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2015-06-08 City Council Agenda Packet
CITY OF PALO ALTO CITY COUNCIL June 8, 2015 Regular Meeting Council Chambers 6:00 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday preceding the meeting. 1 June 8, 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 Agenda Changes, Additions and Deletions City Manager Comments 6:00-6:10 PM Oral Communications 6:10-6:25 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. Consent Calendar 6:25-6:30 PM Items will be voted on in one motion unless removed from the calendar by three Council Members. 1.Finance Committee Recommendation to Accept the Police Department: Palo Alto Animal Services Audit 2.Approval of Amendment Three to Contract Number S13149754 With Renne Sloan Holtzman Sakai LLP Public Law Group to Add $36,000 for a Total Amount Not to Exceed $216,000 for Labor Negotiations Services and Extend the Contract Term by Six Months REVISED 2 June 8, 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. 3.Approval of the 2015 Santa Clara County Multi-Jurisdictional Program for Public Information (PPI) to Provide Reduced Flood Insurance Premiums for Palo Alto Residents and Businesses Through the National Flood Insurance Program’s Community Rating System (CRS) Special Orders of the Day 6:30-6:40 PM 4.Appointment of One Candidate to the Architectural Review Board for One Unexpired Term Ending December 15, 2017 Action Items Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters. 6:40-7:00 PM 5.PUBLIC HEARING AND PROPOSITION 218 HEARING: Staff Recommendation that the City Council Adopt a Resolution Amending Rate Schedules W-1 (General Residential Water Service), W-2 (Water Service from Fire Hydrants), W-3 (Fire Service Connections), W-4 (Residential Master-Metered and General Non-Residential Water Service), and W-7 (Non-Residential Irrigation Water Service) to Increase Average Water Rates by 8 Percent 7:00-8:30 PM 6.PUBLIC HEARING AND PROPOSITION 218 HEARING: Adoption of Budget Amendment Ordinance for Fiscal Year 2016, including Adoption of Operating and Capital Budgets and Municipal Fee Schedule; Adoption of five Resolutions, including: Adopting a Dark Fiber Rate Increase of 2.7 Percent and Amending Utility Rate Schedules EDF-1 and EDF-2; Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage) to Increase Storm Drain Rates by 2.7 Percent Per Month Per Equivalent Residential Unit for Fiscal Year 2016; Adopting a Wastewater Collection Fee Increase of 9.0 Percent and Amending Utility Rate Schedules S-1, S-2, S-6, and S-7; Adopting Residential Refuse Rate increases ranging between 9.0 percent and 19.0 percent, and Amending Utility Rules and Regulations 2, 3, 11, and 24; Amending the Salary Schedule attached to the 2014-2016 Compensation Plan for Management and Professional Employees, as Amended by Resolution No. 9053 to Add One New Position and Change The Title of Two Positions; Amending the 2013-15 Memorandum of Agreement Service Employees International Union (SEIU), Adopted by Resolution No 9398 to Add One Position and Correct the Salary of One Position; and Amending the Terms for the Utility Management Professional Association, as Amended by Resolution Nos. 9492 & 9503 to Correct the Salary for One Position and Add Two New Positions; and Refer to the Finance Committee a discussion of changes to the Public Art Ordinance to simplify the calculation of the Public Art Fee and a discussion of usage and replacement of pool vehicles. At-Place Memo 3 June 8, 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. 8:30-10:00 PM 7.Review of a Draft Scope of Work for the Fry's Master Plan and Adoption of a Resolution Regarding the Use of Regional Transportation Funding 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. Closed Session Public Comments: Members of the public may speak to the Closed Session item(s); three minutes per speaker. 8. CONFERENCE WITH CITY ATTORNEY- EXISTING LITIGATION Clear Light Ventures, Inc., et al. v. City of Palo Alto, et al. (Verizon Wireless; Little League Baseball of Palo Alto, Inc.), Santa Clara Superior Court Case No. 1-15-CV-278025 4 June 8, 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 Policy and Services Committee Meeting June 9, 2015 City School Committee Meeting June 11, 2015 Schedule of Meetings Schedule of Meetings Tentative Agenda Tentative Agenda Public Letters to Council Set 1 Set 2 CITY OF PALO ALTO OFFICE OF THE CITY AUDITOR June 8, 2015 The Honorable City Council Palo Alto, California Finance Committee Recommendation to Accept the Police Department: Palo Alto Animal Services Audit The Office of the City Auditor recommends acceptance of the Police Department: Palo Alto Animal Services Audit. At its meeting on April 22, 2015, the Finance Committee approved and unanimously recommended that the City Council accept the report. The Finance Committee minutes are included in this packet. Respectfully submitted, Harriet Richardson City Auditor ATTACHMENTS: Attachment A: Police Department: Palo Alto Animal Services Audit (PDF) Attachment B: Weighted Palo Alto Animal Services Survey Results (PDF) Attachment C: Finance Committee Meeting Minutes Excerpt (April 22, 2015) (PDF) Department Head: Harriet Richardson, City Auditor Page 2 CITY OF PALO ALTO OFFICE OF THE CITY AUDITOR April 22, 2015 The Honorable City Council Attention: Finance Committee Palo Alto, California Police Department: Palo Alto Animal Services Audit In accordance with the Fiscal Year 2015 Annual Audit Work Plan, the Office of the City Auditor has completed the Police Department: Palo Alto Animal Services Audit. The audit report presents one finding with a total of eight recommendations. The Office of the City Auditor recommends that the Finance Committee review and recommend to the City Council acceptance of the Palo Alto Animal Services Audit. We would like to thank management and staff in the Administrative Services Department; Community Services Department, including the former director; Police Department, including Animal Services; and Public Works Department for their time, cooperation, and assistance during the audit process. We also thank management and staff at the Palo Alto Humane Society, Humane Society Silicon Valley, Peninsula Humane Society & SPCA, Silicon Valley Animal Control Authority, San Francisco SPCA, and the cities of San Jose and Sunnyvale. Respectfully submitted, Harriet Richardson City Auditor ATTACHMENTS: Attachment A: Police Department: Palo Alto Animal Services Audit (PDF) Department Head: Harriet Richardson, City Auditor Attachment A Page 2 Attachment A Police Department: Palo Alto Animal Services Audit April 2015 Pictures courtesy of Palo Alto Animal Services Office of the City Auditor Harriet Richardson, City Auditor Houman Boussina, Senior Performance Auditor Deniz Tunc, Administrative Assistant Lisa Wehara, Performance Auditor Attachment A Page intentionally left blank Attachment A Office of the City Auditor EXECUTIVE SUMMARY Police Department: Palo Alto Animal Services Audit PURPOSE OF THE AUDIT: The objectives of this audit were to determine: Appropriate areas of focus for the City Council and management based on Palo Alto resident and animal shelter customer opinions regarding: a) the overall adequacy of Palo Alto Animal Services (PAAS), b) demand for local animal sheltering services, and c) resident willingness to financially support PAAS and improvements, including facilities. Whether there are opportunities to increase PAAS revenues and decrease expenditures. Whether Palo Alto effectively and efficiently planned and executed upgrades to the PAAS facility in order to meet sheltering goals and objectives. The appropriateness of PAAS’ organizational structure. SUMMARY OF RESULTS: Palo Alto Animal Services (PAAS) faces challenges that are unlikely to be resolved if it continues operating as solely a city-managed function without a significant increase in general fund subsidy, donations, and/or revenue-generating contracts. Having animal services provided locally is very important to Palo Alto residents and PAAS customers, and they are very satisfied with the quality of PAAS’ services. More than 80 percent of residents and PAAS customers who responded to a recent survey of animal services said it was “essential” or “very important” for PAAS to provide key services such as animal control, animal cruelty investigations, pet licensing, vaccinations, spay and neuter, and the ability to look for or reclaim a lost pet and to surrender a pet or stray animal, but they do not want to travel more than 10 miles for the services. Over 97 percent of survey respondents rated spay and neuter services as “excellent” or “good,” and 90 percent rated animal control, adoptions, and licensing as “excellent” or “good.” PAAS cannot become revenue neutral under its current financial model. Its primary revenue sources have been from the spay and neuter clinic and agreements with Mountain View, Los Altos, and Los Altos Hills to provide animal control services. Although Palo Alto’s general fund has subsidized PAAS during each of the past ten years, the subsidy increased significantly after Palo Alto lost the agreement with Mountain View in November 2012 and the accompanying $400,000 in annual revenues. Additional general fund subsidies were required in Fiscal Year 2014 due to a temporary closure of the spay and neuter clinic that caused revenues to decline from about $190,000 annually to $47,000 after the loss of both veterinary technicians. There is a limited market for entering into agreements with other jurisdictions for animal control services, and most of that market has already been captured by other animal services agencies in the region, including Peninsula Humane Society (PHS), Silicon Valley Animal Control Authority, and San Jose Animal Care and Services. PHS, Humane Society Silicon Valley, and the San Francisco Society for the Prevention of Cruelty to Animals generate a significant amount of revenue through donations and grants, but PAAS cannot solicit donations in city facilities at this time due to city policy. Eighty-two percent of Palo Alto residents and 94 percent of residents who used the shelter in the past 12 months who responded to the animal services survey said that they support using the general fund to subsidize PAAS, and about 75 percent of the survey respondents support a public-private partnership to minimize the general fund subsidy. Office of the City Auditor ● 250 Hamilton Avenue, 7th Floor ● Palo Alto, CA 94301 ● 650.329.2667 Copies of the full report are available on the Office of the City Auditor website at: http://www.cityofpaloalto.org/gov/depts.aud/reports/performance.asp Attachment A Palo Alto Animal Services Revenues and Expenditures FY 2005 to FY 2014 Comparison of Animal Services Agency Revenues as a Percent of Total Expenditures Notes: 1. “Other” includes indirect charges, direct charges, and contract expenses. 2. FY 2014 revenue decline is due to loss of the Mountain View contract and temporary closure of the spay and neuter clinic. Source: City of Palo Alto Financial Records (SAP) Note: Revenues are shown as a percent of total agency expenditures in the specified fiscal year (the most recent financial information available for PHS and SF SPCA was for FY 2013). Bars exceeding 100 percent (HSSV and SF SPCA) indicate that the agency’s revenues exceeded its expenditures. Source: Financial Records Provided by Each Agency The animal shelter, built in 1972, is outdated and does not meet modern standards for animal care, which is likely a reason that other jurisdictions have been reluctant to enter into animal services agreements with Palo Alto. The shelter design does not meet animals’ physical and behavioral needs: kennels are cramped and some have sharp edges that are unsafe for the animals, there is insufficient space to separate incompatible animals, porous flooring cannot be cleaned to recognized standards, there is not a separate receiving and intake room, and some types of small animals are housed in the staff lunch room. Since 2003, the City has spent $1.7 million on capital improvement program (CIP) projects designed mostly to refurbish, repair, rebuild, and/or relocate the outdated facility, but for a variety of reasons, have only provided critical repairs. About 83 percent of Palo Alto residents who responded to the survey “strongly” or “somewhat” support refurbishing the existing animal shelter, while 55 percent support building a new animal shelter. However, because the facility is beyond its useful life, refurbishing the shelter is not a viable option. More than 90 percent of survey respondents “strongly support” or “somewhat support” fundraising to pay for shelter improvements. PAAS’ acting superintendent’s planned retirement in December 2015 creates another challenge. The position’s salaries are not competitive with neighboring animal services organizations, and there is a significant gap between the superintendent’s responsibilities and those of other PAAS positions, thereby limiting the ability for another PAAS employee to step into the superintendent position and be effective. External recruiting would likely be challenging due to uncertainty regarding PAAS’ future. The report describes the pros and cons of various reporting structures for PAAS that could help overcome both the financial and organizational uncertainties facing PAAS. RECOMMENDATIONS The audit report includes eight recommendations designed to ensure the future success and financial viability of PAAS, including assigning someone to work at PAAS to guide it through the transition into the future, conducting a cost- benefit analysis of expanding PAAS hours, identifying a strategy to engage nonprofit organizations and/or other animal service organizations in discussions for operating the shelter, and assessing the feasibility of obtaining funding through fundraising, public/private partnerships, general fund subsidies, or a bond initiative to build a new animal shelter that meets modern-day standards for animal care and safety. $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 Salaries & Benefits Supplies & Materials Other Total revenues 0% 20% 40% 60% 80% 100% 120% 140% 160% Palo Alto 6/30/14 HSSV 6/30/14 PHS 6/30/13 SVACA 6/30/14 San Jose 6/30/14 SF SPCA 6/30/13 Contracts with Government Agencies Program Fees & Charges Other Income Contributions, including Donations & Grants Total Expenditures Attachment A TABLE OF CONTENTS OBJECTIVE .................................................................................................................................................. 1 BACKGROUND ............................................................................................................................................. 1 SCOPE AND METHODOLOGY .......................................................................................................................... 6 FINDING: PALO ALTO ANIMAL SERVICES (PAAS) FACES CHALLENGES THAT ARE UNLIKELY TO BE RESOLVED IF IT CONTINUES OPERATING AS SOLELY A CITY-MANAGED FUNCTION WITHOUT A SIGNIFICANT INCREASE IN GENERAL FUND SUBSIDY, DONATIONS, AND/OR REVENUE-GENERATING CONTRACTS ............................................................................. 10 Finding Recommendations ................................................................................................................... 31 APPENDIX 1: History of Animal Services Facilities in Palo Alto ............................................................... 33 APPENDIX 2: Animal Services Survey ....................................................................................................... 34 APPENDIX 3: Animal Services Survey Results .......................................................................................... 38 APPENDIX 4: Fee Comparison With Other Agencies ............................................................................... 64 APPENDIX 5: Photos Comparing Palo Alto Animal Services Facility and Humane Society Silicon Valley Facilities … ........................................................................................................................................ 65 APPENDIX 6: Municipal Services Center/Animal Services Sites .............................................................. 67 APPENDIX 7: City Manager’s Response ................................................................................................... 68 ABBREVIATIONS ACO Animal Control Officer ADA Americans with Disabilities Act CIP Capital Improvement Program CSD Community Services Department CY Calendar Year FoPAAS Friends of the Palo Alto Animal Shelter FTE Full-time Equivalent FY Fiscal Year HSSV Humane Society Silicon Valley HSUS Humane Society of the United States JMZ Junior Museum and Zoo LATP Los Altos Treatment Plant NACA National Animal Care and Control Association NCS National Citizen Survey™ NRC National Research Center PAAS Palo Alto Animal Services PAHS Palo Alto Humane Society PD Police Department PHS Peninsula Humane Society SF Square Feet SF SPCA San Francisco Society for the Prevention of Cruelty to Animals SPCA Society for the Prevention of Cruelty to Animals SVACA Silicon Valley Animal Control Authority Attachment A Page intentionally left blank Attachment A Audit of Palo Alto Animal Services 1 INTRODUCTION Objective The objectives of this audit were to determine: Appropriate areas of focus for the City Council and management based on Palo Alto resident and animal shelter customer opinions regarding: a) the overall adequacy of Palo Alto Animal Services (PAAS), b) demand for local animal sheltering services, and c) resident willingness to financially support PAAS and improvements, including facilities. Whether there are opportunities to increase PAAS revenues and decrease expenditures. Whether Palo Alto effectively and efficiently planned and executed upgrades to the PAAS facility in order to meet sheltering goals and objectives. The appropriateness of PAAS’ organizational structure. Background History in brief Palo Alto Humane Society (PAHS), a private nonprofit organization, was founded in 1908 to end cruelty to animals. PAHS operated the shelter until 1972 when the City assumed management of it. The existing 5,263 square foot animal shelter was originally built in 1972, and an isolation building and euthanasia room were added in 1985. Exhibit 1 provides recent pictures of the current animal shelter facility. Appendix 1 provides a timeline of Palo Alto Animal Shelter facilities. Exhibit 1: Palo Alto Animal Services - 3281 East Bayshore Road Source: Office of the City Auditor Photos Roles and responsibilities PAAS is a division of the Palo Alto Police Department and is led by a superintendent. It provides animal control, pet recovery and adoption services, animal care, animal health and welfare, and Attachment A Audit of Palo Alto Animal Services 2 regional animal services. Exhibit 2 shows the Fiscal Year (FY) 2015 organizational chart for PAAS, including the count of budgeted full- time equivalent (FTE) employees. Exhibit 2: Organizational Chart – Palo Alto Police Department, Animal Services Division Source: City of Palo Alto FY 2015 Operating Budget Laws and regulations California statutes require counties and municipalities to provide animal control services for public health protection and safety and for animal protection. The main laws are California Health and Safety Codes 121575-121710, with a particular emphasis on 121690(e), which includes the duty to maintain a pound system and a rabies control program. These laws also require a dog licensing program to monitor compliance with rabies vaccination requirements. Rabies control programs include operating the animal shelter, animal bite reporting and investigation, stray dog control, animal rabies investigations, quarantining biting dogs and cats and other animals potentially exposed to rabies, and providing rabies shot clinics. State laws also mandate policies and services related to euthanasia, dangerous and vicious dogs, abandoned animals, animal fighting, and impound and seizure. In addition to the state mandates, Palo Alto has local laws that regulate animal ownership. From 1934 to 1972, Palo Alto's animal control program consisted of animal control officers (ACOs) who enforced Palo Alto’s Municipal Code requirements for animal care and keeping. The City opened the Animal Services Placement Center on East Bayshore Road in 1972 and began providing spay and neuter services one year later. City Manager (1) Police Chief (1) Assistant Police Chief (1) Superintendent, Animal Services (1) Veterinarian (1) Veterinarian Technician (2) Animal Control Officer - Lead (1) Animal Control Officer (3) Animal Service Specialist (2) Temporary/Hourly (.66) Attachment A Audit of Palo Alto Animal Services 3 PAAS goals and objectives PAAS’ goals include ensuring the protection and well-being of animals and people by providing responsive animal services and spay and neuter advocacy. PAAS’ objectives include: Providing assistance, enforcement, and guidance to the community regarding animals. Promoting responsible pet ownership through adoption counseling, education, and support services. Staffing PAAS’ budgeted staffing has declined in recent years. Exhibit 3 shows the budgeted FTE staff from FY 2005 through FY 2015. Exhibit 3: Palo Alto Animal Services’ Budgeted Staff (Shaded cells show years when staffing levels changed from earlier years) Position FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 Superintendent 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Supervisor 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Veterinarian 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Veterinarian Technician 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 Lead Animal Control Officer 1.00 Animal Control Officer 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 3.50 4.00 3.00 Animal Services Specialist II 1.00 1.00 1.00 1.00 1.00 1.00 1.00 2.00 2.00 2.00 2.00 Animal Services Specialist I 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Volunteer Coordinator 1.00 1.00 1.00 1.00 1.00 0.50 0.50 0.50 0.50 Hourly/Temporary 0.92 0.92 0.92 0.92 0.92 1.42 1.42 1.24 1.24 0.66 0.66 TOTAL FTE 13.42 13.42 13.42 13.42 13.42 13.42 13.42 13.24 11.24 10.66 10.66 Note: Although budgeted, no veterinarian technicians were on staff for most of FY 2014 and only one was on staff in FY 2015. There was only a 0.5 FTE volunteer coordinator from FY 2005 through FY 2009. Hourly/temporary staff perform various duties. Source: City of Palo Alto FY 2005 through FY 2015 Operating Budgets Performance measures Palo Alto Animal Services uses performance metrics to track and report progress on achieving its goals and objectives. Exhibit 4 provides an example of a key performance measure reported by PAAS: the percent of dogs and cats that are received by the shelter and returned to their owners.1 1 See the Police Department chapter of the Office of the City Auditor performance reports for other PAAS performance measures: http://www.cityofpaloalto.org/gov/depts/aud/reports/accomplishments.asp Attachment A Audit of Palo Alto Animal Services 4 Exhibit 4: Percent of Dogs and Cats Returned to Owner Source: Palo Alto Police Department Contracts with other agencies In mid-1993, as a result of Santa Clara County discontinuing animal services to municipalities, Palo Alto entered into agreements with the cities of Mountain View, Los Altos, and Los Altos Hills for regional animal control services. The agreements included emergency animal control services, sheltering, and enforcement of state and local laws, including dog licensing. Mountain View provided notification in November 2011 of its intent to terminate its agreement with the Palo Alto and contract instead with the Silicon Valley Animal Control Authority (SVACA) beginning in late 2012. Exhibit 5 shows the number of animal service calls by jurisdiction each year, including the significant decline in calls from Mountain View residents starting in 2013. 77% 78% 82% 75% 70% 75% 68% 69% 65% 68% 12% 9% 18% 17% 11% 10% 20% 14% 17% 10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 Percent of dogs received by shelter returned to owner Percent of cats received by shelter returned to owner Target - 65% of dogs returned to owner Target - 8% of cats returned to owner Attachment A Audit of Palo Alto Animal Services 5 Exhibit 5: Number of Animal Services Calls by Jurisdiction LOCATION FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 Palo Alto 2,406 2,443 2,212 2,233 2,085 1,858 2,014 2,060 1,797 1,745 Mountain View 820 934 872 814 776 753 841 853 346 1 Los Altos 397 427 380 346 317 323 397 385 298 354 Los Altos Hills 141 171 131 126 157 130 162 132 183 167 Other 8 20 9 22 14 59 68 70 28 79 TOTAL 3,772 3,995 3,604 3,541 3,349 3,123 3,482 3,500 2,652 2,346 Source: Palo Alto Police Department Finances The City has taken steps to address budget deficits resulting mostly from the loss of its contract with Mountain View. Because PAAS’ expenditures are mostly driven by salaries and benefits, the reductions were achieved primarily through staffing reductions. Exhibit 6 shows a significant decline in total expenditures and revenues starting in FY 2013, as well as the increasing deficit that resulted from the loss of the Mountain View contract and the temporary closure of the spay and neuter clinic due to lack of staffing. The City also reduced the volunteer coordinator position from a full FTE to a 0.5 FTE as a cost-saving measure. The audit finding discusses opportunities for increased revenues and reasons for the decline in revenues. 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 PALO ALTO MOUNTAIN VIEW LOS ALTOS LOS ALTOS HILLS OTHER Attachment A Audit of Palo Alto Animal Services 6 Exhibit 6: Palo Alto Animal Services Revenues and Expenditures - FY 2005 to FY 2014 Notes: 1. “Other” includes indirect charges, direct charges, and contract expenses. 2. FY 2014 revenue decline is due to loss of the Mountain View contract and temporary closure of the spay and neuter clinic. Source: City of Palo Alto Financial Records (SAP) Scope and Methodology To accomplish our audit objectives, we: Assessed PAAS’ revenues, expenditures, workload, and staffing levels from July 1, 2005, through December 31, 2014, including its long-term financial and staffing trends. Reviewed state and local laws and regulations for providing animal services. Toured facilities and/or interviewed staff at Palo Alto Animal Services (PAAS), the Humane Society Silicon Valley (HSSV), the Peninsula Humane Society & SPCA2 (PHS), the Palo Alto Humane Society (PAHS), and the Silicon Valley Animal Control Authority (SVACA), and obtained information from the San Francisco SPCA and the cities of San Jose and Sunnyvale. Assessed whether PAAS’ facilities adequately meet operational goals and objectives, including animal care and customer service and satisfaction. Assessed the City’s efforts and expenditures to rebuild the existing animal shelter facilities. Compared Palo Alto staffing, financial information, and facilities with local animal shelters. 2 The commonly used acronym “SPCA” stands for “Society for the Prevention of Cruelty to Animals.” $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 Salaries & Benefits Supplies & Materials Other Total revenues Attachment A Audit of Palo Alto Animal Services 7 Interviewed management and staff at the Administrative Services, Community Services, Police, and Public Works Departments regarding PAAS’ oversight, management, and facilities. Animal Services survey To assess resident and customer satisfaction with PAAS’ services and opinions on policies relevant to the audit scope and objectives, we contracted with the National Research Center, Inc., (NRC) to conduct statistically reliable surveys of Palo Alto residents and PAAS’ customers. The NRC administered the survey using methodology that was generally consistent with The National Citizen SurveyTM (NCS).3 Key differences between the methodology we used and the standard NCS methodology were: We developed the survey questions with input from the NRC and other stakeholders. Appendix 2 shows the survey sent to residents and customers. We did not weight the data to account for differences between survey respondent characteristics and population norms. As a result, the survey sample may not represent the opinions of the community as a whole. We used the raw survey data collected by the NRC to interpret and report on the survey results. The NRC distributed the survey to two groups: 1) a random sample of 1,500 households in Palo Alto and 2) a random sample of 1,500 PAAS customers in 2014. The second group included 678 households within Palo Alto and 822 households outside of Palo Alto. Exhibit 7 shows the number of surveys distributed in each group, the response rate (based on the number of eligible surveys, after accounting for undeliverable surveys), and the margin of error at a 95 percent confidence level. 