 6, 2015 The City Council of the City of Palo Alto met on this date in the Council Chambers at 6:06 P.M. Present: Berman, Burt, Filseth, Holman, Kniss arrived at 7:14 P.M., Scharff, Schmid, Wolbach Absent: DuBois Study Session 1. Cost of Services Update and Draft User Fee Cost Recovery Level Policy Discussion. Walter Rossmann, Office of Management and Budget Director, reported Staff began working with the Finance Committee in 2013 on a Cost of Services Study. The Study was comprised of two components: identifying alternative service delivery options for City-provided services and charging fees to recover the costs for providing services. Staff continued to review various services and, where appropriate, provided recommendations for alternative service delivery models. During the past few years, the City had outsourced parks maintenance, golf course maintenance, custodial services, and street sweeping services. Because of fluctuating workloads, the City had employed hybrid models to address the timely provision of services. Staff had not systematically analyzed all services provided to the public; therefore, as part of the Fiscal Year (FY) 2016 Proposed Budget, Staff would request funds for consultant services to assist with the effort. One outcome of the Study was identification of potential public-private partnerships and outsourcing opportunities. Annually, the City Council approved charges for services and fees when it adopted the Municipal Fee Schedule as part of the Budget. Currently, the City was recovering some portion of fee-related services. To ensure a balanced revenue portfolio, Staff sought Council input regarding appropriate cost recovery levels. The Staff Report provided the cost recovery level for fee groups, except most Development Services fees and Planning and Community Environment fees. The Planning Department had engaged a consultant to study department fees and hoped to conclude the study within the fiscal year. For fees studied, the cost recovery level DRAFT ACTION MINUTES Page 2 of 8 City Council Meeting Draft Action Minutes: 04/06/2015 varied quite a bit. The draft policy sought to ensure consistent recovery of costs for similar fees and the level of cost recovery for fee-related activities. Community versus private benefit primarily addressed inspection fees and permits that protected the property owner and the community. Service recipients versus community benefit addressed regulatory permits. Consistency with City goals and policies provided direction to Staff to reduce fees. Elasticity of demand for services allowed Staff to increase or decrease fees based on demand. Availability of services from the private sector considered services offered by the nonprofit and private sector to ensure the City did not undercut private and nonprofit services while maximizing the City's revenues. The policy statement was deliberately broad to allow flexibility in subsidizing fees. Some City services were consistently in high demand; therefore, higher fees would not negatively affect enrollment. Classes with low attendance incurred the same fixed costs; therefore, they might require a General Fund subsidy. The City should remain in healthy competition with the nonprofit and private sectors by not charging substantially above or below the competitive rate for similar services. Alignment with this policy statement most likely would result in a higher cost recovery level. Based on the Council's feedback regarding the draft policy, Staff would refine the policy and return it to the Council for adoption. As part of the annual budget process, the adopted policy would guide potential fee increases. Any substantive increase of fees would be phased in over several years. An alignment of fees would ensure the City continued to have a balanced revenue portfolio. Council Member Burt wanted to understand the balance between cost of service recovery, particularly for youth programs, and providing youth programs for those who could not afford them. Mr. Rossmann indicated the Council should first consider enrollment. The City offered a discount for low-income youth. Then the Council should balance City classes against classes offered by nonprofit and private sectors. Council Member Burt asked if Staff knew whether youth of modest incomes were being excluded from programs. He was aware that the City subsidized enrollment for low-income families. He asked if Staff could survey low- income families to determine whether they did not participate in youth programs because they did not qualify for scholarships, were unaware of scholarships, or suffered from stigma. Rob de Geus, Community Services Director, did not have a good grasp of information to answer that question. The City provided a generous fee reduction program which allowed $300 per person in a family annually. Many teen programs were provided at low cost or no cost. The fee reduction DRAFT ACTION MINUTES Page 3 of 8 City Council Meeting Draft Action Minutes: 04/06/2015 program was heavily used annually, but he did not know if a need remained in the community. Council Member Burt felt heavy use of the fee reduction production program meant it was attractive, not that it was provided to the full spectrum of youth. Perhaps better sampling could be obtained through nonprofit housing agencies surveying their families or through a Palo Alto Unified School District (PAUSD) list of families qualifying for support. The Council had no data to determine whether the City was successfully addressing the issue or whether programs were inclusive or discriminatory. Mr. de Geus advised that any family who qualified for the PAUSD low-income meal program automatically qualified for the City's low-income fee reduction program. Council Member Burt inquired whether families were notified of that. Mr. de Geus answered yes. Council Member Burt felt a survey to determine whether families were participating to the extent they wished or whether other families were not being captured would be worthwhile. Families who did not qualify for the PAUSD low-income meal program might not be able to afford participation in City programs. He requested colleagues comment on whether they would like to have better data in order to make decisions. Vice Mayor Schmid questioned whether the draft policy was applicable to other areas, specifically overflow parking. The parking issue definitely favored employers in Downtown, and it brought a cost to the neighborhood. City policies provided maintenance of a barrier between office-centered and residential areas. Offering free parking in the neighborhoods created more demand. He inquired whether a user fee could be utilized to pay for parking programs. Mr. Rossmann reported the draft policy addressed all kinds of fees. He understood Vice Mayor Schmid was suggesting the City charge for on-street parking. Staff could use the policy as a starting point and return to the Council with a suggestion of charging a fee under certain policy considerations. As part of the FY 2016 Proposed Budget, Staff was including a request for funding to study fees for street parking. Vice Mayor Schmid believed it could be worthwhile to consider using the same criteria for assessing costs on the parking issue as in other fees. This might be a more effective way of raising funds for mitigation measures. DRAFT ACTION MINUTES Page 4 of 8 City Council Meeting Draft Action Minutes: 04/06/2015 James Keene, City Manager, explained that the concept of the Residential Parking Permit (RPP) Program in the Downtown area was comprised of two phases. The first was a trial phase for six months with no cost for residents. Once Staff obtained a sense of parking infiltration under some sort of program, then the Council could determine costs for the RPP Program. That discussion would be related to the Council having better information about the impacts of costs after a pilot program. Vice Mayor Schmid expressed concerned about the upfront costs of a nine- month trial period. Mr. Keene stated the Council could discuss that when Staff returned. Council Member Scharff asked if the Council was vetting a fee structure or broad principles. Mr. Rossmann replied broad principles. Staff was asking the Council to provide input. Attachment D was generated by a consultant two or three years ago. During the annual budget process, Staff calculated the cost recovery level for most fees based on Staff input. Now, Staff wanted to align those fees to broad policy statements. Council Member Scharff suggested the Council consider eliminating some fees. Many fees could have a societal value such that the fee should not be priced excessively high. Fees for housing were becoming substantial. He was worried that costs were escalating above inflation. The draft policy contained good, broad policies; however, he was unsure whether they would be easy to apply. He was concerned that fees would be presented to the Council in large groups or categories such that the Council could not discuss individual fees. Mr. Rossmann indicated the challenge was the number of similar fees that were not similar in cost recovery level. The first goal was to ensure cost recovery was consistent. During the annual budget process, Staff would present the fee, the cost recovery level for each fee, and the resulting fee. Thus, the Finance Committee and the Council could discuss individual fees. If Staff proposed maintaining the cost recovery level for fees, they would present those fees in groups. Mr. Keene noted the application of cost recovery levels could generate a great deal of discussion. The budget process contained too many details and categories each year for the Council to discuss each fee individually. Perhaps over the course of the year, Staff could prioritize groups of fees for periodic Council review. DRAFT ACTION MINUTES Page 5 of 8 City Council Meeting Draft Action Minutes: 04/06/2015 Council Member Scharff asked if Staff would present fees to the Finance Committee in manageable groups. Mr. Rossmann explained that Staff would return with a policy, based on the current discussion, for Council adoption. However, that would occur too late for the FY 2016 Proposed Budget. For FY 2016, Staff would propose a 3.6 percent increase, which was equivalent to the increase in salary and benefits costs. For FY 2017-2019, Staff would attempt to align groups of fees with the policy and present them for Council review. Those incremental steps over the next three years would allow the Council to discuss fees. Council Member Scharff inquired whether Staff would present the policy contained in Attachment F with revisions for Council adoption. Mr. Rossmann indicated Staff would present the policy to the Council for adoption and implement it thereafter. Council Member Berman believed Staff presented a good draft policy. Different elements of the policy could conflict. The Council could prioritize fees based on the total amount of fees paid each year or based on the change Staff proposed. He would support a policy allowing the City Manager to waive certain planning fees if the City Manager reported to the Council after the fact regarding time sensitive issues. Mr. Rossmann wanted to include that provision within the policy if the Council concurred. For FY 2016, Staff would outline fees proposed for deletion, new fees, and any fee which would increase more than 3.6 percent. Council Member Berman inquired whether Staff had a multiyear plan to align fees with the proper recovery levels. Mr. Rossmann responded yes. The City should not be charging all the fees, but a discussion of which fees to eliminate would be lengthy. Council Member Berman asked if some fees would be adjusted more than 3.6 percent in the FY 2016 Proposed Budget. Mr. Rossmann answered yes. Some fees would be new and some would have a higher change. Council Member Berman encouraged Staff to present in the FY 2016 Proposed Budget any fees that obviously needed changing. Mayor Holman recalled that Staff assured the Council in 2014 that some fees would be addressed in the FY 2016 Proposed Budget. One was the Alma Plaza Community Room, and the other was the return of low-income DRAFT ACTION MINUTES Page 6 of 8 City Council Meeting Draft Action Minutes: 04/06/2015 community garden fees. She did not find either one of those fees on the list. She hoped they would be addressed in the FY 2016 Proposed Budget. Mr. Rossmann explained that the issue of the Alma Plaza Community Room was presented to the Policy and Services Committee. The Finance Committee could propose a subsidy for community gardeners. Mayor Holman requested clarification of the Alma Plaza Community Room. Mr. Rossmann advised that Staff wished to receive Council feedback regarding the draft policy before returning to the Policy and Services Committee to discuss free rental rooms. Mr. Keene reported the Alma Plaza Community Room would return to the Policy and Services Committee for further discussion. Council Member Scharff recalled the Policy and Services Committee making a decision regarding the Alma Plaza Community Room. Mr. de Geus recalled a long discussion about the Alma Plaza Community Room at the Policy and Services Committee. Staff recommended a fee for private use of the room. Public use of the room would be free through a co- sponsorship policy. The Policy and Services Committee approved the existing policies unanimously. Council Member Scharff agreed. Because there was no change in policy, there was no need for Council action. Mayor Holman stated that should be reflected in the fee schedule. Mr. Rossmann referred to the Policy and Services Committee discussion outlined on packet page 16 regarding a need for Staff to return to the Policy and Services Committee. Mayor Holman expressed concern about impact fees. In a prior meeting, the consultant stated the City's impact fees were low. Delaying changes to impact fees to FY 2017 would be detrimental as the economy and development were growing at the current time. Mr. Keene noted the report stated no later than FY2017. Staff shared Mayor Holman's concern. Hillary Gitelman, Planning and Community Environment Director, clarified that the section of the Staff Report referred to user fees. It was not specific to impact fees, which Staff considered quite separate. The study of user fees was concluding, and Staff hoped to present the initial results to the DRAFT ACTION MINUTES Page 7 of 8 City Council Meeting Draft Action Minutes: 04/06/2015 Finance Committee after the budget process. Staff could work through the user fees over the summer and fall and be prepared for the next budget cycle. A nexus study was required for those fees not examined in the process in 2014. A housing nexus study was underway. For FY 2016, Staff proposed funds to complete a nexus study for transportation impact fees. Mayor Holman asked if a study of park impact fees had been funded. Ms. Gitelman did not program a review of park impact fees and did not know if that was included in the 2014 study. Mayor Holman did not believe impact fees adjustments would be included in the FY 2016 Proposed Budget. Ms. Gitelman concurred. Staff needed a nexus study prior to presenting increases to the Council. Mayor Holman stated the City's impact fees were low in comparison to other communities. She inquired whether the Council could make incremental adjustments. Ms. Gitelman responded no. A nexus study was needed for any changes. The current housing fee was comparable to other jurisdictions, but it could increase quite a bit based on conclusions of the nexus study. Mayor Holman asked if the Council could set a dollar amount for appeals of Planning and Community Environment matters. She was concerned that the amount of the fee would be a barrier to filing appeals. Mr. Rossmann replied yes. Vice Mayor Schmid noted the fee schedule showed a range for some fees, particularly Community Services fees. He inquired about the Council making decisions based on wide ranges. Mr. Rossmann explained that fees for Community Services programs were guided by a separate policy, shown in Attachment G, adopted in 2007. Staff planned to review the Community Services Department Class Cost Recovery Policy after the broader policy was adopted. The Community Services Department reviewed the cost for providing classes and demand for classes and attempted to maintain the same cost recovery level or increased fees based upon the policy Vice Mayor Schmid felt it was important for the Council to explain increasing fees. A description would be helpful. DRAFT ACTION MINUTES Page 8 of 8 City Council Meeting Draft Action Minutes: 04/06/2015 Council Member Wolbach agreed the Council should understand if people were aware of programs and discounts and scholarships. With respect to the City Manager waiving fees, maybe such an item could be placed on the Consent Calendar if the matter was not time sensitive. Adjournment: The meeting was adjourned at 12:23 A.M. City of Palo Alto (ID # 5760) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/18/2015 City of Palo Alto Page 1 Summary Title: Consultant Contract for Baylands Interpretive Center Design Services Title: Approval of Contract No. C1515321 with FOG Studio in the Amount of $97,900 for Design Services for the Baylands Interpretive Center Improvements Project PE-15029 From: City Manager Lead Department: Public Works Recommendation Staff recommends that Council approve and authorize the City Manager or his designee to execute Contract No. C15153291 with FOG Studio (Attachment A) in a not-to-exceed amount of $97,900 for design services, including $89,000 for basic services and $8,900 for additional services for the Baylands Nature Interpretive Center Facility Improvements project (PE-15029). Background The Lucy Evans Baylands Nature Interpretive Center is located within the City’s Baylands Nature Preserve. Built on piles above the salt marsh in 1967, the center was the first educational center within this unique Bay Area ecosystem. The scope of this CIP project includes replacement of the decking, railings, structural framing members as needed, exterior wood siding, flooring, cabinetry and doors. Funding for the estimated $405,000 construction phase is planned for FY 2016, but does not include code upgrades or improvements to the restroom likely needed to comply with the Americans with Disabilities Act (ADA). These potential needs were identified during a preproposal walk-through of the facility that was part of the solicitation process. Staff will request additional construction funding in the future if it is determined to be needed for these items. Discussion City of Palo Alto Page 2 The proposed contract with FOG Studio includes a structural assessment and report, a building code analysis and an ADA compliance assessment. The consultant will provide a design development package for repairs and/or improvements to exterior siding, decking, railings, interior floor refinishing and cabinetry, including a development level project schedule incorporating time for required permits. The design development package will not include changes to the existing architecture of the building. The consultant will also provide construction documents, including architectural, structural, and building systems drawings, materials lists and specifications. The consultant will provide a preliminary cost estimate at the end of the design development phase and a final cost estimate to accompany the construction documents. The consultant will coordinate, prepare and submit all necessary documents and plans needed for construction and permitting as part of the project. Design of potential restroom upgrades to comply with ADA and any code-mandated improvements to the electrical and mechanical systems not previously anticipated in the project scope are also included in this contract. Should the consultant identify the need for significant structural improvements, additional design services funding may be needed. This contract provides design services through the design phase but does not include construction administration services. Upon completion of the design phase, staff will return to Council with a contract amendment to provide construction administration services during the project’s construction phase. Construction administration services include responding to contractor questions and participating in project management meetings with City staff and contractor representatives. Project Coordination and Outreach There are three separate but related CIP projects involving the Lucy Evans Baylands Interpretive Center. These include: Baylands Boardwalk Improvements (PE-14018), Baylands Nature Interpretive Center Exhibit Improvements (AC- 14001), and Baylands Nature Interpretive Center Facility Improvements (PE- 15029). All three projects will be managed by Public Works and Community Services to ensure design decisions are coordinated and discussed with the public. The City anticipates reviewing structural repair options for the boardwalk and the center’s improvements with the public this fall. The interpretive signage design will also begin in FY 2016, and will be informed by the findings of the Boardwalk City of Palo Alto Page 3 Feasibility Study and Interpretive Center schematic design. Public input on the improvements, schedule and coordination of these projects will be necessary to minimize the impacts of construction activities at the center. Summary of Solicitation Process Proposal Description/157772 Name/Number of Proposal here Proposed Length of Project 22 months Number of Consultants Emailed 7 Total Days to Respond to Proposal 26 days Pre-proposal Meeting Date January 26, 2015 Number of Company Attendees at Pre-proposal Meeting 4 Number of Proposals Received: 3 Company Name Location (City, State) Selected for oral interview? FOG Studio El Cerrito, CA Yes Grossmann Design Group Architecture Planning Research San Francisco, CA No Vigen Inc, Architecture & Planning Fresno, CA No City of Palo Alto Page 4 Range of Proposal Amounts Submitted excluding additional services $91,589 - $94,500 On January 15, 2015, the City released a Request for Proposals (RFP) No. 157772) for Professional Services. Three proposals were received in response to the RFP. Public Works Engineering and Community Services staff carefully reviewed each firm's qualifications and submittal in response to the criteria identified in the RFP. Staff’s recommendation to award the contract to FOG Studio is based on their experience with the City of East Palo Alto’s Cooley Landing Education Center, understanding of the project scope outlined in the RFP and subsequent suggestions to improve the project as a whole. Resource Impact Funding for the design phase is available in Capital Improvement Program project PE-15029, Lucy Evans Baylands Nature Interpretive Center Improvements. As mentioned above, additional construction funding may be required to address ADA improvements to the restroom and other building code requirements that will be assessed during the design phase. Policy Implications Approval of the contract is consistent with City policies. Environmental Review It is anticipated that this project will be categorically exempt from the California Environmental Quality Act (CEQA) under section 15301(c), which addresses minor alterations and repairs to existing facilities. The potential need for regulatory agency review and permitting for construction work due to the sensitivity of the Interpretive Center’s endangered species habitat area will be evaluated during the design process. Next Steps Staff anticipates applying for any necessary permits in spring 2016, shortly before completing the 22-month contract. Construction is tentatively planned for fall 2016. Attachments:  A - Contract (PDF) City of Palo Alto Page 5  FOG Studio Contract Page 14: Task 5 corrected to read Task 4 (PDF) CITY OF PALO ALTO CONTRACT NO. C15157772 AGREEMENT BETWEEN THE CITY OF PALO ALTO AND FOG STUDIO FOR PROFESSIONAL SERVICES This Agreement is entered into on this 1st day of May, 2015, (“Agreement”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and FOG STUDIO, a California General Partnership, located at 8106 Terrace Drive, El Cerrito, CA 94530 ("CONSULTANT"). RECITALS The following recitals are a substantive portion of this Agreement. A. CITY intends to provide improvements to the Baylands Interpretive Center (“Project”) and desires to engage a consultant to provide design services 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 in Exhibit “A” in accordance with the terms and conditions contained in this Agreement. The performance of all Services shall be to the reasonable satisfaction of CITY. Optional On-Call Provision (This provision only applies if checked and only applies to on- call agreements.) Services will be authorized by the City, as needed, with a Task Order assigned and approved by the City’s Project Manager. Each Task Order shall be in substantially the same form as Exhibit A-1. Each Task Order shall designate a City Project Manager and shall contain a specific scope of work, a specific schedule of performance and a specific compensation amount. The total price of all Task Orders issued under this Agreement shall not exceed the amount of Compensation set forth in Section 4 of this Agreement. CONSULTANT shall only be compensated for work performed under an authorized Task Order and the City may elect, but is not required, to authorize work up to the maximum compensation amount set forth in Section 4. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through completion of the services in accordance with the Schedule of Performance attached as Exhibit “B” unless terminated earlier pursuant to Section 19 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. 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 Eighty Nine Thousand Dollars ($89,000.00). In the event Additional Services are authorized, the total compensation for Services, Additional Services and reimbursable expenses shall not exceed Ninety Seven Thousand Nine Hundred Dollars ($97,900.00). The applicable rates and schedule of payment are set out in 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 in 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 subconsultants, 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 Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 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, 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 errors, omissions or ambiguities discovered prior to and during the course of construction of the Project. This obligation shall survive termination of the Agreement. SECTION 9. COST ESTIMATES. If this Agreement pertains to the design of a public works project, CONSULTANT shall submit estimates of probable construction costs at each phase of design submittal. If the total estimated construction cost at any submittal exceeds ten percent (10%) of the Schematic Design cost estimate, CONSULTANT shall make recommendations to the CITY for aligning the PROJECT design with the budget, incorporate CITY approved recommendations, and revise the design to meet the Project budget, at no additional cost to CITY. SECTION 10. INDEPENDENT CONTRACTOR. It is understood and agreed that in 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 the CITY. SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of CONSULTANT are material considerations for this Agreement. CONSULTANT shall not assign or transfer any interest in this Agreement nor the performance of any of 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. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 SECTION 12. SUBCONTRACTING. Option A: No Subcontractor: CONSULTANT shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of the city manager or designee. Option B: Subcontracts Authorized: Notwithstanding Section 11 above, CITY agrees that subconsultants may be used to complete the Services. The subconsultants authorized by CITY to perform work on this Project are: 1. Holmes Culley – Structural Engineering 2. ACG Engineers, Inc. – Electrical Engineering 3. Mack 5 – Cost Estimation 4. MHC Engineers – Mechanical/Plumbing Engineering CONSULTANT shall be responsible for directing the work of any subconsultants and for any compensation due to subconsultants. CITY assumes no responsibility whatsoever concerning compensation. CONSULTANT shall be fully responsible to CITY for all acts and omissions of a subconsultant. CONSULTANT shall change or add subconsultants only with the prior approval of the city manager or his designee. SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Tiffany Redding as the Project Manager to have supervisory responsibility for the performance, progress, and execution of the Services and Brandon Marshall as the project Architect 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. The City’s project manager is Elizabeth Ames, Public Works Department, Engineering Division, 250 Hamilton Ave, Palo Alto, CA 94301, Telephone:650-329-2502. The project manager will be CONSULTANT’s point of contact with respect to performance, progress and execution of the Services. The CITY may designate an alternate project manager from time to time. SECTION 14. OWNERSHIP OF MATERIALS. Upon delivery, all work product, including without limitation, 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. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 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. [Option A applies to the following design professionals pursuant to Civil Code Section 2782.8: architects; landscape architects; registered professional engineers and licensed professional land surveyors.] 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”) that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the CONSULTANT, its officers, employees, agents or contractors under this Agreement, regardless of whether or not it is caused in part by an Indemnified Party. [Option B applies to any consultant who does not qualify as a design professional as defined in Civil Code Section 2782.8.] 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 active negligence, sole negligence or willful misconduct, in whole or in part 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. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 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 Purchasing Manager 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. 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 Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 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 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 subconsultants, 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” Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 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 the 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 the 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 Consultant to City generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double-sided and printed on a minimum of 30% or greater post-consumer content paper, unless otherwise approved by the 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 the City shall be purchased in accordance with the 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 Office. • Reusable/returnable pallets shall be taken back by the Consultant, at no additional cost to the City, for reuse or recycling. Consultant shall provide documentation from the facility accepting the pallets to verify that pallets are not being disposed. SECTION 24. NON-APPROPRIATION 24.1. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion 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. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 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) 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. / / / / / / / / / / Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 / / / / / / / / / / 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 ____________________________ City Manager (Required on contracts over $85,000) APPROVED AS TO FORM: __________________________ Senior Asst. City Attorney (Required on Contracts over $25,000) FOG STUDIO By:___________________________ Name:_________________________ Title:________________________ Attachments: EXHIBIT “A”: SCOPE OF WORK EXHIBIT “B”: SCHEDULE OF PERFORMANCE EXHIBIT “C”: COMPENSATION EXHIBIT “C-1”: HOURLY RATE SCHEDULE EXHIBIT “D”: INSURANCE REQUIREMENTS Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 Tiffany Redding Owner / Partner, FOG Studio EXHIBIT “A” SCOPE OF SERVICES 1. INTRODUCTION This contract is for a Design Consultant to provide design improvements to the building and its amenities; present the design improvements to Palo Alto’s Architectural Review Board and Parks & Recreation Commission; acquire permitting from various agencies as needed (Fish and Game, Fish and Wildlife, Army Corp, BCDC, etc.) for construction; and provide construction administration services. Improvements include replacement of the decking, railing, structure framing members (as needed), exterior wood siding, flooring, cabinetry, and doors. The project is expected to be categorically exempt under the California Environmental Quality Act. 2. SCOPE OF SERVICES General Requirements FOG Studio (hereinafter “Consultant”) shall provide the following design services: 1. Building structural system* a. Structural assessment and report b. Structural engineering of new members or repaired/replaced existing members 2. Design and detailing of new exterior railing to meet building code and ADA 3. Design of replacement siding to match or complement existing siding 4. Design and electrical engineering of exterior lighting to meet building code and enhance visitors experience and safety 5. Engineering of electrical panel, control system and power distribution system upgrades 6. Design of replacement decking to match or complement existing siding 7. Design and documentation of ADA-compliant restrooms, including new partitions, doors, lighting, plumbing, exhaust, and finishes 7. Title 24 energy and lighting compliance calculations 8. CalGreen compliance forms 9. Evaluation and recommendations for existing interior flooring *The Basic Structural Scope of Services will include the following: 1.1 Project start-up & programming a. Review as-built drawings to be provided by City b. Structural survey above & below deck (wader access) 1.2 Schematic Design a. Structural evaluation report b. Prepare typical repair details (appendix to report) Exclusions to Basic Structural Scope of Services: a. Exploratory demolition and destructive investigation b. Material testing c. Access to view underside of deck, other than via waders at low tide d. Geotechnical investigation and report e. Investigation of pest or fungal infestation f. Special Inspections during construction Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 g. Obtaining or producing as-built structural drawings h. Demolition documentation i. Design of temporary shoring, formwork and underpinning j. Construction Administration If problems are discovered during the Basic Structural Services phase, the Consultant shall provide the following services on a not-to-exceed fee basis as an additional services: 2.1 Design of repair for substructure (i.e. piles), if damage found 2.2 Preparation of drafted structural documents and details 2.3 Preparation of calculations for permit submittal 2.4 Construction Documents 2.5 Additional Services (new item from latest proposal) a. As agreed during Contract Negotiations, if significant deterioration is found that causes extensive Structural Engineering work, the proposed $2500 fees for each phase (Design Development/Construction Documents) will be augmented as needed via an Additional Service. b. Additional Services may include, but are not limited to: finding that the building has “Substantial Structural Damage” as defined by the California Building Code which could include major deficiencies in the as-built state due to deterioration or construction defects; deficiencies or lack of gravity or lateral load path in the structure; additional site visits to further investigate existing deficient conditions; production of drawing submittal requiring more than 1 plan sheet and 1 detail sheet; and/or review of architectural details not including railing design, exterior deck repairs, and partition detailing. Task 1. Schematic Design 1.1 Project start-up and Programming a. Consultant and Design Team shall meet with City and Community Services Department representatives b. Consultant shall review as-builts to be provided by City c. Consultant shall coordinate with City and Community Services Department representatives to gather information and comments for the schematic design 1.2 Prepare schematic design for the improvements to the Baylands Interpretive Center. a. Consultant shall conduct code analysis and ADA assessment b. Consultant shall coordinate design with City and Community Services Department representatives c. Consultant shall meet with City and Community Services Department representatives (1 meeting @ 4 hours) d. Consultant shall prepare outline specifications and schedule for project e. Consultant shall submit a digital file in PDF format of the schematic design package to City for review which shall be compromised of the site (plan), architectural (architectural plans, elevations, and sections), structural (basic structural systems), and any relevant supporting materials 1.2.1 Consultant shall provide a description of the regulatory permits that are expected to be necessary for construction of the improvements, including the process and expected timeline for each individual permit and the overall expected timeline for all permits. 1.3 Present schematic design to City a. Consultant shall prepare presentation materials (architectural plans, elevations, and sections as appropriate) Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 b. Consultant may be required to present the schematic design to City Boards and Commissions (2 meetings @ 4 hours each with ARB and PRC). If meetings are required, the Consultant shall be compensated via “Additional Services” at a lump sum of $1,000 per meeting. 1.4 Consultant shall coordinate with project team (includes meetings) Task 2. Design Development 2.1 Prepare design development package for improvements to the Baylands Interpretive Center a. Consultant shall refine and update schematic design drawings in response to comments from Commissions, Community Services Department and City representatives b. Consultant shall develop building and site details c. Consultant shall prepare in-progress specifications for projects d. Consultant shall develop interior/exterior design e. Consultant shall prepare interior/exterior product/finish boards 2.2 Consultant shall submit a digital file in PDF format of the design development package to City for review which shall include the architectural, structural, and building systems drawings, and any relevant drawings, and materials 2.3 Consultant shall coordinate with project team (includes meetings) 2.4 Upon completion of design development, Consultant shall a provide a cost estimate and design development level project schedule including time for permits required for the Project 2.5 Present design development package to City a. Prepare presentation materials b. Consultant may be required to present the schematic design to City Boards and Commissions (2 meetings @ 4 hours each with ARB and PRC). If meetings are required, the Consultant shall be compensated via “Additional Services” at a lump sum of $1,000 per meeting. Task 3. Construction Documents 3.1 Consultant shall prepare construction documents for Baylands Interpretive Center Improvements a. Consultant shall refine and update design development drawings b. Consultant shall prepare technical specifications for project in CSI format c. Consultant shall refine interior design d. Consultant shall develop final interior product/finish/furnishing boards e. Consultant shall coordinate with City 3.2 Consultant shall submit soft copy in pdf format of the 65% and 95% construction documents package to City for review which shall include the architectural, structural, and building systems drawings, and any relevant drawings, and materials and specifications. Anticipated plan sheets for submittal to the City shall include the following: 1. Title Sheet 2. Stage Construction Plan and Notes 3. Architectural Exterior and Interior Plans and Elevations 4. Structural Plans and Details 5. Typical Cross Sections Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 6. Cabinetry, Doors and Miscellaneous details 3.3 Consultant shall update project schedules at 65% & 95% 3.4 Upon completion of construction documents, Consultant shall provide a final construction cost estimate for the Project 3.5 Consultant shall deliver final 100% construction documents and cost estimate to City (digital copy in PDF format) Task 4. Permits This project may require permitting from various regulatory agencies (Fish and Game, Fish and Wildlife, Army Corps of Engineers, BCDC, etc.). The Consultant shall coordinate, prepare applications, and submit all necessary documents, permits and/or plans that are required by the agencies needed for construction as part of the project. Permit fees shall be the responsibility of the City. Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 EXHIBIT “B” SCHEDULE OF PERFORMANCE CONSULTANT shall perform the Services so as to complete each milestone within the number of days/weeks specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the project managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed. Milestones Completion Weeks from NTP 1. Task 1 – Schematic Design 12 2. Task 2 – Design Development 23 3. Task 3 – Construction Documents 46 4. Task 4 – Agencies Permits 46 Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 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 not to exceed budget amount for each task set forth below. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit “A” (“Basic Services”) and reimbursable expenses shall not exceed $89,000.00. CONSULTANT agrees to complete all Basic Services, including reimbursable expenses, within this amount. In the event CITY authorizes any Additional Services, the maximum compensation for Services, Additional services and reimbursable expenses shall not exceed $97,900.00. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY. CONSULTANT shall perform the tasks and categories of work as outlined and budgeted below. The CITY’s Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below provided the total compensation for Basic Services, including reimbursable expenses, does not exceed $89,000.00 and the total compensation for Additional Services, Services and reimbursable expenses does not exceed $97,900.00. BUDGET SCHEDULE NOT TO EXCEED AMOUNT Task 1 $29,150.00 (Schematic Design) Task 2 $28,150.00 (Design Development) Task 3 $29,700.00 (Construction Documents) Task 5 $0 (Permits) Sub-total Basic Services $87,000.00 Reimbursable Expenses $2,000.00 Total Basic Services and Reimbursable expenses $89,000.00 Additional Services (Not to Exceed) $8,900.00 Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 Maximum Total Compensation $97,900.00 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. CITY shall reimburse CONSULTANT for the following reimbursable expenses at cost. Expenses for which CONSULTANT shall be reimbursed are: A. Travel outside the San Francisco Bay area, including transportation and meals, will be reimbursed at actual cost subject to the City of Palo Alto’s policy for reimbursement of travel and meal expenses for City of Palo Alto employees. B. Long distance telephone service charges, cellular phone service charges, facsimile transmission and postage charges are reimbursable at actual cost. C. Presentation boards and mounting. All requests for payment of expenses shall be accompanied by appropriate backup information. Any expense anticipated to be more than $500.00 shall be approved in advance by the CITY’s project manager. ADDITIONAL SERVICES The CONSULTANT shall provide additional services only by advanced, written authorization from the CITY. The CONSULTANT, at the CITY’s project manager’s request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONSULTANT’s proposed maximum compensation, including reimbursable expense, for such services based on the rates set forth in Exhibit C-1. The additional services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the CITY’s Project Manager and CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement Professional Services Rev. Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 EXHIBIT “C-1” HOURLY RATE SCHEDULE Team Member Rate ($) 2015 1. Principal in charge $150/hr 2. Project Architect $125/hr 3. Administration $60/hr Professional Services Rev Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 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 SUBCONSULTANTS, 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 Professional Services Rev Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 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, 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: EMAIL: InsuranceCerts@CityofPaloAlto.org PURCHASING AND CONTRACT ADMINISTRATION CITY OF PALO ALTO P.O. BOX 10250 PALO ALTO, CA 94303 Professional Services Rev Feb. 2014 DocuSign Envelope ID: 16BCCC9F-EC46-49C3-8A1C-A7B2C893A053 Professional Services Rev. Feb. 2014 14 S:\PWD\ENG\EA PROJECTS\CIPs\Baylands Interpretive Center PE-15029\Contract\FOG Studio\FOG Studio Contract.docx 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 not to exceed budget amount for each task set forth below. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit “A” (“Basic Services”) and reimbursable expenses shall not exceed $129,660.00. CONSULTANT agrees to complete all Basic Services, including reimbursable expenses, within this amount. In the event CITY authorizes any Additional Services, the maximum compensation shall not exceed $142,626.00. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY. CONSULTANT shall perform the tasks and categories of work as outlined and budgeted below. The CITY’s Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below provided the total compensation for Basic Services, including reimbursable expenses, does not exceed $129,660.00 and the total compensation for Additional Services does not exceed $142,626.00. BUDGET SCHEDULE NOT TO EXCEED AMOUNT Task 1 $29,150.00 (Schematic Design) Task 2 $28,150.00 (Design Development) Task 3 $29,700.00 (Construction Documents) Task 4 $0 (Permits) Sub-total Basic Services $87,000.00 Reimbursable Expenses $2,000.00 Total Basic Services and Reimbursable expenses $89,000.00 Additional Services (Not to Exceed) $8,900.00 City of Palo Alto (ID # 5756) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/18/2015 City of Palo Alto Page 1 Council Priority: Environmental Sustainability Summary Title: Palo Alto CLEAN Program Updates and Extension Title: Finance Committee Recommendation that Council: (1) Add a 25-Year Contract Term Option in Addition to the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program’s Existing 20-Year Contract Term Option; (2) Continue the CLEAN Program for Solar Resources at a Contract Price Reduced from 16.5¢/kWh to the Avoided Cost of the Solar Energy Generated (10.3 ¢/kWh to 10.4 ¢/kWh) with a Program Cap of 3 Megawatts; and (3) Expand the CLEAN Program's Eligibility to Non-Solar Renewable Energy Resources with a Program Cap of 3 Megawatts at a Contract Price Equal to the Avoided Cost of the Non-Solar Energy Generated (9.3 ¢/kWh to 9.4 ¢/kWh) From: City Manager Lead Department: Utilities Recommended Motion I move that Council: 1. Adopt a resolution (Attachment A) to make the following changes and amend the CLEAN Program Eligibility Rules and Regulations accordingly: a. Add a 25-Year Contract Term Option in Addition to the CLEAN Program’s Existing 20-Year Contract Term Option; b. Continue the Palo Alto CLEAN Program for solar energy resources, reducing the contract price from 16.5 cents per kilowatt-hour (¢/kWh) to a contract price equal to the avoided cost of solar energy resources of 10.3 ¢/kWh for a 20-year contract, and 10.4 ¢/kWh for a 25-year contract term, and to continue with a CLEAN Program limit for solar energy resources of 3 megawatts (MW); c. Expand the CLEAN Program to allow non-solar eligible renewable energy resources to participate, and offer such resources a contract price equal to their City of Palo Alto Page 2 avoided cost of 9.3 cents per kilowatt-hour (¢/kWh) for a 20-year contract, and 9.4 ¢/kWh for a 25-year contract term, with a program limit of 3 MW; 2. Direct staff to return to the Finance Committee after reviewing ways to continue the PV Partners for residential use; and 3. Approve the attached amended CLEAN Program Power Purchase Agreement (PPA) (Attachment B) to implement the recommended changes to the CLEAN Program and delegate authority to the City Manager to make any such additional changes as are approved by the City Attorney’s office, and are otherwise necessary to implement any of the recommended changes identified in this staff report that are approved by Council or are otherwise necessary to implement Council’s action on this item. Recommendation The Finance Committee recommends that the City Council: 1. Adopt a resolution (Attachment A) to make the following changes and amend the CLEAN Program Eligibility Rules and Regulations accordingly, as attached to the resolution as Exhibit A-1: a. Add a 25-Year Contract Term Option in Addition to the CLEAN Program’s Existing 20-Year Contract Term Option; b. Continue the Palo Alto CLEAN Program for solar energy resources, reducing the contract price from 16.5 cents per kilowatt-hour (¢/kWh) to a contract price equal to the avoided cost of solar energy resources of 10.3 ¢/kWh for a 20-year contract, and 10.4 ¢/kWh for a 25-year contract term, and to continue with a CLEAN Program limit for solar energy resources of 3 megawatts (MW); c. Expand the CLEAN Program to allow non-solar eligible renewable energy resources to participate, and offer such resources a contract price equal to their avoided cost of 9.3 cents per kilowatt-hour (¢/kWh) for a 20-year contract, and 9.4 ¢/kWh for a 25-year contract term, with a program limit of 3 MW; 2. Direct staff to return to the Finance Committee after reviewing ways to continue the PV Partners for residential use; and 3. Approve the attached amended CLEAN Program Power Purchase Agreement (PPA) (Attachment B) to implement the recommended changes to the CLEAN Program and delegate authority to the City Manager to make any such additional changes as are approved by the City Attorney’s Office, and are otherwise necessary to implement any of the recommended changes identified in this staff report that are approved by Council or are otherwise necessary to implement Council’s action on this item. City of Palo Alto Page 3 The recommendation from the Finance Committee differs from the recommendation made by the Utilities Advisory Committee (UAC). At its December 2014 meeting, the UAC supported staff’s initial recommendation to continue the Palo Alto CLEAN Program for solar resources at the current 16.5 ¢/kWh contract price, with a program limit of 3 MW for solar energy resources. However, the UAC did not support staff’s recommendation to expand the CLEAN Program’s eligibility to non-solar renewable energy resources. The Finance Committee’s recommendation that Council reduce the CLEAN Program price for solar resources (from 16.5¢/kWh to 10.3¢/kWh or 10.4 ¢/kWh, depending on contract term length) also has implications for a City project (Solar Installations on City-Owned Parking Garages) and a City program (the Community Solar Program) currently in negotiations and under development by City staff. Should Council elect to adopt the Finance Committee recommendation to reduce the contract price under the CLEAN Program for solar resources, it’s possible that one or both of these initiatives will no longer be able to move forward. Executive Summary In March 2012, the Council adopted the Palo Alto CLEAN (Clean Local Energy Accessible Now) program (also commonly referred to as a feed-in tariff, or FIT, program). The program was designed to address the Long-term Electric Acquisition Plan (LEAP) Objective to enhance supply reliability through the pursuit of local generation opportunities, and to complement the City of Palo Alto Utilities’ (CPAU’s) existing PV Partners solar rebate program. Palo Alto CLEAN created an additional alternative for property owners by enabling them to build a new solar system on their property and sell the energy to CPAU under a long-term, fixed-rate contract rather than participate in the PV Partners program and use the energy on site. Addition of 25-Year Contract Term Option to the CLEAN Program A number of solar project developers have indicated to staff that the CLEAN Program might be somewhat more attractive to them (and their investors) if the PPA term were extended from 20 to 25 years in part, to synchronize the term of the PPA with the 25-year expected life of solar panels. The City does not have a strong preference for one contract term or the other; therefore, the UAC and the Finance Committee both recommend allowing developers to choose either a 20-year or 25-year contract term at the time they execute a CLEAN Program PPA. Reduction in Contract Price for Solar Resources from 16.5¢/kWh to 10.3 or 10.4¢/kWh At its December 2014 meeting, the UAC supported staff’s initial recommendation to continue the Palo Alto CLEAN Program for solar resources at the current 16.5 ¢/kWh contract price, with a program limit of 3 MW for solar energy resources. However, the Finance Committee now recommends a reduction of the contract price to avoided cost. For solar resources, the avoided cost of their output is 10.3 ¢/kWh for a 20-year term and 10.4 ¢/kWh for a 25-year term; for non-solar renewable energy resources, the avoided cost of their output is 9.3 ¢/kWh for a 20- year term and 9.4 ¢/kWh for a 25-year term. City of Palo Alto Page 4 The recommendation to reduce the contract price for local solar resources from 16.5¢/kWh to their avoided cost level represents a deviation from existing Council policy. When establishing the CLEAN Program price of 16.5 ¢/kWh in December 2012, Council reviewed the market value of local solar and determined that there were additional financial and environmental benefits to increasing local solar generation, such as reducing the need to construct new transmission lines, improving grid reliability, and encouraging local economic development. In recommending a reduction in the CLEAN Program contract price, Finance Committee members cited, among other things, more general trends in the reduction of the avoided cost of solar energy and the lower prices the City is paying for long-term PPAs for solar energy generated by larger projects. The Palo Alto CLEAN Program has no deadline for participation and solar developers continue to express interest in it, but no applications have been received for the CLEAN Program as of mid-April 2015. However, City staff is currently in the process of developing and negotiating a project (Public Works Department - Solar installations on City-Owned Parking Garages) which is a potential participant in the CLEAN Program, and a program (Utilities Department - the Community Solar Program) which involves a PPA that is based on the CLEAN Program PPA. Reducing the CLEAN Program contract price as recommended in this staff report has notable implications for both the Public Works project and Utilities program:  Solar Installations on City-Owned Parking Garages (Public Works): Reducing the contract price for solar resources would dramatically reduce the attractiveness of a lease agreement the Public Works Department is currently negotiating to facilitate the installation of rooftop solar at five City-owned parking garages. The prospective lessee intended to install solar projects that would be eligible to participate in the CLEAN Program at the 16.5 ¢/kWh contract price.  The Community Solar Program (Utilities): The community solar program, an element of the Council-adopted Local Solar Plan, is currently under development and could be adversely affected by the decision to reduce the CLEAN price. Staff has continued its marketing efforts to commercial customers and property owners, both for the PV Partners program and the CLEAN Program, but expects that most growth in commercial solar installations will come from customers participating in the PV Partners program. Although the CLEAN Program is available to all, including residential, customers, staff expects residents will continue to install PV systems that generate electricity for use on-site and have the advantages of lowering utility bills through net metering. Expansion of CLEAN Program Eligibility to Non-Solar Resources The Finance Committee also recommends expanding the CLEAN Program and for the first time opening the program up to non-solar eligible renewable energy resources, with separate 3 MW program limits applying to each of the two different types of resources. Further, the Finance City of Palo Alto Page 5 Committee recommends offering both types of resources contract rates equal to the avoided cost of their energy over terms of 20 or 25 years. For non-solar resources, the avoided cost of their output is 9.3 ¢/kWh for a 20-year term and 9.4 ¢/kWh for a 25-year term. At its December 2014 meeting, the UAC rejected staff’s recommendation to expand the CLEAN Program to non-solar resources, citing a lack of supporting justification for expanding the CLEAN Program’s eligibility to non-solar renewable energy resources. The recommendation to expand the CLEAN Program to include non-solar renewable energy generation resources is consistent with staff’s indications both at the time the CLEAN Program was first introduced in 2012 and at the time that Council terminated the Power from Local Ultra-clean Generation Incentive (PLUG-In) program in June 2014. The recommendation to expand the CLEAN Program to compensate non-solar renewable resources at their avoided cost level is also consistent with adopted Council policy. Background The PV Partners Program CPAU has a long and successful history of supporting solar power. It initiated the PV Partners program in 1999, and in 2007 the program was expanded to meet the requirements of the State’s Million Solar Roofs Bill (Senate Bill 1 (SB1), 2006). Under the PV Partners program CPAU provides rebates to residential and commercial customers who install solar to offset their own electricity use. The PV Partners program has been successful at stimulating solar development, with 6.0 MW of local solar capacity installed by nearly 694 participants as of the end of December 2014. Palo Alto is one of the top ten utilities nationwide in PV installations per customer. Through the PV Partners program, CPAU already provides substantial financial support for local solar installations. CPAU’s total SB1 program budget for 2008 through 2017 is $13 million and the total program goal is 6.6 MW. When this goal is achieved the energy generated by the program annually will be 11.2 GWh (1.1% of Palo Alto load). The cost of the program is roughly $1.3 million per year for the rebates plus the cost of administration and the lost distribution system revenue associated with net metering. At the same time, the local solar generation reduces CPAU’s total supply costs by approximately $1.15 million per year by reducing the cost of energy purchases, transmission, and capacity so that the rate impact is less than 0.2% per year while rebates are being paid. Due to SB1, PV Partners is a state mandated program, and regardless of the rate impact, CPAU is required to offer it until the total program budget of $13 million has been exhausted. The PV Partners program rebates for residential PV systems were fully reserved on August 9, 2014 and the $1.6 million in remaining funds for commercial PV systems is expected to be reserved by the end of 2015. The CLEAN Program In March 2012, the City expanded its support for local distributed generation by launching Palo Alto CLEAN with a price of 14 ¢/kWh for a 20-year contract (Staff Report 2548, Resolution City of Palo Alto Page 6 9235). The CLEAN Program expanded the options available to property owners beyond the existing PV Partners program by enabling them to sell energy directly to CPAU under a long term contract instead of using the energy on-site. Initially, the CLEAN Program generated a high level of interest from solar developers who wanted to lease rooftops in Palo Alto in order to build a solar system and sell the energy to CPAU. However, it soon became apparent that the 14 ¢/kWh price was insufficient to enable third-party developers to earn their target returns while still offering attractive rooftop lease rates. In December 2012, Council extended the CLEAN Program and increased the rate to 16.5 ¢/kWh for a 20-year contract (Staff Report 3316, Resolution 9308). In February 2014, Council extended the CLEAN Program again at the rate of 16.5 ¢/kWh for a 20-year contract, increased the program capacity limit to 3 MW, and requested that staff return to review the program after one year or when the 3 MW cap was reached (Staff Report 4378, Resolution 9393). The CLEAN Program has no deadline for participation and solar developers continue to express interest in it, but (as noted above) no applications have been received for it as of mid-April 2015. However, CPAU has provided assistance to the Public Works Department to work with Clean Coalition, a local nonprofit organization, to issue a Request for Proposals to lease the rooftop space on the top decks of five city-owned parking garages (three downtown and two on Cambridge Avenue) in order to install solar canopies, which would provide an estimated 1.5 MW of local solar capacity. Staff interviewed all three respondents to the Request for Proposals, selected the top vendor, and (at the time of this writing) is negotiating a site lease for the project and preparing it for potential Council approval. Since the CLEAN Program requires participants to have site control before applying for the program, the vendor will become eligible and is expected to apply to the CLEAN Program, should the City Council approve the site lease. Despite the lack of participation to date, there have still been positive outcomes from the CLEAN Program offering. The CLEAN Program prompted developers to take a serious look at the cost of developing solar projects in Palo Alto, and some of them shared that information with CPAU staff. At the same time, the solar project permitting processes at the development center have been improved based on input gathered from solar developers. In addition, a number of public utilities across the country have called CPAU to discuss how to follow Palo Alto’s lead and develop a CLEAN Program in their own service areas. Similar Feed-in Tariff Programs in California Other municipalities in California have developed feed-in tariff (FIT) programs similar to Palo Alto CLEAN, and some have succeeded in getting actual projects built. The key difference between Palo Alto CLEAN and other FIT programs around the state is that most other programs are geared toward ground-mounted or parking structure-based solar installations, rather than the significantly more costly rooftop installations. But given how built-out Palo Alto land is, there are very few opportunities to build solar generation resources anywhere but on rooftops. City of Palo Alto Page 7 The Los Angeles Department of Water and Power (LADWP) has a FIT program with a 100 MW capacity goal (FIT 100) that has been active over the past three years utilizing a declining market price structure. This program began in May 2012, and the initial contract prices were established based on developer bids (the weighted average contract rate was 17.5 ¢/kWh). Once the capacity allocated to this first price tranche was fully reserved, the contract price was reduced to 17 ¢/kWh, and was subsequently reduced in 1 ¢/kWh increments after the capacity in each tranche was fully allocated. As shown in Table 1 below, LADWP’s FIT 100 program has seen a strong market response exceeding each capacity offering. However, high project cancellation rates have been observed at each price level as projects encountered uneconomic costs, and the level of market response has rapidly decreased as the offer price has declined. In fact, the final tranche opened up in March 2015 at an offer price of 13 ¢/kWh, and to date it has received only nine applications totaling 5.6 MW (out of the 25 MW being offered). Table 1 – LADWP FIT 100 Procurement Summary Offering Date Price Capacity Offered (MW) Active (MW) Cancelled (MW) Operating (MW) May 2012 17.5 ¢/kWh (average) 10 0 5.6 1.6 Feb 2013 17 ¢/kWh 20 15.1 28.2 1.6 July 2013 16 ¢/kWh 20 15.2 20.8 2.2 Mar 2014 15 ¢/kWh 20 14.1 11.4 0 Aug 2014 14 ¢/kWh 15 11.6 0.9 0 Mar 2015 13 ¢/kWh 25 5.6 0 0 Source: LADWP Fifth FIT Allocation Board Presentation, December 2014 Among smaller California utilities, Marin Clean Energy (MCE) also operates a FIT program similar to Palo Alto CLEAN. MCE’s program has a 10 MW capacity target, and like the LADWP FIT 100 program, it utilizes a declining market price structure based on total capacity procured. The MCE program also began operating in 2012, and quickly executed a contract for a 1 MW rooftop solar PV project located at the San Rafael airport; the contract rate was 13.77 ¢/kWh, and the project is now operating. The MCE FIT program has a couple of additional parking structure-based solar PV projects under development, and the offer rate is now at 12 ¢/kWh. Discussion Palo Alto CLEAN Program Price for Local Solar – History and Proposal When establishing the CLEAN price of 16.5 ¢/kWh in December 2012, Council reviewed the market value of the local solar energy and determined that there were additional financial and environmental benefits to increasing local solar generation. In February 2014, when Council re- affirmed the 16.5 ¢/kWh price, staff estimated the cost of buying renewable energy outside of Palo Alto and transmitting it to Palo Alto was 9.9 ¢/kWh (including renewable energy value, transmission and capacity) for a 20-year contract. Therefore, purchasing the energy generated from 3 MW of local solar projects at 16.5 ¢/kWh was expected to cost about $320,000 per year more than buying the same energy outside of Palo Alto (and having it transported to Palo Alto). This was equivalent to a 0.27% increase in the electric utility’s costs. Council determined that City of Palo Alto Page 8 this additional cost was acceptable as a means to encourage local solar installations and in light of the additional benefits of encouraging local solar generation. In June 2014, the City executed a long-term Power Purchase Agreement (PPA) to buy renewable energy from a 25 MW solar energy project near Bakersfield at a cost of about 6.9 ¢/kWh (Staff Report 4791, Resolution 9416). The cost to deliver that energy to Palo Alto, combined with the capacity related benefits that local solar would provide, is projected to be an additional 3.4 ¢/kWh, for a total value of local solar energy of 10.3 ¢/kWh. Based on this value, or avoided cost, the cost of continuing the 16.5 ¢/kWh CLEAN price for 3 MW of solar PV projects would be about $310,000 per year more than buying the same energy outside of Palo Alto, or $6.2 million over the 20-year contract term. This is equivalent to a 0.26% increase in the electric utility’s costs. Table 2 below shows the history of the Palo Alto CLEAN price since the program started as well as the Finance Committee’s recommended CLEAN contract price for local solar for a 20-year contract term, which is equal to local solar energy’s avoided cost of 10.3 ¢/kWh. Table 2 – Palo Alto CLEAN Program Prices for Local Solar Council Approval Avoided Cost of Local Solar Generation * (¢/kWh) CLEAN Price for 20 years (¢/kWh) Annual Excess Cost (Rate Impact) Total Excess Cost over 20- year Term March 2012 13.553 14.0 $15,000 (0.01%) for 2 MW cap $300,000 December 2012 11.6 16.5 $160,000 (0.10%) for 2 MW cap $3.2 million February 2014 9.9 16.5 $332,500 (0.27%) for 3 MW cap $6.45 million UAC Dec. 2014 Recommendation 10.3 16.5 $310,000 (0.26%) for 3 MW cap $6.2 million Current Proposal: Finance Committee Recommendation 10.3 10.3 $0 $0 * The cost of buying renewable energy outside of Palo Alto and transmitting it to Palo Alto. Reduction in the CLEAN Program Contract Price However, as discussed in more detail in the “Committee Review and Recommendation” section below, the Finance Committee recommends that the CLEAN contract price for local solar resources be reduced to the avoided cost level (10.3 ¢/kWh for a 20-year contract term). At the avoided cost price, if any developers of local solar projects did participate in the CLEAN Program there would be no cost impact on CPAU ratepayers. Some members of the Finance Committee suggested that the extra cost of the CLEAN Program funds could be used instead to replenish the PV Partners rebate funds available to residential customers installing solar panels on their homes. However, because the residential PV Partners rebate funds were fully reserved in City of Palo Alto Page 9 August 2014 (and the application process to receive these funds subsequently shut down), staff feels that there would be significant logistical and equity issues associated with re-initiating the residential PV Partners program. Funds could, however, be used to start a new solar rebate program when current PV Partners funds are exhausted.  