HomeMy WebLinkAboutStaff Report 2510-5385CITY OF PALO ALTO
CITY COUNCIL
Monday, December 15, 2025
Council Chambers & Hybrid
4:30 PM
Agenda Item
18.Approval of Professional Services Contract Number C26194283 with Keyser Marston
Associates, Inc. in the Amount Not-to-Exceed $371,415 to Conduct Development Impact
and In-Lieu Fee Study. CEQA Status: Exempt Under CEQA Guidelines Sections 15061(b)
(2) and (b)(3).
1
City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Planning and Development Services
Meeting Date: December 15, 2025
Report #:2510-5385
TITLE
Approval of Professional Services Contract Number C26194283 with Keyser Marston Associates,
Inc. in the Amount Not-to-Exceed $371,415 to Conduct Development Impact and In-Lieu Fee
Study. CEQA Status: Exempt Under CEQA Guidelines Sections 15061(b)(2) and (b)(3).
RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager or their
designee to execute Contract No. C26194283 (Attachment A) with Keyser Marston Associates,
Inc. to conduct development impact and in-lieu fee study for a term of three years and a total
not-to-exceed $371,415, including $337,650 for basic services and $33,765 for additional
services.
BACKGROUND
Under the Mitigation Fee Act (Assembly Bill [AB] 1600), cities can charge new development for
its relative share of the cost to fund the acquisition of land and improvements to public
facilities. These fees are established based on the nexus between impacts caused by new
development and the improvements needed to mitigate those impacts that would be funded
by the established fee.
AB 602 requires nexus studies to be updated every eight years beginning January 1, 2022.1 Palo
Alto’s certified Housing Element Program 2.1B also requires the City to initiate a study to
update the City’s nexus and feasibility study for residential and commercial housing impact fees
by December 31, 2025. In addition, Housing Element Program 3.1B requires the City to prepare
feasibility studies to analyze the implications of development impact fees for housing
production. To comply with these policies in a timely manner, the City seeks to update all
impact and related in-lieu fees citywide, including conducting policy research and providing key
program recommendations. A detailed scope of work is provided in Exhibit A to Attachment A,
but generally, this effort would include the preparation of an AB 602 compliant nexus study to
1 https://legiscan.com/CA/text/AB602/id/2434861
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update development impact and in lieu- fees for parks, community center, library, general
government, citywide transportation, public safety, parkland, and public art. This effort will
include market/peer benchmarking, and pro forma feasibility testing of residential prototypes,
with policy/implementation recommendations and stakeholder outreach.
ANALYSIS
Table 1: Summary of Request for Proposals
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On September 4, 2025, the City notified Keyser Marston Associates (KMA) of its intent to award
the firm a contract for the services described in the RFP. Proposals were evaluated using the
required criteria established in the solicitation, including proposal quality and completeness,
the quality and performance characteristics of the proposed solution, experience with similar
scope and complexity, proposed cost, financial stability, ability to meet specified timelines, and
compliance with applicable laws and City policies. KMA’s overall performance placed it highest
after all evaluation components were completed, supported by stronger results in proposal
quality, proposed solution, relevant experience, and prior government performance while fully
meeting compliance requirements. Its strong interview performance, including the clarity and
completeness of its responses to questions, further strengthened its final ranking. KMA and its
sub-consultant NBS Government Financial Group are well known for their work in this area and
bring extensive experience in housing-related legislation, inclusionary housing programs,
feasibility analysis, housing impact fee studies, and state law requirements for development
impact fees. Together, they offer a comprehensive and complementary approach that will
support the City in recommending a fee structure that offsets development impacts while
preserving the feasibility of housing production.
FISCAL/RESOURCE IMPACT
3 as part of the annual reappropriation process.
STAKEHOLDER ENGAGEMENT
3https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=8738&meetingTemplateType=2&com
piledMeetingDocumentId=17069
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ENVIRONMENTAL REVIEW
ATTACHMENTS
APPROVED BY:
Professional Services
Rev. Oct 16,2024 Page 1 of 30
CITY OF PALO ALTO CONTRACT NO. C26194283
AGREEMENT FOR PROFESSIONAL SERVICES
BETWEEN THE CITY OF PALO ALTO AND
KEYSER MARSTON ASSOCIATES, INC.
This Agreement for Professional Services (this “Agreement”) is entered into as of the day
of , 2025 (the “Effective Date”), by and between the CITY OF PALO ALTO, a California
chartered municipal corporation (“CITY”), and KEYSER MARSTON ASSOCIATES, INC., a
California Corporation, located at 1299 Fourth Street, Suite 408 San Rafael, CA 94901
(“CONSULTANT”).
The following recitals are a substantive portion of this Agreement and are fully incorporated herein
by this reference:
RECITALS
A. CITY intends to conduct a Development Impact and In-Lieu Fee Nexus and Feasibility
Study (the “Project”) and desires to engage a consultant to review, update, and potentially expand
the City’s current development impact and in-lieu fee program in accordance with California laws
in connection with the Project (the “Services”, as detailed more fully in Exhibit A).
B. CONSULTANT represents that it, its employees and subconsultants, if any, possess 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, entitled “SCOPE OF SERVICES”.
NOW, THEREFORE, in consideration of the recitals, covenants, terms, and conditions, in this
Agreement, the parties agree as follows:
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 effective date of this agreement through June 30,
2027, unless terminated earlier pursuant to Section 19 (Termination) 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, entitled “SCHEDULE
OF PERFORMANCE”. Any Services for which times for performance are not specified in this
Agreement shall be commenced and completed by CONSULTANT in a reasonably prompt and
timely manner based upon the circumstances and direction communicated to the CONSULTANT.
CITY’s agreement to extend the term or the schedule for performance shall not preclude recovery
of damages for delay if the extension is required due to the fault of CONSULTANT.
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SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to
CONSULTANT for performance of the Services shall be based on the compensation structure
detailed in Exhibit C, entitled “COMPENSATION,” including any reimbursable expenses
specified therein, and the maximum total compensation shall not exceed Three Hundred Thirty-
Seven Thousand Six Hundred Fifty Dollars ($337,650). The hourly schedule of rates, if
applicable, is set out in Exhibit C-1, entitled “SCHEDULE OF RATES.” Any work performed or
expenses incurred for which payment would result in a total exceeding the maximum
compensation set forth in this Section 4 shall be at no cost to the CITY.
Optional Additional Services Provision (This provision applies only if checked and a
not-to-exceed compensation amount for Additional Services is allocated below under this
Section 4.)
In addition to the not-to-exceed compensation specified above, CITY has set aside the not-
to-exceed compensation amount of Thirty-Three Thousand Seven Hundred Sixty Five
Dollars ($33,765) for the performance of Additional Services (as defined below). The
total compensation for performance of the Services, Additional Services and any
reimbursable expenses specified in Exhibit C, shall not exceed Three Hundred Seventy-
One Thousand Four Hundred Fifteen Dollars ($371,415), as detailed in Exhibit C.