3 The National Citizen Survey report is posted on the Office of the City Auditor’s website at: http://www.cityofpaloalto.org/gov/depts/aud/reports/accomplishments.asp Attachment A Audit of Palo Alto Animal Services 8 Exhibit 7: Animal Services Survey Response Rate and Margin of Error at a 95 Percent Confidence Level Group Name Number Mailed Undeliverable Eligible Returned Response Rate Margin of Error Palo Alto Residents – Randomly selected 1,500 31 1,469 278 19% +/- 6% PAAS Customers – Palo Alto Residents 678 6 672 217 32% +/- 7% PAAS Customers – Nonresidents 822 6 816 149 18% +/- 8% Overall 3,000 43 2,957 644 22% +/- 4% Source: National Research Center Exhibit 7 cites the margin of error for each group, but the actual margin for each question could vary significantly based on the number of actual responses to the specific question and the number of “don’t know” responses, which we excluded in our presentation of the survey results. The margin of error for each sample group is based on a 95 percent confidence level, which means that for every 100 samples of the same number of people randomly selected to take the survey, the responses would be within the margin of error 95 percent of the time. Appendix 3 provides the complete survey results, including respondent demographics. Data reliability We assessed the reliability of selected data in the Chameleon software, which is the data management system that PAAS uses. Chameleon includes financial, clinical, animal care, and calls-for- service records. We: Interviewed staff and reviewed policies and procedures to gain an understanding of key data and system access. Our assessment identified concerns regarding the use of a privileged, generic user account with a shared password. We alerted staff to this concern and best practices regarding the use of appropriately restricted, uniquely identifying user accounts and the principles of “least privilege” and “segregation of duties” required to ensure the security, reliability, and availability of data. Verified the completeness of kenneling records by counting and comparing animals held at the shelter with Chameleon records during a walk-through at a selected point in time. Verified the accuracy of calls-for-service records for two randomly selected days. We identified calls-for-service records that indicated unusually low or high response or completion times. We removed these records from our analysis because the PAAS acting superintendent told us that some dates were entered in error and that there are no data cleansing steps. Attachment A Audit of Palo Alto Animal Services 9 Although our assessment identified some discrepancies between the City’s reported financial and performance data, source documents, and Chameleon records, we feel that the data we used, with some manual corrections made for obvious errors, was sufficiently reliable to support our audit findings and conclusions. Compliance with government auditing standards We conducted this audit of Palo Alto Animal Services in accordance with our Fiscal Year 2015 Annual Audit Work Plan and generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We would like to thank management and staff in the Administrative Services Department; Community Services Department, including the former director; Police Department, including Animal Services; and Public Works Department for their time, cooperation, and assistance during the audit process. We also thank management and staff at the Palo Alto Humane Society, Humane Society Silicon Valley, Peninsula Humane Society & SPCA, Silicon Valley Animal Control Authority, San Francisco SPCA, and the cities of San Jose and Sunnyvale. Attachment A Audit of Palo Alto Animal Services 10 Finding Palo Alto Animal Services (PAAS) faces challenges that are unlikely to be resolved if it continues operating as solely a city-managed function without a significant increase in general fund subsidy, donations, and/or revenue-generating contracts PAAS is unlikely to recover its operating costs under its current financial and operating model, and the current staffing model is not ideal for moving PAAS toward being a first-class animal services operation. Many residents who responded to the Animal Services survey are unaware of available services and current shelter hours are not convenient for all customers, resulting in lost opportunities to serve residents and generate revenues. In addition, PAAS facilities are outdated and inadequate to meet modern animal-care standards, and the City has not successfully completed projects to refurbish and renew the shelter over the years. These factors likely contributed to a loss of a key revenue-generating contract with the City of Mountain View in November 2012. There are limited opportunities to increase revenues by entering into agreements to provide animal control services to other jurisdictions, and the City’s restrictions on fundraising further limit opportunities to increase revenues. Despite these challenges, residents and PAAS customers who responded to the survey are very satisfied with the quality of PAAS’ services, think it is very important to provide animal services locally, and are supportive of providing funding to pay for shelter improvements. Several options exist for establishing an organizational structure that can move PAAS into the future, but a clear vision, adequate planning, and dedicated resources will be needed to successfully pursue those. We developed a list of both short- and long-term recommendations to help the City Manager plan for the future of PAAS. PAAS is unlikely to recover operating costs under its current operating model PAAS’ revenues, including revenues from other jurisdictions for animal control services, spay and neuter clinic fees, vaccination fees, pet supply sales, and donations, totaled about $500,000 in FY 2014, which was only 37 percent of its total expenditures. Although PAAS’ revenues were unusually low in FY 2014, revenues accounted for an average of 64 percent of total expenditures over the past 10 years, which was still not enough to cover costs. In other animal services operations, program fees and charges alone do not cover costs Other animal services providers do not typically cover their costs without significant revenues from donations and animal control contracts with other agencies. Exhibit 8 shows that in most animal shelter operations, donations and/or contracts for services comprise the majority of revenues. For example, the City of San Jose covers Attachment A Audit of Palo Alto Animal Services 11 more of its animal services costs because of greater revenue from contracts with other government agencies, and HSSV and the San Francisco (SF) SPCA generate most of their revenue from donations and grants. Exhibit 8: Comparison of Animal Services Agency Revenues as a Percent of Total Expenditures Note: Revenues are shown as a percent of total agency expenditures in the specified fiscal year (the most recent financial information available for PHS and SF SPCA was for FY 2013). Bars exceeding 100 percent (HSSV and SF SPCA) indicate that the agency’s revenues exceeded its expenditures. Source: Financial Records Provided by Each Agency Palo Alto Animal Services’ fees are competitive with local jurisdictions The fees charged by Palo Alto for dog and cat adoptions, spay and neuter services, and dog licenses are generally comparable to other organizations’ fees, although the price that the City of San Jose charges nonresidents compared to residents for most of its services is much larger than Palo Alto’s price differences. San Jose charges much less for spay and neuter services, while the SF SPCA charges much more for the same services. San Jose also charges much more for an unaltered dog license than what Palo Alto charges and does not allow unaltered dog licenses to be valid for more than 12months. PAAS’ acting superintendent said that Palo Alto had raised its fees in the past, but that resulted in a decline in revenue due to a decrease in demand. Appendix 4 compares Palo Alto’s fees with those charged by other animal service organizations within the region. Contracts with other jurisdictions generate most revenues Exhibit 9 shows that PAAS currently generates most of its revenues from contracts to provide animal control services to Los Altos and Los Altos Hills. Contract revenues averaged 58 percent of total revenues over the past 10 years. In FY 2014, following the City’s loss of its contract with Mountain View, PAAS lost more than $400,000 in annual revenues. City staff reported that they made significant, but 0% 20% 40% 60% 80% 100% 120% 140% 160% Palo Alto 6/30/14 HSSV 6/30/14 PHS 6/30/13 SVACA 6/30/14 San Jose 6/30/14 SF SPCA 6/30/13 Contributions, including Donations & Grants Other Income Program Fees & Charges Contracts with Government Agencies Total Expenditures Attachment A Audit of Palo Alto Animal Services 12 unsuccessful, efforts to retain the Mountain View contract, including attending Mountain View’s city council meetings. The loss of this contract means that contract revenues will be a much lower percentage of PAAS’ total revenues in the future, unless the City is able to enter into agreements with other jurisdictions for animal control services. Exhibit 9: Palo Alto Animal Services Revenue Details (FY 2005 – FY 2014) Year FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 Total $937,775 $941,909 $1,049,922 $1,156,055 $1,002,551 $1,427,776 $1,042,097 $997,471 $1,288,259 $435,000 Note: Total revenue is calculated by adding “Revenues from other agencies” to the revenue total shown in the stacked bars. In FY 2013, “Other” included about $175,000 in donations transferred from a separate fund. The City does not include donations in PAAS’ budget until the money is transferred from the fund. Source: City of Palo Alto Financial Records (SAP) Limited market share; limited ability to attract other jurisdictions There are a limited number of jurisdictions in the region that can contract with PAAS for animal control services, and most of that market has already been captured by other animal services agencies in the region. The City’s current share of that market is Los Altos and Los Altos Hills. City staff reported that they have engaged in conversations with at least ten other jurisdictions about providing animal control services. However, none of the jurisdictions entered into agreements with Palo Alto because the City could not save them money and/or due to the uncertainty regarding PAAS’ future. Stanford, although nearby, receives free animal services from Santa Clara County and is therefore unlikely to enter into an agreement with Palo Alto. Police Department staff stated that the condition of the shelter facility may also be a deterrent to prospective jurisdictions that may want to contract for services. $557,669 $572,808 $675,301 $749,848 $573,538 $951,384 $611,394 $603,955 $585,557 $154,203 $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 Dog Licenses Other sales Spay/Neuter Clinic Vaccination fee Other (General Fund, including donations)Revenues from other agencies Attachment A Audit of Palo Alto Animal Services 13 In addition, the 20 cities and towns in San Mateo County contract with the County for animal control and shelter services. The County, in turn, contracts with PHS to provide the services. These cities are due to renew their contracts with the county by June 30, which may, at least for the near-term, eliminate opportunities for Palo Alto to contract with those neighboring jurisdictions. The limited ability to contract with these other jurisdictions and the potential for other agencies to spread their costs of service to a larger pool of cities is likely to continue to limit Palo Alto’s ability to significantly increase its contract revenues in the near future. This means that Palo Alto will need to find other ways to pay for animal services. Community adoption events provide an opportunity for additional revenue Adoption revenue has averaged only about $23,000 annually over the past ten years, or about 2 percent of total revenues. PAAS does not routinely participate in community adoption events, which are a way that other shelters increase their animal adoption rates and raise revenues. Taking adoptable animals from other shelters to community adoption events provides additional opportunities for increasing revenues. More evening and weekend shelter hours provide an opportunity for additional revenues According to the Humane Society of the United States’ (HSUS) “Guidelines for Shelter Policies,” shelters should be open a minimum of five days per week for claiming or adopting animals, including at least one weekend day. Shelters should be open until at least 7 pm at least one evening a week to be accessible to people working typical business hours. Exhibit 10 shows that while PAAS’ hours are generally consistent with best practices, the shelter is not open at least one day a week until 7 pm. Exhibit 10: Palo Alto Animal Services’ Shelter Hours Compared to Best Practices Palo Alto Hours Best Practice (HSUS) Monday – Friday, 11 am – 5:30 pm closed every other Friday Monday – Friday open at least one evening a week until 7 pm Saturday, 11 am – 5:30 pm At least one weekend day Source: City of Palo Alto Records and HSUS’ “Guidelines for Shelter Policies” Proven success with extended hours; PAAS would require extra staffing to extend hours Regional animal service organizations have reported significantly more adoptions as a result of being open on weekends and/or extended weekday hours: The SF SPCA reported that they do as many or more adoptions on Saturday and Sunday than the rest of the week combined, and that those are critical days. It also found that staying open until 7 pm means people who work a regular job or have a significant after-work commute are more likely to be able to come in and Attachment A Audit of Palo Alto Animal Services 14 complete an adoption on a weekday. SF SPCA reported an increase of approximately 820 adoptions in FY 2013 as compared to 2009, when they used to close at 6 pm, with further increases as more people have become aware of the extended hours since the change was made. The change has resulted in a corresponding increase in revenue. The Peninsula Humane Society & SPCA (PHS) also reported that weekends are their busiest days for adoptions, and that their philosophy is to be open seven days per week, regardless of how much the public uses their services on any one day. Humane Society Silicon Valley (HSSV) also reported that weekends are their busiest times, with more visitors, more adoptions, and more pet store sales. Palo Alto residents want the shelter to be open on Fridays and Sundays The results of the Animal Services survey, summarized in Exhibit 11, show that most Palo Alto residents who responded to the survey consider it essential or very important to have the shelter open on weekday evenings, Fridays, and Sundays. Although other agencies reported success with extended hours, PAAS’ current staffing levels do not support being able to extend its hours. We estimate that PAAS would require an additional two 0.5 FTE animal services specialists, at a cost of at least $85,500 per year, to extend its hours to 7 pm at least two weekday evenings and to be open every Friday and on Sundays. We also estimate that each holiday the shelter is open would cost at least $1,000 in additional staffing costs. Exhibit 11: Animal Services Survey Results – Questions Regarding Shelter Hours Percent Rating “Essential” or “Very Important” Survey Question Palo Alto Residents (randomly selected) Palo Alto Residents Who Used the Shelter in the Past 12 Months* Shelter open on Fridays 61% 67% Shelter open on Sundays 56% 56% Shelter open on holidays 41% 34% Shelter open on weekday evenings 51% 49% * Combined responses for all residents (randomly selected and known users) who used Palo Alto Animal Services in the past 12 months. Source: Animal Services Survey Conducted by the National Research Center Additional animal care staffing needed The City has not sufficiently staffed the shelter to ensure that minimum animal-care standards are met for both the facility and the animals. From FY 2005 through FY 2014, PAAS kenneled a high of 986 animals in FY 2006 to a low of 466 animals in FY 2014. The National Animal Care and Control Association’s (NACA) guidelines conservatively estimate that animal shelters should allocate Attachment A Audit of Palo Alto Animal Services 15 15 minutes per day – 9 for kennel cleaning and 6 for feeding – per kenneled animal, and that one FTE should spend about 3 hours per day performing these tasks. The 3-hour time frame assumes that for safety and convenience reasons, the work should generally be completed prior to opening the shelter to the public. The FTE’s remaining time should be spent performing other shelter tasks, such as laundry and dishwashing. Based on NACA’s guideline, we estimate that PAAS should have had 1.9 FTE in FY 2014 to perform these direct animal-care tasks.4 However, PAAS assigned one ACO FTE and hourly/temporary staff, a total of 1.22 FTE, to perform these tasks in FY 2014. Overall, from FY 2005 through FY 2014, PAAS may have been short-staffed by an average of 0.7 FTE for animal care.5 In addition, the City has not budgeted PAAS for the animal attendant position, which has a job description specifically suited to this type of work, or used recognized staffing standards to determine the appropriate number and type of staff needed. Using an ACO as the primary employee performing these tasks eliminates the ACO’s availability to perform animal control work during regular business hours. The City did not seize the opportunity to provide animal licensing services to San Mateo County The City had an opportunity in 2012 to submit a proposal to provide animal-licensing services to San Mateo County. PAAS staff estimated that adding 0.5 FTE could generate $300,000 in additional revenue during the first year, with more revenue related to citations possible in subsequent years. The City did not to go forward with a proposal due to the uncertainty of PAAS remaining a City function at the time. The current contract for animal-licensing services in San Mateo County expires in June 2016. Depending on the policy decisions the City Council makes regarding PAAS’ future, submitting a proposal in 2016 to provide animal licensing services to San Mateo County could increase net revenues. Decline in spay and neuter clinic and vaccination revenues due to turnover Since FY 2005, PAAS has generated about $190,000 annually in spay and neuter fees, or about 18 percent of its total revenues. In FY 2014, the clinic only generated $47,500 because it had to close due to the loss of both veterinary technicians early in the fiscal year. Staff reported that while two new veterinary technicians were hired at the end of the fiscal year, one was later terminated. The clinic has continued to operate with only one veterinary technician due to recruitment challenges and the 3- to 6-month hiring process. 4 We estimated the required FTE based on 4.5 hours instead of NACA’s suggested 3 hours because the ACO responsible for animal care has 4.5 hours to perform these tasks prior to PAAS opening to the public. 5 Significant seasonal variations in the number of animals may require more or less staffing. Attachment A Audit of Palo Alto Animal Services 16 Vaccination fee revenues were similarly affected with a 37 percent decline, from about $69,000 in FY 2012 and FY 2013 to about $43,000 in FY 2014. The number of customers has also declined since losing the Mountain View contract, from over 5,000 customers each year from 2005 through 2012, to about 4,600 in 2014. Donations not a major revenue source for PAAS, but are for other animal shelters The donations that PAAS receives annually are a much lower percentage of total revenue compared to some other local animal shelters. Since 2005, PAAS has received only about $470,000 in donations, or about 4 percent of its total revenues.6 Donations are limited because PAAS does not have significant outreach efforts for fundraising due to policy and staffing constraints. City policy prohibits soliciting funds or charitable donations from members of the public or City staff within City facilities, but PAAS’ website does provide a PayPal portal for those interested in donating. PAAS’ acting superintendent also said that staff is not available for fundraising. The Friends of the Palo Alto Animal Shelter (FoPAAS) is a volunteer- led nonprofit corporation, established in mid-2012 with the goal of raising money to support PAAS. FoPAAS has donated goods and services, such as artificial turf and cataract surgery for a dog, but has not provided significant monetary donations. Although efforts were made in January2013, the City has not formalized its relationship with FoPAAS with a partnership agreement. Compared to the relatively few donations that Palo Alto Animal Services receives, other local shelters reported that donations comprise a much greater percentage of their operating revenues, as shown in Exhibit 8. For example: HSSV reported that in calendar year 2014, 18,372 individual donors contributed over $8 million and about 1,000 organizations donated $16 million. HSSV has a development department, led by a vice-president, with a team of fundraising professionals who have implemented several significant programs: online giving, a corporate volunteer/engagement program, and over-the-counter and major gift efforts. PHS reported that 24,000 donors provided $4.7 million in FY 2013, which does not include more than $24 million in donations for its new shelter. PHS has a vice-president of development and planned giving who oversees three staff. PHS has various ways for donors to contribute to the organization, including ongoing 6 The City does not include donations in PAAS’ budget until the money is transferred from a separate fund. Attachment A Audit of Palo Alto Animal Services 17 promotions with businesses to benefit PHS, memberships for donors who make renewable yearly gifts, and a thrift store whose proceeds directly benefit the shelter animals. Palo Alto residents generally support subsidizing PAAS More than 80 percent of Palo Alto residents who responded to the Animal Services survey and 94 percent of residents who used the shelter in the past 12 months thought that the City’s general fund should subsidize PAAS to the extent necessary to ensure that the City manages and provides oversight of a City animal shelter in accordance with best practices. Most residents who responded to the survey prefer that donations be used for animal services and care. Exhibit 12 shows resident opinions that the City Council and management should consider when making policy decisions regarding the future of Palo Alto Animal Services. Exhibit 12: Animal Services Survey Results – Questions Regarding Use of Funds Survey Question Palo Alto Residents (Randomly Selected) Palo Alto Residents Who Used the Shelter in the Past 12 Months* Percent Who “Strongly” or “Somewhat” Agree Animal services should be 100 percent self-supporting through user fees and contracts with other jurisdictions or agencies that use Palo Alto Animal Services 46% 31% The City should develop public-private partnerships to minimize the general fund subsidy of Animal Services 75% 74% The City should contract out Animal Services to minimize its general fund subsidy 37% 13% The City's general fund should subsidize Animal Services to the extent necessary to ensure that the City manages and provides oversight of a City animal shelter in accordance with best practices 82% 94% Percent Who Selected One Option If you were to make a donation to support PAAS, how would you prefer your donation be used? Animal services and care (e.g., vaccinations, spay/neuter, adoption) 67% 57% Improve facilities (e.g., new kennels, exam room, equipment, etc.) 17% 18% To support daily operations (e.g., administration, outreach, etc.) 16% 25% * Combined responses for all residents (randomly selected and known users) who used Palo Alto Animal Services in the past 12 months. Source: Animal Services Survey Conducted by the National Research Center Many residents unaware of available services Most (55 percent) PAAS customers in calendar year 2014 were not Palo Alto residents: 37 percent were from Los Altos, Los Altos Hills, and East Palo Alto, and 18 percent were from other cities. The Animal Attachment A Audit of Palo Alto Animal Services 18 Services survey shows three primary reasons why Palo Alto households did not use PAAS during the past 12 months: 17 percent were not aware of available services 12 percent preferred to use a private veterinarian 9 percent were not aware of potential significant savings due to lower, subsidized fees Exhibit 13 shows the origin of PAAS customers and the decline from more than 5,000 in 2005 to about 4,600 in 2014. Exhibit 13: Number of PAAS Customers by City of Residence Source: Chameleon Records Opportunities exist to market services In addition to the reasons cited above for not using PAAS as a service provider, the PAAS facility on East Bayshore Road is not centrally located and does not have good visibility from the road. The lack of knowledge of PAAS and its services provide opportunities for PAAS to market its services. PAAS’ past marketing efforts have included outreach through its Facebook page and the City’s website. Residents highly satisfied with most PAAS services Despite the general lack of knowledge of the breadth of services that PAAS has to offer, Palo Alto residents who responded in the survey that they has used PAAS in the past 12 months reported a high degree of satisfaction for most services. More than 90 percent of those respondents rated services such as animal control, spay or neuter service, vaccinations, licensing, educational opportunities, and ease of donating money or supplies as “excellent” or “good.” The pet store and dead animal pick-up received slightly lower scores. In addition, the survey responses indicate opportunities for outreach to increase community awareness of services. For example, 1.5 percent of the survey respondents who live in Palo Alto and 0 1,000 2,000 3,000 4,000 5,000 6,000 CY 05 CY 06 CY 07 CY 08 CY 09 CY 10 CY 11 CY 12 CY 13 CY 14 REDWOOD CITY MENLO PARK SUNNYVALE EAST PALO ALTO SAN JOSE LOS ALTOS HILLS OTHER LOS ALTOS MOUNTAIN VIEW PALO ALTO Most of decline in CY 13 was due to the loss of Mountain View Attachment A Audit of Palo Alto Animal Services 19 owned dogs and 14 percent who owned cats did not have all of their pets vaccinated against rabies, and 11 percent of the dog owners and 23 percent of the cat owners did not microchip all of their pets. Customers willing to travel limited distances for animal services The survey results show that residents and nonresidents are generally willing to travel no more than 10 miles to take their pets to an animal shelter or other pet organization that meets their needs. Exhibit 14 shows the distance that Palo Alto residents and PAAS customers who responded to the survey are willing to travel. If PAAS were to close, the next closest animal services facility is SVACA, which is 11 miles from PAAS. HSSV, PHS, and San Jose Animal Care and Services range from 15 to 21 miles away. Exhibit 14: Animal Services Survey Results – Willingness to Travel for Animal Services How far are you willing to travel to take your pet to an animal shelter or pet organization that meets your needs? Palo Alto Residents (Randomly Selected) Palo Alto Residents Who Used the Shelter in the Past 12 Months* Nonresidents Who Used the Shelter in the Past 12 Months Less than 3 miles 16% 16% 2% 3 to 5 miles 35% 37% 26% 6 to 10 miles 32% 30% 34% 11 to 20 miles 9% 8% 21% More than 20 miles 8% 8% 16% * Combined responses for all residents (randomly selected and known users) who used Palo Alto Animal Services in the past 12 months. Source: Animal Services Survey Conducted by the National Research Center Shelter is outdated and inadequate to meet modern standards of animal care Palo Alto’s shelter does not compete with other local shelter facilities that we toured in terms of being a modern and engaging facility. Exhibit 15 shows differences between PAAS and Humane Society Silicon Valley. Appendix 5 compares other areas of PAAS and HSSV. Exhibit 15: Pictures Comparing PAAS and HSSV PAAS Adoptable Cat/Cat Play Room HSSV Adoptable Cat/Cat Play Room Source: Office of the City Auditor Photos Attachment A Audit of Palo Alto Animal Services 20 PAAS staff identified several specific shelter deficiencies based on standards established by the Association of Shelter Veterinarians: Animal enclosures are not safe and sanitary Dog kennels face each other, which can cause barking and behavioral challenges. We could not enter the enclosed area between kennels due to excessively loud barking that echoes in the area. Staff explained that gutters are hazardous because staff sometimes work with aggressive animals directly through kennel doors, which requires maneuvering around the gutter. Some kennels have sharp edges in areas that are hazardous to animals and staff. Flooring in some areas was not properly constructed and sealed; it is now porous, discolored, and burdensome to clean. Flooring in other animal care areas has seams and/or missing grout. One animal care and housing area has carpeting that is not cleaned as frequently or as easily as noncarpeted areas. PAAS staff reported that in 2008, a virus outbreak affected a mother cat and eight kittens, all of whom had to be euthanized. Staff attributed the incident to cleaning challenges and stated that having a receiving and intake room could have prevented the incident. Enclosures do not meet animals’ physical and behavioral needs Old-fashioned, cramped dog kennels are sometimes used to house dogs in isolation for long periods. Alternatives to cage-type housing are not available to dogs or other animals sheltered for long periods. Cage type kennels do not support sufficient isolation of unaltered animals that may react to each other’s scents, resulting in discomfort and behavioral challenges. The shelter courtyard exposes incompatible animals, including predatory dogs and prey animals, to each other. Rabbits, cats, and birds are exposed to the sights and sounds of dogs. Facility is too small to meet current needs Due to a lack of space, an interior, carpeted room serves as an eating area for staff and also as housing for birds, small prey animals such as hamsters and rabbits, and predatory animals such as snakes, which should be housed separately. In addition, the shelter does not have a separate receiving/intake room. These limitations present hygienic challenges for both staff and animals, although staff stated that there are no known incidents of animal to human disease transmission at the shelter. Attachment A Audit of Palo Alto Animal Services 21 Studies and discussions regarding PAAS’ future have not resulted in solutions Public Works Department staff stated that the current animal shelter has reached the end of its useful life and estimate that building a new shelter on the current site would cost about $4 million. However, rebuilding the current shelter at the same location would disrupt operations, and the City would need a temporary solution to address its animal control and sheltering needs and its obligations to Los Altos and Los Altos Hills during construction. Since 2003, the City has spent about $1.7 million in budgeted capital improvement program (CIP) projects that were mostly designed to refurbish, repair, expand, and plan for relocating and building a new facility to replace the outdated 1972 animal shelter. These efforts, for a variety of reasons, only resulted in critical repairs being made to address dry rot and structural issues, roof replacement, and replacement of mechanical systems that were far beyond their useful lives, rather than significant facility upgrades. Although the City has kept the shelter operational, the efforts to date have not brought it current with modern animal-care standards, and it does not fully meet the City’s goals and objectives or resident expectations for animal care and control. Exhibit 16 summarizes the CIP projects, budgets, and total expenditures from 2003 through 2014 that were associated with the City’s animal shelter. The 2009 Los Altos Treatment Plant (LATP) Master Plan Study proposed that the City build a new animal shelter, at the LATP site at an estimated cost of $10.7 million for building and site work construction. The study envisioned a modern shelter with indoor spaces increased from 5,263 square feet (sf) up to about 8,000 sf, and a new 2,000-sf dog park. Due to the recession and because plans to lease the land on the current animal shelter site to a car dealership did not move forward, further consideration was not given to relocating PAAS. Attachment A Audit of Palo Alto Animal Services 22 Exhibit 16: Palo Alto Animal Services Capital Expenditures (2003 – 2014) Capital Improvement Project (CIP) Description and Outcome Expenditures Animal Shelter Expansion & Renovation (PE-04014) Original project description: This project will provide a 2,000 square foot expansion to the shelter to increase administrative space, cat rooms, veterinary receiving/treatment area, spay/neuter clinic, storage areas, and add a small animal room. A new separate 2,300-square foot dog kennel building will also be added. In addition, the heating, ventilation, and air conditioning (HVAC) system will be renovated or replaced, electrical service panels will be upgraded, and Americans with Disabilities Act (ADA) requirements will be met. If necessary, the structure will be seismically evaluated. Outcome: Majority of expenditures (about $900,000) were in Calendar Year (CY) 08 and CY 09. Renovation and expansion work was bid on three separate occasions. Due to the bid amounts exceeding the budget on all three occasions, a contract was not awarded, and the building was not renovated or expanded. The work under this project addressed immediate needs to keep the facility operational until a new facility could be constructed or major renovation could be done. The project addressed dry rot and structural issues, roof replacement, and replacement of mechanical systems that were far beyond their useful lives. Original Budget: $3,310,925 Total Expenditures $1,641,831 Note: These expenditures were partially offset by $269,900 in contributions from Los Altos Hills, Los Altos, Mountain View, and Sunnyvale Los Altos Treatment Plant (LATP) Master Plan Study (PE-09004) Original project description: The purpose of this project was to determine which City services should be located at the former Los Altos Treatment Plant (LATP) site (see map in Appendix 6). Outcome: Majority of expenditures in were CY 08 and CY 09. Group 4 Architecture, Research + Planning, Inc. drafted a summary report in April 2009 that proposed building the new animal shelter, Utility Department storage & contractor lay-down, and permanent transfer station on the LATP site. The report noted that the existing shelter is outdated, needing electrical and mechanical improvements as well as ADA upgrades to meet current code. It also noted needs for improvements to the shelter for animal care, safety, and operational reasons. Public Works Department staff stated that this project was originally a priority due to consideration of having a car dealership on the current shelter site, with desirable exposure to the freeway; this could have benefited the car dealership and the City in the form of additional tax revenues. Due to the recession and because plans to lease the land to the car dealership did not move forward, further consideration was not given to relocating PAAS. Original Budget: $100,000* Total Costs: $91,901* *Cited costs were associated with the entire study, not just the animal shelter. Source: Palo Alto Approved Capital Budget Documents (FY 2005 – FY 2015) and SAP financial records The City has not acted on Palo Alto Humane Society assessments and proposals In October 2013, the Palo Alto Humane Society (PAHS) proposed a joint public-private partnership to provide animal services to Palo Alto and its contracted cities. PAHS proposed building a new, state- of-the-art animal services center for Palo Alto, but presented a Attachment A Audit of Palo Alto Animal Services 23 revised proposal in November 2014. The revised proposal no longer included operating the shelter or fundraising for the City to build a new facility. The City has not responded to these proposals. Based on community outreach and its assessment, PAHS believes that the City’s animal shelter needs to be modernized and that additional services are needed to better serve and engage the community. PAHS stated that a modernized facility would provide better and more attractive housing for adoptive animals and more willingness for the public to use it for community activities, such as summer camps and education programs that can draw customers. Exhibit 17 summarizes terms of the recent PAHS proposal and the superseded proposal. The PAHS executive director stated that there could be additional, potential benefits and efficiencies in a partnership between PAHS and the City: PAHS could still provide fundraising assistance to construct a new facility or refurbish the existing facility. If a partnership is formed and space is provided for PAHS at the animal shelter, PAHS could provide about $25,000 annually to the City annually. PAHS could provide $100,000 to $150,000 to include in the City’s annual budget for spay and neuter services. These are funds that PAHS already uses to support people needing spay and neuter services that PAHS mostly refers to PAAS. Exhibit 17: Key Terms of Palo Alto Humane Society’s Proposals October 2013 Proposal (Superseded) November 2014 Proposal PAHS would manage the new facility. PAHS would raise an estimated $10-$12 million to build the new facility on existing City land. PAHS would run the facility, with the City paying a contracted fee with set review and increase points. The City would continue to fund and manage mandated animal control services. The City would continue to operate the shelter. PAHS would partner with the City to develop and add an education/community center to the existing Palo Alto Animal Services facility and to provide various PAHS services to the community. PAHS would offer a community program at the shelter. PAHS would work with the City to develop a financing plan to construct an education/community center. Source: Palo Alto Humane Society Proposals to the City of Palo Alto Palo Alto residents support building a new shelter or refurbishing the existing shelter Palo Alto residents who responded to the Animal Services survey “strongly” or “somewhat” support funding improvements to the animal shelter facility: 86 percent support refurbishing the existing animal shelter Attachment A Audit of Palo Alto Animal Services 24 56 percent support building a new shelter 75 percent support increasing the capacity of the current shelter 91 percent support fundraising events to fund improvements to the standard of animal care in Palo Alto 91 percent support a public/private partnership 79 percent support a general fund subsidy. 