Implications of CLEAN Program Contract Price Reduction: CLEAN Program Participation As discussed above, the Palo Alto CLEAN Program has yet to receive an application from a solar PV project, even after two years of offering a contract rate of 16.5 ¢/kWh. Industry groups, such as the CLEAN Coalition, attribute low participation levels to the comparatively high rates that property owners in Palo Alto charge for leasing their rooftop space, as well as the lack of space available to install ground-mounted or parking structure-based projects. However, as the cost of solar panels and other balance of system costs continue to decline over time, staff believes that the 16.5 ¢/kWh price would soon prove sufficient to attract program participants—even beyond the aforementioned parking garage rooftop lease project. On the other hand, reducing the CLEAN contract price to the avoided cost level would undoubtedly eliminate any possibility that the program would experience any participation for the foreseeable future. In effect, the program would exist in name only—although maintaining the program in this state would nonetheless require that some level of staff time and resources continue to be devoted to it.  Implications of CLEAN Program Contract Price Reduction for the Solar Installations on City-Owned Parking Garages Project (Public Works) In March 2014, the City released a Request for Proposals (RFP) for the installation and operation of a solar PV system at one or more of the five City-owned parking structures (Staff Report 4540). The RFP was structured to solicit projects that could be eligible to participate in the Palo Alto CLEAN Program providing an estimated 1.5 MW of local solar capacity. At the time of this writing, Public Works staff is completing negotiations for a site lease for the project and was preparing to present terms to Council for approval. The negotiation of this lease, however, was predicated on the notion that the ultimate rooftop solar installations would receive a CLEAN contract at a price of 16.5 ¢/kWh for a 20-year contract term. If the CLEAN Program price is reduced at this point, and the parking garage rooftop solar projects are no longer able to receive the assumed 16.5 ¢/kWh contract price, it would result either in the cancellation of the lease and the solar installations or a very significant reduction in the lease payments of approximately $154,000 per year to the City that are currently contained in the draft lease agreement. Furthermore, taking this action at the culmination of the year-long solicitation and negotiation process may damage the reputation of the City in the solar industry, at least with the companies focused on the development of commercial-scale projects.  Implications of CLEAN Program Contract Price Reduction for the Community Solar Program (Utilities) City of Palo Alto Page 10 As part of the Local Solar Plan, which was established by Council in April 2014 (Staff Report 4608, Resolution 9402), CPAU staff is currently working on the development of a voluntary community solar share program, which would be available to all electric ratepayers and would primarily benefit community members who do not have good solar access but have the desire to participate in a local solar project. Staff released an RFP in July 2014 for proposals of a CPAU- branded community solar program totaling 1 to 3 MW in capacity and selected the top vendor. Staff has been discussing the program details and negotiating a professional services contract and a PPA with the vendor; assuming the PPA is approved by Council, the developer would then build the project and market it to ratepayers, who would be able to pay a flat fee to “own” a portion of the system. Thus far, these PPA negotiations have been conducted under the assumption that the community solar PPA price will be set at the same level as the CLEAN Program price for solar projects, which was 16.5 ¢/kWh at the time the PPA negotiations started. If the CLEAN contract price is reduced to the avoided cost level, and the community solar PPA price is reduced to the same level, it may impact the project and the community solar program. The City could decide to set a different contract price for the output from the community solar project, but would have difficulty explaining how it could offer a different contract price to the community solar project that to other local solar projects through the CLEAN Program. Adding a 25-Year Contract Term Option Since the inception of the CLEAN Program, staff has held numerous meetings and conversations with solar developers who are eager to participate in the program. Recently, staff distributed a survey to a large number of local solar developers inquiring about program modifications that they would like to see. A number of these developers indicated that the CLEAN Program might be somewhat more attractive to them (and their investors) if the PPA term were extended from 20 to 25 years in part, to synchronize the term of the PPA with the 25-year expected life of solar panels. The City does not have a strong preference for one contract term or the other; therefore, the UAC and the Finance Committee both recommend allowing developers to choose either a 20- or 25-year contract term at the time they execute a CLEAN Program PPA. Table 3 – Cost of Palo Alto CLEAN Program at 16.5 ¢/kWh Price by Contract Term Contract Term Avoided Cost of Local Solar Generation * (¢/kWh) CLEAN Price (¢/kWh) Annual Excess Cost for 3 MW Total Excess Cost over Term 20 years 10.3 16.5 $310,000 $6.2 million 25 years 10.4 16.5 $305,000 $7.6 million * The cost of buying renewable energy outside of Palo Alto and transmitting it to Palo Alto. Of course, at a CLEAN price equal to the avoided cost of local solar generation (10.3¢/kWh for a 20-year term or 10.4 ¢/kWh for a 25-year term), the annual excess cost would be zero and there would be no rate impact. City of Palo Alto Page 11 Expanding CLEAN Eligibility to Non-Solar Renewable Energy Resources at their Avoided Cost When Council first approved the Palo Alto CLEAN Program in March 2012, the impetus for the program was the community’s desire for a feed-in tariff program to encourage greater rates of large rooftop solar PV development in Palo Alto. At the time, there was little to no potential seen for other types of renewable energy resources to be sited locally, due to lack of resource potential and developable land. However, in the March 2012 staff report (Staff Report 2548), staff noted that, “[w]hile the first year of the program is restricted to solar systems on large rooftops, future program years may include a wider range of renewable technologies and may be available to smaller projects.” In addition, in June 2014 Council terminated the PLUG-In program (Staff Report 4878, Resolution 9440), which was designed to encourage high efficiency renewable and non-renewable local distributed generation projects. Besides the program having no participants and being inconsistent with the City’s recently adopted Carbon Neutral Plan, another reason cited in the report for the program’s termination was that the City “anticipates expanding [the Palo Alto CLEAN Program] to other [non-solar] local renewable electric supplies.” As new technology and energy storage systems are developed, local renewable energy generation, including technology beyond local solar, in combination with storage systems, has the potential to provide resiliency to the City’s electric distribution system. Further, local renewable energy generation that participates in the CLEAN Program provides long-term supply cost certainty and value to the entire community—benefits that are not provided when such energy is sold to the City on a short-term basis or used on-site. For these reasons, the Finance Committee recommends expanding the program’s eligibility criteria to include all eligible renewable energy resources (as defined by state law), rather than limiting participation to solar resources. Doing so would permit the proposed anaerobic digester facility near the Baylands to apply to the CLEAN Program if the Regional Water Quality Control Plant (RWQCP) decides to sell all of that resource’s output to CPAU, rather than using it on-site to meet the RWQCP’s energy needs. Expanded eligibility beyond solar resources would also allow other locally-sited resources to participate in the program, so long as they meet the state’s definition of a renewable resource1 and satisfy all of the City’s other zoning and permitting requirements. In addition, Palo Alto would not be the first utility in the country to allow non-solar resources to participate in a feed-in tariff program. LADWP, MCE, and Sonoma Clean Power also operate FIT programs that are open to all resources that are deemed to be renewable under state law.2 1 The state’s renewable resource definitions are articulated in Section 399.12(e) of the Public Utilities Code and Section 25741 of the Public Resources Code. Examples of eligible renewable resources (besides solar) include wind, landfill gas, biomass, geothermal, small hydroelectric and ocean/tidal resources. Electricity generated by a fuel cell is eligible as well, provided that the fuel cell uses a renewable fuel to produce this output. 2 See MCE’s FIT program: http://www.mcecleanenergy.org/feed-in-tariff/, and Sonoma Clean Power’s ProFIT program: https://sonomacleanpower.org/profit/. City of Palo Alto Page 12 A contract price to these non-solar projects that is equal to the estimated cost of buying renewable energy outside of Palo Alto and transmitting it to Palo Alto (9.3 ¢/kWh for a 20-year contract, or 9.4 ¢/kWh for a 25-year contract3) is consistent with prior Council action to price non-solar renewable resources at avoided cost. The City Council’s May 12, 2014 motion stated that the proposed anaerobic digester facility should be compensated at “the local market price for Northern California for green electricity” for any electrical generation that the facility produces and sells to CPAU (Staff Report 4744). Because the contract price for these resources will be equal to the value of renewable energy generation to the City, their participation in the Palo Alto CLEAN Program will not have any rate impact on customers. While staff believes that there is unlikely to be much uptake from non-solar resources due to the lack of non-solar resource potential and the high cost of land in Palo Alto, the Finance Committee recommends that the non-solar renewable resources be subject to a 3 MW participation cap, which is separate from the 3 MW cap for solar resources. Even though Public Works staff expects that a potential anaerobic digester is unlikely to participate in the CLEAN Program, as it would be more financially beneficial to use its output onsite to meet the RWQCP’s electricity needs, expanding the program will provide another option for consideration when evaluating the economics of that technology. Committee Review and Recommendation UAC Consideration and Recommendation The UAC considered staff’s recommendation at its December 10, 2014 meeting. (Staff’s initial recommendation to the UAC was to continue the CLEAN Program for solar energy resources at the 16.5 ¢/kWh contract price; add a 25-year contract term option; expand the program the non-solar renewable energy resources; offering non-solar resources a contract price based on the avoided cost of their energy; and impose no program limit on non-solar resources.) While expressing overall support for the Palo Alto CLEAN Program, and expressing no concerns about staff’s recommendation to add a 25-year contract term option to the program and continue to offer the 16.5 ¢/kWh contract price to solar energy resources, some Commissioners voiced concerns about staff’s proposal to expand the program to non-solar renewable energy resources. For example, some Commissioners indicated concerns about potential unanticipated consequences resulting from opening the program to such resources, in terms of the type and scale of projects that might participate. The Commission expressed general support for including a program cap on participation by non-solar resources. Commissioners also stated 3 The avoided cost estimate for non-solar resources assumes that the resource will be producing energy essentially around the clock all year long, which is, for example, how an anaerobic digester facility would be expected to operate. This is in contrast to solar energy resources, which only produce power during the middle of the day, when wholesale energy prices are significantly higher. This difference in the generation profiles of the various resources is the reason for the 1.0 ¢/kWh premium in the avoided cost of solar energy compared to non-solar energy. City of Palo Alto Page 13 their interest in seeing a fuller discussion of the rationale and potential impacts of opening the program up to non-solar resources before providing their formal endorsement of such a proposal. After its discussion, the UAC voted 3-2 (with Vice Chair Waldfogel and Commissioners Eglash and Hall voting yes, Chair Foster and Commissioner Melton voting no, Commissioner Cook abstaining, and Commissioner Chang absent) to recommend that the City Council: 1. Continue the Palo Alto CLEAN Program at the current price of 16.5 cents per kilowatt- hour (¢/kWh) for a 20-year contract, add a 25-year contract term option with a 16.5 ¢/kWh price, and continue with a program limit of 3 megawatts (MW) for solar resources; and, 2. Direct staff to return to the Council with a review of the program in one year or at the time the program capacity is filled, whichever comes first. The approved minutes from the UAC’s December 10, 2014 meeting are provided as Attachment C. Finance Committee Consideration and Recommendation In response to the UAC’s comments, staff modified its proposal to the Finance Committee by including a program participation cap of 3 MW on non-solar renewable energy resources. (Otherwise, staff presented the same recommendation to the Finance Committee as it presented to the UAC.) In addition, staff expanded the discussion on the proposal to extend the CLEAN Program to non-solar resources in its report to the Finance Committee—specifically, noting the Council’s May 12, 2014 motion establishing the compensation rate to be paid by CPAU to the anaerobic digester for electricity sales, and elaborating on the participation eligibility requirements for non-solar resources and the historical background for expanding the program’s eligibility criteria. The Finance Committee considered staff’s and the UAC’s recommendations at its March 17, 2015 meeting (Staff Report 5428). Committee members expressed no concerns with the proposals to add a 25-year contract term option or to expand the CLEAN Program’s eligibility criteria to include non-solar eligible renewable energy resources. However, Committee members expressed serious concern about the proposal to continue offering the CLEAN Program contract price of 16.5¢/kWh for solar resources, rather than a lower rate closer to the current avoided cost of that solar energy. Finance Committee members noted that as the value (avoided cost) of solar energy decreases, the excess cost that ratepayers must pay to support the 16.5 ¢/kWh rate increases, and they indicated an unwillingness to continue to pay this excess cost to procure solar energy generated located in Palo Alto. They also cited the low price the City paid for long-term PPAs for solar energy generated by larger projects and questioned whether it was better for the environment to have solar locally versus much larger projects in such places as Fresno. Several Committee members expressed a desire to reduce the CLEAN contract price to the avoided cost level for City of Palo Alto Page 14 solar resources, and discussed the potential to use the funds that would have supported the excess cost associated with the 16.5 ¢/kWh rate to benefit residential ratepayers—for example, by replenishing the rebate funds available to residential customers through the PV Partners program. Some Committee members also expressed skepticism about the additional benefits of local solar energy resources that existing Council policy had identified and used to justify paying a contract price greater than the avoided cost of the energy. After discussion, the Finance Committee voted unanimously (4 to 0) to recommend that the Council: 1) Continue the Palo Alto CLEAN Program at a price for solar renewable projects at the avoided cost of 10.3 cents per kilowatt-hour for 20 years and 10.4 cents per kilowatt- hour for 25 years; 2) Amend the Palo Alto CLEAN Program eligibility rules and requirements to allow non- solar eligible renewable energy resources to participate and offer local non-solar renewables at a price of 9.3 cents per kilowatt-hour for 20 years and 9.4 cents per kilowatt-hour for 25 years, with a cap on the program of 3 megawatts; and 3) Direct staff to return to the Finance Committee after reviewing ways to continue the PV Partners Program for residential use. The draft excerpted minutes from the Finance Committee’s discussion of the Palo Alto CLEAN Program at its March 17, 2015 meeting are provided as Attachment D. Resource Impact Staff estimates that the current cost of buying energy from solar resources outside of Palo Alto is 10.3 ¢/kWh (including transmission and capacity) for a 20-year contract, or 10.4 ¢/kWh for a 25-year contract. Purchasing the energy generated by local solar projects at contract prices equal to these avoided cost values would not impact the cost to Utility customers. On the other hand, purchasing the output from 3 MW of local solar projects at a contract price of 16.5 ¢/kWh would cost about $310,000 per year more than buying the same energy outside of Palo Alto. This is equivalent to a 0.26% increase in the electric utility’s total costs, and staff has determined that the system average electric rate would have to increase by 0.03 ¢/kWh as a result. This is equivalent to a bill impact of $1.50 per year for the median residential customer using 410 kWh/month, or $2.30 per year for a residential customer using 650 kWh/month. Expanding the program to local, non-solar renewable energy projects is not expected to impact the cost to Utility customers since the recommended contract price for those projects is equal to the value of acquiring such energy outside the City. In addition to the energy cost impacts described above, staff time is associated with marketing and project review. The project review can be absorbed with existing staff over the life of the program, and costs will be recovered through project review fees. The marketing efforts are City of Palo Alto Page 15 expected to require about 0.1 FTE of staff time and may involve an additional budget for marketing materials, which would be requested through the annual budget process. The marketing work will be absorbed by existing staff, but will decrease time spent on other customer account management and efficiency program delivery activities. Policy Implications The recommendation to continue the Palo Alto CLEAN Program and expand it to non-solar eligible renewable energy resources supports the City’s carbon neutral electric supply portfolio policy as well as the LEAP Objective to enhance supply reliability through the pursuit of local generation opportunities. However, the recommendation to reduce the Palo Alto CLEAN contract price for solar resources from 16.5 ¢/kWh to the avoided cost level of 10.3 ¢/kWh for a 20-year contract, or 10.4 ¢/kWh for a 25-year contract, represents a change in emphasis in adopted Council policy—which has previously noted the additional financial and environmental benefits to increasing local solar generation that are not captured in the avoided cost calculation. Environmental Review Adoption of the attached resolution is not subject to California Environmental Quality Act (CEQA) review under California Public Resources Code section 21080(b)(8), because the contract price adopted reflects the reasonable cost of the CLEAN Program’s operating expenses. Approval of the amended CLEAN Program Eligibility Rules and Requirements and the amended CLEAN Program PPA is not a project under CEQA, and therefore, no environmental assessment is necessary. Attachments:  Attachment A: Resolution Expanding the Palo Alto CLEAN Program's Eligibility to Non- Solar Renewable Energy Resources and Adding a 25-Year Contract Term Option (with Exhibit A-1 Revised Program Rules) (PDF)  Attachment B: Updated Palo Alto CLEAN Power Purchase Agreement (PDF)  Attachment C: Final Excerpted Minutes of the December 10 2014 UAC Meeting (PDF)  Attachment D: Draft Excerpted Minutes of the March 17 2015 Finance Committee Meeting (PDF) *NOT YET APPROVED* Resolution No. _________ Resolution of the Council of the City of Palo Alto Reducing the Contract Price for the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program from 16.5 ¢/kWh to between 10.3- 10.4¢/kWh for Solar Resources, Expanding the CLEAN Program’s Eligibility to Non-solar Renewable Energy Resources and Adding a 25-Year Contract Term Option R E C I T A L S A. On March 5, 2012, the City approved the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program (or feed-in tariff). Under the Palo Alto CLEAN Program, participants who build a new solar generating system in Palo Alto may obtain a long-term, fixed-price contract with the City to sell the energy from the system to the City’s electric utility. B. The first program year of Palo Alto CLEAN commenced on April 2, 2012 and was originally set to terminate on December 31, 2012. C. On February 3, 2014, Council approved Resolution 9393, which continued Palo Alto CLEAN with a contract price of 16.5cents per Kilowatt-hour (kWh) and established a maximum total Palo Alto CLEAN Program cost commitment of $20,000,000 over the life of the program. This amount was sufficient for a program cap of 3 megawatts (MW) of generating capacity. D. The City wants to continuing to offer the program for solar resources with the existing 3 MW cap of generating capacity, while adding a 25-year contract term option and simultaneously reducing the contract price offered from 16.5 cents per kWh to 10.3 cents per kWh for a 20-year contract or 10.4 cents per kWh for a 25 year contract . E. The City also wants to open the program to local, non-solar eligible renewable energy resources and offer contract prices of 9.3 cents per kWh for a 20-year contract term or 9.4 cents per kWh for a 25-year contract term for such resources. F. The City intends that non-solar, local eligible renewable energy resources not be counted toward the Palo Alto CLEAN Program’s 3 MW generating capacity cap for solar resources, but be subject to a separate 3 MW generating capacity cap of its own. The Council of the City of Palo Alto (“City”) RESOLVES: SECTION 1. To modify the CLEAN Program to: a. Add a 25-Year Contract Term Option in Addition to the CLEAN Program’s Existing 20-Year Contract Term Option; b. Continue the Palo Alto CLEAN Program for solar energy resources, reducing the contract price from 16.5 cents per kilowatt-hour (¢/kWh) to a contract price *NOT YET APPROVED* equal to the avoided cost of solar energy resources of 10.3 ¢/kWh for a 20-year contract, and 10.4 ¢/kWh for a 25-year contract term, and to continue with a CLEAN Program limit for solar energy resources of 3 megawatts (MW); and c. Expand the CLEAN Program to allow non-solar eligible renewable energy resources to participate, and offer such resources a contract price equal to their avoided cost of 9.3 cents per kilowatt-hour (¢/kWh) for a 20-year contract, and 9.4 ¢/kWh for a 25-year contract term, with a program limit of 3 MW. SECTION 2. To implement such changes, the Council adopts revised Palo Alto CLEAN Program Eligibility Rules Requirements, set forth in Exhibit A-1 attached to this Resolution. SECTION 3. The Council authorizes the City Manager or his designee to sign contracts for the output of one or more solar, or other non-solar eligible renewable energy resource meeting the CLEAN Program Eligibility Rules and Requirements described in Section 1. The total CLEAN Program cost commitment made by the City during the life of the program shall not exceed $75,000,000, which is sufficient for a program cap of 3 MW of local solar generating capacity and 3 MW of local, non-solar generating capacity over a 25-year contract term. SECTION 4. The Council finds that the adoption of this resolution is not subject to California Environmental Quality Act (CEQA) review under California Public Resources Code section 21080(b)(8), because the rate adopted reflects the reasonable cost of the CLEAN Program’s operating expenses. Approval of the amended CLEAN Program Eligibility Rules and Requirements is not a project under CEQA, and therefore, no environmental assessment is necessary INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ___________________________ _______________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ _______________________ Senior Deputy City Attorney City Manager ___________________________ *NOT YET APPROVED* Director of Utilities ___________________________ Director of Administrative Services 040914 jrm 0180042 1 POWER PURCHASE AGREEMENT ELIGIBLE RENEWABLE ENERGY RESOURCE (Palo Alto Clean Local Energy Accessible Now Program) This Power Purchase Agreement - Eligible Renewable Energy Resource, dated, for convenience, , 20 (the “Effective Date”), is entered into by and between the CITY OF PALO ALTO, a California chartered municipal corporation, and , a corporation (individually, a “Party” and, collectively, the “Parties”). RECITALS 1.The Buyer has adopted and implemented its CLEAN Program, which allows an owner of a qualifying electric generation system to sell to the Buyer the power output of a small-scale distributed generation Eligible Renewable Energy Resource, subject to the CLEAN Program’s rules and requirements. 2.The Seller owns or operates and desires to interconnect its Facility in parallel with Buyer’s Distribution System and sell the Energy produced by its Facility, net of Station Service Load, directly to the Buyer in furtherance of the CLEAN Program. 3.The Parties do not intend this Agreement to constitute an agreement by the Buyer to provide retail electrical service to the Seller. 4.The Parties wish to enter into a power purchase agreement for the sale and purchase of the Output of the Facility. The Parties will enter into a separate “Interconnection Agreement” in connection with this Agreement. NOW THEREFORE, in consideration of the foregoing recitals and the following covenants, terms and conditions, the Parties agree, as follows: AGREEMENT 1.1 DEFINITIONS The initially capitalized terms, whenever used in this Agreement, have the meanings set forth below, unless they are otherwise herein defined. The terms “include,” “includes,” and “including,” when used in this Agreement, shall mean, respectively, “include, without limitation,“ “includes, without limitation” and “including, without limitation.” “Agreement” means this Power Purchase Agreement – Eligible Renewable Energy Resource between the Buyer and the Seller. “Business Day” means any day except a Saturday, Sunday, or a day that the City observes as a regular holiday under Palo Alto Municipal Code section 2.08.100(a). “Buyer” refers to the City of Palo Alto, California, with a principal place of business at 250 Hamilton Avenue, Palo Alto, California 94301. “Buyer’s Distribution System” means the wires, transformers, and related equipment used by the Buyer to deliver electric power to the Buyer’s retail customers, typically at sub-transmission level voltages or lower. “CAISO” means the California Independent System Operator Corporation, or successor entity. “CAISO Tariff” means the CAISO FERC Electric Tariff, as amended. “Capacity” means the ability of a generator at any given time to produce Energy at a specified rate, as ATTACHMENT B 040914 jrm 0180042 2 measured in megawatts (“MW”) or kilowatts (“kW”), and any reporting rights associated with it. “Capacity Attributes” means any current or future defined characteristic, certificate, tag, credit, or ancillary service attribute, whether general in nature or specific as to the location or any other attribute of the Facility, intended to value any aspect of the Contract Capacity of the Facility to produce Energy or ancillary services, including contributions towards Resource Adequacy (including those requirements defined in Section 40 of the CAISO Tariff) or reserve requirements (if any), and any other reliability or power attributes. “CEC” means the California Energy Resources Conservation and Development Commission, or successor agency. “Certificate of RPS Eligibility” means a certificate issued by the CEC as evidence of RPS Certification of the Facility. “City” means the government of the City of Palo Alto, California. “CLEAN Program” refers to the Palo Alto Clean Local Energy Accessible Now Program, a renewable energy program established by the City by adoption of resolution number , dated , of the Palo Alto City Council, whereby the Buyer will purchase from the Seller the Output of Eligible Renewable Energy Resources that meet specified criteria set forth in the City’s applicable ordinances and resolutions. “Commercial Operation” means the period of operation of the Facility, once the Commercial Operation Date has occurred. “Commercial Operation Date” means the date specified in the Commercial Operation Date Confirmation Letter, which the Parties execute and exchange in accordance with this Agreement. “Contract Capacity” means the installed electrical Capacity available upon the Commercial Operation Date of the Facility in an amount, as specified in Exhibit “PPA-A.” “Contract Capacity” is measured at the Buyer’s revenue meter at the Delivery Point and is net of any Station Service Loads, any applicable Facility step-up transformer losses, and distribution losses on Buyer’s Distribution System up to the Delivery Point. “Contract Price” means the price paid by the Buyer to the Seller for the Output generated at the Facility and received by the Buyer, as set forth in Exhibit “PPA-A.” “CPUC” means the California Public Utilities Commission, or successor agency. “Delivery Point” means the point of interconnection to Buyer’s Distribution System, where the Buyer accepts title to the Output. “Delivery Term” has the meaning set forth in Section 14.2 hereof. “Eligible Renewable Energy Resource” means an electric generating facility that is defined and qualified as an “eligible renewable energy resource” under California Public Utilities Code Section 399.12(e) and California Public Resources Code Section 25471, respectively, as amended. “Energy” means electrical energy generated from the Facility and delivered to Buyer’s Distribution System with the voltage and quality required by the Buyer, and measured in megawatt-hours (“MWh”) or kilowatt- hours (“kWh”), as metered at the Delivery Point. “Facility” means the qualifying renewable energy generation equipment and associated power conditioning and interconnection equipment that deliver the Output to the Buyer at the Delivery Point. “FERC” means the Federal Energy Regulatory Commission, or successor agency. 040914 jrm 0180042 3 “Forced Outage” means an unplanned outage of one or more of the Facility’s components that results in a reduction of the ability of the Facility to produce Capacity. “Force Majeure” means an event or circumstance, which prevents a Party from performing its obligations under this Agreement, and which is not in the reasonable control of, or the result of negligence of, the Party claiming Force Majeure, and which by the exercise of due diligence is unable to overcome or cause to be avoided. “Force Majeure” shall include: (a) An act of nature, riot, insurrection, war, explosion, labor dispute, fire, flood, earthquake, storm, lightning, tidal wave, backwater caused by flood, act of the public enemy, terrorism, or epidemic; (b) Interruption of transmission or generation services as a result of a physical emergency condition (and not congestion-related or economic curtailment) not caused by the fault or negligence of the Party claiming Force Majeure and reasonably relied upon and without a reasonable source of substitution to make or receive deliveries hereunder, civil disturbances, strike, labor disturbances, labor or material shortage, national emergency, restraint by court order or other public authority or governmental agency, actions taken to limit the extent of disturbances on the electrical grid; or (c) Other similar causes beyond the control of the Party affected, which causes such Party could not have avoided by the exercise of due diligence and reasonable care. A Party's financial incapacity, the Seller’s ability to sell the Output at a more favorable price or under more favorable conditions, or the Buyer’s ability to acquire the Output at a more favorable price or under more favorable conditions or other economic reasons shall not constitute an event of Force Majeure. “Force Majeure” does not include a Forced Outage to the extent such event is not caused or exacerbated by an event of Force Majeure, as described above, and does not include the Seller’s inability to obtain financing, permits, or other equipment and instruments necessary to plan for, construct, or operate the Facility. “Good Utility Practice” means those practices, methods and acts that would be implemented and followed by prudent operators of electric energy generating facilities in the western United States, similar to the Facility, during the relevant time period, which practices, methods and acts, in the exercise of prudent and responsible professional judgment in the light of the facts known at the time the decision was made, could reasonably have been expected to accomplish the desired result consistent with good business practices, reliability, and safety. The Seller acknowledges that its use of Good Utility Practice does not exempt it from performing any of its obligations arising under this Agreement. “Good Utility Practice” includes, at a minimum, those professionally responsible practices, methods and acts described in the preceding paragraph that comply with manufacturers’ warranties, restrictions in this Agreement, the interconnection requirements of Buyer, the requirements of governmental authorities, and WECC and NERC standards. “Good Utility Practice” also includes the taking of reasonable steps to ensure that: (a) Equipment, materials, resources, and supplies, including spare parts inventories, are available to meet the Facility’s needs; (b) Sufficient operating personnel are available at all times and are adequately experienced and trained and licensed as necessary to operate the Facility properly and efficiently, and are capable of responding to reasonably foreseeable emergency conditions at the Facility and emergencies whether caused by events on or off the Facility’s site; (c) Preventive, routine, and non-routine maintenance and repairs are performed on a basis that ensures reliable, long-term and safe operation of the Facility, and are performed by knowledgeable, trained, and experienced personnel utilizing proper equipment and tools; (d) Appropriate monitoring and testing are performed to ensure equipment is functioning as designed; and (e) Equipment is not operated in a reckless manner, in violation of manufacturer’s guidelines or in a manner unsafe to workers, the general public, or the connecting utility’s electric system or contrary to environmental laws, permits or regulations or without regard to defined limitations such as, flood conditions, safety inspection requirements, operating voltage, current, volt ampere reactive (VAR) loading, frequency, rotational speed, polarity, synchronization, and control system limits; and equipment and components are designed and manufactured to meet or exceed the standard of durability that is generally used for electric energy generating facilities operating in the western United States and will function properly over the full range of ambient temperature and weather conditions reasonably expected to occur at the Facility site and under both normal and emergency conditions. 040914 jrm 0180042 4 “Green Attributes” refers to the definition set forth in the Standard Terms and Conditions, Appendix A-2, as amended, Decision D.07-02-011, as modified by D.07-05-057, of the CPUC, which incorporates the definition of “Environmental Attributes” set forth in the Standard Terms and Conditions, Appendix A-1, as amended, D. 04-06-014. “Green Attributes” includes any and all credits, benefits, emissions reductions, environmental air quality credits, offsets, and allowances, howsoever entitled, attributable to the generation from the Facility, and its displacement of conventional energy generation, whether existing now or arising in the future. “Green Attributes” includes RECs, as well as (1) any avoided emissions of pollutants to the air, soil or water, such as sulfur oxides (“SOx”), nitrogen oxides (“NOx”), carbon monoxide (“CO”) and other pollutants; (2) any avoided emissions of carbon dioxide (“CO2”), methane (“CH4”), nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and other greenhouse gases (“GHGs”) that have been determined by the United Nations Intergovernmental Panel on Climate Change, or otherwise by law, to contribute to the actual or potential threat of altering the Earth’s climate by trapping heat in the atmosphere; and (3) the reporting rights to these avoided emissions such as Green Tag Reporting Rights and RECs. “Green Tag Reporting Rights” are the right of a Green Tag Purchaser to report the ownership of accumulated Green Tags in compliance with federal or state law, if applicable, and to a federal or state agency or any other party at the Green Tag Purchaser’s discretion, and include those Green Tag Reporting Rights accruing under Section 1605(b) of the Energy Policy Act of 1992 and any present or future federal, state, or local law, regulation or bill, and international or foreign emissions trading program. Green Tags are accumulated on a kWh basis and one Green Tag represents the Green Attributes associated with one (1) MWh of Energy. “Green Attributes” do not include (i) any Energy, Capacity, reliability, or other power attributes of the Facility, (ii) production or investment tax credits associated with the construction or operation of the Facility and other financial incentives in the form of credits, grants, reductions, or allowances associated with the Facility that are applicable to a state or federal income taxation obligation, (iii) fuel-related subsidies or “tipping fees” that may be paid to Seller to accept certain fuels, or local subsidies received by the generator for the destruction of particular pre-existing pollutants or the promotion of local environmental benefits, or (iv) emission reduction credits encumbered, used or created by the Facility for compliance with or sale under local, state, or federal operating and/or air quality permits or programs. If the Facility is a biomass or landfill facility and the Seller receives any tradable Green Attributes based on the Facility’s greenhouse gas reduction benefits or other emission offsets attributed to its fuel usage, the Seller shall provide the Buyer with sufficient Green Attributes to ensure that there are zero net emissions associated with the production of electricity from the Facility. “Green Attributes” includes any other environmental credits or benefits recognized in the future and attributable to Energy generated by the Facility during the Term that may not be represented by Green Tag Reporting Rights or RECs, unless otherwise excluded herein. Any Green Attributes provided under this Agreement shall be documented by RECs, or any other representation of the environmental benefits of the Output, the monthly cumulative total of which shall be provided to the Buyer, as specified herein. “Interconnection Agreement” refers to the agreement between the Buyer and the Seller, specific to the interconnection of the Facility to Buyer’s Distribution System. “NERC” means the North American Electric Reliability Corporation, or successor organization. “NCPA” means Northern California Power Agency, a California joint action agency, or successor agency. “Output” means all Capacity associated with Contract Capacity and associated Energy made available from the Facility, as well as any Capacity Attributes, Green Attributes, or other attributes existing now or in the future associated with Contract Capacity and/or associated Energy. “Output” does not include production or investment tax credits associated with the construction or operation of the Facility and other financial incentives in the form of credits, grants, reductions, or allowances associated with the Facility that are applicable to a state or federal income taxation obligation. “Planned Outage” means an outage, scheduled in advance, of one or more of the Facility’s components that results in a reduction of the ability of the Facility to produce Capacity. 040914 jrm 0180042 5 “Pre-Certification Price” means the contract price to be paid for all Energy delivered to the Buyer prior to the RPS Certification Date, as specified in Exhibit “PPA-A”. “Renewable Energy Credit” or “REC” has the meaning set forth in Section 399.12(h)(1) and (2) of the California Public Utilities Code, and includes a certificate of proof that one unit of electricity was generated by an Eligible Renewable Energy Resource. Currently, RECs are used to convey all Green Attributes associated with electricity production by a renewable energy resource. RECs are accumulated on a kWh basis and one REC represents the Green Attributes associated with the generation of 1 MWh (1,000 kWhs) from the Facility. For purposes of this Agreement, the term REC shall be synonymous with the term Green Tag, green ticket, bundled or unbundled renewable energy credit, tradable renewable energy certificates, or any other term used to describe the documentation that evidences the renewable and Green Attributes associated with electricity production by an Eligible Renewable Energy Resource. “Renewables Portfolio Standard” or “RPS” means the standard adopted by the State of California pursuant to Senate Bill 2 1st Extraordinary Session (SBX1 2, Chapter 1, Statutes 2011-12), and California Public Utilities Code Sections 399.11through 399.31, inclusive, as may be amended, setting minimum renewable energy targets for local publicly owned electric utilities. “Reservation Deposit” means the monetary deposit submitted by the Seller (or the Facility sponsor on behalf of the Seller) to secure a reservation of the CLEAN Program’s prices. The Reservation Deposit is set forth in Exhibit “PPA-A.” “Resource Adequacy” means a requirement by a governmental authority or in accordance with its FERC- approved tariff, or a policy approved by a local regulatory authority, that is binding upon either Party and that requires that Party to procure a certain amount of electric generating capacity. “RPS Certification” means certification by the CEC that the Facility qualifies as an Eligible Renewable Energy Resource for RPS purposes, and that all Energy produced by the Facility qualifies as generation from an Eligible Renewable Energy Resource, as evidenced by a Certificate of RPS Eligibility. “RPS Certification Date” means the date on which the RPS Certification begins, as specified in the Certificate of RPS Eligibility. “Seller” means with a principal place of business at , , . “Station Service Load” means the electrical loads associated with the operation and maintenance of the Facility, which may at times be supplied from the Facility’s Energy. “Term” has the meaning set forth in Section 14.1 hereof. “WECC” means the Western Electricity Coordinating Council, the regional entity responsible for coordinating and promoting regional bulk electric system reliability in the Western Canada and the United States, or any successor organization. 2.0 SELLER’S GENERATING FACILITY, PURCHASE PRICE AND PAYMENT 2.1 Facility. This Agreement governs the Buyer’s purchase of the Output from the Facility, as described in Exhibit “PPA-A.” The Seller shall not modify the Facility to increase or decrease the Contract Capacity after the Commercial Operation Date. 2.2 Products Purchased. During the Delivery Term, the Seller shall sell and deliver, or cause to be delivered, and the Buyer shall purchase and receive, or cause to be received, the Output from the Facility. The Seller shall not have the right to procure the Output from sources other than the Facility for sale or delivery to the Buyer under this Agreement or to substitute the Output. 040914 jrm 0180042 6 2.3 Delivery Term. The Delivery Term shall commence on the Commercial Operation Date under this Agreement, and shall continue for an uninterrupted period of [twenty (20) or twenty-five (25)] years. This period will commence on the first day of the calendar month immediately following the Commercial Operation Date. As evidence of the Commercial Operation Date, the Parties shall execute and exchange the “Commercial Operation Date Confirmation Letter,” attached hereto as Exhibit “PPA-B.” The Commercial Operation Date shall be the date on which the Parties acknowledge, in writing, that the Facility starts operating and is otherwise in compliance with applicable interconnection and system protection requirements, including the final approvals by the City’s building department official. 2.4 Payment for Products Purchased. 2.4.1 Deliveries Prior to RPS Certification Date. Once the Facility has achieved Commercial Operation, if the CEC has not issued a Certificate of RPS Eligibility for the Facility or the Facility has not been registered with the appropriate entity for the tracking of Green Attributes, the Buyer will pay the Seller for the Output by multiplying the Pre-Certification Price by the quantity of Energy. 2.4.2 Deliveries After RPS Certification Date. Once the Facility has achieved Commercial Operation, the CEC has issued a Certificate of RPS Eligibility for the Facility, and the Facility has been registered with the appropriate entity for the tracking of Green Attributes, the Buyer shall pay the Seller for all Output on or after the RPS Certification Date by multiplying the Contract Price by the quantity of Energy. 2.4.3 True-up Upon Issuance of Certificate of RPS Eligibility. Once the Facility has achieved Commercial Operation, the CEC has issued a Certificate of RPS Eligibility for the Facility, and the Facility has been registered with the appropriate entity for the tracking of Green Attributes, the Buyer will pay the Seller an amount equal to the difference between the Contract Price and the Pre-Certification Price for the Output (a) that was delivered on or after the RPS Certification Date and (b) for which the Seller has already received payment at the Pre- Certification Energy Price. 2.4.4 Energy in Excess of Contract Capacity. The Seller shall not receive payment for any Energy or Green Attributes delivered in any hour to the Buyer in excess of the following amount of energy (in kilowatt-hours): 110% of the Contract Capacity (in kilowatts) multiplied by one hour. Any payment in excess of this amount shall be refunded to the Buyer, on demand. 2.5 Billing. The Buyer shall pay the Seller by check or electronic funds transfer, on a monthly basis, within thirty (30) days of the meter reading date. 2.6 Title and Risk of Loss. Title to and risk of loss related to the Output shall be transferred from the Seller to the Buyer at the Delivery Point. The Seller warrants that it will deliver to the Buyer the Output free and clear of all liens, security interests, claims, encumbrances or any interest therein or thereto by any person, arising prior to the Delivery Point. 2.7 No Additional Incentives. The Seller warrants that it has not received any other incentives funded by the Buyer’s ratepayers and it further agrees that, during the Term, it shall not seek additional compensation or other benefits from the Buyer pursuant to the following programs of the Buyer: (a) Photovoltaic (PV) Partners Program; (b) Power from Local Ultra-Clean Generation Incentive (PLUG- In) Program; or (c) other similar programs that are or may be funded by the Buyer’s ratepayers. 040914 jrm 0180042 7 3.0 RPS CERTIFICATION; GREEN ATTRIBUTES 3.1 CEC Certification. The Seller, at its own cost and expense, shall obtain the RPS Certification within six (6) months of the Commercial Operation Date. The Seller shall maintain the RPS Certification at all times during the Delivery Term. The foregoing provision notwithstanding, the Seller shall not be in breach of this Agreement and the Buyer shall not have the right to terminate this Agreement, if the Seller’s failure to obtain or maintain the RPS Certification is due to a change in California law, occurring after the Commercial Operation Date, so long as the Seller has used commercially reasonable efforts to obtain and maintain the RPS Certification and the Seller’s actions or omissions did not contribute to its inability to obtain and maintain the RPS Certification. 3.2 Obligation to Deliver Green Attributes. The Seller shall sell and deliver to the Buyer, and the Buyer shall buy and receive from the Seller, all right, title, and interest in and to Green Attributes associated with Energy, produced by the Facility and delivered to the Buyer at the Delivery Point, whether now existing or that hereafter come into existence during the Term, except as otherwise excluded herein; provided, the Buyer shall not be obligated to purchase and pay the Seller for any Green Attributes associated with any amount of the Output, that is generated by any fuel which is not renewable and which cannot be counted for the purpose of the production of Green Attributes. The Seller agrees to sell and make all such Green Attributes available to the Buyer to the fullest extent allowed by applicable law, in accordance with the terms and conditions of this Agreement. The Seller warrants that the Green Attributes provided under this Agreement to the Buyer shall be free and clear of all liens, security interests, claims and encumbrances. 3.3 Conveyance of Green Attributes. The Seller shall provide Green Attributes associated with the Facility, which shall be documented and conveyed to the Buyer in accordance with the procedure described in Exhibit “PPA-D.” 3.4 Additional Evidence of Green Attributes Conveyance. At the Buyer’s request, the Seller shall provide additional reasonable evidence to the Buyer or to third parties of the Buyer’s right, title, and interest in the Green Attributes and any other information with respect to Green Attributes, as may be requested by the Buyer. 3.5 Modification of Green Attributes Conveyance Procedure. The Buyer may unilaterally modify Exhibit “PPA-D” in order to reflect changes necessary in the Green Attributes conveyance procedures, so that the Buyer may be able to receive and report the Green Attributes, purchased under this Agreement, as belonging to the Buyer. 3.6 Reporting of Ownership of Green Attributes. The Seller shall not report to any person or entity that the Green Attributes sold and conveyed to the Buyer belong to any person other than the Buyer. The Buyer may report under any applicable program that Green Attributes purchased by the Buyer hereunder belong to it. 3.7 Greenhouse Gas Emissions. The Seller shall comply with any laws and/or regulations regarding the need to offset emissions of GHGs by delivering to the Buyer the Energy from the Facility with a net zero GHG impact. 4.0 CONVEYANCE OF CAPACITY ATTRIBUTES 4.1 Conveyance of Resource Adequacy Capacity. The Seller shall not report to any person or entity that the Resource Adequacy Capacity, as defined in the CAISO Tariff) associated with the Facility, if any, belongs to a person other than the Buyer, which may report that Resource Adequacy Capacity purchased hereunder belongs to it to fulfill the Resource Adequacy requirements, as defined in Section 40 of the CAISO Tariff, as amended, or any successor program. The Seller shall take those actions described in Section 6.0 hereof, as applicable, to secure recognition of Resource Adequacy Capacity by the CAISO. 4.2 Conveyance of Other Capacity Attributes. In addition to the obligations imposed on the 040914 jrm 0180042 8 Seller under Section 4.1, the Seller will undertake any and all actions reasonably needed to enable the Buyer to effect the recognition and transfer of any Capacity Attributes in addition Resource Adequacy, to the extent that such Capacity Attributes exist now or will exist in the future; provided, if such actions require any actions beyond the giving of notice by the Seller, then the Buyer shall reimburse all out-of- pocket costs and charges of such actions. 4.3 Reporting of Ownership of Capacity Attributes. The Seller shall not report to any person or entity that the Capacity Attributes sold and conveyed to the Buyer belong to any person other than the Buyer. The Buyer may report under any such program that such Capacity Attributes purchased hereunder belong to it. 5.0 METERING AND OPERATIONS 5.1 Timing of Outages. The Seller may not schedule or take any Planned Outage from 12:00 p.m. through 7:00 p.m. Pacific Time during the months of June through October. 5.2 Outage Reporting. 5.2.1 Buyer Request. The Seller is not required to report any Planned Outage or Forced Outage, unless the Buyer first submits a written request to the Seller to commence Outage reporting. Upon receipt of such a request, the Seller shall report all subsequent Planned Outages and the Forced Outages according to the procedures described in subsections 5.2.2 and 5.2.3, and shall continue such reporting until (a) the termination of this Agreement for any reason, or (b) the Buyer subsequently provides written notice to the Seller that the Seller may cease such reporting in the future. 5.2.2 Planned Outage Notifications. The Seller shall notify the Buyer at least 72 hours in advance of any Planned Outage that would result in a reduction in the effective Output of the Facility during the period over which the Planned Outage is scheduled. Notification shall be provided by e-mail to the e-mail address (or addresses) set forth in Exhibit “PPA-F.” 5.2.3 Forced Outage Notifications. Within 24 hours of the occurrence of a Forced Outage of the Facility that impacts the ability of the Facility to produce Energy, the Seller shall notify the Buyer of the Forced Outage, including the Capacity of the Facility that is impacted, and the expected duration of the Forced Outage. Within 24 hours of the return of the Facility to service following the Forced Outage, the Seller shall notify the Buyer of the return-to-service details. Notification shall be made by e-mail to the address (or addresses) set forth in Exhibit “PPA-F.” 5.3 Metering. The Buyer shall furnish and install one or more standard watt-hour meters to read Energy generated by the Facility, and it will charge a meter fee to the Seller to cover the costs associated with the meter’s purchase and installation. As requested, the Seller shall provide and install a meter socket in accordance with the Buyer’s metering standards. The Buyer reserves the right to install additional metering equipment at its sole cost and expense. 6.0 PARTICIPATING GENERATORS 6.1 Applicability. This Section 6.0 shall apply if the Facility meets the definition of a “Participating Generator,” as may be defined by the CAISO Tariff. This Section 6.0 shall not apply if the definition applies to the Facility only upon the election by the Seller. For the purposes of this Section 6.0, all special terms not otherwise defined in Section 1.0 are defined in the CAISO Tariff. 6.2 Participating Generator Agreement. The Buyer will notify the CAISO of the Seller’s interconnection to Buyer’s Distribution System. If the CAISO requires it, the Seller, at its own expense, shall negotiate and enter in to two contracts, a “Participating Generator Agreement” and a “Meter Services Agreement for CAISO Metered Entities,” with the CAISO. 040914 jrm 0180042 9 6.3 Scheduling Coordination. If the CAISO requires the Seller to enter in to a Participating Generator Agreement, then the Seller shall designate NCPA as the Buyer’s scheduling coordinator. The Buyer, acting in its sole discretion, may replace NCPA as the scheduling coordinator for the Facility. If NCPA ceases to be the scheduling coordinator for the Facility and the Buyer has not, upon fourteen (14) days’ prior written notice of inquiry from the Seller, appointed a replacement scheduling coordinator, then the Seller shall have the right to appoint a replacement scheduling coordinator on the Buyer’s behalf. Thereafter, the Buyer shall enter into all reasonable and appropriate agreements with such replacement scheduling coordinator at its own costs. 6.4 Scheduling Procedure. The Buyer may require the Seller to provide the Buyer with Energy forecasts on a periodic basis, as may be necessary for the Buyer to account for expected Facility generation in its daily power scheduling process. The requirements are set forth in Exhibit “PPA-C.” 6.5 Modification of Scheduling and Outage Notification Procedure. The Buyer may unilaterally modify Exhibit “PPA-C” to reflect changes necessary in the scheduling and Outage notification procedures. The Buyer shall give the Seller reasonable notice of any such changes. 6.6 Provision of Other Equipment. If the Seller is required to enter into a Participating Generator Agreement with the CAISO, then the Seller, at its own cost and expense, shall provide and maintain data transmission-grade phone line and telecommunications equipment at the meter location that complies with applicable requirements of the CAISO, the Buyer, and NCPA. Any meter installed by the Seller shall comply at all times with the CAISO’s metering requirements. If the Seller fails to provide or maintain any such required equipment or data connection, then the Buyer shall acquire, install and maintain the same at the Seller’s sole cost and expense. 6.7 Designation as Resource Adequacy Resource. The Buyer may submit a written request to the Seller to obtain the CAISO’s designation of the Facility as a Resource Adequacy Resource. Upon receipt of such request, the Seller shall provide such information and undertake such steps as may be required by the CAISO in order to complete such an assessment. If the Buyer makes such a request, then the Buyer shall be responsible for the following: (1) any costs charged to the Seller by the CAISO as a condition of applying for or receiving designation as a Resource Adequacy Resource, including any deposits required during the study process or the cost of any related studies or deliverability assessments performed by the CAISO; (2) the capital, installation, and maintenance costs of any additional equipment required by the CAISO as a condition of receiving designation as a Resource Adequacy Resource; (3) the costs of any Network Upgrades, as defined in the CAISO Tariff, as may be required by the CAISO, provided, the Buyer shall receive any subsequent repayments from the CAISO or the Participating Transmission Owner related to such upgrades; and (4) any charges or penalties assessed by the CAISO as a consequence of the Facility’s designation as a Resource Adequacy Resource. 6.8 CAISO Charges. The Buyer shall be solely responsible for paying all costs and charges associated with the receipt of Energy under this Agreement, at the Delivery Point, and for the transmission and delivery of Energy from the Delivery Point to any other point downstream of the Delivery Point, including transmission costs and charges, competition transition charges, applicable control area service charges, transmission congestion charges, inadvertent energy flows, any other CAISO charges related to the transmission of such Energy by the CAISO and any charge assessed or collected in the future pursuant to any utility tariff or rate schedule, however defined, for transmission or transmission-related service rendered by or for any transmission-owning or operating entity. The Seller will undertake any and all actions reasonably needed to allow the Buyer to comply with any obligations, and minimize any potential liability, under the CAISO tariff. If and to the extent that the Seller fails to comply with the notice provision in Exhibit “PPA-C,” concerning Outages, or with its obligations as outlined in the previous sentence, the Seller shall be wholly responsible for all imbalances, deviations, or any other CAISO charges or penalties associated with such Outage or other CAISO Tariff obligation. 6.9 Inclusion in Metered Subsystem. At the option of the Buyer, the Facility may be included within NCPA’s metered sub-system in connection with the scheduling of power over the CAISO grid and related functions; provided, however, that such inclusion shall have no adverse effect on the Facility’s operations or the Seller (or any such effect shall be fully mitigated by the Buyer). The Seller will undertake any and all actions reasonably needed to allow the Buyer to comply with any obligations, and 040914 jrm 0180042 10 minimize any potential liability, under the CAISO Tariff; provided, that if such actions require any actions beyond the giving of notice to be provided by the Buyer, then the Buyer shall reimburse the Seller for all out-of-pocket costs and charges of such actions. 7.0 COMMERCIAL OPERATION DATE; REFUND OF RESERVATION DEPOSIT 7.1 Commercial Operation Date. The Facility shall achieve Commercial Operation by the Commercial Operation Date deadline (the “Deadline”), which is one (1) year from the Effective Date. 7.2 Reservation Deposit. The Buyer acknowledges that, as of the Effective Date or other date established by the Buyer, the Seller has provided the Reservation Deposit to the Buyer. 7.2.1 If the Commercial Operation Date occurs on or prior to the Deadline, the Buyer shall refund to the Seller the Reservation Deposit without interest. 7.2.2 If the Commercial Operation Date commences within seventy (70) days of the Deadline, the Seller, as liquidated damages and not as a penalty, shall relinquish its claim to a ten percent (10%) portion of the amount of the Reservation Deposit for every full week transpiring between the Deadline and the Commercial Operation Date, but the total amount to be relinquished to the Buyer shall not exceed 100% of the Reservation Deposit. 7.2.3 If the Facility has not achieved Commercial Operation within seventy (70) days of the Deadline, then the Buyer may terminate this Agreement without liability of either Party to the other Party by giving written notice of termination to the Seller. 