“Additional Services” means any work that is determined by CITY to be necessary for the
proper completion of the Project, but which is not included within the Scope of Services
described at Exhibit A. CITY may elect to, but is not required to, authorize Additional
Services up to the maximum amount of compensation set forth for Additional Services in
this Section 4. CONSULTANT shall provide Additional Services only by advanced,
written authorization from CITY as detailed in this Section. Additional Services, if any,
shall be authorized by CITY with a Task Order assigned and authorized by CITY’s Project
Manager, as identified in Section 13 (Project Management). Each Task Order shall be in
substantially the same form as Exhibit A-1, entitled “PROFESSIONAL SERVICES TASK
ORDER”. Each Task Order shall contain a specific scope of services, schedule of
performance and maximum compensation amount, in accordance with the provisions of
this Agreement. Compensation for Additional Services shall be specified by CITY in the
Task Order, based on whichever is lowest: the compensation structure set forth in Exhibit
C, the hourly rates set forth in Exhibit C-1, or a negotiated lump sum.
To accept a Task Order, CONSULTANT shall sign the Task Order and return it to CITY’s
Project Manager within the time specified by the Project Manager, and upon authorization
by CITY (defined as counter-signature by the CITY Project Manager), the fully executed
Task Order shall become part of this Agreement. The cumulative total compensation to
CONSULTANT for all Task Orders authorized under this Agreement shall not exceed the
amount of compensation set forth for Additional Services in this Section 4.
CONSULTANT shall only be compensated for Additional Services performed under an
authorized Task Order and only up to the maximum amount of compensation set forth for
Additional Services in this Section 4. Performance of and payment for any Additional
Services are subject to all requirements and restrictions in this Agreement.
SECTION 5. INVOICES. In order to request payment, CONSULTANT shall submit monthly
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invoices to the CITY describing the Services performed and the applicable charges (including, if
applicable, an identification of personnel who performed the Services, hours worked, hourly rates,
and reimbursable expenses), based upon Exhibit C or, as applicable, CONSULTANT’s schedule
of 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 invoices shall be subject to
verification by CITY. CONSULTANT shall send all invoices to CITY’s Project Manager via
email at the following address: PCEContracts@paloalto.gov.. CITY will generally process and
pay invoices within thirty (30) days of receipt of an acceptable invoice.
SECTION 6. QUALIFICATIONS/STANDARD OF CARE. All Services shall be performed
by CONSULTANT or under CONSULTANT’s supervision. CONSULTANT represents that it,
its employees and subcontractors, if any, possess the professional and technical personnel
necessary to perform the Services required by this Agreement and that the personnel have
sufficient skill and experience to perform the Services assigned to them. CONSULTANT
represents that it, its employees and subcontractors, if any, 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 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, as amended from time to time. 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 is solely responsible for costs,
including, but not limited to, increases in the cost of Services, arising from or caused by
CONSULTANT’s errors and omissions, including, but not limited to, the costs of corrections such
errors and omissions, any change order markup costs, or costs arising from delay caused by the
errors and omissions or unreasonable delay in correcting the errors and omissions.
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 the CITY’s
stated construction budget by ten percent (10%) or more, CONSULTANT shall make
recommendations to CITY for aligning the Project design with the budget, incorporate CITY
approved recommendations, and revise the design to meet the Project budget, at no additional cost
to CITY.
SECTION 10. INDEPENDENT CONTRACTOR. CONSULTANT acknowledges and agrees
that CONSULTANT and any agent or employee of CONSULTANT will act as and shall be
deemed at all times to be an independent contractor and shall be wholly responsible for the manner
in which CONSULTANT performs the Services requested by CITY under this Agreement.
CONSULTANT and any agent or employee of CONSULTANT will not have employee status
with CITY, nor be entitled to participate in any plans, arrangements, or distributions by CITY
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pertaining to or in connection with any retirement, health or other benefits that CITY may offer its
employees. CONSULTANT will be responsible for all obligations and payments, whether
imposed by federal, state or local law, including, but not limited to, FICA, income tax
withholdings, workers’ compensation, unemployment compensation, insurance, and other similar
responsibilities related to CONSULTANT’s performance of the Services, or any agent or
employee of CONSULTANT providing same. Nothing in this Agreement shall be construed as
creating an employment or agency relationship between CITY and CONSULTANT or any agent
or employee of CONSULTANT. Any terms in this Agreement referring to direction from CITY
shall be construed as providing for direction as to policy and the result of CONSULTANT’s
provision of the Services only, and not as to the means by which such a result is obtained.
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 approval of the City Manager. Any purported
assignment made without the prior written approval of the City Manager will be void and without
effect. Subject to the foregoing, the covenants, terms, conditions and provisions of this Agreement
will apply to, and will bind, the heirs, successors, executors, administrators and assignees of the
parties.
SECTION 12. SUBCONTRACTING.
Subcontracts Authorized: Notwithstanding Section 11 (Assignment) above, CITY agrees that
subcontractors may be used to complete the Services with prior approval, documented in writing,
including Scope of Services, cost, and schedule of performances. The use of subcontractors cannot
increase compensation pursuant to Section 4 of this Agreement. The subcontractors identified at
Agreement commencement are:
- NBS GOVERNMENT FINANCE GROUP (CA#1968655) 32605 Temecula Parkway
#316 Temecula, CA 92592
CONSULTANT shall be responsible for directing the work of any subcontractors and for any
compensation due to subcontractors. CITY assumes no responsibility whatsoever concerning
compensation of subcontractors. CONSULTANT shall be fully responsible to CITY for all acts
and omissions of subcontractors. CONSULTANT shall change or add subcontractors only with
the prior written approval of the City Manager or designee.
SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Tim R. Bretz, Phone:
(213) 622-8095 ext. 404, Email: tbretz@keysermarston.com as the CONSULTANT’s Project
Manager to have supervisory responsibility for the performance, progress, and execution of the
Services and represent CONSULTANT during the day-to-day performance of the Services. If
circumstances cause the substitution of the CONSULTANT’s Project Manager or any other of
CONSULTANT’s key personnel for any reason, the appointment of a substitute Project Manager
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 CONSULTANT 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 Services
or a threat to the safety of persons or property.
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CITY’s Project Manager is Julia Knight, Planning & Development Services Department, 250
Hamilton Avenue Palo Alto, CA, 95014, Telephone: (650) 838-2839.. CITY’s Project Manager
will be CONSULTANT’s point of contact with respect to performance, progress and execution of
the Services. CITY may designate an alternate Project Manager from time to time.
SECTION 14. OWNERSHIP OF MATERIALS. With the exception of CONSULTANT’S
proprietary computer models, all work product, including without limitation, all writings,
drawings, studies, sketches, photographs, plans, reports, specifications, computations, models,
recordings, data, documents, and other materials and copyright interests developed under this
Agreement, in any form or media, 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 product pursuant to this Agreement are vested in CITY, and CONSULTANT
hereby waives and relinquishes all claims to copyright or other intellectual property rights in favor
of CITY. Neither CONSULTANT nor its subcontractors, if any, shall make any of such work
product 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 Services.
SECTION 15. AUDITS. CONSULTANT agrees to permit CITY and its authorized
representatives to audit, at any reasonable time during the term of this Agreement and for four (4)
years from the date of final payment, CONSULTANT’s records pertaining to matters covered by
this Agreement, including without limitation records demonstrating compliance with the
requirements of Section 10 (Independent Contractor). CONSULTANT further agrees to maintain
and retain accurate books and records in accordance with generally accepted accounting principles
for at least four (4) years after the expiration or earlier termination of this Agreement or the
completion of any audit hereunder, whichever is later.