52 percent of Palo Alto residents who responded to the survey support a bond initiative. Exhibit 18 shows resident opinions for funding improvements. Exhibit 18: Animal Services Survey Results – Questions Regarding Funding PAAS Improvements Survey Question Palo Alto Residents (Randomly Selected) Palo Alto Residents Who Used the Shelter in the Past 12 Months* To what extent do you support or oppose each of the following options to improve the standard of animal care in the City of Palo Alto? Percent Who “Strongly” or “Somewhat” Agree Refurbish the existing animal shelter 83% 92% Build a new animal shelter 55% 58% Increase the capacity of the current animal shelter 72% 82% To what extent do you support or oppose each of the following options to fund improvements to the standard of animal care in Palo Alto? Percent Who “Strongly” or “Somewhat” Support Bond initiative (paid through special property taxes imposed on City real estate owners) 46% 63% Fundraising events 90% 97% General fund subsidy 72% 90% Public/private partnerships 90% 88% * Combined responses for all residents (randomly selected and known users) who used Palo Alto Animal Services in the past 12 months. Source: Animal Services Survey Conducted by the National Research Center No “ideal” place in government organizational structures for animal services functions In other municipalities, animal control and services are an intergovernmental entity; a separate department; under code enforcement, police, public health, public works, parks/recreation, finance, or administrative/general services; the city clerk’s office, or the city manager’s office. Exhibit 19 lists pros and cons for various possible reporting models. There are also variations to those models, and other models not listed may also be appropriate for Palo Alto. Current staffing model not ideal for taking PAAS into the future PAAS reports through its acting superintendent to an Assistant Police Chief (see Exhibit 2 in the background section of this report). Police Department staff said that the department considers PAAS as an Attachment A Audit of Palo Alto Animal Services 25 ancillary operation, and that PAAS is mostly self-managed with minimal coordination of activities and expertise with the rest of the Police Department. In addition, PAAS’ management does not have a long-term vision to carry PAAS into the future. This model does not bode well for advancing PAAS to a first-class animal shelter operation. Operating structure is important to achieving objectives The United States Government Accountability Office’s internal control standards for government7 state that management should establish an organizational structure, assign responsibility and delegate authority to achieve the entity’s objectives. Management should periodically evaluate the organizational structure so that it meets the entity’s objectives and has adapted to any new objectives for the entity, such as a new law or regulation. Any decision to move Palo Alto Animal Services within the City’s organizational structure needs to carefully consider the ability for PAAS to become a thriving function that provides animal services in accordance with recognized animal-care standards. Options exist for the future of PAAS We did not identify an “ideal” place for PAAS within the City’s organizational structure but identified several possible organizational options, which all have their pros and cons. Exhibit 19 describes various options, although others may exist that could be explored. Keeping the animal control function within the Police Department while partnering with another regional organization for shelter operations offers the most potential for maintaining an animal services function within the City. Because the existing animal shelter is past its useful life and no longer able to be renovated, it is important to recognize that a significant capital investment will need to be made, regardless of whether one of the following options or another option is chosen. The feasibility of raising those capital funds will need to be considered when choosing an option. 7 U.S. Government Accountability Office, “Standards for Internal Control in the Federal Government,” Washington, D.C., 2014, p. 27-28, available at http://www.gao.gov/products/GAO-14-704G. Attachment A Audit of Palo Alto Animal Services 26 Exhibit 19: Pros and Cons of Various Reporting Structures for PAAS Reporting Structure Pros Cons Police Department (PD) (Status quo) Core law enforcement services align well with animal control, a key PAAS component. Demonstrates that law enforcement is a priority. Currently has goals and objectives aligned with PAAS. Core law enforcement services do not align well with animal care and adoption services; PD considers the shelter an ancillary service. Continued gap in leadership and management of the shelter after the current superintendent retires. Hiring staff generally takes 3 to 6 months and requires a background check, which could dissuade or reject potentially qualified candidates. Community Services Department (CSD) Community-centered mission may better align with PAAS animal care and adoption services. Potential efficiencies in consolidating animal care services with CSD. Less burdensome hiring process may be more appropriate for most PAAS positions. The mission of Palo Alto Junior Museum and Zoo (JMZ) is to engage children’s curiosity in science and nature; PAAS focuses on animal control, pet recovery and adoption, and regional animal services. PAAS animal control services are better aligned with PD’s core law enforcement services. More staff may be required because ACOs currently perform shelter duties in addition to field services. The City Council approved a motion in November 2014 for the City and the Friends of the Palo Alto JMZ to collaborate to develop agreements to build a new and enhanced JMZ facility, and to operate the new facility for up to 40 years. Animal Control reports to PD; shelter operation reports to CSD May be able to benefit from strengths of each model (above). Accountability for meeting animal care and control objectives is split and coordination of efforts becomes complex. Different missions (see above) do not lend themselves to a consolidated function. Separate department reporting to City Manager Higher status may provide more freedom to achieve mission, goals, and objectives. Demonstrates greater priority and visibility for PAAS. Hiring and other key processes could be more easily customized to suit depart- mental mission, goals, and objectives. PAAS may not benefit from resources, support, and management experience and expertise of a larger department. PAAS would require more administrative and management staffing as the superintendent position would become less directly involved in operations in order to effectively report to the City Manager, City Council, and the public. Intergovernmental entity and/or public/ private partnership Potential efficiencies gained in sharing costs and benefitting from available resources; expertise is mutually available. Dividing accountability and decision making responsibilities – coordinating the efforts of each entity is more complex. Animal Control reports to PD; shelter operation partners with a private, nonprofit, or regional animal services organization, either as a separate entity or a satellite facility Same as status quo option above. Other animal services organizations have goals and objectives aligned with PAAS’ shelter operations. Ability to capitalize on known management and leadership expertise in other animal services organizations. Ability to capitalize on others’ fundraising experience. Increased ability to draw customers through others’ established education programs. Ability to generate revenue for key services, such as spay and neuter. Transitioning to this model will take a significant amount of planning and follow-through to ensure success. Sufficient resources must be allocated to the planning effort to ensure success. Negotiations with potential partners must provide assurance that adequate funding will be available to either refurbish or construct a new animal shelter facility that can accommodate education and other community programs to draw customers to the shelter. Sources: 1. Staff From the Police Department, Community Services Department, and Office of the City Manager 2. Aronson, Stephen, Animal Control Management – A New Look at Public Responsibility, Purdue University Press, Indiana, 2012, p. 25-50. 3. City of Palo Alto FY 2015 Adopted Operating Budget Attachment A Audit of Palo Alto Animal Services 27 Succession planning not done for key employee due to retire Recent turnover of the animal shelter’s superintendent position and the planned retirement of the acting superintendent pose a risk to the shelter in meeting its goals and objectives and maintaining effective and efficient operations. In addition to the financial considerations, it also increases the importance of examining alternate operating models for moving PAAS into the future. The previous superintendent held her position from 1996 through 2012. The supervisor has been in an acting superintendent role since then, and the supervisor position was eliminated from the budget beginning with FY 2013 (see Exhibit 3). The acting superintendent has informed the City that she plans to retire in December 2015. PAAS does not have staff with the breadth of experience to address its immediate challenges. There is a significant gap between the superintendent’s duties and responsibilities, which include providing leadership, direction, and vision to the City’s animal community, and the duties and responsibilities of other positions within PAAS. In addition, the Police Department may have serious challenges in recruiting an experienced supervisor because: The lead position in an animal shelter may not be easy to fill due to the specialized skills and management experience necessary. A comparable local shelter operation recently used a recruiter but still experienced difficulty in filling its director position. That shelter reported that although the recruiter had found two seemingly qualified staff, one backed out and the other was rejected in the hiring process. There may be hesitation from qualified individuals to apply and commit to the superintendent position at PAAS given the publicly known challenges and uncertainty regarding PAAS’ future. The Police Department’s hiring process takes 3 to 6 months and includes a background check. This process has resulted in disqualifying candidates in the past and could dissuade potentially qualified candidates. The salary is not competitive with other local animal shelter leadership positions. PAAS’ superintendent position has significant responsibilities PAAS’ animal services superintendent is expected to provide services that are essential to the City as it moves forward with policy decisions regarding the future of PAAS: Represent the City in animal-related services and provide guidance to our regional jurisdictions Attachment A Audit of Palo Alto Animal Services 28 Enforce City ordinances governing the control and disposal of animals, public health and safety, PAAS operations, and the spay and neuter clinic The United States Government Accountability Office’s internal control standards for government8 state that management should have succession and contingency plans for key roles to help the entity continue achieving its objectives. Considering recent challenges, including loss of the Mountain View contract, an inability to establish new contracts that could save other jurisdictions money, uncertainty about the future of the shelter, and concerns about the facility, the City should have begun an executive level recruitment process as soon as the acting superintendent provided notice of her intent to retire. Salaries not competitive Palo Alto conducts salary surveys by comparing and adjusting salaries with other governmental agencies. The City completed a salary study in 2014, but the comparisons did not include nongovernmental agencies that may also be competition when recruiting for a key position such as the superintendent. Setting salaries based on the local government market only does not necessarily consider the unique challenges that a position might face that would justify a higher salary range. For example, depending on policy decisions made regarding the future of the Palo Alto Animal Services, the superintendent could need to become involved in significant fundraising activities, as well as be part of planning the construction of a new facility, which are both significant undertakings not currently required by the position. For comparison, executive staff at SVACA, HSSV, and PHS have had to raise funds and successfully manage building new shelters, which is something that requires skills beyond what has been required of the PAAS’ superintendent position. Exhibit 20 shows the salaries of leadership positions in local nonprofit animal shelter agencies, as well as for the City of San Jose and SVACA, which run operations that are similar to PAAS but serve much larger populations. 8 Ibid., p. 31. Attachment A Audit of Palo Alto Animal Services 29 Exhibit 20: Comparison of Animal Shelter Leadership Salaries Agency Title Salary Benefits Total Salaries & Benefits Palo Alto Superintendent $80,000 - $120,000 $45,000 - $69,000 $125,000 - $188,000 HSSV President $203,000 $10,000 $213,000 PHS President $330,000 $47,000 $377,000 SVACA Executive Director $160,000 $31,000 $191,000 San Jose Supervisor $71,000 - $86,000 $47,000 - $57,000 $118,000 - $143,000 Source: City of Palo Alto Records, Information From Each Agency, and www.charitynavigator.org Palo Alto Animal Services response times to calls for service are competitive PAAS’ records show that the ACOs handled 2,345 calls for service in FY 2014. Exhibit 21 shows that their average response time in FY 2014 was 25 minutes for emergency calls and 41 minutes for nonemergency calls. “Municipal Benchmarks – Assessing Local Performance and Establishing Community Standards,”9 says that response times and response time targets of several cities suggest that an average emergency response time of 20 minutes or less is achievable by many agencies. Although precise benchmarking is difficult due to factors such as traffic, Palo Alto’s response time for emergency calls is close to the suggested benchmark. Exhibit 21: Animal Control Call Response Times, in Minutes - FY 2005 Through FY 2014 Source: PAAS Chameleon Software Nearby jurisdictions have lower expectations for response times Some nearby jurisdictions have lower expectations regarding their response times for both emergency and nonemergency calls for service: 9 Ammons, David N., Municipal Benchmarks: Assessing Local Performance and Establishing Community Standards, Routledge, New York, 2012, p. 24. 29 30 25 24 25 24 29 24 25 25 42 39 41 35 38 37 41 39 39 41 0 5 10 15 20 25 30 35 40 45 50 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 Avg. Emergency Response Time Avg. Nonemergency Response Time Attachment A Audit of Palo Alto Animal Services 30 The City of San Jose’s Animal Care Center, which serves San Jose, Cupertino, Los Gatos, Milpitas, and Saratoga, has a target time to respond to emergency animal calls, such as dangerous situations or critically injured or sick animals, within one hour. PHS’ contract with San Mateo County says that PHS will always respond to emergency (Priority 1) calls within one hour, to nonemergency (Priority 2) calls within 12 hours, and to other (Priority 3) calls within 24 hours. Residents and PAAS users continue to rate animal control services highly The ACOs’ level of service is reflected in resident satisfaction rates. In the most recent National Citizen SurveyTM, 80 percent of Palo Alto residents rated animal control services as “excellent” or “good,” which is higher than resident ratings of “excellent” or “good” for other local jurisdictions that participated in the survey: San Jose - 49 percent Sunnyvale - 78 percent Walnut Creek - 77 percent Livermore - 71 percent In the Animal Services survey conducted during this audit, all three surveyed groups rated animal control services very highly and generally considered animal control services as “essential” or “very important,” as shown in Exhibit 22. Exhibit 22: Animal Services Survey Results – Questions Regarding Animal Control Survey Question Palo Alto Residents (Randomly Selected) Palo Alto Residents Who Used the Shelter in the Past 12 Months* Nonresidents Who Used the Shelter in the Past 12 Months Percent Rating Services as “Excellent” or “Good” Animal Control (e.g., called about vicious, attacking, or injured dog or cat, animal bite, barking dog) 98% 94% 89% Dead animal pick-up 95% 95% 88% Percent Rating Services “Essential” or “Very important” Animal Control 90% 97% 95% Animal cruelty investigations 90% 91% 96% Dead animal pick-up 86% 89% 87% * Combined responses for all residents (randomly selected and known users) who used Palo Alto Animal Services in the past 12 months. Source: Animal Services Survey Conducted by the National Research Center Attachment A Audit of Palo Alto Animal Services 31 Recommendations We recommend that the City Manager: 1. Recommend to the City Council that it make a policy decision for management to explore options, and based on the results, develop a recommendation for the best approach for retaining Palo Alto Animal Services as a regional animal shelter facility. 2. Identify and assign someone with management skills to immediately begin working at Palo Alto Animal Services to learn the management side of the shelter operations and carry PAAS through its transition into the future after the acting superintendent retires. This can be either a current or new City employee, but should be a person with an understanding of the challenges currently facing PAAS. The person selected should be retained in the position until a clear direction is developed regarding the future of PAAS and the skills and experience needed for a director or superintendent position are known and recruitment can take place, if appropriate. As part of this process, determine whether to temporarily move animal services to a function under the Office of the City Manager until a permanent decision is made regarding the long-term direction for providing animal services. 3. Conduct a staffing analysis to determine an appropriate staffing level to continue performing shelter operations during the transition period without the assistance of the ACOs. Include an analysis of potential expanded hours, including variations of extended weekday, weekend, and holiday hours and the potential increase in revenues as a result of expanded hours. Seek budget funding from the City Council to hire the appropriate staff based on the analysis and recruit for the necessary positions. After implementing Recommendations 1 to 3: 4. Engage in discussions with nonprofit organizations and/or other animal shelters for strategies to operate Palo Alto Animal Services or provide specific services that would enhance current animal shelter services under a long-term partnership agreement with the City, including potential assistance in raising funds to build a new shelter. Present the results to the City Council for a policy decision on the direction to take for pursuing either the long-term future of PAAS, including the possibility of continued general fund support, or closure of the facility if no strategy is feasible from both a financial and operational perspective. Attachment A Audit of Palo Alto Animal Services 32 5. As part of the discussion in Recommendation 4, analyze the feasibility of separating the ACO activities from the shelter activities. If appropriate, transition the ACO function out of PAAS so it becomes solely a Police Department function or part of another regional animal services organization with ACOs dedicated to the Palo Alto service area, including Los Altos and Los Altos Hills, to continue providing the level of response time service that PAAS currently provides. Depending on the outcome, engage in discussions with other jurisdictions to promote the City’s competitive response times and consistently high customer satisfaction ratings to potentially enter into agreements with the City of Palo Alto for animal control services as the jurisdictions’ current agreements expire. 6. Develop and implement a strategy to market Palo Alto Animal Services to both residents and nonresidents. Marketing efforts should focus on promoting awareness of all available services, as well as the cost savings available to customers for using PAAS’ services. Engage nonprofit organizations, volunteers, and other animal shelters to assist in marketing PAAS’ services to a larger group of potential customers. 7. Review the work that has already been done related to building a new animal shelter. Assess the feasibility of obtaining sufficient funding through fundraising, public/private partnerships, general fund subsidies, or a bond initiative, to build a new animal shelter that meets modern-day standards for animal care and safety, including animals’ physical and behavioral needs, as established by the Association of Shelter Veterinarians or a comparable standard. Explore the potential revenue that can be generated from including new features in a new facility, such as a community and education center. Involve the Public Works Department in this assessment as necessary. Based on the results, present a proposal to the City Council for a decision on whether to move forward with pursuing construction of a new animal shelter and the funding source. 8. Seek future opportunities to provide animal licensing services to the County of San Mateo when its current contract expires in 2016. Attachment A Audit of Palo Alto Animal Services 33 APPENDIX 1 – History of Animal Services Facilities in Palo Alto 1908 1926 1972 1985 1987 1990 1993 1996 2003 2004 2006 2007 2008 2009 1908 The Palo Alto Society for the Prevention of Cruelty to Animals, originally formed in 1902, changed its name to the Palo Alto Humane Society (PAHS). 1972 Animal Services Center at 3281 East BayshoreRoad was built. Shelter management shifted from PAHS to the City. 1985 Construction of an isolation building and euthanasia room. 1987 Front office remodel. 1990 Addition of a volunteer center/meeting room. 1993 City of Palo Alto started providing regional animal control and sheltering services to Los Altos, Los Altos Hills and Mountain View. 1996 A City consultant, Adamson Associates, recommended renovations for the shelter, but implementation was delayed pending a potential contract with the City of Sunnyvale. December 2003 The Council approved new 10-year service agreements with Los Altos, Los Altos Hills and Mountain View and a 20-year service agreement with the City of Sunnyvale. February 2004 The Council approved a contract with Philip Henry Architecture for design services for the shelter’s expansion project, includingrenovations to the existing building. The four partner cities agreed to share in the cost of the shelter design and construction. March 2007 Sunnyvale City Council voted to withdraw from the partnership, opting instead to secure animal shelteringthrough a contract with Humane Society Silicon Valley. May 2006-February 2007 The expansion project was advertised for bids three times, but all the bids exceeded the construction budget. January 2008 The City purchased the City of Los Altos’ one-half interest in a 13.26 acre Los Altos Treatment Plant (LATP) site at 1237 North San Antonio Road, and completed the annexation process so that the site would fall within Palo Alto city limits November 2008 The Council approved a contract with IMR Contractor for maintenance and accessibility renovations. The need to repair the existing buildings and bring them up to current accessibility standards became urgent due to significant deterioration of the buildings. April 2009 A City consultant, Group 4 Architecture, Research + Planning, Inc., conducted a feasibility study that proposed a new animal shelter on the LATP site. 1926 PAHS built the first (temporary) animal shelter. A new facility was built in 1937. PAHS administered the shelter until 1972. Attachment A Audit of Palo Alto Animal Services 34 APPENDIX 2 – Animal Services Survey Attachment A Audit of Palo Alto Animal Services 35 Attachment A Audit of Palo Alto Animal Services 36 Attachment A Audit of Palo Alto Animal Services 37 Attachment A Audit of Palo Alto Animal Services 38 APPENDIX 3 – Animal Services Survey Results Note: The responses below are actual counts and percentages from the survey responses received; they are not weighted to account for differences between survey respondent characteristics and population norms. As a result, the survey sample may not represent the opinions of the community as a whole. We removed “Don’t know” responses in the count and percent calculations, except for Questions 2 and 3. Survey Results Palo Alto Residents: (Random Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Question 1: How many, if any, of the following house pets or livestock did you own? (Note: The results have been summarized for animals other than dogs or cats) q01a. Dogs Zero 177 69.69% 12 5.94% 9 6.77% 198 33.62% One 57 22.44% 127 62.87% 74 55.64% 258 43.80% Two 17 6.69% 53 26.24% 33 24.81% 103 17.49% Three 3 1.18% 7 3.47% 10 7.52% 20 3.40% Four 0.00% 1 0.50% 5 3.76% 6 1.02% Five or more 0.00% 2 0.99% 2 1.50% 4 0.68% Total: 254 100% 202 100% 133 100% 589 100% q01b. Cats Zero 180 75.00% 61 51.26% 48 50.00% 289 63.52% One 39 16.25% 25 21.01% 21 21.88% 85 18.68% Two 20 8.33% 19 15.97% 18 18.75% 57 12.53% Three 1 0.42% 10 8.40% 4 4.17% 15 3.30% Four 0.00% 2 1.68% 3 3.13% 5 1.10% Five or more 0.00% 2 1.68% 2 2.08% 4 0.88% Total: 240 100% 119 100% 96 100% 455 100% q01. Other (combines “q01” responses for birds, rabbits, rodents, reptiles, fowl, cows, goats, horses, pigs, and sheep) Zero 205 94.47% 82 86.32% 60 77.92% 347 89.20% One 4 1.84% 15 15.79% 10 12.99% 29 7.46% Two 9 4.15% 4 4.21% 13 16.88% 26 6.68% Three 2 0.92% 3 3.16% 0.00% 5 1.29% Four 4 1.84% 4 4.21% 3 3.90% 11 2.83% Five or more 1 0.46% 4 4.21% 5 6.49% 10 2.57% Total: (exceeds 100% if more than one was selected) 217 104% 95 118% 77 118.18% 389 110% Attachment A Audit of Palo Alto Animal Services 39 Note: This is a summary of Questions 1 and 2 that shows the number of dogs reported by respondents in columns (data from Question 1) and the number of their dogs that respondents reported that had the service specified (data from Question 2) in rows. Question 2: [If You Own At Least One Dog] Of total dogs stated in #1 above, how many are currently … Q02a. Vaccinated against rabies Owned One Dog Owned Two Dogs Owned Three Dogs Owned Four Dogs Owned Five or more Dogs Count Count Count Count Count General Palo Alto (Random) Don't know if vaccinated … Zero vaccinated … One vaccinated … 53 1 Two vaccinated … 1* 16 Three vaccinated … 2 Total: 54 17 2 PAAS Customers: Palo Alto Residents One vaccinated … 124 2 Two vaccinated ... 1* 50 1 Three vaccinated ... 6 Four vaccinated ... 1 Five or more vaccinated … 1* 2 Total: 126 52 7 1 2 PAAS Customers: Nonresidents Zero vaccinated ... One vaccinated ... 73 3 1 Two vaccinated ... 30 Three vaccinated ... 9 Four vaccinated ... 5 Five or more vaccinated ... 2 Total: 73 33 10 5 2 * Respondent(s) answered the questions inconsistently. Attachment A Audit of Palo Alto Animal Services 40 Note: This is a summary of Questions 1 and 2 that shows the number of dogs reported by respondents in columns (data from Question 1) and the number of their dogs that respondents reported that had the service specified (data from Question 2) in rows. Question 2: [If You Own At Least One Dog] Of total dogs stated in #1 above, how many are currently … Q02b. Vaccinated against distemper and parvovirus Owned One Dog Owned Two Dogs Owned Three Dogs Owned Four Dogs Owned Five or more Dogs Count Count Count Count Count General Palo Alto (Random) Don't know if vaccinated … 1 Zero vaccinated … 2 1 One vaccinated … 50 1 Two vaccinated … 1* 15 Three vaccinated … 2 Total: 54 17 2 PAAS Customers: Palo Alto Residents Don't know if vaccinated … 2 1 Zero vaccinated … 2 One vaccinated … 116 4 Two vaccinated ... 