7.2.4 If the Seller gives notice of termination to terminate the Agreement before Commercial Operation occurs, then the Buyer shall refund a percentage of the Reservation Deposit equal to the following: the percentage to be refunded will equal A/B, where A equals the number of days between the date of the Seller’s notice of termination, received by the Buyer, and the Deadline, and B equals the number of days between the Effective Date and the Deadline. 7.3 Return of Reservation Deposit. The Buyer shall return to the Seller the Reservation Deposit, without interest, in the event that (a) the Buyer furnishes written notice of the costs of interconnection (defined in the Interconnection Agreement to include the costs related to the Interconnection Facilities and Distribution Upgrades) to the Seller and (b) within thirty (30) days of receipt of the notice regarding costs of interconnection, the Seller provides the Buyer with written notice that the Seller does not intend to sign the Interconnection Agreement and does intend to proceed with the project. 8.0 REPRESENTATION AND WARRANTIES; COVENANTS 8.1 Representations and Warranties. On the Effective Date, each Party represents and warrants to the other Party that: 040914 jrm 0180042 11 8.1.1 It is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation; 8.1.2 The execution, delivery and performance of this Agreement is within its powers, have been duly authorized by all necessary action and do not violate any of the terms and conditions in its governing documents, any contracts to which it is a party or any law, rule, regulation, order or the like applicable to it; 8.1.3 This Agreement and each other document executed and delivered in accordance with this Agreement constitutes its legally valid and binding obligation enforceable against it in accordance with its terms; 8.1.4 It is not bankrupt and there are no proceedings pending or being contemplated by it or, to its knowledge, threatened against it which would result in it being or becoming bankrupt; 8.1.5 There is not pending or, to its knowledge, threatened against it or any of its affiliates, if any, any legal proceedings that could materially adversely affect its ability to perform its obligations under this Agreement; and 8.1.6 It is acting for its own account, has made its own independent decision to enter into this Agreement and as to whether this Agreement is appropriate or proper for it based upon its own judgment, is not relying upon the advice or recommendations of the other Party in so doing, and is capable of assessing the merits of, and understands and accepts, the terms, conditions and risks of this Agreement. 8.2 General Covenants. Each Party covenants that, during the Term: 8.2.1 It shall continue to be duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation; 8.2.2. It shall maintain (or obtain from time to time as required, including through renewal, as applicable) all regulatory authorizations necessary for it to legally perform its obligations under this Agreement; and 8.2.3 It shall perform its obligations under this Agreement in a manner that does not violate any of the terms and conditions in its governing documents, any contracts to which it is a party or any law, rule, regulation, order or the like applicable to it. 8.3 Covenant by Seller. The Seller covenants that, during the Term: 8.3.1 If the Eligible Renewal Energy Resource or the Facility is considered an ‘eligible qualifying facility’ under applicable law and has a net power production capacity of greater than one (1) megawatt, then the Seller covenants and agrees that, within thirty (30) days of the Effective Date or longer period allowed by law, it will complete and file Form No. 556 or other similar form with FERC as the same may be required by law.” 9.0 GENERAL CONDITIONS 9.1 Facility Care and Interconnection. During the Delivery Term, the Seller shall execute and maintain an “Interconnection Agreement” with the Buyer, whereby the Seller shall pay and be responsible for designing, installing, operating, and maintaining the Facility in accordance with all applicable laws and regulations and shall comply with all applicable Buyer, WECC, FERC, and NERC requirements, including applicable interconnection and metering requirements. The Seller shall also comply with any modifications, amendments or additions to the applicable tariff and protocols. The Seller also shall arrange and pay independently for any and all necessary costs under the Interconnection Agreement with the Buyer. 040914 jrm 0180042 12 9.2 Standard of Care. The Seller shall: (a) operate and maintain the Facility in a safe manner in accordance with its existing applicable interconnection agreements, manufacturer’s guidelines, warranty requirements, Good Utility Practice, industry norms (including standards of the National Electrical Code, Institute of Electrical and Electronic Engineers, American National Standards Institute, and the Underwriters Laboratories, and in accordance with the requirements of all applicable federal, state and local laws and the National Electric Safety Code, as such laws and code norms may be amended from time to time; (b) obtain any governmental authorizations and permits required for the construction and operation thereof. The Seller shall make any necessary and commercially reasonable repairs with the intent of optimizing the availability of electricity to the Buyer. The Seller shall reimburse the Buyer for any and all losses, damages, claims, penalties, or liability that the Buyer incurs as a result of the Seller’s failure to obtain or maintain any governmental authorizations and permits required for the construction and operation of the Facility throughout the Term. 9.3 Access Rights. The Buyer, its authorized agents, employees and inspectors shall have the right to inspect the Facility on reasonable advance notice during normal business hours and for any purposes reasonably connected with this Agreement or the exercise of any and all rights secured to the Buyer by law, including, without limitation, its ordinances, resolutions, tariffs, utility rate schedules or utilities rules and regulations. The Buyer shall make reasonable efforts to coordinate its emergency activities with the safety and security departments, if any, of the Facility’s operator. The Seller shall keep the Buyer advised of current procedures for communicating with the Facility operator’s safety and security departments. 9.4 Protection of Property. Each Party shall be responsible for protecting its own facilities from possible damage resulting from electrical disturbances or faults caused by the operation, faulty operation, or non-operation of the other Party’s facilities and such other Party shall not be liable for any such damages so caused. 9.5 Insurance. During the Term, the Seller shall obtain and maintain and otherwise comply with the insurance requirements, as set forth in Exhibit “PPA-E.” 9.6 Buyer’s Performance Excuse; Seller Curtailment. 9.6.1 Buyer Performance Excuse. The Buyer shall not be obligated to accept or pay for the Output during Force Majeure that affects the Buyer’s ability to accept Energy. 9.6.2 Seller Curtailment. The Buyer may require the Seller to interrupt or reduce deliveries of Energy: (a) whenever necessary to construct, install, maintain, repair, replace, remove, or investigate any of its equipment or part of the Buyer’s Distribution System or facilities; or (b) if the Buyer determines that curtailment, interruption, or reduction is necessary due to a System Emergency, as defined in the CAISO Tariff, an unplanned outage on Buyer’s Distribution System, Force Majeure, or compliance with Good Utility Practice. 9.7 Notices of Outages. Whenever possible, the Buyer shall give the Seller reasonable notice of the possibility that interruption or reduction of deliveries may be required. 9.8 No Additional Loads. The Seller shall not connect any loads not associated with Station Service Loads at the location of the Facility in a manner that would reduce Energy provided from the Facility to the Buyer hereunder. The Seller shall obtain separate retail electric service under the Buyer’s rate schedules for the service of such additional loads. 10.0 FORCE MAJEURE 10.1 Effect of Force Majeure. A Party shall be excused from its performance under this Agreement to the extent, but only to the extent, that its performance hereunder is prevented by Force Majeure. A Party claiming Force Majeure shall exercise due diligence to overcome or mitigate the effects 040914 jrm 0180042 13 of Force Majeure; provided, that nothing in this Agreement shall be deemed to obligate the Party affected by Force Majeure (a) to forestall or settle any strike, lock-out or other labor dispute against its will; or (b) for Force Majeure affecting the Seller only, to purchase electric power to cure Force Majeure. 10.2 Remedial Action. A Party shall not be liable to the other Party if the Party is prevented from performing its obligations hereunder due to Force Majeure. The Party rendered unable to fulfill an obligation by reason of Force Majeure shall take all action necessary to remove such inability with all due speed and diligence. The nonperforming Party shall be prompt and diligent in attempting to remove the cause of its failure to perform, and nothing herein shall be construed as permitting that Party to continue to fail to perform after that cause has been removed. Notwithstanding the foregoing, the existence of Force Majeure shall not excuse any Party from its obligations to make payment of amounts due hereunder. 10.3 Notice of Force Majeure. In the event of any delay or nonperformance resulting from Force Majeure, the Party directly impacted by Force Majeure shall, as soon as practicable under the circumstances, notify the other Party, in writing, of the nature, cause, date of commencement thereof and the anticipated extent of any delay or interruption in performance. 10.4 Termination Due to Force Majeure. If a Party will be prevented from performing its material obligations under this Agreement for an estimated period of twelve (12) consecutive months or longer due to Force Majeure, then the unaffected Party may terminate this Agreement, without liability of either Party to the other, upon thirty (30) Days’ prior written notice at any time during Force Majeure. 11.0 INDEMNITY 11.1 Indemnity by the Seller. The Seller shall indemnify, defend, and hold harmless the Buyer, its elected and appointed officials, directors, officers, employees, agents, and representatives against and from any and all losses, claims, demands, liabilities and expenses, actions or suits, including reasonable costs and attorney’s fees, resulting from, or arising out of or in any way connected with claims by third parties associated with (A) (i) Energy delivered at the Delivery Point; (ii) the Seller’s operation and/or maintenance of the Facility; or (iii) the Seller’s actions or inactions with respect to this Agreement, and (B) any loss, claim, action or suit, for or on account of injury, bodily or otherwise, to, or death of, persons, or for damage to or destruction of property belonging to the Buyer or other third party, excepting only such loss, claim, action or suit as may be caused solely by the willful misconduct or gross negligence of the Buyer, its agents, employees, directors or officers. 11.2 Indemnity by the Buyer. The Buyer shall indemnify, defend, and hold harmless the Seller, its directors, officers, employees, agents, and representatives against and from any and all losses, claims, demands, liabilities and expenses, actions or suits, including reasonable costs and attorney’s fees resulting from, or arising out of or in any way connected with claims by third parties associated with acts of the Buyer, its officers, employees, agents, and representatives, relating to: (A) Energy delivered by the Seller under this Agreement after the Delivery Point, and (B) any loss, claim, action or suit, for or on account of injury, bodily or otherwise, to, or death of, persons, or for damage to or destruction of property belonging to the Seller or other third party, excepting only such loss, claim, action or suit as may be caused solely by the willful misconduct or gross negligence of the Seller, its agents, employees, directors or officers. 12.0 LIMITATION OF DAMAGES EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED UNLESS EXPRESSLY HEREIN PROVIDED. NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR 040914 jrm 0180042 14 CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. UNLESS EXPRESSLY HEREIN PROVIDED, AND SUBJECT TO THE PROVISIONS OF SECTION 11 (INDEMNITY), IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. 13.0 NOTICES Notices shall, unless otherwise specified herein, be given, in writing, and may be delivered by hand delivery, United States mail, overnight courier service, facsimile or electronic messaging (e-mail) to the addresses set forth in Exhibit “PPA-F.”. Whenever this Agreement requires or permits delivery of a “notice” (or requires a Party to “notify”), the Party with such right or obligation shall provide a written communication in the manner specified below. A notice sent by facsimile transmission or electronic mail will be recognized and shall be deemed received on the Business Day on which such notice was transmitted if received before 5 p.m. Pacific Time (and if received after 5 p.m., on the next Business Day) and a notice by overnight mail or courier shall be deemed to have been received two (2) Business Days after it was sent or such earlier time as is confirmed by the receiving Party unless it confirms a prior oral communication, in which case any such notice shall be deemed received on the day sent. A Party may change its addresses by providing notice of same in accordance with this provision. A Party may request a change to Exhibit “PPA- F” as necessary to keep the information current. 14.0 TERM, TERMINATION EVENT AND TERMINATION 14.1 Term. The Term shall commence upon the execution by the duly authorized representatives of each of the Parties, and shall remain in effect until the conclusion of the Delivery Term, unless terminated sooner pursuant to the terms and conditions of this Agreement. All indemnity rights shall survive the termination of this Agreement for twelve (12) months. 14.2 Delivery Term. The Delivery Term of the Agreement is _______ years and is defined as the period of time from the Commercial Operation Date through the expiration or early termination of this Agreement. 14.3 Termination Event. 14.3.1 The Buyer shall have the right, but not the obligation, to terminate this Agreement upon the occurrence of any of the following, each of which is a “Termination Event”: (a) The Facility has not achieved Commercial Operation within seventy (70) days following the Deadline; (b) After the Commercial Operation Date, the Seller has not sold or delivered Energy from the Facility to the Buyer for a period of twelve (12) consecutive months; (c) If the Facility does not obtain RPS Certification within six (6) months of the Commercial Operation Date and maintain RPS Certification as required by Section 3.2; or (d) The Seller breaches any other material obligation of this Agreement. 14.3.2 The Seller shall have the right, but not the obligation, to terminate this Agreement upon the occurrence of any of the following, each of which is a “Termination Event”: (a) The Buyer fails to make a payment due and payable under this Agreement within thirty (30) days after written notice that such payment is due; or (b) The Buyer breaches any other material obligation of this Agreement. The preceding sentence notwithstanding, the Seller may terminate this Agreement without cause at any time prior to the Commercial Operation Date, subject to the provisions of Section 7 of this Agreement. 14.4 Time to Cure. None of the events described in Section 14.2.1 and 14.2.2 shall constitute a Termination Event if the Buyer or the Seller cures the event, failure, or circumstance within thirty (30) days after receipt of written notification sent by the other Party, seeking termination, or such longer period as may be necessary to cure so long as the Party subject to the Terminating Event is exercising diligent efforts to cure. 14.5 Termination. 040914 jrm 0180042 15 14.5.1 Declaration of a Termination Event. If a Termination Event has occurred and is continuing, the Party with the right to terminate shall have the right to: (a) send notice, designating a day, no earlier than thirty (30) days after such notice is deemed to be received (as provided in Section 13), as an early termination date of this Agreement (the “Early Termination Date”), unless the Seller has timely communicated with the Buyer and the Parties have agreed to resolve the circumstances giving rise to the Termination Event; (b) accelerate all amounts owing between the Parties; and (c) terminate this Agreement and end the Delivery Term effective as of the Early Termination Date. 14.5.2 Release of Liability for Termination Event. Upon termination of this Agreement pursuant to this section neither Party shall be under any further obligation or subject to liability hereunder, except with respect to the indemnity provision in Section 11 hereof, which shall remain in effect for a period of 12 months following the Early Termination Date. 14.6 No Limitation on Damages. Nothing in this Agreement shall be deemed or construed to limit a Party’s right to recover damages from the other Party, except as otherwise provided in this Agreement. 15.0 RELEASE OF DATA Except as may be exempt from disclosure under applicable law, the Seller authorizes the Buyer to release to any regulatory authority having jurisdiction over the Facility or a Party, or to any request made pursuant to the California Constitution or the California Public Records Act, information regarding the Facility, including the Seller’s name and location, operational characteristics, the Term of this Agreement, the Facility resource type, the scheduled Commercial Operation Date, the actual Commercial Operation Date, the Contract Capacity, payments made to the Seller and Energy production information. The Seller acknowledges that this information may be made publicly available. 16.0 ASSIGNMENT Neither Party shall assign this Agreement or its rights hereunder without the prior written consent of the other Party, which consent shall not be unreasonably withheld. 16.1 Upon the written request of the Seller, the Buyer will execute a “Lender Consent and Agreement” between the Seller and the Seller’s lender(s), if any, in the form acceptable to the Parties; provided, for illustration purposes only, an exemplar is attached hereto as Exhibit “PPA-G.” 16.2 Notwithstanding the foregoing, no Consent and Agreement shall be required for: 16.2.1 Any assignment or transfer of this Agreement by the Seller to an affiliate of the Seller, provided that such affiliate’s creditworthiness is equal to or better than that of Seller, as reasonably determined by the non-assigning or non-transferring Party; or 16.2.2 Any assignment or transfer of this Agreement by the Seller or the Buyer to a person succeeding to all or substantially all of the assets of such Party, provided that such person’s creditworthiness is equal to or greater than that of such Party, as reasonably determined by the non-assigning or non-transferring Party. 16.2.3 Notification of any assignment or transfer of this Agreement under Section 16.2.1 or 16.2.2 shall be given to the non-assigning or non-transferring Party in accordance with Exhibit “PPA-F.” 17.0 APPLICABLE LAW, VENUE, ATTORNEYS’ FEES, AND INTERPRETATION This Agreement will be governed by and construed in accordance with the laws of the State of California. The Parties will comply with applicable laws pertaining to their obligations arising under this 040914 jrm 0180042 16 Agreement. In the event that an action is brought, the Parties agree that trial of such action will be vested exclusively in the state courts of California or in the United States District Court for the Northern District of California in the County of Santa Clara, State of California. 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. If a court of competent jurisdiction finds or rules that any provision of this Agreement, the Exhibits, or any amendment thereto is void or unenforceable, the unaffected provisions of this Agreement, the Exhibits, or any amendment thereto will remain in full force and effect. The Parties agree that the normal rule of construction to the effect that any ambiguity is to be resolved against the drafting party will not be employed in the interpretation of this Agreement or any Exhibit or any amendment thereof. 18.0 SEVERABILITY If any provision in this Agreement is determined to be invalid, void or unenforceable by any court having jurisdiction, such determination shall not invalidate, void, or make unenforceable any other provision, agreement or covenant of this Agreement and the Parties shall use their best efforts to modify this Agreement to give effect to the original intention of the Parties. 19.0 COUNTERPARTS; INTERPRETATION OF CONFLICTING PROVISIONS This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall be deemed one and the same Agreement. Delivery of an executed counterpart of this Agreement by facsimile or portable document format (“PDF”) transmission will be deemed as effective as delivery of an originally executed counterpart. Each Party delivering an executed counterpart of this Agreement by facsimile or PDF transmission will also deliver an originally executed counterpart, but the failure of any Party to deliver an originally executed counterpart of this Agreement will not affect the validity or effectiveness of this Agreement. In the event of a conflict between the Agreement and any, some or all of the Exhibits, the document imposing the more specific duty or obligation will prevail. 20.0 GENERAL No amendment to or modification of this Agreement shall be enforceable unless reduced to writing and executed by both Parties. This Agreement shall not impart any rights enforceable by any third party other than a permitted successor or assignee bound to this Agreement. Waiver by a Party of any default by the other Party shall not be construed as a waiver of any other default. The headings used herein are for convenience and reference purposes only. // // // // // // 040914 jrm 0180042 17 21. EXHIBITS The following exhibits shall be deemed incorporated in and made a part of this Agreement. Exhibit “PPA-A” - Facility Description, Prices, and Reservation Deposit Exhibit “PPA-B” - Commercial Operation Date Confirmation Letter Exhibit “PPA-C” - Scheduling and Outage Notification Procedure Exhibit “PPA-D” - Green Attributes Reporting and Conveyance Procedures Exhibit “PPA-E” - Insurance Requirements Exhibit “PPA-F” - Notices Exhibit “PPA-G” - Form of Lender Consent and Agreement IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their authorized representatives as of the Effective Date. CITY OF PALO ALTO SELLER APPROVED AS TO FORM Senior Deputy City Attorney APPROVED City Manager Director of Utilities 040914 jrm 0180042 18 EXHIBIT “PPA-A” Facility Description, Rates, and Reservation Deposit Program Rates Contract Term: Twenty (20) or twenty-five (25) years Contract rate: $0.103 per kWh for solar resources, 20-year contract term $0.104 per kWh for solar resources, 25-year contract term $0.093 per kWh for non-solar resources, 20-year contract term $0.094 per kWh for non-solar resources, 25-year contract term Pre-certification rate: $0.08 per kWh Reservation Deposit Reservation Deposit ($20/kW of Contract Capacity) $ Service address: Facility Description: Contract Capacity: kW (CEC-AC), based on solar array rating (Panel rated output at PV USA test conditions x inverter efficiency) Facility primary fuel/technology: 040914 jrm 0180042 19 EXHIBIT “PPA-B” Commercial Operation Date Confirmation Letter In accordance with the terms of the Power Purchase Agreement (Palo Alto CLEAN), dated (the “Agreement”) by and between the City of Palo Alto, as the Buyer, and , as the Seller, this Confirmation Letter serves to document the Parties’ agreement that (i) the conditions precedent to the occurrence of the Commercial Operation Date have been satisfied, and (ii) the Buyer has received Energy, as specified in the Agreement, as of , . The actual installed Contract Capacity is kW. This Confirmation Letter shall confirm the Commercial Operation Date, as defined in the Agreement, as of the date referenced in the preceding sentence. IN WITNESS WHEREOF, each Party has caused this letter to be duly executed by its authorized representative as of the date of last signature provided below: Buyer Seller By: By: Name: Name: Title: Director of Utilities Title: Date: Date: In recognition of the Commercial Operation Date relative to the Effective Date of the Agreement by and between the Buyer and the Seller, the Seller hereby calculates the amount to return, if any, of the Seller’s deposit, as follows: Original Reservation Deposit Amount: $ Commercial Operation Date Deadline: □ Commercial Operation Date is prior to Deadline □ Commercial Operation Date occurred weeks following the Deadline, meaning that % of the Reservation Deposit is relinquished by Seller per Section 7.2.2 of the Power Purchase Agreement. Amount (if any) of Reservation Deposit to return to the Seller is: $ 040914 jrm 0180042 20 EXHIBIT “PPA-C” Scheduling and Outage Notification Procedure C.1 Applicability. This Exhibit” PPA-C” shall apply if the Facility is subject to Section 6.0 of this Agreement. C.2 Annual Operations Forecast C.2.1 By the tenth (10th) day September of each calendar year, the Seller will provide NCPA with an annual operations forecast detailing hourly expected generation and all proposed planned Outages for the next calendar year. The annual operations forecast for the calendar year shall be provided by not later than ninety (90) days prior to the scheduled Commercial Operation Date of the Generating Facility. C.2.2 NCPA may request modifications to the annual operations forecast at any time, and the Seller shall use good faith efforts to accommodate the requested modifications. C.2.3 The Seller shall not conduct Planned Outages at times other than as set forth in its annual operations forecast, unless approved in advance by NCPA, which approval shall not be withheld or delayed unreasonably. C.2.4 The Seller shall not schedule or conduct Planned Outages from 12:00 p.m. through 7:00 p.m. Pacific Time during the months of June through October. C.3. Short Term Operations Forecasts C.3.1. Quarterly Operations Forecast C.3.1.1 By the fifth (5th) day of January, April and July of each Contract Year, the Seller shall provide a calendar quarter-operations forecast by hour of expected generation and all proposed Planned Outages for the next full calendar quarter and the twelve (12) months following that calendar quarter. As an example, by January 5, 2014, the Seller would provide a calendar quarter-operations forecast by hour of expected generation for the period, April 1, 2014 through June 30, 2014, and identify all proposed Planned Outages for the period, April 1, 2014 through June 30, 2015. C.3.1.2 NCPA will approve or require modifications to the proposed calendar quarter-operations forecast within ten (10) days of receipt of the forecast. C.3.1.3 If required by NCPA, the Seller will provide a modified calendar quarter-operations forecast within seven (7) days after receipt of required modifications from NCPA. C.3.2 Weekly Update C.3.2.1 By 14:00 of each Wednesday, the Seller shall provide an electronic update, in a format specified by NCPA, to the calendar quarter-operations forecast for the following seven (7) days (Thursday through the next Wednesday). C.3.2.2 The weekly update shall include hourly expected generation and all proposed planned Outages for the relevant seven (7) day period. C.4 Outage Detail for Annual and Short Term Operations Forecasts. Outage information provided by the Seller shall include, at a minimum, the start time and stop time of the Outage, capacity out of service (kW), the equipment that is or will be out of service, and the reason for the Outage. 040914 jrm 0180042 21 C.5 General Scheduling Protocols C.5.1 Daily Modifications to Forecasts. Unless otherwise mutually agreed, the Seller may make changes to the weekly update to the calendar quarter-operations forecast by providing such changes to NCPA prior to 08:00 of the day that is two (2) Business Days before the active scheduling day as determined by the WECC prescheduling calendar. Example: For power that is scheduled for generation or delivery on Friday, March 29, 2014, changes must be submitted to NCPA by 08:00 on Wednesday, March 27, 2014. C.5.2 Hourly Modifications to Active Schedules. Unless otherwise mutually agreed, the Seller may request changes to active schedules by providing such changes to NCPA with a minimum of four (4) hours’ notice prior to the applicable CAISO market deadline (e.g. Hour Ahead Scheduling Process (“HASP”) Scheduling deadline, as defined in the CAISO Tariff). Active day Schedule changes are not binding. Changes to active Schedules are limited to two (2) changes per day, excluding forced Outages, unless otherwise agreed to between the Parties. One request for a Schedule change, of one-hour or multiple-hours duration, constitutes one Schedule change. Example: For power that is scheduled for generation or delivery in hour ending 15:00 (for the period from 14:01 to 15:00), changes must be submitted to NCPA by 10:00. C.5.3. Unforeseen Circumstances. At the Seller’s request, NCPA may, but is not required to, modify the Schedules for the Generation Facility Output due to unforeseen circumstances in accordance with the above scheduling timeline constraints described in this Exhibit PPA-C. C.5.4. Absence of Forecasts. In the absence of forecasts and schedules as required by this Agreement or this Exhibit, NCPA shall utilize the most current information the Seller provides in the development and submission of Schedules. C.6 Outage Reporting Protocols C.6.1. Notification. The Seller shall notify NCPA of all planned or forced Outages of the Generating Facility to ensure compliance with the CAISO Outage Coordination and Enforcement Protocols. C.6.1.1 Outage information provided by the Seller shall include, at a minimum, the start time and stop time of the Outage, Capacity out of service (kW), equipment out of service, and the reason for the Outage. C. 6.1.2 Seller shall provide the Planned Outages not included in the annual operations forecast, the calendar quarter-operations forecast, or the weekly update, to NCPA at least four (4) Business Days prior to the start of the requested outage. C. 6.1.3 At any time prior to the start of a Planned Outage, the CAISO may deny the Outage due to a System Emergency (as defined in the CAISO Tariff) or as otherwise permitted under the CAISO Tariff. If NCPA receives notice that the CAISO has denied an Outage in accordance with the CAISO Tariff, NCPA will notify the Seller as soon as possible and the Seller shall modify the planned Outage as required by the CAISO. C.6.2 Commencement of an Outage. The Seller shall not begin any Planned Outage without the prior approval of NCPA and the CAISO. C.6.3 Forced Outages C.6.3.1 The Seller shall report the Forced Outages to NCPA within twenty (20) 040914 jrm 0180042 22 minutes of such Outages. C.6.3.2 The Seller’s notice of a Forced Outage sent to NCPA shall include the reason for the Outage (if known), expected duration of the Outage, and the Capacity reduction. C.6.3.3 By the end of the next Business Day following the day on which a Forced Outage has occurred, the Seller shall provide to NCPA a detailed written report, specifying the reason for the Outage, expected duration of such Outage, capacity reduction, and actions taken to mitigate such Outage. C.6.4 Return to Service. The Seller shall notify NCPA as soon as possible, but in any case before the Generating Facility is returned to service. C.7 Notices. All Scheduling notices and Schedules shall be submitted to NCPA by phone, fax or email, or other means as may be mutually agreed by the Parties, to the persons designated in Exhibit “PPA-F.” C.8 Changes in Scheduling and Outage Procedure. The Buyer shall revise Exhibit “PPA-C,” or, as appropriate, give written notice to the Seller regarding the revision, and issue a new Exhibit “PPA-C,” which shall then become part of the Agreement to reflect changes in the scheduling and outage notification procedure. 040914 jrm 0180042 23 EXHIBIT “PPA-D” Green Attributes Reporting and Conveyance Procedures D.1 Additional Definitions for the Conveyance of Green Attributes D.1.1 “Certificate Transfers” means the process, as described in the WREGIS Operating Rules, whereby a WREGIS account holder may request that WREGIS Certificates from a specific generating unit shall be directly deposited to another WREGIS account. D.1.2 “WREGIS Certificates” means a certificate created within the WREGIS system that represents all Renewable and Green Attributes from one MWh of electricity generation from an Eligible Renewable Energy Resource that is registered with WREGIS. D.1.3 “WREGIS Operating Rules” means the document published by WREGIS that governs the operation of the WREGIS system for registering, tracking, and conveying, among others, RECs produced from Eligible Renewable Energy Resources that shall be registered with WREGIS. D.1.4 “WREGIS” means Western Renewable Energy Generation Information System. D.2 RECs. Green Attributes shall be conveyed by the Seller to the Buyer through RECs, which shall be registered tracked and conveyed to the Buyer, using WREGIS. D.3 WREGIS Registration. Prior to the Commercial Operation Date, the Buyer will register the Facility in the Buyer’s WREGIS account on behalf of the Seller. The Buyer shall charge back to the Seller any costs of registering and maintaining the registration of the Facility with WREGIS. The Seller shall provide to the Buyer any documents required by WREGIS and assign the Seller’s rights to register the Facility in WREGIS, using agreements provided by WREGIS. D.4 B u yer ’s W REGI S Acco unt . The Buyer shall, at its sole expense, establish and maintain the Buyer’s WREGIS account sufficient to accommodate the WREGIS Certificates produced by the output of the Facility. The Buyer shall be responsible for all expenses associated with (A) establishing and maintaining the Buyer’s WREGIS Account, and (B) subsequently transferring or retiring WREGIS Certificates. D.5 Qualified Reporting Entity. The Buyer shall be the Qualified Reporting Entity (as such term is defined by WREGIS) for the Facility, and shall be responsible for providing the metered Output data to WREGIS. D.6 Reporting of Environmental Attributes. In lieu of the Seller’s transfer of the WREGIS Certificates using Certificate Transfers from the Seller’s WREGIS account to the Buyer’s WREGIS account, the Buyer shall report the Facility as being held directly in its WREGIS account, which will preclude the Seller from reporting the Facility in its own WREGIS account. D.6.1 By avoiding the use of Certificate Transfers, there will be no transaction costs to the Seller or the Buyer for the Certificate Transfers that would otherwise be used. D.6.2 WREGIS Certificates for the Facility will be created on a calendar month basis in accordance with the certification procedure established by the WREGIS Operating Rules in an amount equal to the Energy generated by the Project and delivered to the Buyer in the same calendar month. D.6.3 WREGIS Certificates will only be created for whole MWh amounts of energy generated. Any fractional MWh amounts (i.e., kWh) will be carried forward until sufficient generation is accumulated for the creation of a WREGIS Certificate and all such accumulated 040914 jrm 0180042 24 MWh of Environmental Attributes will then be available to Buyer. D.6.4 If a WREGIS Certificate Modification (as such term is defined by WREGIS) will be required to reflect any errors or omissions regarding the Green Attributes from the Facility, then the Buyer will manage the submission of the WREGIS Certificate Modification. D.6.5 Due to the expected delay in the creation of WREGIS Certificates relative to the timing of invoice payments under Section 2, the Buyer will normally be making an invoice payment for the Output for a given month in accordance with Section 2 before the WREGIS Certificates for such month may be created in the Buyer’s WREGIS account. Notwithstanding this delay, the Buyer shall have all right and title to all such WREGIS Certificates upon payment to the Seller in accordance with Section 2. D.7 Changes in Green Attributes Reporting and Conveyance Procedures. The Buyer shall revise this Exhibit “PPA-D,” as appropriate, give written notice to the Seller regarding the revision, and issue a new Exhibit “PPA-D,” which shall then become part of this Agreement in the event that: D.7.1 WREGIS changes the WREGIS Operating Rules (as defined by WREGIS) after the Effective Date or applies the WREGIS Operating Rules in a manner inconsistent with this Exhibit “PPA-D” after the Effective Date; or, D.7.2 WREGIS is replaced as the primary method that the Buyer uses for conveyance of Green Attributes, or additional methods to convey all Green Attributes, are required. 040914 jrm 0180042 25 EXHIBIT “PPA-E” Insurance Requirements CONTRACTORS TO THE CITY OF PALO ALTO (CITY), AT THEIR SOLE EXPENSE, WILL FOR THE TERM OF THE CONTRACT OBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW, AFFORDED BY COMPANIES WITH A 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 AUTOMOBILE LIABILITY STATUTORY STATUTORY YES COMMERCIAL 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 $2,000,000 $2,000,000 $2,000,000 YES COMPREHENSIVE AUTOMOBILE LIABILITY, INCLUDING, 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 NO 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: PROPOSER, 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 PROPOSER AND ITS SUBCONSULTANS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS’ COMPENSATION, EMPLOYER’S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSURES CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES. I. INSURANCE COVERAGE MUST INCLUDE: A. A PROVISION FOR A WRITTEN THIRTY DAY ADVANCE NOTICE TO CITY OF CHANGE IN COVERAGE OR OF COVERAGE CANCELLATION; AND B. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CONTRACTOR’S AGREEMENT TO INDEMNIFY CITY – SEE, SAMPLE AGREEMENT FOR SERVICES. II. SUBMIT CERTIFICATE(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE, OR COMPLETE THIS SECTION AND IV THROUGH V, BELOW. A. NAME AND ADDRESS OF COMPANY AFFORDING COVERAGE (NOT AGENT OR BROKER): B. NAME, ADDRESS, AND PHONE NUMBER OF YOUR INSURANCE AGENT/BROKER: 040914 jrm 0180042 26 C. POLICY NUMBER(S): D. DEDUCTIBLE AMOUNT(S) (DEDUCTIBLE AMOUNTS IN EXCESS OF $5,000 REQUIRE CITY’S PRIOR APPROVAL): III. AWARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS, AND PROPOSER’S SUBMITTAL OF CERTIFICATES OF INSURANCE EVIDENCING COMPLIANCE WITH THE REQUIREMENTS SPECIFIED HEREIN. IV. ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO “ADDITIONAL INSURES” 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 INSURES. B. CROSS LIABILITY THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSURES 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 ISSUING COMPANY 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. V. PROPOSER CERTIFIES THAT PROPOSER’S INSURANCE COVERAGE MEETS THE ABOVE REQUIREMENTS: THE INFORMATION HEREIN IS CERTIFIED CORRECT BY SIGNATURE(S) BELOW. SIGNATURE(S) MUST BE SAME SIGNATURE(S) AS APPEAR(S) ON SECTION II, ATTACHMENT A, PROPOSER’S INFORMATION FORM. Firm: Signature: Name: (Print or type name) Signature: Name: (Print or type name) 040914 jrm 0180042 27 NOTICES SHALL BE MAILED TO: PURCHASING AND CONTRACT ADMINISTRATION CITY OF PALO ALTO P.O. BOX 10250 PALO ALTO, CA 94303. 040914 jrm 0180042 28 EXHIBIT “PPA-F” Notices Contract Administration BUYER: SELLER: City of Palo Alto Utilities Resource Management 250 Hamilton Avenue Palo Alto, CA 94301 Ph: 650-329-2689 Email: UtilityCommoditySettlements@CityofPaloAlto.Org Billing and Settlements BUYER: SELLER: City of Palo Alto Utilities Resource Management 250 Hamilton Avenue Palo Alto, CA 94301 Ph: 650-329-2689 Email: UtilityCommoditySettlements@CityofPaloAlto.Org Forecasting and Outage Reporting under Section 6 of this Agreement Planned Outages: BUYER: SELLER: Northern California Power Agency Real- Time Dispatch 651 Commerce Drive Roseville, CA 95678 Ph: 916-786-3518 Forced Outages BUYER: SELLER: Northern California Power Agency Real- Time Dispatch 651 Commerce Drive Roseville, CA 95678 Ph: 916-786-3518 Forecasting and Scheduling BUYER: SELLER: Northern California Power Agency Operations and Pre-Scheduling 651 Commerce Drive Roseville, CA 95678 Ph: 916-786-0123 040914 jrm 0180042 29 EXHIBIT “PPA-G” Form of Lender Consent and Agreement This CONSENT AND AGREEMENT (this “Consent”), dated as of , 20 , is entered into by and among the CITY OF PALO ALTO, a California chartered municipal corporation (the “City”), , a corporation (the “Lender),” by its agent, (the “Administrative Agent”), and , a corporation (the “Borrower”) (collectively, the “Parties”). Unless otherwise defined, all capitalized terms have the meaning given in the Contract (as hereinafter defined). RECITALS A. Borrower intends to develop, construct, install, test, own, operate and use an approximately MW electric generating facility located in the city of Palo Alto in the State of California, known as the Project (the “Project”). B. In order to partially finance the development, construction, installation, testing, operation and use of the Project, Borrower has entered into that certain financing agreement dated as of (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Financing Agreement”), among Borrower, the financial institutions from time to time parties thereto (collectively, the “Lenders”) , and Administrative Agent for the Lenders, pursuant to which, among other things, Lenders have extended commitments to make loans and other financial accommodations to, and for the benefit of, Borrower. C. The City and Borrower have entered into that certain Power Purchase Agreement, dated as of (attached hereto and incorporated herein by reference, as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the “Power Purchase Agreement”). D. The City and Borrower have entered into that certain Interconnection Agreement, dated as of _ (attached hereto and incorporated herein by reference, as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the “Interconnection Agreement”). E. Pursuant to a security agreement executed by Borrower and Administrative Agent for the Lenders (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”), Borrower has agreed, among other things, to assign, as collateral security for its obligations under the Financing Agreement and related documents (collectively, the “Financing Documents”), all of its right, title and interest in, to and under the Power Purchase Agreement and Interconnection Agreement to Administrative Agent for the benefit of itself, the Lenders and each other entity or person providing collateral security under the Financing Documents. F. It is a requirement under the Financing Agreement that the Parties hereto execute this Consent. AGREEMENT NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, the Parties agree, as follows: 1. CONSENT TO ASSIGNMENT. The City acknowledges the assignment referred to in Recital E above, consents to an assignment of the Power Purchase Agreement and Interconnection Agreement pursuant thereto, and agrees with Administrative Agent, as follows: (a) Administrative Agent shall be entitled (but not obligated) to exercise all rights and to cure any 040914 jrm 0180042 30 defaults of Borrower under the Power Purchase Agreement or Interconnection Agreement, as the case may be, subject to applicable notice and cure periods provided in the Power Purchase Agreement and Interconnection Agreement. Upon receipt of notice from Administrative Agent, the City agrees to accept such exercise and cure by Administrative Agent if timely made by Administrative Agent under the Power Purchase Agreement or Interconnection Agreement, as the case may be, and this Consent. Upon receipt of Administrative Agent's written instructions and to the extent allowed by law, the City agrees to make directly to such account as Administrative Agent may direct the City, in writing, from time to time, all payments to be made by the City to Borrower under the Power Purchase Agreement or Interconnection Agreement, as the case may be, from and after the City’s receipt of such instructions, and Borrower consents to any such action. The City shall not incur any liability to Borrower under the Power Purchase Agreement, Interconnection Agreement, or this Consent for directing such payments to Administrative Agent in accordance with this subsection (a). (b) The City will not, without the prior written consent of Administrative Agent (such consent not to be unreasonably withheld), (i) cancel or terminate the Power Purchase Agreement or Interconnection Agreement, or consent to or accept any cancellation, termination or suspension thereof by Borrower, except as provided in the Power Purchase Agreement or Interconnection Agreement and in accordance with subparagraph 1(c) hereof, (ii) sell, assign or otherwise dispose (by operation of law or otherwise) of any part of its interest in the Power Purchase Agreement or Interconnection Agreement, except as provided in the Power Purchase Agreement or Interconnection Agreement, or (iii) amend or modify the Power Purchase Agreement or Interconnection Agreement in any manner materially adverse to the interest of the Lenders in the Power Purchase Agreement and Interconnection Agreement as collateral security under the Security Agreement. (c) The City agrees to deliver duplicates or copies of all notices of default delivered by the City under or pursuant to the Power Purchase Agreement or Interconnection Agreement to Administrative Agent in accordance with the notice provisions of this Consent. The City shall deliver any such notices concurrently with delivery of the notice to Borrower under the Power Purchase Agreement or Interconnection Agreement. To the extent that a cure period is provided under the Power Purchase Agreement or Interconnection Agreement, Administrative Agent shall have the same period of time to cure the breach or default that Borrower is entitled to under the Power Purchase Agreement or Interconnection Agreement, except that if the City does not deliver the default notice to Administrative Agent concurrently with delivery of the notice to Borrower under the Power Purchase Agreement or Interconnection Agreement, then as to Administrative Agent, the applicable cure period under the Power Purchase Agreement or Interconnection Agreement shall begin on the date on which the notice is given to Administrative Agent. If possession of the Project is necessary to cure such breach or default, and Administrative Agent or its designee(s) or assignee(s) declare Borrower in default and commence foreclosure proceedings, Administrative Agent or its designee(s) or assignee(s) will be allowed a reasonable period to complete such proceedings so long as Administrative Agent or its designee(s) continue to perform any monetary obligations under the Power Purchase Agreement or Interconnection Agreement, as the case may be. The City consents to the transfer of Borrower's interest under the Power Purchase Agreement and Interconnection Agreement to the Lenders or Administrative Agent or their designee(s) or assignee(s) or any of them or a purchaser or grantee at a foreclosure sale by judicial or nonjudicial foreclosure and sale or by a conveyance by Borrower in lieu of foreclosure and agrees that upon such foreclosure, sale or conveyance, the City shall recognize the Lenders or Administrative Agent or their designee(s) or assignee(s) or any of them or other purchaser or grantee as the applicable party under the Power Purchase Agreement and Interconnection Agreement (provided that such Lenders or Administrative Agent or their designee(s) or assignee(s) or purchaser or grantee assume the obligations of Borrower under the Power Purchase Agreement and Interconnection Agreement, including, without limitation, satisfaction and compliance with all credit provisions of the Power Purchase Agreement and Interconnection Agreement, if any, and provided further that such Lenders or Administrative Agent or their designee(s) or assignee(s) or purchaser or grantee has a creditworthiness equal to or better than 040914 jrm 0180042 31 Borrower, as reasonably determined by City). (d) In the event that either the Power Purchase Agreement or Interconnection Agreement, or both is rejected by a trustee or debtor-in-possession in any bankruptcy or insolvency proceeding, and if, within forty-five (45) days after such rejection, Administrative Agent shall so request, the City will execute and deliver to Administrative Agent a new power purchase agreement or interconnection agreement, as the case may be, which power purchase agreement or interconnection agreement shall be on the same terms and conditions as the original Power Purchase Agreement or Interconnection Agreement for the remaining term of the original Power Purchase Agreement or Interconnection Agreement before giving effect to such rejection, and which shall require Administrative Agent to cure any defaults then existing under the original Power Purchase Agreement or Interconnection Agreement. Notwithstanding the foregoing, any new renewable power purchase agreement or interconnection agreement will be subject to all regulatory approvals required by law. The City will use good faith efforts to promptly obtain any necessary regulatory approvals. (e) In the event Administrative Agent, the Lenders or their designee(s) or assignee(s) elect to perform Borrower's obligations under the Power Purchase Agreement and Interconnection Agreement, succeed to Borrower’s interest under the Power Purchase Agreement and Interconnection Agreement, or enter into a new power purchase agreement or interconnection agreement as provided in subparagraph 1(d) above, the recourse of the City against Administrative Agent, Lenders or their designee(s) and assignee(s) shall be limited to such Parties’ interests in the Project, and the credit support required under the Power Purchase Agreement and Interconnection Agreement, if any. (f) In the event Administrative Agent, the Lenders or their designee(s) or assignee(s) succeed to Borrower's interest under the Power Purchase Agreement and Interconnection Agreement, Administrative Agent, the Lenders or their designee(s) or assignee(s) shall cure any then-existing payment and performance defaults under the Power Purchase Agreement or Interconnection Agreement, except any performance defaults of Borrower itself, which by their nature are not susceptible of being cured. Administrative Agent, the Lenders and their designee(s) or assignee(s) shall have the right to assign all or a pro rata interest in the Power Purchase Agreement and Interconnection Agreement to a person or entity to whom Borrower’s interest in the Project is transferred, provided such transferee assumes the obligations of Borrower under the Power Purchase Agreement and Interconnection Agreement and has a creditworthiness equal to or better than Borrower, as reasonably determined by the City. Upon such assignment, Administrative Agent and the Lenders and their designee(s) or assignee(s) (including their agents and employees) shall be released from any further liability thereunder accruing from and after the date of such assignment, to the extent of the interest assigned. 2. REPRESENTATIONS AND WARRANTIES. The City hereby represents and warrants that as of the date of this Consent: (a) It (i) is duly formed and validly existing under the laws of the State of California, and (ii) has all requisite power and authority to enter into and to perform its obligations hereunder and under the Power Purchase Agreement and Interconnection Agreement, and to carry out the terms hereof and thereof and the transactions contemplated hereby and thereby; (b) the execution, delivery and performance of this Consent, the Power Purchase Agreement and the Interconnection Agreement have been duly authorized by all necessary action on its part and do not require any approvals, material filings with, or consents of any entity or person which have not previously been obtained or made; (c) each of this Consent, the Power Purchase Agreement, and the Interconnection Agreement is in full force and effect; 040914 jrm 0180042 32 (d) each of this Consent, the Power Purchase Agreement, and the Interconnection Agreement has been duly executed and delivered on its behalf and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as the enforceability thereof may be limited by (i) bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general equitable principles (whether considered in a proceeding in equity or at law); (e) there is no litigation, arbitration, investigation or other proceeding pending for which the City has received service of process or, to the City’s actual knowledge, threatened against the City relating solely to this Consent, the Power Purchase Agreement, or the Interconnection Agreement and the transactions contemplated hereby and thereby; (f) the execution, delivery and performance by it of this Consent, the Power Purchase Agreement, and the Interconnection Agreement, and the consummation of the transactions contemplated hereby, will not result in any violation of, breach of or default under any term of any material contract or material agreement to which it is a party or by which it or its property is bound, or of any material requirements of law presently in effect having applicability to it, the violation, breach or default of which could have a material adverse effect on its ability to perform its obligations under this Consent; (g) neither the City nor, to the City’s actual knowledge, any other party to the Power Purchase Agreement or Interconnection Agreement, is in default of any of its obligations thereunder; and (h) to the City’s actual knowledge, (i) no Force Majeure Event exists under, and as defined in, the Power Purchase Agreement or Interconnection Agreement and (ii) no event or condition exists which would either immediately or with the passage of any applicable grace period or giving of notice, or both, enable either the City or Borrower to terminate or suspend its obligations under the Power Purchase Agreement or the Interconnection Agreement. Each of the representations and warranties set forth herein shall survive the execution and delivery of this Consent and the consummation of the transactions contemplated hereby. 3. NOTICES. All notices required or permitted hereunder shall be given, in writing, and shall be effective (a) upon receipt if hand delivered, (b) upon telephonic verification of receipt if sent by facsimile and (c) if otherwise delivered, upon the earlier of receipt or three (3) Business Days after being sent registered or certified mail, return receipt requested, with proper postage affixed thereto, or by private courier or delivery service with charges prepaid, and addressed as specified below: If to the City: [ ] [ ] [ ] Telephone No.: [ ] Facsimile No.: [ ] Attn: [ ] If to Administrative Agent: [ ] [ ] [ ] Telephone No.: [ ] Facsimile No.: [ ] Attn: [ ] 040914 jrm 0180042 33 If to Borrower: [ ] [ ] [ ] Telephone No.: [ ] Facsimile No.: [ ] Attn: [ ] Any party shall have the right to change its address for notice hereunder to any other location within the United States by giving thirty (30) days written notice to the other parties in the manner set forth above. 4. ASSIGNMENT, TERMINATION, AMENDMENT. This Consent shall be binding upon and benefit the successors and assigns of the Parties hereto and their respective successors, transferees and assigns (including without limitation, any entity that refinances all or any portion of the obligations under the Financing Agreement). The City agrees (a) to confirm such continuing obligation, in writing, upon the reasonable request of (and at the expense of) Borrower, Administrative Agent, the Lenders or any of their respective successors, transferees or assigns, and (b) to cause any successor-in-interest to the City with respect to its interest in the Power Purchase Agreement or Interconnection Agreement to assume, in writing and in form and substance reasonably satisfactory to Administrative Agent, the obligations of City hereunder. Any purported assignment or transfer of the Power Purchase Agreement or Interconnection Agreement not in conjunction with the written instrument of assumption contemplated by the foregoing clause (b) shall be null and void. No termination, amendment, or variation of any provisions of this Consent shall be effective unless in writing and signed by the parties hereto. No waiver of any provisions of this Consent shall be effective unless in writing and signed by the party waiving any of its rights hereunder. 5. GOVERNING LAW. This Consent shall be governed by the laws of the State of California applicable to contracts made and to be performed in California. The federal courts or the state courts located in California shall have exclusive jurisdiction to resolve any disputes with respect to this Consent with the City, Assignor, and the Lender or Lenders irrevocably consenting to the jurisdiction thereof for any actions, suits, or proceedings arising out of or relating to this Consent. 6. COUNTERPARTS. This Consent may be executed in one or more duplicate counterparts, and when executed and delivered by all the parties listed below, shall constitute a single binding agreement. 7. SEVERABILITY. In case any provision of this Consent, or the obligations of any of the Parties hereto, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions, or the obligations of the other Parties hereto, shall not in any way be affected or impaired thereby. 