SECTION 16. INDEMNITY.
16.1. To the fullest extent permitted by law, CONSULTANT shall 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 the negligence, recklessness or willful misconduct 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 a Claim arising from the active
negligence or willful misconduct of an Indemnified Party that is not contributed to by any act of,
or by any omission to perform a duty imposed by law or agreement by, CONSULTANT, its
officers, employees, agents or contractors under this Agreement.
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
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the expiration or early termination of this Agreement.
SECTION 17. WAIVERS. No waiver of a condition or nonperformance of an obligation under
this Agreement is effective unless it is in writing in accordance with Section 29.4 of this
Agreement. No delay or failure to require performance of any provision of this Agreement shall
constitute a waiver of that provision as to that or any other instance. Any waiver granted shall
apply solely to the specific instance expressly stated. No single or partial exercise of any right or
remedy will preclude any other or further exercise of any right or remedy.
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, entitled “INSURANCE REQUIREMENTS”. CONSULTANT and its contractors, if any, shall
obtain a policy endorsement naming CITY as an additional insured under any general liability or
automobile policy or policies.
18.2. All insurance coverage required hereunder shall be provided through
carriers with AM Best’s Key Rating Guide ratings of A-:VII or higher which are licensed or
authorized to transact insurance business in the State of California. Any and all contractors of
CONSULTANT retained to perform Services under this Agreement will obtain and maintain, in
full force and effect during the term of this Agreement, identical insurance coverage, naming CITY
as an additional insured under such policies as required above.
18.3. Certificates evidencing such insurance shall be filed with CITY
concurrently with the execution of this Agreement. The certificates will be subject to the approval
of CITY’s Risk Manager and will contain an endorsement stating that the insurance is primary
coverage and will not be canceled, or materially reduced in coverage or limits, by the insurer except
after filing with the Purchasing Manager thirty (30) days’ prior written notice of the cancellation
or modification. If the insurer cancels or modifies the insurance and provides less than thirty (30)
days’ notice to CONSULTANT, CONSULTANT shall provide the Purchasing Manager written
notice of the cancellation or modification within two (2) business days of the CONSULTANT’s
receipt of such notice. CONSULTANT shall be responsible for ensuring that current certificates
evidencing the insurance are provided to CITY’s Chief Procurement Officer during the entire term
of this Agreement.
18.4. The procuring of such required policy or policies of insurance will not be
construed to limit CONSULTANT’s liability hereunder nor to fulfill the indemnification
provisions of this Agreement. Notwithstanding the policy or policies of insurance,
CONSULTANT will be obligated for the full and total amount of any damage, injury, or loss
caused by or directly arising as a result of the Services performed under this Agreement, including
such damage, injury, or loss arising after the Agreement is terminated or the term has expired.
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. If CONSULTANT fails to perform any of its material
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obligations under this Agreement, in addition to all other remedies provided under this Agreement
or at law, the City Manager may terminate this Agreement sooner upon written notice of
termination. Upon receipt of any notice of suspension or termination, CONSULTANT will
discontinue its performance of the Services on the effective date in the notice of suspension or
termination.
19.2. In event of suspension or termination, CONSULTANT will deliver to the
City Manager on or before the effective date in the notice of suspension or termination, any and
all work product, as detailed in Section 14 (Ownership of Materials), whether or not completed,
prepared by CONSULTANT or its contractors, if any, in the performance of this Agreement. Such
work product is the property of CITY, as detailed in Section 14 (Ownership of Materials).
19.3. In event of suspension or termination, CONSULTANT will be paid for the
Services rendered and work products delivered to CITY in accordance with the Scope of Services
up to the effective date in the 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
provided in material conformity with this Agreement as such determination is 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, 17, 19.2, 19.3, 19.4, 20, 25,
27, 28, 29 and 30.
19.4. 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, unless made
in accordance with Section 17 (Waivers).
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 Manager at the address of
CONSULTANT recited on the first page of this Agreement.
CONSULTANT shall provide written notice to CITY of any change of address.
SECTION 21. CONFLICT OF INTEREST.
21.1. In executing 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.
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21.2. CONSULTANT further covenants that, in the performance of this
Agreement, it will not employ subcontractors or other persons or parties 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, as amended from time to time. CONSULTANT agrees to notify CITY if any
conflict arises.
21.3. If the CONSULTANT meets the definition of a “Consultant” as defined by
the Regulations of the Fair Political Practices Commission, CONSULTANT will file the
appropriate financial disclosure documents required by the Palo Alto Municipal Code and the
Political Reform Act of 1974, as amended from time to time.
SECTION 22. NONDISCRIMINATION; COMPLIANCE WITH ADA.
22.1. As set forth in Palo Alto Municipal Code Section 2.30.510, as amended
from time to time, CONSULTANT certifies that in the performance of this Agreement, it shall not
discriminate in the employment of any person due to that person’s race, skin color, gender, gender
identity, age, religion, disability, national origin, ancestry, sexual orientation, pregnancy, genetic
information or condition, 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.
22.2. CONSULTANT understands and agrees that pursuant to the Americans
Disabilities Act (“ADA”), programs, services and other activities provided by a public entity to
the public, whether directly or through a contractor or subcontractor, are required to be accessible
to the disabled public. CONSULTANT will provide the Services specified in this Agreement in a
manner that complies with the ADA and any other applicable federal, state and local disability
rights laws and regulations, as amended from time to time. CONSULTANT will not discriminate
against persons with disabilities in the provision of services, benefits or activities provided under
this Agreement.
SECTION 23. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO
WASTE REQUIREMENTS. CONSULTANT shall comply with the CITY’s Environmentally
Preferred Purchasing policies which are available at CITY’s Purchasing Department, hereby
incorporated by reference and as amended from time to time. CONSULTANT shall comply with
waste reduction, reuse, recycling and disposal requirements of CITY’s Zero Waste Program. Zero
Waste best practices include, first, minimizing and reducing waste; second, reusing waste; and,
third, recycling or composting waste. In particular, CONSULTANT shall comply with the
following Zero Waste requirements:
(a) 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 CITY’s Project Manager. Any
submitted materials printed by a professional printing company shall be a minimum of 30% or
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greater post-consumer material and printed with vegetable-based inks.
(b) Goods purchased by CONSULTANT on behalf of CITY shall be purchased in
accordance with CITY’s Environmental Purchasing Policy including but not limited to Extended
Producer Responsibility requirements for products and packaging. A copy of this policy is on file
at the Purchasing Department’s office.
(c) Reusable/returnable pallets shall be taken back by CONSULTANT, at no
additional cost to 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. COMPLIANCE WITH PALO ALTO MINIMUM WAGE ORDINANCE.