1* 46 1 Three vaccinated ... 6 Four vaccinated ... 1 Five or more vaccinated … 1* 1 Total: 122 50 7 1 2 PAAS Customers: Nonresidents Don't know if vaccinated … 1 Zero vaccinated … One vaccinated … 71 3 1 Two vaccinated ... 29 1 Three vaccinated ... 8 Four vaccinated ... 5 Five or more vaccinated … 2 Total: 71 33 10 5 2 * Respondent(s) answered the questions inconsistently. Attachment A Audit of Palo Alto Animal Services 41 Note: This is a summary of Question 1 and Question 2 that shows the number of dogs reported by respondents in columns (data from Question 1) and the number of their dogs that respondents reported that had the service specified (data from Question 2) in rows. Question 2: [If You Own At Least One Dog] Of total dogs stated in #1 above, how many are currently … Q02c. Licensed Owned One Dog Owned Two Dogs Owned Three Dogs Owned Four Dogs Owned Five or more Dogs Count Count Count Count Count General Palo Alto (Random) Don't know if licensed Zero licensed 3 One licensed 49 1 Two licensed 16 1 Three licensed 1 Total: 52 17 2 PAAS Customers: Palo Alto Residents Zero licensed 1 One licensed 123 2 Two licensed 47 1 Three licensed 6 1 Four licensed 1 Five or more licensed 1* 1 Total: 124 50 7 1 2 PAAS Customers: Nonresidents Don't know if licensed 1 Zero licensed 1 One licensed 69 6 Two licensed 26 Three licensed 9 Four licensed 4 Five or more licensed 2 Total: 71 32 9 4 2 * Respondent(s) answered the questions inconsistently. Attachment A Audit of Palo Alto Animal Services 42 Note: This is a summary of Questions 1 and 2 that shows the number of dogs reported by respondents in columns (data from Question 1) and the number of their dogs that respondents reported that had the service specified (data from Question 2) in rows. Question 2: [If You Own At Least One Dog] Of total dogs stated in #1 above, how many are currently . . . Q02d. Microchipped Owned One Dog Owned Two Dogs Owned Three Dogs Owned Four Dogs Owned Five or more Dogs Count Count Count Count Count General Palo Alto (Random) Don't know if microchipped 1 Zero microchipped 2 1 One microchipped 47 3 Two microchipped 13 Three microchipped 2 Total: 50 17 2 PAAS Customers: Palo Alto Residents Zero microchipped 10 1 One microchipped 105 7 Two microchipped 1 42 2 Three microchipped 5 Four microchipped 1 2 Total: 116 50 7 1 2 PAAS Customers: Nonresidents Don't know if microchipped 1 Zero microchipped 4 2 1 One microchipped 60 7 1 Two microchipped 23 1 Three microchipped 7 Four microchipped 4 Five or more microchipped 2 Total: 65 32 9 5 2 Attachment A Audit of Palo Alto Animal Services 43 Note: This is a summary of Questions 1 and 2 that shows the number of dogs reported by respondents in columns (data from Question 1) and the number of their dogs that respondents reported that had the service specified (data from Question 2) in rows. Question 2: [If You Own At Least One Dog] Of total dogs stated in #1 above, how many are currently … Q02e. Spayed or neutered Owned One Dog Owned Two Dogs Owned Three Dogs Owned Four Dogs Owned Five or more Dogs Count Count Count Count Count General Palo Alto (Random) Zero spayed or neutered 1 One spayed or neutered 51 1 Two spayed or neutered 1* 16 Three spayed or neutered 2 Total: 53 17 2 PAAS Customers: Palo Alto Residents Zero spayed or neutered 6 One spayed or neutered 114 6 1 Two spayed or neutered 1* 46 2 Three spayed or neutered 4 Four spayed or neutered 1 1 Five or more spayed or neutered 1 Total: 121 52 7 1 2 PAAS Customers: Nonresidents Zero spayed or neutered 2 One spayed or neutered 70 3 Two spayed or neutered 30 2 1 Three spayed or neutered 8 1 1 Four spayed or neutered 3 Five or more spayed or neutered 1 Total: 72 33 10 5 2 * Respondent(s) answered the questions inconsistently. Attachment A Audit of Palo Alto Animal Services 44 Note: This is a summary of Questions 1 and 3 that shows the number of cats reported by respondents in columns (data from Question 1) and the number of their cats that respondents reported that had the service specified (data from Question 3) in rows. Question 3: [If You Own At Least One Cat] Of total cats stated in #1 above, how many are currently … Q03a. Vaccinated against rabies Owned One Cat Owned Two Cats Owned Three Cats Owned Four Cats Owned Five or more Cats Count Count Count Count Count General Palo Alto (Random) Don't know if vaccinated … 1 Zero vaccinated … 6 1 One vaccinated … 28 2 Two vaccinated … 17 Three vaccinated … 1 Total: 35 20 1 PAAS Customers: Palo Alto Residents Don't know if vaccinated … 1 1 Zero vaccinated … 4 One vaccinated … 19 2 Two vaccinated … 15 Three vaccinated … 6 Four vaccinated … 2 Five or more vaccinated … 2 Total: 24 15 9 2 2 PAAS Customers: Nonresidents Don't know if vaccinated … 1 Zero vaccinated … 2 3 1 One vaccinated … 15 1 Two vaccinated … 1* 13 Three vaccinated … 4 Four vaccinated … 1 Five or more vaccinated … 1 Total: 18 18 4 2 1 * Respondent(s) answered the questions inconsistently. Attachment A Audit of Palo Alto Animal Services 45 Note: This is a summary of Questions 1 and 3 that shows the number of cats reported by respondents in columns (data from Question 1) and the number of their cats that respondents reported that had the service specified (data from Question 3) in rows. Question 3: [If You Own At Least One Cat] Of total cats stated in #1 above, how many are currently ... Q03b. Vaccinated against distemper and parvovirus Owned One Cat Owned Two Cats Owned Three Cats Owned Four Cats Owned Five or more Cats Count Count Count Count Count General Palo Alto (Random) Don't know if vaccinated … 1 2 Zero vaccinated … 7 One vaccinated … 25 3 Two vaccinated … 14 Three vaccinated … 1 Total: 33 19 1 PAAS Customers: Palo Alto Residents Don't know if vaccinated … 1 1 Zero vaccinated … 3 One vaccinated … 18 1 Two vaccinated … 16 Three vaccinated … 7 Four vaccinated … 2 Five or more vaccinated … 2 Total: 22 16 9 2 2 PAAS Customers: Nonresidents Don't know if vaccinated … 1 1 Zero vaccinated … 3 3 One vaccinated … 12 Two vaccinated … 1* 14 Three vaccinated … 4 Four vaccinated … 3 Five or more vaccinated … 1 Total: 17 18 4 3 1 * Respondent(s) answered the questions inconsistently. Attachment A Audit of Palo Alto Animal Services 46 Note: This is a summary of Questions 1 and 3 that shows the number of cats reported by respondents in columns (data from Question 1) and the number of their cats that respondents reported that had the service specified (data from Question 3) in rows. Question 3: [If You Own At Least One Cat] Of total cats stated in #1 above, how many are currently … Q03c. Licensed Owned One Cat Owned Two Cats Owned Three Cats Owned Four Cats Owned Five or more Cats Count Count Count Count Count General Palo Alto (Random) Don't know if licensed 3 1 Zero licensed 15 7 One licensed 11 Two licensed 7 Three licensed 1 Total: 29 15 1 PAAS Customers: Palo Alto Residents Don't know if licensed 2 Zero licensed 10 2 2 2 1 One licensed 8 Two licensed 9 Three licensed 5 Total: 20 11 7 2 1 PAAS Customers: Nonresidents Don't know if licensed 1 2 Zero licensed 8 6 1 2 1 One licensed 7 1 Two licensed 7 Three licensed 1 Total: 16 15 3 2 1 Attachment A Audit of Palo Alto Animal Services 47 Note: This is a summary of Questions 1 and 3 that shows the number of cats reported by respondents in columns (data from Question 1) and the number of their cats that respondents reported that had the service specified (data from Question 3) in rows. Question 3: [If You Own At Least One Cat] Of total cats stated in #1 above, how many are currently … Q03d. Microchipped Owned One Cat Owned Two Cats Owned Three Cats Owned Four Cats Owned Five or more Cats Count Count Count Count Count General Palo Alto (Random) Don't know if microchipped 2 Zero microchipped 11 2 One microchipped 18 3 Two microchipped 14 Three microchipped 1 Total: 31 19 1 PAAS Customers: Palo Alto Residents Zero microchipped 5 1 1 One microchipped 16 Two microchipped 16 Three microchipped 9 Four microchipped 1 Five or more microchipped 2 Total: 21 16 10 2 2 PAAS Customers: Nonresidents Zero microchipped 2 2 1 1 1 One microchipped 13 3 Two microchipped 1* 12 Three microchipped 2 Four microchipped 2 Total: 16 17 3 3 1 * Respondent(s) answered the questions inconsistently. Attachment A Audit of Palo Alto Animal Services 48 Note: This is a summary of Questions 1 and 3 that shows the number of cats reported by respondents in columns (data from Question 1) and the number of their cats that respondents reported that had the service specified (data from Question 3) in rows. Question 3: [If You Own At Least One Cat] Of total cats stated in #1 above, how many are currently … Q03e. Spayed or neutered Owned One Cat Owned Two Cats Owned Three Cats Owned Four Cats Owned Five or more Cats Count Count Count Count Count General Palo Alto (Random) Don't know if spayed or neutered 1 Zero spayed or neutered 2 One spayed or neutered 32 1 Two spayed or neutered 19 Three spayed or neutered 1 Total: 35 20 1 PAAS Customers: Palo Alto Residents Zero spayed or neutered One spayed or neutered 22 Two spayed or neutered 17 Three spayed or neutered 10 Four spayed or neutered 2 Five or more spayed or neutered 2 Total: 22 17 10 2 2 PAAS Customers: Nonresidents Zero spayed or neutered 1 One spayed or neutered 16 Two spayed or neutered 1* 18 Three spayed or neutered 4 Four spayed or neutered 3 Five or more spayed or neutered 2 Total: 18 18 4 3 2 * Respondent(s) answered the questions inconsistently. Attachment A Audit of Palo Alto Animal Services 49 Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q04. In the past 12 months, did you or other household members use Palo Alto Animal Services (PAAS)? No 232 88.21% 99 49.25% 54 38.30% 385 63.64% Yes 31 11.79% 102 50.75% 87 61.70% 220 36.36% Total: 263 100% 201 100% 141 100% 605 100% Q05. If no, why not? (Check all that apply.) q05a. I do not have a pet 150 65.22% 1 0.94% 3 5.66% 154 39.59% q05b. Not competitively priced 1 0.43% 0.00% 0.00% 1 0.26% q05c. Location not convenient 5 2.17% 5 4.72% 11 20.75% 21 5.40% q05d. Too far from home 4 1.74% 2 1.89% 5 9.43% 11 2.83% q05e. Too far from work 1 0.43% 1 0.94% 1 1.89% 3 0.77% q05f. Lack of trust in animal care providers 2 0.87% 1 0.94% 2 3.77% 5 1.29% q05g. Poor customer service 1 0.43% 2 1.89% 1 1.89% 4 1.03% q05h. Lack of trust of government agencies 0.00% 1 0.94% 1 1.89% 2 0.51% q05i. Was not aware of potential significant savings due to lower (subsidized) fees 20 8.70% 18 16.98% 10 18.87% 48 12.34% q05j. Other 23 10.00% 19 17.92% 13 24.53% 55 14.14% q05k. Quality of services 0.00% 2 1.89% 0.00% 2 0.51% q05l. Quality of facilities 1 0.43% 1 0.94% 1 1.89% 3 0.77% q05m. Types of services do not meet my needs 2 0.87% 2 1.89% 3 5.66% 7 1.80% q05n. Prefer to use a private veterinarian 27 11.74% 48 45.28% 21 39.62% 96 24.68% q05o. Was not aware of available services 38 16.52% 38 35.85% 19 35.85% 95 24.42% q05p. Hours of operation are not convenient 5 2.17% 9 8.49% 4 7.55% 18 4.63% q05q. Closed too often 4 1.74% 7 6.60% 0.00% 11 2.83% q05r. Too few or not a good selection of animals to adopt 3 1.30% 1 0.94% 1 1.89% 5 1.29% q05s. It is a sad place to go 3 1.30% 1 0.94% 1 1.89% 5 1.29% Total: (exceeds 100% if more than one was selected) 230 126% 106 150% 53 183% 389 140% Q06. If yes, why did you choose Palo Alto Animal Services over another provider? (Check all that apply.) q06a. Cost savings in comparison to a private veterinarian 16 41.03% 55 50.93% 52 57.14% 123 51.68% q06b. Location is convenient 23 58.97% 68 62.96% 39 42.86% 130 54.62% q06c. Close to home 21 53.85% 53 49.07% 31 34.07% 105 44.12% q06d. Close to work 7 17.95% 15 13.89% 7 7.69% 29 12.18% q06e. Greater trust in animal care providers 5 12.82% 28 25.93% 22 24.18% 55 23.11% q06f. I want to adopt locally 7 17.95% 17 15.74% 11 12.09% 35 14.71% q06g. Other 13 33.33% 28 25.93% 26 28.57% 67 28.15% q06h. Hours of operation are more convenient 5 12.82% 18 16.67% 17 18.68% 40 16.81% q06i. Quality of services 13 33.33% 45 41.67% 41 45.05% 99 41.60% q06j. Quality of facilities 5 12.82% 23 21.30% 20 21.98% 48 20.17% Attachment A Audit of Palo Alto Animal Services 50 Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q06. If yes, why did you choose Palo Alto Animal Services over another provider? (Check all that apply.) q06k. Types of services better meet my needs 9 23.08% 28 25.93% 19 20.88% 56 23.53% q06l. Prefer to use a City-managed provider 8 20.51% 29 26.85% 13 14.29% 50 21.01% q06m. Quality of customer service 17 43.59% 40 37.04% 31 34.07% 88 36.97% Total: (exceeds 100% if more than one option was selected) 39 382% 108 414% 91 362% 238 389% Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q07. In the past 12 months, how often, if ever, have you or other household members used each of the following services provided by Palo Alto Animal Services (PAAS)? q07a. Animal Control (e.g., called about vicious, attacking, or injured dog or cat, animal bite, barking dog) Never 235 94.00% 148 88.62% 94 92.16% 477 91.91% 1-2 times (in the last 12 months) 14 5.60% 17 10.18% 7 6.86% 38 7.32% 3-12 times (in the last 12 months) 1 0.40% 2 1.20% 0.00% 3 0.58% More than 26 times (in the last 12 months) 0.00% 0.00% 1 0.98% 1 0.19% Total: 250 100% 167 100% 102 100% 519 100% q07b. Dead animal pick-up Never 234 96.30% 148 91.36% 91 91.00% 473 93.66% 1-2 times (in the last 12 months) 8 3.29% 13 8.02% 8 8.00% 29 5.74% 3-12 times (in the last 12 months) 1 0.41% 1 0.62% 0.00% 2 0.40% 13-26 times (in the last 12 months) 0.00% 0.00% 1 1.00% 1 0.20% Total: 243 100% 162 100% 100 100% 505 100% q07c. Look for/reclaim lost pet Never 238 97.54% 147 91.30% 96 95.05% 481 95.06% 1-2 times (in the last 12 months) 5 2.05% 12 7.45% 4 3.96% 21 4.15% 3-12 times (in the last 12 months) 1 0.41% 2 1.24% 1 0.99% 4 0.79% Total: 244 100% 161 100% 101 100% 506 6.22% q07d. Adoption Never 232 95.08% 145 89.51% 86 85.15% 463 91.32% 1-2 times (in the last 12 months) 11 4.51% 15 9.26% 14 13.86% 40 7.89% 3-12 times (in the last 12 months) 1 0.41% 2 1.23% 1 0.99% 4 0.79% Total: 244 100% 162 100% 101 100% 507 100% q07e. Euthanasia (put animal down/to sleep) Never 240 99.59% 155 98.73% 91 91.00% 486 97.59% 1-2 times (in the last 12 months) 1 0.41% 2 1.27% 9 9.00% 12 2.41% Total: 241 100% 157 100% 100 100% 498 100% q07f. Microchipping Never 237 97.53% 144 91.14% 88 85.44% 469 93.06% 1-2 times (in the last 12 months) 4 1.65% 11 6.96% 14 13.59% 29 5.75% 3-12 times (in the last 12 months) 2 0.82% 3 1.90% 1 0.97% 6 1.19% Total: 243 100% 158 100% 103 100% 504 100% Attachment A Audit of Palo Alto Animal Services 51 PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Palo Alto Residents: (Randomly Selected) Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q07. In the past 12 months, how often, if ever, have you or other household members used each of the following services provided by Palo Alto Animal Services (PAAS)? q07g. Spay or neuter service Never 236 96.72% 135 85.99% 79 74.53% 450 88.76% 1-2 times (in the last 12 months) 6 2.46% 17 10.83% 25 23.58% 48 9.47% 3-12 times (in the last 12 months) 2 0.82% 4 2.55% 1 0.94% 7 1.38% 13-26 times (in the last 12 months) 0.00% 1 0.64% 1 0.94% 2 0.39% Total: 244 100% 157 100% 106 100% 507 100% q07h. Vaccinations Never 233 96.28% 128 74.85% 68 65.38% 429 82.98% 1-2 times (in the last 12 months) 8 3.31% 40 23.39% 33 31.73% 81 15.67% 3-12 times (in the last 12 months) 1 0.41% 2 1.17% 3 2.88% 6 1.16% 13-26 times (in the last 12 months) 0.00% 1 0.58% 0.00% 1 0.19% Total: 242 100% 171 100% 104 100% 517 100% q07i. Licensing Never 214 85.26% 73 38.62% 64 53.33% 351 62.68% 1-2 times (in the last 12 months) 36 14.34% 107 56.61% 53 44.17% 196 35.00% 3-12 times (in the last 12 months) 1 0.40% 7 3.70% 1 0.83% 9 1.61% 13-26 times (in the last 12 months) 0.00% 1 0.53% 1 0.83% 2 0.36% More than 26 times (in the last 12 months) 0.00% 1 0.53% 1 0.83% 2 0.36% Total: 251 100% 189 100% 120 100% 560 100% q07j. Foster a pet Never 239 99.58% 149 97.39% 97 100.00% 485 98.98% 1-2 times (in the last 12 months) 1 0.42% 3 1.96% 0.00% 4 0.82% 3-12 times (in the last 12 months) 0.00% 1 0.65% 0.00% 1 0.20% Total: 240 100% 153 100% 97 100% 490 100% q07k. Surrender a pet or stray Never 237 97.93% 152 95.60% 95 95.96% 484 96.80% 1-2 times (in the last 12 months) 5 2.07% 7 4.40% 4 4.04% 16 3.20% Total: 242 100% 159 100% 99 100% 500 100% q07l. Educational purpose Never 238 98.76% 153 98.08% 92 94.85% 483 97.77% 1-2 times (in the last 12 months) 3 1.24% 3 1.92% 5 5.15% 11 2.23% Total: 241 100% 156 100% 97 100% 494 100% q07m. Volunteer opportunities Never 238 99.58% 148 95.48% 92 94.85% 478 97.35% 1-2 times (in the last 12 months) 1 0.42% 4 2.58% 3 3.09% 8 1.63% 3-12 times (in the last 12 months) 0.00% 1 0.65% 2 2.06% 3 0.61% 13-26 times (in the last 12 months) 0.00% 1 0.65% 0.00% 1 0.20% More than 26 times (in the last 12 months) 0.00% 1 0.65% 0.00% 1 0.20% Total: 239 100% 155 100% 97 100% 491 100% q07n. Store – Pet supplies Never 230 95.04% 139 83.73% 81 77.88% 450 87.89% 1-2 times (in the last 12 months) 9 3.72% 24 14.46% 17 16.35% 50 9.77% 3-12 times (in the last 12 months) 3 1.24% 2 1.20% 2 1.92% 7 1.37% 13-26 times (in the last 12 months) 0.00% 1 0.60% 2 1.92% 3 0.59% More than 26 times (in the last 12 months) 0.00% 0.00% 2 1.92% 2 0.39% Total: 242 100% 166 100% 104 100% 512 100% Attachment A Audit of Palo Alto Animal Services 52 Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q07. In the past 12 months, how often, if ever, have you or other household members used each of the following services provided by Palo Alto Animal Services (PAAS)? q07o. Donate money or supplies Never 228 93.06% 131 77.51% 82 78.10% 441 84.97% 1-2 times (in the last 12 months) 15 6.12% 32 18.93% 19 18.10% 66 12.72% 3-12 times (in the last 12 months) 1 0.41% 6 3.55% 2 1.90% 9 1.73% 13-26 times (in the last 12 months) 1 0.41% 0.00% 1 0.95% 2 0.39% More than 26 times (in the last 12 months) 0.00% 0.00% 1 0.95% 1 0.19% Total: 245 100% 169 100% 105 100% 519 100% q07p. Viewing Never 224 92.18% 131 79.39% 74 71.84% 429 83.95% 1-2 times (in the last 12 months) 14 5.76% 25 15.15% 21 20.39% 60 11.74% 3-12 times (in the last 12 months) 4 1.65% 7 4.24% 6 5.83% 17 3.33% 13-26 times (in the last 12 months) 1 0.41% 1 0.61% 1 0.97% 3 0.59% More than 26 times (in the last 12 months) 0.00% 1 0.61% 1 0.97% 2 0.39% Total: 243 100% 165 100% 103 100% 511 100% Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q08. How would you rate each of the following services provided by PAAS? q08a. Animal Control (e.g., called about vicious, attacking, or injured dog or cat, animal bite, barking dog) Excellent 34 68.00% 39 60.00% 19 61.29% 92 63.01% Good 15 30.00% 18 27.69% 9 29.03% 42 28.77% Fair 1 2.00% 4 6.15% 3 9.68% 8 5.48% Poor 0.00% 4 6.15% 0.00% 4 2.74% Total: 50 100% 65 100% 31 100% 146 100% q08b. Dead animal pick-up Excellent 29 74.36% 32 65.31% 18 72.00% 79 69.91% Good 8 20.51% 12 24.49% 4 16.00% 24 21.24% Fair 1 2.56% 5 10.20% 2 8.00% 8 7.08% Poor 1 2.56% 0.00% 1 4.00% 2 1.77% Total: 39 100% 49 100% 25 100% 113 100% q08c. Look for/reclaim lost pet Excellent 18 64.29% 28 66.67% 17 58.62% 63 63.64% Good 9 32.14% 10 23.81% 9 31.03% 28 28.28% Fair 1 3.57% 4 9.52% 3 10.34% 8 8.08% Total: 28 100% 42 100% 29 100% 99 100% q08d. Adoption Excellent 29 69.05% 37 72.55% 27 65.85% 93 69.40% Good 8 19.05% 11 21.57% 10 24.39% 29 21.64% Fair 2 4.76% 3 5.88% 3 7.32% 8 5.97% Poor 3 7.14% 0.00% 1 2.44% 4 2.99% Total: 42 100% 51 100% 41 100% 134 100% q08e. Euthanasia (put animal down/to sleep) Excellent 13 50.00% 14 82.35% 15 78.95% 42 67.74% Good 10 38.46% 3 17.65% 4 21.05% 17 27.42% Fair 1 3.85% 0.00% 0.00% 1 1.61% Poor 2 7.69% 0.00% 0.00% 2 3.23% Total: 26 100% 17 100% 19 100% 62 100% Attachment A Audit of Palo Alto Animal Services 53 Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents Palo Alto Residents: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q08. How would you rate each of the following services provided by PAAS? q08f. Microchipping Excellent 24 75.00% 41 78.85% 34 77.27% 99 77.34% Good 8 25.00% 11 21.15% 9 20.45% 28 21.88% Fair 0.00% 0.00% 1 2.27% 1 0.78% Total: 32 100% 52 100% 44 100% 128 100% q08g. Spay or neuter service Excellent 36 76.60% 54 79.41% 55 80.88% 145 79.23% Good 8 17.02% 14 20.59% 11 16.18% 33 18.03% Fair 3 6.38% 0.00% 2 2.94% 5 2.73% Total: 47 100% 68 100% 68 100% 183 100% q08h. Vaccinations Excellent 25 65.79% 60 80.00% 47 77.05% 132 75.86% Good 11 28.95% 11 14.67% 13 21.31% 35 20.11% Fair 2 5.26% 2 2.67% 1 1.64% 5 2.87% Poor 0.00% 2 2.67% 0.00% 2 1.15% Total: 38 100% 75 100% 61 100% 174 100% q08i. Licensing Excellent 49 72.06% 83 64.34% 58 69.05% 190 67.62% Good 16 23.53% 33 25.58% 21 25.00% 70 24.91% Fair 1 1.47% 8 6.20% 2 2.38% 11 3.91% Poor 2 2.94% 5 3.88% 3 3.57% 10 3.56% Total: 68 100% 129 100% 84 100% 281 100% q08j. Foster a pet Excellent 14 73.68% 11 68.75% 9 64.29% 34 69.39% Good 5 26.32% 4 25.00% 4 28.57% 13 26.53% Fair 0.00% 1 6.25% 1 7.14% 2 4.08% Total: 19 100% 16 100% 14 100% 49 100% q08k. Surrender a pet or stray Excellent 17 73.91% 20 74.07% 11 73.33% 48 73.85% Good 6 26.09% 5 18.52% 3 20.00% 14 21.54% Fair 0.00% 2 7.41% 0.00% 2 3.08% Poor 0.00% 0.00% 1 6.67% 1 1.54% Total: 23 100% 27 100% 15 100% 65 100% q08l. Educational purpose Excellent 14 66.67% 10 52.63% 14 66.67% 38 62.30% Good 6 28.57% 6 31.58% 7 33.33% 19 31.15% Fair 1 4.76% 0.00% 0.00% 1 1.64% Poor 0.00% 3 15.79% 0.00% 3 4.92% Total: 21 100% 19 100% 21 100% 61 100% q08m. Volunteer opportunities Excellent 15 65.22% 15 55.56% 11 55.00% 41 58.57% Good 7 30.43% 5 18.52% 7 35.00% 19 27.14% Fair 0.00% 2 7.41% 1 5.00% 3 4.29% Poor 1 4.35% 5 18.52% 1 5.00% 7 10.00% Total: 23 100% 27 100% 20 100% 70 0.32% Attachment A Audit of Palo Alto Animal Services 54 Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents Palo Alto Residents: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q08. How would you rate each of the following services provided by PAAS? q08n. Store – Pet supplies Excellent 13 48.15% 23 48.94% 19 47.50% 55 48.25% Good 8 29.63% 15 31.91% 14 35.00% 37 32.46% Fair 6 22.22% 6 12.77% 6 15.00% 18 15.79% Poor 0.00% 3 6.38% 1 2.50% 4 3.51% Total: 27 100% 47 100% 40 100% 114 100% q08o. Ease of donating money or supplies to PAAS Excellent 21 56.76% 32 72.73% 25 65.79% 78 65.55% Good 13 35.14% 9 20.45% 10 26.32% 32 26.89% Fair 2 5.41% 3 6.82% 3 7.89% 8 6.72% Poor 1 2.70% 0.00% 0.00% 1 0.84% Total: 37 100% 44 100% 38 100% 119 100% q08p. Viewing Excellent 21 55.26% 30 61.22% 27 71.05% 78 62.40% Good 13 34.21% 13 26.53% 9 23.68% 35 28.00% Fair 2 5.26% 5 10.20% 2 5.26% 9 7.20% Poor 2 5.26% 1 2.04% 0.00% 3 2.40% Total: 38 100% 49 100% 38 100% 125 100% Attachment A Audit of Palo Alto Animal Services 55 Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents Palo Alto Residents: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q09. How important, if at all, is it to you that the animal shelter provides the following services? q09a. Animal Control Essential 141 64.98% 141 69.80% 94 69.12% 376 67.75% Very important 55 25.35% 51 25.25% 36 26.47% 142 25.59% Somewhat important 17 7.83% 8 3.96% 6 4.41% 31 5.59% Not at all important 4 1.84% 2 0.99% 0.00% 6 1.08% Total: 217 100% 202 100% 136 100% 555 100% q09b. Animal cruelty investigations Essential 133 61.86% 138 67.32% 96 71.11% 367 66.13% Very important 60 27.91% 48 23.41% 33 24.44% 141 25.41% Somewhat important 16 7.44% 15 7.32% 6 4.44% 37 6.67% Not at all important 6 2.79% 4 1.95% 0.00% 10 1.80% Total: 215 100% 205 100% 135 100% 555 100% q09c. Dead animal pick-up Essential 133 61.29% 137 67.49% 73 57.94% 343 62.82% Very important 54 24.88% 48 23.65% 38 30.16% 140 25.64% Somewhat important 25 11.52% 17 8.37% 14 11.11% 56 10.26% Not at all important 5 2.30% 1 0.49% 1 0.79% 7 1.28% Total: 217 100% 203 100% 126 100% 546 100% q09d. Look for/reclaim lost pet Essential 119 55.09% 131 63.29% 96 70.07% 346 61.79% Very important 51 23.61% 57 27.54% 35 25.55% 143 25.54% Somewhat important 38 17.59% 15 7.25% 6 4.38% 59 10.54% Not at all important 8 3.70% 4 1.93% 0.00% 12 2.14% Total: 216 100% 207 100% 137 100% 560 100% q09e. Adoption – on-site Essential 96 46.38% 89 46.11% 71 52.21% 256 47.76% Very important 54 26.09% 61 31.61% 45 33.09% 160 29.85% Somewhat important 42 20.29% 34 17.62% 19 13.97% 95 17.72% Not at all important 15 7.25% 9 4.66% 1 0.74% 25 4.66% Total: 207 100% 193 100% 136 100% 536 100% Attachment A Audit of Palo Alto Animal Services 56 Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q09. How important, if at all, is it to you that the animal shelter provides the following services? q09f. Adoption – off-site Essential 69 37.70% 49 28.82% 49 40.16% 167 35.16% Very important 53 28.96% 47 27.65% 43 35.25% 143 30.11% Somewhat important 48 26.23% 54 31.76% 23 18.85% 125 26.32% Not at all important 13 7.10% 20 11.76% 7 5.74% 40 8.42% Total: 183 100% 170 100% 122 100% 475 100% q09g. Animal licensing Essential 112 54.11% 133 66.50% 79 62.20% 324 60.67% Very important 47 22.71% 40 20.00% 32 25.20% 119 22.28% Somewhat important 37 17.87% 21 10.50% 14 11.02% 72 13.48% Not at all important 11 5.31% 6 3.00% 2 1.57% 19 3.56% Total: 207 100% 200 100% 127 100% 534 100% q09h. Education (general public) Essential 79 37.98% 61 33.89% 58 45.31% 198 38.37% Very important 62 29.81% 56 31.11% 37 28.91% 155 30.04% Somewhat important 54 25.96% 52 28.89% 29 22.66% 135 26.16% Not at all important 13 6.25% 11 6.11% 4 3.13% 28 5.43% Total: 208 100% 180 100% 128 100% 516 100% q09i. Euthanasia (put animal down/to sleep) Essential 79 39.30% 75 42.86% 53 43.09% 207 41.48% Very important 62 30.85% 57 32.57% 44 35.77% 163 32.67% Somewhat important 46 22.89% 35 20.00% 23 18.70% 104 20.84% Not at all important 14 6.97% 8 4.57% 3 2.44% 25 5.01% Total: 201 100% 175 100% 123 100% 499 100% q09j. Foster care program Essential 77 39.09% 64 38.10% 50 39.06% 191 38.74% Very important 56 28.43% 56 33.33% 54 42.19% 166 33.67% Somewhat important 49 24.87% 42 25.00% 22 17.19% 113 22.92% Not at all important 15 7.61% 6 3.57% 2 1.56% 23 4.67% Total: 197 100% 168 100% 128 100% 493 100% q09k. Microchipping Essential 89 44.06% 95 50.53% 66 49.25% 250 47.71% Very important 53 26.24% 59 31.38% 48 35.82% 160 30.53% Somewhat important 41 20.30% 29 15.43% 20 14.93% 90 17.18% Not at all important 19 9.41% 5 2.66% 0.00% 24 4.58% Total: 202 100% 188 100% 134 100% 524 100% q09l. Shelter open on Fridays Essential 61 35.26% 52 31.14% 50 40.32% 163 35.13% Very important 44 25.43% 52 31.14% 34 27.42% 130 28.02% Somewhat important 40 23.12% 47 28.14% 33 26.61% 120 25.86% Not at all important 28 16.18% 16 9.58% 7 5.65% 51 10.99% Total: 173 100% 167 100% 124 100% 464 100% q09m. Shelter open on Sundays Essential 59 34.71% 53 30.11% 46 38.98% 158 34.05% Very important 37 21.76% 43 24.43% 35 29.66% 115 24.78% Somewhat important 40 23.53% 48 27.27% 30 25.42% 118 25.43% Not at all important 34 20.00% 32 18.18% 7 5.93% 73 15.73% Total: 170 100% 176 100% 118 100% 464 100% Attachment A Audit of Palo Alto Animal Services 57 Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q09. How important, if at all, is it to you that the animal shelter provides the following services? q09n. Shelter open on holidays Essential 42 25.45% 41 25.15% 32 27.59% 115 25.90% Very important 26 15.76% 31 19.02% 30 25.86% 87 19.59% Somewhat important 45 27.27% 34 20.86% 30 25.86% 109 24.55% Not at all important 52 31.52% 57 34.97% 24 20.69% 133 29.95% Total: 165 100% 163 100% 116 100% 444 100% q09o. Shelter open on weekday evenings Essential 48 27.75% 35 21.88% 35 30.17% 118 26.28% Very important 40 23.12% 51 31.88% 37 31.90% 128 28.51% Somewhat important 51 29.48% 55 34.38% 33 28.45% 139 30.96% Not at all important 34 19.65% 19 11.88% 11 9.48% 64 14.25% Total: 173 100% 160 100% 116 100% 449 100% q09p. Spay or neuter services Essential 133 62.15% 134 68.72% 91 65.00% 358 65.21% Very important 50 23.36% 48 24.62% 40 28.57% 138 25.14% Somewhat important 22 10.28% 11 5.64% 9 6.43% 42 7.65% Not at all important 9 4.21% 2 1.03% 0.00% 11 2.00% Total: 214 100% 195 100% 140 100% 549 100% q09q. Store – pet supplies Essential 21 11.29% 13 7.22% 18 14.63% 52 10.63% Very important 18 9.68% 24 13.33% 24 19.51% 66 13.50% Somewhat important 71 38.17% 75 41.67% 38 30.89% 184 37.63% Not at all important 76 40.86% 68 37.78% 43 34.96% 187 38.24% Total: 186 100% 180 100% 123 100% 489 100% q09r. Surrender a pet or stray Essential 90 44.33% 116 61.70% 61 47.29% 267 51.35% Very important 69 33.99% 53 28.19% 58 44.96% 180 34.62% Somewhat important 38 18.72% 15 7.98% 9 6.98% 62 11.92% Not at all important 6 2.96% 4 2.13% 1 0.78% 11 2.12% Total: 203 100% 188 100% 129 100% 520 100% q09s. Training - agility Essential 27 15.25% 17 10.24% 16 13.79% 60 13.07% Very important 30 16.95% 27 16.27% 31 26.72% 88 19.17% Somewhat important 70 39.55% 65 39.16% 39 33.62% 174 37.91% Not at all important 50 28.25% 57 34.34% 30 25.86% 137 29.85% Total: 177 100% 166 100% 116 100% 459 100% q09t. Training – behavioral (e.g., excessive barking, chewing, housebreaking, etc.) Essential 39 21.20% 32 18.50% 20 16.95% 91 19.16% Very important 51 27.72% 43 24.86% 41 34.75% 135 28.42% Somewhat important 64 34.78% 76 43.93% 46 38.98% 186 39.16% Not at all important 30 16.30% 22 12.72% 11 9.32% 63 13.26% Total: 184 100% 173 100% 118 100% 475 100% q09u. Training – obedience (e.g., commands such as sit, stay, lie down, etc.) Essential 35 19.13% 29 17.16% 19 16.10% 83 17.66% Very important 51 27.87% 40 23.67% 41 34.75% 132 28.09% Somewhat important 65 35.52% 75 44.38% 45 38.14% 185 39.36% Not at all important 32 17.49% 25 14.79% 13 11.02% 70 14.89% Total: 183 100% 169 100% 118 100% 470 100% Attachment A Audit of Palo Alto Animal Services 58 Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q09. How important, if at all, is it to you that the animal shelter provides the following services? q09v. Vaccinations Essential 116 55.77% 117 61.58% 70 52.63% 303 57.06% Very important 56 26.92% 53 27.89% 51 38.35% 160 30.13% Somewhat important 31 14.90% 17 8.95% 10 7.52% 58 10.92% Not at all important 5 2.40% 3 1.58% 2 1.50% 10 1.88% Total: 208 100% 190 100% 133 100% 531 100% q09w. Viewing Essential 60 34.48% 66 42.31% 56 48.28% 182 40.81% Very important 45 25.86% 41 26.28% 34 29.31% 120 26.91% Somewhat important 48 27.59% 37 23.72% 20 17.24% 105 23.54% Not at all important 21 12.07% 12 7.69% 6 5.17% 39 8.74% Total: 174 100% 156 100% 116 100% 446 100% q09x. Volunteer opportunities Essential 61 30.96% 57 33.14% 48 40.34% 166 34.02% Very important 71 36.04% 66 38.37% 45 37.82% 182 37.30% Somewhat important 53 26.90% 42 24.42% 17 14.29% 112 22.95% Not at all important 12 6.09% 7 4.07% 9 7.56% 28 5.74% Total: 197 100% 172 100% 119 100% 488 100% Attachment A Audit of Palo Alto Animal Services 59 Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q10. Excluding animal controls services provided by the City, to what extent do you agree or disagree with each of the following statements regarding the funding of animal services (e.g., adoption, spay and neuter, vaccinations, microchipping)? q10a. Animal services should be 100 percent self-supporting through user fees and contracts with other jurisdictions or agencies that use Palo Alto Animal Services Strongly agree 42 19.09% 22 11.96% 15 12.93% 79 15.19% Somewhat agree 59 26.82% 47 25.54% 27 23.28% 133 25.58% Somewhat disagree 73 33.18% 54 29.35% 35 30.17% 162 31.15% Strongly disagree 46 20.91% 61 33.15% 39 33.62% 146 28.08% Total: 220 100% 184 100% 116 100% 520 100% q10b. The City should develop public-private partnerships to minimize the general fund subsidy of Animal Services Strongly agree 47 22.82% 51 28.33% 29 25.66% 127 25.45% Somewhat agree 108 52.43% 85 47.22% 52 46.02% 245 49.10% Somewhat disagree 33 16.02% 30 16.67% 19 16.81% 82 16.43% Strongly disagree 18 8.74% 14 7.78% 13 11.50% 45 9.02% Total: 206 100% 180 100% 113 100% 499 100% q10c. The city should contract out Animal Services to minimize its general fund subsidy