8. ACKNOWLEDGMENTS BY BORROWER. Borrower, by its execution hereof, acknowledges and agrees that neither the execution of this Consent, the performance by the City of any of the obligations of the City hereunder, the exercise of any of the rights of the City hereunder, or the acceptance by the City of performance of the Power Purchase Agreement by any party other than Borrower shall (1) release Borrower from any obligation of Borrower under the Power Purchase Agreement or Interconnection Agreement, (2) constitute a consent by the City to, or impute knowledge to the City of, any specific terms or conditions of the Financing Agreement, the Security Agreement or any of the other Financing Documents, or (3) except as expressly set forth in this Consent, constitute a waiver by the City of any of its rights under the Power Purchase Agreement or Interconnection Agreement. Borrower and Administrative Agent acknowledge hereby for the benefit of City that none of the Financing Agreement, the Security 040914 jrm 0180042 34 Agreement, the Financing Documents or any other documents executed in connection therewith alter, amend, modify or impair (or purport to alter, amend, modify or impair) any provisions of the Power Purchase Agreement. CITY OF PALO ALTO ADMINISTRATIVE AGENT APPROVED AS TO FORM Senior Deputy City Attorney BORROWER APPROVED City Manager Director of Utilities Utilities Advisory Commission Minutes Approved on: February 4, 2015 Page 1 of 4 EXCERPTED FINAL MINUTES OF THE DECEMBER 10, 2014 UTILITIES ADVISORY COMMISSION MEETING ITEM 2 (Original Agenda New Business Item 1): ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend that Council Continue the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program at the Rate of 16.5 cents per Kilowatt-hour for a 20- Year Contract and a Program Cap of 3 Megawatts, Add a 25-Year Contract Term Option, and Expand CLEAN Program Eligibility to Non-Solar Renewable Energy Resources Senior Resource Planner Jim Stack summarized the history of the Palo Alto CLEAN program from when it was first adopted in March 2012 to the last updated price and program cap in February 2014. Stack indicated that the City released a Request for Proposals for lease agreements for City-owned parking structures and has selected a finalist who is expected to participate in the program at five facilities for a total of about 1.5 megawatts (MW). Stack explained that the value of local solar has fallen since the program was first launched, but has increased slightly since last year's evaluation. He said that staff recommends that the current price of 16.5 cents/kilowatt-hour (¢/kWh) and program participation cap of 3 MW be recommended to Council. He also said that staff recommends allowing participants to choose either a 20-year or 25-year contract term, noting that some developers had requested a longer contract term given that it would align better with the solar module lifetime and product warranties. Stack also said that staff recommends expanding the CLEAN program’s eligibility to include non- solar local renewable resources, while offering these resources a contract price that is equal to their avoided cost (9.3 ¢/kWh for a 20-year term or 9.4 ¢/kWh for a 25-year term). He noted that expanding the program to non-solar resources has been discussed since the program’s inception, but that it was initially not done due to the fact that the City already had a competing program (the Power from Local Ultra-clean Generation Incentive, or PLUG-In, program) in place for such resources. However, this program was terminated by Council earlier this year. Stack noted that the potential anaerobic digester facility that has been discussed for the wastewater treatment plant has been mentioned as a possible non-solar participant in the CLEAN program. Finally, Stack stated that staff recommends that there be no participation cap on non-solar resources participating in the CLEAN program, given that these resources will be compensated at their avoided cost and therefore not have any impact on ratepayers. Commissioner Eglash asked if resources are paid only for the energy that is delivered, not based on their nameplate capacity. Stack said that this was the case; that payments are made only for energy received, as with a regular power purchase agreement (PPA). Commissioner Eglash ATTACHMENT C Utilities Advisory Commission Minutes Approved on: February 4, 2015 Page 2 of 4 noted that this means the City does not have to worry about degradation of the solar panels over time. Commissioner Eglash commented on the types of non-solar resources that would be eligible for the program, and asked about a hypothetical example of a system of lead-acid batteries that are charged at night using electricity from the grid, and whether that would be eligible to participate in the program. Stack stated that the program Eligibility Rules and Requirements stipulate that a resource must be deemed an “eligible renewable” resource under the California Public Utilities Code in order to participate. Commissioner Eglash asked whether there are any risks that the City should consider in opening the program up to non-solar renewable energy resources, and also asked whether there are any other utilities that are allowing non-solar renewable energy resources to participate in their feed-in tariff programs. Senior Deputy City Attorney Jessica Mullan mentioned that the Los Angeles Department of Water and Power has a feed-in tariff program that is open to wind and biomass projects. Commissioner Eglash asked whether a customer who wanted to install a small wind turbine on their property would have to go through a zoning review process in order to do that. Assistant Director Jane Ratchye stated that such a project would have to go through a regular City review process—possibly including an architectural review process and an environmental review process—just like any other development project. Vice Chair Waldfogel asked whether a fuel cell using “green gas” would be considered a renewable resource by the California Energy Commission (CEC). Stack stated it would be considered a renewable resource, while Ratchye noted that it would likely be difficult to get physical “green gas” delivered to the City. Commissioner Eglash asked whether a fuel cell such as a Bloom Box that simply used a regular natural gas supply would be deemed eligible, and Stack stated that it would not. Vice Chair Waldfogel asked whether a Bloom Box that used gas from the City’s PaloAltoGreen Gas program would be eligible. Stack stated that it would not, because that program uses environmental offsets to “green up” a regular natural gas supply, whereas the state Public Utilities Code requires that fuel cells use actual green gas in order to be deemed a renewable electricity supply. Commissioner Eglash asked Stack for his opinion on whether the staff recommendation to open the CLEAN program to non-solar renewable energy resources was wise and well thought out. Stack responded that he thought it did make sense to open the program to non-solar resources rather than discriminate against them, and that as long as they can pass through the City’s regular permitting and review processes they should be eligible to participate. Commissioner Eglash stated his concern that opening the program up to any type of renewable resource, for a 20- or 25-year term, with no participation cap (for non-solar resources) exposed the City to risks that it may not have considered. However, he also noted that the City regularly signs long-term PPAs, locking in a contract price for an extended period of time. Utilities Advisory Commission Minutes Approved on: February 4, 2015 Page 3 of 4 Ratchye agreed that opening the CLEAN program to non-solar resources would not be significantly different from the City’s regular PPA process. She also noted that staff would be returning to Council every year to review the program and its contract price, so the prices and terms being proposed right now would not be available forever. She also noted that staff does not expect significant participation from non-solar resources. She stated that the only real concern with the staff proposal was for a non-solar price that was based on the avoided cost of a baseload type of resource, such as an anaerobic digester, and that it might not accurately reflect the value of a renewable resource with a different generation profile such as a wind resource. Finally, she pointed out that one way to address the concern about participation of non-solar resources in the CLEAN program would be to impose a program participation cap on those resources. Commissioner Eglash noted that in the case of regular PPAs, each project is reviewed by the UAC, the Finance Committee, and the full City Council. Whereas with the CLEAN program the City would be committing itself to projects of unlimited size without any additional review. He suggested that the UAC might want to consider requiring Council approval of larger projects. Ratchye responded that the UAC could certainly make that recommendation; however, it would defeat the purpose of a feed-in tariff program, which is to establish a known price and a standard contract and a set of participation criteria, and allow projects to participate in the program without going through the typical thorough review process. She also noted that the chances of a giant locally-sited project are incredibly remote. Vice Chair Waldfogel commented that large projects would have long lead times to develop and that it would not be unreasonable to expect some negotiations to occur for such large projects. Commissioner Hall stated that he has problems with the anaerobic digester being part of this program due to the fact that it could be a very large project and it should have to go through the regular PPA negotiation and review process. He also said that since the anaerobic digester would likely be a City-owned project (but not owned by Utilities) and therefore it would be a transfer price and this could be an issue for the public. However, he likes the idea of having a feed-in tariff program in place, and that in the future fuel cells could be a good technology to participate in the program as their prices come down. Commissioner Foster noted that although there has not been any uptake for the program yet, he is supportive of continuing the program for solar at the 16.5 ¢/kWh price and that he supports adding a 25-year contract term option. He also noted that for solar projects, the incremental cost of those projects participating is very small for residential customers (he calculated the rate impact as 12.5 ¢/month for the median residential customer, assuming the CLEAN program was fully subscribed). Commissioner Foster noted that the anaerobic digester is a large motivation for expanding the program to non-solar projects, and that it is a complicated project for the City. He noted that if that project participates in the CLEAN program it will bring certainty to one aspect of the project (the revenue it will receive for the power it generates) that is currently up in the air. He also stated that because the project will be compensated at its avoided cost he feels that the Utilities Advisory Commission Minutes Approved on: February 4, 2015 Page 4 of 4 arrangement is reasonable and therefore he supports the non-solar portion of the staff recommendation in addition to the solar portion. Commissioner Melton stated that he is also comfortable with the staff proposal and that he is convinced that there will not be any off-the-wall projects coming out of this program, since any resource that wishes to participate must be defined by the state as an eligible renewable energy resource. Commissioner Cook stated that he also likes the staff recommendation, but he would put a cap on the non-solar projects, such as 3 MW, in order to have more control on the City’s exposure. For a compelling project that is larger than 3 MW, the developers would come to staff to discuss the project and staff could seek Council approval of the project or seek Council approval to raise the 3 MW cap. He also stated that he is not concerned about the transfer pricing issue, since the price is set at the avoided cost of the energy. Commissioner Eglash commented that Commissioner Cook’s recommendation did not signal that the City would reject projects larger than 3 MW, but that such projects would have to go through a more thorough review process. Ratchye asked Stack to remind the Commission about the size of the anaerobic digester project. Stack stated that Public Works staff currently anticipates that the project will consist of three 800 kilowatt (kW) engines, with two engines operating and one idle at any point in time; therefore the project would have an operating capacity of about 1.6 MW. Ratchye also reminded the Commission that when Council terminated the PLUG-In program earlier this year, staff told Council that after terminating that program, it would return to Council with a recommendation to expand the CLEAN program to include non-solar renewable energy resources such as the anaerobic digester. ACTION: Chair Foster made a motion to approve staff’s recommendation. Commissioner Melton seconded the motion. Commissioner Eglash, explaining that he doesn't feel that the UAC has received a full discussion and justification for non-solar projects, made a substitute motion to eliminate the non-solar aspect of the staff recommendation. His motion was to approve staff’s recommendation parts 1.a. and 2 (Adopt a resolution to continue the Palo Alto CLEAN program at the current price of 16.5 cents per kilowatt-hour (¢/kWh) for a 20-year contract, add a 25-year contract term option with a 16.5 ¢/kWh price, and continue with a program limit of 3 megawatts (MW) for solar energy resources; and Direct staff to return to the Council with a review of the program in one year or at the time the program capacity is filled, whichever comes first.). Commissioner Hall seconded the substitute motion. The motion carried by a vote of 3-2 (with Chair Foster and Commissioner Melton voting no, Vice Chair Waldfogel and Commissioners Eglash and Hall voting yes, Commissioner Cook abstaining, and Commissioner Chang absent). FINANCE COMMITTEE DRAFT MINUTES Page 1 of 15 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: 2.Utilities Advisory Commission Recommendation that Council Continue the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program at the Rate of 16.5 Cents per Kilowatt-hour for Solar Resources for a 20-Year Contract and a Program Cap of 3 Megawatts, and Add a 25-Year Contract Term Option; Staff Recommendation that Council Expand CLEAN Program Eligibility to Non-Solar Renewable Energy Resources with a Rate Equal to their Avoided Cost for 20- and 25-year Contracts and Program Cap of 3 Megawatts; and Approval of Amended CLEAN Program Power Purchase Agreement. Valerie Fong, Utilities Director, noted that a representative from the Utilities Advisory Commission (UAC), Steven Eglash, was present at this meeting. Staff was going to give a brief overview of the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program. Jim Stack, Senior Resource Planner, said the CLEAN Program started three years ago, it was a Feed-in Tariff Program, a program that offered a guarantee of payments to renewable energy developers for the electricity they produce. When the CLEAN Program was approved three years ago, the PV Partners Program, Palo Alto’s solar rebate program, was intended to assist people in installing solar systems on their rooftops or businesses, but the funds set aside were starting to run out. The CLEAN Program was intended to help people set up solar on their rooftops, following the expiration of the PV Partners Program funds. The CLEAN Program started at 14 cents/kilowatt-hour (kWh) for a 20 year contract term. The Program was limited to solar photovoltaic (PV) technologies, following the success with the ATTACHMENT D DRAFT MINUTES Page 2 of 15 Finance Committee Special Meeting Draft Minutes 3/17/2015 PV Partners Program; the CLEAN Program Participation Cap was set at four megawatts (MW). The first year of the CLEAN Program had no sign-ups. As a result, Council directed Staff to increase the contract rate from 14 cents to 16.5 cents/kWh. The initial 14 cent rate was set to be approximately equal to the value that Staff determined the energy would have to the City. The Program went from being an unsubsidized Program, to a Program with a bit of subsidy to encourage customers to participate; the Program Participation Cap was reduced from four to two MW at that time. A year later there were still no sign-ups, so in early 2014, Council renewed the Program at the same 16.5 cents/kWh rate but increased the participation cap from two to three MW. Staff started to hear that the economics of the Program were looking better. It was thought that there was no participation because the cost of doing solar projects in Palo Alto was too high. As the economics of solar improved, Staff was getting closer to receiving a project application. Some changes in the CLEAN Program parameters were the Program Participation Cap over the years, and how the value of local solar energy changed in Palo Alto over time. Palo Alto started with the value of solar energy being 13.5 cents/kWh. As the price of solar has declined, and the cost of transmission and capacity has changed, the City is now down to a rate of 10.3 cents/kWh for the value of solar energy. The combination of changes in the value of solar energy and the CLEAN price means that the Program is now expected to have a financial impact on the City and their customers if the Program was maxed out at the Program Cap because the CLEAN price has risen and the value of solar has decreased Staff presented the UAC with recommendations in December 2014. The UAC and Staff unanimously recommended that Staff continue the CLEAN program for another year at 16.5 cent/kWh rate for local solar energy resources. This was six cents per kWh higher than what Staff valued the energy produced in Palo Alto to be. The reason was local solar projects had additional benefits to the City, such as: economic benefits from investment in the City, job creation, a reduction in the need for constructing new transmission throughout the State, providing shade, and increasing the resiliency of the local electric system. Staff and the UAC also recommended continuing the Program Participation Cap at three MW for local solar projects; the final Item was adding a 25 year contract term, in addition to the current 20 year contract term that was offered to developers. This recommendation was based on feedback Staff received from solar developers that wanted to see some additional options. The suggestion of 25 years was made because it aligned with the warranty lifetime on solar panels and other equipment. There was little difference in the value of local solar energy when increasing the agreement term from 20 years to 25 years. Staff recommended offering the same 16.5 cent/kWh rate for the 20 year and the 25 year program. Staff also recommended expanding the CLEAN Program eligibility to include non-solar local renewable energy resources and implementing a separate three MW participation cap DRAFT MINUTES Page 3 of 15 Finance Committee Special Meeting Draft Minutes 3/17/2015 for non-solar resources. There would be a three MW participation cap on solar, and a separate three MW participation cap for non-solar resources in the CLEAN Program. Finally, Staff recommended that the non-solar resources be compensated at a contract rate that was equal to the avoided cost of local renewable non-solar energy. For non-solar resources, this was going to be an unsubsidized Program: the rate for non-solar resources was 9.3 cents/kWh for 20 years and 9.4 cents/kWh for 25 years. When Staff went to the UAC with this recommendation in December, 2014, there was an original recommendation to not include the Program Participation Cap for non-solar resources at all because the price in the non-solar program equaled the avoided cost of the resource and there was no financial impact on the City; thus there was no need for a cap on the resources participating. The UAC was concerned about this recommendation, including the concern over the type and size of the resources that could potentially participate in this Program. There was a desire expressed to put a cap on the overall Program Participation for non-solar resources and a desire expressed to see a fuller discussion of the impact and the rationale of expanding this program to include non-solar resources. Staff responded to these concerns in the Staff Report by changing the recommendation from an un-capped Program for non-solar resources to a Program that had a three MW cap. The Staff Report included a more complete discussion of the proposal to expand non- solar resources, including clarifying that these resources needed to meet the State’s legal definition for renewable resources. Staff also clarified the need to comply with normal zoning and permitting requirements in order to get a contract through this Program. Staff also noted that this proposal was consistent with Council’s May 12, 2014 Motion that the proposed Anaerobic Digester Facility be compensated at the Avoided Cost level. Staff noted that the proposal was consistent with the previously stated intentions to expand the Program beyond solar and to include other renewable energy resources. Staff made note of some other Feed-in Tariff Programs operated by municipal utilities in the State that were open to non-solar resources. If the Program included non-solar resources, it would provide the option of price certainty to the Anaerobic Digester Facility should it decide to participate in the program and sell its energy to City of Palo Alto’s Utilities, rather than use the energy on site. Council Member Kniss requested more background and recalled a discussion on pricing. Mr. Stack relayed that most of the City’s renewable resources were contracted from larger resources outside Palo Alto; they were large 20-40 MW projects. The CLEAN Program was built to encourage projects within the City limits. Staff did not have to get the energy across the system to Palo DRAFT MINUTES Page 4 of 15 Finance Committee Special Meeting Draft Minutes 3/17/2015 Alto but it improved the resiliency of the local system and that helped the City to meet their Resource Adequacy Requirement to procure capacity in the Bay Area. There was a lot of interest in solar energy over the years and an increasing desire to see large programs being built in Palo Alto. Council Member Kniss clarified that she was really interested in pricing and recalled pricing being at 16.5 cents/kWh. Ms. Fong gave a background about the Program and said the first year of the Program was priced at the Avoided Cost of 14.0 cents/kWh, which took into account that the energy had to be moved into Palo Alto. If these variables were embedded into the price it came out to roughly 14 cents/kWh. There were no takers. Staff heard from potential developers that a price more in the range of 16-18 cents/kWh might cause a project to develop in Palo Alto. Staff went through the Council and the Finance Committee (Committee) to suggest a rate of 16.5 cents/kWh, which at the time the CLEAN Coalition thought was a good price. A variable that stopped developers from developing in Palo Alto was the high rent for rooftop space, where solar panels were normally put. Developers remarked that they needed more incentive to afford building in Palo Alto in order to make a decent margin of return for a locally developed solar project. Council adopted the 16.5 cent/kWh price, but still there were no takers. In year three, Staff was not comfortable increasing the rate because the cost of renewables went down. At the same time Staff was hearing that in order to build in Palo Alto, 16 cents/kWh was needed. Staff recommended that the 16.5 cents/kWh rate be maintained. It was understood that the CLEAN Coalition, in conjunction with a local developer, were looking into City facilities for rooftop rentals. Staff was interested in seeing what projects the 16.5 cent/kWh rate would yield. Council Member Kniss confirmed that there were still no takers. Ms. Fong replied yes. Chair Schmid wanted to hear from the representative from the UAC before a general discussion was launched. Steve Eglash, Utilities Advisory Commission, Commissioner noted that he was not formally representing the UAC. He wanted to comment on the Feed-in Tariff and the path by which this information moved from the UAC to the Committee. A Feed-in Tariff was a highly flexible and powerful tool because by adjusting the price by which a person may commit to pay for DRAFT MINUTES Page 5 of 15 Finance Committee Special Meeting Draft Minutes 3/17/2015 energy produced, a person was able to get any degree of involvement and participation that a person wanted. For example, if the price was fixed at a higher rate, there was going to be takers, and if it was fixed high enough, there would be as many takers as a person wanted. Palo Alto’s approach over the years has been conservative because they set the price close to or slightly above alternate sources of Green Energy. This process protected what the City has been doing fiscally. He noted that there was never a strong enough argument to set the Feed-in Tariff rate significantly higher to insure involvement in the Program. He knew that many people, including himself, were not dismayed by the lack of takers and were happy with the way the Program played out. The reason was because Palo Alto said they were willing to pay a certain amount and no more for projects of this type: if there were takers at that price, they were happy, but if not, it meant that Palo Alto protected the money they were willing to invest in the Program. There were other cities and countries in the world that set their Feed-in Tariffs at much higher rates to try to get more solar deployed; there was never a strong feeling in Palo Alto to do that because doing that became a kind of wealth redistribution from the rate payers to solar developers and there were strong social reasons not to set the price at 20 or 30 cents/kWh. His second point was that the UAC received a slightly different Staff Memo than the Committee received; the Memo that the UAC received had a whole lot less background and justification proposing the expansion of the Program to non-solar. He was part of a majority that offered a Substitute Motion that eliminated the non-solar part of the Program. Staff has since provided additional information to this Committee. This Item has not come back before the UAC but he thought the Staff presentation and the Staff Report before the Committee did a great job of explaining why Staff was proposing an expansion of a Non-Solar Program. He thought the expansion was fine, prudent, conservative, it was consistent with established policy, he liked that it included a potential Anaerobic Digester, and Staff added a three MW cap in case there was some unforeseen consequence of expanding the Program. Council Member Kniss suggested Council Member Scharff comment since he was the Liaison for the UAC. Council Member Scharff did not see any problem with extending the Program to non-solar resources. The Council raised the Program price from 14 cents/kWh to 16.5 cents/kWh because there was almost no profit margin for developers at the lower rate. Things changed. The price of solar was falling, which was a bad deal for the rate payers. His concerns were fiscally related because for example, every time the City spent $1 million on an Electric Utility program, there was a one percent rate increase to the rate payers. The Program’s subsidy level of $300,000 per year meant a rate DRAFT MINUTES Page 6 of 15 Finance Committee Special Meeting Draft Minutes 3/17/2015 increase of .333 (recurring) cents, which was a reason why he was not really bothered that the Program had no takers. He also questioned the need for the Program in the Community. There was no problem with 16.5 cents/kWh versus 14 cents/kWh, it was getting to that stage that he had a problem with. He noted that Avoided Costs were falling and solar was becoming more and more cheap. A person locked into a Program for 25 years meant they were locked into a highly subsidized rate. He wanted to ask if Local System Resource Adequacy was really an argument and if having Resource Adequacy under three MW made any difference. His main concern was putting solar panels on City facilities, especially parking garages because technology was changing rapidly and the City may want to repurpose their parking garages, including tearing them down. This was a bigger problem if the City had to buy people out in the future, considering the cost. A reason there were not any takers was because the person was locking themselves into the development potential of that site, which was unable to be changed. An owner did not do that unless they had a building that was going to have more than a 25 year life that was useful. Ms. Fong wanted to know if Staff should abandon the whole local solar strategy and requested clarification. Council Member Kniss supported Council Member Scharff’s comments. A home owner making a commitment over a long period of time thought they were going to get their money back or that they were doing something good for the environment. She was unclear which direction the Committee should go in and was not sure she wanted to make that decision at this time. Council Member Filseth recalled mention of one project that might be coming soon and wanted to know if that involved the rooftop of a parking garage or if it was a homeowner project. Mr. Stack answered that Staff was referring to a City facility garage rooftop. The Public Works Department released a Request for Proposal last year to lease rooftop space at several City parking garages. Council Member Filseth understood that with this Program the City was subsidizing up to $300,000 per year in order to have solar generated in Palo Alto, as opposed to some place outside of the City. Mr. Stack agreed. DRAFT MINUTES Page 7 of 15 Finance Committee Special Meeting Draft Minutes 3/17/2015 Council Member Filseth spoke regarding 20 year contracts and said if the price of solar dropped to six or five cents/kWh in the next 10 years, then the size of the City’s subsidy was going to go from $300,000 to $500,000. Mr. Stack replied that was about right. The City was currently locking in long-term contracts for 25-30 years at about seven cents/kWh, which was just the cost of the energy, which did not include the cost of transporting the energy. Council Member Filseth asked if the cost of transmission was about one cent/kWh. Mr. Stack said the price rose to two or three cents/kWh for a 25 year term. Ms. Fong remarked that almost the entire portfolio for the City was comprised of long-term contracts; if the market price went down, the portfolio was more out of market, and if the market prices went up, the portfolio was more in the market. This was a factor that was inherent in a contract because a person might end up either paying more or less than they originally bargained for. Council Member Filseth thought that made sense and inquired if the City’s contracts expired at staggered intervals. Mr. Stack answered they expired between the years 2021 and 2040. Council Member Filseth confirmed that the contracts would be resetting in that time bracket. He asked about expanding the Program to non-solar renewable sources and wanted to know if the primary target of that was the Anaerobic Digester. Mr. Stack remarked that the Anaerobic Digester was the one non-solar project that Staff felt was conceivable in this Program. He said there could also be wind or biomass projects in this Program, but land in Palo Alto was not really viable for that. Council Member Filseth commented that some of the ancillary benefits were that Staff should not propose 16.5 cents/kWh for non-solar because it did not have the ancillary benefits that solar had. He wanted to know which benefits applied to solar and which to the Digester or a wind turbine that someone might put on their roof. DRAFT MINUTES Page 8 of 15 Finance Committee Special Meeting Draft Minutes 3/17/2015 Mr. Stack answered that the other projects would not have the shade benefit that solar had. People were more likely to get local economic benefit from solar and people were more likely to hire local workers, as opposed to a wind facility that would be built by a company not located in Palo Alto. Council Member Filseth wanted to know what would happen if Palo Alto built an Anaerobic Digester, started running it and then realized that power was costing 20 cents/kWh; was the City required to buy that power. Mr. Stack said yes. The two business models that were considered for the Anaerobic Digester were selling all of the output to the City, the facility would continue to buy power from the City, and then sell all the energy from the Anaerobic Digester to the City at a rate of 9.3 or 9.4 cents/kWh, regardless of what it was going to cost to generate the power. The other option was to use all the energy that the Anaerobic Digester produced on- site to off-set the energy that the facility used. The second option was more advantageous because the cost of the City’s energy was higher than 9.3 cents/kWh, the price the City would be buying it at through the CLEAN Program. Council Member Filseth remarked that if it was going to cost a person 20 cents/kWh to produce it, and if they could buy it at 10 cents/kWh, then they might buy it from outside. Council Member Scharff noted that when this project came before the Council in 2012, he added an Amendment saying that the City was not going to pay more than the market price, plus the Avoided Cost for the Anaerobic Digester. Public Works was for the idea that if the energy cost 20 cents/kWh, then the City should buy at 20 cents/kWh; he did not want that to occur. Council Member Filseth agreed because it made it harder to understand the transfer between the Utility, the City, the General Fund, and so forth. Ms. Fong added the electric rate payers were indifferent to whether they bought the power from the Anaerobic Digester or someone else. Council Member Filseth wanted to discuss putting solar on rooftops and being locked into rates because if the City was locked into buying power, was the supplier locked into selling the power. Mr. Stack confirmed that both sides were locked in. DRAFT MINUTES Page 9 of 15 Finance Committee Special Meeting Draft Minutes 3/17/2015 Council Member Filseth stated the central question was: what was it worth to the City to get solar power locally, as opposed to some place like Fresno, California. This argument did not apply to non-solar because it was at market rate. It was not a huge amount of money but it was the same as the previous amount of money. Council Member Scharff clarified that the cost was more than that because of the Staff time. Council Member Kniss added that there was the social justice issue that was also brought up. Council Member Filseth understood there was not a huge subsidy going from 14 to 16 cents/kWh, but that might not be a bad thing. Chair Schmid spoke regarding the Anaerobic Digester and inquired what would happen if markets fell by the time this Program came online. He wanted to know what would happen in the next few years if the market price was eight or nine cents/kWh. Mr. Stack clarified that the Anaerobic Digester would get the nine cents/kWh, not 16 cents/kWh, since it was not a solar resource. The City paid what they estimated as the value of the energy, which was currently 9.3 or 9.4 cents/kWh. Chair Schmid confirmed the Anaerobic Digester was going to get the rate quoted. Mr. Stack said yes, it was not subsidized for the Non-Solar projects. Ms. Fong clarified there were two rates being proposed, one was for solar facilities with the incentive that brought the price up to 16.5 cents/kWh, and the other was no incentive at the rate of 9.3 or 9.4 cents/kW. Chair Schmid noted that there were zero participants in the CLEAN Program and 680 participants in the PV Partners Program, which primarily dealt with individual homes and residences. Mr. Stack added that commercial customers also participated now. DRAFT MINUTES Page 10 of 15 Finance Committee Special Meeting Draft Minutes 3/17/2015 Chair Schmid asked if the money behind this was running out and was going to disappear in one or two years. Mr. Stack relayed that the funds for the Residential Program were gone and the Commercial funds were going to run out in about 2017. Chair Schmid questioned why the residential customers were not joining the CLEAN Program and maintaining high rates for a long period of time; why were the 680 from PV Partners not joining the CLEAN Program. Ms. Fong replied that residential customers with a couple solar panels on their roof found it more advantageous to go through the Rebate Program. Participation in the CLEAN Program with sales to the Utility was very different from the Net Metering Program, which was something that residential customers could get. Regarding the CLEAN Program, a participant had to sign an agreement and to meet certain obligations under the Power Purchase Agreement, which was not needed under the Rebate Program. Chair Schmid wanted to know what the Rebate Program was and what was rebated. Ms. Fong answered that the City paid some level of the Capital Cost to install the system, which was net energy metered. Chair Schmid asked if there was a transfer in cash with the rebate. Ms. Fong said there was an initial transfer because there was some capital funding put in the solar panel. Monthly or annually the City netted out the power generation, subtracted that amount from the total use, and then reflected that amount in people’s bills. She noted that the Rebate Program was fully subscribed for residential customers under the Senate Bill One funds and said there were still some rebate dollars for commercial customers only. One suggestion from Staff was to help residential customers that might no longer qualify for the Rebate Program to purchase through the Group-Buy Program, which enabled customers to join together to get some economies of scale to buy the panels cheaper than they normally would on their own. A third option was the Community Solar Program, which Staff has not brought before the Committee yet. Chair Schmid wanted to know if it was okay to take the subsidy in the CLEAN Program and present it to residents, possibly using that money to DRAFT MINUTES Page 11 of 15 Finance Committee Special Meeting Draft Minutes 3/17/2015 increase the incentive for residents to put up new solar panels. He wondered if the City was going to end up with more MW of solar power. Ms. Fong thought that since there were zero takers under the CLEAN Program, there would probably be more than zero. The Local Solar Program was a learning experience of how the Power Purchase Agreements worked for large scale local solar projects. Chair Schmid explained that his social concern was the rate payers transferring because under the CLEAN Program the goal was to transfer to large developers. He wanted to know why the City was not transferring the same amounts to residents, which was distributed back to a much wider group of rate payers. Ms. Fong felt that the Council expressed its preference through adoption of the solar strategy which contains different program elements. Chair Schmid was concerned that the City was pushing this Program and said a parallel effort should be made to offer residents incentives. Ms. Fong inquired if the Committee was not going to recommend Staff’s proposal to the Council or whether there was an alternative price the Committee could recommend, or whether the Committee was saying “no” to the CLEAN Program. Chair Schmid felt the amount that Staff was asking for was relatively modest and the goal of generating local solar energy was good. He wondered if the project should be focused on a few major developments, as opposed to the thousands of residents that were not using solar power at the moment. Mr. Stack clarified that the Program was available to residential customers. Chair Schmid thought the terms of a 20 or 25 years made the Program seem like a major investment. Mr. Stack agreed. Council Member Filseth felt that the long term commitment was a bigger barrier for the residents than some of the financial variables and he was not convinced of the value of having the project in Palo Alto, versus having it in Fresno, California. His question was at what price was it sensible to proceed DRAFT MINUTES Page 12 of 15 Finance Committee Special Meeting Draft Minutes 3/17/2015 and suggested market price, plus 2.5-3 cents/kWh, or whatever the estimated transmission cost was. The Program was not going to get a lot of takers now, but technology was going to be different in five years. Council Member Scharff thought the solar Program should continue, but at the Avoided Cost of 9.3 cents/kWh for a 20 year contract term, or 9.4 cents/kWh for a 25 year Program, the same as non-solar. He did not think there would be any takers now but he thought technology was changing rapidly and the price seemed to be falling. He was not sure why solar energy was preferred over wind. He disagreed with renewables that created a release of carbon because then the City had to buy Renewable Energy Certificates (REC) to offset that. This caused Palo Alto to pay extra money to offset the power with REC’s. There was no reason to go forward with everything at the same price and he did not want the project to take place on garages. Mr. Stack clarified the Avoided Cost for solar energy was 10.3 or 10.4 cents/kWh, which was slightly higher than the 9.3 or 9.4 cents/kWh for non- solar resources. The reasoning was solar energy was generated in the day time when prices were higher and the energy was more valuable for the City, as opposed to wind, which was generated more in the middle of the night, when market prices were lower. Council Member Scharff questioned baseload resources, such as geothermal, and wondered if the Avoided Cost was higher. He heard concern from Staff because the City did not have enough baseload resources and were buying all the solar; the City may be flooding the market and have to pay fees because there were too many renewables. If all the energy was solar, there could be a problem. Mr. Stack said that was true but at this point in time Staff was not seeing that. Staff’s best estimate was 10.3 cents/kWh for solar and 9.3 cents/kWh for wind, or base load resources. Council Member Scharff asked for clarification. Mr. Stack reiterated that the avoided cost price for local renewable solar projects was 10.3 cents/kWh for 20 years. Chair Schmid questioned about energy prices around the county, and said the peak energy price was in the late afternoon, between 12:00 P.M and 6:00 P.M.; he thought Staff said that was when the prices were low. DRAFT MINUTES Page 13 of 15 Finance Committee Special Meeting Draft Minutes 3/17/2015 Mr. Stack said no, that was when the prices were highest, which could change in California because there could be so much solar generated that it drove prices down. MOTION: Council Member Scharff moved, seconded by Chair Schmid to recommend that the Council: 1) continue the Palo Alto CLEAN Program at a price for solar renewable projects at the Avoided Cost of 10.3 cents per kilowatt-hour for 20 years and 10.4 cents per kilowatt-hour for 25 years; 2) to amend the Palo Alto CLEAN Program eligibility rules and requirements to allow non-solar eligible renewable energy resources to participate and offer local non-solar renewables at a price of 9.3 cents per kilowatt-hour for 20 years and 9.4 cents per kilowatt-hour for 25 years, with a cap on the program of 3 megawatts; and 3) direct Staff to return to the Finance Committee after reviewing ways to continue the PV Partners Program for residential use. Ms. Fong wanted to clarify the prices stated were for a 20 year Power Purchase Agreement and it was slightly higher for a 25 year: 10.4 and 9.4 cents/kWh for the 25 year Program. Council Member Scharff said that was fine. He thought this made more sense because the Program evolved when it was at 14 cents/kWh; conditions changed and this made more economic sense. This proposal was going to get the City more solar, instead of transferring the subsidy for business interests, when there was probably no need for subsidy; this transferred to home owners who live in a Palo Alto who want to show their commitment to being green. Chair Schmid thought this made more sense, and would not generate a lot of big customers. Considering the PV Partners Program was good because Staff was going to look at the terms of the agreement that were going to be used to generate a response, and then come back to the Committee for a discussion. Council Member Kniss mentioned Council Member Scharff’s comments about extending the Program to home owners and questioned whether there was a demand for that at this point in time. Mr. Stack felt that extending the PV Partners Program and providing more subsidies would encourage uptake in the Program. DRAFT MINUTES Page 14 of 15 Finance Committee Special Meeting Draft Minutes 3/17/2015 Council Member Kniss mentioned how much the price of solar energy has come down, and given the drought, she thought it might drop faster. She hoped Staff was preparing for that future, especially if there was not a lot of rain and more heat. She wanted to know if the amount of heat affected the amount of energy that was received from the solar panels. Mr. Stack replied that there was a minor effect and said there was less energy when it was really hot because electrical systems performed better at cooler temperatures; the energy output was more related to the sun and the cloud cover. Council Member Kniss confirmed that the temperature difference was not going to change much. Mr. Stack replied not much. Council Member Kniss felt this discussion was worth considering because energy was a fast changing field. Council Member Filseth thought what was done was good because there was a frame work in place with the CLEAN Program so that as the technology changed, if and when it became viable to develop significant solar generation, the City was ready. Chair Schmid wanted to know if this recommendation was going to displace the Staff recommendation, or did the Committee want to present both the Committee and the Staff recommendation. Council Member Scharff thought this Item needed to go on the Consent Calendar if there was a unanimous vote. It was good to honor the process because there was trouble getting through the Council meetings. If someone wanted to pull the Item and have the discussion, they could, but he did not believe in extending the Council meeting when discussion was not necessary. Chair Schmid questioned whether, from Staff’s perspective, if this was a major shift in the Program that needed the full Council endorsement. Ms. Fong answered that this was a major shift in the Program but Staff will follow the direction of the Committee. She had hoped there would be some DRAFT MINUTES Page 15 of 15 Finance Committee Special Meeting Draft Minutes 3/17/2015 incentive for local solar above 10.3 cents/kWh but staff would follow the direction of the Committee. Chair Schmid stated that the Motion was for the Finance Committee to “recommend” to the full Council the Avoided solar Cost. He asked staff to return to the Finance Committee with additional program suggestions forthe PV Partners program. MOTION PASSED: 4-0 City of Palo Alto (ID # 5747) City Council Staff Report City of Palo Alto Page 1 Report Type: Consent Calendar Meeting Date: 5/18/2015 Summary Title: Portal to Portal Paid Deployment Title: Adoption of Resolution Authorizing Overtime and Portal to Portal Pay for Deployments Away from the City for the Palo Alto Fire Department From: City Manager Lead Department: Fire Recommended Motion Staff recommends the City Council adopt a Resolution approving Portal to Portal pay and overtime for certain Fire Department employees. Executive Summary The Palo Alto Fire Department participates in the State Wide Mutual Aid System. This system provides for movement of local government resources throughout the state during times of disasters to assist other government agencies. Passage of the proposed resolution conforms to past practice and provides the required documentation per the California Fire Assistance Agreement (CFAA). Background Cal Fire and the Federal Agencies that have fire suppression responsibilities are not covered under the Statewide Mutual Aid System; therefore, a separate agreement was created several years ago to provide support to these agencies when needed. The CFAA governs the mobilization and payment for resources that respond in support of Cal Fire and the Federal Agencies. Discussion The CFAA has recently gone through an update and rewrite process as allowed under the guidelines of the Governor’s Office of Emergency Services. While a majority of the changes are updating the agreement to reflect current practices, a new requirement has been added requiring local government agencies to provide copies of existing MOUs/MOAs and a governing body resolution or equivalent that indicates how personnel will be compensated. Historically, the method used to reimburse local agencies has been Portal to Portal, meaning the firefighters are paid from the moment they depart for the assignment to the moment they return. This formula has worked well in that it assumes, at some point, the crews providing mutual aid are City of Palo Alto Page 2 earning overtime, as are the crews called in to cover shifts back at the agency’s community. In order to comply with the new requirements and maintain our long-standing process of paying our crews Portal to Portal, we must ask that the City Council adopt a resolution that in essence reinforces what we have already been doing for as long as the department has been providing resources under the CFAA. In addition, as the Department’s Chief Officers are not covered by an MOU/MOA, it is important that the Resolution reinforce the past practice of paying the Chief Officers in the same manner as our firefighters. If this resolution is not adopted, the crews would only be paid for actual hours worked on the fire. The firefighters would not be paid for the time they are in base camp, mandated rest periods or otherwise not engaged in a fire line assignment. While the firefighters are on these assignments, they are not allowed, nor would it be practical, to return home after their shift. Only when the fire is contained or controlled and the firefighters have been demobilized and returned to Palo Alto are they released an allowed to return home. Timeline The adoption of this resolution coincides with the upcoming wildfire season. Resource Impact The adoption of the proposed resolution will have no fiscal impact to the City as the Portal to Portal method of payment identified is the City’s existing practice. Portal to Portal payment under the CFAA is designed to fully compensate the City for the cost of providing resources, including the overtime impact of filling shift vacancies in City stations while crews are deployed. Failure to adopt the proposed resolution may result in less than full compensation to the City of Palo Alto for the cost of providing resources while crews are deployed. The City would likely be required to pay the employees their full salary and overtime based upon past practice, yet the City would only be reimbursed approximately one half the amounts. Attachments:  Attachment A- A Resolution For Terms And Conditions For Compensation Of Outside Jurisdiction Incidents (PDF) *NOT YET APPROVED* Resolution No. ________ Resolution of the Council of the City of Palo Alto Identifying the Terms and Conditions for Compensation and Reimbursement for Palo Alto Fire Department Response to Incidents Outside of the Jurisdiction R E C I T A L S A. The City of Palo Alto Fire Department routinely responds to requests for assistance to incidents outside the jurisdiction; B. The request for resources to respond for assistance may be through an “Assistance for Hire” agreement; C. The City of Palo Alto Fire Department may be compensated for resources provided or reimbursed for response expenses through such agreements; and D. The City of Palo Alto Fire Department personnel will be compensated for all time, including overtime, on a portal to portal basis by the City of Palo Alto for response through such agreements. NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows: SECTION 1. When the City of Palo Alto receives compensation and/or reimbursement for incident/event response through an agreement, such compensation, and/or reimbursement shall be used for personnel compensation, equipment use, repair, and replacement, and allowable administrative costs as authorized by the agreement. SECTION 2. Personnel shall be compensated at a rate specified by a Memorandum of Understanding (MOU) accompanying the agreement, and/or other directive that identifies personnel compensation in the workplace. SECTION 3. In the event a personnel classification does not have an assigned compensation rate “Base Rate” as set forth in an organizational policy, an administrative directive or similar document shall be used to compensate such personnel. SECTION 4. The City of Palo Alto Fire Department will maintain a current salary survey or acknowledgement of acceptance of the “Base Rate’ on file with the California Governor’s Office of Emergency Services, Fire Rescue Division. SECTION 5. Personnel will be compensated (portal to portal) beginning at the time of dispatch to the return to jurisdiction when equipment and personnel are in service and available for agency response. SECTION 6. The Palo Alto Fire Department response personnel include: Fire Chief, Deputy Chief, Battalion Chief, Fire Captain, Engineer, Fire Inspector and Firefighter. 1 150416 sh 0170009 *NOT YET APPROVED* SECTION 7. The Council finds that the adoption of this resolution does not meet the definition of a project under Public Resources Code Section 21065, thus, no environmental assessment under the California Environmental Quality Act is required. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: __________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: __________________________ _____________________________ Assistant City Attorney City Manager _____________________________ Fire Chief _____________________________ Director of Administrative Services 2 150416 sh 0170009 CITY OF PALO ALTO OFFICE OF THE CITY ATTORNEY May 18, 2015 The Honorable City Council Palo Alto, California Request for Authorization to Increase Existing Contract with Newdorf Legal by an Additional $55,000 For a Total Contract Not to Exceed Amount of $160,000 for Legal Services Related to Litigation Matters The City Attorney's Office requests authorization to amend the existing contract with Newdorf Legal, Attorneys at Law, to increase the contract amount by an additional $55,000 for a total not to exceed amount of $160,000 for legal and professional services relating to defense of the City in litigation matters. Newdorf Legal has defended the City in various litigation matters since September 2011. The current contract with Newdorf Legal is for $105,000 and covers litigation defense since May 2014. This amendment brings the not to exceed amount to $160,000. Funding for this contract does not require additional budgetary authority as it can be accommodated within the Office of the City Attorney’s budget for Fiscal Year 2015. Department Head: Molly Stump, City Attorney Page 2 City of Palo Alto (ID # 5773) City Council Staff Report Report Type: Action Items Meeting Date: 5/18/2015 City of Palo Alto Page 1 Summary Title: City Hall Wayfinding Contract Title: Approval of a Construction Contract with Express Sign & Neon, Inc. For a not To Exceed Amount of $327,558 for the Wayfinding Portion of the City Hall Remodel Project PE-12017 (Continued from April 13, 2015) From: City Manager Lead Department: Public Works Recommendation 1. Staff recommends that Council approve and authorize the City Manager or his designee to execute the attached contract with Express Sign & Neon, Inc. in the amount of $297,780 (Attachment A) for the wayfinding portion of the City Hall First Floor Renovations Project (PE-12017); and 2. Authorize the City Manager or his designee to negotiate and execute one or more change orders to the contract with Express Sign & Neon, Inc. for related, additional but unforeseen work which may develop during the project, the total value of which shall not exceed $29,778. Executive Summary This report recommends approval of a contract for completion of the wayfinding scope of work for the City Hall First Floor Renovations Project. Although the cost of the contract exceeds the construction cost estimate by seven percent, the wayfinding work was part of the total project cost described in Staff Report Number 4754 (Attachment E) in June 2014. Staff Report Number 4754 also explained that the wayfinding work would be bid as a separate construction contract to be considered for approval by Council at a later date. Background Palo Alto City Hall is currently undergoing an extensive remodel to the first floor City of Palo Alto Page 2 for public uses, and resultant modifications to the mezzanine and second floor under the City Hall Remodel Capital Improvement Program project (PE-12017). A portion of the remodel includes wayfinding, building signage and garage signage. The scope of the remodel, including the need for wayfinding improvements, can be reviewed in Staff Report Number 4754 from June 2014 (Attachment E). Staff Report Number 4754 included the approval of the construction contract with D. L. Falk for the City Hall Remodel project, but identified the wayfinding component as a separate scope of work that would be conducted under a subsequent construction contract. The City Hall signage and graphics wayfinding contract is an integral part of the City Hall Remodel project that is currently in progress. The contract will provide new directory signs in the elevators and elevator lobbies, with an emphasis on making the directory information more useful to the public. It will also change the garage level names to P1, P2, and P3. This entails updating over 200 columns within the garage with the new name designation and enhanced graphics. Other key elements include a large building identification sign at the corner of Hamilton and Bryant, a new entrance podium at the main entrance door, a new entrance podium at the Police Department entrance on Forest Avenue, and new signs at the garage entrances. The primary goal of the signage and graphics package is to improve the City Hall experience for first time visitors and the general public who use the facility. City Hall parking has a longer (3-hour) parking allowance than other public parking downtown. It is widely used by the public for shopping and dining excursions to the nearby commercial area. Combined with the upcoming King Plaza landscaping project, the new signs will give a fresh look to the 45-year old Civic Center facility. The signs are designed to inform users with both graphics and text via simple consistent messages. They will allow the elimination of the myriad existing signs that have been added haphazardly over the years, creating a new standard for City Hall signage with a new, consistent look and feel. The new signs will help promote city hall as a comfortable and welcoming public space for the community. When Staff Report Number 4754 was reviewed by the Council in June 2014, the wayfinding design for exterior signage was awaiting review by the Architectural City of Palo Alto Page 3 Review Board (ARB). On August 21, 2014, the exterior signage was approved by the ARB and subsequently approved by the Director of Planning and Community Environment on September 4, 2014 (Exhibit B). Thereafter, an Invitation for Bids (IFB) was issued to procure the services of a specialty signage fabrication and installation contractor. Discussion Scope Overview The scope of work for the attached construction contract includes exterior, interior, and garage signage as follows: 1) Exterior signage encompasses the area surrounding the building including the plaza, garage entrances and exits, portals over the main lobby and Police entrances and a large monument along Hamilton Avenue near Bryant Street. 2) Interior signage involves directories at elevator lobbies and within the elevator cabs; and signage in hallways directing the public to room locations and departments. The interior signage improvements include changing the name of the current Mezzanine level to Second Floor, with the current floors Two through Eight becoming floors Three through Nine. This change is in agreement with current accessibility requirements for new buildings and is expected to reduce frequent confusion about the mezzanine level. Additionally, garage floors A, B and C will become P1, P2 and P3, respectively. 3) Garage signage includes signs on columns and on elevator and stairwell wall enclosures. The table below provides a breakdown of the categories and costs of the various signs, graphics and directories that are included in the wayfinding contract. In addition, Attachment F includes graphics from the bid package for the more significant items. Signage Program Elements Category of Signage Number of Signs/Graphics Cost Building Identification 3 $47,600 Pedestrian Guidance Exterior 10 $39,980 City of Palo Alto Page 4 Garage 231 $107,600 Interior 33 $33,760 Garage Directional 32 $27,800 Interior Directory 22 $35,200 Elevator Buttons N/A $3,840 Total: 331 $295,780 The building will remain functional during the course of the project and work in the garage will be sequenced to minimize impacts on parking. Bid Process Notices inviting formal bids for the City Hall Signage and Graphics project were posted at City Hall and sent to 15 contractors on December 31, 2014. The bidding period was 49 days. Bids were received from three qualified contractors on February 17, 2015. Summary of Bid Process Bid Name/Number City Hall Signage & Graphics – IFB 157657 Proposed Length of Project 125 calendar days Number of Bid Packages Mailed to Contractors 15 Number of Builder’s Exchanges Receiving Bid Packages 14 Total Days to Respond to Bid 49 Pre-Bid Meeting January 27, 2015 Number of Company Attendees at Pre-Bid Meeting 17 firms attended with the requirement of a C-45 specialty license (electric signage) Number of Bids Received: 4 bids received, 1 of which was deemed incomplete and non-responsive Base Bid Price Range $297,786 to $390,050 *The submitted bid form from Express Signs & Neon, Inc., along with the IFB Bid Summary are included as Exhibits C and D. Staff reviewed the submitted bids and recommends that Express Sign & Neon, Inc. be declared the lowest responsible bidder. Staff recommends that the City City of Palo Alto Page 5 award a contract in the amount of the Base Bid ($297,786). The base bid is 7% greater than the construction cost estimate for the scope of work included. A contingency amount of $29,779, equal to 10 percent of the total contract, is requested for unforeseen conditions which may be discovered during construction. Staff confirmed with the Contractor’s State License Board that the contractor has an active license on file. Staff checked references supplied by the contractor for previous work performed and found their projects were similar to this project and completed to the satisfaction of the owners. Timeline The construction of the wayfinding and signage upgrades to the City Hall building and garage are to be completed within 125 calendar days of the commencement date specified in the City’s Notice to Proceed. Resource Impact As discussed, in June 2014, the City Council approved the funding for the City Hall Remodel Contract (CMR #4754). At that time, the cost for wayfinding including contingency was estimated at $307,450. As part of this report, staff recommends awarding the contract to Express Sign & Neon, Inc. in the amount of $297,780. With the 10% recommended contingency, the contract award totals $327,558, which is approximately $20,000 higher than originally anticipated. Although, there is an additional cost for this contract, sufficient funding is available in the City Hall First Floor Renovations project (PE-12017) for this contract. The wayfinding contract includes new signs in the Civic Center garage with a cost of $156,400. Therefore, as part of closing out the Fiscal Year 2015 budget, staff will bring forward a recommendation to reimburse the Capital Improvement Fund from the University Avenue Parking Permit Fund for that amount. Policy Implications This recommendation does not represent any change to existing City policies. Environmental Review (If Applicable) This project is categorically exempt from California Environmental Quality Act (CEQA) under Sections 15301 and 15302 of the CEQA guidelines as an alteration to an existing facility and no further environmental review is necessary. City of Palo Alto Page 6 Attachments:  A - Express Sign and Neon Contract (DOCX)  B - Signed ARB approval (PDF)  C - Express Sign and Neon Bid Form (PDF)  D - Bid Summary for IFB 157657 (XLS)  E - ID#4754 City Hall Remodel Contract 6-16-14 (PDF)  F - Schematic Exhibit of Key Project Signs and Costs (PDF) Invitation for Bid (IFB) Package 1 Rev. February 2015 CONSTRUCTION CONTRACT CONSTRUCTION CONTRACT Contract No. C15157657 City of Palo Alto And Express Sign and Neon, Inc. PROJECT City Hall Signage & Graphics Project Attachment A Invitation for Bid (IFB) Package 2 Rev. February 2015 CONSTRUCTION CONTRACT CONSTRUCTION CONTRACT TABLE OF CONTENTS SECTION 1 INCORPORATION OF RECITALS AND DEFINITIONS………………………………………………..5 1.1 Recitals…………………………………………………………………………………………………………………….5 1.2 Definitions……………………………………………………………………………………………………………….5 SECTION 2 THE PROJECT………………………………………………………………………………………………………...5 SECTION 3 THE CONTRACT DOCUMENTS………………………………………………………………………………..6 3.1 List of Documents……………………………………………………………………………………………..........6 3.2 Order of Precedence……………………………………………………………………………………………......6 SECTION 4 CONTRACTOR’S DUTY…………………………………………………………………………………………..7 SECTION 5 PROJECT TEAM……………………………………………………………………………………………………..7 SECTION 6 TIME OF COMPLETION…………………………………………………………………………………….......7 6.1 Time Is of Essence…………………………………………………………………………………………………….7 6.2 Commencement of Work…………………………………………………………………………………………7 6.3 Contract Time…………………………………………………………………………………………………………..7 6.4 Liquidated Damages…………………………………………………………………………………………………8 6.4.1 Other Remedies……………………………………………………………………………………………………..8 6.5 Adjustments to Contract Time………………………………………………………………………………….8 SECTION 7 COMPENSATION TO CONTRACTOR……………………………………………………………………….8 7.1 Contract Sum……………………………………………………………………………………………………………8 7.2 Full Compensation……………………………………………………………………………………………………8 SECTION 8 STANDARD OF CARE……………………………………………………………………………………………..9 SECTION 9 INDEMNIFICATION………………………………………………………………………………………………..9 9.1 Hold Harmless………………………………………………………………………………………………………….9 9.2 Survival……………………………………………………………………………………………………………………9 SECTION 10 NONDISCRIMINATION………………………………………………………………………………………..9 SECTION 11 INSURANCE AND BONDS…………………………………………………………………………………….9 SECTION 12 PROHIBITION AGAINST TRANSFERS…………………………………………………………………..10 SECTION 13 NOTICES ……………………………………………………………………………………………………………10 13.1 Method of Notice …………………………………………………………………………………………………10 Invitation for Bid (IFB) Package 3 Rev. February 2015 CONSTRUCTION CONTRACT 13.2 Notice Recipents ………………………………………………………………………………………………….10 13.3 Change of Address……………………………………………………………………………………………….11 SECTION 14 DEFAULT…………………………………………………………………………………………………………...11 14.1 Notice of Default………………………………………………………………………………………………….11 14.2 Opportunity to Cure Default………………………………………………………………………………..11 SECTION 15 CITY'S RIGHTS AND REMEDIES…………………………………………………………………………..12 15.1 Remedies Upon Default……………………………………………………………………………………….12 15.1.1 Delete Certain Services…………………………………………………………………………………….12 15.1.2 Perform and Withhold……………………………………………………………………………………..12 15.1.3 Suspend The Construction Contract………………………………………………………………..12 15.1.4 Terminate the Construction Contract for Default……………………………………………12 15.1.5 Invoke the Performance Bond………………………………………………………………………….12 15.1.6 Additional Provisions……………………………………………………………………………………….12 15.2 Delays by Sureties……………………………………………………………………………………………….12 15.3 Damages to City…………………………………………………………………………………………………..13 15.3.1 For Contractor's Default…………………………………………………………………………………..13 15.3.2 Compensation for Losses………………………………………………………………………………….13 15.4 Suspension by City……………………………………………………………………………………………….13 15.4.1 Suspension for Convenience……………………………………………………………………………..13 15.4.2 Suspension for Cause………………………………………………………………………………………..13 15.5 Termination Without Cause…………………………………………………………………………………14 15.5.1 Compensation………………………………………………………………………………………………….14 15.5.2 Subcontractors…………………………………………………………………………………………………14 15.6 Contractor’s Duties Upon Termination………………………………………………………………..14 SECTION 16 CONTRACTOR'S RIGHTS AND REMEDIES…………………………………………………………..15 16.1 Contractor’s Remedies………………………………………………………………………………………….15 16.1.1 For Work Stoppage……………………………………………………………………………………………15 16.1.2 For City's Non-Payment…………………………………………………………………………………….15 16.2 Damages to Contractor………………………………………………………………………………………..15 SECTION 17 ACCOUNTING RECORDS……………………………………………………………………………………15 17.1 Financial Management and City Access……………………………………………………………….15 Invitation for Bid (IFB) Package 4 Rev. February 2015 CONSTRUCTION CONTRACT 17.2 Compliance with City Requests…………………………………………………………………………….16 SECTION 18 INDEPENDENT PARTIES……………………………………………………………………………………..16 SECTION 19 NUISANCE…………………………………………………………………………………………………………16 SECTION 20 PERMITS AND LICENSES…………………………………………………………………………………….16 SECTION 21 WAIVER…………………………………………………………………………………………………………….16 SECTION 22 GOVERNING LAW AND VENUE………………………………………………………………………….16 SECTION 23 COMPLETE AGREEMENT……………………………………………………………………………………17 SECTION 24 SURVIVAL OF CONTRACT…………………………………………………………………………………..17 SECTION 25 PREVAILING WAGES………………………………………………………………………………………….17 SECTION 26 NON APPROPRIATION……………………………………………………………………………………….17 SECTION 27 AUTHORITY……………………………………………………………………………………………………….17 SECTION 28 COUNTERPARTS………………………………………………………………………………………………..18 SECTION 29 SEVERABILITY……………………………………………………………………………………………………18 SECTION 30 STATUTORY AND REGULATORY REFERENCES ………………………………………………….18 SECTION 31 WORKERS’ COMPENSATION CERTIFICATION…………………………………………………….18 Invitation for Bid (IFB) Package 5 Rev. February 2015 CONSTRUCTION CONTRACT CONSTRUCTION CONTRACT THIS CONSTRUCTION CONTRACT entered into on April 13, 2015 (“Execution Date”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation ("City"), and Express Sign & Neon ("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 Numbers 643841/979879. 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 31, 2014, City issued an Invitation for Bids (IFB) to contractors for the City Hall Signage and Graphics (“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 City Hall Signage and Graphics Project, located at 250 Hamilton Avenue, Palo Alto, CA. 94301 ("Project"). Invitation for Bid (IFB) Package 6 Rev. February 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 Invitation for Bid (IFB) Package 7 Rev. February 2015 CONSTRUCTION CONTRACT shall have the sole power to decide which document or provision shall govern as may be in the best interests of the City. SECTION 4 CONTRACTOR’S DUTY. 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. 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 125 calendar days () 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. Invitation for Bid (IFB) Package 8 Rev. February 2015 CONSTRUCTION CONTRACT 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 ($500.00) 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, 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 Ninety Seven Thousand Seven Hundred and Eighty Dollars ($297,780). [This amount includes the Base Bid and Additive Alternates .] 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. Invitation for Bid (IFB) Package 9 Rev. February 2015 CONSTRUCTION CONTRACT SECTION 8 STANDARD OF CARE. Contractor agrees that the Work shall be performed by qualified, experienced and well-supervised personnel. All services performed in connection with this Construction Contract shall be performed in a manner consistent with the standard of care under California law applicable to those who specialize in providing such services for projects of the type, scope and complexity of the Project. 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 NONDISCRIMINATION. As set forth in Palo Alto Municipal Code section 2.30.510, Contractor certifies that in the performance of this Agreement, it shall not discriminate in the employment of any person because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. Contractor acknowledges that it has read and understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and will comply with all requirements of Section 2.30.510 pertaining to nondiscrimination in employment. SECTION 11 INSURANCE AND BONDS. 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 10 Rev. February 2015 CONSTRUCTION CONTRACT SECTION 12 PROHIBITION AGAINST TRANSFERS. 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. The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Contractor or of any general partner or joint venturer or syndicate member of Contractor, if the Contractor is a partnership or joint venture or syndicate or co-tenancy shall result in changing the control of Contractor, shall be construed as an assignment of this Construction Contract. Control means more than fifty percent (50%) of the voting power of the corporation or other entity. SECTION 13 NOTICES. 