CONSULTANT shall comply with all requirements of the Palo Alto Municipal Code Chapter 4.62
(Citywide Minimum Wage), as amended from time to time. In particular, for any employee
otherwise entitled to the State minimum wage, who performs at least two (2) hours of work in a
calendar week within the geographic boundaries of the City, CONSULTANT shall pay such
employees no less than the minimum wage set forth in Palo Alto Municipal Code Section 4.62.030
for each hour worked within the geographic boundaries of the City of Palo Alto. In addition,
CONSULTANT shall post notices regarding the Palo Alto Minimum Wage Ordinance in
accordance with Palo Alto Municipal Code Section 4.62.060.
SECTION 25. 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, as amended from time to
time. 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 26. PREVAILING WAGES AND DIR REGISTRATION FOR PUBLIC
WORKS CONTRACTS.
26.1. This Project is not subject to prevailing wages and related
requirements. CONSULTANT is not required to pay prevailing wages and meet related
requirements under the California Labor Code and California Code of Regulations in the
performance and implementation of the Project if the contract:
(1) is not a public works contract;
(2) is for a public works construction project of $25,000 or less, per California
Labor Code Sections 1782(d)(1), 1725.5(f) and 1773.3(j); or
(3) is for a public works alteration, demolition, repair, or maintenance project of
$15,000 or less, per California Labor Code Sections 1782(d)(1), 1725.5(f) and
1773.3(j).
SECTION 27. CLAIMS PROCEDURE FOR “9204 PUBLIC WORKS PROJECTS”. For
purposes of this Section 27, a “9204 Public Works Project” means the erection, construction,
alteration, repair, or improvement of any public structure, building, road, or other public
improvement of any kind. (Cal. Pub. Cont. Code § 9204.) Per California Public Contract Code
Section 9204, for Public Works Projects, certain claims procedures shall apply, as set forth in
Exhibit F, entitled “Claims for Public Contract Code Section 9204 Public Works Projects”.
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This Project is not a 9204 Public Works Project.
SECTION 28. CONFIDENTIAL INFORMATION.
28.1. In the performance of this Agreement, CONSULTANT may have access to
CITY’s Confidential Information (defined below). CONSULTANT will hold Confidential
Information in strict confidence, not disclose it to any third party, and will use it only for the
performance of its obligations to CITY under this Agreement and for no other purpose.
CONSULTANT will maintain reasonable and appropriate administrative, technical and physical
safeguards to ensure the security, confidentiality and integrity of the Confidential Information.
Notwithstanding the foregoing, CONSULTANT may disclose Confidential Information to its
employees, agents and subcontractors, if any, to the extent they have a need to know in order to
perform CONSULTANT’s obligations to CITY under this Agreement and for no other purpose,
provided that the CONSULTANT informs them of, and requires them to follow, the confidentiality
and security obligations of this Agreement.
28.2. “Confidential Information” means all data, information (including without
limitation “Personal Information” about a California resident as defined in Civil Code Section
1798 et seq., as amended from time to time) and materials, in any form or media, tangible or
intangible, provided or otherwise made available to CONSULTANT by CITY, directly or
indirectly, pursuant to this Agreement. Confidential Information excludes information that
CONSULTANT can show by appropriate documentation: (i) was publicly known at the time it
was provided or has subsequently become publicly known other than by a breach of this
Agreement; (ii) was rightfully in CONSULTANT’s possession free of any obligation of
confidence prior to receipt of Confidential Information; (iii) is rightfully obtained by
CONSULTANT from a third party without breach of any confidentiality obligation; (iv) is
independently developed by employees of CONSULTANT without any use of or access to the
Confidential Information; or (v) CONSULTANT has written consent to disclose signed by an
authorized representative of CITY.
28.3. Notwithstanding the foregoing, CONSULTANT may disclose Confidential
Information to the extent required by order of a court of competent jurisdiction or governmental
body, provided that CONSULTANT will notify CITY in writing of such order immediately upon
receipt and prior to any such disclosure (unless CONSULTANT is prohibited by law from doing
so), to give CITY an opportunity to oppose or otherwise respond to such order.
28.4. CONSULTANT will notify City promptly upon learning of any breach in
the security of its systems or unauthorized disclosure of, or access to, Confidential Information in
its possession or control, and if such Confidential Information consists of Personal Information,
CONSULTANT will provide information to CITY sufficient to meet the notice requirements of
Civil Code Section 1798 et seq., as applicable, as amended from time to time.
28.5. Prior to or upon termination or expiration of this Agreement,
CONSULTANT will honor any request from the CITY to return or securely destroy all copies of
Confidential Information. All Confidential Information is and will remain the property of the CITY
and nothing contained in this Agreement grants or confers any rights to such Confidential
Information on CONSULTANT.
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28.6. If selected in Section 30 (Exhibits), this Agreement is also subject to the
terms and conditions of the Information Privacy Policy and Cybersecurity Terms and Conditions.
SECTION 29. MISCELLANEOUS PROVISIONS.
29.1. This Agreement will be governed by California law, without regard to its
conflict of law provisions.
29.2. 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.
29.3. 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.
29.4. This Agreement, including all exhibits, constitutes the entire and integrated
agreement between the parties with respect to the subject matter of this Agreement, and supersedes
all prior agreements, negotiations, representations, statements and undertakings, either oral or
written. This Agreement may be amended only by a written instrument, which is signed by the
authorized representatives of the parties and approved as required under Palo Alto Municipal
Code, as amended from time to time.
29.5. If a court of competent jurisdiction finds or rules that any provision of this
Agreement is void or unenforceable, the unaffected provisions of this Agreement will remain in
full force and effect.
29.6. In the event of a conflict between the terms of this Agreement and the
exhibits hereto (per Section 30) or CONSULTANT’s proposal (if any), the Agreement shall
control. In the event of a conflict between the exhibits hereto and CONSULTANT’s proposal (if
any), the exhibits shall control.
29.7. The provisions of all checked boxes in this Agreement shall apply to this
Agreement; the provisions of any unchecked boxes shall not apply to this Agreement.
29.8. All section headings contained in this Agreement are for convenience and
reference only and are not intended to define or limit the scope of any provision of this Agreement.
29.9. This Agreement may be signed in multiple counterparts, which, when
executed by the authorized representatives of the parties, shall together constitute a single binding
agreement.
SECTION 30. EXHIBITS. Each of the following exhibits, if the check box for such exhibit is
selected below, is hereby attached and incorporated into this Agreement by reference as though
fully set forth herein:
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EXHIBIT A: SCOPE OF SERVICES
EXHIBIT A-1 PROFESSIONAL SERVICES TASK ORDER
EXHIBIT B: SCHEDULE OF PERFORMANCE
EXHIBIT C: COMPENSATION
EXHIBIT C-1: SCHEDULE OF RATES
EXHIBIT D: INSURANCE REQUIREMENTS
THIS AGREEMENT IS NOT COMPLETE UNLESS ALL SELECTED EXHIBITS
ARE ATTACHED.
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CONTRACT No. C26194283
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have by their duly authorized representatives
executed this Agreement as of the date first above written.
CITY OF PALO ALTO
____________________________
City Manager
APPROVED AS TO FORM:
__________________________
City Attorney or designee
KEYSER MARSTON ASSOCIATES,
INC.