Strongly agree 25 12.95% 15 8.62% 7 6.48% 47 9.89% Somewhat agree 46 23.83% 12 6.90% 23 21.30% 81 17.05% Somewhat disagree 54 27.98% 43 24.71% 25 23.15% 122 25.68% Strongly disagree 68 35.23% 104 59.77% 53 49.07% 225 47.37% Total: 193 100% 174 100% 108 100% 475 100% q10d. The City's general fund should subsidize Animal Services to the extent necessary to ensure that the City manages and provides oversight of a City animal shelter in accordance with best practices Strongly agree 111 50.68% 104 54.17% 70 59.32% 285 53.88% Somewhat agree 68 31.05% 66 34.38% 38 32.20% 172 32.51% Somewhat disagree 26 11.87% 11 5.73% 7 5.93% 44 8.32% Strongly disagree 14 6.39% 11 5.73% 3 2.54% 28 5.29% Total: 219 100% 192 100% 118 100% 529 100% Attachment A Audit of Palo Alto Animal Services 60 Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q11. To what extent do you support or oppose each of the following options to improve the standard of animal care in the City of Palo Alto? q11a. Increase the variety of services provided Strongly support 36 16.22% 35 18.23% 32 24.43% 103 18.90% Somewhat support 112 50.45% 89 46.35% 70 53.44% 271 49.72% Somewhat oppose 51 22.97% 57 29.69% 23 17.56% 131 24.04% Strongly oppose 23 10.36% 11 5.73% 6 4.58% 40 7.34% Total: 222 100% 192 100% 131 100% 545 100% q11b. Increase the capacity of the current animal shelter Strongly support 60 27.15% 67 35.26% 54 40.91% 181 33.33% Somewhat support 100 45.25% 83 43.68% 60 45.45% 243 44.75% Somewhat oppose 42 19.00% 35 18.42% 15 11.36% 92 16.94% Strongly oppose 19 8.60% 5 2.63% 3 2.27% 27 4.97% Total: 221 100% 190 100% 132 100% 543 100% q11c. Build a new animal shelter Strongly support 39 18.40% 49 25.79% 34 26.98% 122 23.11% Somewhat support 78 36.79% 59 31.05% 50 39.68% 187 35.42% Somewhat oppose 59 27.83% 63 33.16% 33 26.19% 155 29.36% Strongly oppose 36 16.98% 19 10.00% 9 7.14% 64 12.12% Total: 212 100% 190 100% 126 100% 528 100% q11d. Refurbish the existing animal shelter Strongly support 65 30.52% 78 40.84% 48 37.21% 191 35.83% Somewhat support 111 52.11% 95 49.74% 69 53.49% 275 51.59% Somewhat oppose 24 11.27% 13 6.81% 9 6.98% 46 8.63% Strongly oppose 13 6.10% 5 2.62% 3 2.33% 21 3.94% Total: 213 100% 191 100% 129 100% 533 100% Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q12. To what extent do you support or oppose each of the following options to fund improvements to the standard of animal care in Palo Alto? q12a. Bond initiative (paid through special property taxes imposed on real estate owners in the City) Strongly support 41 17.15% 47 24.35% 36 28.35% 124 22.18% Somewhat support 69 28.87% 67 34.72% 38 29.92% 174 31.13% Somewhat oppose 62 25.94% 40 20.73% 36 28.35% 138 24.69% Strongly oppose 67 28.03% 39 20.21% 17 13.39% 123 22.00% Total: 239 100% 193 100% 127 100% 559 100% q12b. Fundraising events Strongly support 118 49.37% 99 50.51% 75 59.52% 292 52.05% Somewhat support 97 40.59% 83 42.35% 47 37.30% 227 40.46% Somewhat oppose 14 5.86% 8 4.08% 4 3.17% 26 4.63% Strongly oppose 10 4.18% 6 3.06% 0.00% 16 2.85% Total: 239 100% 196 100% 126 100% 561 100% q12c. General fund subsidy Strongly support 82 34.31% 83 42.35% 56 44.44% 221 39.39% Somewhat support 89 37.24% 90 45.92% 60 47.62% 239 42.60% Somewhat oppose 34 14.23% 14 7.14% 4 3.17% 52 9.27% Strongly oppose 34 14.23% 9 4.59% 6 4.76% 49 8.73% Total: 239 100% 196 100% 126 100% 561 100% Attachment A Audit of Palo Alto Animal Services 61 Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q12. To what extent do you support or oppose each of the following options to fund improvements to the standard of animal care in Palo Alto? q12d. Public/private partnerships Strongly support 104 43.15% 108 54.82% 71 56.35% 283 50.18% Somewhat support 112 46.47% 76 38.58% 46 36.51% 234 41.49% Somewhat oppose 14 5.81% 9 4.57% 5 3.97% 28 4.96% Strongly oppose 11 4.56% 4 2.03% 4 3.17% 19 3.37% Total: 241 100% 197 100% 126 100% 564 100% Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q13. If you were to make a donation to support PAAS, how would you prefer your donation be used? To support daily operations (e.g., administration, outreach, etc.) 36 15.58% 36 18.27% 26 18.57% 98 17.25% Improve facilities (e.g., new kennels, exam room, equipment, etc.) 40 17.32% 35 17.77% 31 22.14% 106 18.66% Animal services and care (e.g., vaccinations, spay/neuter, adoption) 155 67.10% 126 63.96% 83 59.29% 364 64.08% Total: 231 100% 197 100% 140 100% 568 100% Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q14. How far are you willing to travel to take your pet to an animal shelter or pet organization that meets your needs? Less than 3 miles 34 15.67% 27 12.92% 6 4.17% 67 11.75% 3 to 5 miles 77 35.48% 85 40.67% 41 28.47% 203 35.61% 6 to 10 miles 69 31.80% 65 31.10% 53 36.81% 187 32.81% 11 to 20 miles 19 8.76% 23 11.00% 26 18.06% 68 11.93% More than 20 miles 18 8.29% 9 4.31% 18 12.50% 45 7.89% Total: 217 100% 209 100% 144 100% 570 100% Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent Q15. In regard to management and oversight of animal services, excluding animal control, the City of Palo Alto should… Continue to provide and fully manage the provision of animal services 113 47.88% 128 63.37% 77 56.62% 318 55.40% Partner with an outside organization, such as a Human Society or another city, for the provision of animal services 99 41.95% 65 32.18% 58 42.65% 222 38.68% Completely outsource animal services, except for animal control 24 10.17% 9 4.46% 1 0.74% 34 5.92% Total: 236 100% 202 100% 136 100% 574 100% Attachment A Audit of Palo Alto Animal Services 62 Demographic Questions Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent d01. How many years have you lived in Palo Alto? Less than 2 years 18 6.59% 6 2.78% 19 20.00% 43 7.36% 2 to 5 years 35 12.82% 15 6.94% 6 6.32% 56 9.59% 6 to 10 years 45 16.48% 19 8.80% 9 9.47% 73 12.50% 11 to 20 years 33 12.09% 43 19.91% 19 20.00% 95 16.27% More than 20 years 142 52.01% 133 61.57% 42 44.21% 317 54.28% Total: 273 100% 216 100% 95 100% 584 100% d02. Which best describes the building you live in? One family house detached from any other houses 156 57.56% 199 92.13% 129 87.76% 484 76.34% Building with two or more homes (duplex, townhome, apartment or condominium) 108 39.85% 17 7.87% 13 8.84% 138 21.77% Mobile home 1 0.37% 0.00% 5 3.40% 6 0.95% Other 6 2.21% 0.00% 0.00% 6 0.95% d02. Which best describes the building you live in? Total 271 100% 216 100% 147 100% 634 100% d03. Is this house, apartment or mobile home... Rented 90 33.71% 22 10.33% 17 11.72% 129 20.64% Owned 177 66.29% 191 89.67% 128 88.28% 496 79.36% Total: 267 100% 213 100% 145 100% 625 100% d04. About how much is your monthly housing cost for the place you live (including rent, mortgage payment, property tax, property insurance and homeowners' association (HOA) fees)? Less than $1,000 per month 32 16.00% 27 19.15% 12 14.29% 71 16.71% $1,000 to $1,499 per month 18 9.00% 10 7.09% 8 9.52% 36 8.47% $1,500 to $1,999 per month 26 13.00% 12 8.51% 12 14.29% 50 11.76% $2,000 to $2,499 per month 30 15.00% 17 12.06% 9 10.71% 56 13.18% $2,500 to $2,999 per month 18 9.00% 14 9.93% 10 11.90% 42 9.88% $3,000 to $3,499 per month 21 10.50% 22 15.60% 9 10.71% 52 12.24% $3,500 to $3,999 per month 23 11.50% 12 8.51% 10 11.90% 45 10.59% $4,000 to $4,499 per month 25 12.50% 18 12.77% 10 11.90% 53 12.47% $4,500 to $4,999 per month 7 3.50% 9 6.38% 4 4.76% 20 4.71% Total: 200 100% 141 100% 84 100% 425 100% d05. Do any children 17 or under live in your household? No 201 75.00% 136 64.15% 94 64.38% 431 68.85% Yes 67 25.00% 76 35.85% 52 35.62% 195 31.15% Total: 268 100% 212 100% 146 100% 626 100% d06. Are you or any other members of your household aged 65 or older? No 147 55.06% 132 61.97% 89 60.96% 368 58.79% Yes 120 44.94% 81 38.03% 57 39.04% 258 41.21% Total: 267 100% 213 100% 146 100% 626 100% Attachment A Audit of Palo Alto Animal Services 63 Palo Alto Residents: (Randomly Selected) PAAS Customers: Palo Alto Residents PAAS Customers: Nonresidents Grand Total (all populations) Count Percent Count Percent Count Percent Count Percent d07. How much do you anticipate your household's total income before taxes will be for the current year? (Please include in your total income money from all sources for all persons living in your household.) Less than $25,000 15 6.38% 2 1.10% 9 7.44% 26 4.84% $25,000 to $49,999 21 8.94% 17 9.39% 7 5.79% 45 8.38% $50,000 to $99,999 51 21.70% 20 11.05% 24 19.83% 95 17.69% $100,000 to $149,999 42 17.87% 24 13.26% 18 14.88% 84 15.64% $150,000 to $199,999 28 11.91% 29 16.02% 11 9.09% 68 12.66% $200,000 to $249,999 24 10.21% 23 12.71% 9 7.44% 56 10.43% $250,000 to $299,999 16 6.81% 25 13.81% 13 10.74% 54 10.06% $300,000 or more 38 16.17% 41 22.65% 30 24.79% 109 20.30% Total: 235 100% 181 100% 121 100% 537 100% d08. Are you Spanish, Hispanic or Latino? No, not Spanish, Hispanic or Latino 259 97.74% 196 95.15% 134 93.71% 589 95.93% Yes, I consider myself to be Spanish, Hispanic or Latino 6 2.26% 10 4.85% 9 6.29% 25 4.07% Total: 265 100% 206 100% 143 100% 614 100% d09. What is your race? (Mark one or more races to indicate what race you consider yourself to be.) American Indian or Alaskan Native 0.00% 2 0.98% 0.00% 2 0.33% Asian, Asian Indian or Pacific Islander 60 22.56% 35 17.07% 26 18.44% 121 19.77% Black or African American 4 1.50% 1 0.49% 2 1.42% 7 1.14% White 206 77.44% 165 80.49% 120 85.11% 491 80.23% Other 7 2.63% 9 4.39% 4 2.84% 20 3.27% Total: (exceeds 100% if more than one was selected) 277 104% 212 103% 152 108% 641 105% d10. In which category is your age? 18 to 24 years 1 0.37% 2 0.96% 1 0.69% 4 0.64% 25 to 34 years 28 10.45% 9 4.31% 6 4.14% 43 6.91% 35 to 44 years 32 11.94% 13 6.22% 13 8.97% 58 9.32% 45 to 54 years 52 19.40% 58 27.75% 43 29.66% 153 24.60% 55 to 64 years 45 16.79% 60 28.71% 46 31.72% 151 24.28% 65 to 74 years 56 20.90% 47 22.49% 25 17.24% 128 20.58% 75 years or older 54 20.15% 20 9.57% 11 7.59% 85 13.67% Total: 268 100% 209 100% 145 100% 622 100% d11. What is your sex? Female 164 61.19% 139 66.51% 111 76.55% 414 66.56% Male 104 38.81% 70 33.49% 34 23.45% 208 33.44% Total: 268 100% 209 100% 145 100% 622 100% Attachment A Audit of Palo Alto Animal Services 64 APPENDIX 4 –Fee Comparison With Other Agencies Description Palo Alto SVACA San Jose HSSV PHS SF SPCA Adoption Adoption fee - dogs $125 $150 $65-$135 $175 $75-$135 $100-$250 Adoption fee - cats $125 $100-$150 $35-$100 $175 $50-$105 $75-$125 Spay and Neuter Dog spay $105-$270 resident $120-$140 resident $30 resident $110-$170+ $95-$150+ $375 $110-$345 nonresident $145-$165 nonresident $100 nonresident Dog neuter $90-$250 resident $110-$130 resident $20 resident $85-$135+ $80-$140+ $375 $95-$325 nonresident $135-$155 nonresident $75 nonresident Cat spay $85 resident $70 resident $20 resident $95 $60 $215 $90 nonresident $85 nonresident $75 nonresident Cat neuter $60 resident $60 resident $15 resident $60 $50 $215 $65 nonresident $75 nonresident $65 nonresident Licensing Dog license - 12, 24, 36 months altered $20, $30, $40 $22, $32, $42 $20, $45, $45 N/A N/A N/A Dog license - 12, 24, 36 months unaltered $40, $60, $80 $100, N/A, N/A $60, N/A, N/A N/A N/A N/A Notes: Palo Alto charges discounted spay and neuter fees to rescue groups. SVACA does not perform spay and neuter services on dogs over 80 pounds. San Jose charges discounted fees to senior citizens over 65 years of age adopting dogs and cats over 3 years old. Source: City of Palo Alto Municipal Fee Schedule and Information From Each Agency Attachment A Audit of Palo Alto Animal Services 65 APPENDIX 5 – Photos Comparing Palo Alto Animal Services Facility and Humane Society Silicon Valley Facility PALO ALTO ANIMAL SERVICES HUMANE SOCIETY SILICON VALLEY PAAS Street View HSSV Street View PAAS Front Entry HSSV Front Entry PAAS Adoptable Dog Kennels HSSV Adoptable Dog Rooms Attachment A Audit of Palo Alto Animal Services 66 PALO ALTO ANIMAL SERVICES HUMANE SOCIETY SILICON VALLEY PAAS Pet Store HSSV Pet Store PAAS Clinic facilities (surgical) HSSV Clinic facilities (surgical) PAAS Drug Area HSSV Drug Dispensing Unit Attachment A Audit of Palo Alto Animal Services 67 APPENDIX 6 – Municipal Services Center/Animal Services Sites Attachment A Audit of Palo Alto Animal Services 68 APPENDIX 7 – City Manager’s Response Date: April 9, 2015 To: Harriet Richardson, City Auditor From: James Keene, City Manager The staff greatly appreciates the assistance from the City Auditor in assessing Animal Services and agrees with the findings and recommendations of the audit. The survey conducted by the audit indicates a high level of support from respondents for retaining a shelter in Palo Alto as well as support for shelter operations. We agree that our current service delivery model cannot achieve revenue neutrality, as Council discussions in part years urged. In fact, general fund subsidy has dramatically increased. Additionally the facility is outdated and needs investment to meet current and future needs. In our opinion it does not meet the facility or operational standards we expect in our City. It is clear that there are current staffing and management challenges which need to be addressed within the first quarter of the new fiscal year. Real change is necessary. At the same time, as the audit acknowledges there are more immediate and near term actions that staff will need to initiate. I have identified those as intervention or triage actions in our responses to the audit recommendations in Appendix 7. But the audit also recognizes that a sustainable long term service model needs to be developed if we are going to maintain a shelter operation in our City. I think the audit and my own conclusions point to a separation of the Animal Control and shelter operations, with the shelter spun off to an entity with more capacity to improve the facility and operations and maintain them over time, due to cost management and revenue raising potentials beyond the reach of a municipal operation. In addition to upcoming discussion with the Finance Committee on April 22 with presentation of your audit findings and subsequently during the FY 2016 Budget discussions in May and June, staff expects we will continue working with the local community, non-profit organizations, and regional partners to identify the best long term solution. In addition to the audit, we recommend the Council and interested community members also review the information report presented to City Council on March 2, 2015. This report provides a variety of background materials. Additionally, since the information report, staff has conducted two public meetings to discuss the different perspectives about the services models. A meeting with interested community members is scheduled for tonight, April 9, 2015, which will discuss the audit findings and recommendations prior to the April 22, 2015 Finance Committee meeting. Attachment A Audit of Palo Alto Animal Services 69 The City Manager has agreed to take the following actions in response to the audit recommendations in this report. The City Manager will report progress on implementation six months after the Council accepts the audit report, and every six months thereafter until all recommendations have been implemented. Recommendation Responsible Department(s) Agree, Partially Agree, or Do Not Agree and Target Date and Corrective Action Plan Status Finding: Palo Alto Animal Services (PAAS) faces challenges that are unlikely to be resolved if it continues operating as solely a city-managed function without a significant increase in general fund subsidy, donations, and/or revenue-generating contracts 1. Recommend to the City Council that it make a policy decision for management to explore options, and based on the results, develop a recommendation for the best approach for retaining Palo Alto Animal Services as a regional animal shelter facility. City Manager’s Office Concurrence: Agree Target Date: April, May, and June 2015 Action Plan: The City Manager concurs with the recommendation. The financial condition of the animal services program along with the audit finding and community feedback make it clear that staff must explore a range of options. Council direction to do so is not required—the state of animal services is so dire-- but near term and ongoing engagement with Council and the Finance Committee will be essential. 2. Identify and assign someone with management skills to immediately begin working at Palo Alto Animal Services to learn the management side of the shelter operations and carry PAAS through its transition into the future after the acting superintendent retires. This can be either a current or new City employee, but should be a person with an understanding of the challenges currently facing PAAS. The person selected should be retained in the position until a clear direction is developed regarding the future of PAAS and the skills and experience needed for a director or superintendent position are known and recruitment can take place, if appropriate. As part of this process, determine whether to temporarily move animal services to a function under the Office of the City Manager City Manager’s Office Concurrence: Agree Target Date: July 2015 Action Plan: Due to the range of issues-departing staff, a losing business proposition in the current form, facility conditions, and the need for more capacity and agility in improving services and raising funding, intervention and a “triage” based near term approach is required. The City Manager will share with Council how this near term intervention leadership will be provided. Initial discussion of directions can take place during this Audit discussion, with more refinement during the budget process with Finance in May. This recommendation in conjunction with several other recommendations in the audit will increase city costs over the next year. Attachment A Audit of Palo Alto Animal Services 70 Recommendation Responsible Department(s) Agree, Partially Agree, or Do Not Agree and Target Date and Corrective Action Plan Status until a permanent decision is made regarding the long-term direction for providing animal services. 3. Conduct a staffing analysis to determine an appropriate staffing level to continue performing shelter operations during the transition period without the assistance of the ACOs. Include an analysis of potential expanded hours, including variations of extended weekday, weekend, and holiday hours and the potential increase in revenues as a result of expanded hours. Seek budget funding from the City Council to hire the appropriate staff based on the analysis and recruit for the necessary positions. City Manager’s Office Concurrence: Agree Target Date: May 2015 Action Plan: This staffing analysis will be conducted and appropriate recommendations brought to Council as funding is needed. After implementing Recommendations 1-3: 4. Engage in discussions with nonprofit organizations and/or other animal shelters for strategies to operate Palo Alto Animal Services or provide specific services that would enhance current animal shelter services under a long-term partnership agreement with the City, including potential assistance in raising funds to build a new shelter. Present the results to the City Council for a policy decision on the direction to take for pursuing either the long-term future of PAAS, including the possibility of continued general fund support, or closure of the facility if no strategy is feasible from both a financial and operational perspective. City Manager’s Office Concurrence: Agree Target Date: June 2016 Action Plan: Conversations with various entities have occurred in some form over the past two years. Conversations with representative stakeholders are currently under way. The City Manager believes that a new model is essential for continuation and improvement of the animal shelter in Palo Alto. This effort will occur concurrent with the triage staffing recommendations in 2-3. Staff will have a better schedule for timeline for Council discussion before the Council summer break. 5. As part of the discussion in Recommendation 4, analyze the feasibility of separating the ACO activities from the shelter activities. If appropriate, transition the ACO function out City Manager’s Office Concurrence: Agree Target Date: June 2016 Action Plan: This will be done. At this time, the City Manager presumes that bifurcation of the Attachment A Audit of Palo Alto Animal Services 71 Recommendation Responsible Department(s) Agree, Partially Agree, or Do Not Agree and Target Date and Corrective Action Plan Status of PAAS so it becomes solely a Police Department function or part of another regional animal services organization with ACOs dedicated to the Palo Alto service area, including Los Altos and Los Altos Hills, to continue providing the level of response time service that PAAS currently provides. Depending on the outcome, engage in discussions with other jurisdictions to promote the City’s competitive response times and consistently high customer satisfaction ratings to potentially enter into agreements with the City of Palo Alto for animal control services as the jurisdictions’ current agreements expire. duties will be our future approach, maintaining ACO operations within the City and spinning the shelter off to a non-profit entity in the longer term. This assumes shelter will remain in Palo Alto. 6. Develop and implement a strategy to market Palo Alto Animal Services to both residents and nonresidents. Marketing efforts should focus on promoting awareness of all available services, as well as the cost savings available to customers for using PAAS’ services. Engage nonprofit organizations, volunteers, and other animal shelters to assist in marketing PAAS’ services to a larger group of potential customers. City Manager’s Office Concurrence: Agree Target Date: June 2016 Action Plan: Staff will develop a plan to increase and improve the website database and other marketing materials to promote awareness about services during the triage period. The new long term model will need to ensure successful marketing to be successful. 7. Review the work that has already been done related to building a new animal shelter. Assess the feasibility of obtaining sufficient funding through fundraising, public/private partnerships, general fund subsidies, or a bond initiative, to build a new animal shelter that meets modern-day standards for animal care and safety, including animals’ physical and behavioral needs, as established by the Association of Shelter Veterinarians or a comparable standard. Explore the potential City Manager’s Office Concurrence: Agree Target Date: June 2016 Action Plan: The improvement of the Animal Shelter is key to the long term viability of our program. This work will be done as an integral part of the assessment of alternative models and a presumed eventual decision to transfer shelter operation to a new entity. Attachment A Audit of Palo Alto Animal Services 72 Recommendation Responsible Department(s) Agree, Partially Agree, or Do Not Agree and Target Date and Corrective Action Plan Status revenue that can be generated from including new features in a new facility, such as a community and education center. Involve the Public Works Department in this assessment as necessary. Based on the results, present a proposal to the City Council for a decision on whether to move forward with pursuing construction of a new animal shelter and the funding source. 8. Seek future opportunities to provide animal licensing services to the County of San Mateo when its current contract expires in 2016. City Manager’s Office Concurrence: Partially Agree Target Date: June 2016 Action Plan: Initial staff review suggests that the County’s licensing services would not provide profit to the operation. However, staff will reassess the opportunity and provide those results to as part of the audit update. Other opportunities to increase revenue in the near term appear quite limited. Staff presumes that the long term plan will need to expand services to be successful. Attachment A CITY OF PALO ALTO MEMORANDUM TO: FINANCE COMMITTEE FROM: CITY AUDITOR’S OFFICE AGENDA DATE: April 22, 2015 ID# 5729 SUBJECT: Weighted Palo Alto Animal Services Survey Results This report presents the weighted results and the margin of error for selected questions in the 2015 Palo Alto Animal Services survey that were included in our April 2015 report, “Police Department: Palo Alto Animal Services Audit.” 1 Weighting the responses does not change a survey respondent’s answers. Rather, it adjusts the weight given to each individual response so that it appropriately represents the demographics of the population that the respondent represents – in this case, Palo Alto residents. We only weighted the survey data for the randomly selected sample of Palo Alto residents, not the resident and nonresident customer groups discussed in the report. The weighted results and the margin of error provide a clearer perspective on Palo Alto residents’ opinions that may impact policy decisions regarding the future of Palo Alto Animal Services. The differences between the weighted and unweighted survey data were not enough to warrant changes to our audit conclusions or recommendations. Respectfully submitted, ___________________________ HARRIET RICHARDSON City Auditor 1 The audit report is posted on the Office of the City Auditor’s website at: http://www.cityofpaloalto.org/civicax/filebank/documents/46817 Attachment B Office of the City Auditor April 22, 2015 Weighted Palo Alto Animal Services Survey Results The Honorable City Council Palo Alto, California This report presents the weighted results and the margin of error for selected questions in the 2015 Palo Alto Animal Services survey that were included in our April 2015 report, “Police Department: Palo Alto Animal Services Audit.” 1 Weighting the responses does not change a survey respondent’s answers. Rather, it adjusts the weight given to each individual response so that it appropriately represents the demographics of the population that the respondent represents – in this case, Palo Alto residents. We only weighted the survey data for the randomly selected sample of Palo Alto residents, not the resident and nonresident customer groups discussed in the report. The weighted results and the margin of error provide a clearer perspective on Palo Alto residents’ opinions that may impact policy decisions regarding the future of Palo Alto Animal Services. The differences between the weighted and unweighted survey data were not enough to warrant changes to our audit conclusions or recommendations. BACKGROUND Our audit report includes the results of the 2015 Palo Alto Animal Services survey, which we designed to assess resident and customer satisfaction with Palo Alto Animal Services and opinions that would likely impact policy decisions regarding the future of Palo Alto Animal Services. We stated in the Scope and Methodology section of the audit report that the survey sample may not represent the opinions of the community as a whole because we did not weight the data to account for differences between survey respondent demographics and population norms prior to issuing the report. However, we identified potential imbalances in the demographics of the randomly selected Palo Alto resident sample that suggested the need to weight the data: Some demographic characteristics of the survey respondents varied significantly from known and/or expected population norms based on the 2010 U.S. Census. For example, many more females than males responded to the survey. While such variances could be explained for the Palo Alto Animal Services customer sample, they are not easily explained for the randomly selected sample of Palo Alto residents. Results in the 2014 Palo Alto National Citizen Survey2 for a question regarding resident satisfaction with the City’s animal control services were significantly different from the results for a similar question in the Palo Alto Animal Services survey – 80 percent of respondents to the National Citizen Survey and 98 percent of respondents to the animal services survey rated animal control services as “excellent” or “good.” 1 The audit report is posted on the Office of the City Auditor’s website at: http://www.cityofpaloalto.org/civicax/filebank/documents/46817 2 The National Citizen Survey report is posted at: http://www.cityofpaloalto.org/gov/depts/aud/reports/accomplishments.asp Attachment B Weighted Palo Alto Animal Services Survey Results 2 We contracted with the National Research Center to conduct the animal services survey and to weight the survey responses for the randomly selected sample of Palo Alto residents. The following table shows the population norms for Palo Alto and the demographic characteristics of the unweighted responses included in the audit report and the weighted responses provided in this memorandum. Characteristic Population Norm* Unweighted Data Weighted Data Housing Rent home 44% 34% 43% Own home 56% 66% 57% Detached unit** 58% 58% 57% Attached unit** 42% 42% 43% Race and Ethnicity White 68% 74% 70% Not white 32% 26% 30% Not Hispanic 95% 98% 97% Hispanic 5% 2% 3% White alone, not Hispanic 64% 72% 68% Hispanic and/or other race 36% 28% 32% Gender and Age Female 52% 61% 51% Male 48% 39% 49% 18‐34 years of age 22% 11% 21% 35‐54 years of age 41% 31% 40% 55+ years of age 37% 58% 38% Females 18‐34 10% 6% 10% Females 35‐54 21% 21% 21% Females 55+ 20% 34% 21% Males 18‐34 12% 4% 12% Males 35‐54 20% 10% 20% Males 55+ 17% 24% 17% * 2010 U.S. Census ** American Community Survey 2011 5‐year estimates Comparative Results The differences between the unweighted and weighted survey responses were small for most questions shown in the audit report exhibits. However, the difference between resident ratings for animal control services in the 2014 National Citizen Survey and the weighted responses for the 2015 Palo Alto Animal Services survey remained significant, with 80 percent versus 96 percent ratings of “excellent” or “good” for animal control services in the respective surveys. The National Research Center explained the differences: The Palo Alto Animal Services Survey is a topic specific survey, rather than a broad citizen survey. When people evaluate more than 40 services in the National Citizen Survey, they are likely comparing one service to another when developing individual assessments. The question was slightly different in the surveys – the animal services survey provided examples of what is considered an animal control service and the the National Citizen Survey did not. Attachment B Weighted Palo Alto Animal Services Survey Results 3 The tables below provide the unweighted survey results from the audit report, weighted results, difference between the unweighted and weighted results, and margin of error for each question. The margin of error is based on a 95 percent confidence level, which means that for every 100 samples of the same number of people randomly selected to take the survey, the responses would be within the margin of error 95 percent of the time. We highlighted the questions in the tables below where the difference between the unweighted and unweighted responses was 5 percent or more, based on unrounded numbers. However, it is important to understand that although the weighted responses may be statistically different than the unweighted responses, the difference itself may not be meaningful (e.g, they did not change our audit conclusions). Questions Regarding Shelter Hours Survey Question Unweighted Weighted Difference Margin of Error Percent Rating “Essential” or “Very Important” Shelter open on Fridays 61% 56% ‐5% +/‐ 7% Shelter open on Sundays 56% 55% ‐2% +/‐ 8% Shelter open on holidays 41% 36% ‐5% +/‐ 8% Shelter open on weekday evenings 51% 49% ‐2% +/‐ 7% See Exhibit 11, page 14, and Appendix 3, page 57 in the audit report Questions Regarding Use of Funds Survey Question Unweighted Weighted Difference Margin of Error In regard to management and oversight of animal services, excluding animal control, the City of Palo Alto should… Percent Who “Strongly” or “Somewhat” Agree Continue to provide and fully manage