13.1 Method of Notice. All notices, demands, requests or approvals to be given under this Construction Contract shall be given in writing and shall be deemed served on the earlier of the following: (i) On the date delivered if delivered personally; (ii) On the third business day after the deposit thereof in the United States mail, postage prepaid, and addressed as hereinafter provided; (iii) On the date sent if sent by facsimile transmission; (iv) On the date sent if delivered by electronic mail; or (v) On the date it is accepted or rejected if sent by certified mail. 13.2 Notice Recipients. All notices, demands or requests (including, without limitation, 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: Matt Raschke AND [Include Construction Manager, If Applicable.] City of Palo Alto Utilities Engineering 250 Hamilton Avenue Invitation for Bid (IFB) Package 11 Rev. February 2015 CONSTRUCTION CONTRACT 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: Express Sign and Neon, Inc. 1720 W. Slauson Ave. Los Angeles, CA 90047 Attn: Frank Bang 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 12 Rev. February 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. Invitation for Bid (IFB) Package 13 Rev. February 2015 CONSTRUCTION CONTRACT 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 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. Invitation for Bid (IFB) Package 14 Rev. February 2015 CONSTRUCTION CONTRACT 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. 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 Invitation for Bid (IFB) Package 15 Rev. February 2015 CONSTRUCTION CONTRACT 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, 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 Invitation for Bid (IFB) Package 16 Rev. February 2015 CONSTRUCTION CONTRACT 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. 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. 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. 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. 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. A waiver by either party of any breach of any term, covenant, or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or condition contained herein, whether of the same or a different character. SECTION 22 GOVERNING LAW AND VENUE. 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. Invitation for Bid (IFB) Package 17 Rev. February 2015 CONSTRUCTION CONTRACT SECTION 23 COMPLETE AGREEMENT. This Agreement represents the entire and integrated agreement between the parties and supersedes all prior negotiations, representations, and contracts, either written or oral. This Agreement may be amended only by a written instrument, which is signed by the parties. SECTION 24 SURVIVAL OF CONTRACT. The provisions of the Construction Contract which by their nature survive termination of the Construction Contract or Final Completion, including, without limitation, all warranties, indemnities, payment obligations, and City’s right to audit Contractor’s books and records, shall remain in full force and effect after Final Completion or any termination of the Construction Contract. SECTION 25 PREVAILING WAGES. This Project is not subject to prevailing wages. The Contractor is not required to pay prevailing wages in the performance and implementation of the Project, because the City, pursuant to its authority as a chartered city, has adopted Resolution No. 5981 exempting the City from prevailing wages. The City invokes the exemption from the state prevailing wage requirement for this Project and declares that the Project is funded one hundred percent (100%) by the City of Palo Alto. This Project remains subject to all other applicable provisions of the California Labor Code and regulations promulgated thereunder. Or The Contractor is required to pay general prevailing wages as defined in Subchapter 3, Title 8 of the California Code of Regulations and Section 16000 et seq. and Section 1773.1 of the California Labor Code. Pursuant to the provisions of Section 1773 of the Labor Code of the State of California, the City Council has obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work in this locality for each craft, classification, or type of worker needed to execute the contract for this Project from the Director of the Department of Industrial Relations. Copies of these rates may be obtained at the Purchasing Office of the City of Palo Alto. Contractor shall provide a copy of prevailing wage rates to any staff or subcontractor hired, and shall pay the adopted prevailing wage rates as a minimum. Contractor shall comply with the provisions of Sections 1775, 1776, 1777.5, 1810, and 1813 of the Labor Code. SECTION 26 NON APPROPRIATION. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that the City does not appropriate funds for the following fiscal year for this event, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds for this Construction Contract are no longer available. This section shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Agreement. SECTION 27 AUTHORITY. The individuals executing this Agreement represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. Invitation for Bid (IFB) Package 18 Rev. February 2015 CONSTRUCTION CONTRACT SECTION 28 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. 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. 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. 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.” 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 Express Sign and Neon By:___________________________ Name:___Frank Bang____________ Title:____President______________ Date: _________________________ ATTACHMENT A . FINDINGS FOR APPROVAL ARCHITECTURAL REVIEW BOARD STANDARDS FOR REVIEW 250 Hamilton Avenue / File No. 14PLN-00053 The design and architecture of the proposed project, as conditioned, complies with the Findings for Architectural Review as required in PAMC Chapter 18.76. (1) The design is consistent and compatible with applicable elements of the Palo Alto Comprehensive Plan. This finding can be made in the affinnative in that the project incorporates quality design that confonns with policies that encourage high quality design that is attractive, appropriate for the location and balances visibility needs with aesthetic needs. (2) The design is compatible with the immediate environment of the site. This finding can be made in the affinnative in that the proposed design of the signage is appropriate for, the downtown retail/commercial setting. (3) The design is appropriate to the function of the project, This finding can be made in the affinnative in that the installation is not excessive for the intended civic use. (4) In areas considered by the board as having a unified design character or historical character, the design is compatible with such character, This finding can be made in the affinnative in that the project is generally consistent with the Downtown Urban Design Guide and is pedestrian oriented. (5) The design promotes harmonious transitions in scale and character in areas between different designated land uses, This finding is not applicable to this project. (6) The design is compatible with approved improvements both on and off the site, This finding can be made in the affinnative in that the project is compatible in scale and design with the City Hall use and the surrounding commercial sites. (7) The planning and siting of the various jUnctions and buildings on the 'site create an internal sense of order and provide a desirable environment for occupants, visitors and the general community. This finding is not applicable to this sign project. However, the proposed sign program will enhance wayfinding for visitors to City Hall. (8) The amount and arrangement of open space are appropriate to the des)gn and the jUnction of the structures, This finding is not applicable to this sign project. (9) Sufficient ancillary jUnctions are provided to support the main functions of the project and the same are compatible with the project's design concept, This finding is not applicable to this sign project. (l0) Access to the property and circulation thereon are safe and convenient for pedestrians, cyclists and vehicles, This finding is not applicable to this sign project. Page 1 of2 ATTACHMENT A (11) Natural features are appropriately preserved and integrated with the project. This finding is not applicable to this sign project as no natural features will be changed. (12) The materials, textures, colors and details of construction and plant material are appropriate expression to the design and function. This finding can be made in the affirmative, in that the proposed signs utilize a uniform pattern of colors and materials that are compatible with and complementary to the City Hall building, see Findings 2, 3, and 4 above. (13) The landscape design concept for the site, as shown by the relationship of plant masses, open space, scale, plant forms and foliage textures and colors create a desirable and fUnctional environment. This finding is not applicable to this sign project. (14) Plant material is suitable and adaptable to the site, capable of being properly maintained on the site, and is of a variety which would tend to be drought-resistant to reduce consumption of water in its installation and maintenance. This finding is not applicable to this sign project. (15) The project exhibits green building and sustainable design that is energy efficient, water conserving, durable and nontoxic, with high-quality spaces and high recycled content materials. This finding is not applicable to this sign project. The scope of the project is small and there is limited opportunity to incorporate green building design into the sign installations. (16) The design is consistent and compatible with the purpose of architectural review as set forth in subsection 18. 76.020(a). This finding can be made in the affirmative in that the project design promotes wayfinding with visual environments that are of high aesthetic quality and variety. Page 2 of2 DRAFT FINDINGS FOR APPROVAL SIGN CODE EXCEPTION 250 Hamilton Avenue / File No. l4PLN-00053 ATTACHMENT B' The following findings have been made to support the sign exception request for the proposed City Hall master sign program, as modified by the ARB approval conditions. The specific exceptions that have been requested are for the following standards: Requested Sign Exceptions: • Freestanding Monument sign (AAl) -exceeds allowed square footage • Freestanding Portal sign (AA2 Option 7B) -above allowed height limit and exceeds allowed square footage, exceeds number of freestanding signs allowed on one frontage • Police Department ID (AA3) -above allowed height limit and exceeds allowed square footage • Pedestrian Directional (AD!) -above allowed height limit and includes the name of the business • Elevator & Stair ID @ Hamilton & Forest (AA4) -above allowed height limit, exceeds allowed square footage, and includes the name of the business • Informational Panel (CA3) -above allowed height limit and exceeds allowed square footage (1) There are exceptional or extraordinary circumstances or conditions applicable to the property involved that do not apply generally to property in the same district. The project site is City Hall, and due to its civic nature and unique and specific function, City Hall would be considered an exceptional use that is not found at other sites within the downtown or at any other site within the City. (2) The granting of the application is necessary for the preservation and enjoyment of a substantial property right of the applicant and to prevent unreasonable property loss or unnecessary . hardships. Civic engagement is an integral part of the functions of the City of Palo Alto. The proposed sign promote wayfinding, which is a priority for users in need of government services. (3) The granting of the application will not be detrimental or injurious to property or improvements in the vicinity and will not be detrimental to the public health, safety, general welfare or convenience. The project will be constructed in accordance with all building code requirements of the City of Palo Alto and will be neither detrimental nor injurious to surrounding properties, public health, safety, general welfare, or convenience. The proposed signs will enhance wayfinding within the City Hall complex and will have minimal impacts to the site as perceived by the neighboring properties. ATTACHMENT C CONDITIONS OF APPROVAL 250 Hamilton Avenue / File No. 14PLN-00053 PLANNING & COMMUNITY ENVIRONMENT On August 21, 2014 the Architectural Review Board (ARB) recommended approval of the application referenced above, and the Director of Planning and Community Environment (Director) approved the project on September 4,2014. Project Planner: Jodie Gerhardt, AICP Planning Division 1. The project shall be in substantial conformance with the approved plans and related documents received August 14, 2014, except as modified to incorporate these conditions of approval. a. Option 7B (portal) shall be used for the front entrance. If this option is not feasible, the applicant shall return to the ARB for review of additional alternatives. The alternative could likely be agenized on the consent calendar. b. No portals shall be used at the garage entrances. Therefore, the garage signs shall match the upper portion of Sheet 14A. 2. The Conditions of Approval document shall be printed on all plans submitted for building permits related to this project. 3. All future signs shall conform to the approved dimensions of the Master Sign Program. The final text for all signs shall be submitted to the Project Planner for review and approval prior to installation. 4. For any future changes to the signdimensions, an Architectural Review application must be filed for review and approval. 5. The project approval shall be valid for a period of one year from the original date of approval. In the event a building permit(s), if applicable, is not secured for the project within the time limit specified above, the ARB approval shall expire and be of no further force or effect. Application for extension of this entitlement may be made prior to the one year expiration. 6. Indemnity: To the extent permitted by law, the Applicant shall indemnify and hold harmless the City, its City Council, its officers, employees and agents (the "indemnified parties") from and against any claim, action, or proceeding brought by a third party against the indemnified parties and the applicant to attack, set aside or void, any permit or approval authorized hereby for the Project, including (without limitation) reimbursing the City for its actual attorneys' fees and costs incurred in defense of the litigation. The City may, in its sole discretion, elect to defend any such action with attorneys of its own choice. Urban Forestry 7. . Tree preservation & root protection. During excavation of grass/soil, for any root encountered over one inch (I-inch) diameter, Contractor shall request site inspection by Urban Forestry (dorothy.dale@cityofpaloalto.org, 650-496-5953) for root pruning direction. BID APPROX. UNI DESCRIPTION, WITH UNIT PRICE IN WORDS UNIT PRICE TOTAL ITEM ITEM QTY T (EACH BID ITEM SHALL INCLUDE ALL APPLICABLE TAXES, PROFIT, PRICE INSURANCE, BONDS, AND OTHER OVERHEAD) 006 2 EA CA2/Parking Entry ID, Clearance: $6,400.00 $12,800.00 (Unit Price in Words: Six Thousand Four Hundred Dollars. ) 007 2 EA CA311nformationai Panel: $500.00 $1,000.00 (Unit Price in Words: Five Hundred Dollars. ) OOB 200 EA CA4/Column Graphics: $300.00 $ 60,000.00 (Unit Price in Words: Three Hundred Dollars. ) 009 2 EA CA5e/City Hall Elevator Core Graphics: $4,000.00 $ 8,000.00 (Unit Price in Words: Four Thousand Dollars. ) 010 2 EA CA5i/City Hall Elevator Core Graphics Interior Lobby: $2,000.00 $4,000.00 (Unit Price in Words: Two Thousand Dollars. ) 011 1 EA CA6/Level P1 City Hall Lobby Entry Graphics: $2,000.00 $2,000.00 (Unit Price in Words: I Two Thousand Dollars. ) 012 3 EA CA7/Elevator Core Graphics: $2,000.00 $ 6,000.00 (Unit Price in Words: Two Thousand Dollars. ) 013 3 EA CAB/Stair Core Graphics @ Hamilton Ave.: $2,000.00 $ 6,000.00 (Unit Price in Words: Two Thousand Dollars. ) 014 4 EA CA9/Stair Core Graphics @ Forest Ave.: $2,000.00 $ 8,000.00 (Unit Price in Words: Two Thousand Dollars. ) __________ ~lllnv~iwta~t~ioHnuf~o~r~B~idL(~IFoB~)~#ul~5~7~6~57LLP~acwk~a~g~e----------~2~--------------------~ya~2014 PART 3 -BID FORM AND BIDDER'S DOCUMENTS BID APPROX. UNI DESCRIPTION, WITH UNIT PRICE IN WORDS UNIT PRICE TOTAL ITEM ITEM QTY T (EACH BID ITEM SHALL INCLUDE ALL APPLICABLE TAXES, PROFIT, PRICE INSURANCE, BONDS, AND OTHER OVERHEAD) 015 1 EA CB1/Parking Informational: $N/A $N/A (Unit Price in Words: N/Ai No information given. ) 016 23 EA CD1/0verhead Directional: $400.00 $ 9,200.00 (Unit Price in Words: Four Hundred Dollars. ) 017 3 EA CD1 h/Overhead Directional: Hanging Version: $1,800.00 $ 5,400.00 (Unit Price in Words: One Thousand Eight Hundred Dollars. ) 018 24 EA CD2/Pedestrian Directional: $1,400.00 $ 33,600.00 (Unit Price in Words: One Thousand Four Hundred. ) 019 4 EA CD3/Do Not Enter: $100.00 $ 400.00 (Unit Price in Words: One Hundred Dollars. ) 020 1 EA BA 1/Community Station ID: $1,000.00 $1,000.00 (Unit Price in Words: One Thousand Dollars. ) 021 1 EA BA4/Community Room ID: $2,000.00 $ 2,000.00 (Unit Price in Words: Two Thousand Dollars. ) 022 2 EA BA2/Soffit ID Directional: $2,500.00 $ 5,000.00 (Unit Price in Words: Two Thousand Five Hundred. ) 023 1 EA BA3/Service Window ID: $800.00 $ 800.00 (Unit Price in Words: Eight Hundred Dollars. ) Invitation for Bid (IFB) #157657 Package _____ ~ ___ 3 _____ ~_ __ _____ ~R~e~v.~Janua~~~20~1=4L------- PART 3 -BID FORM AND BIDDER'S DOCUMENTS BID APPROX. UNI DESCRIPTION, WITH UNIT PRICE IN WORDS UNIT PRICE TOTAL ITEM ITEM QTY T (EACH BID ITEM SHALL INCLUDE ALL APPLICABLE TAXES, PROFIT, PRICE INSURANCE, BONDS, AND OTHER OVERHEAD) 024 19 EA BB1 Elevator Lobby Directory & Directional: $1,800.00 $ 34,200.00 (Unit Price in Words: One Thousand Eight Hundred Dollars. ) 025 3 EA BB2/Elevator Cab Directory: $1,000.00 $ 3,000.00 (Unit Price in Words: One Thousand Dollars. ) 026 9 EA BC1lWomen's Restroom Door & Wall: $220.00 $1,980.00 (Unit Price in Words: Two Hundred and Twent~ Dollars. ) 027 9 EA BC2/Men's Restroom Door & Wall: $220.00 $1,980.00 . (Unit Price in Words: Two Hundred and Twent~ Dollars. ) 028 24 EA New Level Identification Insignias on Elevator $80.00 $1,920.00 Exterior Posts on Levels 1, P1, P2, and P3 (Include Demo of 24 Existing. (Starto be on Level 1) (Unit Price in Words: Eight~ Dollars. ) 029 24 EA Replace Existing Interior Elevator Cab Buttons A, $80.00 $1,920.00 B, C, and 1 with P1, P2, P3, and (Star 1) (Unit Price in Words: Eigh!}! Dollars. ) 030 1 LS Remove all redundant signage that is replaced by $ Included $ Included new signs including but not limited to Front Door Signs, Signage over garage entrance, stairwells, garage columns, and grounds. Repair and paint to match original existing area. Note: Exclude police signage at stairway handrail from this bid item. (Unit Price in Words: Included in Base Bid Total. ) Invitation for Bid (IFB) #157657 Package 4 Rev lanllary 2014 PART 3 -BID FORM AND BIDDER'S DOCUMENTS BID APPROX. UNI DESCRIPTION, WITH UNIT PRICE IN WORDS UNIT PRICE TOTAL ITEM ITEM QTY T (EACH BID ITEM SHALL INCLUDE ALL APPLICABLE TAXES, PROFIT, PRICE INSURANCE, BONDS, AND OTHER OVERHEAD) 031 1 LS Remove Existing Police Directional Sign that is $ Included $ Included mounted to stairway handrail. Repair and Paint Stairway handrail to match original exiting condition. (Unit Price in Words: Included in Base Bid Total. ) 032 1 LS Provide Timer(s) for all lighted signs similar to $ Included $ Included TORKEWZ103 (Unit Price in Words: Ingly!;l!il!;l in BS!§!il Bi!;l TQts!1. ) Base Bid Total (items 001 through 032) $297,780.00 (Total in words: Two Hundred Nine!y Seven Thousand Seven Hundred and Eigh!y Dollars.) D. Addenda During the Bid process there may be changes to the Contract Documents, which would require an issuance of an addendum or addenda. City disclaims any and all liability for loss, or damage to any Bidder who does not receive any addendum issued by City in connection with this IFB. Any Bidder in submitting a Bid is deemed to waive any and all claims and demands Bidder may have against City on account of the failure of delivery of any such addendum to Bidder. Any and all addenda issued by City shall be deemed included in this IFB, and the provisions and instructions therein contained shall be incorporated to any Bid submitted by Bidder. To assure that all Bidders have received each addendum, the following acknowledgment and sign-off is required. Failure to acknowledge receipt of an addendum/addenda may be considered an irregularity in the Bid: . Addendum: Date Received: Addendum: Date Received: #01 01/23/2015 #05 #02 02/03/2015 #06 #03 02/12/2015 #07 #04 #08 Or, 0 __ No Addendum/Addenda Were Received (check and initial). E. The Bidder represents that it has not retained a person to solicit or secure a City contract (upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee) except for retention of bona fide employee or bona fide established commercial selling agencies for the purpose of securing business. _____ ~ln'."v~it~at .... io"_'n~f'_':o"_r_'"B"'id"__(1"IF'_'B"_1)~#~1""_5'__'76..,.5"-,7--,P,-"a,-,"c~ka,,,!gi<:e,-----____ ---",,5,--· __________ Rev--lanuaqt-20l44 _______ _ PART 3 -BID FORM AND BIDDER'S DOCUMENTS F. Bidder's Representations and Warranties. The Bidder represents and warrants: 1. That any information submitted by the Bidder prior to the award of Contract, or thereafter, upon request, whether or not submitted under a continuing obligation by the terms of the Contract to do so, is true and correct at the time such information is submitted or made available to the City; 2. That the Bidder has not colluded, conspired, or agreed, directly or indirectly, with any person in regard to the terms and conditions of the Bidder's Bid, except as may be permitted by this Invitation for Bids; 3. That the Bidder has the power and authority to enter into this Contract with the City, that the individual(s) executing this Contract are duly authorized to do so by appropriate resolution (if applicable), and that this Contract shall be executed, delivered and performed pursuant to the power and authority conferred upon the person or persons authorized to bind the Bidder; 4. That the Bidder has not attempted to exert undue influence with the Purchasing Manager or Project Manager or any other person who has directly participated in the decision to award the Contract to the Bidder; 5. That the Bidder has furnished and will furnish true and accurate statements, records, reports, resolutions, certifications, and other written information as may be requested of the Bidder by the City during the term of this Contract; 6. That the Bidder and all its subcontractors performing work on this Project are duly licensed as a contractor with the State of California as required by California Business & Professions Code Section 7028, as amended; 7. That the Bidder has fully examined and inspected the Project site and has full knowledge of the physical conditions of the Project site; and, 8. That there are no claims or disputes between the Bidder and the City which would materially affect the Bidder's ability to perform under the Contract. F. Bidder's Designated Contact Person Name: Frank & Son. Inc. dba Express Sign & Neon Title: President Phone: (323) 291-3333 Fax: (323) 291-3704 Email: edgar.esn@hotmail.com By submitting a Bid, the Bidder acknowledges that it has received the Instructions to Bidders and agrees to its terms and to the terms of all other Contract Documents. Firm: ~Sign&Neon Signature*: Name: . Frank Bang * The signatory represents and warrants that he or she has the legal capacity and authority to bind the Bidder. ______ ~--~ln~v~it~a~ti~0~n~fo~r~B~id~(I~FB~)u#~1~5~7M65~7LDPa~c~k~ag~e~ ________ ~6L-__________________ ~R~e~v~.J~~1~4~-------------- PART 3 -BID FORM AND BIDDER'S DOCUMENTS ----_.---------_ .. ----------------------- 1. 2. 3. 4. 5. Subcontractor Listing H. Reference Section 4100, et seq., of the Public Contract Code: identify the name, and business address, and California contractor license numberof each Subcontractor performing work (under this IFB) that has a value in excess of one-half of one percent of the Bidder's total Bid price, or, in the case of bids or offers for the construction of streets or highways, including bridges, in excess of one-half of 1 percent of the prime contractor's total bid or ten thousand dollars ($10,000), whichever is greater. Also identify the portion of the Work that will be performed by such Subcontractor. After opening of Bids, no changes or substitutions will be allowed except as otherwise provided by law. The listing of more than one Subcontractor for each item of work to be performed with the words 'and/or' will not be permitted. Failure to comply with this requirement may render the Bid as non·responsive and may cause its rejection. list all such Subcontractors below, or on additional sheets, as required. Or, 0 ___ . Subcontractors will not perform work, provide labor, or render services in or about the work covered by this IFB (check and initial). NAME/BUSINESS ADDRESS CALIFORNIA CONTRACTOR LICENSE CONTACT/TELEPHONE NUMBER PORTION OF WORK Waterproofing Associates Inc. 649862 Waterproofing service. Safe2core ., 940453 Concrete scanning service. Invitation for Bid (IFB) Package 17 Rev. January 2014 PART 3 -BID FORM AND BIDDER'S DOCUMENTS .' BID BOND #11-803-017 CONTRACTOR: {Insert name, legal status, and complete business address (principal place of business), SURffi: (Insert name, legal status, and complete business address (principal place of business), Surety warrants that it is a duly admitted surety insurer under the laws of the State of California, OWNER: City of Palo Alto, 250 Hamilton Avenue, Palo Alto, CA 94301 BOND AMOUNT: (Insert the amount of this Bid Bond in numbers and words) $ 10% PROJECT: _T_e_n __ P_e_r_'_c_e_n_t __ o_f __ b_i_d __ a_m_o_u_n_t_-_-_-_-_-_-_-_-_-__ i_n ___ Dollars and _____ Cents The Bond Amount set forth above shall be the penal sum ("penalty qmount") of TEN PERCENT (10%) of the maximum amount of the Bid Proposal submitted by Contractor to Owner, inclusive of additive and/or alternate bid items, if any, and be paid in lawful money of the United States of America, Contactor has submitted the accompanying Bid Proposal to Owner for the Project described below, The Bid Proposal must be accompanied by Bid Security, (Insert the name, location or address, and project number (if applicable) oj the Project to which this Bid Bond applies, Contractor has. purchased this Bid Bond from Surety as a guarantee to Owner that Contractor will honor' its bid and execl,Jtl=all contract documents)f awarded the contract by Owner. Contractor and Suretyare bound to Owner in the amount set forth above (the Bond Amount), Under the provision s and conditions ofthis Bid Bond, Contractor and Surety bind themselves, their heirs, executors, administrators, successors and assigns, jointly and severally, for the payment of the Bond Amount. The conditi9ns of this Bid Bond are such 'that if within ten (10) days of issuance of the Notice of Award, or within such time period as may be agreed to by Owner and Contractor, and Contractor either: 1) enters into a contract with Owner in accordance with the terms of its Bid and gives such bond(s) as may be specified the Contract Documents, with a surety admitted in the jurisdiction of the Project and otherwise acceptable to the Owner, for the faithful performance of such Contract and for the prompt payment of labor and materials furnished in the prosecution of the Contract; or 2) fails to do so and pays to Owner the difference, not to exceed the amount of this Bid Bond, between the amount specified in said bid and such larger amount for which Owner may in good faith contract with another party to perform the work covered by said bid, then this obligation shall be null and void, otherwise this obligation shall remain in full force and effect. Surety herby waives any notice of an agreement between Owner and Contractor to extend the time in which Owner may accept the bid. Waiver of such notice by Surety shall not apply to any time extensions which exceed sixty (60) calendar days after award of contract as specified in the Contract Documents, Owner and Contractor shall obtain Surety's consent for any time extension beyond sixty (60) days, For value received, Surety stipulates and agrees that no change, alteration or addition to the terms of the Contract or the Invitation for Bid, the Work to be performed thereunder, the Drawings or the Specifications accompanying the same, or any other portion of the Contract Documents shall in anY-"'La'l...-affect-it.s-GtJl.j.g.atisHgc-------- under this Bond. Surety hereby waives notice of any such change, alteration or addition to the terms of said Contract, the Invitation for Bid, the Work, the Drawings or the Specifications, or any other portion of the Contract Documents. . Invitation for Bid,OFB) Package 22 Rev. January 2014 PART 3 -BID FORM AND BIDDER'S DOCUMENTS BIDDER'S QUESTIONNAIRE PROVIDE THE INFORMATION REQUESTED BELOW OR INDICATE "NOT APPLICABLE", IF APPROPRIATE NAME OF BIDDER (COMPANY) ADDRESS Frank & Son, Inc. 1720 W. Slauson Ave. Express Sign & Neon Los Angeles, CA 90047 Website: EsnCo.Net Phone Number: Fax Number: (800) 481-7700 . (323) 291-3704 (323) 291-3333 Email: edgar.esn@hotmail.com A. Bidder is a: ~ California Corporation o Corporation organized under the laws of the State of ___ C=alc:.:.ifo;:.:r..:.;n.:.:ia=--___ _ with head offices located at 1720 W. Slauson Ave. Los Angeles, CA 90047. and offices in California at 1720 W. Slauson Ave. Los Angeles, CA 90047. o Limited Liability Company List names of general partners; state which partneror partners are managing partner(s) o Sole Proprietorship o Partnership o Limited Liability Partnership List names of general partners; state which partner or partners are managing partner(s) o Other (attach Addendum with explanatory details) B. How many years have you (or your company) done business under the name listed above? 24 years. Invitation for Bid (IFB) Package 28 Rev. January 2014 PART 3 -BID FORM AND BIDDER'S DOCUMENTS C. How many years of experience similar to work or services covered in this IFB? 20 Years. D. Have you (or your company) previously worked for the City of Palo Alto? DYes, or ~ No (if "Yes", list above, or if necessary, provide information on additional sheets). E. If applicable, provide a list of the plant(s), and/or facilities, a nd equipment owned by the Bidder which are available for use in connection with the proposed work as may be required herein. QUANTITY NAME/TYPE/MODEL, CAPACITY, ETC. CONDITION LOCATION N/A N/A (INCLUDE ADDITIONAL PAGES IF NECESSARY) F. Provide a list of the Bidder's management staff who will manage the proposed work or services. NAME FIELD OF EXPERTISE/CAPABILITIES/EXPERIENCE Planning, defining and managing project scope, developing & managing project Edgar Aceituno I Project Manager schedule, allocate resources, manage project funds. 10 years of experience. Expert sign maker and installer. Superintendent responsible for day to day Daniel Salanic I Superintendent operations and timely task completion. Certified welder. 21 years of experience. Simon Jeong I Senior Designer Design development. Identity and wayfinding. Oversees and coordinates shop drawinq development. 14 years of experience. (INCLUDE ADDITIONAL PAGES IF NECESSARY) G. California Contractor's License Number: 643841/979879 Classification: --=B~a:;.;n.;.:d.:...C.:..-_4.;.:5 ______________________ _ Expiration Date: 05/3112016 & 10/10/2015 Invitation for Bid (IFB) Package 29 Rev. January 2014 PART 3 -BID FORM AND BIDDER'S DOCUMENTS ATTACHMENT D BID DESCRIPTION BID UNIT BID UNIT BID UNIT BID UNIT BID ITEM QTY UNIT PRICE AMOUNT PRICE AMOUNT PRICE AMOUNT PRICE AMOUNT 1 AA1/ Monument ID 1 EA $15,800.00 $15,800.00 $18,000.00 $18,000.00 $15,000.00 $15,000.00 $19,900.00 $19,900.00 2 AA2/Building ID 1 EA $15,900.00 $15,900.00 $25,000.00 $25,000.00 $15,000.00 $15,000.00 $25,900.00 $25,900.00 3 AA3/Police Department ID 1 EA $15,900.00 $15,900.00 $25,000.00 $25,000.00 $15,000.00 $15,000.00 $20,200.00 $20,200.00 4 AA4/Elevator & Stair ID 4 EA $5,000.00 $20,000.00 $4,500.00 $18,000.00 $4,000.00 $16,000.00 $8,450.00 $33,800.00 5 AD1/Pedestrian Directional 6 EA $3,330.00 $19,980.00 $2,500.00 $15,000.00 $3,500.00 $21,000.00 $3,500.00 $21,000.00 6 CA2/Parking Entry ID 2 EA $6,400.00 $12,800.00 $11,000.00 $22,000.00 $6,000.00 $12,000.00 $5,000.00 $10,000.00 7 CA3/Informational Panel 2 EA $500.00 $1,000.00 $1,500.00 $3,000.00 $1,000.00 $2,000.00 $4,000.00 $8,000.00 8 CA4/Column Graphics 200 EA $300.00 $60,000.00 $190.00 $38,000.00 $250.00 $50,000.00 $200.00 $40,000.00 9 CA5e/City Hall Elevator Core Graphics 2 EA $4,000.00 $8,000.00 $7,000.00 $14,000.00 $5,000.00 $10,000.00 $800.00 $1,600.00 10 CA5i/City Hall Elevator Core Graphics Interior Lobby 2 EA $2,000.00 $4,000.00 $5,500.00 $11,000.00 $2,500.00 $5,000.00 $700.00 $1,400.00 11 CA6/Level P1 City Hall Lobby Entry Graphics 1 EA $2,000.00 $2,000.00 $1,800.00 $1,800.00 $3,000.00 $3,000.00 $570.00 $570.00 12 CA7/Elevator Core Graphics 3 EA $2,000.00 $6,000.00 $6,000.00 $18,000.00 $5,000.00 $15,000.00 $2,733.33 $8,200.00 13 CA8/Stair Core Graphics @ Hamilton 3 EA $2,000.00 $6,000.00 $6,000.00 $18,000.00 $3,000.00 $9,000.00 $2,233.33 $6,700.00 14 CA9/Stair Core Graphics @ Forest 4 EA $2,000.00 $8,000.00 $4,000.00 $16,000.00 $3,000.00 $12,000.00 $1,850.00 $7,400.00 15 CB1/Parking Informational 1 EA $0.00 $0.00 $500.00 $500.00 $1,000.00 $1,000.00 $60.00 $60.00 16 CD1/Overhead Directional 23 EA $400.00 $9,200.00 $1,500.00 $34,500.00 $300.00 $6,900.00 $1,293.91 $29,759.93 17 CD1h/Overhead Directional Hanging 3 EA $1,800.00 $5,400.00 $2,500.00 $7,500.00 $600.00 $1,800.00 $1,300.00 $3,900.00 18 CD2/Pedestrian Directional 24 EA $1,400.00 $33,600.00 $2,500.00 $60,000.00 $1,500.00 $36,000.00 $958.33 $23,000.00 19 CD3/Do Not Enter 4 EA $100.00 $400.00 $525.00 $2,100.00 $250.00 $1,000.00 $475.00 $1,900.00 20 BA1/Community Station ID 1 EA $1,000.00 $1,000.00 $1,500.00 $1,500.00 $2,500.00 $2,500.00 $770.00 $770.00 21 BA4/Community Room ID 1 EA $2,000.00 $2,000.00 $1,800.00 $1,800.00 $600.00 $600.00 $1,100.00 $1,100.00 22 BA2/Soffit ID Directional 2 EA $2,500.00 $5,000.00 $3,000.00 $6,000.00 $3,000.00 $6,000.00 $1,400.00 $2,800.00 23 BA3/Service Window ID 1 EA $800.00 $800.00 $700.00 $700.00 $600.00 $600.00 $600.00 $600.00 24 BB1/Elevator Lobby Directory & Directional 19 EA $1,800.00 $34,200.00 $1,800.00 $34,200.00 $2,000.00 $38,000.00 $1,838.78 $34,936.78 25 BB2/Elevator Cab Directory 3 EA $1,000.00 $3,000.00 $550.00 $1,650.00 $1,200.00 $3,600.00 $566.67 $1,700.00 26 BC1/Women's Restroom Door & Wall 9 EA $220.00 $1,980.00 $150.00 $1,350.00 $100.00 $900.00 $400.00 $3,600.00 27 BC2/Men's Restroom Door & Wall 9 EA $220.00 $1,980.00 $150.00 $1,350.00 $100.00 $900.00 $400.00 $3,600.00 28 New Level ID Insignias on Elevator Exterior Posts 24 EA $80.00 $1,920.00 $100.00 $2,400.00 $125.00 $3,000.00 $316.67 $7,600.00 29 Replace Existing Interior Elevator Cab Buttons 24 EA $80.00 $1,920.00 $25.00 $600.00 $125.00 $3,000.00 $170.83 $4,100.00 30 Remove Redundant Existing Signage 1 LS $0.00 $0.00 $1,000.00 $1,000.00 $10,000.00 $10,000.00 31 Remove Police Sign on Stairway Handrail 1 LS $0.00 $0.00 $850.00 $850.00 $1,000.00 $1,000.00 32 Provide Timers for lighted signs 1 LS $0.00 $0.00 $250.00 $250.00 $1,000.00 $1,000.00 $297,780.00 $401,050.00 $317,800.00 $324,096.71 R.C. Benson & Sons, Inc. General Contractors NO RESPONSE NO RESPONSE NO RESPONSE City Hall Signage and Graphics IFB NO. 157657 BID SUMMARY Frank & Son, Inc. Express Sign & Neon A Good Sign and Graphics Co. Turner Signs City of Palo Alto (ID # 4754) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/16/2014 City of Palo Alto Page 1 Summary Title: City Hall Remodel Contract Title: Approval of a Construction Contract with D.L. Falk Construction, Inc. in the Amount of $2,718,350, Approval of Amendment Number 2 to Contract No. C12144101 with WMB Architects, Inc. in the Amount of $141,565 for a Not-to-Exceed Amount of $426,256 for the City Hall Remodel Project PE- 12017, and Adoption of a Budget Amendment Ordinance for Fiscal Year 2014 to Provide an Additional Appropriation in the Amount of $1,607,109 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 D.L. Falk Construction, Inc.in the amount of $2,718,350 (Attachment A) for the City Hall Remodel Capital Improvement Program Project PE-12017; 2.Authorize the City Manager or his designee to negotiate and execute one or more change orders to the contract with D.L. Falk Construction, Inc.for related, additional but unforeseen work which may develop during the project, the total value of which shall not exceed a ten percent contingency of $271,835; 3.Approve and authorize the City Manager or his designee to execute the attached amendment to Contract C12144101 with WMB Architects, Inc. (Attachment B) in the amount of $141,565 for construction administration services for the City Hall Remodel Project (Capital Improvement Program Project PE-12017), adding $128,695 to basic services and adding $12,870 City of Palo Alto Page 2 for additional services for a total contract amount not-to-exceed $426,256; and 4.Approve the attached Budget Amendment Ordinance (BAO) in the amount of $1,607,109 (Attachment C) for construction to selected areas on the first floor, mezzanine, and second floor of City Hall. Background Palo Alto City Hall opened 44 years ago in 1970. Although the building has recently undergone a thorough mechanical, electrical, and exterior refurbishment under the Civic Center Infrastructure Upgrade Project (PF-01002), some of the interior areas remain functionally inadequate and aesthetically dated. Specifically, there are several public meeting and gathering areas that hinder effective interaction between the community and city staff and Council due to small seating capability and technical limitations. In particular, the Council Conference Room has a limited seating capacity, has outdated architectural treatments and furnishings, and lacks modern amenities such as flexible seating, efficient lighting,and technological resources for audio-visual presentations. Staff has identified the need for additional building elements similar to the Council Conference Room for the first floor of City Hall, and included them in the scope of this comprehensive project. These include a more welcoming and accommodating lobby area; a new community conference room with a capacity to seat 55 to better serve larger Council Committee and Commission meetings, and several areas for efficient use of space for enhanced customer services for residents. Additionally, the elevator cabs have worn-out wall and floor finishes, harsh lighting, and inadequate building information and directional signage. There is also a significant need to improve the signage and other wayfinding information at the various building entrances and on the first floor of City Hall in order to assist members of the public with finding the staff members and services that can meet their needs. During the project design, the goal of the first floor renovation was broadened in scope to achieve a more open atmosphere to encourage public participation and community access to City Hall. The final plan also includes moving the Utilities City of Palo Alto Page 3 Department’s customer service counter from the second floor to the lobby area to be located near the Revenue Collections customer service counter.The People Strategy & Operations conference room behind the Council Chambers would then become a new, larger conference room that could also be used for Council and staff sessions and the current (very inadequate) Council Conference Room would be transformed into a staff training and multi-use room. To relocate People Strategy & Operations (PSO)out of the lobby level, a number of other staff reconfigurations and relocations are necessary. PSO would be consolidated on the mezzanine level by relocating the Information Technology (IT) Department staff currently using the space. The IT Department will be consolidated on the second floor using more densely configured desks in an open floor plan similar to what many high tech firms use. They will also expand into the portion of the second floor vacated by the Utilities Department’s customer service counter staff that will move to the first floor. The plan accomplishes the goal of consolidating customer service functions on the first floor and providing improved public spaces to promote public involvement. In addition, PSO and IT staff are currently split between different floors. Following construction,they will each be located together on their respective floors, improving employee interaction and increasing efficiency. Additional aspects of the project include reconfiguration of the existing restrooms serving the Council to conform to Americans with Disabilities Act (ADA) accessibility requirements. The kitchenette serving evening Council meetings will also be relocated. Since the project will include extensive carpeting on much of the first floor, mezzanine and second floor, staff combined the new carpeting and the reupholstery of the seating for the Council Chambers. Council Chamber carpeting is funded through CIP PF-11001. Open government and technology are the key principles for this project. The new community conference room and renovated public spaces have been designed for better interaction and public engagement. The rooms will be equipped with broadcast media capabilities, including multiple LCD screens, High Definition cameras, and wall-mounted speakers. Flexibility is also a key theme of the design. The rooms will allow multiple table and chair configurations. Most importantly, for very large events, the proposed glass partition separating the lobby from the City of Palo Alto Page 4 new community conference room can be opened and folded away to allow even greater space flexibility. The project will also coordinate with a new interactive digital media public art element to be installed on the main lobby wall facing the main building entry doors. An open call to new media artists was recently conducted by the Community Services Department (CSD). Their call for artists resulted in 104 responses that were narrowed to 29 by a selection panel that included staff and Public Art Commissioners. Further selection panels brought the field down to 5, then to 3, and now a final artist selection is nearly complete. CSD will bring the artist’s contract and full details of the proposed digital art piece for Council approval in late summer. A portion of the funding for the artist is included in the attached Budget Amendment Ordinance. Wayfinding and building signage aspects of the overall project are also still in final design stages. Exterior signage is expected to be reviewed by the Architectural Review Board (ARB) this summer. Following ARB approval, an invitation for bids (IFB) will be issued to procure the services of a specialty signage fabrication and installation contractor. Discussion Scope Overview The scope of work for the attached construction contract includes: 1)Main Lobby remodel including coordination with an interactive digital media public art element; 2)Enhance the lobby area heating, ventilation, and air conditioning (HVAC) system in order to handle the increased loads from the new community meeting room and the new digital art installation; 3)Restore the terrazzo floor of the main lobby; 4)Convert existing PSO conference room into a new Council Conference Room; 5)Convert existing Council Conference Room into a new Training and Multi- purpose Meeting Room for staff and the public; 6)Create a new Community Meeting Room beside the Main Lobby; 7)Install broadcast media capabilities for all the new lobby-level meeting spaces, including multiple LCD screens, High Definition cameras, and wall- mounted speakers; City of Palo Alto Page 5 8)Modify the lobby payment counter to match the new architectural style of the lobby and provide a lower ledge for writing checks and signing forms; 9)Convert the Revenue Services offices into new Utilities Customer Service counter and offices; 10)Reconfigure and renovate mezzanine level offices (PSO and Purchasing); 11)Reconfigure and renovate second floor offices (IT and Utilities); 12)New carpeting and new bench upholstery for Council Chambers; and 13)Remodel the three (3)building elevator cabs. The building will remain occupied during the course of the project. Work will be scheduled to keep systems operational during working hours and to minimize the impacts of construction on staff and the public. There may be some temporary relocation of department staff to accommodate construction. The entire PSO Department will temporarily relocate to Cubberley Community Center Room H-5 for the duration of the project. This move will provide space in the building for other temporary office relocations that are necessary for construction. Bid Process Notices inviting formal bids for the City Hall Remodel Project were posted at City Hall and sent to 32 contractors on April 18, 2014. The bidding period was 19 days. Bids were received from one qualified contractor on May 6, 2014. Summary of Bid Process Bid Name/Number City Hall Remodel Project –IFB 153838 Proposed Length of Project 225 calendar days Number of Bid Packages Mailed to Contractors 32 Number of Builder’s Exchanges receiving Bid Packages 0 Total Days to Respond to Bid 19 Pre-Bid Meeting April 23, 2014 Number of Company Attendees at Pre-Bid Meeting 10 firms attended of which 5 were General Contractors and 5 were Subcontractors Number of Bids Received: 1 Base Bid Price Range $2,664,000 City of Palo Alto Page 6 *The submitted bid form from D.L. Falk is provided as Attachment D. Staff reviewed the bid submitted and recommends that D.L. Falk Construction be declared the lowest responsible bidder. Staff recommends that the City award the Base Bid ($2,664,000) plus Add Alternates 1 through 6 ($54,350)for a total contract award amount of $2,718,350. The base bid is approximately 19% above the construction cost estimate for the scope of work included. Staff believes that the busy local construction industry has resulted in higher prices and the higher bid is still reasonable for the complex nature of this project. Staff also inquired as to why other contractors did not submit bids. Smaller firms indicated that bonds for projects over $1.5 million are difficult to obtain. One firm that worked on City Hall previously indicated they no longer bid on public projects. Another unionized firm indicated they did not think they could prepare a competitive bid for a non-prevailing wage project. Others said the project did not fit their schedule. A contingency amount of $271,835 equal to 10 percent of the total contract is requested for unforeseen conditions which may be discovered during construction. With renovation of an existing facility, there is a high likelihood of additional required repairs or system replacement triggered by the base construction. In addition, due to the time constraints placed upon the contractors to complete their work during off hours, the majority of change orders will be billed at a premium rate for night or weekend work. Staff confirmed with the Contractor’s State License Board that the contractor has an active license on file. Staff checked references supplied by the contractor for previous work performed and found that their projects were similar to this project and were completed to the satisfaction of the owners. WMB Contract –Construction Administration The contract amendment with the design architect, WMB Architects (Attachment B) will provide for the architect’s general construction administration oversight during project work. As the designer of record, WMB Architects will respond to design questions and issues raised by the contractor, attend meetings at the job site,make construction observations, review material submittals, and assist in the preparation of the record documents at the completion of City of Palo Alto Page 7 construction. The contract also includes work related to wayfinding signage design for the exterior and interior areas of the City Hall complex. The signage fabrication and installation will be let as a separate invitation for bid (IFB) to be awarded to a specialty contractor in late summer or early fall. Timeline The construction of the architectural upgrades to City Hall are to be completed in four phases. The first phase encompases the majority of the work for the first floor and the duration is anticipated to be ninety days. The subsequent three remaining phases at forty-five days each will be used for work on the mezzanine level and second floors. Note that some construction in the first floor lobby may be delayed towards the end of the project to keep the current Council Conference Room available for meetings during Phase 1 and to allow for construction to include a new public art display on the large lobby wall near the main building entrance. Resource Impact Funding for this project has been allocated in several capital projects, including: City Hall First Floor Renovations (PE-12017), Facility Interior Finishes Replacement (PF-02022), and Council Chambers Carpet (PF-11001). Remaining funding from the Civic Center Infrastructure Upgrade project (PF-01002) will also be used for the project. All of these projects are budgeted in the Capital Improvement Fund, which receives the majority of its funding from the annual General Fund transfer. As referenced earlier in the staff report, the bids for the project came in higher than previously estimated as a result of the local construction environment, the public art element, and changes in scope. In order to complete the project, a Budget Amendment Ordinance (BAO) is required. The Budget Amendment Ordinance recommended as part of this report would increase the City Hall First Floor Renovations project by $1,607,109. This increase would allow for the construction contract, contingency, design fees, wayfinding systems construction, furniture, temporary office space, permit fees, architectural construction administration, and a portion of the public art costs. Offsetting the increased costs would be transfers from various funding sources, resulting in no reduction to the Infrastructure Reserve. The transfers from other funding sources, which will recover each fund’s respective fair share of the costs, will enable a return of City of Palo Alto Page 8 funds to the Infrastructure Reserve upon completion of the project. In determining the amounts and funding sources for the BAO, staff carefully reviewed the bid and the work units benefitting from the work. A concerted effort has been made to align the cost of the project to the benefitting department/fund. For example, the cost of renovating the space to meet the functional requirements of the Utilities Department will be charged to the Utility Funds. Similarly, the cost of improving the Information Technology Department’s space will be charged to the Technology Fund, while the cost of improving the Administrative Services and People Strategies and Operations Departments will be charged to the Capital Improvement Fund. Much of the work involves improvements to common areas. The common area costs can be divided into two categories: the first floor community room and improvements to the rest of the facility that do not primarily benefit one exclusive department. As part of the BAO, the cost of the new community room is recommended to be charged to the Community Center Development Impact Fee Fund. The remaining common areas are charged to the Capital Improvement Fund, with the City’s various Enterprise Funds paying a share proportionate to their anticipated utilization of space in City Hall. It should be noted that after accounting for the transfers from the various Utility Funds, Technology Fund, and the Community Center Development Impact Fee Fund, some portion of the funding in the Capital Improvement Fund is expected to be returned to the Infrastructure Reserve. A summary of the funding sources, as well as anticipated uses, is included in the table on the following page. Summary of Project Funding Existing Funding Source (from Capital Improvement Fund) Amount allocated City Hall First Floor Renovations (PE-12017)$2,183,733 Facility Interior Finishes Replacement (PF-02022)$380,000 Council Chambers Carpet (PF-11001)$80,000 Civic Center Infrastructure Upgrade (PF-01002)$61,643 Total Current Funding $2,705,376 City of Palo Alto Page 9 Funding Source (BAO)Amount allocated Transfer from Community Center Development Impact Fee Fund $686,298 Transfer from Electric Fund $133,687 Transfer from Gas Fund $133,687 Transfer from Wastewater Collection Fund $133,687 Transfer from Water Fund $133,687 Transfer from Fiber Optics Fund $133,687 Transfer from Technology Fund $499,335 Total New Funding $1,854,068 Total Project Funding $4,559,444 Summary of Project Expenditures Construction Contract $2,718,350 Contract Contingency (10%)$271,835 Design Fees $278,285 Architectural Construction Administration $141,565 Public Art $150,000 Furniture $300,000 Wayfinding Systems Construction $307,450 Other $145,000 Total Project Expenditures $4,312,485 Anticipated Return to Infrastructure Reserve $246,959 Policy Implications This recommendation does not represent any change to existing City policies. Environmental Review This project is categorically exempt from California Environmental Quality Act (CEQA) under Sections 15301 and 15302 of the CEQA guidelines as an alteration to an existing facility and no further environmental review is necessary. Attachments: ·A -D.L. Falk Construction Contract (PDF) City of Palo Alto Page 10 ·B -WMB Architects Contract Amendment No. 2 (PDF) ·C -BAO -City Hall Remodel (DOC) ·D -D.L. Falk Bid Form (PDF) Invitation for Bid (IFB) Package 1 Rev. January 2014 CONSTRUCTION CONTRACT CONSTRUCTION CONTRACT Contract No. C14153838 City of Palo Alto And D.L. Falk Construction, Inc. PROJECT City Hall Remodel Project Invitation for Bid (IFB) Package 2 Rev. January 2014 CONSTRUCTION CONTRACT CONSTRUCTION CONTRACT TABLE OF CONTENTS SECTION 1 INCORPORATION OF RECITALS AND DEFINITIONS. ......................................................... 5 1.1 Recitals. ................................................................................................................................................... 5 1.2 Definitions. ............................................................................................................................................ 5 SECTION 2 THE PROJECT. .................................................................................................................... 5 SECTION 3 THE CONTRACT DOCUMENTS. ......................................................................................... 6 SECTION 4 CONTRACTOR’S DUTY. ...................................................................................................... 7 SECTION 5 PROJECT TEAM. ................................................................................................................. 7 6.1 Time Is of Essence. .............................................................................................................................. 7 6.2 Commencement of Work. ................................................................................................................ 7 6.3 Contract Time. ...................................................................................................................................... 7 6.4 Liquidated Damages. .......................................................................................................................... 8 6.4.1 Other Remedies. ....................................................................................................... 8 6.5 Adjustments to Contract Time. ....................................................................................................... 8 SECTION 7 COMPENSATION TO CONTRACTOR. ................................................................................ 8 7.1 Contract Sum. ....................................................................................................................................... 8 7.2 Full Compensation. ............................................................................................................................. 8 SECTION 8 STANDARD OF CARE. ........................................................................................................ 9 SECTION 9 INDEMNIFICATION. ........................................................................................................... 9 9.1 Hold Harmless. ..................................................................................................................................... 9 9.2 Survival. .................................................................................................................................................. 9 SECTION 10 NONDISCRIMINATION. ................................................................................................... 9 SECTION 11 INSURANCE AND BONDS. ............................................................................................... 9 SECTION 12 PROHIBITION AGAINST TRANSFERS............................................................................... 10 SECTION 13 NOTICES ……………………………………………………………………………………………………………………. 10 13.1 Method of Notice ………………………………………………………………………………………………………………10 13.2 Notice Recipents ……………………………………………………………………………………………………………….10 13.3 Change of Address. ........................................................................................................................... 11 SECTION 14 DEFAULT. ......................................................................................................................... 11 Invitation for Bid (IFB) Package 3 Rev. January 2014 CONSTRUCTION CONTRACT 14.1 Notice of Default. .............................................................................................................................. 11 14.2 Opportunity to Cure Default. ........................................................................................................ 11 SECTION 15 CITY'S RIGHTS AND REMEDIES. ...................................................................................... 12 15.1 Remedies Upon Default. ................................................................................................................. 12 15.1.1 Delete Certain Services. .......................................................................................... 12 15.1.2 Perform and Withhold. ........................................................................................... 12 15.1.3 Suspend The Construction Contract. .................................................................... 12 15.1.5 Invoke the Performance Bond. .............................................................................. 12 15.1.6 Additional Provisions. ............................................................................................. 12 15.2 Delays by Sureties. ............................................................................................................................ 12 15.3 Damages to City. ................................................................................................................................ 13 15.3.1 For Contractor's Default. ........................................................................................ 13 15.3.2 Compensation for Losses. ...................................................................................... 13 15.4 Suspension by City ............................................................................................................................ 13 15.4.1 Suspension for Convenience. .......................................................................................... 13 15.5 Termination Without Cause. ......................................................................................................... 14 15.5.1 Compensation. ......................................................................................................... 14 15.5.2 Subcontractors. ........................................................................................................ 14 15.6 Contractor’s Duties Upon Termination. ..................................................................................... 14 SECTION 16 CONTRACTOR'S RIGHTS AND REMEDIES. ...................................................................... 15 16.1 Contractor’s Remedies. ................................................................................................................... 15 16.1.1 For Work Stoppage. ................................................................................................. 15 16.1.2 For City's Non‐Payment. ......................................................................................... 15 16.2 Damages to Contractor. .................................................................................................................. 15 SECTION 17 ACCOUNTING RECORDS. ................................................................................................ 15 17.1 Financial Management and City Access. ................................................................................... 15 17.2 Compliance with City Requests. ................................................................................................... 16 SECTION 18 INDEPENDENT PARTIES. ................................................................................................. 16 SECTION 19 NUISANCE. ...................................................................................................................... 16 SECTION 20 PERMITS AND LICENSES. ................................................................................................ 16 SECTION 21 WAIVER. .......................................................................................................................... 16 SECTION 22 GOVERNING LAW AND VENUE. ...................................................................................... 16 Invitation for Bid (IFB) Package 4 Rev. January 2014 CONSTRUCTION CONTRACT SECTION 23 COMPLETE AGREEMENT. ................................................................................................ 17 SECTION 24 SURVIVAL OF CONTRACT. ............................................................................................... 17 SECTION 25 PREVAILING WAGES. ...................................................................................................... 17 SECTION 26 NON APPROPRIATION. ................................................................................................... 17 SECTION 27 AUTHORITY. .................................................................................................................... 17 SECTION 28 COUNTERPARTS .............................................................................................................. 18 SECTION 29 SEVERABILITY. ................................................................................................................. 18 SECTION 30 STATUTORY AND REGULATORY REFERENCES . ............................................................. 18 SECTION 31 WORKERS’ COMPENSATION CERTIFICATION. ................................................................ 18 Invitation for Bid (IFB) Package 5 Rev. January 2014 CONSTRUCTION CONTRACT CONSTRUCTION CONTRACT THIS CONSTRUCTION CONTRACT entered into on June 5, 2014 (“Execution Date”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation ("City"), and D.L. Falk Construction, Inc. ("Contractor"), is made with reference to the following: R E C I T A L S: A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. Contractor is a California Corporation duly organized and in good standing in the State of California, Contractor’s License Number 683837. 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 April 18, 2014, City issued an Invitation for Bids (IFB) to contractors for the City Hall Remodel 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 City Hall Remodel Project, located at 250 Hamilton Avenue, Palo Alto, CA. 94301 ("Project"). Invitation for Bid (IFB) Package 6 Rev. January 2014 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 Invitation for Bid (IFB) Package 7 Rev. January 2014 CONSTRUCTION CONTRACT shall have the sole power to decide which document or provision shall govern as may be in the best interests of the City. SECTION 4 CONTRACTOR’S DUTY. 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. 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 225 calendar days () 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. Invitation for Bid (IFB) Package 8 Rev. January 2014 CONSTRUCTION CONTRACT 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 ($500.00) 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, 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 million seven hundred eighteen three hundred fifty Dollars ($2,718,350). [This amount includes the Base Bid of $2,664,000 and Additive Alternates 1 for $7,800, Additive Alternate 2 for $13,400, Additive Alternate 3 for $5,050, Additive Alternate 4 for $3,000, Additive Alternate 5 for $17,200, and Additive Alternate 6 for $7,900.] 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. Invitation for Bid (IFB) Package 9 Rev. January 2014 CONSTRUCTION CONTRACT SECTION 8 STANDARD OF CARE. Contractor agrees that the Work shall be performed by qualified, experienced and well‐supervised personnel. All services performed in connection with this Construction Contract shall be performed in a manner consistent with the standard of care under California law applicable to those who specialize in providing such services for projects of the type, scope and complexity of the Project. 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 NONDISCRIMINATION. As set forth in Palo Alto Municipal Code section 2.30.510, Contractor certifies that in the performance of this Agreement, it shall not discriminate in the employment of any person because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. Contractor acknowledges that it has read and understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and will comply with all requirements of Section 2.30.510 pertaining to nondiscrimination in employment. SECTION 11 INSURANCE AND BONDS. 