Officer 1
By:
Name: Kathleen Head
Title: President
khead@keysermarston.com
Officer 2 (Required for Corp. or LLC)
By:
Name: Tim Bretz
Title: Assistant Secretary
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EXHIBIT A
SCOPE OF SERVICES
CONSULTANT shall provide the Services detailed in this Exhibit A, entitled “SCOPE OF
SERVICES”. Notwithstanding any provision herein to the contrary, CONSULTANT’s duties and
services described in this Scope of Services shall not include preparing or assisting CITY with any
portion of CITY’s preparation of a request for proposals, request for qualifications, or any other
solicitation regarding a subsequent or additional contract with CITY. CITY shall at all times retain
responsibility for public contracting, including with respect to any subsequent phase of this project.
CONSULTANT’s participation in the planning, discussions, or drawing of project plans or
specifications shall be limited to conceptual, preliminary, or initial plans or specifications.
CONSULTANT shall cooperate with CITY to ensure that all bidders for a subsequent contract on
any subsequent phase of this project have access to the same information, including all conceptual,
preliminary, or initial plans or specifications prepared by CONSULTANT pursuant to this Scope
of Services.
TASK A. NEXUS STUDIES
Task A – Part 1 – Kick-Off Meeting
CONSULTANT and SUBCONSULTANT will prepare a meeting agenda and attend a virtual
kick -off meeting with CITY staff. CONSULTANT proposes to discuss the following at this kick
off meeting:
• Discuss the goals, work plan and schedule for the project
• Establish coordination, communication and reporting procedures
• Conduct initial interviews with key CITY staff members
• Evaluate available information resources
• Review the existing impact fee program and inclusionary housing program, and identify
any issues of concern to the staff, CITY Council members or stakeholders
• Assess the CITY’s current development patterns and growth potential
Upon project initiation, we plan to review impacts and explore methodology options relating to
fee programs as a result of recent legislative changes such as AB 602 and legal decisions such as
Sheetz v. County of El Dorado. We request the CITY involve legal counsel at this time to assist
in discussion and direction setting for the study that will best serve the CITY’s needs.
Task A – Part 2 – Development Impact Fees for Non- Affordable Housing Fees
The scope of services proposed to be completed by SUBCONSULTANT is specific to section
5.1.A- Nexus Study (Legal Foundation) of the CITY’s RFP#194283 for a Development Impact
and In- Lieu Nexus and Feasibility Study.
The following impact fees will be addressed in the scope of work for this agreement:
• Parks Development
• Community Center
• Library
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• General Government Facility
• Citywide Transportation (vehicle trips method)
• Public Safety Facility
• Charleston -Arastradero Corridor Pedestrian and Bicyclist Safety
The following In- Lieu fees will also be addressed:
• Parkland Dedication (Quimby Act)
• Public Art (as authorized by local ordinance requirements)
• University Ave Non -Residential Parking
SUBCONSULTANT understands Water and Wastewater Connection/Capacity fees are excluded
from the scope of review; however, SUBCONSULTANT can assist under an amended scope of
services and project budget with these fees as needed.
SUBCONSULTANT is also available to initially discuss current or planned infrastructure with
the CITY that could lead to identification of new fees, and the data available to support a solid
nexus for new fees. Analysis and development of new fee calculations, however, would also be
covered under a separate scope of services and project budget from this proposal.
INFORMATION TO BE PROVIDED BY THE CITY
The work to be performed by SUBCONSULTANT on this impact fee study will depend heavily
on information to be provided by the CITY. Among the types of information needed are:
• The current General Plan, and any specific plans or other relevant planning studies
• Data on the amount of existing development and planned future development in the study
area, by land use type
• The Capital Improvement Program, level of service policies, facility master plans and
other facility planning data, plus inventories of existing facilities, vehicles and equipment
of types to be funded by impact fees
• Cost estimates for land, capital improvements, vehicles, and/or equipment to be funded
by impact fees
• Information on capital improvement funding sources and financing plans and any
outstanding debt related to existing capital facilities
This agreement assumes that all information needed to perform the work covered by the scope of
this agreement will be provided by the CITY or is readily available from other sources such as
the U.S. Census Bureau or the California Department of Finance.
Detailed Work Plan
The following subtasks comprise the detailed work plan for this fee study. These subtasks
represent the typical requirements of a non -affordable housing impact fee study and may be
adjusted to meet the needs of this project.
SUBTASK 1: COMPILE DATA ON EXISTING AND FUTURE DEVELOPMENT
In this task, the SUBCONSULTANT will collect, review, organize and analyze data on existing
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and future development in the CITY and compile it in a form useful for this study. Steps in that
process may include:
• Establish boundaries of the study area to be used in the analysis (e.g., existing CITY vs.
sphere of influence)
• Define the breakdown of land use types to be used in the study
• A critical new requirement of AB 602 (Govt. Code Section 66016.5) is that residential
impact fees must be calculated proportionately to the square footage of units unless
another method is justified by specific findings. We will work with the CITY early in the
study process to determine the most appropriate way to satisfy that requirement,
including alternative fee structures such as housing -related fees based on bedroom count
or a hybrid model based on both bedroom count and square footage.
• Discuss applicability of fees to home additions and full rebuilds, based on incremental
size increases
• Discuss options for charging fees to Junior/Accessory Dwelling Units (JADUs and
ADUs), considering State requirements, local policy goals, and equity impacts
• Analyze land use data provided by the CITY to establish a baseline of existing
development and a forecast of future development by land use type
• Identify demand variables and specify demand factors that will be used to represent the
impact of development in the impact fee calculations
• Prepare development data tables to incorporate into the fee calculation model and the
study report
SUBTASK 2: FACILITY NEEDS ANALYSIS
Using forecasts of future development from Subtask 1, SUBCONSULTANT will review the
Capital Improvement Program and facility master plans and work with staff to identify new
facilities, facility expansions, vehicles and equipment needed to serve future development. Steps
in that process will include the following:
• Review adopted level -of-service standards and actual service levels for relevant facility
types
• Work with CITY staff to identify the operative level -of-service standard to be used in the
impact fee analysis for each facility type
• Identify any existing deficiencies or available capacity relative to the selected level of
service standard
• Project the additional service demand that will be created by new development, based on
selected service levels
• Translate service demand into facility needs by facility type
• Compile cost estimates for relevant facilities and other assets\
• Identify costs eligible for impact fee funding
The scope of this study excludes any legal, engineering, architectural, cost estimating and
appraisal services; SUBCONSULTANT will, however, provide guidance and recommendations
to the CITY regarding typical sources of information utilized in impact fee studies for
development of facility needs assumptions. To the extent the CITY is tasked with estimating
costs for existing facilities or new and expanded facilities, SUBCONSULTANT will provide
guidance as to the format and requirements of information needed to inform the impact fee
calculation model.
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SUBTASK 3: IMPACT /IN-LIEU FEE ANALYSIS
Using the information developed in Subtasks 1 and 2, we will conduct the fee analysis and
calculate impact fees by land use type for each type of facility addressed in the study. That
process typically includes these steps:
• Review the methods used to calculate existing impact fees and consider alternative
methods where appropriate
• Construct a spreadsheet fee calculation model incorporating data on existing and future
development, demand factors and costs for land, buildings and other capital assets
relevant to the fee calculations
• Specify formulas in the model to allocate facility costs in proportion to the impact of new
development by land use type
• Calculate a cost per unit of service for each facility type
• Convert the cost per unit of service into a schedule of impact fees per unit of
development, by development type
• Project potential revenue from the proposed fees
In-Lieu fees will generally follow the same approach, as needed, depending on type of facility.