the provision of animal services 48% 45% ‐2% +/‐ 6% Partner with an outside organization, such as a Humane Society or another city, for the provision of animal services 42% 43% +1% +/‐ 6% Completely outsource animal services, except for animal control 10% 11% +1% +/‐ 6% Animal services should be 100 percent self‐supporting through user fees and contracts with other jurisdictions or agencies that use Palo Alto Animal Services 46% 48% +2% +/‐ 7% The City should develop public‐private partnerships to minimize the general fund subsidy of Animal Services 75% 77% +2% +/‐ 7% The City should contract out Animal Services to minimize its general fund subsidy 37% 42% +5% +/‐ 7% The City's general fund should subsidize Animal Services to the extent necessary to ensure that the City manages and provides oversight of a City animal shelter in accordance with best practices 82% 77% ‐4% +/‐ 7% If you were to make a donation to support PAAS, how would you prefer your donation be used? Percent Who Selected One Option Animal services and care (e.g., vaccinations, spay/neuter, adoption) 67% 70% +3% +/‐ 6% Improve facilities (e.g., new kennels, exam room, equipment, etc.) 17% 16% ‐1% +/‐ 6% To support daily operations (e.g., administration, outreach, etc.) 16% 14% ‐1% +/‐ 6% See Exhibit 12, page 17, and Appendix 3, pages 59‐61, in the audit report Attachment B Weighted Palo Alto Animal Services Survey Results 4 Questions Regarding Willingness to Travel for Animal Services How far are you willing to travel to take your pet to an animal shelter or pet organization that meets your needs? Unweighted Weighted Difference Margin of Error Less than 3 miles 16% 15% 0% +/‐ 7% 3 to 5 miles 35% 33% ‐2% +/‐ 7% 6 to 10 miles 32% 34% +2% +/‐ 7% 11 to 20 miles 9% 8% ‐1% +/‐ 7% More than 20 miles 8% 10% +1% +/‐ 7% See Exhibit 14 on page 19 in the audit report Questions Regarding Funding PAAS Improvements Survey Question Unweighted Weighted Difference Margin of Error To what extent do you support or oppose each of the following options to improve the standard of animal care in the City of Palo Alto? Percent Who “Strongly” or “Somewhat” Agree Refurbish the existing animal shelter 83% 80% ‐2% +/‐ 7% Build a new animal shelter 55% 55% ‐1% +/‐ 7% Increase the capacity of the current animal shelter 72% 71% ‐2% +/‐ 7% To what extent do you support or oppose each of the following options to fund improvements to the standard of animal care in Palo Alto? Percent Who “Strongly” or “Somewhat” Support Bond initiative (paid through special property taxes imposed on City real estate owners) 46% 47% +1% +/‐ 6% Fundraising events 90% 89% ‐1% +/‐ 6% General fund subsidy 72% 70% ‐1% +/‐ 6% Public/private partnerships 90% 88% ‐1% +/‐ 6% See Exhibit 18 on page 24 in the audit report Questions Regarding Animal Control Survey Question Unweighted Weighted Difference Margin of Error Percent Rating Services as “Excellent” or “Good” Animal Control (e.g., called about vicious, attacking, or injured dog or cat, animal bite, barking dog) 98% 96% ‐2% +/‐ 14% Dead animal pick‐up 95% 92% ‐3% +/‐ 16% Percent Rating Services “Essential” or “Very important” Animal Control 90% 90% ‐1% +/‐ 7% Animal cruelty investigations 90% 88% ‐1% +/‐ 7% Dead animal pick‐up 86% 84% ‐2% +/‐ 7% See Exhibit 22 on page 30 in the audit report Attachment B FINANCE COMMITTEE MINUTES EXCERPT Page 1 of 14 Special Meeting Tuesday, April 22, 2015 Chairperson Schmid called the meeting to order at 5:32 P.M. in the Council Chambers, 250 Hamilton Avenue, Palo Alto, California. Present: Filseth, Scharff, Schmid (Chair) Absent: Kniss Agenda Items 4. Police Department: Palo Alto Animal Services Audit. Harriet Richardson, City Auditor remarked that there were four audit objectives. This audit was included in the Fiscal Year (FY) 2015 Audit Work Plan because of the Animal Shelter’s ongoing financial deficit since the City lost its agreement with the City of Mountain View in November 2012 to provide animal control services. The audit was prioritized at the request of the City Manager, Jim Keene, to issue a report in time for the Finance Committee’s (Committee) discussion of the FY 2016 Budget. The audit objectives were to: 1) determine appropriate areas of focus for the City Council and management based on Palo Alto resident and animal shelter customer opinions regarding the overall adequacy of Palo Alto Animal Services, the demand to keep Animal Services local, and residents’ willingness to financially support operational and facility improvements for Animal Services; 2) opportunities to increase Animal Services’ revenues and decrease its expenditures to make it more financially sustainable; 3) whether Palo Alto effectively and efficiently planned and executed upgrades to the Animal Shelter to meet Animal Services’ goals and objectives; and 4) the appropriateness of Animal Services’ organizational structure. In addition to the standard review of relevant financial and operational information, and speaking with appropriate Staff regarding operations, it was important to get a broader perspective of what residents wanted regarding Animal Services. Staff contracted with the National Research Center to conduct a survey that focused only on Palo Alto Animal Services. The survey included three different groups: 1) 1,500 randomly selected Palo Alto households, 2) 678 Attachment C MINUTES EXCERPT Page 2 of 14 Finance Committee Special Meeting Minutes Excerpt 4/22/2015 households in Palo Alto with a record of having used Palo Alto Animal Services, and 3) 822 households outside of Palo Alto with a record of having used Palo Alto Animal Services. Due to time constraints, Staff did not weight the survey responses prior to publishing the audit report, but Staff subsequently weighted the responses from the randomly selected Palo Alto households to more accurately represent the demographics of the population. There was an At Places Memo given to the Committee at this meeting that provided updates for selected survey results. Staff also wanted to understand what other well-functioning Animal Services organizations do to be operationally and financially successful. Staff toured other Animal Services organizations in the area and spoke with leadership at those organizations. The organizations visited were: 1) the Humane Society of Silicon Valley; 2) Peninsula Humane Society and Society for the Prevention of Cruelty to Animals (SPCA); 3) the Palo Alto Humane Society; and 4) the Silicon Valley Animal Control Authority (SVACA). Staff benchmarked various aspects of Palo Alto Animal Services against these organizations, as well as with the San Francisco SPCA, the City of San Jose and the City of Sunnyvale. Staff also compiled and reviewed prior reports that the City conducted over time regarding efforts to improve or rebuild the Animal Shelter. Houman Boussina, Senior Performance Auditor noted that the audit report had one finding that discussed the challenges and opportunities facing Animal Services, as well as the need to make immediate changes and to develop a service model that was going to be financially sustainable over the long term. He discussed Animal Services’ dire financial situation and said there was a significant decline in revenues for FY 2014, with an unequal decline in total expenditures. Although Palo Alto’s General Fund subsidized Animal Services for the past 10 years, the subsidy from the General Fund increased significantly after Palo Alto lost the agreement with the city of Mountain View and the accompanying $400,000 in revenues. Further revenue decline was due to the loss of the Spay and Neuter Clinic in FY 2014 after the loss of Veterinary Technicians, which caused revenues to decline from about $190,000 annually to about $47,000. Police Department Staff told Audit Staff that they made significant efforts to retain the Mountain View contract, including attending Mountain View Council meetings, but were not successful. He noted that non-salary expenses remained stable during the 10-year period, while the data showed that the City implemented staffing reductions to address the budget deficit in FY 2014. Donations and contracts for services comprised the majority of revenue for other Animal Services organizations, but Palo Alto Animal Services had limited revenue in each of these areas in FY 2014. Palo Alto’s options for increasing revenue from these revenue sources were limited for two reasons. One reason was there was a limited market share for contracts with other jurisdictions; most Attachment C MINUTES EXCERPT Page 3 of 14 Finance Committee Special Meeting Minutes Excerpt 4/22/2015 of that market was captured by other Animal Services organizations. Although other jurisdictions discussed contracts with Palo Alto for Animal Control Services, they were not interested because Palo Alto could not save them money or because of the uncertainty of the future of Palo Alto Animal Services. The second reason was a City policy that restricted Animal Services’ ability to solicit donations. Even if the policy was changed, resources would need to be dedicated to fund raising efforts. Although Animal Services received donations from the Friends of the Palo Alto Animal Shelter (Friends), the City had not formalized its relationship with the Friends group. Other monetary donations, which were done through an online portal, were not significant. Other opportunities to increase revenue existed, but were not likely to be significant factors in cost recovery. These included: 1) increasing resident awareness of services provided; 2) adding evening and weekend shelter hours; 3) participating in community adoption events; and 4) providing animal licensing services to other jurisdictions. Having Animal Services provided locally was very important to Palo Alto residents and Animal Services’ customers. More than 80 percent of residents and customers who responded to the survey thought it was essential or very important for Palo Alto to provide key animal services. He noted that 83 percent of Palo Alto residents did not want to travel more than 10 miles to obtain animal services, and more than 90 percent of survey respondents rated services as excellent or good for animal control, dead animal pick-up, spay or neuter services, vaccinations, and licensing. The Animal Services survey showed that Palo Alto residents supported subsidizing Animal Services, particularly if they used the services during FY 2014. He said 77 percent of randomly selected Palo Alto residents who responded to the survey, and 94 percent of residents who used the shelter in the past 12 months thought the City’s General Fund should subsidize Animal Services to the extent necessary to ensure that the City manages and provides oversight of a City Animal Shelter in accordance with the best practices. These residents also favored developing public/private partnerships as an option. Neither the randomly selected residents nor the residents who used Animal Services favored making Animal Services 100 percent self-supporting or supported contracting out Animal Services. The Animal Shelter was built in 1972, has outlived its useful life, and did not meet modern standards of animal care, which was likely a reason that other jurisdictions did not want to enter into Animal Services agreements with Palo Alto. The Animal Shelter did not have sufficient space to meet the animals’ physical and behavioral needs, including separating incompatible animals. The kennels were cramped and some had sharp edges, the flooring could not be cleaned to recognized sanitation standards, there was not a separate receiving and intake room, and some types of small animals were housed in the Staff lunch room, which presented a health hazard to both the animals and the staff. The City has spent $1.7 million on Capital Improvement Attachment C MINUTES EXCERPT Page 4 of 14 Finance Committee Special Meeting Minutes Excerpt 4/22/2015 Projects (CIP) since 2003, but the improvements provided only critical repairs and did not upgrade the Shelter to meet modern standards of care. The City conducted a Master Plan Study of the Los Altos Treatment Plant site, which included a proposal to build a new shelter. There was no subsequent action to move forward with one of the proposed plans from that Study. Palo Alto residents supported facility improvement to improve the standard of animal care, as well as funding those improvements. Although residents who responded to the survey preferred refurbishing the facility, this was not a viable option because the Animal Shelter was beyond its useful life. There was positive support for building a new Animal Shelter, but it was much less favored than the refurbishment option. Residents who responded to the survey strongly favored fundraising and public/private partnerships as a way to pay for improvements; although they also supported General Fund subsidies, this was much less of a preferred option for residents who had not used the Animal Shelter. Issuing bonds to pay for the Animal Shelter improvements was not a well supported option. The audit report discussed proposals from the Palo Alto Humane Society, including financial and other support for a new or refurbished facility. The City has not acted on those proposals, but through discussions with the Palo Alto Humane Society, Staff learned that they were still committed to providing support to move Palo Alto Animal Services into the future. Animal Services faced other significant challenges, such as the Acting Superintendent’s plan to retire in December 2015. This was a position that would be essential to the City as it moves forward to act on the Council’s decisions regarding policies for Animal Services. Staff anticipated that hiring a qualified person was going to be challenging because the position required specialized skills and management experience, the salary for the position was not competitive with neighboring animal services facilities, and there was a significant gap between the Superintendent’s duties and responsibilities, and those of other positions in Animal Services, which limited the ability for other Animal Services employees to step into the position and be effective. There was uncertainty regarding the future of Animal Services, which may cause qualified individuals to hesitate to apply and to commit to the position. The Police Department’s hiring process took three to six months, and included a more detailed background check than was required for other City employees. This process resulted in disqualifying candidates in the past and could otherwise dissuade qualified candidates from applying for the position. Second, the Police Department considered Animal Services an ancillary operation that was mostly self-managed, with minimal coordination of activities and expertise, in comparison with the rest of the Police Department. While there was no ideal placement for the Animal Services function, the audit report described the pros and cons of various reporting structures for Animal Services that could help it overcome both its financial and organizational uncertainties. Attachment C MINUTES EXCERPT Page 5 of 14 Finance Committee Special Meeting Minutes Excerpt 4/22/2015 Ms. Richardson explained that Staff made eight recommendations in the audit report, which Staff expected would be implemented over a period of time, as well as prioritized; some recommendations needed to be implemented before others. The recommendations identified ways for the future success and financial viability of Animal Services; they included assigning someone with management skills to work at Animal Services to guide it through the transition in the future. This was a critical first step that needed to be implemented quickly if Council wanted to keep an Animal Services function in Palo Alto. Staff recommended conducting a cost-benefit analysis of expanding Animal Servicess hours as a way to increase its revenues; increasing revenues through expanded hours was very unlikely to raise much more than a fraction of the revenues lost when Palo Alto lost the Mountain View contract. Staff recommended identifying a strategy to engage nonprofit or other Animal Services organizations in discussions for operating the Shelter. The City Manager started this process before the audit began and continued it while the audit was being conducted. Staff believed that using the results of the meetings, in conjunction with the information in the audit report was going to provide valuable information to the Council as they made their decision about the future of Palo Alto Animal Services. As part of that recommendation, Staff recommended assessing the feasibility of separating the Animal Control activities from the Animal Shelter activities, leaving the Animal Control portion with the Police Department, and separating the remaining functions of Animal Services. In addition, Staff recommended assessing the feasibility of increasing revenues through fundraising, public/private partnerships, General Fund subsidies, or a bond initiative to build a new animal shelter that met modern day standards for animal care and safety. These strategies were proven for other animal services organizations and were the most likely way to allow Animal Services to remain an active function in Palo Alto. The primary reason Staff prioritized completion of this audit was because implementation of the recommendations required financial resources that were not currently in the Animal Services Budget and presenting the audit now allowed the City Manager to propose the resources needed for FY 2016 during the upcoming budget hearings. The City Manager agreed with seven of the eight recommendations; he partially agreed with the recommendation to seek the opportunity to provide animal licensing services to San Mateo County when the current contract expired. The City Manager’s action plan to assess that opportunity was appropriate and Audit Staff did not recommend any changes to his response. Jim Keene, City Manager said the work of the Auditor’s Office, the timing, and the alignment with the City’s own data was a good example of an internal consultant that was able to look deeper into matters and give their Attachment C MINUTES EXCERPT Page 6 of 14 Finance Committee Special Meeting Minutes Excerpt 4/22/2015 own independent analysis of a situation. The responses that were written in the audit were less passive than responses sometimes were; they were statements of agreement, an attempt to state Staff’s intentions, and they displayed the urgency of Staff to respond to the recommendations. There was a lot of agreement about the situation of Animal Services, the proposals that were made for going forward, and a need to revisit the challenges of the Animal Shelter operation over the past years to reflect on its financial condition. There was a recollection of the losses in Animal Control and the significant financial challenges that were seen as a City, which led Staff to suggest that they needed to look at abandoning the Animal Shelter operation and pursue something similar to Mountain View. In the years 2010 or 2011 there was a lot of reaction in the community to do fundraising, as a reflection of the desire to keep the Animal Shelter. In FY 2015 there was a drop in net costs to $420,000. Staff’s intent was to stay on the course and to try to see a zero deficit. In looking at the data from subsequent years, Staff was going in the wrong direction; there was a loss of almost $900,000 in FY 2014 and there was an increase in FY 2015. These numbers were a reflection of an operation that clearly did not work. This was not just about the numbers, it had to do with the condition of the Animal Shelter and the ability to restructure the Shelter so it was more self- supporting; the conditions, the quality of care, and the appeal needed to be enhanced. The audit showed that municipal operations were not looking good and there was a need for the City to look at alternatives. Staff’s response to the audit was they agreed and they thought they should retain the Animal Control Officers. This was a service that was important to the two remaining partners of Los Altos and Los Altos Hills. He agreed that retaining the Animal Shelter in Palo Alto was good but a new model was needed. The challenge was the transition period between now and the ability to move toward a new model. This was complicated by the fact that during the transition, the director of the Shelter would be retiring. He wanted to keep the Shelter in operation and to focus on developing a transition plan. He showed a chart that were rough estimates of the Staffing support and he suggested consultants might be needed. The main point was that a year was needed before Staff was in a situation to pursue passing the Shelter to a new entity, so Staff had to backfill staffing at the Shelter to keep it in operation. He noted that the transitional costs were not included in the Operating Budget, which were going to be presented to the Council. Chair Schmid understood the recommendation was to accept the audit report a whole and consider Item 1. Mr. Keene agreed that the audit as whole should be considered but he thought the City Manager’s response to the audit was important. The Attachment C MINUTES EXCERPT Page 7 of 14 Finance Committee Special Meeting Minutes Excerpt 4/22/2015 Committee needed to direct Staff regarding the Budget Hearings. He thought it would be helpful to know if the Committee favored the City Manager’s recommendation in the audit or if the Committee wanted to go in another direction. Council Member Filseth felt the audit was a very clear and comprehensive assessment of Animal Services. He understood the Animal Control function was going to stay with the City. The City Manager’s suggestion was for the Animal Shelter to continue to be run for a limited period of time, while Staff looked toward transitioning the Shelter to some other partnership completely. Mr. Keene agreed about the Animal Shelter. Council Member Filseth inquired when the Animal Shelter was transitioned out completely, was the entire shelter going to be transitioned out. He explained that there were some short-term elements, for example, if a person turned in a stray dog, versus the protocol of some private shelters. He wanted to know whether people might actively support adoption and a pet fairs program. If the Shelter activities were transitioned out, was there going to be a Shelter retained for lost animals, or would that be contracted out too. Mr. Keene noted that Staff’s thinking during the transition was to stick to how the Shelter was at this time, and not distract Staff from the task of moving to the new model. He explained that expanded hours and coming into contracts were good, but he did not want to dilute Staff’s attention. The Request for Proposals (RFP) were going to have specific options on how the Shelter was going to be configured. There might be an open-ended piece that allowed people to propose alternatives that they thought would work the best. These suggestions had the opportunity to be built into the response in the model. Council Member Scharff requested more background because the initial recommendation from the City Manager’s Office was to close the Animal Shelter; he did not recall if it was both the Shelter and the Animal Control Unit and whether Staff wanted to contract these out with a brand new Animal Shelter. Mr. Keene said that was correct. He did not recall being really focused on the Animal Control piece in the recommendation. The response to the proposal was significant. Attachment C MINUTES EXCERPT Page 8 of 14 Finance Committee Special Meeting Minutes Excerpt 4/22/2015 Council Member Scharff wanted to understand that when Staff said they were going to contract out the Shelter, how was that different from when the community had a lot of concerns with the Manager’s previous recommendation. Mr. Keene noted a main difference was Staff was talking about closing the Palo Alto Animal Shelter and moving it toward another external provider. This proposal involved keeping the Shelter within Palo Alto. He thought that was why there was significant support in this recommendation because there was an opportunity to improve the Shelter. This was the kind of process that happened in the Palo Alto community where everyone’s perspective advanced in the discussions. People realized there was a financial challenge. More than anything, people saw this as improving and enhancing a service in the City. Council Member Scharff confirmed that the City had both Animal Control and the Animal Shelter but wanted to know what was different. Mr. Keene clarified that there was an Animal Shelter that received animals and provided many services. Additionally, Palo Alto had their own Animal Control operation that responded to requests in the Community, as well as in partner communities. Staff did not feel they had problems with the Animal Control function because it was a high-quality service and the customers thought it was a high-quality service; there was a strong partnership with existing Staff and he did not feel the need to change that model out. The Animal Shelter had problems. He likened the Animal Shelter to the Junior Museum and Zoo because there was difficulty finding a funding investment to expand and change the management to some extent. He said the Animal Shelter could go further than the Zoo and the City would contract out everything. Council Member Scharff confirmed the City was losing about $900,000 with the Animal Shelter. Mr. Keene confirmed yes and said the FY 2015 half-year cost was going to keep the City on a poorer performance. Council Member Scharff repeated that the City was losing about $1 million and Staff was requesting to put another $2,300,000 back into the Animal Shelter for transitional costs. Attachment C MINUTES EXCERPT Page 9 of 14 Finance Committee Special Meeting Minutes Excerpt 4/22/2015 Mr. Keene relayed that this was not something that he wanted to say to the Council, but the Shelter was continuing to lose more and more money. In order to fix the problem, there needed to be a loss of more money for a time. Council Member Scharff wanted to know what the transition costs were for. Mr. Keene said Staff needed in-house expertise that was able to help structure and manage the transition, including a more detailed analysis on the scope of work, how to issue RFP’s, and to employ a person that had a level of expertise that Staff did not have at this time. Council Member Scharff questioned whether Staff was going to hire a consultant or was it going to be in-house personnel only. Mr. Keene remarked that there were two capacities that were needed during the transition: 1) some degree of expertise, as it related to the operation, which was best done by a consultant or a Staff person who had a lot of expertise; and 2) management capacity because the Animal Shelter Director was going to retire in six months. Staff agreed that those skills weighed more on a management skill side than they did on the technical operational skills side. There was a possibility that there could be a combination of recommendations about assigning Staff to do this job, rather than outsource for the job. Working through the Committee and having Staff present a number of options to the Committee was his suggestion. He questioned whether there was real concern to minimize the additional cost increases during the transition period. Council Member Scharff clarified that Staff was looking for a plan and estimated that would take $2,300,000. He wanted to know how long the transition period was going to be because if the City was going to lose money, he wanted to know how long the money was going to be lost. Mr. Keene did not feel like Staff had a good answer and recognized that there was no way to complete all this work in less than one year. He understood that Council expected Staff to report on their progress because as the market place was surveyed, the options were understood, and the timing was considered, things could change; Staff would know the time frame by the middle of next year. He did not like the situation and did not like losing this amount of money, but at the same time, it was not just about money. The facility and the standards were not being met with the current Attachment C MINUTES EXCERPT Page 10 of 14 Finance Committee Special Meeting Minutes Excerpt 4/22/2015 operation; he was not applying this approach in other service areas and he knew this problem needed to be fixed. Council Member Scharff commented that when he joined the Council, the City Manager had been employed for one to two years and there was a beginning of an investment into infrastructure. This problem of the Animal Shelter was partly self-inflicted because if the effort and the money were spent, and if the Animal Shelter was upgraded, then Palo Alto would not have lost Mountain View’s contract; it was the dismal shape of the Animal Shelter that caused Palo Alto to lose the Mountain View contract. He said Palo Alto could lose Los Altos and Los Altos Hills if this was not taken care of correctly. Palo Alto was now investing in roads and utilities and that there was an Infrastructure Plan, but every now and then things like this come before the Council. He remarked on the walkway at the Baylands and how it was not maintained, and since he was on the Council, he recalled a piece of artwork that had to be de-assessed because it was not maintained; the artwork had to be thrown away. He appreciated there being some kind of sense of what else was not being maintained so this kind of situation did not come up again. Mr. Keene shared the Committee’s concerns and said this kind of thing was happening all over the Country. Council Member Scharff interjected that it was possible to solve Palo Alto’s infrastructure problems; Palo Alto had the money available. Mr. Keene remarked that the infrastructure examples given did not happen overnight, they happened over a generation. Council Member Filseth wanted to know if there was a third option, one that was faster and more aggressive, one that worked toward an externalization model. The bottom line was: what was going to serve the residents of Palo Alto best. If Staff was going to end up at the same place in the next two years and were going to be spending another $2 million, he wanted to know if there was a shorter transition possibility. Mr. Keene remarked that Staff knew what the problem was and wanted to move as fast as possible. The problem was not a 100 percent management and Council decision because there were people in the community who were invested in the decisions made as well. These were not matters that were in Staff’s direct control, as was the state of the market place; there might be Attachment C MINUTES EXCERPT Page 11 of 14 Finance Committee Special Meeting Minutes Excerpt 4/22/2015 existing nonprofits that might have the capacity to take Palo Alto up on their offer. Staff’s intent was to make the transition as quickly as possible. Barry Hayes was disturbed by the characterization of losing money because the Animal Shelter was a Municipal Service, like fixing potholes. The Animal Shelter was a highly valued service. A second point was there was no magic way of making the Animal Shelter a non-City service, something that Palo Alto could not run; the quality of the service needed to be maintained, and increased. This was not a service that the government was unable to run. Beth Ward, Humane Society Silicon Valley, thanked the City Auditor for compiling this audit and thanked the people who helped make the recommendations. The audit allowed for a forum that enabled people to discuss the problem. The Humane Society supported the recommendations of the audit report and looked forward to the next steps of a quick and effective solution that would help the animals and the people that were served by Animal Services. Carole Hyde, Palo Alto Humane Society, said modern shelters were community centers; they had information outreach and various programs. Their vision allowed