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 10 Rev. January 2014 CONSTRUCTION CONTRACT SECTION 12 PROHIBITION AGAINST TRANSFERS. 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. The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Contractor or of any general partner or joint venturer or syndicate member of Contractor, if the Contractor is a partnership or joint venture or syndicate or co‐tenancy shall result in changing the control of Contractor, shall be construed as an assignment of this Construction Contract. Control means more than fifty percent (50%) of the voting power of the corporation or other entity. SECTION 13 NOTICES. 13.1 Method of Notice. All notices, demands, requests or approvals to be given under this Construction Contract shall be given in writing and shall be deemed served on the earlier of the following: (i) On the date delivered if delivered personally; (ii) On the third business day after the deposit thereof in the United States mail, postage prepaid, and addressed as hereinafter provided; (iii) On the date sent if sent by facsimile transmission; (iv) On the date sent if delivered by electronic mail; or (v) On the date it is accepted or rejected if sent by certified mail. 13.2 Notice Recipients. All notices, demands or requests (including, without limitation, 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: Matt Raschke AND [Include Construction Manager, If Applicable.] City of Palo Alto Utilities Engineering 250 Hamilton Avenue Invitation for Bid (IFB) Package 11 Rev. January 2014 CONSTRUCTION CONTRACT 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: D.L. Falk Construction, Inc. 3526 Investment Blvd. Hayward, CA 94545 Attn: David L. Falk 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 12 Rev. January 2014 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. Invitation for Bid (IFB) Package 13 Rev. January 2014 CONSTRUCTION CONTRACT 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 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. Invitation for Bid (IFB) Package 14 Rev. January 2014 CONSTRUCTION CONTRACT 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. 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 Invitation for Bid (IFB) Package 15 Rev. January 2014 CONSTRUCTION CONTRACT 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, 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 Invitation for Bid (IFB) Package 16 Rev. January 2014 CONSTRUCTION CONTRACT 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. 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. 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. 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. 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. A waiver by either party of any breach of any term, covenant, or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or condition contained herein, whether of the same or a different character. SECTION 22 GOVERNING LAW AND VENUE. 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. Invitation for Bid (IFB) Package 17 Rev. January 2014 CONSTRUCTION CONTRACT SECTION 23 COMPLETE AGREEMENT. This Agreement represents the entire and integrated agreement between the parties and supersedes all prior negotiations, representations, and contracts, either written or oral. This Agreement may be amended only by a written instrument, which is signed by the parties. SECTION 24 SURVIVAL OF CONTRACT. The provisions of the Construction Contract which by their nature survive termination of the Construction Contract or Final Completion, including, without limitation, all warranties, indemnities, payment obligations, and City’s right to audit Contractor’s books and records, shall remain in full force and effect after Final Completion or any termination of the Construction Contract. SECTION 25 PREVAILING WAGES. This Project is not subject to prevailing wages. The Contractor is not required to pay prevailing wages in the performance and implementation of the Project, because the City, pursuant to its authority as a chartered city, has adopted Resolution No. 5981 exempting the City from prevailing wages. The City invokes the exemption from the state prevailing wage requirement for this Project and declares that the Project is funded one hundred percent (100%) by the City of Palo Alto. This Project remains subject to all other applicable provisions of the California Labor Code and regulations promulgated thereunder. Or The Contractor is required to pay general prevailing wages as defined in Subchapter 3, Title 8 of the California Code of Regulations and Section 16000 et seq. and Section 1773.1 of the California Labor Code. Pursuant to the provisions of Section 1773 of the Labor Code of the State of California, the City Council has obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work in this locality for each craft, classification, or type of worker needed to execute the contract for this Project from the Director of the Department of Industrial Relations. Copies of these rates may be obtained at the Purchasing Office of the City of Palo Alto. Contractor shall provide a copy of prevailing wage rates to any staff or subcontractor hired, and shall pay the adopted prevailing wage rates as a minimum. Contractor shall comply with the provisions of Sections 1775, 1776, 1777.5, 1810, and 1813 of the Labor Code. SECTION 26 NON APPROPRIATION. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that the City does not appropriate funds for the following fiscal year for this event, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds for this Construction Contract are no longer available. This section shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Agreement. SECTION 27 AUTHORITY. The individuals executing this Agreement represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. Invitation for Bid (IFB) Package 18 Rev. January 2014 CONSTRUCTION CONTRACT SECTION 28 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. 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. 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. 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.” 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 D. L. Falk Construction, Inc. By:___________________________ Name:__David L. Falk____________ Title:____President _____________ Date: _________________________ AMENDMENT NO.2 TO CONTRACT NO. C12144101 BETWEEN THE CITY OF PALO ALTO AND WMB ARCHITECTS, INC. This Amendment No.2 ("Amendment") to Contract No. C12144101 ("Contract") is entered into and made effective on June _,2014, by and between the CITY OF PALO ALTO, a California chartered municipal corporation ("CITY"), and WMB Architects, Inc., a California Corporation, located at 5757 Pacific Avenue, Suite 226, Stockton, CA 95207, ("CONSULTANT"). RECIT ALS WHEREAS, the Contract was entered into between the parties for the provision of professional design services relating to the City Hall Remodel Project ("Project"); and WHEREAS, on September 16, 2013, the parties amended the Contract to add $105,974 of compensation for a total Contract amount not to exceed $284,691; and WHEREAS, the parties seek by this Amendment No.2 to increase the scope of services, schedule of performance, and compensation; NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION 1. Section A of RECITALS is hereby amended to read as follows: "A. CITY intends to implement the City Hall Renovation Project ("Project") and desires to engage a consultant to provide professional architectural design services and construction administration services for architectural upgrades in connection with the Project ("Services")." SECTION 2. Section 4 of the Contract, NOT TO EXCEED COMPENSATION, Paragraph 1, is hereby amended to read as follows: "The compensation to be paid to CONSULT ANT for performance of the Services described in Exhibit "A", including both payment for professional services and reimbursable expenses, shall not exceed Three Hundred Eighty-Seven Thousand Five Hundred Five Dollars [$387,505.00]. In the event Additional Services are authorized, the total compensation for services and reimbursable expenses shall not exceed Four Hundred Twenty-Six Thousand Two Hundred Fifty·Six Dollars [$426,256.00]. The applicable rates and schedule of payment are set out in Exhibit "C-2", entitled "CONSTRUCTION ADMINISTRATION FEE SCHEDULE", which is attached to and make a part of this Agreement." 1 Revision April 28, 2014 SECTION 4. The following exhibit(s) to the Contract is/are hereby amended to read as set forth in the attachment(s) to this Amendment, which are incorporated in full by this reference: a. Exhibit "A" entitled "Scope of Work". b. Exhibit "B" entitled "Schedule". c. Exhibit "C" entitled "Compensation". SECTION 5. Except as herein modified, all other provisions of the Contract, including any exhibits and subsequent amendments thereto, shall remain in full force and effect. IN WITNESS WHEREOF, the parties have by their duly authorized representatives executed this Amendment on the date first above written. CITY OF PALO ALTO WMB Architects, Inc. City Manager ::!!:~ APPROVED AS TO FORM: Title: nZW/ectOr Senior Asst. City Attorney Attachments: EXHIBIT "A": EXHIBIT "B": EXHIBIT "C": SCOPE OF PROJECT TIME SCHEDULE COMPENSATION SCHEDULE 2 Revision Apli12S, 2014 EXHIBIT “A” - SCOPE OF WORK CONTRACT C12144101 - AMENDMENT No. 2 CIP PROJECT PE-12017 Task 1: City Hall Lobby Design Modifications The Lobby is intended to serve as a space that welcomes members of the public to the building and helps direct them to their destination within City Hall. The Lobby should also be modified to better accommodate the display of public art and to create opportunities for small, informal gatherings of staff and the public. A) Transform the Lobby into an attractive and welcoming space to display public art and facilitate gatherings and events. B) Remove the current furniture and cabinets. C) Refinish walls and design an improved display mounting system to create a more attractive, functional, and safe environment for the display of artwork. D) Establish lighting conducive to displaying art, both on walls and freestanding that allows for safe, easy, and efficient bulb replacement. E) Establish signage and an electronic information kiosk to provide wayfinding information to the public. F) Create paths for foot traffic through the lobby which create protected spaces conducive to small gatherings. G) Design and select furniture and carpets which create space for gatherings & meetings. H) Consider changes to ceiling fixtures to modernize the lobby’s appearance. Task 2: City Hall Council Conference Room Design Modifications The Council Conference Room is intended to serve as a less formal, more intimate meeting space for the Finance Committee and Policy & Services Committee of the City Council, various advisory Boards and Commissions, public gatherings, and to host larger staff meetings. A) Transform the Council Conference Room into a more modern and usable space which will more readily accommodate the multitude of departments and Committees, Boards, and Commissions that utilize the area. B) Explore opportunities to enlarge the existing area via the removal of the existing east wall and incorporation of the adjoining corridor into a larger and more usable meeting space. A structural analysis for this portion of the design will be required. C) Provide room layout and seating arrangements that will improve the interface between Contract C12144101 Amendment No. 2 Page 3 Committee/Board/Commission members and audience members during public meetings. D) Provide flexible room layout and seating arrangements to accommodate a larger number of occupants during public meetings, public multi-media presentations, and staff meetings. E) Design a more modern method for effective presentation delivery to accommodate conferences and public presentations via electronic media. Seating arrangements will be critical to allow for easy viewing of the material presented by both board/commission members as well as audience members. F) Modernize the area utilizing newly-designed lighting, wall coverings, flooring, and furniture. Task 3: City Hall Human Resources Conference Room Design Modifications The Human Resources Conference Room serves as one of the larger staff meeting rooms in City Hall and is used by the City Council for private discussion during closed sessions. A) Transform the Human Resources Conference Room into a more modern and usable space which will more readily accommodate the multitude of departments that utilize the area. B) Design a more modern method for effective presentation delivery to accommodate conferences and small department presentations via electronic media. C) Modernize the area utilizing newly-designed lighting, wall coverings, flooring, and furniture. Task 4: City Hall Wayfinding Design Modifications Existing directional signage in City Hall is sparse and inadequate. The proposed wayfinding modifications should provide a simple, attractive, uniform, intuitive system of signage and other directional elements to assist members of the public to locate the service provider within City Hall that can address their needs and to find their vehicle upon returning to the garage. A) Integrate the signage and an electronic information kiosk from Task 1 into a programmatic and unified City Hall signage program that will readily direct members of the public to service locations throughout the various departments on all levels of City Hall (including the Police Wing); including paths of travel from the exterior of the building. B) Improve signage on the building exterior to direct members of the public to the Police Department offices on Forest Avenue. Coordinate the new signage with the signage on the Downtown Library across the street. C) Provide an easy means of identifying parking locations in the underground City Hall Garage which will readily assist customers in relocating their vehicle. D) Incorporate signage to direct customers from the parking garage to the location of an information kiosk on the First Floor. E) Provide signage and terminology that assists the customer to readily locate the service provider Contract C12144101 Amendment No. 2 Page 4 within City Hall that can address their needs. Integrate service descriptions with department names into unified naming conventions. F) Coordinate the design of informational signage in the elevator lobbies with ongoing efforts by the City Manager’s Office to integrate photographs evocative of the services provided on each floor of the building with the accompanying signage. Task 5: City Hall Way Elevator Cabs Refurbishment A) Upgrade and modernize interior cab panels, including all sides, doors, flooring, and ceiling. B) Provide a more energy-efficient lighting system that will provide softer, more diffused illumination. C) Modernize the signage direction/display systems. Integrate same with Task 4, Wayfinding. D) Enhance the appearance of exterior door panels. Possibilities include integration with Task 4, Wayfinding, as well as including artistic concepts that correlate with department themes associated with that individual floor level. B. SCOPE OF SERVICES 1. Study Phase City Hall is an occupied building and will remain so during the entire design process and through the completion of construction. The Consultant will be responsible for surveying all the various departments and end-users that will be utilizing the areas of refurbishment to effectively address their desired needs and concerns. The study shall identify strategies and alternatives that will provide maximum benefit to endusers and optimize the functionality and usefulness of the work spaces. The analysis and resulting recommendation shall take into account both feasibility and economics. The Consultant shall work with the City’s Project Manager to develop the survey strategy, identify the existing conditions and needs, and develop recommended modifications to meet the critical needs. Consultant shall identify implementation methodologies for the renovation to assist in accommodating existing occupants. Relocation alternatives, rebuilding on a “fast-track” basis, and other alternatives proposed by Consultant shall be considered during this phase to accomplish the work with the least cost and/or minimum disruption to the occupants. Consultant shall present the study with alternates and recommendations to the Project Manager and appropriate departmental managers in the affected work areas for review and comment. Once a decision on approach, alternates, and recommendations is made by the City, the next phase of the project shall commence. 2. Conceptual Design Consultant’s second phase shall be to prepare a preliminary design with estimated construction costs for the City’s review. Consultant shall evaluate all parameters and observations in preparing a conceptual design to accomplish the City’s objectives as outlined in the four tasks described above. A proposed methodology for completing the renovations during time periods of least impact to the functions of the departments will be proposed; along with refining the full scope of the project. Consultant shall provide conceptual (30%) drawings for review and approval and shall attend Contract C12144101 Amendment No. 2 Page 5 meetings with City staff to describe and discuss the elements of the conceptual design. Consultant shall provide a preliminary engineer’s estimate of the construction contract cost for City review at the 30% design stage to aid the City in determining the final scope of work. 3. Construction Documents In the third phase, Consultant shall prepare the construction documents, including plans, technical specifications, an engineer’s estimate, and a preliminary construction schedule which minimizes disruptions to building occupants. Consultant shall prepare the final construction documents for all components defined in the Conceptual Design. Plans and specifications shall be presented to the City at 60% and 90% completion for review and comment. An engineer’s estimate shall be prepared at the 90% design stage. Consultant shall assist the City in obtaining all building permits, and other permits as applicable, required for implementation of the work. 4. Bid and Construction Phase The Consultant shall provide assistance to City staff (e.g. pre-bid meeting with prospective bidders, issuance of addenda, etc.) during the bidding phase of the project. Upon award of a construction contract to a general contractor, the City will negotiate with the Consultant an appropriate scope of work for construction phase services to be provided (e.g. assistance with Requests for Information, review of contractor submittals, review of change order requests, periodic site inspections, preparation of record drawings, etc.). Construction phase services will be added to the Consultant’s contract at the City’s discretion via a contract amendment. C. PROJECT ELEMENTS Preparation Work • City will provide any available existing plans for the City Hall work spaces to be modified during this project. • Consultant will meet with City representatives to develop a schedule for the work. Some tasks will hold a higher priority and may need to be fast tracked in comparison to some of the other tasks. Site Assessment • Consultant will conduct site visits. • Consultant will review and evaluate all available information and determine procedure for acquiring any necessary additional information. Equipment Evaluation • Consultant will evaluate existing lighting for anticipated needs. • Consultant will suggest possible audio/visual equipment to satisfy requirements. Economic Analysis and Feasibility • Consultant will recommend equipment based on functionality and cost. Contract C12144101 Amendment No. 2 Page 6 WORK PLAN ARCHITECTURAL AND ENGINEERING TASK LIST TASK 1: INVESTIGATION PHASE Subtask 1.1 On-site review of existing building documents. Subtask 1.2 On-site verification and measurement of lobby, elevator lobbies and conference rooms, mezzanine and second floor. Subtask 1.3 On-site photographing of existing building areas. Subtask 1.4 CADD input of base floor plans, reflected ceiling plans and interior elevations. Subtask 1.5 CADD input of parking levels and site plan for wayfinding. TASK 2: NEEDS ASSESSMENT PHASE Subtask 2.1 Prepare program survey forms Subtask 2.2 On-site meetings with departmental end-user groups to establish needs for conference spaces and lobby areas Subtask 2.3 On-site meetings with departmental end-user groups to establish needs for wayfinding. Subtask 2.4 Summarize in written and graphic format the needs assessment information. Subtask 2.5 Meet with Project Manager, Project Engineer to review needs assessment data. Subtask 2.6 Working with Project Manager and Project Engineer, refine needs assessment and set priorities. Subtask 2.7 Prepare final Needs Assessment document that will serve as the basis for the design Subtask 2.8 Meet with design team to review completed needs assessment document. TASK 3: CONCEPT DESIGN DEVELOMENT PHASE Subtask 3.1 Utilizing the approved Final Needs Assessment, design team will develop concept design solutions that meet the criteria set forth in the Final Needs Assessment. Design concepts to be illustrated by floor plan(s), reflected ceiling plans, 3 dimensional sketches, interior finish materials samples, AV concepts and modifications to building electrical and mechanical systems Subtask 3.2 Develop concept budget estimates for design options. Subtask 3.3 Meet with City’s Project Manager to review concept design/cost estimates. Subtask 3.4 Prepare base floor plans, reflected ceiling plans and interior elevations of existing conditions. Subtask 3.5 Per Project Managers Direction, Present concept design to City Staff for review and input. Subtask 3.6 Refine concept design documentation and budget estimate incorporating City input. Subtask 3.7 Prepare Concept Design package (30%) for City review and approval. TASK 4: CONSTRUCTION DOCUMENTS PHASE Subtask 4.1 Based on approved concept design and budget, develop construction documents (including plans, specifications, calculations and budget estimate) for plan review, permitting and bidding. Prepare City review packages at 60% and 90%. Subtask 4.2 60% document review meeting with Project Manager and Project Engineer. Subtask 4.3 90% document review meeting with Project Manager and Project Engineer. Subtask 4.4 In-house peer review of documents. Contract C12144101 Amendment No. 2 Page 7 Subtask 4.5 Prepare 100% construction document submittal package. Subtask 4.6 Review meeting with Project Manager and Project Engineer of final construction document package. TASK 5: PLAN REVIEW | PERMITTING PHASE Subtask 5.1 Assist City in submittal of construction documents package for plan review for building permit. Subtask 5.2 Make revisions to construction documents to address plan review comments. Subtask 5.3 Assist City in re-submittal of construction documents package incorporating plan review comments. TASK 6: BIDDING PHASE Subtask 6.1 Provide assistance to City staff during bid process including: attendance at pre-bid meeting, assist City in responding to bid questions, and issue addenda as required. Subtask 6.2 Assist City in review of submitted bids. TASK 7: CONSTRUCTION ADMINISTRATION PHASE (Amendment No. 2) Subtask 7.1 Twenty-four (24) Weekly Construction site meetings with architect (assume 6 months construction timeframe). Subtask 7.2 Six (6) monthly Site visits for mechanical, electrical and audio visual engineers. Subtask 7.3 Process and document as required General Contractor’s Requests for Information (RFI’s). Subtask 7.4 Process product submittals and shop drawings. Subtask 7.5 Review and evaluate substitutions to products and equipment submitted by the General Contractor. Subtask 7.6 General Contractor payment request and progressive lien waiver review. Sub-contractor lien waiver documentation and verification responsibility of the General Contractor. Subtask 7.7 Punch-list site at substantial completion. Develop punch list of items for correction. Follow-up evaluation of punch list items at final completion. Subtask 7.8 Review of General Contractor’s Operations and Maintenance Manual and warranties. Subtask 7.9 Perform project closeout activities and prepare final record plan set from contractor markups. Contract C12144101 Amendment No. 2 Page 8 WORK PLAN WAYFINDING TASKS PARAGRAPH 5.4 SCOPE OF WORK | WORK PLAN PROPOSAL SCOPE OF WORK The Square Peg Proven Project Approach and Design Process Square Peg employs a proven project process and design approach based on a well defined schedule of evaluation, progress and milestone review meetings with the Client and the Design team. The checks and balances built in the this highly collaborative process ensures that the • Vision and goals are clearly understood at the onset of the project • Pertinent information is collected and analyzed • Design work is concepted and refined based on multiple reviews by the Client and Design Team • Documentation is subjected to multiple reviews • One or more of the key sign types are prototyped prior to final production for Client and Design Team approval. • Construction administration and installation oversight services ensure continuity and control throughout the entire process. Square Peg will thoroughly review the existing signing, study circulation etc in preparation to develop a new wayfinding and signing program. The new program will address the following: 1. Integrate the signage and an electronic information kiosk from Task 1 into a programmatic and unified City Hall signage program that will readily direct members of the public to service locations throughout the various departments on all levels of City Hall (including the Police Wing); including paths of travel from the exterior of the building. 2. Improve signage on the building exterior to direct members of the public to the Police Department offices on Forest Avenue. Coordinate the new signage with the signage on the Downtown Library across the street. 3. Provide an easy means of identifying parking locations in the underground City Hall Garage which will readily assist customers in relocating their vehicle. 4. Incorporate signage to direct customers from the parking garage to the location of an information kiosk on the First Floor. 5. Provide signage and terminology that assists the customer to readily locate the service provider within City Hall that can address their needs. Integrate service descriptions with department names into unified naming conventions. 6. Coordinate the design of informational signage in the elevator lobbies with ongoing efforts by the City Manager’s Office to integrate photographs evocative of the services provided on each floor of the building with the accompanying signage. Contract C12144101 Amendment No. 2 Page 9 Based on the scope outline from the RFP and past experience with similar projects we anticipate the scope of signs to include, but is not limited to: Based on the scope outline from the RFP and information gained at the interview with the City, we anticipate the scope of signs may include, but is not limited to: SITE SIGNING  Project/Building Identity Signing  Parking Garage Entrance ID Sign  Directional Signing  Accessibility Signing  Signing at Entry Doors  Entrance ID Signing  Pedestrian Directional & Information Signing  Building Entry Identification Graphics at Entry Doors (Address, HC Accessibility, No Smoking, etc.)  Emergency Assembly Area Signing  Building Address PARKING  Parking Entry ID  Clearance Bar  Vehicular Directional Signing  Pedestrian Directional Signing  Column and Core Graphics  Misc Room ID Signing INTERIOR SIGNING  Orientation Directory/Information Display or Kiosk (Static / Dynamic) - Main Lobby - Secondary Entry Lobbies - Elevator Lobbies at Upper Levels  Floor Level ID in Elevator Lobbies  Floor Level Directories and/or Orientation Maps  Directional Signing  Changeable Displays for Daily Events, Information, etc ( Digital System and/or Static)  Service Window Signing ( Digital System and/or Static)  Informational Signing in Elevator Cabs ( Digital System and/or Static) NOTE: The design process for signing will be closely coordinated with WMB Architects and GB Engineers to insure a well integrated design solution. Contract C12144101 Amendment No. 2 Page 10 Square Peg will explore and incorporate technology as potential solutions at multiple locations throughout the project. A combination of design, cost and evaluation of benefits will be provided to the client with regard to proposed technology solutions as a means to inform the design decisions and approvals. SCOPE EXCLUSIONS Items that are specifically excluded from the scope of work include:  Signing for Non Public Areas such as office areas and back of house: Room Identification Signing Department/Area Identification Office ID Workstation ID Conference Room ID Misc Room ID Back of House Room ID Evacuation Maps at Elevators, Stairs and Exits  Preparation of building floor plans for use in sign location plans. It is assumed that the client will provide SPD with building plans for use in preparation of sign location plans and documents.  Logo design  Print & Amenity design  Sculptures / Feature pieces  Content Design of Digital Media for Digital Displays. Note: SPD can provide content solutions as additional service if requested, or recommend other means of creating and/or obtaining content. Should any of these items be required Square Peg Design can provide them as an additional service. PHASE 1 WAYFINDING STRATEGY AND SCHEMATIC DESIGN During this phase of work, SPD will meet with the Client and consultants to review the project goals, existing design concepts, program criteria, and design influences. This phase shall include, but not limited to, the following tasks and design work: 1. Meet with Client and consultants to review the project goals, existing design concepts, program criteria, design influences etc. 2. Conduct wayfinding survey to determine overall signage strategy. Systematically study pedestrian and vehicular traffic flow as it relates to ingress, egress and circulation within the development. 3. Conduct appropriate research on potential design influences, available technologies, materials and finishes. 4. Collect all relevant data available for the Project to include: -Architectural plans and drawings -Existing design themes and details -Details of architectural elements Contract C12144101 Amendment No. 2 Page 11 5. Prepare preliminary programming for sign locations and message schedules. 6. Confirm required sign types and environmental graphic elements. 7. Review of municipality and authorities regulations. 8. Produce three (3) design concepts for physical form and scale of signage including proposed materials, finishes, colors. 9. Coordinate design concepts with the architecture and lighting. 10. Based on design concepts and proposed sign quantities, prepare implementation budgets for review and discussion with client. 11. Present Schematic Design Concepts, budgets and phasing options for comment and approval. MEETINGS 1. Kickoff Meeting 2. Interim Meetings with City Staff and Design Team as needed for coordination 3. Schematic Design presentation PHASE DELIVERABLES 1. Schematic drawing package showing three (3) signage concepts 2. Preliminary power, data and structural requirements. 3. Preliminary sign location plans and phasing options 4. Preliminary implementation budgets. PHASE ACTION REQUIRED BY CLIENT Client review, comment, selection of one Schematic design direction and final approval of all phase deliverables to proceed into Phase 2. PHASE 2 DESIGN DEVELOPMENT Based on the approved Schematic Design direction from Phase 1, Square Peg will develop and apply the approved design direction to all remaining sign types. The following is expected during this phase of work: 1. Develop the approved Schematic Design per comments from Phase 1 and apply to all remaining sign types. 2. Coordinate all sign sizes, locations, power and structural requirements with the Design Team and project Consultants. 3. Refine and finalize signing typography, icons, materials and finishes 4. Prepare sign message schedules listing all proposed sign types and message copy. 5. Prepare Design Development presentation 6. Present developed materials for approval MEETINGS 1. Interim design coordination with the city and design consultants as needed 2. Present Final Design Contract C12144101 Amendment No. 2 Page 12 PHASE DELIVERABLES 1. Design Development drawings for all sign types. 2. Sign location plans and message schedule(s) for all required sign types. 3. Power, data and structural requirements per sign type 4. Sign implementation budget. 5. Material samples as necessary for review. PHASE ACTION REQUIRED BY CLIENT Client review, comment and final approval of all phase deliverables to proceed into Phase 3. PHASE 3 DOCUMENTATION The purpose of Phase 3 is to provide design intent documentation and technical detailing sufficient in detail to facilitate tendering and fabrication by a qualified sign fabricator. The Documentation Phase shall include, but not limited to, the following: 1. Prepare design intent documentation drawings sufficient in detail to facilitate bidding and fabrication by a qualified sign fabricator. 2. Coordinate all sign sizes, locations, power and structural requirements with the design team. 3. Document design details for all sign types. 4. Specify and document signing colors, illumination and materials. 5. Write performance specifications for all signing colors, illumination, materials and installation as required. 6. Finalize typography. 7. Finalize sign location plans and message schedules. 8. Produce final set of documentation drawings for signing and graphic elements. MEETINGS 1. Coordination with the city and design consultants as required PHASE DELIVERABLE At the completion of the Documentation Phase, we will deliver Final Documents to the Client. Documents shall include, but not limited to, the following deliverables and presentation materials: 1. Design Intent documentation sufficient in detail to facilitate tendering and fabrication by a qualified sign fabricator. 2. Specifications 3. Final sign location plans and message schedule(s) for all required sign types. Contract C12144101 Amendment No. 2 Page 13 Documents will be issued as follows: 1. Design documentation drawings for signing elements in Illustrator CS4 on Mac OS X platform: CD and three (3) hard copies, Tabloid format 2. Location Plans - CAD 2010, CD and three (3) hard copies 3. Message Schedule - Filemaker: CD and three (3) hard copies PHASE 4 CONSTRUCTION ADMINISTRATION The purpose of Phase 4 is to provide Construction Administration services for the Exterior, Parking and Interior Signing. To insure the design intent and desired quality of fabrication is achieved, SPD will coordinate with the selected fabricator through the submittal, fabrication and installation phases of work to answer questions, provide details and information. SPD will also review submittals, installation and a final inspection of the completed installation. Tasks to included: 1. Review, comment and approval of shop drawings, materials, mock-ups and samples. 2. Review Prototypes and Samples. 3. Provide details and sketches to clarify design intent. 4. Coordinate with the fabricator on Site regarding sign locations. 5. Up to four (4) site visits. 6. Respond to requests made by fabricator for clarification of Contract Documents. 7. Inspect final Installations and prepare punchlist of items for correction. 8. Follow-up evaluation of punch list items at final completion. 9. Perform project closeout activities and prepare final record plan set from contractor markups. Contract C12144101 Amendment No. 2 Page 14 WMB ARCHITECTS Contract C12144101 - Amendment No. 2 Exhibit "B" - Project Schedule City Hall Remodel A M J J A S O N D J F M A M J J A S O N D J Program Confirmation Design Development Construction Documents Plan Review Bidding Construction Co n t r a c t R e v i s i o n 2013 2014 2015 Co n t r a c t R e v i s i o n EXHIBIT “C” COMPENSATION CONTRACT C12144101 - AMENDMENT No. 2 The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the hourly rate schedule attached as EXHIBIT “C-1” up to the not-to-exceed budget amount for each task set forth below. The compensation to be paid to CONSULTANT under this Agreement for all services described in EXHIBIT “A” (“Scope of Work”) and reimbursable expenses shall not exceed Three Hundred Eighty-Seven Thousand Five Hundred Five Dollars [$387,505.00]. CONSULTANT agrees to complete all Basic Services, including reimbursable expenses, within this amount. In the event CITY authorizes any Additional Services, the maximum compensation shall not exceed Four Hundred Twenty-Six Thousand Two Hundred Fifty-Six Dollars [$426,256.00]. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY. CONSULTANT shall perform the tasks and categories of work as outlined and budgeted below. The CITY’s project manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below provided the total compensation for Basic Services, including reimbursable expenses, does not exceed Three Hundred Eighty-Seven Thousand Five Hundred Five Dollars [$387,505.00] and the total compensation for Additional Services does not exceed Thirty-Eight Thousand Seven Hundred Fifty-One Dollars [$38,751.00]. Attachment C ORDINANCE NO. XXXX ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR FISCAL YEAR 2014 TO PROVIDE ADDITIONAL APPROPRIATION OF $1,607,109 IN THE FIRST FLOOR RENOVATIONS PROJECT (PE-12017), BUDGETED IN THE CAPITAL IMPROVEMENT FUND, FOR ENHANCEMENTS TO CITY HALL, RESULTING IN NO IMPACT TO THE INFRASTRUCTURE RESERVE. A SERIES OF TRANSFERS INTO THE CAPITAL IMPROVEMENT FUND WILL OFFSET THE INCREASED BUDGET AMOUNT, INCLUDING: $686,298 FROM THE COMMUNITY CENTER DEVELOPMENT IMPACT FEE FUND, $499,335 FROM THE TECHNOLOGY FUND, AND $668,437 FROM THE UTILITIES ADMINISTRATION FUND. THE TRANSFERS FROM THE COMMUNITY CENTER DEVELOPMENT IMPACT FEE FUND ($696,298), TECHNOLOGY FUND ($517,962), AND UTILITIES ADMINISTRATION FUND ($685,121) WILL BE OFFSET BY DECREASES TO THE FUND BALANCES TO EACH RESPECTIVE FUND. THESE TRANSFERS FROM OTHER FUNDS WILL ALLOW FOR AN INCREASE TO THE INFRASTRUCTURE RESERVE IN THE AMOUNT OF $246,961. The Council of the City of Palo Alto does ordain as follows: SECTION 1. The Council of the City of Palo Alto finds and determines as follows: A. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Council on June 10, 2013 did adopt a budget for Fiscal Year 2014; and B.At the time the 2014 Adopted Budget was being considered by the City Council, the costs associated with the First Floor Renovation project were not known; and C. The project will provide for enhancements to City Hall in order to allow for better civic engagement. Improvements include: a remodel to the main lobby, including coordination with a new digital public art element; an enhancement to the heating, ventilation, and air conditioning (HVAC) system in the lobby area in order to handle the increased loads from the new community meeting room and digital art installation; a restoration to the terrazzo floor of the main lobby; conversion of the existing People Strategy and Operations conference room to a new City Council conference room; conversion of the existing City Council conference room to a new training and multipurpose meeting room; creation of a new community meeting room beside the main lobby; installation of broadcast media capabilities for all the new lobby-level meeting spaces; modification of the lobby payment counter to match the new architectural style of the lobby and provide a lower ledge for writing checks and signing forms; conversion of the Revenue Services offices into new Utilities Customer Service counter and offices; reconfiguration and renovation of mezzanine level offices; reconfiguration and renovation of second floor offices; new carpeting and bench upholstery for City Council chambers; and remodeling the three building elevator cabs. D.In April 2014, the City posted a notice inviting formal bids (IFB) for the project, with a bidding period of nineteen calendar days; and E. Bids were received from one qualified contractor on May 6, 2014 with a base bid of $2,664,000, plus add alternates of $54,350, bringing the total bid to $2,718,350. This bid amount is 19% higher than the construction cost estimate, indicative of the busy local construction climate. F. Staff recommends that the bid of $2,718,350 submitted by D.L. Falk Construction, Inc. be declared the lowest responsible and responsive bid; and G. A contingency amount of $271,835, equal to ten percent of the total base bid contract amount, is requested for related, additional, but unforeseen work which may develop during the project. SECTION 2.The sum of One Million Six Hundred Seven Thousand One Hundred and Nine Dollars is hereby appropriated for the City Hall First Floor Remodel Project. To offset the increased a portion of the increased costs in the Capital Improvement Fund, a series of transfers are recommended, including Six Hundred Eighty Six Thousand Two Hundred Ninety Eight Dollars from the Community Center Development Impact Fee Fund, One hundred thirty three thousand six hundred eighty seven dollars from the Electric Fund, One hundred thirty three thousand six hundred eighty seven dollars from the Gas Fund, One hundred thirty three thousand six hundred eighty seven dollars from the Wastewater Collection Fund, One hundred thirty three thousand six hundred eighty seven dollars from the Water Fund, One hundred thirty three thousand six hundred eighty seven dollars from the Fiber Optics Fund, and four hundred ninety nine thousand three hundred and thirty five dollars from the Technology Fund. The transfers in from the various funds would be offset by reductions to each respective funds ending fund balance. Finally, as a result of the transfers in to the Capital Improvement Fund from the various funds, the Infrastructure Reserve can be increased by two hundred forty six thousand nine hundred sixty one dollars. SECTION 4. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption. SECTION 5.The Council of the City of Palo Alto hereby finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST:APPROVED: City Clerk Mayor APPROVED AS TO FORM: City Manager Director of Public Works Director of Administrative Services " ---------- City Council/City Manager City of Palo Alto Palo Alto, California BID FORM (Revised per Addendum No.1) Name of Company D.L. Falk Construction Inc. In response to this Invitation For Bids (IFB), the undersigned, as Bidder, declares that the only persons or parties interested in this Bid as principals are those named herein; that this Bid is made without collusion with any other person, firm or corporation; that the Bidder has carefully examined the location of the proposed work and the plans and specifications herein referred to; and that the Bidder proposes and agrees, if this Bid is accepted, ~o contract with the City of Palo Alto (City), to provide all' necessary materials, equipment, tools, apparatus, and other means of transport services, and to do all the Work and comply with all the specified requirements in this IFB, in the manner herein prescribed and for the prices stated in the following Bid: Project Title: CITY HALL REMODEL A: Base Bid: Provide all labor, equipment material, transportation and applicable taxes, profit, insurance, bonds and other overhead to perform the Work in accordance with the Project Plans and Technical Specifications, herein: BID APPROX UNIT DESCRIPTION, WITH UNIT PRICE IN WORDS UNIT TOTAL ITEM ITEM (EACH BID ITEM SHALL INCLUDE ALL APPLICABLE TAXES, PRICE PRICE QUANTI PROFIT, INSURANCE, BONDS, AND OTHER OVERHEAD) TV 1. 1 LS Upgrade the aesthetic and functionality of the Council $ fPC I~ Conference Room, Human Resources Conference Room, Lobby Area, Mezzanine, Level 2, and Elevator Cabs at Palo 1\"" I Alto City Hall. rv~ . ~'V~ 2. 1 lS Moving Allowance $70,000 $70,000 0 Base Bid Total (item 1 and 2) $ cfJ 1.\1 (Total in words: -It-Jo ~1'~·f2V1. t A~[~ ~;Jr-&IAL ~~ \b\J ~/K (\..-\ II II II II ADDENDUM NO. ONE TO CITY OF PALO ALTO IFB 153838 PAGE 3 OF 6 BID APPRO UNIT DESCRIPTION, WITH UNIT PRICE IN WORDS UNIT TOTAL ITEM ITEM X.QTY. (EACH BID ITEM SHALL INCLUDE ALL APPLICABLE TAXES, PRICE PRICE PROFIT, INSURANCE, BONDS, AND OTHER OVERHEAD) 6. 1 LS Expand existing AMAG Security Access Control System to $ $ include Doors No: 107.1, 109.1, 126.1, 122.1, 122.2, 123.1, MOS.l, Mo6.1 and.20S.1. 1,~OO +~OO . &)t,vM ~ lztNifl. A tIliiJ\-t kJ.(t-J.. Additive Alternate Bid Total (item 1 through 6) $ (Total in words: 6~~¥ ~\W' ~tA~~ lctL ~JctJ cJhf ) :;4 Ii:> 'fiV C: Deductive Alternate Bid Total: Provide all labor, equipment material, transportation and applicable taxes, profit, insurance, bonds and other overhead to perform the Work in accordance with the Project Plans and Technical Specifications, herein: BID APPRO UNIT DESCRIPTION, WITH UNIT PRICE IN WORDS UNIT TOTAL ITEM ITEM X.QTY. (EACH BID ITEM SHALL INCLUDE ALL APPLICABLE TAXES, PRICE PRICE PROFIT, INSURANCE, BONDS, AND OTHER OVERHEAD) 1. 1 LS Delete Elevator Interiors Package $ $ ~-1S' i\~~l--1r k Ib",~ C'"'-I ~~!h! ~~~ ~Ve.., ~~~1S' (Unit rice in words) 'b't-, 2. 1 LS Delete AV @ Entry Wall including power, data and $ $ monitors refer to Sheet AV2.1, Note 1 ':00 e.ttv tiN ~~s,."J. eir;tt-~~V\cLftJ e::\~~'f 'J(o~~O ~ q,\ol ( nit Price in Words) 3. 1 LS Delete metal panels at entry surrounding restroom core. $ $ As shown on sheet A 2.4. On lieu of install 5/8" gyp board over th e specified new furring. Tape, texture and paint (n) t;DO gyp board. ~1~oO ~Chl ~l> ~""c"tAMJ t;\It hl.lMclH~ e;1.1 (Unit Price in Words) 4. 1 LS Delete decorative glazing at doors to Community Meeting $ $ Room (refer to door schedule Sheet A 8.1) and replace with X" clear tempered glazing. 0° \6D ~ ... t ~ ~~ I)ttt.. "'~~u" \ " \" (Unit Price in Words) S. 1 LS Delete Folding walls at Community Meeting Room, replace $ $ with fixed anodized aluminum frame storefront system 00 00 ~~i:~nst:;~:rrf<::ed Cl-ea 'II\J ~ 1\;\ I (Unit Price in Words) ADDENDUM NO. ONE TO CITY OF PALO ALTO IFB 153838 PAGE 5 OF 6 BID APPRO UNIT DESCRIPTION, WITH UNIT PRICE IN WORDS UNIT TOTAL ITEM ITEM X.QTY. (EACH BID ITEM SHALL INCLUDE ALL APPlicABLE TAXES, PRICE PRICE PROFIT, INSURANCE, BONDS, AND OTHER OVERHEAD) 6. 1 LS Delete Drinking Fountain Replacement with Water Filling $ $ stations on Floor level A, 1, 2, 3, 4, 5, 6, and 7. See Sheet P.01Note P of General Plumbing Notes. .. qOb ,\00 ~i '\:)I sttc ~,a-V'l-J "".V\t U(-eJ (~nit Price iti or s)· ~lP' ~l 7. 1 LS Delete all work associated with Finance Department $ $ counter including casework, decorative glazing and terrazzo floor infill as shown on sheets D2.1,A2.1, A2.4 and L{"I .. P .;..",0 Ani r.",(vy -S~\C ~S~ ~w '-t~tJ. ~v..hl yIJ 1 I.\,tp\ (Unit Price in Words) 8. 1 LS Delete all work in City Council Chambers as shown of Sheet $ $ A1D.l-CC, including installation of new carpeting and ~tP reupholster of existing bench style seating. 0° ~~~"'" f1.,vw~~ M~ ~ ~ i,() \ 'h01 ( nit Price in Words) 9. 1 LS In lieu of replacing suspended ceiling systems as specified $ $ on the Mezzanine and Second Floor levels, maintain existing suspended grid system as currently installed. Modify existing grid system as required to accommodate 'lr 0 1/0 new specified fixtures and mechanical diffusers. Replace 7~ ceiling' tiles with specified tiles. Refer to sheet A 9.2 ~~ ~t.t-~\II.<"~ e.Aj"-\-",IAI"-ar~! +-wev--~I (Unit Price in Words) Deductive Alternate Bid Total (items 1 through 9) $ (Total in words: ) 4~11n~ ~\.W ~ ~f ~\j .fw& ~1A.r...... J 4fl .. t. "'-..J.r~ .u..;,. f...t/ h "//f!.. D. Addenda During the Bid process there may be changes to the Contract Documents, which would require an issuance of an addendum or addenda. City disclaims any and all liability for loss, or damage to any Bidder who does not receive any addendum issued by City in connection with this IFB. Any Bidder in submitting a Bid is deemed to waive any and all claims and demands Bidder may have against City on account of the failure of delivery of any such addendum to Bidder. Any and all addenda issued by City shall be deemed included in this IFB, and the provisions and instructions therein contained shall be incorporated to any Bid su bmitted by Bidder. To assure that all Bidders have received each addendum, the following acknowledgment and sign-off is required. Failure to acknowledge receipt of an addendum/addenda may be considered an irregularity in the Bid: ADDENDUM NO. ONE TO CITY OF PALO ALTO IFB 153838 PAGE 6 OF6 SQUARE PEG DESIGN City Hall : Signing and Graphics Dec. 2014 100% Documentation/Bid GD01.01 AA1 Monument ID CLIENT PROJECT : 15013 GRAPHIC CONSULTANT DRAWING SUBMITTALS DRAWING TITLE DRAWING NUMBER SQUARE PEG DESIGN 1631 Telegraph Avenue Oakland, California 94612 phone 510 596 8810 PROJECT ARCHITECT © 2008 Square Peg Design, all rights reserved. This drawing, and the concepts, ideas, and design expressed herein are intended for use on this project only, and remain the sole property of SPD. 4’ - 6 ” 2’ - 8 ” 1 1 / 4 ” 1’ - 8 3 / 4 ” 2’ - 0 ” 14’-10” 8” 1 ELEVATION Scale: 3/4” = 1’-0”2 SIDE VIEW Scale: 3/4” = 1’-0” To MatchColored Concreteof the lighter coloron circles (on thesite hardscape) S-1 To Match GreenPMS 369 CMatthews PaintMP26749 Spring Green P-1 To MatchPMS Cool Gray 9 CMatthews PaintMP11316Pahoehoe Gray P-4 9 1 / 4 ” 5 3 / 4 ” 4”250 HAMILTON 1'-0"2'-4 1/4" 1' - 2 3 / 4 " 6 1 / 8 " 6 1/2" Logo & letters are white translucent acrylic push through circle or letterforms with internally illuminated LED’s; flush to the cabinet face, acrylic has a satin finish; circle to have masked and opaque painted logo face Address is 1/4” thick cut out aluminum with paint finish on all visible sides, concealed stud flush mounted to concrete base Fabricator is responsible for verifying, reviewing and confirming actual site installation conditions above parking garage for any potential conflicts; coordination with City of Palo Alto staff may be required Base is colored concrete, Davis Concrete color (or equal) to be selected during site review ; footing as required Fabricated aluminum sign cabinet with acrylic polyurethane paint finish on main cabinet and reveal, satin finish; mounted to concrete base; create concealed access panel for future maintenance; all wiring is internal to the cabinet and pig tailed near the base on the back side for final hook-up by the City 1'-0" 14'-8 1/2" Dec. 2014 100% Documentation/Bid GD02.01 AA2 Building ID CLIENT PROJECT : 15013 GRAPHIC CONSULTANT DRAWING SUBMITTALS DRAWING TITLE DRAWING NUMBER SQUARE PEG DESIGN 1631 Telegraph Avenue Oakland, California 94612 phone 510 596 8810 PROJECT ARCHITECT © 2008 Square Peg Design, all rights reserved. This drawing, and the concepts, ideas, and design expressed herein are intended for use on this project only, and remain the sole property of SPD. 10 ’ - 1 0 ” 10 ” * THIS PORTAL OPTION IS INSTALLED IN THE CENTER OF THE CIRCLE, ALIGNED WITH ENTRY COLUMNS ON EACH SIDE OF 4 ENTRY DOORS 1’ - 5 ” 1 1 / 2 ” 10 ” 3 LETTERS ELEVATION Scale: 1” = 1’-0”4 SIDE DETAIL Scale: 1” = 1’-0” 2 SIDE VIEW Scale: 1/4” = 1’-0” 5 RENDERING Scale: NTS 14 ” 14’-3” 1 CONTEXT ELEVATIONS Scale: 1/4” = 1’-0”6 LOGO ELEVATION Scale: 1” = 1’-0” Vinyl logo application to glass doors All measurements are approximate and need to be field verified 3M Translucent Vinyl3630-136Lime Green V-4 V-1 To Match Matthews PaintBrushed Aluminum P-5 To MatchPMS Cool Gray 9 CMatthews PaintMP11316 Pahoehoe Gray P-4 C I TY HA L L C I TY HA L L 7’- 0 ” T O C I R C L E C E N T E R CL 20-0” +- to center of landscape circles (all dimensions to be confirmed on site) Portal 10 ' - 0 " 1'-8" 10 ' - 9 " 1" PT1 PROTOTYPE : GD02.01 - AA2 Building ID - Illuminated Letter Mounted to Aluminum post/cabinet Provide 2 samples: 1 with 2” letter depth/return per drawing & 1 with 3” letter depth/return 3M Reflective VinylWhite 680-10 V-1 1'-8" 2"1" CITY HALL letters are 2” deep white translucent acrylic returns with embedded LED’s and solid painted aluminum letter form laminated to front and back faces, the acrylic letter returns are illuminated Fabricated aluminum portal frame with paint finish Appropriate footing TBD by fabricator, preference is to have a clean connection at the base between the frame and the plaza with no exposed plates etc. 2” deep white translucent acrylic returns with internally illuminated embedded LED’s 1/8“ solid painted aluminum letter form laminated to front of acrylic 1/8“ solid painted aluminum letter form laminated to back of acrylic 3/4” standoff used to mount letters to portal and connect electrical wiring Fabricated aluminum portal frame with paint finish Concealed maintenance access panel and wiring is within frame Fabricator is responsible for verifying, reviewing and confirming actual site installation conditions above parking garage for any potential conflicts; coordination with City of Palo Alto staff may be required Accessible Entranceon Hamilton Avenue. POLICE SERVICES 10 ” 7” 5” 2” 2’ - 6 ” 12 ” 9” A BB A A BB A POLICESERVICES Accessible Entranceon Hamilton Avenue. POLICESERVICES Accessible Entranceon Hamilton Avenue. 6' - 6 " 10 ' - 0 " 10 " 10 ' - 0 " 14’-3” 17-7” +- to center of entrance cement (all dimensions to be confirmed on site) Dec. 2014 100% Documentation/Bid GD03.01 AA3 Police Department ID CLIENT PROJECT : 15013 GRAPHIC CONSULTANT DRAWING SUBMITTALS DRAWING TITLE DRAWING NUMBER SQUARE PEG DESIGN 1631 Telegraph Avenue Oakland, California 94612 phone 510 596 8810 PROJECT ARCHITECT © 2008 Square Peg Design, all rights reserved. This drawing, and the concepts, ideas, and design expressed herein are intended for use on this project only, and remain the sole property of SPD. 6 RENDERING Scale: NTS 1 ELEVATION Scale: 1/4” = 1’-0”2 ELEVATION A : External Portal Return Scale: 3/8” = 1’-0”3 ELEVATION B : Internal Portal Return Scale: 3/8” = 1’-0” To Match WhiteMatthews PaintMP27386Verizon White P-3 3M Reflective VinylWhite 680-10 V-1 To Match Matthews PaintBrushed Aluminum P-5 To Match GrayPMS Cool Gray 9 CMatthews PaintMP11316Pahoehoe Gray P-4 To Match GreenPMS 369 CMatthews PaintMP26749 Spring Green P-1 POLICE letters are 2” deep white translucent acrylic returns with embedded LED’s and solid painted aluminum letter form laminated to front and back faces, the acrylic letter returns are illuminated Painted band and graphics Fabricated aluminum portal frame with paint finish Appropriate footing TBD by fabricator, preference is to have a clean connection at the base between the frame and the sidewalk with no exposed plates etc. Painted band and graphics First surface applied vinyl graphics 1’ - 5 ” 1 1 / 2 ” 10 ” 4 LETTERS ELEVATION Scale: 1” = 1’-0” All measurements are approximate and need to be field verified Portal 4 SIDE DETAIL Scale: 1” = 1’-0” 1'-8" 2"1" 2” deep white translucent acrylic returns with internally illuminated embedded LED’s 1/8“ solid painted aluminum letter form laminated to front of acrylic 1/8“ solid painted aluminum letter form laminated to back of acrylic 3/4” standoff used to mount letters to portal and connect electrical wiring Fabricated aluminum portal frame with paint finish Concealed maintenance access panel and wiring is within frame Fabricator is responsible for verifying, reviewing and confirming actual site installation conditions for any potential conflicts; coordination with City of Palo Alto staff may be required Dec. 2014 100% Documentation/Bid GD04.02 AA4 Elevator & Stair ID Hamilton @ Bryant CLIENT PROJECT : 15013 GRAPHIC CONSULTANT DRAWING SUBMITTALS DRAWING TITLE DRAWING NUMBER SQUARE PEG DESIGN 1631 Telegraph Avenue Oakland, California 94612 phone 510 596 8810 PROJECT ARCHITECT © 2008 Square Peg Design, all rights reserved. This drawing, and the concepts, ideas, and design expressed herein are intended for use on this project only, and remain the sole property of SPD. 1 RENDERING - HAMILTON @ BRYANT Scale: NTS 2 RENDERING - HAMILTON @ BRYANT Scale: NTS 3 ELEVATION Scale: NTS Hamilton Avenue@ Bryant Street Hamilton Avenue@ Bryant Street Hamilton Avenue@ Bryant Street Sign mounts flush to stair fencing does not impede on sidewalk Dec. 2014 100% Documentation/Bid GD04.03 AA4 Elevator & Stair ID Hamilton Ave @ Ramona CLIENT PROJECT : 15013 GRAPHIC CONSULTANT DRAWING SUBMITTALS DRAWING TITLE DRAWING NUMBER SQUARE PEG DESIGN 1631 Telegraph Avenue Oakland, California 94612 phone 510 596 8810 PROJECT ARCHITECT © 2008 Square Peg Design, all rights reserved. This drawing, and the concepts, ideas, and design expressed herein are intended for use on this project only, and remain the sole property of SPD. 1 RENDERING - HAMILTON @ RAMONA Scale: NTS2ELEVATION Scale: NTS Hamilton Avenue@ Ramona Street Accessible Entranceon Hamilton Avenue. Hamilton Avenue@ Ramona Street Sign mounts flush to stair fencing does not impede on sidewalk Dec. 2014 100% Documentation/Bid GD04.04 AA4 Elevator & Stair ID Forest Ave @ Bryant CLIENT PROJECT : 15013 GRAPHIC CONSULTANT DRAWING SUBMITTALS DRAWING TITLE DRAWING NUMBER SQUARE PEG DESIGN 1631 Telegraph Avenue Oakland, California 94612 phone 510 596 8810 PROJECT ARCHITECT © 2008 Square Peg Design, all rights reserved. This drawing, and the concepts, ideas, and design expressed herein are intended for use on this project only, and remain the sole property of SPD. 1 RENDERING - FOREST @ RAMONA (FOREST @ BRYANT SIMILAR) Scale: NTS2ELEVATION Scale: NTS Forest Avenue@ Ramona Street Accessible Entranceon Hamilton Avenue Sign mounts in landscape, does not impede on sidewalk PUBLIC PARKING 3 Hour Free Parking per 24 hour cycle PUBLIC PARKING 3 Hour Free Parking per 24 hour cycle PERMIT PARKING Monday - Friday 8am-5pm All other times 3 Hour Free Parking within a 24 hour cycle PERMIT PARKING Monday - Friday 8am-5pm All other times 3 Hour Free Parking within a 24 hour cycle PUBLICCORAL ZONE PERMIT PERMIT Dec. 2014 100% Documentation/Bid GD12.01 CA4 Column Graphics CLIENT PROJECT : 15013 GRAPHIC CONSULTANT DRAWING SUBMITTALS DRAWING TITLE DRAWING NUMBER SQUARE PEG DESIGN 1631 Telegraph Avenue Oakland, California 94612 phone 510 596 8810 PROJECT ARCHITECT © 2008 Square Peg Design, all rights reserved. This drawing, and the concepts, ideas, and design expressed herein are intended for use on this project only, and remain the sole property of SPD. 1 PUBLICCORAL ZONE Fabricator is responsible for verifying, reviewing and confirming actual site installation conditions for any potential conflicts; coordination with City of Palo Alto staff may be required Paint-outs may be required to determine if the contrast between the white lettering and the lighter background color is sufficient - gray lettering may be the alternative The majority of columns measure approximately 18” sq. with 1” beveled corners, heights and adjacent beams vary slightly from floor to floor, fabricator will establish a top margin line that can be consistently applied to all coumns on all floors for a final uniform appearance WHITE LETTER OPTION GRAY LETTER OPTION 1 ELEVATION Scale: 1” = 1’-0” All column graphics are ... OPTION 1 : painted with masked and painted text OPTION 2 : applied vinyl for the text NOTE: All costs associated with prep work for columns at required locations will be provided by the Fabricator as a line item that may be included in the final scope, or withdrawn To Match WhiteMatthews PaintMP27386Verizon White P-3 To MatchPittsburgh Paints209-4Lettuce Alone P-8 To MatchDunn EdwardsDE5579Cabbage Patch P-9 To MatchPittsburgh Paints150-3Songbird P-10 To MatchDunn EdwardsDE5836Sail away P-11 To MatchDunn EdwardsDE5305Yuma Gold P-12 To MatchDunn EdwardsDE5222Orange Marmalade P-13 To MatchPittsburgh Paints132-6Pomegranate P-14 Dec. 2014 100% Documentation/Bid GD14.01 CA6 Level P1 City Hall Lobby Entry Graphics CLIENT PROJECT : 15013 GRAPHIC CONSULTANT DRAWING SUBMITTALS DRAWING TITLE DRAWING NUMBER SQUARE PEG DESIGN 1631 Telegraph Avenue Oakland, California 94612 phone 510 596 8810 PROJECT ARCHITECT © 2008 Square Peg Design, all rights reserved. This drawing, and the concepts, ideas, and design expressed herein are intended for use on this project only, and remain the sole property of SPD. 1 CITY HALL elevator Existing Entry Lobby entry wall is... OPTION 1 : painted walls with masked and painted text/graphics OPTION 2 : painted walls with applied vinyl text/graphics OPTION 3 : painted walls with painted aluminum panels/dimensional letters mounted to walls Logo on glass doors is applied vinyl ALL CONDITIONS TO BE REVIEWED ON SITE PRIOR TO FABRICATION NOTE: All costs associated with prep work for walls at required locations will be provided by the Fabricator as a line item that may be included in the final scope, or withdrawn To Match WhiteMatthews PaintMP27386Verizon White P-3 To MatchPMS Cool Gray 9 CMatthews PaintMP11316 Pahoehoe Gray P-4 To MatchPittsburgh Paints209-4Lettuce Alone P-8 To MatchDunn EdwardsDE5579Cabbage Patch P-9 SCALE : 1/4” = 1’-0” Door logo graphics are applied vinyl 3M Translucent Vinyl3630-136Lime Green V-4 Fabricator is responsible for verifying, reviewing and confirming actual site installation conditions for any potential conflicts; coordination with City of Palo Alto staff may be required Paint-outs may be required to determine if the contrast between the white lettering and the light green background color is sufficient Dec. 2014 100% Documentation/Bid GD16.02 CA8 P2 Stair Core Graphics @ Hamilton Ave CLIENT PROJECT : 15013 GRAPHIC CONSULTANT DRAWING SUBMITTALS DRAWING TITLE DRAWING NUMBER SQUARE PEG DESIGN 1631 Telegraph Avenue Oakland, California 94612 phone 510 596 8810 PROJECT ARCHITECT © 2008 Square Peg Design, all rights reserved. This drawing, and the concepts, ideas, and design expressed herein are intended for use on this project only, and remain the sole property of SPD. SCALE : 1/4” = 1’-0” D BB PLAN B & CA & B A B C DC & D B D C CA A B 9’ HAMILTON AVENUEstairway HAMILTON AVENUEstairway HAMILTON AVENUEstairway HAMILTON AVENUEstairway Dec. 2014 100% Documentation/Bid GD16.03 CA8 P3 Stair Core Graphics @ Hamilton Ave CLIENT PROJECT : 15013 GRAPHIC CONSULTANT DRAWING SUBMITTALS DRAWING TITLE DRAWING NUMBER SQUARE PEG DESIGN 1631 Telegraph Avenue Oakland, California 94612 phone 510 596 8810 PROJECT ARCHITECT © 2008 Square Peg Design, all rights reserved. This drawing, and the concepts, ideas, and design expressed herein are intended for use on this project only, and remain the sole property of SPD. SCALE : 1/4” = 1’-0” D PLAN B D C CA A B & CA & B A B C DC & DB 9’ HAMILTON AVENUEstairway HAMILTON AVENUEstairway HAMILTON AVENUEstairway HAMILTON AVENUEstairway BB Dec. 2014 100% Documentation/Bid GD19.01 CD1 Overhead Directional CLIENT PROJECT : 15013 GRAPHIC CONSULTANT DRAWING SUBMITTALS DRAWING TITLE DRAWING NUMBER SQUARE PEG DESIGN 1631 Telegraph Avenue Oakland, California 94612 phone 510 596 8810 PROJECT ARCHITECT © 2008 Square Peg Design, all rights reserved. This drawing, and the concepts, ideas, and design expressed herein are intended for use on this project only, and remain the sole property of SPD.EXIT PARK EXIT/PUBLIC 3 HR PERMIT EXIT PERMIT PARKING Bryant St. Ramona St. 3 Hour LimitPUBLIC PARKING CORAL ZONE After time expires no reparking until 5:00 pm DO NOT ENTER 1 ELEVATIONS Scale: 3/4” = 1’-0” 1/8” aluminum panels with paint finish on all exposed surfaces, panels mount flush to beams with concealed fasteners appropriate for garage conditions, text/arrows are reflective vinyl ALL dimensions are to be confirmed on site pror to shop drawings and fabrication 10’-0” 15’-0” 1’ - 1 ” 4 5 / 8 ” 7 1 / 8 ” 2 1 / 2 ” 6 1 / 4 ” 4” 8 3 / 4 ” 2 1 / 2 ” Fabricator is responsible for verifying, reviewing and confirming actual installation conditions in parking garage for any potential conflicts prior to fabrication; coordination with City of Palo Alto staff and Square Peg Design may be required - a complete walkthrough is recommended - sizes noted may need to be adjusted after walk through To MatchPMS Cool Gray 9 CMatthews PaintMP11316 Pahoehoe Gray P-4 3M Reflective VinylWhite 680-10 V-1 3M Reflective VinylRed 680-72 V-3 To MatchPittsburgh Paints132-6Pomegranate P-14 Dec. 2014 100% Documentation/Bid GD20.01 CD2 Pedestrian Directional CLIENT PROJECT : 15013 GRAPHIC CONSULTANT DRAWING SUBMITTALS DRAWING TITLE DRAWING NUMBER SQUARE PEG DESIGN 1631 Telegraph Avenue Oakland, California 94612 phone 510 596 8810 PROJECT ARCHITECT © 2008 Square Peg Design, all rights reserved. This drawing, and the concepts, ideas, and design expressed herein are intended for use on this project only, and remain the sole property of SPD. Hamilton Avenue ForestAvenue 1 CONTEXT ELEVATION Scale: 1/2” = 1’-0” 2 PANEL ELEVATION Scale: 1/2” = 1’-0” Hamilton Avenue ForestAvenueP2LEVEL P3LEVEL Hamilton Avenue ForestAvenueP3LEVEL Hamilton Avenue ForestAvenueP1LEVEL 1/8” aluminum panels with paint finish on all exposed surfaces in 2 colors, panels mount flush to walls with concealed fasteners appropriate for garage wall conditions, text/arrows are reflective vinyl, accent colors change per floor LEVEL P3 LEVEL P2LEVEL P1 3’ - 7 ” 14’-0” Fabricator is responsible for verifying, reviewing and confirming actual installation conditions in parking garage for any potential conflicts prior to fabrication; coordination with City of Palo Alto staff and Square Peg Design may be required - a complete walkthrough is recommended - sizes noted may need to be adjusted after walk through, conditions will vary To MatchPMS Cool Gray 9 CMatthews PaintMP11316 Pahoehoe Gray P-4 To MatchDunn EdwardsDE5579Cabbage Patch P-9 To MatchDunn EdwardsDE5836Sail away P-11 To MatchDunn EdwardsDE5222Orange Marmalade P-13 3M Reflective VinylWhite 680-10 V-1 Dec. 2014 100% Documentation/Bid GD25.01 BA1 Community Station ID CLIENT PROJECT : 15013 GRAPHIC CONSULTANT DRAWING SUBMITTALS DRAWING TITLE DRAWING NUMBER SQUARE PEG DESIGN 1631 Telegraph Avenue Oakland, California 94612 phone 510 596 8810 PROJECT ARCHITECT © 2008 Square Peg Design, all