Specific to transportation- related fees, the CITY’s RFP for this project requests evaluation of
transportation -related fees based on multimodal trips, vehicle miles traveled
(VMT), combination of both vehicle trips and VMT, or an asset inventory method. The scope of
work proposed for transportation- related fees will rely on the cost of transportation facilities
needed to serve new development, as provided by the CITY, and apply a standard vehicle trips
cost allocation method, relying on ITE data factors for trips and average trip length (if
applicable). Other cost allocation methods such as VMT or multi -modal trips would require the
CITY to provide data on how many trips, either multi- modal and/VMT , are added by new
development, and specifically how those trips are associated with each type of development.
This typically requires a traffic model or third party traffic engineering study to support. If active
transportation measures are to be incorporated that reduce the need for more roadway capacity,
the CITY would also need to provide the engineering cost estimating and trip reduction factors
associated with these improvements.
SUBTASK 3.1 ADDITIONAL TRANSPORTATION ANALYSIS (Optional)
CITY staff may direct CONSULTANT or SUBCONSULTANT to conduct further background
analysis to refine transportation-related needs, models and assumptions to explore various fee
structures. The focus of this task will be on enhancing the quality of existing transportation data,
identifying gaps and incorporating new data and insights. The CONSULTANT will work closely
with CITY staff to validate assumptions, ensuring they align with current standards and local
needs. Deliverables may include one or more memos detailing the strengths and weaknesses of
the different fee structures studied and/or recommending any additional analysis or next steps
needed to select and implement an alternative transportation fee structure in the future.
This task is not included in the budget noted in Agreement’s Exhibit C - (SUPPLEMENTAL
POLICY AND PROGRAM ANALYSIS & STAKEHOLDER ENGAGEMENT). If CITY staff
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initiate this task, they would utilize the provision of Exhibit C, to transfer funds between tasks, or
utilize the additional services budget, or seek a contract amendment to increase the maximum
total compensation.
SUBTASK 4: CAPITAL INFRASTRUCTURE PLANNING ASSISTANCE
Results of the impact fee analysis in Subtask 3, above, will provide estimated projections of
potential revenue from impact fees based on growth assumptions developed in Subtask 1. The
CITY will need to identify how the impact fees will be spent on specific projects.
A new provision in the Mitigation Fee Act, Government Code Section 66016.5(a)(6), was added
by Assembly Bill 602 in 2021 and requires that large jurisdictions adopt a capital improvement
plan as part of an impact fee study. “Large jurisdiction” means a county of 250,000 or more or
any CITY within that county, to which Palo Alto qualifies. That requirement applies to all
impact fee nexus studies adopted after January 1, 2022. Section 66002 (a) states that the capital
improvement plan shall indicate the approximate location, size, time of availability and estimates
of cost for all facilities or improvements to be financed with the fees.
For this task, the CITY will be responsible for identifying the list capital improvement projects
needed to serve new development, including any architectural, engineering, or cost estimation
required to describe and define each project. SUBCONSULTANT is available to assist the
CITY in meeting the capital improvement plan requirements, as follows:
• Project additional facility requirements based on determinations of existing levels of
service for each facility type developed in Subtask 2. This task applies to all facility types
in the scope of work with the exception of engineered facilities such as transportation as
well as in -lieu fees.
• Work with the CITY Attorney to obtain direction as to whether the CIP pertaining to
impact fees is to be included in the actual consultant report, or through targeted
amendments to the CITY’s overall Capital Improvement Program.
• Assist in evaluation of proposed project eligibility for impact fee funding and standard
approaches to determining whole or partial funding depending on the type of
improvement proposed
The deliverable for this task includes development of report text and formatted appendices for
inclusion in the Draft and Final Study Reports, as directed by the CITY.
SUBTASK 5: DRAFT AND FINAL STUDY REPORTS
The draft and final report for the study will explain the data, methodology and formulas
used in the fee calculations and document the nexus between the proposed fees and the impacts
of development for each type of impact fee calculated in the study. As the study progresses,
SUBCONSULTANT will submit preliminary drafts of portions of the study report for review
and comment by CITY staff. Once all sections are in draft form, an administrative draft of the
entire study report, incorporating any previous staff comments, will be submitted for review.
Then a final draft document will be prepared for the CITY Council and public review. If
necessary, additional changes will be incorporated into the final study report.
The study report will include the following components:
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• An Executive Summary including summary impact fee tables
• A chapter discussing the legal requirements for impact fees and methods used to calculate
the fees
• A chapter presenting data on existing and future development in the study area and the
factors used to measure the impacts of development on individual facility types.
• A separate chapter for each type of fee presenting the data and methodology used in the
analysis, a detailed explanation the impact fee calculations, and documentation of the
nexus
• A chapter on implementation recommendations, covering steps needed to comply with
the Mitigation Fee Act through proper administration of the impact fees, including but
not limited to:
o Findings and enactment of fees
o Collection and expenditure of fees
o Accounting and reporting requirements
o Administrative appeals, waivers, and exemptions
o Credits and reimbursements for developer -provided facilities
o Updating and indexing the fees
o Recovery of administrative costs for the impact fee program
Deliverables include: (1) Preliminary chapter drafts; (2) a complete draft report for staff review;
(3) a final draft report for CITY Council and public review; (4) the final report. All drafts and the
final report will be submitted electronically in .pdf format. All original Microsoft Word and
Excel files will be provided to the CITY at completion of the work if requested.
SUBTASK 6: MEETINGS
In general, SUBCONSULTANT has assumed all meetings with staff for the purpose of
developing the final findings and reports for each work plan above will be conducted remotely.
We have the tools to accomplish all aspects of the project’s work plan remotely from
SUBCONSULTANT offices. We utilize video conferencing, email, and telephone to coordinate
on the project and review deliverables in an effective manner.
CONSULTANT, as the project manager, will participate in all meetings with
SUBCONSULTANT and CITY staff with this time included in CONSULTANT’s project
management task.
At the implementation stage of the project, we are available to present the Study’s outcomes in
up to three (3) public meetings. During presentations, SUBCONSULTANT will review the study
process, present study results and recommendations, receive input and guidance on the direction
of the study, and answer questions. We will prepare a PowerPoint presentation for these
meetings which will include visual aids, graphics, charts, and additional worksheets or handouts.
Task A – Part 3 – Development Impact Fees for Affordable Housing
The CITY desires to complete nexus studies to support the imposition of affordable housing
impact fees on residential and/or non- residential development. To that end, CONSULTANT will
prepare the following affordable housing nexus studies.
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• Residential Affordable Housing Nexus Study: The residential nexus study is used to
document the impact of residential development on the need for affordable housing, to
quantify the cost of providing affordable units to mitigate this increased affordable
housing need and to determine the resulting mitigation cost on a per square foot and per
unit basis. The Residential Affordable Housing Nexus Study results in the maximum
legally supportable affordable housing impact fee that can be assessed against new mar
ket rate residential development. For the purposes of the residential affordable housing
nexus study, CONSULTANT proposes to analyze the following residential development
types: detached single family development, attached single family development, and
apartment s with varying densities/sizes ( e.g., small apartment project and large
apartment project).