for self-sustaining community programs and services. Enhanced space allowed Palo Alto Humane Society to offer these types of programs; they agreed with the Auditor’s report. The Humane Society submitted two proposals to Staff but was not able to fund an entire facility. They wanted to participate in creating a new facility that housed their programs and expanded the income generated to be able to spay and neuter. Scottie Zimmerman mentioned that the Friends of the Palo Alto Animal Shelter held meetings on how to approach the problems. They toured other shelters and discovered some other ways to earn money. There was a need to be more realistic to describe what the new Shelter was going to look like and to find money. The city of Berkeley replaced their shelter built in 1946. She wanted a better place in the community, money earning propositions, and for the animals to be happy. Chair Schmid commented that it was striking to see the loss of substantial money over a number of years and said the audit report identified a few factors that led to revenues being so low. He envisioned the transition period as getting Staff in the Shelter, but also making changes that ensured the Clinic was running well and that services were delivered with a sense of urgency. The Interim Manager needed to lower the deficit, which he wanted Attachment C MINUTES EXCERPT Page 12 of 14 Finance Committee Special Meeting Minutes Excerpt 4/22/2015 addressed when this item came back before the Council. The new Staff person needed to be someone that picked up ideas, saw how they worked, put them into practice, and given the Shelter’s condition, was able to see whether it could be run more effectively. He questioned when this item was coming back to the Committee. Lalo Perez, Chief Financial Officer and Director of Administrative Services answered that the item was coming back May 7, 2015, the evening that the Police Budget was going to be discussed. Chair Schmid remarked that this meeting was going to be a busy one. Mr. Perez mentioned that the Council discussed knowing that the City was going to be at a $500,000 deficit. Discussing the Animal Services Audit was in Staff’s plans; maybe there were situations or components that could be taken care of sooner. Chair Schmid remarked that part of the deficit was the Animal Control portion. Mr. Perez thought it was good to be clear and separate the two items because it was part of a function that the City needed to have. A lot of the functions were State mandated. Chair Schmid agreed; knowing if Staff was subsidizing, and by how much was important. He noted that there was no mention of reaching out to services and partnerships and there was no mention of the local interest. He was surprised that only 55 percent of the users of the Shelter were Palo Alto residents. Neighbors mentioned they had their own veterinarian, they went to stores for supplies and advice, and got their pets from other places. He suggested getting the whole animal community together: veterinarians; veterinarian hospitals; breeders; stores. These were all people who had an interest in healthy animal services in Palo Alto. He suggested forming partnerships, and having the animal community contribute to healthy Animal Services Center: what was their role and how did Staff get them involved. Another idea was, since Palo Alto was on the border of San Mateo County, and San Mateo County was providing services for their county; he wanted to know if there was a way Palo Alto could become a provider to San Mateo County. Maybe Menlo Park or East Palo Alto were able to get some of their services from Palo Alto. A striking point of the survey was that people did not want to go that far for animal services; he noted that Menlo Park and East Palo Alto were a few miles away and wondered why they were not Palo Attachment C MINUTES EXCERPT Page 13 of 14 Finance Committee Special Meeting Minutes Excerpt 4/22/2015 Alto’s partners. Critical questions were: what kind of interim arrangement was going to be made; could it be dynamic enough to where Staff could experiment and try new a revenue generation, new partnerships; and who in the community might be an investor. If there were notions of design, he wanted to know: what would it look like, how big would it be, and who would be participants. These were necessary things to know in order to sell partnerships. Council Member Filseth felt that the City Auditor identified the major difficulties and said that finances were a big difficulty; the audit findings underscored the difficulties of running an Animal Shelter. There was a known working model for running an animal shelter and it was characterized by an executive team that spent a huge amount of time fundraising, had a relatively low cost-structure for everyone else, had huge numbers of volunteers, there was a lot of outreach done, there were aggressive adoption programs, pet fairs were organized, and organizations were barely able to make their revenue. This was not a model that was commonly found in government. Having the right kind of management was going to be critical in making the program successful. He mentioned some personal association with a wildlife organization that was destroyed by management and said this was not something to be taken lightly. Ms. Richardson noted that the Motion was to “recommend” to the Council to accept the report. MOTION: Council Member Filseth moved, seconded by Council Member Scharff to recommend to the Council to accept the City Auditor’s report. Chair Schmid looked forward to May 7, 2015, where Staff would bring concrete budget proposals to discuss making the transition work. He wanted to know if Staff needed any other input from the Committee. Mr. Keene replied no but said it was too early to say, as Staff was looking at the decisions being made in the budget process and at the transition. He was a little worried about overstating Staff’s ability to lower the deficit. This was not because he did not have the intention, but the Auditor’s Office and the City Manager’s Office did some preliminary searches for different services and the cost-benefit analysis yielded benefits on a small scale in this time frame. Staff was not able to ignore the limitations that the existing operation placed on the Shelter. The condition of the Shelter and the amount of space were factors in Staff’s ability to make the Animal Shelter work. The real solution was embedded with a new Shelter coming into Attachment C MINUTES EXCERPT Page 14 of 14 Finance Committee Special Meeting Minutes Excerpt 4/22/2015 existence. The points about location were important, about them being an advantage and a disadvantage, and about having an improved facility. Some of the draw of the facility was convenience, but for others, it was a strong emotional attachment to having the Shelter in Palo Alto; people were able to work through the deficiencies that Palo Alto had. He suggested upgrading the facility and the ability to make it work. He did not want to leave any feeling that this was a profit motivation. There was no intent to run the Shelter as a profit center. Palo Alto provided many critical services that the City did not directly provide, or was not generally subsidized, such as: wastewater; refuse; and senior services. All of these were operated with the sense that there was a way to price things to make them work and to improve the service. Lastly, it was very clear that the ability to fundraise for capital and operations worked in the other model, and this was really difficult in a municipal model. To ignore the potential and suggest subsidizing this service by taking from other City services, when there was a model that worked better, was an idea that he wanted to bring out. He thought Staff was striking the right balance on how they could go forward in the future. Chair Schmid appreciated the audit report and hoped that Palo Alto could achieve some of its goals and targets. MOTION PASSED: 3-0 Kniss absent ADJOURNMENT: Meeting adjourned at 7:51 P.M. Attachment C labor strategy advice in prior negotiations, and continuing IAFF and PAPOA negotiations with RSHS will provide important continuity in the bargaining process, since the firm is familiar with labor issues in the City and the issues on the bargaining table, with both labor groups. Resource Impact The recommended increase in total compensation is $36,000, which staff and RSHS estimates will be sufficient to complete the bargaining process with both IAFF and PAPOA by December 2015. Funds for this contract amendment are available in the Human Resources Department Fiscal Year 2015 general fund budget allocation for labor relations contractual services. Environmental Review : , The approval of this contract amendment is not a project under the California Environmental Quality Act. Attachments: • Attachment A: 513149754 Contract Amendment Three (PDF} City of Palo Alto Page 2 ,DoaJSign Envelope ID: B68E714A-62D6-469E-B287-513D9FCAD734 AMENDMENT NO. 3 TO CONTRACT NO. S13149754 BETWEEN THE CITY OF PALO ALTO AND RENNE SLOAN HOLTZMAN SAKAI, LLP This Amendment No. 3 to Contract No. S 13149754 ("Contract") is entered into May 20, 2015 by and between the CITY OF PALO ALTO, a California chartered municipal corporation ("CITY"), and RENNE SLOAN HOLTZMAN SAKAI, LLP, a California Limited Liability Partnership, located at 350 Sansome Street, Suite 300, San Francisco, California, 94104, Telephone (415) 678-3800 ("CONSULTANT"). RE CIT AL S: WHEREAS, the Contract was entered into between the parties for the provision of labor negotiation services between CITY and labor unions; and WHEREAS, CITY intends to extend the term and increase the compensation From $180,000.00 by $36,000.00 to $216,000.00 for continuation of services as specified in Exhibit "A" Scope of Services; and WHEREAS, the parties wish to amend the Contract; NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree:· SECTION 1. Section 2 is hereby ai~ended to read as follows: "SECTION 2. TERM. The term of this Agreement shall be from the date bf its full execution through September 30, 2015 unless terminated earlier pursuant to Section 19 of this Agreement." SECTION 2. Section 4 is hereby amended to read as follows: "SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSUL TANT for performance of the Services described in Exhibit "A", including both payment for professional services and reimbursable expenses, shall not exceed Two Hundred Sixteen Thousand Dollars ($216,000.00). The applicable rates and schedule of payment are set out in Exhibit "C-1 ", entitled "HOURLY RA TE SCHEDULE," which is attached to and made a part of this Agreement. Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit "C". CONSUL TANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described in Exhibit "A"." 1 of3 Revision July 25, 2012 DoruSign Envelope ID: B68E714A-62D6-469E-B287-513D9FCAD734 SECTION 3. The following exhibit(s) to the Contract is/are hereby amended to read -as set forth in the attachment(s) to this Amendment, which are in~orporated in full by this reference: a. Exhibit "C" entitled "COMPENSATION". SECTION 4. Except as herein modified, all other provisions of the Contract, including any exhibits and subsequent amendments thereto, shall remain in full force and effect. IN WITNESS WHEREOF, the parties have by their duly authorized representatives executed this Amendment on the date first above writtenl : CITY OF PALO ALTO APPROVED AS TO FORM: Attachments: EXHIBIT "C": COMPENSATION RENNE SLOAN HOLTZMAN SAKAI, LLP ~$~ 65736F426A574FD ... Managing Partner 2 of3 Revision July 25, 2012 OocuSign Envelope ID: B68E714A-62D6-469E-B287-513D9FCAD734 EXIDBIT "C" I COMPENSATION ' The CITY agrees to compensate the CONSUL TANT for professional services performed in accordance with the terms and conditions of this Agreement based on the hourly rate schedule attached as Exhibit C-1. The compensation to be paid to CONSULT ANT under this Agreement for all services described in Exhibit "A" ("Scope of Services") and reimbursable expenses shall not exceed $216,000.00. CONSULTANT agrees to complete all Services, including reimbursable expenses, within this amount. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY. 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: None ADDITIONAL SERVICES· The CONSULT ANT shall provide additional services 'only by advanced, written authorization from the CITY. The CONSULT ANT, at the CITY' s project manager's request, shall submit a detailed written proposal including a description of thefsc?pe of services, schedule, level of effort, and CONSULTANT's proposed maximl.im opinpensation, including reimbursable expenses, for such services based on the rates set f9rth in Exhibit C-1. 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City of Palo Alto (ID # 5783) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/8/2015 City of Palo Alto Page 1 Council Priority: Emergency Preparedness Summary Title: Approval of 2015 Santa Clara County Multi-Jurisdictional Program for Public Information (PPI) Title: Approval of the 2015 Santa Clara County Multi-Jurisdictional Program for Public Information (PPI) to Provide Reduced Flood Insurance Premiums for Palo Alto Residents and Businesses through the National Flood Insurance Program’s Community Rating System (CRS) From: City Manager Lead Department: Public Works Recommendation Staff recommends that Council approve the 2015 Santa Clara County Multi- Jurisdictional Program for Public Information (PPI) (Attachment A). Background The Community Rating System (CRS) is a voluntary program under the National Flood Insurance Program (NFIP) that allows communities to earn flood insurance premium discounts for their residents and businesses by conducting floodplain management activities that exceed NFIP minimum requirements. Communities earn CRS points for activities that promote flood risk reduction practices and encourage the purchase of flood insurance. Activities eligible for CRS credit include flood emergency preparedness planning, maintenance of elevation certificates and benchmarks, open space preservation within the designated floodplain, and public outreach and education on flood risk and flood insurance. CRS class ratings are assigned to participating communities based on credit points earned, with each 500-point increment resulting in a better class rating. Each incremental improvement in class rating (CRS class ratings range from 10 to 1) qualifies residents and businesses within the participating community to an City of Palo Alto Page 2 additional 5% discount on flood insurance premiums. The City of Palo Alto has participated in the CRS since its inception in 1990 and has a current CRS class rating of 7, which equates to a 15% flood insurance premium discount. Neighboring cities have earned similar CRS ratings (Mountain View – 8; East Palo Alto - 7; Los Altos – 8; Sunnyvale - 7). It would be chalIenging for the City to earn additional CRS credits without undertaking significant new efforts requiring additional funding or major floodplain management policy changes. The total savings for Santa Clara County residents and businesses from CRS discounts is approximately $2.5 million per year. City of Palo Alto property owners pay $4.45 million per year in flood insurance premiums (as of January 31, 2015, per the NFIP). The total annual savings to policy holders attributable to the City’s CRS discount is approximately $670,000. Palo Alto is required to comply with the updated 2013 CRS Coordinator’s Manual starting in 2015. One of the key changes in the new manual is a recommendation for local agencies to work together to develop and implement a coordinated regional PPI. In developing a PPI, local agencies mutually decide which flood risk reduction messages are most appropriate and design a region-wide program to deliver those messages. The objectives of participating in a PPI program are to enhance the effectiveness of the flood risk messages to residents, reduce flood risks within the region, and earn valuable CRS credit points. The number of CRS credit points earned through implementation of an approved PPI will vary depending on how extensive a program is enacted within each community’s boundaries. It is estimated that the recommended Santa Clara County Multi- Jurisdictional PPI described below will earn from 80 to 200 CRS credit points for each participating Santa Clara County community. Depending on the changes achieved in other CRS credit categories, the points earned through the PPI may result in a better CRS rating for Palo Alto and a related increase in flood insurance savings for local residents and businesses. Discussion The CRS guidelines require that a regional PPI must be developed by a committee comprised of both staff and non-governmental representatives from each of the participating communities. The Santa Clara Valley Water District (Water District) acted as the lead agency in creating the PPI for Santa Clara County. The Water District initiated the PPI process in November 2013 by inviting local agency staff and stakeholders from throughout the county to participate in the drafting of the City of Palo Alto Page 3 plan. The ten Santa Clara County communities (Cupertino, Gilroy, Los Altos, Milpitas, Morgan Hill, Mountain View, Palo Alto, San Jose, Santa Clara, and Sunnyvale) that participate in CRS and the County of Santa Clara elected to work with the Water District to develop a multi-jurisdictional PPI for Santa Clara County. Staff from the Public Works Department and the Office of Emergency Services as well as a volunteer member of Palo Alto’s Community Emergency Response Team (CERT) represented Palo Alto during the PPI development process. Table 1 of the attached PPI lists all of the committee members from throughout the county. Participation from a broad variety of staff members and community volunteers brought multiple perspectives and suggestions to the process and produced a better outreach plan. Standard outreach topics include knowledge of local flood hazards, the importance of flood insurance, protection of people from flood hazards, tips on building responsibly to avoid flood risk, and protection of natural floodplain functions. In addition to these standard flood emergency preparedness messages recommended by the Federal Emergency Management Agency (FEMA), the PPI committee identified two additional key outreach messages important to Santa Clara County: 1) encouraging residents and workers to complete a personal family emergency plan and 2) urging drivers to reduce speeds on wet roads and avoid driving through ponded water in an effort to reduce traffic accidents. Dissemination of the key messages will be conducted through a combination of mailings, web sites, a coordinated media campaign, school outreach programs, and community presentations hosted by the American Red Cross and other local outreach partners. FEMA requires the elected body of each participating community to approve the PPI in order to receive CRS credit points for the plan. The draft PPI was reviewed by FEMA representatives to ensure that it is compliant with CRS guidelines. FEMA found the Santa Clara County PPI to be acceptable and noted that it is one of the first multi-jurisdictional PPIs to be completed and that it involves the largest number of participating communities to-date. Based on the FEMA reviewer’s input, a number of additional potential outreach projects were added to the PPI program. The Water District Board approved the PPI document at their April 14th meeting. The document is now being submitted to the governing body of each participating agency for approval. As required by the terms of the PPI, the PPI committee must reconvene annually to evaluate whether the flood risk reduction City of Palo Alto Page 4 messages are still appropriate and adjust the PPI as needed. A report to FEMA must be submitted annually describing the PPI implementation. Every five years, the legislative body of each participating community must reapprove the plan in order to continue receiving CRS credit points. Resource Impact The City’s participation in the development and implementation of the PPI can be accommodated with the existing staff and operating budgets of the Public Works Department and the Office of Emergency Services. The Water District incurred costs of approximately $120,000 to manage and coordinate the creation of the multi-jurisdictional PPI. Environmental Review The recommended action does not constitute a project under CEQA Public Resources Code section 21065 and CEQA Guidelines section 15378 as it does not have a potential for resulting in direct or reasonably foreseeable indirect physical change in the environment. Attachments: A - Santa Clara County Program for Public Information (PPI) (PDF) Santa Clara County Multi-Jurisdictional Program for Public Information 2015 April 14, 2015 Prepared by: Santa Clara Valley Water District and Participating Santa Clara County Communities County of Santa Clara Attachment #1 Page 1 of 32 R13169.docx i TABLE OF CONTENTS Page I. BACKGROUND ............................................................................................................ 1 II. GOALS ......................................................................................................................... 2 III. PPI COMMITTEE ......................................................................................................... 3 IV. HIGHLIGHTS OF COMMUNITY SELF-ASSESSMENTS ............................................. 6 a. County of Santa Clara b. Cupertino c. Gilroy d. Los Altos e. Milpitas f. Morgan Hill g. Mountain View h. Palo Alto i. San Jose j. Santa Clara k. Santa Clara Valley Water District l. Sunnyvale V. TARGET AUDIENCES ............................................................................................... 18 VI. OTHER PUBLIC INFORMATION EFFORTS .............................................................. 19 VII. COMMUNICATION STRATEGY, PROJECTS AND INITIATIVES .............................. 20 VIII. ADOPTION ................................................................................................................ 23 IX. ANNUAL EVALUATION ............................................................................................. 23 X. REFERENCES ........................................................................................................... 24 XI. APPENDIX A: PPI WORKSHEET ........................................................................... 25 Attachment #1 Page 2 of 32 R13169.docx Page 1 of 30 I. BACKGROUND Santa Clara County is located at the south end of San Francisco Bay and has come to be known nationally as Silicon Valley. Eleven of the 15 incorporated communities in Santa Clara County participate in the Community Rating System (CRS) of FEMA’s National Flood Insurance Program, a program to provide discounts on flood insurance premiums. The Santa Clara Valley Water District (District), the water management agency for Santa Clara County, participates as the only fictitious community in the nation. This unique arrangement was set up with FEMA in 1998 so that participating Santa Clara County CRS communities could take advantage of the District’s point-earning efforts. Essentially this allows the District’s activities to provide a foundation of points with simplified bookkeeping, because FEMA has already approved the activities through the District’s annual verification. Flooding in Santa Clara County comes from heavy local rainstorms that occur during the winter months of December through March. Sometimes, the rainy season extends into April but little rain falls here between May to October. Historically, the District designs and carries out extensive flood protection outreach programs. For instance, the District puts ads on buses, radio stations and maintains an extensive website of flood protection information. Cities have augmented the District’s efforts through inserts in utility bills and newsletters. Until the Program for Public Information (PPI) process started, there had been little discussion between the cities and the District about the effectiveness of these programs and if they contained the most significant messages. The District has led meetings from time to time to educate the floodplain managers of the participating cities and to increase participation in CRS. For instance, the District hosted a 5-day FEMA class on Floodplain Management in 2012 to help prepare staff from local cities for the Certified Floodplain Manager exam. Based on high class participation, it was clear that local cities were interested in working with their counterparts in other cities to understand the CRS program better and maximize their own jurisdiction’s CRS points. The new Program for Public Information that was introduced in the 2013 CRS Coordinator’s Manual was recognized as an excellent project to work on jointly with the CRS communities of Santa Clara County. As stated in the Example PPI from Washington: The Program for Public Information is a planning tool to provide a step-by-step coordinated approach to flood hazard outreach. The PPI can be developed and implemented by a single community or with other communities as a multi-jurisdictional effort. The purpose is the same: to improve communication with citizens, and to provide information about flood hazards, flood safety, flood insurance and ways to protect property and natural floodplain functions to those who can benefit from it. The intent of the CRS program, and the PPI, is to reduce injury to people and damage to property from future floods. Coordination between jurisdictions through a Multi-Jurisdictional Program for Public Information further increases efficiency in resources and improves communication with citizens. In addition, developing a Multi-Jurisdictional PPI in Santa Clara County was seen as a way to earn significant CRS points which may translate into greater discounts on flood insurance premiums for our residents. It also rewards participants for developing messages that are tailored to local needs. Attachment #1 Page 3 of 32 R13169.docx Page 2 of 30 This District convened a meeting of the CRS coordinators in November 2013 to explain the PPI process and gauge interest for developing a Multi-Jurisdictional PPI for Santa Clara County. Although the District offered to host the process and provided staffing, it was understood that each participating community would be required to (1) conduct the CRS Self-Assessment, (2) recruit a non-governmental stakeholder, (3) participate in the PPI Committee meetings, and (4) bring the PPI to their elected body for approval. With the enthusiastic support of the CRS coordinators the PPI process was started. For Santa Clara County and the 11 CRS Communities located here, several factors encouraged development of a PPI. First, a wake-up call from the California Department of Water Resources Flood Futures Report, a comprehensive look at flood risk across the entire state released in April of 2013. Santa Clara County had the dubious honor of being second in California in two important flood risk categories: most-people-exposed-to-flooding and most-property-exposed-to-flooding. Second, the threat of sea level rise and increases in storm intensity expected from climate change may make flooding more severe locally. Thirdly, the local ISO CRS Specialist brought the program to our attention as something that would work well with the District’s role as a fictitious community. The six priority topics of the revised CRS program are essentially best management practices for households, but are not necessarily focused on businesses. The major employers of Silicon Valley form a ring around the edge of the Bay, located in areas subject to tidal flooding. As sea levels rise due to climate change, these industrial parks will be subject to more frequent flooding. Although the buildings may be designed to withstand floods, issues associated with flooded roads may create problems for thousands of workers getting to and from work. Each person who works in the tidal flooding zone will need to develop emergency plans for getting home before freeways flood and communicating with and caring for their families. In Santa Clara County most of the flood risk to households is from fluvial flooding. Because Santa Clara County is adjacent to San Francisco Bay, tidal flooding and fluvial flooding both pose risks. Historically, fluvial flooding has caused most of the flood damage that has occurred here, but in the future, the risk of tidal flooding is expected to increase due to climate change induced sea level rise. The PPI meetings have provided an opportunity for the staff from the various cities and the District who work on CRS regularly to talk about what the local flood messages really need to say and what aspects of the extensive public outreach plan are already in place and are working well. As electronic forms of communication become more and more a part of daily living, information is expected to be just a few clicks away. The role of local flood professionals is to make sure that the information is in place for people to find when they need it. In the PPI meetings, discussions have incurred as to what makes up that “needed information”. II. GOALS The PPI participants share a vision to improve the efficiency of the Cities’ collective outreach efforts and to tailor outreach messages better to local needs. The participants also see the PPI as the backbone activity of an ongoing CRS users group that will help the local governments maintain or improve their individual CRS ratings by encouraging the purchase of flood insurance and promoting best practices that reduce flood risk. At the beginning of the PPI process, it was recognized that getting 12 agencies (10 cities, the County of Santa Clara, and the District) to meet all the FEMA requirements for participation would be a challenge. Consequently, the goal was set for the first year’s PPI as getting the process going with as many communities as possible and developing a track record of success. Attachment #1 Page 4 of 32 R13169.docx Page 3 of 30 Given that the District has had an extensive public outreach program for many years, the goal was not to increase the size and scope of the program, but to tailor the existing programs to be more effective and efficient. Through the discussions between stakeholders during the PPI meetings, the PPI process was determined to be a good way to evaluate the existing outreach system and build on what works well. The Cities’ staff had good insight about what aspects of the District’s program were well-received with their residents through questions, complaints and comments they have gotten from the public over the years. The stakeholders shared reactions to various components of past outreach efforts and their effectiveness in conveying the message. Several messages relating to public safety came out of the discussions as messages that need to be stressed. One was to “slow down on wet roads” and the other is “never drive though water.” Even though these are common sense messages, there are accidents every rainy season because some people do not follow them. The lack of personal emergency plans was also seen as an ongoing problem. Although it is easy to prepare these plans, many families don’t get around to it until after the emergency has already happened. For the most part, the family emergency plan is the same for a whole range of emergencies. Locally, the most likely emergencies are related to fire, earthquake or flooding. Another goal that surfaced through the discussions is to collaborate with non-governmental organizations like American Red Cross and Pacific Gas & Electric (PG&E) who conduct lots of outreach. A few slides will be added to the standard American Red Cross and/or PG&E presentations on flooding and encouraging people to purchase flood insurance. The PPI participants may send speakers with knowledge of flooding to appropriate groups. III. PPI COMMITTEE For a group with this many communities