rights reserved. This drawing, and the concepts, ideas, and design expressed herein are intended for use on this project only, and remain the sole property of SPD. 5'-8" 9"3" 3" 3" 1 ELEVATION Scale: 1 1/2” = 1’-0” 4 EXISTING CONDITION Scale: NTS 3 CONTEXT ELEVATION Scale: 1/4” = 1’-0” 2 SIDE VIEW Scale: 1 1/2” = 1’-0” 3"1/4"3” deep alumium sign cabinet; flush mounted to soffit 1/4” thick acrylic text /graphics painted on all visible surfaces; flush mounted to cabinet 5"5" To Match GreenPMS 369 CMatthews PaintMP26749 Spring Green P-1 To Match GrayMatthews PaintMP13795Graynola P-2 Conversations Conversations COMMUNITY ROOM Dec. 2014 100% Documentation/Bid GD25.10 BA4 Community Room ID CLIENT PROJECT : 15013 GRAPHIC CONSULTANT DRAWING SUBMITTALS DRAWING TITLE DRAWING NUMBER SQUARE PEG DESIGN 1631 Telegraph Avenue Oakland, California 94612 phone 510 596 8810 PROJECT ARCHITECT © 2008 Square Peg Design, all rights reserved. This drawing, and the concepts, ideas, and design expressed herein are intended for use on this project only, and remain the sole property of SPD. 2 CONTEXT ELEVATION Scale: 1/4” = 1’-0” 1 DETAIL ELEVATION Scale: 1” = 1’-0” To Match GreenPMS 369 CMatthews PaintMP26749 Spring Green P-1 To Match GrayMatthews PaintMP13795Graynola P-2 COMMUNITY ROOM 5' - 4 " 1/4” thick acrylic logo & text painted on all visible surfaces; flush mounted to wall 11 1 / 4 " 1 7 / 1 6 " 2 9 / 1 6 " 3 1 / 1 6 " 3/ 1 6 " Dec. 2014 100% Documentation/Bid GD26.01 BA2 Soffit ID & Directional CLIENT PROJECT : 15013 GRAPHIC CONSULTANT DRAWING SUBMITTALS DRAWING TITLE DRAWING NUMBER SQUARE PEG DESIGN 1631 Telegraph Avenue Oakland, California 94612 phone 510 596 8810 PROJECT ARCHITECT © 2008 Square Peg Design, all rights reserved. This drawing, and the concepts, ideas, and design expressed herein are intended for use on this project only, and remain the sole property of SPD. COUNCIL CHAMBERS POLICE COUNCIL CHAMBERSPOLICECOUNCIL CHAMBERSPOLICE Utilities Service 1 ELEVATION Scale: 3/4” = 1’-0” 3 CONTEXT ELEVATION Scale: 1/4” = 1’-0” 2 SIDE VIEW Scale: 3/4” = 1’-0” 4 RENDERING @ SOFFIT 1 Scale: NTS Utilities Service COUNCIL CHAMBERS POLICE COUNCIL CHAMBERS POLICE 3" Utilities Service To Match GreenPMS 369 CMatthews PaintMP26749 Spring Green P-1 To Match WhiteMatthews PaintMP27386Verizon White P-3 To Match GrayMatthews PaintMP13795Graynola P-2 1' - 3 3 / 8 " 1 7 / 8 " 3 1 / 2 " 3 1 / 2 " 4" 4" 1/ 4 " 9"7" 5 1 / 4 " 2 3 / 4 " 1/2” thick acrylic logo painted on all visible surfaces; flush mounted to soffit 1/4” thick acrylic text /graphics painted on all visible surfaces; flush mounted to soffit DOUBLE SIDED SIGN 3” deep alumium sign cabinet with screenprinted graphics; flush mounted to soffit ceiling Soffit 1 Double Sided Sign Side A (B is opposite, see schedule) Soffit 1 Side A Side B Soffit 2 Double Sided Sign Side A (B is opposite, see schedule) (no graphics on soffit) Dec. 2014 100% Documentation/Bid GD28.01 BB1 Elevator Lobby Directory Level 1 CLIENT PROJECT : 15013 GRAPHIC CONSULTANT DRAWING SUBMITTALS DRAWING TITLE DRAWING NUMBER SQUARE PEG DESIGN 1631 Telegraph Avenue Oakland, California 94612 phone 510 596 8810 PROJECT ARCHITECT © 2008 Square Peg Design, all rights reserved. This drawing, and the concepts, ideas, and design expressed herein are intended for use on this project only, and remain the sole property of SPD. WOMENWOMENwoMENwoMENMENMENMENMENMEN City AttorneyCity AuditorCity ClerkCity Council & MayorCity ManagerFire Administrative Services (or Department)Public Works / Engineering Planning and Community EnvironmentGeneral Zoning Info / Permit Process / Submittals / Building Inspections...Dev. Center @ 285 Hamilton Ave. City Real Estate Administrative ServicesOffice of Management & BudgetPayroll/Accounts PayableUtilities Administrative ServicesCable TV CoordinatorUtilities Customer Service Center Human Resources DirectorPurchasingRisk Management & SafetyCompensation & Labor RelationsCouncil Chambers/Conference RoomEmployee BenefitsEmploymentParking Citations & PermitsPolice Department Public CounterRevenue CollectionsCafePublic Parking Parking Parking Level 8Level 7 Level 6 Level 5 Level P1 Level P2Level P3 Level 4 Level 3Level 2 Mezzanine Level 1 1 Main LobbyUtilities Service WindowsAccess Palo AltoCouncil Chambers L E V E L Elevators Operate only during City Hall business hours. Use Hamilton Ave. elevator or stairs and Forest Ave. stairs to exit at all other times. BUSINESS HOURSMonday - Thursday 7:30am - 5:30pmFriday 8:00am - 5:00pmSome Departments Closed onAlternate Fridays.Please See Information Desk onFirst Floor Lobby City Attorney City AuditorCity ClerkCity Council & MayorCity Manager Public WorksFire Department (Headquarters)for permit applications and questions please visit the Development Center at 285 Hamilton Avenue Planning and Community Environmentfor building permit applications and general zoning or development review questions please visit the Development Center at 285 Hamilton Avenue Administrative ServicesFinance and Budget Utilities Administration Utilities Marketing Services Civic Technology CenterUtilities Call Center Human ResourcesPurchasing Council ChambersConference Rooms Customer Service CountersPolice Department CafePublic Parking Public & Permit Parking Permit Parking 8 7 6 5 4 3 2 1 P1 P2 P3 1 Main Lobby Council Chambers/ Conference Rooms Police Department Customer Payment Services Parking Citations & Permits Community Room L E V E L Elevators Operate only during City Hall business hours. Use Hamilton Ave. elevator or stairs and Forest Ave. stairs to exit at all other times. BUSINESS HOURSMonday - Thursday 7:30am - 5:30pmFriday 8:00am - 5:00pm Some Departments Closed on Alternate Fridays. Please See Information Desk onFirst Floor Lobby 6'-0" 3' - 0 " 1'-9 1/2"1'-1 1/2"2'-3/4"11 1/4"1/2"1/2" 6 3 / 4 " 1/ 2 " 1' - 9 1 / 2 " 1/ 2 " 6 3 / 4 " 7 3 / 4 " 1" 1" 2"2"2" 1/ 2 " 1/ 2 " 1/4"1/8" 1 ELEVATION Scale: 1 1/2” = 1’-0” 4 RENDERING Scale: 1/4” = 1’-0” 2 SIDE VIEW Scale: 1 1/2” = 1’-0” 3 PLAN VIEW Scale: 1 1/2” = 1’-0” 1/4” thick painted acrylic back panel flush mounted onto wall 1/8” thick painted acrylic front modular panels flush mounted onto back panel magnetically Front panels have first surface applied screen printed text and graphics 1/8” thick painted acrylic “LEVEL” flush onto back panel 1/8” thick painted acrylic level number flush onto back panel ACCESSIBLE RESTROOMS ARE LOCATED ON LEVEL 2 To Match GreenPMS 369 CMatthews PaintMP26749 Spring Green P-1 To Match WhiteMatthews PaintMP27386Verizon White P-3 PT3 PROTOTYPE : GD28.01 - BB1 Elevator Lobby Directory Entire Modular Sign ALL directory text is placeholder until final review and confirmation from City of Palo Alto staff To Match GrayMatthews PaintMP13795Graynola P-2 9 City of Palo Alto (ID # 5779) City Council Staff Report Report Type: Action Items Meeting Date: 5/18/2015 City of Palo Alto Page 1 Summary Title: BID Re-Authorization Title: PUBLIC HEARING: to Hear Objections to the Levy of Proposed Assessments on the Palo Alto Downtown Business Improvement District and Adoption of a Resolution Confirming the Report of the Advisory Board and Levying Assessment for Fiscal Year 2016 on the Downtown Palo Alto Business Improvement District From: City Manager Lead Department: City Manager Recommendation 1. Hold a public hearing on the levy of proposed assessments in Fiscal Year 2016 in connection with the Downtown Palo Alto Business Improvement District; and 2. Approve a resolution confirming the report of the Advisory Board and levying an assessment for Fiscal Year 2016 on the Downtown Palo Alto Business Improvement District (Attachment B). Background The Palo Alto Downtown Business Improvement District (BID) was established by the City Council in 2004 pursuant to the California Parking and Business Improvement Area Law to promote the economic revitalization and physical maintenance of the Palo Alto Downtown business district. The Council appointed the Board of Directors of the Palo Alto Downtown Business and Professional Association (PADBPA), a non-profit corporation, as the Advisory Board for the BID. The Board’s purpose is to advise the Council on the method and basis for levy of assessments in the BID and the expenditure of revenues derived from the assessments. Pursuant to BID law, the Advisory Board must annually submit to the Council a report that proposes a budget for the upcoming Fiscal Year for the BID. The report must: 1) propose any boundary changes in the BID; 2) list the improvements and activities to be provided in the Fiscal Year; 3) estimate the cost to provide the improvements and activities; 4) set forth the method and basis for levy of assessments; 5) identify surplus or deficit revenues carried over from the prior Fiscal Year; and 6) identify amounts of City of Palo Alto Page 2 contributions from sources other than assessments. The City Council is required to annually hold a public hearing, approve the Advisory Board Annual report, and determine whether or not to levy the annual assessment for the Palo Alto Downtown Business Improvement District (BID). The BID is required by State law to be authorized annually. As such, it is not possible under state BID law to implement capital projects that extend longer than one year. Traditionally, funds generated from Business Improvement Districts are used for marketing, promotions, maintenance, and beautification of business districts. Although the BID is an active participant in many issues related to downtown businesses (i.e. transportation, parking, improvements), their legal limitations and budget restrict their ability to fund infrastructure such as parking structures or streetscape improvements. The assessments levied on businesses in the BID are based on the size, type, and location of downtown businesses. Based on a cost-benefit analysis, retailers and restaurants pay a larger assessment because they receive more benefit from the activities undertaken in the business district. For example, a small-large retailer/ restaurant would pay $225 to $450, while a small-large professional business (architect, accountant, etc) pay in the $50 to $225 range. Professional businesses pay the least since they receive less benefit from the BID. On April 27, 2015, the City Council Adopted a resolution preliminarily approving the report filed by the Palo Alto Downtown Business Improvement District Advisory Board for the Fiscal Year 2016; Adopted a resolution of intention to levy the annual assessment for 2015-2016; and Set May 18, 2015 at 7:00pm, or soon thereafter, as the date and time for the public hearing on the levy of the proposed assessments. The staff report for April 27 and related documents are available at: http://www.cityofpaloalto.org/civicax/filebank/documents/46875 Discussion Absent a majority protest at the public hearing, the Council may adopt a resolution approving the report for Fiscal Year 2016 as filed or as modified by the Council at the conclusion of the public hearing. The adoption of the resolution constitutes the levying of the BID assessments for Fiscal Year 2016. The staff report (April 27, 2015) describes the actions related to the BID re- authorization, and includes report of the Palo Alto Downtown Business and Professional Association (PADBPA) to the City Council (included separately here as Attachment A). Attached is the Council Resolution approving the BID for Fiscal Year 2016 including City of Palo Alto Page 3 required exhibits (Attachment B). As per the agreement that the City and PADBPA have entered, the City has certain responsibilities as it pertains to the invoicing and collection of BID revenues. In prior years, staff from the Planning & Community Environment and Administrative Services Departments have been involved in the collection of BID assessments by setting fees, creating and sending invoices, and managing payment collections for the first 60 days of July. To streamline the process, reduce the staff time involved, and minimize the possibility for errors to occur, staff has explored other avenues for this invoicing and collection activity to occur. If the Council moves forward with the re-authorization of the BID in FY 2016, staff recommends that the City enter an agreement with an outside firm that can handle all aspects of the City’s responsibilities to the BID in terms of invoicing, billing, and collections. Resource Impacts Adoption of the proposed BID budget does not typically impact City revenue. BID assessments are restricted for use exclusively by the BID. It is anticipated that a healthy BID will encourage vitality in the retail community and consequently result in additional sales tax revenue for the City. Some staff effort is expended annually to administer the collection of BID revenues, but will be virtually eliminated by the new process outlined above. An informal bidding process has revealed that the billing and invoicing responsibilities of the City can be managed by Muni Services, LLC for approximately $8,500. The cost and collection of BID assessments past 60 days is borne by the BID. The Attorney's Office will continue to provide legal oversight to the BID during the annual reauthorization process. The Economic Development Manager will continue to provide oversight to the BID and will prepare the annual reauthorization. Environmental Review This action by the City Council does not meet the definition of a project under Section 21065 of the California Environmental Quality Act, and therefore no environmental assessment is necessary. Attachments:  Attachment A: PADB&PA Annual report FY 2016 (PDF)  Attachment B: RESO Confirming Rpt of BID For FY16 (PDF) 0 EATSGREAT THINGSIDEAS! FIND OUT WHAT’S BLOOMIN’ IN DOWNTOWN PALO ALTO THIS SPRING There are dozens of great places to shop and eat and thousands of great ideas being generated every day. Only in downtown Palo Alto. Palo Alto Downtown Business Improvement District 2015 -1 6 Annual Report Prepared for: Palo Alto City Council Prepared by: Russ Cohen, Executive Director, Palo Alto Downtown Business and Professional Association 1 Introduction This report from the Advisory Board of the Palo Alto Downtown Business & Professional Association (“PAd”) was prepared for City Council to review for the annual reauthorization of the Downtown Palo Alto Business Improvement District (“BID”) pursuant to Section 36533 of the Parking and Business Improvement Law of 1989 (Section 36500 and following of the California Streets and Highways code) (the “Law”). This report is for the proposed fiscal year for the BID commencing July 1, 2015 and ending June 30, 2016. (“Fiscal Year 2016-16”). As required by the Law, this report contains the following information: I. Any proposed changes in BID boundaries and benefit zones within the BID; II. The improvements and activities to be provided for Fiscal Year 2015-16; III. An estimate of the cost of providing the improvements and the activities for Fiscal Year 2015-16; IV. The method and basis of levying the assessment in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for Fiscal Year 2015-16. V. The amount of any surplus or deficit revenues to be carried over from a previous fiscal year. VI. The amount of any contributions to be made from sources other than assessments levied pursuant to the Law. Submitted by Brad Ehikian, Chair, and Russ Cohen, Executive Director on behalf of the Advisory Board (“Advisory Board”) of the Palo Alto Downtown Business & Professional Association (“PAd”). The Advisory Board approved this report on April 8, 2015. Received on file in the Office of the City Clerk of the City of Palo Alto on April __, 2015. 2 Section I: BID boundaries and Benefit Zones There have been no changes in the BID boundaries or benefit zones within the BID and no changes are proposed. The current boundaries are depicted on the map below. The area of the BID is referred to as “Downtown.” 934- 9 4 4 927 932 233 281 933 - 9 3 7 943 327 1001 942 469 475 744 459 832 801 A P T 1 - 5 427-453 920912 362 370 900 838 846 471 459 835 - 8 5 5 460 815 840836 834 845 400 803 928930 931933 835 - 8 3 7 831- 8 3 3 451453 802800 810 - 8 1 6 818 - 8 2 0 828 - 8 3 0 817- 8 1 9 823 - 8 2 5 567-569 559563 536 526 100 1 101 1 - 540 483 904 912 468 918 926 537 965-971505-507 519-521 939-945 931-935 923-925518-520 539541543 515-517 809811 420 1001 1011 1010 376 370 980960 990 34 354 326 426 4 1000 448 944 471 483948952 959947925 915 933 935 425-443 451449 463-465 936-940 458 460 440 428426 527-533 543 551 510520 558-560 903 825 837 581 575940934 813-823 501-509 511-519 521-529 531-539 541-547 556 596 904 926 561-567 569 845 580 574 566 991- 997 136 610 116-122 150 535529525 542516140 102 116124 163 145 566556 167 528 643635 635 645- 685 660- 666 620 180 164 158156 624628632636 640644 617621 151-165 171-195 203 642640636 200 151 115 125 135 514 101 440 444 436432 427 425 117119 630616 208 228220 240-248 575 530- 534536540 552 177 156 201209215225 595 229231 611-623 180 508500 625-631 170 172-174 542544 538-542 552548546 541-547 230-238 734 723 721 702- 730220-244 744 701 731 755757 771 200 160 728-732 762-776740-746 250 275 270 255741 265 724 730 651 221-225227 668 707 205 201203451449 209 219 221 233235450460470 442444 400 420 430 411 425 429 185 165 181 412 250 420 245 171-169 441- 445 435-439 346344 333335 342 344 431 460 450 235530 220 220 B 222 240 514278 274270 250 545 540 251485255 271 281 300310301 581 259-267 533535537 261267 518-526 532- 536 520-526 530-536 271 281 252 270 240-248202-216 228226234238 244242 210- 216 228- 234 223-229 209215 247-259 240 232230 311-317 251 344 326 340 337339 323317 400 420 332330 314 353 355 367 305 347 265272-278 418 319 321- 341 328 330 300- 310 431401 366 436 426 #1-7 369 335 319 390 301 315 375 307-311 325330 332 1&2330 1-3 324 326316 318 373-377 416- 424 361 338 340 560 345 321325 315 529 285 555 650636 628 1-12 628 A-E 385 365 375380 345 664 325650-654 661635300 690 675 555541-549533 535-539 318-324326 352 425 439-441 435429425 415-419 405403453 461 383460 502 510 526 520 540 499 467 459 439 425 555 400 436-452 456 379 370-374376380-382 384-396 550-552 364 360 431 440-444 423 499 475 421-423 431-433 432428 460-476 450 635 446 430 400 745 720706 385744734 724-730 720712704 360 351 315737 332 300 653-681 683685 512 501619 609605 518 482486496 610 630 455 400 651-687 543-545 532534 542544 550 552 554556 558560562564 635-6 643-6 470 313 334 333 325326 342 303301 229 336 308 310 312 316 318 311 331 315 319 317 321 335 228220 356-360 347-367 351 357 369-379360 258-296 350 210 204 302- 316 379310 320 328 332 340 437 412 311 A-B 404 313 325 327 333 407 401385 411 452 378-390 360 - 1A - 1C360 - 2A - 2C360 - 3A - 3C360 - 4A - 4C360 - 5A - 5C360 - 6A 344-348 418420 482 328 456 321 325 330204218 236 240 250-252 477 475 467 457 453249235225221 201 60 275 505-509 239-243209-213 210-214 513-519 460 474472228- 230 535 558 201 1612 20 209 215 223 231 521 80 239-245 530-540 544-554 212- 216 218-222 333 335-337 351 457451 465463 489-499360 530 480 420 430 480 463 451443437411405 419405401 441 480-498 347 351 355 359 525 430 473 332- 342 425415 400 570568 556 550 543 327321315305 343 515 525 551 555 328 309-311 518-528 536-540 552-554 558-562 573 A-E 591-599 557-571 330-332 318-320 406-418 417 542548568 524 550 500-528 578 564 550 546 540 530 531-535 541 505 525 537 555 565 571530 619-6 520 440-446 579 567 523610 600 555 581 420-438 437 566 224 228 A-F 244 579 575 565 559 251 355 A-J 335329604 576 566 345-347 243245 25725920921922723502 505 610-616 727 678 676 674672 642 636-638 567 555 711 701705 725 525 759 730718 734 738-740 760 746-750 701 721-7 600 827 835 899 850 530 609 759 7517537737-62611 601 600 1013 10041000 1006 1001 623 137 145 700 780 790 744 111700 753100 825805 33 51 75 63 841 44 675 49 41 711 799 703 100 101 139654 625 160 1001 1005 1009 1010 1004 930 975945929931 948 181 940 960 145900 955 999875 853 925 81 855 901-907 909 87 98 917 921 925 735 849 707 847 842828 820248 230-232 212 825 829833 839 800 812818 882 165831 801 815 809801 841 791153 718 774 761 795745 201 209 834836 845 895 926 190 934 942 948 203 209 219 225 929200 240 904 910 926 270 935 904 909909A 217 222 148 171 421 130 312 318 324 317 301 186 192 323 329 151 325 329 334 131 129 355301 235 258 212 163 115 291247 210 201 207 64 202 235 251249 252 247 244250 177220 261 251-257 205245 231225213205 70 2206 234240 183 251 270 241-247 215- 237 210-216 219 235 62 202 245 54 52 50 203 215 221 313-317318 220- 224 238 542-550 531-539 532 759 223-239 905 911-917907 188190 251- 293 202206208 210 212 216 220 1008 275 539 201 400 27 168 865857 302 324 340 795 848 918 903903A 408412 440 483A - F 435 751 735 745 532 210 727 733 335 328 330 345 214 350 800 806 441 441A 230302306308312316 301 303 305 307 309 325 251 807 821 829 801 818-824 420 424 430 832A 832 842A 842 852A 852 862A 862 872A 872 351A 351 355A 355 359A 359 363A 363 367A 367 425 911 943 951 918 936 940 944 271 253 241 301 319 919A919 935 949 928 936 940-946 353 264 367 361 310 1005 1010 423425413 - 419 457-467 469-471473-481 454 729 A-D 733-743 734-740 724-732 936 824-828 920 949 943941 715 95 445 324 328 545 590 425447 827 565585595 904 315 507 561 706 536 200 100 280-290 150 158164 276 516 698 161 159 157777 132 127 180 528 120 247 372 524 548550 538 152 345 336 515 658 227 27 29 539 115 135 321 558 #200-202 558 #C & D 965 140 350 808 915 461 435433 945 1012 421 727 A-C 218 255 206 739 260 840 650 642 351 451 551 375 530 643 415 12 700 802 99 89 87 901 560564568572576580584588592594 906908 910912914 916918920 922924 548 423 668 901 305 -313 423 405 352354 611 320322 346 323 471 484 528 426 264 430 1001 508 756 -760 940 930 544546 515 7 745 7 549 211213 151 160 257 433-457 482 330 349 401 539 440 691 755 67 312 202 651 443445 447 716 218 398 998 262 335 218 640-646506 327 469 303 401 403 254 401 91 40 101 819 301 725 595 705 541 Quarry Road Homer Avenue Lane 8 West Medical Foundation Way Lane 7 West Lane 7 East Encina Avenue El Camino Real Urban Lane Wells Avenue Forest Avenue High Street Emerson Street Ch a n n i n g A v e n u e Alma Street El Camino Real Mitchell Lane Everett Avenue Lytton Avenue Lane 15 E High Street Alma Street Bryant Street Lane 6 E Lane 11 W Lane 21 High Street Gilman Street Hamilton Avenue University Avenue Bryant Court Lane 30 Florence Street Kipling Street Tasso Street Cowper Street Everett Avenue Waverley Street Cowper Street Webster Street Everett Court Lytton Avenue Lane A West L L La Addison Avenue Forest Avenue Downing Lane Homer Avenue La Lane 39 Lane 56 Hamilton Avenue Webster Street Waverley Street Kipling Street Bryant Street Ramona Street Addison Avenue Scott Street Webster Street Cowper Street Addison Avenue Channing Avenue Ramona Street Paulsen Ln Lane 15 E Lane 20 W Lane 20 E University Avenue CalTrain ROW Emerson Street Waverley Street Kipling Street Bryant Street Ramona Street Palo Road ay Pear Lane Lane 12 W Lane 5 E Everett Avenue Homer Avenue Emerson Street talm Dr iv e Alma Street Lytton Avenue This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend abc Zone A (Ground Floor) - Zone B (Upper Floors) abc Zone B 0'500' Downtown Palo AltoBusiness ImprovementDistrictArea Map CITY O F PALO A L TO INC OR P ORATE D C ALIFORN I A P a l o A l t oT h e C i t y o f AP RIL 16 1894 The City of Palo Alto assumes no responsibility for any errors ©1989 to 2012 City of Palo Alto rrivera, 2012-04-30 16:57:54CPA BID (\\cc-maps\gis$\gis\admin\Personal\rrivera.mdb) 3 Downtown Palo Alto: A snapshot Methodology: Ratio estimates based on one time data collection through quick probability samplings considered a “windshield survey.” Margin of error is estimated to be 10-15%. At a glance, there are approximately 88 restaurants and 72 retail establishments. 13 national chain restaurants or franchises exist amongst 75 privately owned restaurants. Amongst retail, there are approximately 21 national retailers and 51 independently owned stores. Summary of findings: Many perceive that there is a preponderance of restaurants vs. retail, but in reality the mix is quite balanced. That is also true for the number of chains vs. the number of independently owned businesses—it’s clear that there is much more in the way of independently owned businesses than chain or franchised businesses—thus breaking the commonly held perception of downtown being dominated by chains and restaurants. 2 Section II: 2014-15 Year in Review and Planned Activites for Fiscal Year 2015-2016 “Keeping Downtown Palo Alto Safe, Spotless and Successful. Creating a spotless downtown. The sidewalks downtown are steam cleaned once per month with powerful equipment that helps remove stubborn stains like chewing gum. (For the record, individual businesses can sweep but are prohibited from using water to “hose down” the sidewalks, as that debris will flow directly to the bay. Steam cleaning is the most effective and the most environmentally responsible method.) These methods are an improvement over years past. These increases in frequency along with better equipment and the help of the Downtown Streets Team, (founded by The Palo Alto Downtown Business and Professional Association in 2004) help to keep downtown Palo Alto “spotless.” Working in conjucntion with the city fo Palo Alto Public Works Division, other projects, like the repainting of the University Avenue tunnels, for example, (photos below) have served as a great improvement for those entering the downtown from, in particular, Caltrain. 3 Creating a safe downtown. The Palo Alto Downtown Business and Improvement Association also administers the standing committee known as the Downtown Parking Committee, a committee charged with oversight of the funds and activities associated with the garages. As a reminder, in addition to the association fees, many merchants in the downtown district also contribute fees to the downtown parking district which helped fund the building of the parking garages downtown (an ongoing cost) and fund the ongoing maintenance of the garages at an approximate cost of $1million each year. The garages are patrolled by the Palo Alto Police Department and outreach efforts by the Downtown Streets Team—both are currently funded by these fees. The return of dedicated patrols downtown with two officers assigned to the beat also ensure a presence downtown that helps deter crime and provides rapid response to downtown incidents was initiated two years ago and this year, the number of dedicated officers was increased to four. 4 Creating a destination. Keeping downtown a great place to do business, whether you are a retailer, restaurant, start-up or a one- person office is our mission. There was a time before the existence of the business association that downtown was not a thriving, vibrant place to do business. Today, it is abuzz with activity due in some part to the efforts of the Palo Alto Downtown Business and Professional Association. Making certain that downtown is its own unique brand, one that differentiates itself from any other downtown, is an area of focus for The Association. Creating this brand comes from not only ensuring an attractive downtown, but one that doesn’t mind tooting its own horn. 5 6 Creating an environment that is business friendly. The Palo Alto Downtown Business and Professional Association provides a conduit to leaders and staff at city hall. We don’t work for the city of Palo Alto; we work with it on behalf of all the business located downtown. From helping to develop public policy regarding public parking to smoking in downtown parks to noise ordinances to issues surrounding outdoor dining, we are a stakeholder with a voice that can be heard amongst other stakeholders and Palo Alto’s civic leaders. The “Downtown Crown” as presented to each business that chooses to open downtown. 7 PROJECT STATUS EXPECTED COMPLETION Beautification and Safety Monthly sidewalk cleaning Worked with the City to increase frequency and improve equipment used for sidewalk cleaning. Ongoing Public Art: Downtown Tunnel Light and sound Project In conjunction with Palo Alto Public Arts Commission. Exec. Dir. will serve on review committee. Project awarded. Possible installation in June 2015 June 15 Downtown Ambassador Program PAd continues to explore sponsorship of “ambassadors” with the Downtown Streets Team, with individuals who would be able to provide information regarding Downtown and direction to visitors. Funding being sought. Seeking funding. Meetings have commenced Downtown Streets Team Business Advisory Council PAd continues to explore ways to raise awareness of the benefits of donating to social services organizations rather than to give directly to panhandlers. The Business Advisory Group is working with DST to develop a public awareness campaign TBD Downtown gateway feature Development of feature to mark entrances to Downtown being considered Meetings have been postponed until further notice Camera installation in garages Waiting for the city of Palo Alto to install equipment in CDC as to be consistent with further installations Under development Administration Yearly audit Annual required financial statement audit and tax return completed by independent accounting firm. In progress for 2014-‐15 Annual database update Annual census of new and departed businesses within Downtown in progress. In progress for 2015 Annual invoices Separate communications from PAd added to all City invoices, including separate welcome letter for new businesses. Scheduled for July 1, 2015. RFP going out for outsourcing of this service Membership Communications and programming Downtown Palo Alto Walking Maps Update of merchants and locations is complete; contents In conjunction with the San Mateo/Silicon Valley Visotirs Bureau, Pad will be developing a printed and interactive walking map. Pending data transfer Accepted funding through San Mateo County Convention 8 Bureau “Made in Downtown Palo Alto” Magazine Magazine devoted to Downtown businesses under development. Partial issue was released during the Palo Alto Institute Film Festival in October 2012, but full issue remains to be released. When complete, it will be available for free distribution at Downtown businesses. Under development as another communications vehicle Media Coverage The past fiscal year has seen at least 15 articles, citations, listings or other references in media outlets. Ongoing Facebook presence Photos, posts and calendar items are all included in facebook content. The facebook presence also provides “friends” with updates on new and departing businesses as well as events and activities in the Downtown Ongoing Twitter Account launched Jan 13 Ongoing Events Holiday Tree Lighting 2014 tree lighting occurred on November 30. The 2015 lighting is currently scheduled for November 30 to coincide with Small Business Day Scheduled for Nov 30 World Music Day PAd is involved with this annual Father’s Day event through assistance with securing insurance for the event and providing outreach to the Downtown business community regarding street closures and ways to participate in the event. Scheduled for June 16 “The Downtown Crown” At the grand opening of each new Downtown business, PAd welcomes the business to the district by presenting a crown. Ongoing Breakfast Roundtable Breakfast roundtables have been held in the past. One was entitled, “Let the brainiacs of Silicon Valley improve your downtown business” and featured three local startups, Euclid Elements, FiveStars loyalty and Google interior mapping. Another featured parking experts from San Francisco and Redwood City. 2015 will bring another with a subject relevant to the district Ongoing. New series under consideration Downtown Parking Committee PAd is actively involved in ensuring the Downtown parking assessment district is running effectively. It engaged in considerable outreach with Downtown neighbors regarding impacts including the development of a pilot RPP program. PAd continues to be involved with ongoing Downtown parking studies, working with City staff and working on outreach to Downtown business and property owners. Ongoing Concert Series sponsorship Pad brought live music back to downtown in 2014 with its noontime summer concert series. PAd is currently building relationships and seeking underwriters to resume its outdoor concerts Downtown. To date, we have been successful and anticipate a robust concert series with top notch talent Under development for 2015. Venue change to King Plaza, Sponsorships being sought Event outreach PAd provides continuous member outreach regarding street closures, special events, construction impacts, transportation studies, traffic disruptions and more. Ongoing Completed Projects 2011-‐present 9 Cogswell Park rehabilitation Worked with the City to initiate the rehabilitation project and provided input on design. Grand re-‐opening was December 12, 2012. Wi fi zone added with funding help from PAD Complete Dec-‐12 and 13 University Ave. Tunnel rehabilitation Worked with the City to initiate new paint, water proof sealing and cleaning along with some new signage to brighten and provide a more welcoming entrance to Downtown. Art coming. See Mural project below. Complete Dec-‐12 Cogswell Park wi-‐fi hot spot Contributed funds to pilot free wi-‐fi hot spot program at Cogswell Park; assisted TopCorner.org with fundraising. Complete March -‐13 No Amplified Music Ordinance for Lytton Plaza and Cogswell Park In response to PAd member complaints, worked with the City to draft language and provide outreach to Downtown community. Ordinance is now in effect. Complete Jan-‐13 Operation Flagpole: an initiative to decorate University Ave with flags for special occasions Holes installed as part of the University Ave landscaping improvements. Palo Alto Rotary and the University Rotary Club funded and volunteered to assemble, install and remove flags each national holiday Complete July – 13 and ongoing University Avenue landscape and irrigation rehabilitation Working with the city of Palo Alto on outreach to business community to add awareness and address concerns on scheduled improvements. Began the first of 9 phases of 1-‐2 weeks each on Feb 7. Work completed. Complete Apr-‐13 Public Art: Aurora installation at King Plaza PAd worked with the Pal Alto Arts Commission to move this installation to King Plaza. Fundraising, website and print material distribution involving, among others, the Black Rock Art Foundation. Complete Nov -‐13 Seasonal lamp post banner design Expectation of expanding the program to include a greater variety of banners and more frequent replacement. Additional funding will come from private public partnerships. Complete Spring 13 and Summer 13 , Holiday 13 Spring /Summer 14 complete Lytton Plaza To make Lytton Plaza more welcoming, umbrellas have been added to outdoor seating. A partnership with the Friends of LP has funded the effort. Foliage has also been added to enhance the plaza. Complete. Spring 14 Sleeping in Vehicles subcommittee Served on the committee to develop a pilot program with the faith community to address this issue. Ordinance on hold. Complete and then put on hold pending out of state litigation No smoking ordinance for Lytton Plaza and Suggested new ordinance to City staff as a result of PAd member complaints. Ordinance approved by city council. Complete June-‐13 10 Cogswell Park In effect as of June 13 Palo Alto Downtown Business and Professional Association re-‐ branding Re-‐branding began in fiscal year 2012-‐2013 to increase visibility to members within Downtown and to create a recognizable brand to Downtown visitors. Logo redesign and initial implementation were completed in October 2012. New website, facebook and other branded media complete and in the pipeline Complete Oct-‐12 “Made in Downtown Palo Alto” Rewards Card Launched in partnership with FiveStars, Inc. in late 2012. Currently, over [20] Downtown businesses are participating. Thousands of cards have been distributed. Complete and ongoing Website redesign Board authorization given for ED to proceed with development. Complete Dec 13 Outdoor dining In conjunction with the City, PAd hosted a meeting on March 18 and in April with Downtown restaurant owners to provide information regarding encroachment permit requirements for outdoor dining. Efforts to facilitate compliance with City ordinances will be ongoing. Complete June-‐13 Enforcement to begin as of 10/13 Concert Series sponsorship PAd has brought back outdoor concerts Downtown. Complete Summer 14. Under development for 2015 11 Section III. Budget for 2015-16 The total funds available for activities for this fiscal year are estimated to be $148,000. The budget for providing the activities is set forth as follows: BID 2015/16 Budget INCOME Total Non-Assessment Sources Assessments $175,000 Allowance for Uncollectible Assessments ($35,000) Other Revenue $57,000 $57,000 TOTAL INCOME $197,000 $197,000 EXPENSES Operating Expenses Staff Salaries Executive Director Salary & Benefits $72,600 Payroll taxes and expense $7,260 Office Supplies & Expenses $150 Internet/Website Maintenance $500 Telephone 0 Rent $7,200 Reauthorization Advertising $2,650 Audit-Tax Returns $5,700 Legal $1,000 $1,000 Insurance - Liability $2,300 Workman's Comp $800 Nominating $1,500 Contingencies $2,000 Subtotal -- Operating Expenses $103,660 $1,000 Programs, Marketing and Events Seasonal Banners $24,000 $16,000 Location Specific Banners $6,000 Summer Concert Series $40,000 $40,000 Events $3,500 Outreach & Communication $1,250 $1,000 Downtown Streets Team $5,000 District Opportunity Reserve $13,590 Subtotal --Programs, Marketing & Events $93,340 $56,000 TOTAL EXPENSES $197,000 $57,000 12 Section IV: Method and Basis of Levying the Assessment Cost Benefit Analysis / Bid Assessments The method and basis of levying the assessment is provided in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for Fiscal Year 2015-16 and is not changed from the FY 2014-15 assessment. There have been no changes made to the Cost-Benefit Analysis or to the BID Assessments since they were approved by City Council on February 2, 2004. The method of calculation used to determine the cost and benefit to each business located in the BID is described below. The BID assessments are based on three criteria: the type of business, the location of the business and the size of the business. It has been consistently demonstrated that the typical BID program places a higher priority on activities such as commercial marketing. As a result, the retail and restaurant establishments in the BID are assessed more than service and professional businesses in the district. While service-oriented businesses benefit from a BID less than retailers and restaurateurs, they benefit more than professional businesses such as medical, dental, architectural, consultant and legal offices with their minimal advertising and promotion needs. For these reasons, various business types are assessed according to the benefit that they receive from the BID, as follows: ! Retail and Restaurant 100% of base amount ! Service 75% of base amount ! Professional 50% of base amount Exceptions to this rule include financial institutions that are traditionally charged a flat rate regardless of location or size and lodging businesses that are typically charged by total rooms. The location of a business also determines the degree of benefit that accrues to that business. Centrally located businesses tend to benefit more, as do businesses located on the ground floor. For this reason, A and B benefit zones have been identified for the BID. In Palo Alto, Zone A benefit businesses are assessed 100% of the base benefit assessment while Zone B businesses are assessed 75%. A third criterion is used in the BID to determine benefit. This criterion, the size of the business, takes into consideration the number of full time employees employed by the business. Please refer to Attachment 1 for a more complete understanding of the application of these three variables to establish BID benefit. Attachment 2 is the BID assessment for each business located within the BID boundaries. Applying the criteria identified in Attachment 1, a summary of the assessment that applies to each business by size, 13 type and location is outlined. In addition to the Cost-Benefit Analysis, the assessments include the following criteria: ! An exemption for “single person professional businesses” that have 25% or fewer full time equivalent (“FTE”), including the business owner. This covers employees who work less than 10 hours a week (based on a 40 hour work week; an FTE equals approximately 2000 hours annually) ! An assessment specifically for “single person businesses” that have 26% FTE to 1 FTE in the professional business category of the BID (An FTE equals approximately 2000 hours annually) ! The tiering of other professional businesses by size based (according to benefit) on the “single person business” criteria This outline provides information by which a business can determine its annual assessment based on objective criteria. Except where otherwise defined, all terms shall have the meanings identified below: Definitions of Business Types in the Downtown Business Improvement District Retailers and Restaurants: Businesses that buy or resell goods such as clothing stores, shoe stores, office supplies as well as businesses that sell prepared food and drink. Service Businesses: Businesses that sell services such as beauty or barber shops, repair shops, most automotive businesses, dry cleaners, art and dance studios, printing firms, film processing companies, travel agencies, entertainment businesses such as theatres, etc. Hotel and Lodging: These include businesses that have as their main business the lodging of customers. This is restricted to residential businesses that provide lodging services to customers for less than 30 days. Professional Businesses: Businesses that require advanced and/or specialized licenses or academic degrees such as architects, engineers, attorneys, chiropractors, dentists, doctors, accountants, optometrists, realtors, insurance brokers, venture capital firms, consultants, advertising and marketing professionals and mortgage brokers and similar professions. Financial Institutions: Includes banking, savings and loan institutions and credit unions. Additional clarification on business definitions will be defined according to Section 18.04.030 (Definitions) of the Palo Alto Municipal Code. The Advisory Board recommends that the following businesses be exempt from the BID assessment: ! New businesses established in the BID area following the annual assessment for the year in which they locate in the BID area ! Non-profit organizations ! Newspapers ! “Single person professional businesses” that have 25% or less FTE, including the business owner 14 The Assessment calculated shall be paid to the City no later 30 days after receipt of the invoice with the amount of the annual assessment sent by the City. A second notice will be mailed as a reminder to businesses that have not remitted payment by that date. Late payment will be subject to a 10% late fee. Section V: Non-assessment Income It is estimated that $57,000.00 will be raised in fundraising, and sponsor support. Additionally, we anticipate in kind contribution towards expenses for Fiscal Year 2014-15. Projected Income for Fiscal Year 2015-16 Legal (donation) $1,000 Banners $16,000 Summer Concert Series $40,000 Outreach & Communication $1,000 Total $57,000 15 Section VI: PAd Board of Directors by Business Type Retailers and Restaurants Georgie Gleim, Gleim the Jeweler Alex Giovanotto, Joya Travis Nichols, Keen Garage Susan Graf, Susan Graf Service Businesses Robert Peterson, Peterson Architects Hospitality Barbara Gross, Garden Court Hotel Financial Institutions Ali Agah, Boston Private Bank & Trust Company Katie Seedman, Presidio Private Bank and Trust Professional Organizations Brad Ehikian, Premier Properties Patty McGuigan, Cornish & Carey Commercial Michael Lee1, Palantir Sheila Liskar, Palo Alto Laser Skin Care Non Profit Organizations Chris Richardson, Downtown Streets Team Phil Carter, Palo Alto Farmer’s Market COMMUNITY PARTNERS Palo Alto Chamber of Commerce Judy Kleinberg, President & CEO Downtown Streets Team Eileen Richardson, Executive Director City Of Palo Alto Eric Filseth, Palo Alto City Council Thomas Fehrenbach, Manager of Economic Development Attachment 1 ATTACHMENT 1 A General Statement Regarding Cost-Benefit Analysis For BID Businesses Using The Traditional Three Criteria Formula Criteria 1) Type of Business: Statement Concerning Cost-Benefit Formula For BID Businesses Regarding Type Of Business: In a review of 200 California Business Improvement Districts, it is consistently demonstrated that the typical BID Program places a higher priority on Commercial Marketing Programs than on Civic Beautification and Commercial Recruitment Programs. With that trend in mind, retail and restaurant businesses, with their emphasis on, and need for, commercial marketing, are traditionally assessed more than less marketing-sensitive service-oriented or professional-oriented businesses. However, while service-oriented businesses benefit from a BID less than retailers and restaurateurs, they benefit more, (from commercial marketing programs), than professional businesses such as medical, dental and legal offices with their minimal advertising and promotion needs. Therefore, set forth below, is an example of how various business types might be considered regarding the computation of the annual benefit assessment. • Retail and Restaurant: 100% of base amount • Service: 75% of base amount • Professional: 50% of base amount Exceptions to this rule include financial institutions that are traditionally charged a flat rate regardless of location or size and lodging businesses that are typically charged by total rooms. Lodging businesses are assessed based on the total number of rooms because it is a more equitable manner of determining size. Many lodging businesses have many part time employees, but revenues are based on the room occupancies of the hotel, not the goods sold or serviced provided by employees. Criteria 2) Location of Business: Statement Concerning Cost-Benefit Formula For BID Businesses Regarding Location of Business: It has also been consistently demonstrated that the more centrally located businesses tend to benefit from BID activities and services to a greater degree than businesses located toward the periphery of the proposed BID boundaries. Events and activities tend to originate in the central core of the Downtown area and spread benefit to the outer areas with diminishing energy and impact, much like the ripple effect of a stone tossed into a body of calm water. Furthermore, ground floor businesses tend to benefit to a greater degree than businesses located in upper floors. Therefore, in some cases, a new BID's annual benefit assessment formula also takes these street level criteria into account. As mentioned above, special events, fairs, festivals and other activities tend to take place within, or along, the Main Street core rather than in the areas at the periphery of the Downtown core. Additionally, BID-sponsored seasonal decorations, public art projects, street banners and street furniture tend to be located within the immediate core area. Attachment 1 Therefore, businesses located within the most central area of the proposed BID are considered to be within "Zone A" which should be considered the primary benefit zone. There is typically a "secondary zone" or "Zone B" within most proposed BID areas. This area receives less benefit than Zone A and should be assessed accordingly. An example of how different zones might be treated regarding the computation of the annual benefit assessment is as follows. • Zone A: 100% of base benefit assessment • Zone B: 75% of base benefit assessment In the case of Downtown Palo Alto, it is recommended that all Zone A upper floor businesses, as well as any other businesses located at the periphery of the proposed BID, be considered as Zone B businesses. Please refer to the map in Attachment I. Criteria 3) Size of Business: Statement Concerning Cost-Benefit Formula For BID Businesses Regarding Size of Business: In approximately 50% of newly established BIDs, a third assessment criterion is used. This criterion involves the size of each individual business that is based upon the businesses’ total number of full-time employees. Full-time employees are those working a total of 2,000 hours per year. Part-time employees are grouped into full-time job positions, i.e., two half-time employees total one full-time. Fractions are rounded down to the nearest whole number with no less than one person as a minimum for business. An example of how various business sizes might be treated regarding the computation of the annual benefit assessment is as follows: Retail/Restaurants Service Businesses Small 50% of base amount Under 6 FTE* Under 4 FTE Medium 75% of base amount 6 to under 11 FTE 4 to under 7 FTE Large 100% of base amount 11 or more FTE 7 or more FTE * FTE = full time employees Additionally, an exemption was established for “single person professional businesses” that have 25% or less FTE, including the business owner. This covers employees who work less 10 hours a week (based on a 40 hour work week) Since “single person businesses” that have 26% FTE to 1 FTE in the professional business category of the BID benefit the very least from the assessment, their assessments have been tiered by size based (according to benefit) on the new “single person business” criteria. Attachment 1 ATTACHMENT 2 Downtown Palo Alto Business Improvement District Annual BID Assessments ZONE A ZONE B (75% of Zone A amount) Restaurants & Retailers Under 6 FTE (50% of base amount) $225 $170 6 to under 11 FTE (75% of base amount) $340 $260 11 or more FTE (100% of base amount) $450 $340 Service Businesses Under 4 FTE (50% of base amount) $170 $130 4 to under 7 FTE (75% of base amount) $260 $200 Over 7 FTE (100% of base amount) $340 $260 Professional Businesses 25% or fewer FTE, including owner (0% of base amount) Exempt Exempt 26% FTE to under 1 FTE (25% of base amount) $60 $50 2 to 4 FTE (50% of base amount) $110 $90 5 to 9 FTE (75% of base amount) $170 $130 10+ FTE (100% of base amount) $225 $170 Lodging Businesses Up to 20 rooms (50% of base amount) $225 $170 21 to 40 rooms (75% of base amount) $340 $260 41+ rooms (100% of base amount) $450 $340 Financial Institutions $500 $500 Note 1: For retail, restaurant, service, and professional businesses, size will be determined by number of employees either full-time or equivalent (FTE) made up of multiples of part-time employees. A full FTE equals approximately 2000 hours annually. Lodging facilities will be charged by number of rooms available and financial institutions will be charged a flat fee. Note 2: Second floor (and higher) businesses located within Zone A will be assessed the same as similar street-level businesses located within Zone B. Note 3: Assessment amounts are rounded to the nearest ten dollars. The minimum assessment will be $50.00. Not Yet Approved Resolution No. ______ Resolution of the Council of the City of Palo Alto Confirming the Report of the Advisory Board and Levying an Assessment for Fiscal Year 2016 on the Downtown Palo Alto Business Improvement District THE CITY COUNCIL OF THE CITY OF PALO ALTO HEREBY FINDS, DECLARES, AND ORDERS AS FOLLOWS: SECTION 1. The Parking and Business Improvement Area Law of 1989, California Streets and Highways Code Sections 36500 et seq. (the “Law”), authorizes the City Council to levy an assessment against businesses within a parking and business improvement area which is in addition to any assessments, fees, charges, or taxes imposed in the City. SECTION 2. Pursuant to the Law, the City Council adopted Ordinance No. 4819 establishing the Downtown Palo Alto Business Improvement District (the "District") in the City of Palo Alto. SECTION 3. The City Council, by Resolution No. 8416, appointed the Board of Directors of the Palo Alto Downtown Business & Professional Association, a California nonprofit mutual benefit corporation, to serve as the Advisory Board for the District (the "Advisory Board"). SECTION 4. In accordance with Section 36533 of the law, the Advisory Board prepared and filed with the City Clerk a report entitled "Downtown Palo Alto Business Improvement District, Annual Report 2015-2016” (the "Report”), and, by previous resolution, the City Council preliminarily approved such report as filed. SECTION 5. The boundaries of the District are within the City limits of the City of Palo Alto (the "City") and encompass the greater downtown area of the City, generally extending from El Camino Real to the West, Webster Street to the East, Lytton Avenue to the North and Addison Avenue to the South (east of Emerson Street, the boundaries extend only to Forest Avenue to the South). Reference is hereby made to the map of the District attached hereto as Exhibit "A" and incorporated herein by reference for a complete description of the boundaries of the District. SECTION 6. The City Council has adopted a Resolution of Intention, Resolution No. 9505 declaring its intention to levy and collect an assessment for fiscal year 2016 against the businesses in the District. SECTION 7. Following notice duly given pursuant to law, the City Council has held a full and fair public hearing regarding the levy and collection of an assessment within the District for fiscal year 2016. All interested persons were afforded the opportunity to hear and be heard regarding protests and objections to the levy and 150501 jb 0131337 1 Not Yet Approved collection of the assessment for fiscal year 2016. The City Council finds that there was no majority protest within the meaning of the Law. All protests and objections to the levy and collection of the assessment and any and all protests and objections are hereby overruled by the City Council. SECTION 8. Based on its review of the Report, a copy of which has been presented to the City Council and has been filed with the City Clerk, and other reports and information, the City Council hereby finds and determines that (i) the businesses in the District will be benefited by the expenditure of funds raised by the assessment (ii) the District includes all of the businesses so benefited; and (iii) the net amount of the assessment levied within the district for the 2016 fiscal year in accordance with the Report is apportioned by a formula and method which fairly distributes the net amount in proportion to the estimated benefits to be received by each such business. SECTION 9. The City Council hereby confirms the Report as originally filed by the Advisory Board. New businesses established in the District after the beginning of any fiscal year shall be exempt from the levy of the assessment for that fiscal year. In addition, non-profit organizations, newspapers and professional "single-person businesses," defined as those businesses which have 25% or less full time equivalent employees, including the business owner, shall be exempt from the assessment. SECTION 10. The Adoption of this resolution constitutes a levy of an assessment for the fiscal year 2015 (commencing July 1, 2015, and ending June 30, 2016). The assessment formula, including the method and basis of levying the assessment, is set forth Exhibit “B” attached hereto and incorporated herein by reference. New businesses established in the District after the beginning of any fiscal year shall be exempt from the levy of the assessment for that fiscal year. In addition, non-profit organizations, newspapers and professional "single-person businesses," defined as those businesses which have 25% or less full time equivalent employees, including the business owner, shall be exempt from the assessment. SECTION 11. The City Council hereby declares that the proposed uses of the revenues derived from the assessments levied against the businesses in the District are for the following facilities and activities: The types of improvements to be funded by the levy of an assessment against businesses within the District are the acquisition, construction, installation or maintenance of any tangible property with an estimated useful life of five years or more. The types of activities to be funded by the levy of an assessment against businesses within the District are the promotion of public events which benefit businesses in the area and which take place on or in public places within the District; the furnishings of music in any public place in the District; and activities which benefit businesses locating and operating in the District. // // 150501 jb 0131337 2 Not Yet Approved SECTION 12. The Council finds that the adoption of this resolution does not meet the definition of a project under Section 21065 of the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: __________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: __________________________ _____________________________ Senior Assistant City Attorney City Manager _____________________________ Director of Administrative Services 150501 jb 0131337 3 934 - 9 4 4 927 932 233 281 933 - 9 3 7 943 327 1001 94 2 469 475 74 4 459 832 801 A P T 1 - 5 427-453 920 912 362 370 900 838 846 471 459 835 - 8 5 5 460 81 5 840 836 834 845 400 803 928930 931 933 835 - 8 3 7 831 - 8 3 3 451453 802800 81 0 - 8 1 6 81 8 - 8 2 0 82 8 - 8 3 0 817 - 8 1 9 82 3 - 8 2 5 567-569 559563 536 526 100 1 101 1 - 540 483 904 912 468 918 926 537 965-971505-507 519-521 939-945 931-935 923-925 518-520 539541543 515-517 809 811 420 1001 1011 1010 376 370 980960 990 34 354 326 426 4 1000 448 944 471 483948952 959947925 915 933 935 425-443 451449 463-465 936-940 458 460 440 428426 527-533 543 551 510520 558-560 903 825 837 581 575940934 813-823 501-509 511-519 521-529 531-539 541-547 556 596 904 926 561-567 569 845 580 574 566 991- 997 136 610 116-122 150 535529 525 542516140 102 116124 163 145 566 556 167 528 643635 635 645- 685 660- 666 620 180 164 158156 624628 632636 640 644 617621 151-165 171-195 203 642640 636 200 151 115 125 135 514 101 440 444 436432 427 425 117119 630616 208 228220 240-248 575 530- 534 536540 552 177 156 201 209215 225 595 229231 611-623 180 508500 625-631 170 172-174 542544 538- 542 552 548 546 541- 547 230-238 734 723 721 702- 730220-244 744 701 731 755757 771 200 160 728-732 762- 776740-746 250 275 270 255741 265 724 730 651 221-225 227 668 707 205 201203 451449 209 219 221 233235450 460470 442 444 400 420 430 411 425 429 185 165 181 412 250 420 245 171-169 441- 445 435- 439 346344 333335 342 344 431 460 450 235530 220 220 B 222 240 514278 274270 250 545 540 251485255 271 281 300 310 301 581 259-267 533535537 261 267 518-526 532- 536 520-526 530-536 271 281 252 270 240-248 202- 216 228226 234238 244 242 210- 216 228- 234 223- 229 209215 247-259 240 232230 311-317 251 344 326 340 337339 323317 400 420 332330 314 353 355 367 305 347 265272-278 418 319 321- 341 328 330 300- 310 431401 366 436 426 #1-7 369 335 319 390 301 315 375 307- 311 325330 332 1&2330 1-3 324 326316 318 373- 377 416- 424 361 338 340 560 345 321325 315 529 285 555 650636 628 1-12 628 A-E 385 365 375380 345 664 325650-654 661635300 690 675 555541-549533 535- 539 318-324 326 352 425 439-441 435429 425 415-419 405403453 461 383460 502 510 526 520 540 499 467 459 439 425555 400 436-452 456 379 370-374 376 380-382 384-396 550-552 364 360 431 440-444 423 499 475 421-423 431-433 432428 460-476 450 635 446 430 400 745 720706 385744 734 724-730 720 712 704 360 351 315737 332 300 653 -681 683 685 512 501619 609605 518 482486496 610 630 455 400 651-687 543-545 532534 542544 550 552 554556 558560562564 635-6 643-6 470 313 334 333 325326 342 303301 229 336 308 310 312 316 318 311 331 315 319 317 321 335 228220 356-360 347-367 351357 369-379360 258- 296 350 210 204 302- 316 379310 320 328 332 340 437 412 311 A-B 404 313 325 327 333 407401385 411 452 378-390 360 - 1A - 1C360 - 2A - 2C360 - 3A - 3C360 - 4A - 4C360 - 5A - 5C360 - 6A 344-348 418420 482 328 456 321 325 330204 218 236 240 250- 252 477 475 467 457 453249235225221 201 60 275 505-509 239- 243 209- 213 210- 214 513-519 460 474472228- 230 535 558 201 1612 20 209 215 223 231 521 80 239-245 530-540 544-554 212- 216 218-222 333 335- 337 351 457451 465463 489-499360 530 480 420 430 480 463 451443437411 405 419405401 441 480-498 347 351 355 359 525 430 473 332- 342 425415 400 570568 556 550 543 327321315305 343 515 525 551 555 328 309-311 518-528 536-540 552-554 558-562 573 A-E 591-599 557-571 330-332 318-320 406-418 417 542 548568 524 550 500-528 578 564 550 546 540 530 531-535 541 505 525 537 555 565 571 530 619-6 520 440-446 579 567 523610 600 555 581 420-438 437 566 224 228 A-F 244 579 575 565 559 251 355 A-J 335329604 576 566 345-347 243245 25725920921922723502 505 610-616 727 678 676 674672 642 636-638 567 555 711 701705 725 525 759 730 718 734 738-740 760 746-750 701 721-7 600 827 835 899 850 530 609 759 751753 7 737-62611 601 600 1013 10041000 1006 1001 623 137 145 700 780 790 744 111700 753100 825805 33 51 75 63 841 44 675 49 41 711 799 703 100 101 139654 625 160 1001 1005 1009 1010 1004 930 975 945929931 948 181 940 960 145900 955 999875 853 925 81 855 901-907 909 87 98 917 921 925 735 849 707 847 842828 820248 230-232 212 825 829833 839 800 812 818 882 165831 801 815 809801 841 791153 718 774 761 795745 201 209 834836 845 895 926 190 934 942 948 203 209 219 225 929200 240 904 910 926 270 935 904 909 909A 217 222 148 171 421 130 312 318 324 317 301 186 192 323 329 151 325 329 334 131 129 355301 235 258 212 163 115 291247 210 201 207 64 202 235 251 249 252 247 244250 177220 261 251-257 205245 231225213205 70 2 206 234240 183 251 270 241-247 215- 237 210- 216 219 235 62 202 245 54 52 50 203 215 221 313-317318 220- 224 238 542-550 531-539 532 759 223-239 905 911-917907 188 190 251- 293 202 206 208 210 212 216 220 1008 275 539 201 400 27 168 865857 302 324 340 795 848 918 903 903A 408 412 440 483A - F 435 751 735 745 532 210 727 733 335 328 330 345 214 350 800 806 441 441A 230302 306 308 312 316 301 303 305 307 309 325 251 807 821 829 801 818-824 420 424 430 832A 832 842A 842 852A 852 862A 862 872A 872 351A 351 355A 355 359A 359 363A 363 367A 367 425 911 943 951 918 936 940 944 271 253 241 301 319 919A 919 935 949 928 936 940-946 353 264 367 361 310 1005 1010 423425413 - 419 457-467 469-471473-481 454 729 A-D 733-743 734-740 724-732 936 824-828 920 949 943941 715 95 445 324 328 545 590 425447 827 565 585 595 904 315 507 561 706 536 200 100 280-290 150 158164 276 516 698 161 159 157777 132 127 180 528 120 247 372 524 548550 538 152 345 336 515 658 227 27 29 539 115 135 321 558 #200-202 558 #C & D 965 140 350 808 915 461 435433 945 1012 421 727 A-C 218 255 206 739 260 840 650 642 351 451 551 375 530 643 415 12 700 802 99 89 87 901 560564568572576580584588592594 906 908 910 912 914 916 918920 922 924 548 423 668 901 305 -313 423 405 352354 611 320322 346 323 471 484 528 426 264 430 1001 508 756 - 760 940 930 544546 515 7 745 7 549 211 213 151 160 257 433-457 482 330 349 401 539 440 691 755 67 312 202 651 443 445 447 716 218 398 998 262 335 218 640-646506 327 469 303 401 403 254 401 91 40 101 819 301 725 595 705 541 Qu arry Road Home r Avenue Lane 8 West Medical Foundation Way Lane 7 West Lane 7 East Encina Avenue El Camino Real Urban Lane Wells Avenue Forest Avenue High Street Emerson Street Ch a n n i n g A v e n u e Alma Street El Camino Real Mitchell Lane Everett Avenue Lytton Avenue Lane 15 E High Street Alma Street Bryant Street Lane 6 E Lane 11 W La n e 21 High Street Gilman Street Hamil t on Avenue Univ ersit y Avenue Bryant Court Lane 30 Florence Street Kipling Street Tasso Street Cowper Street Everett Avenue Waverley Street Cowper Street Webster Street Everett Court Lytton Avenue Lane A West L L La Addis on Avenue Forest Avenue Downing Lane Homer Avenue La Lane 39 Lane 56 Hamilt on Avenue Webster Street Waverley Street Kipling Street Bryant Street Ramona Street Addis on Avenue Scott Street Webster Street Cowper Street Addison Avenue Channing Avenue Ramona Street Pa ulsen Ln Lane 15 E Lane 20 W Lane 20 E Univ ersit y Avenue CalTrain ROW Emerson Street Waverley Street Kipling Street Bryant Street Ramona Street Palo Road ay Pear Lane Lane 12 W Lane 5 E Everett Avenue Homer Av enue Emerson Street ta l m D r iv e Alma Street Lytton Avenue This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend abc Zone A (Ground Floor) - Zone B (Upper Floors) abc Zone B 0'500' Downtown Palo AltoBusiness ImprovementDistrictArea Map CITY O F PALO A L TO IN C O R P O RATE D C ALIFOR N IA P a l o A l t oT h e C i t y o f A P RIL 16 1894 The City of Palo Alto assumes no responsibility for any errors ©1989 to 2012 City of Palo Alto rrivera, 2012-04-30 16:57:54CPA BID (\\cc-maps\gis$\gis\admin\Personal\rrivera.mdb) EXHIBIT A City of Palo Alto (ID # 5642) City Council Staff Report Report Type: Action Items Meeting Date: 5/18/2015 Summary Title: Cal Ave Retail Preservation Title: Discussion and Direction Regarding a Possible Ordinance to Limit Formula Retail and Other Land Uses to Preserve Ground Floor Retail Along Commercial Areas on California Avenue and some Intersecting Streets. From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that the City Council discuss desired adjustments to ground floor retail protections in the California Avenue Area, including possible adjustments to the uses allowed and the boundaries of that district. Possible direction to staff would be to prepare and ordinance to define formula retail and require a Conditional Use Permit for new formula retail uses within the CC(2)(R)(P) zoning district. Executive Summary The City Council has undertaken a number of actions to preserve ground floor retail uses in the City’s commercial districts, and has prioritized an examination of associated zoning regulations in the California Avenue Area. This report is intended to initiate that discussion and staff is seeking City Council direction regarding next steps and possible parameters of an ordinance to amend the City’s zoning code and zoning map. Issues discussed include the definition of “formula retail” uses and their relationship to the character of California Avenue, as well as possible ways to regulate such uses in the future. This report also transmits initial feedback staff received from area residents, business owners and property owners. It