• Non -Residential Affordable Housing Nexus Study: The non -residential nexus study is
used to document the relationship between new non- residential development, job growth
and affordable housing needs for a range of non- residential development types. The
Non-Residential Affordable Housing Nexus Study results in the maximum legally
supportable affordable housing impact fee that can be assessed against new non -
residential development. For the purposes of the non -residential affordable housing
nexus study, CONSULTANT proposes to analyze the following non -residential land
uses: retail, office, industrial, warehouse, lodging, and research and development.
For both the residential and non -residential nexus studies, CONSULTANT will include the
following:
• Provide recommendations for assessing affordable housing impact fees on home
additions and full rebuilds.
• Provide recommendations related to imposing affordable housing impact fees on
Junior/Accessory Dwelling Units.
• Provide recommendations for methods for increasing the affordable housing impact fees
on an annual basis.
Deliverables: CONSULTANT will prepare written nexus study reports summarizing the
methodology, analysis and maximum legally supportable affordable housing impact fees. The
reports will be separated between the residential nexus study and the non- residential nexus
study. We propose to provide the CITY with one administrative draft of each respective report
and one final draft based on the CITY’s comments.
Meetings: CONSULTANT is prepared to participate in virtual meetings with CITY staff and
stakeholders throughout the engagement. We are also available to present at up to three (3)
public meetings. CONSULTANT will prepare presentation materials for each of these meetings.
Given the scope of work proposed to be provided by CONSULTANT, we have included a
separate meeting budget as part of Task D.
TASK B. FEASIBILITY STUDY (ECONOMIC AND MARKET ANALYSIS)
CONSULTANT proposes to complete the following scope of work related to the Feasibility
Study Task:
Task B – Part 1 – Background Research
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CONSULTANT will review background information provided by the CITY. As part of this task,
CONSULTANT will also prepare a market assessment. The market assessment will provide
context and background information to inform decision -making. This research is important for
understanding local real estate conditions and provides an initial foundation for the development
of residential and non -residential prototypes, which is the starting point for financial feasibility
analyses.
Current real estate conditions and trends will be identified including rents, vacancy rates, home
sale prices, land values, development activity, and the status of major proposed projects.
CONSULTANT will first review any materials provided by the CITY and will then access
additional data sources including recently developed projects, brokerage reports, market data
firms, government reports and other sources.
CONSULTANT will create charts that summarize the pertinent requirements of development
impact fee programs that are levied on residential and non -residential construction in other
California locations. CONSULTANT will work with CITY staff to identify the relevant
jurisdictions to be used in the comparative analysis. The chart will compare the magnitude of the
impact fees imposed by the surveyed programs.
Task B – Part 2 – Creation of Residential Development Prototypes
CONSULTANT anticipates identifying up to six residential prototypes that vary in product type
(detached, attached, etc.), size (bedrooms, square footage) and tenure (rental or ownership) that
will be used to evaluate financial feasibility of varying impact fee amounts as well as to provide
an analysis of potential modifications to the CITY’s 2020 Below Market Rate Financial
Feasibility Report. The intent of the residential prototypes is to reflect the range of development
types expected to occur within Palo Alto in the near term.
Task B – Part 3 – Financial Feasibility Analyses
To evaluate the impacts of proposed impact fees on financial feasibility, CONSULTANT will
prepare pro forma analyses for each of the residential development prototypes identified in Task
B – Part 2. For each of the development prototypes, CONSULTANT proposes to prepare a pro
forma analysis for each of the following scenarios:
• Current Fee Amounts
• Proposed Fee Amounts
• Alternate Fee Level #1
As such, CONSULTANT proposes to prepare three pro forma analyses for each of the six
development prototypes. This equates to a total of 18 pro forma analyses.
The CONSULTANT pro forma analyses will be based on the following assumptions:
• CONSULTANT will use construction and development cost information in its files, as
well as any information provided by the CITY, to create development cost estimates.
CONSULTANT will also reach out to developers to get their input on current
development costs.
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• CONSULTANT will utilize income and operating expense information drawn from
CONSULTANT’s recent experience, as well as any information provided by the CITY or
local developers.
• CONSULTANT will research current capitalization rates and typical return requirements
for each of the land uses.
The CONSULTANT pro forma analyses will be utilized to evaluate the financial feasibility of
each of development prototypes and fee levels. To that end, the pro forma analyses will solve
for the financial surplus or financial gap exhibited by each prototype and impact fee level
scenario. For the purposes of this analysis, CONSULTANT will evaluate the total amount of
maximum financially feasible supportable impact fee amounts. The CITY will need to determine
the individual impact fee amounts to be imposed.
EVALUATION OF POLICY QUESTIONS
The financial feasibility analysis will be used to evaluate the following policy questions :
• CONSULTANT will evaluate how fee waivers and reductions for projects that restrict at
least 20% of the units to households earning 100% AMI or less affect financial
feasibility.
• The results of the financial feasibility analysis will be used to assess the cumulative
impact of development fees to housing feasibility . CONSULTANT will use the results of
the financial feasibility analyses to recommend potential adjustments to the CITY’s fee
amounts.
Task B – Part 4 – Final Feasibility Study
CONSULTANT will prepare a written report summarizing the pro forma analyses and financial
feasibility conclusions. The report will include a description of the development protypes, the
financial assumptions utilized in the pro forma analyses, and the financial surplus or financial
gap generated by each scenario. In addition, CONSULTANT will provide recommendations and
issues for the CITY to consider. The CONSULTANT recommendations will be based on a
number of factors including the results of the financial feasibility analysis, the comparative
survey completed in Task B – Part 1, and the CITY’s policy objectives.
CONSULTANT finds that it is best to prepare an executive summary level memorandum with
summary tables and CONSULTANT recommendations. Separately, CONSULTANT will
prepare a full written report discussing the CONSULTANT methodology and financial
assumptions. CONSULTANT will provide the pro forma analyses as attachments to this full
written report. CONSULTANT proposes to prepare one administrative draft and one final
version.
TASK C. SUPPLEMENTAL POLICY AND PROGRAM ANALYSIS AND
STAKEHOLDER ENGAGEMENT
CONSULTANT proposes to assist the CITY with evaluating the following :
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Using the prototypes from Task B, CONSULTANT will evaluate the existing inclusionary
housing program requirements as well as potential modified requirements for new residential
construction. The feasibility analysis is needed to demonstrate that the requirements being
imposed do not create a constraint to housing development. The feasibility analysis is also
helpful in illustrating the real estate economic realities of residential development to
stakeholders.
CONSULTANT will also create charts that summarize the inclusionary housing obligations for
rental and for-sale units, as well as other important exemptions or thresholds included in the
surveyed programs in other jurisdictions . CONSULTANT has compiled a database that
includes a significant amount of this information for jurisdictions throughout California.
The feasibility analysis will also be used to assist in defining a menu of compliance options that
adjust the percentage of affordable units required depending on the degree of affordability
achieved (i.e., moderate -, low -, very low -, and extremely low income) in a manner that
incentivizes desired outcomes. CONSULTANT will also research and provide recommendations
related to tiered inclusionary housing requirements.
Deliverables:
• By June 2026, CONSULTANT proposes to prepare an executive summary -level
memorandum that evaluates the CITY’s existing Inclusionary Housing Program.
CONSULTANT will provide recommendations related to potential modifications to the
CITY’s existing Inclusionary Housing Program and/or a proposed action plan for
updating the CITY’s Inclusionary Housing requirements.
• At the completion of the nexus studies and financial feasibility analyses, CONSULTANT
will prepare a comprehensive report outlining the results of the nexus and financial
feasibility studies. This report will include proposed recommendations related to
modifications to the CITY’s impact fees as well as inclusionary requirements. It is
anticipated that this report will be completed after June 2026.
Task C – Part 2 - Stakeholder Engagement
CONSULTANT considers it a best practice to hold stakeholder meetings at both the beginning
of the process and after the nexus studies and feasibility analyses are completed. Meetings at the
outset of the assignment work best when consultants and CITY staff are mostly there to listen.
After the analyses are completed, the meetings are used to discuss the evaluation results and
recommendations for program implementation.
CONSULTANT recommends up to three virtual stakeholder meetings for the proposed scope of
work, and we will work with CITY staff to determine the best approach and= schedule for the
stakeholder meetings. We see the stakeholder sessions as preparation and warm- up for the
public hearing process.
Task C – Part 3 – Assistance to CITY Staff
CONSULTANT will provide the following assistance to CITY staff:
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• Throughout the engagement, CONSULTANT will be available to assist CITY staff with
the preparation of materials used for staff briefings, public workshops and formal
hearings.
• CONSULTANT will prepare outreach materials and respond to stakeholder input, as
requested.
• CONSULTANT will provide draft content for the CITY’s website or FAQs related to fee
changes.
TASK D. MEETINGS AND PROJECT MANAGEMENT
Meetings
CONSULTANT is prepared to participate in virtual meetings with CITY staff and stakeholders
throughout the engagement. We are also available to present at up to three (3) public meetings.
CONSULTANT will prepare presentation materials for each of these meetings. Given the scope
of work proposed to be provided by CONSULTANT, we have included a separate meeting
budget as part of Task D.
Project Management
CONSULTANT will act as the point -of-contact and project manager for this engagement. A
CONSULTANT representative will attend meetings with both SUBCONSULTANT and CITY
Staff throughout the engagement. In addition, CONSULTANT will coordinate the project
schedule ensuring that timelines are met for key deliverables.
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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.
Milestones Number of Days/Weeks (as specified below)
1. TASK A: NEXUS STUDIES Projected August 2026, or to be determined by
CONSULTANT and CITY’s Project Managers
by CONSULTANT and CITY’s Project
AND PROGRAM ANALYSIS &
CONSULTANT and CITY’s Project Managers
Optional Schedule of Performance Provision for Additional Services Agreements.
The schedule of performance shall be as provided as detailed in Section 4 in the case of Additional
Services, provided in all cases that the schedule of performance shall fall within the term as
provided in Section 2 (Term) of this Agreement.
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EXHIBIT C
COMPENSATION
CITY agrees to compensate CONSULTANT for 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 rate schedule attached as Exhibit C-1 up to the not to exceed
budget amount for each task set forth below.
CITY’s Project Manager may approve in writing the transfer of budget amounts between any of
the tasks or categories listed below, provided that the total compensation for the Services,
including any specified reimbursable expenses, and the total compensation for Additional Services
(if any, per Section 4 of the Agreement) do not exceed the amounts set forth in Section 4 of this
Agreement.
CONSULTANT agrees to complete all Services, any specified reimbursable expenses, and
Additional Services (if any, per Section 4), within this/these amount(s). Any work performed or
expenses incurred for which payment would result in a total exceeding the maximum amount of
compensation set forth in this Agreement shall be at no cost to the CITY.
BUDGET SCHEDULE
TASK NOT TO EXCEED AMOUNT
(SUPPLEMENTAL POLICY AND PROGRAM
329,150
8,500
Total for Services and Reimbursable Expenses $337,650
Maximum Total Compensation $371,415
REIMBURSABLE EXPENSES
CONSULTANT’S ordinary business expenses, such as administrative, overhead,
administrative support time/overtime, information systems, software and hardware,
photocopying, telecommunications (telephone, internet), in-house printing, insurance and
other ordinary business expenses, are included within the scope of payment for Services and
are not reimbursable expenses hereunder.
Reimbursable expenses, if any are specified as reimbursable under this section, will be
reimbursed at actual cost. The expenses (by type, e.g. travel) for which CONSULTANT will
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be reimbursed are to purchase IMPLAN data for the residential nexus study, travel and
meeting costs up to the not-to-exceed amount of: $8,500.
A. Travel outside the San Francisco Bay Area, including transportation and meals, if
specified as reimbursable, will be reimbursed at actual cost subject to the City of Palo Alto’s
policy for reimbursement of travel and meal expenses.
B. Long-distance telephone service charges, cellular phone service charges, facsimile
transmission and postage charges, if specified as reimbursable, will be reimbursed at actual
cost.
All requests for reimbursement of expenses, if any are specified as reimbursable under this
section, shall be accompanied by appropriate backup documentation and information.
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EXHIBIT C-1
SCHEDULE OF RATES
CITY and CONSULTANT may at any time mutually agree to add new position titles, rates, and
adjust listed rates so long as the changes do not increase the not to exceed amount as noted in
pursuant to Section 4 of the Agreement. CONSULTANT’s schedule of rates is as follows:
KEYSER MARSTON ASSOCIATES, INC.
HOURLY RATES
President $305
Senior Principal $295
Associate $185
NBS GOVERNMENT FINANCE GROUP
HOURLY RATES
Director $250
Impact Fee Specialist $150
Project Analyst $150
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EXHIBIT D
INSURANCE REQUIREMENTS
CONSULTANTS 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 HEREIN.
REQUIRED TYPE OF COVERAGE REQUIREMENT
MINIMUM LIMITS
EACH
OCCURRENCE AGGREGATE
YES
YES
WORKER’S COMPENSATION
EMPLOYER’S LIABILITY
STATUTORY
STATUTORY 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: CONSULTANT, 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
CONSULTANT
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 CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR
CONSULTANT’S AGREEMENT TO INDEMNIFY CITY.
THE CONSULTANT MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE AT
THE FOLLOWING EMAIL: PURCHASINGSUPPORT@PALOALTO.GOV
II.
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
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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
1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON
OTHER THAN THE NON-PAYMENT OF PREMIUM, THE CONSULTANT SHALL PROVIDE
CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE
OF CANCELLATION.
2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT
OF PREMIUM, THE CONSULTANT SHALL PROVIDE CITY AT LEAST A TEN (10) DAY
WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION.
EVIDENCE OF INSURANCE AND OTHER RELATED NOTICES ARE REQUIRED TO BE
FILED WITH THE CITY OF PALO ALTO SENT TO THE FOLLOWING EMAIL:
PURCHASINGSUPPORT@CITYOFPALOALTO.ORG
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