is anticipated that the Council will provide direction to staff to prepare an ordinance that provides greater retail and neighborhood preservation protections. Unless additional analysis and public outreach is desired at this juncture, a draft ordinance would be prepared and presented to the Planning and Transportation Commission for its recommendation and could be acted upon by the Council in late summer or early fall. Background Last September, the City Council held a study session regarding possible changes to commercial City of Palo Alto Page 1 portions of the city’s zoning code and map. When discussing California Avenue, there was interest expressed to consider the following:  Strengthening the prohibition on non-retail uses on the ground floor;  Regulating chain stores by setting a quota on “formula retail-” and  Possibly limiting the number of restaurants The purpose of this meeting is to continue that discussion and direct staff as appropriate. Since September, staff conducted some preliminary research regarding formula retail uses and held two community meetings to gain perspectives that may help guide the Council. Concerns About Neighborhood Character Palo Alto emerged from the Great Recession more quickly than most communities. As vacancy rates dropped, commercial rents increased and developers sought approval for new office buildings, renewed pressure was placed on California Avenue. This part of the city is well known for its distinctive character. Residents and business owners cherish its uniqueness and are proud that it is distinguished from other commercial centers in the community. However, many believe that California Avenue is losing its character as more tenant spaces display signs of national chain stores. Concern has also been expressed about the vulnerability of independent ‘mom and pop’ stores and their ability to maintain a presence on California Avenue with rising lease rates. Many have seen an evolution on California Avenue that is less neighborhood- serving and increasingly focused on serving workers in nearby office buildings. In addition to changes in tenancy, the city’s streetscape improvement project is nearing completion. This project includes wider sidewalks, two new plazas, street furniture and other pedestrian amenities, which are anticipated to attract more people. As California Avenue is increasingly viewed as a destination place, its popularity will increase, which may increase its appeal to national retailers. Current Regulations California Avenue is commercially zoned with a pedestrian and retail shopping combining districts (shaded portion of map below). The retail combining district or “overlay” zone permits eating and drinking, personal services and retail uses on the ground floor and financial services are conditionally permitted (use definitions provided in Attachment A). All other permitted or conditionally permitted uses in the district must be located above the ground floor. City of Palo Alto Page 2 There are existing non-retail ground floor uses on California Avenue that preceded the enactment of the combining district, which are considered legal non-conforming if legally established. Such uses may continue and be replaced with similar uses but may not expand. Areas outside the retail overlay zone are generally zoned Community Commercial (2) Subdistrict (abbreviated as CC(2) and represented by the hatched markings on the map above). Zoning regulations limit office uses on the ground floor in the CC(2), subject to exceptions in Section 18.16.050 of the code. Existing Ground Floor Land Uses California Avenue between the Caltrain Station and El Camino Real has approximately 78 businesses on the ground floor. Eating and drinking establishments make up the highest proportion of uses with 24 businesses, followed by retail (20), personal services (16) and general office (16). Attachment B includes a summary report for California Avenue and other nearby streets. Excluding two banks and an insurance company, there are approximately eight chain retailers on California Avenue including four restaurants, depending on how one defines formula retail. Two other formula restaurants are located in the vicinity. The city owns property on Cambridge and Sherman Avenues, which is currently used as surface parking lots or have parking structures. City of Palo Alto Page 3 Discussion Staff held two community meetings and conducted a questionnaire on Survey Monkey to receive community input on the topics of formula retail, restaurants and the California Avenue district boundaries. Additionally, staff researched formula retail regulations implemented in other California cities. Community Feedback It is clear from the community meetings that residents have a deep connection and identify with California Avenue. Some of these connections were established generations ago and reflect the relationships that have developed over time between property owners, store owners, customers and residents. California Avenue is a walkable district with a diversity of uses that serve the surrounding the neighborhood. Community members embrace its uniqueness and support the local businesses. Chain stores are viewed by some as a threat to the district’s character. Excessive numbers of restaurants are viewed, in part, as supporting the office workers in the area and as less resident-focused. Not all participants held as strong a view about chain stores as others, and there was very little to no support for an outright prohibition on chain stores in the district. Those that were concerned about this issue, advocated for a limit on the number of new formula retail stores, while others espoused the value of chain stores that draw more customers to California Avenue. All participants supported a diverse and vibrant district and some saw opportunities to extend the retail and pedestrian combining districts to Sherman and Cambridge Avenues, with the later generating more positive responses. Others cautioned about expanding the retail protections to other streets, favoring instead to reinforce the retail core on California Avenue. These proponents and others noted that the retail brick and mortar environment has changed significantly, in part due to online stores and low cost delivery of goods to homes. Moreover, zoning alone does not guarantee retailers will locate in all areas. Retail is a revenue sensitive business. Detailed market analysis is required to assess the appropriateness of retail in different locations. Retailers are interested in the demographics of a neighborhood, whether it has the right customers for the product or service being sold, whether other nearby retail markets draw customers away and, among other criteria, if there is room in the market to support more retail. If over regulated, some argued, the district may see vacancies, which bring other problems. Throughout the meetings there was some tension between those who advocated for more regulation to protect neighborhood character and those that favored market forces to determine appropriate businesses based on existing regulations. Many members of the California Avenue Business Association (CAABA/MOCA) attended the first meeting held in March. Sometime later, CAABA/MOCA met again without planning staff and among those voting, favored limiting any one type of use to no more than 25% of the total ground floor land uses. They also supported extending the ground floor protections to City of Palo Alto Page 4 Cambridge Avenue, connecting side streets to California Avenue and considered one side of Sherman Avenue a possibility for more regulation. Additionally, the city posted an informal questionnaire on Survey Monkey. A city representative attended the weekend farmer’s market and spoke with pedestrians on two other occasions during the week. An email was also distributed to lists the city maintains related to California Avenue. A total of 348 responses were received. The results are provided in Attachment C. One question gauged respondent’s reaction to whether there was too many, not enough, or just the right amount of certain land use types on California Avenue; here were the results: Too Many Just Right Not Enough Total Restaurants 7.23% 24 58.73% 195 34.04% 113 332 Shops (Retail) 1.22% 4 25.91% 85 72.87% 239 328 Nail/Hair Salons 48.41% 152 47.77% 150 3.82% 12 314 Financial Services 26.90% 78 64.48% 187 8.62% 25 290 Offices 42.38% 128 46.03% 139 11.59% 35 302 Independent Businesses 3.92% 12 47.71% 146 48.37% 148 306 Chain Stores (Retail) 26.73% 81 58.09% 176 15.18% 46 303 Chain Restaurants 37.95% 115 55.12% 167 6.93% 21 303 While the questionnaire results are not scientific, they are not surprisingly different from feedback received at the community meetings and through informal conversation. There is a desire to reinforce the retail environment with unique stores, allowing for some formula retail, and supported by a mix of restaurants. While hair and nail salons have their value, the desire for more of these establishments is extremely limited and perhaps has exceeded the desired balance. Parking The subject of parking was a passionate topic at the community meetings. It is generally perceived that there is a lack of parking to support the businesses on and around California Avenue. The city has 788 off-street parking spaces in the area in the form of surface lots and structures. The City Council’s adopted Infrastructure Plan includes a new parking garage for California Avenue, which will appear in the Capital Improvement Program (CIP) proposed for adoption as part of the Fiscal Year 2016 budget. Staff is also investigating operational solutions such as valet parking during peak times that may provide a nearer-term benefit. City of Palo Alto Page 5 There is interest among those that participated in the community meetings for a new city garage in the district with ground floor retail. Some even envisioned subsidized rents for the ‘mom and pop’ stores that cannot keep up with escalating rents, but that enrich the neighborhood character. Others envisioned opportunities for a public space to be constructed in conjunction with the garage infrastructure improvements that could facilitate space for artists or other independent ventures that would further distinguish California Avenue from other commercial centers. Existing City parking facilities in the area were financed via an assessment district that sunset this year. New businesses choosing to locate in the area will have to provide the required parking on site or via credit for past participation in the assessment district. Off-site parking is an option, but only with a covenanted agreement with another property with excess parking spaces within 500 feet of a requesting business. Accordingly, it is unlikely that there will be further intensification of land use (from a parking perspective), which means new restaurants are likely going to be limited to locating in existing restaurant spaces unless a new assessment district or in-lieu parking program is created in the future. Adding floor area to existing retail or commercial buildings will similarly be limited to those properties that can provide parking onsite. Formula Retail A number of California communities regulate “formula” retailers, formula restaurants and even formula hotels. Many formula retail definitions are similar and generally include businesses that have a standardized array of services or merchandise, trademark, logo, layout, architecture, signs, décor, uniforms, etc. Attachment D has a list of California cities and the approach used to regulate formula retail. Some communities, such as San Francisco, require there to be 11 or more chain stores before it is considered a formula retail use (although they are currently considering increasing this threshold to 20); other communities do not establish a prerequisite limit. Some cities ban formula uses outright in certain districts, others establish a cap or require a discretionary review process, such as a conditional use permit (CUP). The latter requires the decision maker(s) to make certain findings in order to approve the use. In San Francisco, the decision to approve or deny a formula use is based on the following: 1) the existing concentration of formula retail businesses within the neighborhood; 2) whether similar goods or services are already available within the area; 3) the compatibility of the proposed business with the character of the neighborhood; 4) retail vacancy rates in the area; and 5) the balance of neighborhood-serving versus citywide or regional- serving businesses. A similar ordinance could be established for California Avenue. This street is believed to have eight formula retail establishments, identified in the following table: Address Business City of Palo Alto Page 6 249 & 251 California Avenue FedEx 299 California Avenue Pure Barre 334 California Avenue Aveda Salon 360 California Avenue Benjamin Moore Paints 361 California Avenue Starbucks 365 California Avenue Pizza Studio 369 California Avenue The Counter 421 California Avenue Subway As noted earlier, those that participated in the community meetings did not express an interest in an outright ban. While a limit was supported, there was not much discussion on what that limit should be. If the Council preferred not to ban or limit formula retail, it could still establish a discretionary review process. In Palo Alto, that would likely be a CUP, which is acted upon by the Director of Planning and Community Environment. Individuals not satisfied with the Director’s decision can request a hearing before the Planning and Transportation Commission, which would forward a recommendation to the City Council for final action. Next Steps There is interest in the California Avenue neighborhood for preserving the small, independent businesses that make up this unique commercial district. There are also real or perceived threats to this character due to increased development pressure, rising real estate prices, dynamic retail market and perhaps several other variables. Based on the data available at this time, staff recommends a discrete adjustment to the city’s zoning code to define formula retail and require a CUP for any new formula retail establishment on California Avenue. Existing formula retail that was legally established would be allowed to remain, but could not expand those tenant spaces without a CUP. This approach provides an opportunity to evaluate the mix and diversity of uses and allow for appropriate formula establishments that support and contribute to the character and vibrancy of the area. Moreover, it includes opportunities for interested parties to raise the matter to the City Council at no cost if dissatisfied with the Director’s decision. On April 6th, the City Council noted its interest in extending the retail combining district to Cambridge Avenue during a discussion on retail preservation. While the existing CC(2) zoning district offers some protections to preserve retail, the retail combining districts has a more finite list of permitted land uses: retail, eating and drinking, and personal services. As noted, some in the community also support this direction. Staff does not believe a restriction on the number of restaurants is necessary. Unlike University Avenue, California Avenue does not have a blended rate parking requirement for restaurants. Instead restaurants require 1 space for every 60 square feet of public service area. Conversion City of Palo Alto Page 7 of any retail or office space to restaurant requires more parking, which in most circumstances, cannot feasibly be provided on site. The city’s existing parking regulations and maturity this year of the California Avenue parking infrastructure improvements from decades ago effectively limits future restaurants on California Avenue unless parking is provided onsite (or off-site subject to certain criteria). The Council may also wish to consider creating new or augmenting existing contracts with financial/retail consultants to learn more about market conditions influencing decisions of retailers to locate on California Avenue, to evaluate some of the perceived threats to the area and identify strategies to encourage the retention of independent businesses that reflect the character on California Avenue. Staff looks to the Council with respect to guidance on other regulatory changes, including limits on nail or hair salons on California Avenue, which would involve amendment(s) to the definition of “personal services” in the zoning code, among other things. Timeline Depending on direction received from Council, discrete changes to the zoning code and district map could return to the Council shortly after its summer break. Between now and then, staff would develop a draft ordinance and present it to the Planning and Transportation Commission for their review and recommendation. If the Council desires additional community meetings/input or feels that consultant analysis is needed, this timeline would be extended, and the extent would depend on the direction received. Resource Impact Modest changes to the zoning code and district map can be accommodated within existing department budgets. Requests for consultant work may require appropriation from the General Fund, but that would depend on the scope of work directed by Council. Policy Implications This report addresses Council and community comments about the potential loss of character of the California Avenue commercial district due in part to formula retail uses. If no direction is provided to staff, current regulations would prevail and there would be no restriction on the establishment of formula retail uses on California Avenue. This district would still have standards that require retail, personal services and eating and drinking on the ground floor, except as otherwise permitted for legal non-conforming uses. Moreover, concern regarding Cambridge Ave would not be addressed and a broader range of uses would be allowed on the ground floor on that street including financial services, which are permitted by right. The City’s Comprehensive Plan supports vibrant pedestrian-oriented commercial districts, and the City Council recognized the importance of the California Avenue area when it requested development of a California Avenue Area Concept Plan as part of the Comprehensive Plan Update. While the Concept Plan has not yet been adopted, the draft plan calls for maintaining City of Palo Alto Page 8 the existing neighborhood-oriented commercial character of California Avenue and Cambridge Avenue (Policy CACP-2.1), and requiring active uses on the ground floor of buildings fronting on these avenues (Policy CACP-2.6). Environmental Review The recommendation in this report does not constitute a project under the California Environmental Quality Act (CEQA). However, if directed to prepare an ordinance, staff would further evaluate what level of environmental review would be required. Attachments:  A: Land Use Definitions (PDF)  B: Existing Ground Floor Uses on California Avenue (PDF)  C: Survey Monkey Results (PDF)  D: Partial List of California Cities Regulating Formula Retail (PDF)  E: Map of Ground Floor Cal Ave Land Uses (PDF) City of Palo Alto Page 9 Attachment A - Palo Alto Municipal Code Definitions (18.04.030) "Retail service" means a use engaged in providing retail sale, rental, service, processing, or repair of items primarily intended for consumer or household use, including but not limited to the following: groceries, meat, vegetables, dairy products, baked goods, candy, and other food products; liquor and bottled goods, household cleaning and maintenance products; drugs, cards, and stationery, notions, books, tobacco products, cosmetics, and specialty items; flowers, plants, hobby materials, toys, household pets and supplies, and handcrafted items; apparel, jewelry, fabrics, and like items; cameras, photography services, household electronic equipment, records, sporting equipment, kitchen utensils, home furnishing and appliances, art supplies and framing, arts and antiques, paint and wallpaper, carpeting and floor covering, interior decorating services, office supplies, musical instruments, hardware and homeware, and garden supplies; bicycles; mopeds and automotive parts and accessories (excluding service and installation); cookie shops, ice cream stores and delicatessens. "Personal service" means a use providing services of a personal convenience nature, and cleaning, repair or sales incidental thereto, including: (A) Beauty shops, nail salons, day spas, and barbershops; (B) Self-service laundry and cleaning services; laundry and cleaning pick-up stations where all cleaning or servicing for the particular station is done elsewhere; and laundry and cleaning stations where the cleaning or servicing for the particular station is done on site, utilizing equipment meeting any applicable Bay Area Air Quality Management District requirements, so long as no cleaning for any other station is done on the same site, provided that the amount of hazardous materials stored does not at any time exceed the threshold which would require a permit under Title 17 (Hazardous Materials Storage) of this code; (C) Repair and fitting of clothes, shoes, and personal accessories; (D) Quick printing and copying services where printing or copying for the particular service is done on site, so long as no quick printing or copying for any off-site printing or copying service is done on the same site; (E) Internet and other consumer electronics services; (F) Film, data and video processing shops, including shops where processing for the particular shop is done on site, so long as no processing for any other shop is done on the same site; and (G) Art, dance or music studios intended for an individual or small group of persons in a class (see "commercial recreation" for other activities). "Eating and drinking service" means a use providing preparation and retail sale of food and beverages, including restaurants, fountains, cafes, coffee shops, sandwich shops, ice cream parlors, taverns, cocktail lounges and similar uses. A minimum of 50% of revenues from an "eating and drinking service" must be derived from the sale of food. Attachment B - Professional & General Business Offices 30% Eating and Drinking Services 26% Personal Service 16% Retail Services 14% Parking Lots & Garages 6% Medical Office 4% General Business 4% Total Ground Floor Establishments in the California Avenue Parking Assessment District Source: City of Palo Alto Planning and Community Environment Department A field survey was conducted on April 2 & 3, 2015 in the California Avenue Parking Assessment District. It excluded Second or Third Story Office or Other Uses. It included California Avenue, Sherman Avenue, Cambridge Avenue and the cross streets of Park Blvd., Birch Street, Ash Street and parcels fronting El Camino Real. 0% 20% 40% 60% 80% 100% 120% Professional & General… Eating and Drinking Services Personal Service Retail Services Parking Lots & Garages Medical Office General Business Extensive Retail Service Public Facility Types of Establishments by Location Sherman Ave Cambridge Ave California Ave Source: City of Palo Alto Planning and Community Environment Department A field survey was conducted on April 2 & 3, 2015. It excludes Second or Third Story Office or Other Uses. *Public Facility includes Post Office, Court House, and Clinic *Extensive Retail Service includes Grocery Stores *General Business includes Banks and Financial Institutions *Medical Offices includes Dentist Office, Optometry *Retail Services includes all Retail Stores *Personal Service includes Hair Salons, Nail Salons, Dry Cleaners, Yoga Studios & Gyms, Tutoring Agencies, and Cobblers etc. *Eating and Drinking Services includes all Restaurants *Professional & General Business Offices includes Law Offices, Insurance Offices and all Other types of Professional Office uses *Service Uses includes Hotel Ground Floor Land Use by Zoning Category Approximate Number of Establishments California Avenue Eating and Drinking Services Eating and Drinking Services & Retail Combined Extensive Retail Service General Business Medical Office Personal Service Professional & General Business Offices Retail Services 79 23 1 2 2 1 16 16 18 Ground Floor Land Use by Zoning Category Approximate Number of Establishments Cambridge Avenue General Business Offices Churches & Religious Institutions Eating and Drinking Services Medical Office Parking Personal Service Professional & General Business Offices Public Facility (Post Office) Residential Retail Services 36 1 1 3 5 6 4 13 1 1 1 Ground Floor Land Use by Zoning Category Approximate Number of Establishments Sherman Avenue Parking Professional & General Business Offices Public Facility (Court House & Public Clinic) 14 4 9 1 Approximate Ground Floor Land Use by Zoning Number of Category Establishments Ash Street 4 Eating and Drinking Services 1 2 Parking Services Uses (Hotel) 1 Brich Street 9 Eating and Drinking Services 3 Parking 2 Personal Service 2 Professional & General Business 1 Offices Residential 1 Park Blvd 7 Eating and Drinking Services 3 Personal Service 1 Professional & General Business 3 Offices El Camino Real 6 Eating and Drinking Services 2 General Business 2 Parking 1 Service Uses (Hotel) 1 Attachment C Powered by City of Palo Alto California Ave Monday, April 27, 2015 Date Created: Monday, March 30, 2015 348 Total Responses Complete Responses: 348 Powered by 1 5/1/2015 Q1: On average, how many days during a week do you visit California Avenue? Answered: 346 Skipped: 2 Powered by Q1: On average, how many days during a week do you visit California Avenue? Answered: 346 Skipped: 2 Powered by 2 5/1/2015 Q2: How do you normally get to California Avenue? Answered: 348 Skipped: 0 Powered by Q2: How do you normally get to California Avenue? Answered: 348 Skipped: 0 Powered by 3 5/1/2015 Q3: If you drive, how would describe your ability to find parking? Answered: 284 Skipped: 64 Powered by Q3: If you drive, how would describe your ability to find parking? Answered: 284 Skipped: 64 Powered by 4 5/1/2015 Q4: When do you generally visit? (Click all that apply). Answered: 344 Skipped: 4 Powered by Q4: When do you generally visit? (Click all that apply). Answered: 344 Skipped: 4 Powered by 5 5/1/2015 Q5: What is your primary reason for visiting California Avenue? Answered: 323 Skipped: 25 Powered by Q5: What is your primary reason for visiting California Avenue? Answered: 323 Skipped: 25 Powered by 6 5/1/2015 Q6: On California Avenue today, is there too much, just right, or not enough of the following: Answered: 339 Skipped: 9 Powered by Q6: On California Avenue today, is there too much, just right, or not enough of the following: Answered: 339 Skipped: 9 Powered by 7 5/1/2015 Q7: Which of the following shopping centers do you visit MOST frequently? Answered: 338 Skipped: 10 Powered by Q7: Which of the following shopping centers do you visit MOST frequently? Answered: 338 Skipped: 10 Powered by 8 5/1/2015 Q10: What is your sex? Answered: 337 Skipped: 11 Powered by Q10: What is your sex? Answered: 337 Skipped: 11 Powered by 9 5/1/2015 Q11: What is your age? Answered: 332 Skipped: 16 Powered by Q11: What is your age? Answered: 332 Skipped: 16 Powered by 10 ATTACHMENT DPartial List of California Cities Regulating Formula Retail City Definition Provisions/ Requirements Findings and Decision Arcata A type of retail and/or service activity or retail sales and/or services establishment with greater than 10 outlets in the United States, other than "formula fast food restaurant" already addressed in another section of the Land Use code, which is required by contractual or other arrangement to use or maintain any one of the following: standardized array of services and/or merchandise, trademark, logo, service mark, signage, symbol, decor and/or color scheme, architecture, facade, lighting, layout, uniform apparel, or similar standardized feature. 1) Establishments determined to be formula retail and/or service businesses shall obtain a Use Permit, subject to Planning Commission Review, pursuant to findings in Section 9.72.080 of the LCU; 2) The building façade with the primary entrance of a formula retail and/or service establishment shall not have a street level frontage of greater than 50 linear feet and/or have its retail and/or service space occupy more than two stories. Existing structures which do not meet this standard shall be exempt; 3) The cumulative expansion of a formula retail and/or service establishment by 500 or more square feet of floor area, shall require a Use Permit amendment or initiate the Use Permit Process if the establishment does not already have such a permit. In addition to Use Permit findings as outlined in the Land Use Code, the review authority shall give special consideration to the following guidelines for approval: 1) Existing concentrations of formula retail/services in the City and surrounding areas of influence; 2) Availability of other similar retail/service uses within the City and surrounding areas of influence; 3) Compatibility of the proposed formula retail/service use with the existing architectural and aesthetic character of the surrounding neighborhood; 4) Compatibility of the proposed formula retail/service use with the existing mix of uses within the City and/or surrounding neighborhood; 5) Impact of any formula retail and/or service establishment as non‐ obtrusive and/or helpful in the preservation of the character of both the City and the specific neighborhood in which the establishment is proposed to operate; 6) Existing retail/service vacancy rates within the surrounding neighborhood and in the City; and 7) Existing mix of Citywide‐serving retail/service uses and neighborhood‐serving retail/service uses. 1) The proposed use is allowed within the applicable zoning district and complies with all other applicable provisions of this Land Use Code and the Municipal Code or is a nonconforming use in compliance with subsection 9.90.020A.1; 2) The proposed use is consistent with the General Plan, Local Coastal Program, and any applicable specific plan; 3) The design, location, size, and operating characteristics of the proposed activity are compatible with the existing and potential future land uses in the vicinity; 4) The site is physically suitable for the type, density and intensity of use being proposed, including access, utilities, and the absence of physical constraints; and 5) Granting the permit will not be detrimental to the public interest, health, safety, convenience, or welfare, or materially injurious to persons, property, or improvements in the vicinity and zoning district in which the property is located. Benicia Formula Business means an eating and drinking establishment that maintains any of the following features in common with more than four other establishments in the nine Bay area counties: standardized array of services and/or merchandise, trademark, logo, service mark, symbol, sign, decor, uniform, menu, or other similar standardized feature. Retail stores larger than 20,000 square feet and formula restaurants will not be approved unless they meet criteria outlined in the City's Municipal Code (For a list of criteria, see next column “Findings and Decision”) Approval of a use permit for a formula business and retail sales establishment larger than 20,000 square feet requires that the Planning Commission find that the proposed establishment will: 1) Complement existing uses and enhance the economic health of the surrounding area; 2) Be operated in a non‐obtrusive manner that preserves the City's or area's distinctive character and ambiance; 3) Not result in a concentration of formula and/or retail sales establishments {larger than 20,000 square feet} in the vicinity of the proposed use or citywide; 4) Promote the diversity and variety to assure a balanced mix of commercial uses available to serve both resident and visitor population; 5) Contribute to an appropriate balance of local, regional or national‐based businesses and small, medium and large‐ sized businesses in the community; and 6) Avoid an appearance commonly associated with strip retail or shopping centers. Calistoga Formula business shall mean a business which is required by contractual or other arrangement to maintain any of the following: standardized services, décor, uniforms, architecture, signs or other similar features. This shall include but not be limited to retail sales and service, visitor accommodations, wholesale and industrial operations. Formula restaurant shall mean a restaurant devoted to the preparation and offering of food and beverage for sale to the public for consumption either on or off the premises and which is required by contractual or other arrangement to offer any of the following: standardized menus, ingredients, food preparation, decor, uniforms, architecture, or similar standardized features. Formula restaurants and visitor accommodation are prohibited, while other types of formula businesses are required to undergo review and apply for a special use permit from the Planning Commission. 1) That the proposed development, together with any provisions for its design and improvement, is consistent with the General Plan, any applicable specific plan and other applicable provisions of this code including the finding that the use as proposed is consistent with the historic, rural, small‐town atmosphere of Calistoga; 2) That the site is physically suitable for the type and density of development; 3) That the proposed development has been reviewed in compliance with the California Environmental Quality Act (CEQA) and that the project will not result in detrimental or adverse impacts upon the public resources, wildlife or public health, safety and welfare; 4) Approval of the use permit application will not cause adverse impacts to maintaining an adequate supply of public water and an adequate capacity at the wastewater treatment facility; 5) Approval of the use permit application shall not cause the extension of service mains greater than 500 feet; 6) An allocation for water and/or wastewater service shall be made prior to project approval. Said allocation shall be valid for one year and shall not be subject to renewal; 7) That the proposed development presents a scale and design which are in harmony with the historical and small‐town character of Calistoga; 8) That the proposed development be consistent with and enhance Calistoga’s history of independent, unique, and single location businesses, thus contributing to the uniqueness of the town, which is necessary to maintain a viable visitor industry in Calistoga and to preserve its economy; 9) That the proposed development complements and enhances the architectural integrity and eclectic combination of architectural styles of Calistoga; and 10) To receive a use permit, a finding shall be made that the proposed development or use would be resident serving. This finding shall only apply to formula businesses. 1 Partial List of California Cities Regulating Formula Retail City Definition Provisions/ Requirements Findings and Decision Carmel‐By‐The A business which: (a) is required by Formula restaurants including fast food, take‐out and drive thru establishments are prohibited in the City. None indicated Sea contractual or other arrangements to offer standardized menus, ingredients, food preparation, employee uniforms, interior decor, signage or exterior design; or (b) adopts a name, appearance or food presentation format which causes it to be substantially identical to another restaurant regardless of ownership or location. Coronado A formula business is one that is required by contractual or other arrangement to maintain a standardized array of services or merchandise, and standardized architecture, uniforms, logos, decor, etc. New formula restaurants must obtain a special use permit, may not locate on a corner, and must meet design standards. A Formula Fast Food Restaurant may only be established or relocated: 1) On a site that is not located on a street corner; except such a restaurant may be located on a street corner where the immediate prior use was a Formula Fast Food Restaurant; 2) Where it would not result in two or more Formula Fast Food Restaurant operating on that site (i.e., two or more Formula Fast Food Restaurant business entities requiring separate business licenses, or displaying in a manner visible from public property separate business trademarks, logos, service marks or other mutually identifying names or symbols, for the daily or weekly conducting of business on the same site); 3) When it would not result in Formula Fast Food Restaurant operating at more than 10 sites under the jurisdiction of this Ordinance; and 4) So long as the Planning Commission finds that establishing or relocating the Formula Fast Food Restaurant will not increase the intensity of use on the site to a level that will adversely impact: land uses in the area, pedestrian or motor vehicle traffic, or the public welfare. Los Gatos Formula retail business means a retail business which, along with seven (7) or more other business locations, is required by contractual or other arrangement to maintain any of the following: standardized merchandise, services, decor, uniforms, architecture, colors, signs or other similar features. A conditional use permit shall be required for all formula retail businesses in the C‐2 zoning district. In addition, Formula Retail businesses in the C‐1, CH, and LM greater than 6,000 square feet shall require a conditional use permit. The deciding body, on the basis of the evidence submitted at the hearing, may deny a conditional use permit for a formula retail business or a personal service business if any of the following findings are made: (1) The proposed use of the property is not in harmony with specific provisions or objectives of the general plan and the purposes of this chapter; (2) The proposed use will detract from the existing balance and diversity of businesses in the commercial district in which the use is proposed to be located; (3) The proposed use would create an over‐concentration of similar types of businesses, or (4) The proposed use will detract from the existing land use mix and high urban design standards including uses that promote continuous pedestrian circulation and economic vitality. Malibu Formula retail means any type of retail sales activity and/or retail service activity conducted within a retail establishment which, along with 10 or more other existing, operational retail establishments located within the United States, is required to maintain two or more of the following features: 1) standardized array of merchandise of menu (meaning only 50% or more of in‐stock merchandise or menu items); 2) standardized color scheme; 3) standardized décor; 4) standardized façade; 5) standardized layout; 6) standardized signage, a service mark, or a trademark; and 7) uniform apparel. A conditional use permit shall be required for all new formula retail establishments located within the Civic Center commercial district and for existing formula retail establishments located within the Civic Center that relocate to a new tenant space, expand by 200 square feet or more of gross floor area, or increase service area by 50 square feet or more. Exempt uses include: • Grocery stores, • Drug stores/pharmacies • Gas station, • Banks/financial services • Real estate, • Insurance, • Post offices • Medical, and • Lower‐cost overnight accommodations In lieu of the findings required by Section 17.66.080, the Planning Commission shall make all of the following findings of fact, in a positive manner, in order to approve a formula retail use within the Civic Center commercial district: 1. The nature of the formula retail use is an otherwise permitted or conditionally permitted use within the subject commercial zone and complies with the policies and standards of the General Plan and Local Coastal Program. 2. The formula retail establishment will not impair the City’s unique, small town character by promoting a predominant sense of familiarity or sameness in the Civic Center commercial district as viewed from its main arterial streets including pacific Coast Highway, Cross Creek Road, Civic Center Way, Malibu Road, or Malibu Canyon Road. 3. The formula retail establishment will not exceed 2,500 square feet of gross floor area. 4. Approval of the formula retail establishment will not result in more than 50 percent of each floor of a shopping center, as determined by the percentage of overall square footage or the net number of leasable tenant spaces (excluding the uses described in Section 17.66.130(F)(2)), whichever is greater, from being occupied by formula retail establishments. 2 Partial List of California Cities Regulating Formula Retail City Definition Provisions/ Requirements Findings and Decision Ojai Formula Business means a type of commercial business establishment, retail sales or rental activity and retail sales or rental establishment, including restaurants, hotels and motels, which, along with 10 or more other establishments, maintains three or more of the following features: (i) standardized array of merchandise or standardized menu; (ii) standardized façade; (iii) standardized décor or color scheme; (iv) uniform apparel; (v) standardized signage; or (vi) trademark or service mark. 1) A Formula Business may only be established on a site after obtaining a conditional use permit from the City for the operation of that use on such site. Change of ownership, by itself, shall not require obtaining a conditional use permit pursuant to this section; (2) No permit application of any kind shall be accepted or processed for a Formula Business that also possesses at least two of the following characteristics: Specializes in short order or quick service food and/or drink; Serves food and/or drink primarily in paper, plastic or other disposable containers; and payment is made by customers before food and/or drink is consumed. No conditional use permit shall be issued for a use that is a Formula Business located within the area of the Downtown Commercial Land Use designation of the City's General Plan if either of the following are true: 1) such establishment has street‐level frontage exceeding 25 linear feet on any street, or 2) the useable area of the building or structure wherein the Formula Business is to be located exceeds 2,000 square feet. For purposes of this section, "street level frontage" shall include frontage on private parking lots and access ways where the commercial building does not abut a public street. Except as provided in this section, no conditional use permit shall be issued for a use that is a Formula Business if such establishment exceeds 10,000 square feet of net total floor area. In addition to the findings required by Section 10‐2.2406 as prerequisite to the issuance of a conditional use permit, the Commission shall make all of the following findings prior to the issuance of a conditional use permit for a Formula Business: 1) The proposed Formula Business will not result in an over‐concentration of Formula Business establishments in its immediate vicinity or in the City as a whole; 2) The proposed Formula Business will contribute to an appropriate balance of small, medium and large‐sized businesses in the City; and 3) The proposed Formula Business has been designed to preserve and enhance the City's small town character and to integrate existing community architectural and design features which will preserve such character for the City's residents and visitors. Pacific Grove Formula food service establishments are required by contractual or other arrangements to operate with standardized menus, ingredients, food preparation, architecture, decor, uniforms, or similar standardized features. No use permit application shall be accepted, processed or considered for a food service establishment having all of the following characteristics: 1) It specializes in short order or quick service food service; 2) It serves food primarily in paper, plastic or other disposable containers; 3) It delivers food or beverage products in such a manner that customers may remove such food or beverage products from the food service establishment for consumption; and 4) It is a formula food service establishment required by contractual or other arrangements to operate with standardized menus, ingredients, food preparation, architecture, decor, uniforms, or similar standardized features. None indicated San Francisco The city’s regulations define a formula retail use as an establishment that shares common features, such as a standardized array of merchandise, trademark, architecture, and décor, with at least 11 other establishments in the United States. The term “retail use” includes both stores and restaurants. Throughout most of the city, including all of San Francisco’s Neighborhood Commercial Districts, formula retail stores and restaurants are considered conditional uses and require a permit. This means they must be approved by the Planning Commission on a case‐by‐case basis. The Planning Commission must consider the following factors when deciding whether to approve a formula business: 1) the existing concentration of formula retail businesses within the neighborhood; 2) whether similar goods or services are already available within the area; 3) the compatibility of the proposed business with the character of the neighborhood; 4) retail vacancy rates in the area; and 5) the balance of neighborhood‐serving versus citywide or regional‐serving businesses. San Juan FORMULA RETAIL OR RESTAURANT Formula Retail or Restaurant Business, and Formula Visitor Accommodations are subject to review by the Planning The following findings shall be required: 1) The business offers merchandise and/or services that serve Batista BUSINESS DEVELOPMENT. A retail, restaurant, or fast‐food business that is required by contractual or other arrangement to maintain standardized services, merchandise, menus, ingredients, food preparation, uniforms, décor, logos, architecture, signs, or similar features. FORMULA VISITOR ACCOMMODATIONS. A visitor accommodation business that incorporates physical features common among one or more of the other visitor accommodation businesses owned by the same company and that is required by contractual or other arrangement to maintain standardized services, merchandise, uniforms, décor, logos, architecture, signs, or similar features. Commission so therefore the business/applicant shall fill out the Application Requirements for a Conditional Use Permit and any other pertinent applications as specified therein, pay fees specified, and submit plans as set forth therein. the unmet needs of the population; 2) Although the formula‐based business may have other store locations throughout the country, state, or region, the business will complement and enhance the character of the City; 3) Both exterior and interior appearance and presentation of the business is compatible with the existing scale of development, distinctive architecture and pedestrian orientation of the town character and results in an enhancement of the look and feel (i.e., character) of the surrounding area; 4) Signs shall conform to the City sign standards and Design Guidelines; and 5) Drive‐ thru food establishments shall be prohibited. 3 Partial List of California Cities Regulating Formula Retail City Definition Provisions/ Requirements Findings and Decision Sausalito Formula Retail means a type of retail sales activity or retail sales establishment, including food service, which is required to maintain any of the following: standardized ("formula") array of services and/or merchandise, trademark, logo, service mark, symbol, sign, decor, architecture, layout, uniform, or similar standardized feature. A Conditional Use Permit shall be required for any Formula Retail establishment in the City. 1) The Formula Retail establishment will be compatible with existing surrounding uses, and has been designed and will be operated in a non‐obtrusive manner to preserve the community's distinctive character and ambiance; 2) The Formula Retail establishment will not result in an over‐concentration of formula retail establishments in its immediate vicinity or the City as a whole; 3) The Formula Retail establishment will promote diversity and variety to assure a balanced mix of commercial uses available to serve both resident and visitor populations; 4) The Formula Retail establishment will contribute to an appropriate balance of local, regional or national‐based businesses in the community; 5) The Formula Retail establishment will be mutually beneficial to and would enhance the economic health of surrounding uses in the district; 6) The Formula Retail establishment will contribute to an appropriate balance of small, medium and large‐sized businesses in the community; and 7) The proposed use, together with its design and improvement, is consistent with the unique historic character of Sausalito, and would preserve the distinctive visual appearance and shopping experience of Sausalito for its residents and visitors. Solvang A restaurant devoted to the preparation and offering for sale of food and beverages to the public for consumption either on or off the premises and which is required by contractual or other arrangements to offer any of the following: standardized menus, ingredients, food preparation, decor, uniforms, or similar standardized features. Formula restaurants are prohibited in the Village Center None indicated 4 195 2675 490 2275 480 466 444 425 2502 2508 409 405 408 2401 465 463 461 459 445 437 443335 2458 2454 410 430 2455 460456 454 448 425 431 475 453 451 449 439441 451453 446 454 456 410 469 450 320 306 404 303305307309 315 311 309311 315 2110 448 431 432 443 455 2100 2171 2091 2103 2111 2115 2127 2123 2119 436 446 431435437445 447451 478 482 484 2225 2237 391 390 381 373 360 376 2130 2140 2160 2166 423 424 457 2209 2215 2233 442729 421 431433435437 4394444 41435 422418416412 415417419 421 411 359 351 343 323 322 334 346 301 315 2130 314 201 2030 2060 222 234 244 254 264 280 291 290 281 271 231 237 251 261 305 301 440 414 406408 410 392 360 364 415 2438 415 409407 421 321 361 2415 200 2747 2660 444442 3337 44444471 405 409407 440305 444544135 2222 393935 381385 161 163 345341 347 370 368366 2500 2516 14 12 2510 2508 225506 225504 2502 362 302 330 332 280 2290 375 340 344 350 330 302 2150 261 250 285 315 325 335 350 318 306 320 310 277 2313 2307 309307 305303 301 299 380378 267 271 2350 245 240 255 265 220 230 240 290 260 2363 299 249 164 156 2000593 1 2 22434 450 442 2426 2222117 265 2343 2323 206 200 223 210 2170 220 230 2105 2155 254 260 274 2145 285 263 233 243 253 214 2005 2011 2031 2053 2065 2079 2091 2101 2115 2125 231 2110 2150 2151 2157 2145 2143 2211 211 221 2248 2250 2179 2181 2183 2185 2165 2171 123 150 270 2433 145 2785 101109 117 125 133 141 149 151 153 155 157 159 251 123 1963 2121 2098 2000 2087 2071 2045 2033 2011 2001 2080 2086 2441 2557 2559 2561 304 08 3316 324 200 5 2222557 2259 2261 6691773 7777795 222222222222222281 2283 11111 0 975319 2222222333333321 3 223322553 23222333333317 223344454497 22233351 100 10210101068 4 435 398 1 0 0 2029 480 475 2051 2700 261 2453 390 2504 2506 227 2437 477 2120 334 2431 417 275 370 250 2585 2162 2164 2441 429 2473 2457 2771 448 2155 2418 2432 367 2518 300 250 208 140 298 220 2260 21 96 414 420 434444802444 2149 2655 2021 22007375 22007783 2107 2101 2221 2370 22231 2287 2315 1 3 0 2137 2 2301 420 1 0 5 5 8 0 6 1 6 7 6 9 08 78 2 9 2 5 8 2 0 1 72 2 7 0 5 5 3 5 2 8 1 0 3 7 6 4 5 46 4 8 4 2 4 9 7 9 8 3 3 9 4 7 5 9 2 3 0 2 6 3 3 1 4 3 7 4 3 8 3 2 7 3 2 2 0 9 6 2 1 8 3 7 4 1 6 4 1 4 3 4 2 0 6 6 6 8 0 7 30 3 3 3 6 1 1 1 6 6 0 5 1 4 4 0 4 2 1 3 5 7 1 1 3 4 0 77 5 4 1 5 6 5 1 2 7 5 57 2 8 5 0 5 6 58 06 1 7 7 0 2 6 2 4 1 9 Wallis Park Lot C-9 Train Station, California Avenue S CCo u n t y C o u r t h o u s e a n d J a i l Lot C-2 Lot C-1 Lot C-3 Parking Garage Lot C-4 Lot C-5 Garage Ox f o r d A v e ue E Stanford Avenue Gr a n t A v e n u e 6K H U L G D Q $Y H -D F D U D Q G D / D Q H El Camino Real Sher man Ave n ue Ash Street Mimosa Lane Pa g e M i l l Ro a d Co l l e g e A v e n u e Birch Street Californ ia Avenue Park Boulevard Park Boulevard Street Sedro Lane PeralLane S h e ri d a n A v e n u e Birch Street CITY O F A L TO I N C O R P O R ATE D C ALIFOR N IA A P RIL 1 6 189 4 1 2 3 4 5 6 7 8 9 10 Ne w M a y f i e l d L n 6W D Q I R U G $ Y H Attachment E - PALORetailEaƟng & Drinking (Restaurants) ID Number Business NameID Number Business Name 37 Accent ArtsAnatolia Kitchen Restaurant 2431 38 Benjamin Moore PaintsAntonio's 39 Blossom Birth ServicesBaume T h e C i t y o f P a l o A l t oBook Store ChrisƟan Science40Cafe B rioche 101 2687 41 Cigar HouseCafé Probono 208 Computer and Data ProcessingCheese Steak -U nder ConstrucƟon 42 25 8 5 Chez F ranc 43 Copy America 154 Coīee Shop 44 Country Sun 2501 256 3 256 5 256 7 256 9 2555 257 1 25 7 5 257 3 2575 25 7 9 25 7 7 25 8 1 2625 25 8 3 2635 24 2 1Counter Palo Alto The 45 Fed Ex 2280 Ca m b r i d g e A v e n u e 2401 2425 Domino's Pizza 2409 2417 116567 46 47 Fed Ex122 11 Fine Arts Gallery House 12 Izzy's Brooklyn Bagels 48 Keeble And Shuchat Photography 49 Keeble And Shuchat Photography 50 Key Nogal Lane13 JIN SHO 2460 26914 Joanie's Café 2484 15 La Bodequita Del Medio Mediterranean Wraps 51 Leaf And Petal 16 52 Molly Stone 53 Montaga Jewelry 54 Optometry Eye Works 55 Pharmacy 56 PrinƟng 57 261 RadioShack 276 251 204 17 Olive gardenBirch Street Lot C-618 Palo Alto Baking Café 19 304 Palo Alto Pizza 2160 231 20 Palo Alto Sol Restaurant 316 2060 2050 26031521 PaƟs Bistro 2435 2439 2333 22 323 328 Pizza Studio 58 Village Flower Shop23 Printers Cafe 333 332 24 Restaurant 333 2425 59 Village StaƟoners 60 Vin Vino Wine Ma p o f G r o u n d F l o o r Ca l i f o r n i a A v e n u e La n d U s e s 25 343 342 Restaurant 306312 2670 26 Restaurant 310318 320326 328 305 335450351 350 355 360 Personal or General Service27 Restaurant Birch Street 324 314322 313 2650 2640 366 345 Business Name28 359 360 Sea Food Restaurant 300356358 ID Number365 369 Lot C-729 Simply Sandwhich 334 61 Aj Tutoring Sevice 62 Avalon Art & Yoga Center 63 Aveda Salon 385 352354363 370 371 36030 SpalƟ 365 336338348350381 380 340344 34238331 Spice Kit Street Food 64 California Cleaners 346 39132 Starbucks 382 384 399391393 390 33 Subway 65 Campus BarbersAsh Street34 370 397Szechwan Cafe Restaurant 66 Chic Hair Salon400 35 36 Terun Thai Bistro 67 Cleaners Pilate Barber Hair Salon410411 2040 404 68 European Cobblery407420417425 410 422 69 Hair Salon Parking413 442253433416 70 Hair Salon425 439 430 71 Hair Sharper Club/ Nail Spa 72 Julian Chase Hair Design 73 La Joile 449 428453499 438 440 447447444 2450 450 421 Mahin and Company455 74449454 445454 75456 Massage Therapy Center 77 NTT Skin 2701458 460 76 Norge Cleaners 450 Lo t C - 8 447 445250Legend 450 458460463 470Cambridge Avenue 446264 Opus Arcade Pure Barre 80 City of Palo Alto GIS481Salon/Barber 2755 270578 2805 California Avenue This map is a product of the79 Sherman Avenue 2515 "Formula" %XVLQHVVRQ&DO$YH(>10 Locations) 81 Stript Hair Salon 82 Todd Hair Salon2325 2331 2335 2305Eating & Drinking Places (Restaurants) 479 Retail 2501 Personal or General Service Other (Office, Hotel,HWF531 A field survey was conducted on April 2 & 3, 2015. It excludes 2nd and 3rd floor uses. 0' 200' rrivera, 2015-05-04 09:38:25 This document is a graphic representation only of best available sources. CalAve ExLandUse CMData 042815 (\\cc-maps\gis$\gis\admin\Personal\rrivera.mdb) The City of Palo Alto assumes no responsibility for any errors. ©1989 to 2015 City of Palo Alto City of Palo Alto (ID # 5782) City Council Staff Report Report Type: Action Items Meeting Date: 5/18/2015 Summary Title: Advisory Committee for Comp. Plan Update Title: Composition and Purpose of an Advisory Committee for the Comprehensive Plan Update From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that the City Council approve the formation of a citizens’ advisory committee representing diverse interests to assist with the Comprehensive Plan Update, and direct the City Manager to solicit applications and appoint members of the committee consistent with purpose and parameters in Attachment A. Executive Summary The City is currently working on updating its Comprehensive Plan, “Embracing the New Century, Palo Alto 1998-2010” and on !pril 27, 2015, the City Council requested that the City Manager appoint a Citizens Advisory Committee (CAC) to assist with evaluation of community input received via an “open source” process and preparation of a revised draft plan for City Council review. The City Council also requested an opportunity to review and approve the charter or purpose of the committee and its composition of various stakeholder representatives. The CAC would be a means of ensuring consistent and well-informed participation throughout the update. As such, the role of the CAC will be to:  Participate in eliciting broad community input on the plan and advising staff on the synthesis of this input into revised plan language; and  Review elements of the Comprehensive Plan and make recommendations on proposed changes. To avoid duplication, it’s envisioned that the CAC would replace the Leadership Group formed in 2014 for the purpose of soliciting public input, and that members of the Leadership Group could apply for the new CAC. City of Palo Alto Page 1 Staff would solicit applications for the CAC at the upcoming May 30th Summit. The City Manager would then select individuals for the CAC and the group would convene for its first meeting in early July. The C!C’s initial tasks could include assisting staff with assimilation of the community input received on May 30th for a report to the City Council. Background When the City Council “restarted” the Comprehensive Plan Update process in early 2014, a Leadership Group of community representatives was appointed by the City Manager to assist with community engagement. The Leadership Group has helped to plan the May 30 Summit and it was envisioned that they would continue to assist in planning community work sessions that will follow the summit. These work sessions will be topical meetings scheduled well in advance and open to all interested parties. There will be concurrent opportunities for on-line input, which would be used by attendees at the meetings to ensure the plan that is ultimately adopted reflects the community’s collective vision for Palo !lto in 2030. This strategy of “open sourcing” community input originally excluded the familiar strategy of using an appointed advisory committee, but on April 27, 2015, the City Council directed staff to incorporate an appointed committee into the process, pointing out that a committee consisting of a diverse group of stakeholders can assist staff with the evaluation and synthesis of input received through the “open data” process. !lso, with an appointed committee, there will be more consistent attendance at work sessions by a diverse group of stakeholders, since appointed committees involve a dedicated group of meeting attendees who participate on a regular basis and are designed to be balanced in terms of the interests they represent. Please see CMR#5669 from April 27, 2015 for more information about the Comprehensive Plan Update process. Members of the Council have pointed to the success of the last Comprehensive Plan advisory committee, the CPAC, and to the success of committees associated with the coordinated area plan for the SOFA area, and the Housing Element Update in 2014. The summary below provides some background on these processes: Title of the Committee: CPAC Purpose of the Committee: Prepare an overall vision statement for the Comprehensive Plan and identify all policy areas to be addressed; subsequently review draft background reports and an administrative draft of the plan. Date Convened/Approx. Duration: January 1993 / Plan Adoption in 1998 Summary of Membership Composition: 38 member committee consisting of 28 community members, 10 alternates, and nine representatives of Boards and Commissions. Community members were “selected at large to represent the entire community.” City of Palo Alto Page 2 Comments: The committee was was not expected to reach consensus on major issues, but was charged with drafting majority and minority opinions. Meetings were professionally facilitated. Source: Palo Alto Comprehensive Plan p. I-5 & October 18, 1992 Staff Report Title of the Committee: SOFA Working Group Purpose of the Committee: Discuss planning issues, evaluate alternatives, refine the Plan concepts and listen to public comments; explore different strategies for key issues, develop a single plan concept with major policies “representing the shared vision of the group,” and review the draft plan, providing a recommendation to the City Council. Date Convened/Approx. Duration: September 1997 / Initial work completed June 1998 /Continued to advise through Phase I Plan Adoption March 2000 & Phase 2 Plan Adoption December 2003 Summary of Membership Composition: 14 members and 4 alternates including “neighborhood residents, business owneres, and representatives of a broad range of Citywide and regional planning interests.” Comments: A technical advisory group of city stsaff was also appointed to provide technical information and planning and policy analysis. Source: SOFA I plan, page 4; SOFA II plan, page 1. Title of the Committee: Housing Element Community Pannel Purpose of the Committee: Assist planning staff with preparation, adoption and certification of the City’s 2015-2023 Housing Element by the January 2015 deadline. Assist with policy discussions and community outreach, provide a recommendation to the City Council’s Regional Housing Mandate Committee. Date Convened/Approx. Duration: March 2014 / Plan Adoption November 2014 Summary of Membership Composition: 18 members including one Planning Commissioner, one Human Relations Commissioner, one School Board member, one PTA member, three Palo Alto residential neighborhood association (PAN) representatives from various neighborhoods, one representative from Palo Altans for Sensible Zoning, one local business representative, one representative from a senior citizen organization and one person with disabilities, one local real estate representative, one League of Women Voters Housing Team representaitve, one Palo Alto Housing Corporation Board member, one mixed use housing developer with Palo Alto experience, one City of Palo Alto Page 3 housing advocate and City resident, and one housing expert. Comments: The committee operated mostly by consensus, but did take several votes in the course of their work. Meetings were chaired by staff. Source:http://www.cityofpaloalto.org/gov/depts/pln/advance/housing element update 2015 2023.asp accessed April 28, 2015 Discussion At its April 27, 2015 meeting, the City Council discussed the ongoing Comprehensive Plan Update, its vision statement and goals, and an initial review of the update process ahead. A key part of this discussion was the possible establishment of an advisory committee for the update. At the conclusion of this session the Council requested staff return with recommendations for a working group that would be appointed by the City Manager based on stakeholder categories approved by the City Council. The proposed charter or purpose for the CAC included in Attachment A was developed following a review of prior successful planning efforts and recognizing that --like the 2014 Housing Element Community Panel --the CAC will be able to build on an existing plan with many good qualities. The CAC would also have the benefit of Planning and Transportation Commission recommendations and City Council direction on major policy issues. A membership of 20 people is suggested (three would be ex officio and non-voting), and the City Manager would appoint replacements if/as needed during the process, rather than appointing “alternates” at the time of C!C formation. (This would ensure continued representation of all stakeholder groups/perspectives.) In appointing community members, the City Manager would seek a mix of members in terms of their familiarity with the City’s planning processes, a mix of ages and cultural backgrounds, and a mix of long-time residents and more recent arrivals. While neighborhood representatives would be appointed “at large” to represent the interests of the entire City, residents would be sought from a variety of Palo Alto neighborhoods. Renters and the business community would be represented in addition to home owners, and interest/expertise would also be sought related to the topics of: Affordable housing Natural resource conservation Community health Environmental sustainability Real estate/development Transportation and mobility Architecture and urban design Business and economics City of Palo Alto Page 4 Members would also be sought to represent the interests of seniors, the disabled, Palo Alto parents and youth, and a variety perspectives on the challenges facing our community. (Please see Attachment A for a summary of the C!C’s suggested role and composition.) The Committee would be a Brown Act committee. Staff hopes to begin accepting applications for the committee at the Summit. Timeline If the City Council approves the staff recommendation, application forms will be disseminated at the May 30 Summit and accepted until the close of business on June 15, 2015. The first meeting of the committee will be in early July, 2015 at a time and place to be determined and the committee will meet at least monthly thereafter until a revised draft plan is prepared. Resource Impact Establishment of a citizens committee will assist staff with preparation of the Comprehensive Plan Update, but may add some time to the overall planning process. While it is not possible to associate a dollar figure with the additional time, a longer process is likely to require additional consultant support. Environmental Review The recommended action is not a “project” requiring review pursuant to the California Environmental Quality Act (CEQA). Attachments:  A: Draft Comprehensive Plan Citizens Advisory Committee (CAC) (DOCX) City of Palo Alto Page 5 Attachment A