participating, recruiting a stakeholder for each community and then scheduling times when most people can attend was particularly challenging. The requirements from FEMA are that each community must send at least two representatives to the regional committee, at least half of the representatives must be from outside of local government, and at least half of the representatives must attend all of the meetings of the regional committee. The communities of Santa Clara County owe a special thanks to all the stakeholders who were willing to take part and donate their time to this effort. The PPI Committee is listed in Table 1. Attachment #1 Page 5 of 32 R13169.docx Page 4 of 30 Table 1. Members of the Santa Clara County Multi-Jurisdictional PPI Committee Community Local Government Representative and Alternates Stakeholder Santa Clara Valley Water District Pat Showalter, Sr. Project Manager Ricardo Barajas, Public Information Rep. II Merna Leal, Project Coordinator Naomi Pease American Red Cross Los Altos Aida Fairman, PE Asociate Civil Engineer Kathleen Gallagher CSG Consultants, Inc. Frank Navarro CSG Consultants, Inc. Brandi Garcia PG&E Pam Perdue PG&E Milpitas Ahmed Aly, Principal Civil Engineer, CFM Engineering Land Development Section Babak Kaderi, Assistant Civil Engineer Engineering Land Development Section Donna Chiaramonte State Farm Palo Alto Rajeev Hada, Project Engineer, CFM Public Works Department, Engineering Services Division Dan Melick CERT Volunteer Gilroy Claudia Moran-Garcia, Civil Engineer I Public Works Department Maria Angles, City Development Engineer, CFM Mark Turner Chamber of Commerce Morgan Hill Charlie Ha, Associate Engineer Public Works Department Sanjar Chakamian Morgan Hill Downtown County of Santa Clara Chris Freitas Trish Mulvey CLEAN South Bay Mountain View Renee Gunn, Associate Civil Engineer, CFM Jacqueline Andrews Solomon, Assistant Public Works Director/City Engineer, CFM Lydia Kou Real Estate Agent Erin McKeown Google San Jose Arlene Lew, Floodplain Manager, CFM Department of Public Works Erik Fong Willow Glen Neighborhood Association Linda Baker Alain Pinel Realtor Santa Clara Van Truong Falguni Amin, Acting Principal Engineer Public Works - Engineering Kevin Moore retired City Council member Sunnyvale Jennifer Ng, Senior Civil Engineer Public Works Kerry Haywood Moffett Park Business Group Cupertino Chad Mosley, Senior Engineer Public Works Department Winnie Pagan, Associate Civil Engineer Public Works Department Julia Kinst Neighborhood Block Leader Attachment #1 Page 6 of 32 R13169.docx Page 5 of 30 Each PPI Committee member was asked to share their perspectives on flood information needs and how the existing programs worked. The meetings were organized to follow the example in the FEMA report Developing a Program for Public Information (March 2013) which breaks the process into the following 7 steps: Step 1: Establish a PPI Committee. Step 2: Assess the community’s public information needs and inventory existing public information and outreach efforts. Step 3: Formulate messages. Step 4: Identify outreach projects to convey the messages. Step 5: Examine other public information initiatives. Step 6: Prepare the PPI document. Step 7: Implement, monitor and evaluate the program. The process was designed to be accomplished in four meetings to allow time for a wide range of discussion. Between the third and the fourth meeting, a subgroup worked to draft the PPI for the rest of committee members to review. The dates were set at the beginning of the process, for participants to arrange their schedules accordingly. Even with a lot of lead time, getting participation was challenging. Part of the issue this year may have been local weather conditions. Severe drought made planning for flood protection seem less relevant than normal. The first stakeholder meeting was held on February 12, 2014. Communities were asked to complete FEMA’s self-assessment before the meeting. The participants got to know each other by sharing the flood risk characteristics and flood insurance statistics identified from the self- assessments. These characteristics were translated into the public information needs (Step 2) and target audiences. Step 3 was started by formulating messages and Step 4 by identifying projects for the PPI. The second meeting was held on March 27, 2014. The information from the previous meeting had been captured in a draft of the PPI worksheet and it was agreed to use this draft worksheet as minutes of the discussion. The finished PPI worksheet is attached as Appendix A. A presentation was given on the outreach program operated by the District and discussion ensued regarding the effectiveness of these programs based on perceptions of the stakeholders. Significant progress was made on Steps 3, 4 and 5. In addition to outreach projects, the importance of other public information initiatives (Step 5) was discussed. As our society gets more web-based, people expect to find the information they are seeking at any time day or night within a few clicks. The general consensus was that as the flood protection professionals for the County, it is our job to make sure that the information is available on our websites for our residents to find when they need it. The third meeting was held on April 24, 2014. The American Red Cross presented their outreach programs which are designed for disaster planning in general, not necessarily for flooding disasters. PG&E also briefly presented. This finished Step 2. The PPI worksheet was updated again. Attachment #1 Page 7 of 32 R13169.docx Page 6 of 30 During the April meeting, a sub-committee was convened to draft the PPI. Three working meetings were held to work through issues related to the draft. Writing assignments were shared to produce a draft for the full PPI Committee to review. We also completed formulating messages (Step 3) and identifying outreach projects to convey the messages (Step 4). The fourth meeting was held on June 26, 2014 to discuss the draft of the PPI and finish filling out the assignments for the PPI worksheet. Based on the comments received at the meeting another draft was circulated by email for the PPI stakeholders to approve. IV. HIGHLIGHTS OF COMMUNITY SELF-ASSESSMENTS The CRS Community Self Assessment is an online tool which asks a series of questions that lead to how flood hazards affect the community and which groups of residents could benefit most from outreach efforts and encouragement to purchase flood insurance. In Santa Clara County, careful attention also needs to be paid to flood protection for the businesses that make up Silicon Valley. Many of these large employers are located in a ring of office parks near the edge of the Bay in areas subject to both fluvial and tidal flooding. This is particularly true for the communities of Palo Alto, Mountain View, Sunnyvale, Santa Clara, San Jose and Milpitas. The sections below provide a description of each participating community and highlights of their self- assessment results. Attachment #1 Page 8 of 32 R13169.docx Page 7 of 30 City of Cupertino The City of Cupertino is located at the southern end of San Francisco Bay on the western edge of the Santa Clara Valley. It is about 20 minutes from the Mineta San Jose International Airport with convenient freeway access via State Route 85 and Interstate 280. The City, home of Apple’s corporate headquarters and De Anza College, has a population of over 58,000 residents and encompasses 11.3 square miles or 7,230 acres. Flood Hazard. Under the current FIRMs, the City of Cupertino has 130 structures in the special flood hazard area. The City’s special flood hazard areas consist solely of designated zones A and AE. Of the total structures in the special flood hazard area, 80 percent are single family (1-4units), 1 percent is multifamily (5 or more units) and 19 percent are commercial or non-residential. Several streams run through Cupertino that flow into the San Francisco Bay, including Calabazas Creek, Saratoga Creek, Stevens Creek, Regnart Creek, Heney Creek, Prospect Creek and Permanente Creek. Specific areas that are susceptible to flooding are near Stevens Creek and Heney Creek. The City had experienced flooding around Calabazas Creek in 1998, but flood protection projects completed by the Santa Clara Valley Water District have decreased the risk of flooding significantly. Flood Insurance Data. Of the properties in the special flood hazard area, the City has 39 flood insurance holders. 98 percent of the policy holders are in the AE Zone and the remaining are in the A Zone. Repetitive Loss Properties. There are currently no repetitive loss properties in the City. The City had 1 repetitive loss property within its jurisdiction and the property was purchased by the City in 2014. Attachment #1 Page 9 of 32 R13169.docx Page 8 of 30 City of Gilroy The City of Gilroy is situated in South Santa Clara County at the crossing of U.S. Highway 101 and State Highway 152. The City is located approximately 16 miles south of San Jose, California to Monterey/Day Road on U.S. Route 101 and 19 miles inland from the Pacific Coast. The City has a population of about 50,660 residents and has a total area of 10,340 acres or approximately 16.156 Square Miles. Approximately 7 percent of this area in in parks and preserves and another 29 percent consists of agriculture and other open space uses. The remaining area is nearly completely developed, with the predominance of single family residences. City of Gilroy has about 19 percent of vacant areas (developable land). Flood Hazard. Under the current FIRMs, City of Gilroy has 96 structures in the special flood hazard area. Special flood hazard areas are mainly in FEMA designated Zones A, AE, AH, and AO. Of the total structures in the special flood hazard area, 26 percent are single family (1-4 units), 0 percent are multifamily (5 or more units) and 4 percent are commercial or non-residential. The City of Gilroy receives waters from Lions, Llagas, Uvas, North and South Morey Creek. Specific areas that are susceptible to flooding are around Uvas Creek. The leeve on Uvas Creek has been certified by FEMA. The City of Gilroy has experienced flooding during the storms of December 14 to 28, 1955. The heaviest precipitation occurred during the 3-day period ending December 23. The 12.9 inches of rain reported in the Gilroy area resulted in the Uvas and Carnadero Creeks creating a flow of 14,000 cubic feet per second (cfs) at U.S. Highway 101. Miller Slough was the principal flood problem in January 1963. A rainfall of 3.21 inches during 24 hours caused severe flooding of Forest Street, Church Street, and Sixth Street, with all of the water flowing from Miller Slough. Flood Insurance Data. There are a total of 151 Flood Insurance Property Holders. There are some policy holders that belong to other zones (B, C, or X) than zone A. FEMA Flood Hazard Areas. Some zone designation areas in Gilroy are being reviewed. Please contact City’s Flood Plan Manager for information regarding the zones that are being reviewed. Repetitive Loss Properties. There are no repetitive loss properties in Gilroy. Attachment #1 Page 10 of 32 R13169.docx Page 9 of 30 City of Los Altos The City of Los Altos is located at the base of the San Francisco Peninsula, 40 miles south of San Francisco. The approximately 6.3 square-mile city is developed primarily single-family residential with small businesses, schools, libraries, and churches . According to the 2010 Census, it has a population of 28,976, with a population density of 4,466.8 people per square mile, and average household size of 2.61 people. Los Altos ' climate is marine-influenced with an average summertime high temperature of 78°F and an average low of 57°F, dropping to an average winter nighttime low temperature of 41°F and an average high of 60°F. Mean annual precipitation ranges from 15 to 22 inches, with the majority of that precipitation falling from November through March. Precipitation occurs entirely as rainfall. Snowmelt is not a hydrologic process that significantly affects runoff in the City. Flood Hazard. Under the current FIRMs, the City of Los Altos has 450 properties in the special flood hazard area. Special flood hazard areas are mainly in FEMA designated Zones A and V. Of the total structures in the special flood hazard area, 99 percent are single family and 1 percent are commercial or non- residential. The City has four creeks: Adobe Creek, Hale Creek, Permanente Creek and Stevens Creek. Specific areas that are susceptible to flooding are around Adobe, Permanente and Hale Creeks. Precipitation that falls within the City of Los Altos generates stormwater runoff. This runoff is conveyed in a number of mostly manmade flood protection systems that discharge to the creeks. Most of these systems do not interact with one another, and potential improvements to one system should not impact the performance of other systems . The total land area within the City limits is roughly 6.3 square miles (approximately 4,000 acres). To create a rural aesthetic, many of the streets in Los Altos do not have traditional suburban curb and gutter lined streets . This layout provides some attenuation before runoff reaches a storm drain inlet. In addition to storm drains, flood protection is provided to the City of Los Altos by the District and its maintenance of our four creeks (Hale, Stevens, Adobe, and Permanente) that convey storm-generated runoff north to the San Francisco Bay. Flood Insurance Data. Of the 450 properties in the special flood hazard area, the City has 109 flood insurance policy holders. 51 percent of the policy holders are in the A- Zones and the remaining in the B, C & X Zone. Repetitive Loss Properties. There are no repetitive loss properties in the City of Los Altos. Attachment #1 Page 11 of 32 R13169.docx Page 10 of 30 City of Milpitas The City of Milpitas, located at the southern tip of the San Francisco Bay, is a progressive community that is an integral part of the high tech Silicon Valley. With a diverse resident population of 70,817, Milpitas features quality schools, conveniently located neighborhood parks and shopping centers. Milpitas is often called the “Crossroads of Silicon Valley” with most of its 8,680 Acres or 13.63 square miles of land situated between two major freeways (I-880 and I-680), State Route 237, and a County expressway. A new light rail line opened for service in 2004 and an extension of BART including a major multi-modal station is in the planning stage. The City encompasses 8,680 Acres of land. Approximately 12 percent of this area is in parks and preserves, less than 1 percent consists of agriculture and other open space uses, 31 percent in low density residence, 4 percent in medium density resident, 8 percent in high density resident, 12 percent in commercial/educational uses and 17 percent in industrial uses. There are approximately 1,790 acres, or 2.9 square miles, designated for various industrial uses. About 271 acres are vacant and available in parcels ranging from ½ acre to 75 acres. There are eight existing industrial parks and 550 manufacturing plants in Milpitas. Flood Hazard. The City of Milpitas manages a floodplain that includes several local and regional creeks that convey storm water to other jurisdictions and to the baylands and marshes of the San Francisco Bay. Calera, Coyote, Penitencia, Berryessa, Los Coches Piedmont, Wrigley/Ford, and Tularcitos Creeks are among the major creeks that receive this storm water. The City of Milpitas has 3,000 properties and 3,300 structures in the special flood hazard area. Special flood hazard areas are mainly in FEMA designated zones A, AE, AH, and AO and are located near Calera, Penitencia, Berryessa, Los Coches and Tularcitos Creeks. Flood Insurance Data. Of the 3,000 properties in the special flood hazard area, the City has 2,200 flood insurance policy holders. Repetitive Loss Properties. The City does not have repetitive loss properties. Attachment #1 Page 12 of 32 R13169.docx Page 11 of 30 City of Morgan Hill The City of Morgan Hill is located within South Santa Clara County between the City of San Jose and the City of Gilroy; Morgan Hill is about 65 miles south of San Francisco. The City has an approximate population of 41,200 residents as of January 2014 with an area of 8,206 acres or approximately 13 square miles, with the following breakdown in land use: a. Parks or preserves: 120 acres (1.7 percent) b. Agriculture or Open Space Uses: 1,100 acres (15.6 percent) c. Low Density Res. (0 to 6 DU/ac): 3,522 acres (49.9 percent) d. Medium Density Res. (6 to 12 DU/ac): 471 acres (6.7 percent) e. High Density Res. (12+ d.u. / ac.): 155 acres (2.2 percent) f. Commercial / Educational Uses: 732 acres (10.4 percent) g. Industrial Uses: 795 acres (11.3 percent) h. Mixed Use: 90 acres (1.3 percent) Flood Hazard. Under the current FIRMs, the City of Morgan Hill has approximately 960 structures (as of 2012) in the special flood hazard area. Special flood hazard areas are mainly in the FEMA designated Zone A, AE, AH and AO. Of the total structures in the special flood hazard area, 47.5 percent (279 structures) are low density residents, 41.9 percent (246 structures) are medium density residents, and 10.6 percent (62 structures) are high density residents. There is one main creek, West Little Llagas Creek, which runs through the west side of Morgan Hill and flows south; it is along West Little Llagas Creek where residents and commercial property is susceptible to flooding. West Little Llagas Creek is tributary to Llagas Creek which conveys water to the south to Gilroy and eventually the Monterey Bay. Flood Insurance Data. Of the 587 properties in the special flood hazard area, the City has 379 flood insurance policy holders (as of 2012) and 190 of the policy holders are in the AE Zone. Repetitive Loss Properties. The City has four repetitive loss properties with 5 structures in the repetitive loss properties. Attachment #1 Page 13 of 32 R13169.docx Page 12 of 30 City of Mountain View Nestled between the Santa Cruz Mountains and San Francisco Bay, Mountain View is a diverse community, ideally located in the heart of the Silicon Valley (10 miles north of San Jose and 35 miles south of San Francisco). At just over 12 square miles, the City is home to approximately 75,000 residents, many nationally and internationally known corporations, and a thriving small business base. Mountain View prides itself on providing excellent public services and facilities that meet the needs of a caring and diverse community in a financially responsible manner. While leading the region in innovation and ideas, the City remains committed to the traditional values of strong neighborhoods and citizen involvement. Mountain View boasts strong safety and public education records and is considered one of the best places to live in the Bay Area. Mountain View has a warm-summer Mediterranean climate. Summers are warm and dry, while winters are mild and wet. Annual temperatures range from averages lows at 48 degrees F to average highs of 69 degrees F, with an annual average rainfall of just over 15 inches per year. Flood Hazard: Under the current FIRMs, the City of Mountain View has 1139 parcels in the Special Flood Hazard Area. Special flood hazard areas are in FEMA designated Zones A, AE, AH and AO(1&2). Stevens Creek, Permanente Creek, Permanente Diversion Channel and Hale Creek all flow through the City of Mountain View. The City is also subject to tidal flooding from San Francisco Bay. Flood Insurance Data. Of the 1139 properties (80 percent residential, 20 percent non-residential) in the special flood hazard areas, the City has 455 flood insurance policy holders. Repetitive Loss Properties. There are no repetitive loss properties in the City of Mountain View. Attachment #1 Page 14 of 32 R13169.docx Page 13 of 30 City of Palo Alto The City of Palo Alto is located on the San Francisco peninsula, at the southern end of San Francisco Bay. The City is 35 miles south of San Francisco and 14 miles north of San Jose and at the northern edge of Santa Clara County, between the cities of Mountain View and Menlo Park. The City has a population of around 66,363 residents and encompasses 16,627 acres or approximately 26 square miles. Approximately 40 percent of this area is in parks and preserves and another 15 percent consists of agriculture and other open space uses. The remaining area is nearly completely developed, with single family uses predominating. Less than one percent of the City’s land area consists of vacant, developable land. Flood Hazard. Under the current FIRMs, City of Palo Alto has 4889 structures in the special flood hazard area. Special flood hazard areas are mainly in FEMA designated zone A, AE and AH. Of the total structures in the special flood hazard area, 87 percent are single family (1-4 units), 11 percent are multifamily (5 or more units) and 2 percent are commercial or non-residential. The City has four creeks, San Francisquito Creek, Matadero Creek, Adobe Creek and Barron Creek that flow to San Francisco Bay. San Francisquito Creek flows into San Francisco Bay and Matadero Creek, Barron Creek and Adobe Creek flows into 600 acres Palo Alto Flood Basin. The flow of water from the flood basin to the bay passes through eight box culverts controlled by flap gates in the box culverts. Specific areas that are susceptible to flooding are around San Francisquito Creek and San Francisco Bay where the levees are not built to FEMA standard for a 100-year storm protection. The City has experienced flooding around San Francisquito Creek in 1955 and 1998 when water overtopped the levee and caused immense damage to properties. A Joint Powers Authority was established in 2000 to provide flood protection for the San Francisquito Watershed. Flood Insurance Data. Of the 4889 properties in the special flood hazard area, the City has 3490 flood insurance policy holders. 86 percent of the policy holders are in the A, AH, AE-Zone and the remaining in the B,C,X Zone. Repetitive Loss Properties. There are five repetitive loss properties in the City and there are 21 building structures on the five repetitive properties. Attachment #1 Page 15 of 32 R13169.docx Page 14 of 30 City of San Jose The City of San Jose is located at the southern tip of the San Francisco Bay. With a population of 1,000,536 residents as of April 30, 2014, San Jose is the third largest city in California. The City encompasses 115,200 acres or approximately 180 square miles. Approximately 15 percent of this area is in parks, agriculture, and other open space uses; 44 percent in low density residences, 12 percent in medium density residences, 14 percent in high density residences, 4 percent in commercial / educational uses, and 11 percent in industrial uses. Flood Hazard. Under the current FIRMs, there are approximately 20,000 structures in the Special Flood Hazard Area (SFHA); 85 percent of these structures are single-family residences (1-4 units), 10 percent are multifamily (5 or more units), and 5 percent are commercial or non-residential. These structures are located in FEMA flood zone designations A, AO, AE, AH, and VE. There are two main creeks / rivers that flow into the San Francisco Bay, the Coyote Creek and the Guadalupe River. Areas that flood San Jose are from the many tributaries that drain into the Coyote Creek and the Guadalupe River. Flood Insurance Data. As of May 31, 2014, there are 7,193 flood insurance policy holders in the City of San Jose. Of these policy holders, 92 percent are residential policies, 93 percent are in the SFHA, and 7 percent in the B, C, D & X Zones. Majority of the NFIP policies in force are for structures built before the City joined the NFIP in 1982. Repetitive Loss Properties. The City of San Jose has seven repetitive loss properties with a total of thirteen structures. Attachment #1 Page 16 of 32 R13169.docx Page 15 of 30 City of Santa Clara The City of Santa Clara is located at the southern end of San Francisco Bay. The City is about forty-five (45) miles south of San Francisco. The City has a population of around 121,229 residents and encompasses 12,352 acres or approximately 19.3 square miles. Approximately 43 percent of this area are in residential, 27 percent in commercial and industrial, 11 percent in office/research and development, 11 percent in public/quasi-public, 6 percent in parks and open space, and the remaining in vacant/unassigned areas. Flood Hazard. Under the current FIRMs, City of Santa Clara has 1,823 properties in the special flood hazard area. Special flood hazard areas are mainly in FEMA designated zone A, AE, AH and AO. Of the total properties in the special flood hazard area, 75.3 percent are in residential and the remaining in non-residential areas. The City has mainly four creeks/river, Calabazas Creek, Saratoga Creek, San Tomas Aquino Creek and Guadalupe River. The City has experienced flooding around Calabazas Creek and San Tomas Aquino Creek in 1983, 1986, and 1998 when water overtopped the levees and caused significant damage to properties. Flood Insurance Data. Of the 1,823 properties in the special flood hazard area, the City has 973 flood insurance policy holders. 86 percent of the policy holders are in zones A, AE, AH, and AO, and the remaining are in Zones B, C, and X. Repetitive Loss Properties. The City does not have repetitive loss properties. Attachment #1 Page 17 of 32 R13169.docx Page 16 of 30 County of Santa Clara, Unincorporated Areas The County of Santa Clara is located at the south end of San Francisco Bay between the Counties of Alameda and San Mateo. There are 16 incorporated cities in Santa Clara County. Most are concentrated in the northern half of the county near San Francisco Bay and these cities are jointly known as Silicon Valley. Gilroy and Morgan Hill are located in the southern half of the county. Santa Clara County also falls in two major watersheds. The northern section flows to San Francisco Bay through Coyote Creek, the Guadalupe River, Stevens Creek, San Francisquito Creek and a few smaller creeks. The southern section flows to Monterey Bay through the Pajaro River. Although 73 percent of the land is unincorporated or not included within any city, only 5 percent of the County’s population lives outside of the cities. Most of the unincorporated land is used for agriculture (63 percent), 19 percent is in low-density residential, 17 percent is in parks and open space preserves with about 1 percent in commercial and industrial uses. Flood Hazard: On the FEMA floodplain maps, four Special Flood Hazard Area (SFHA) zones are identified. They are A, AE, AO and AH. The number of structures in the SFHA is unknown, but most are included in low density residential zones with the exception of eight (8) trailer parks in the unincorporated County. Most of the flooding in the unincorporated county occurs along Llagas Creek between Morgan Hill and Gilroy, flowing south to and along the Pajaro River which forms part of the southern boundary of the county. There are levees included in the SFHA and they have been re-certified within the last seven years. Though the County has experienced isolated local flooding events in the last ten years, no events of note have been experienced since the storm events of 1995, 1997, and 1998 (Disaster DR-1046, DR-1155, and DR-1203 respectively). Flood Insurance Data: The unincorporated section of Santa Clara County has 616 flood insurance policy holders. Ten are repetitive loss properties. Attachment #1 Page 18 of 32 R13169.docx Page 17 of 30 City of Sunnyvale The City of Sunnyvale is one of the major cities that make up the Silicon Valley located in the San Francisco Bay Area. It is the second highest populated city within Santa Clara County, with a population of 147,055. Sunnyvale is bordered by portions of San Jose to the north, Moffett Federal Airfield to the northwest, Mountain View to the west, Los Altos to the southwest, Cupertino to the south, and Santa Clara to the east. The City’s land area is approximately 22.86 square miles. Of this, 15.46 square miles are considered developable, as follows: 0.9 percent vacant, 53.7 percent residential, 25 percent office/industrial, 6.5 percent retail/service, 7.4 percent parks/open space, and 6.6 percent other uses. Flood Hazard: Under the current FIRMS, Sunnyvale has 1,582 parcels which lie within a special flood hazard area (SFHA). SFHA’s in Sunnyvale are: Zones A, AE, and AO. Approximately 25 percent, or 409 parcels, are zoned for non-residential use. The remaining parcels within the SFHA are primarily single family (1-4 units) residential (1153 parcels), with only 20 parcels being multi-family residential (5+ units). Areas subject to flooding in Sunnyvale are in general, the northerly portion of the City, selected areas flanking the East and West Channels, Calabazas Creek, El Camino Real, and US Highway 101. Both the East and West Channels and Calabazas Creek flow directly into the San Francisco Bay, which abuts the northerly boundary of the City. Repetitive Loss: There are no repetitive loss properties within the City of Sunnyvale. Attachment #1 Page 19 of 32 R13169.docx Page 18 of 30 V. TARGET AUDIENCES After discussion at the PPI committee, the following key target audiences were selected: 1. Community at Large The PPI Committee recognized that the entire community that lives and/or works in Santa Clara County is subject to impacts due to flooding. The CRS typically focuses on residential flooding but here, flooding of businesses and roads is also very important. The offices of the large employers of Silicon Valley ring the Bay. Consequently, thousands of people work in the zone subject to tidal flooding, driving into and out of the tidal zone everyday on their way to and from work. Street flooding can impact workers’ commutes. Major thoroughfares can be blocked by flooding, impeding access to schools, hospitals and workplaces. Everyone needs a family emergency plan. For residents who live in the SFHA, it is also important to purchase flood insurance. For people who work in the tidal zone, family emergency plans are particularly important, so they have flood safe routes identified to get safely out of the tidal flooding zone. 2. Special Flood Hazard Area Communities The PPI Committee identified several geographic areas that are particularly prone to flooding. This includes areas of Mountain View and Milpitas that are prone to shallow flooding; areas of Mountain View and Palo Alto that are prone to riverine flooding, especially north of Highway 101; areas subject to tidal flooding; Los Altos, near Permanente and Hale creeks; areas of Palo Alto prone to flooding from San Francisquito Creek; flood-prone areas of San Jose, including Alviso; Morgan Hill, especially the downtown area; the South County corridor between Morgan Hill and the county line. Within SFHA’s, the PPI Committee identified several key audiences that can be divided into two categories: those who are at risk of flood impacts and those who are a conduit to those who are at risk of flood impacts or “messengers to other target audiences.” Those at risk of flood impacts include property owners, renters and workers. Of special concern are groups with special evacuation needs, such as seniors and fixed or low-income residents. Of the highest importance are areas that have suffered from repetitive loss. Residents who are new to the area should be a specific target audience because they have not experienced flooding in the past. They are less likely to be aware of flood risks, sandbag locations and how to flood-proof a structure. 3. Messengers to Other Target Audiences Lenders, real estate agencies or boards, developers/contractors and appraisers all serve as a messenger to people who are at risk of flooding as they provide their respective business service. In addition, organizations or agencies that serve communities at risk include PG&E, the American Red Cross, Community Emergency Response Teams (CERT), neighborhood associations, schools, churches, hospitals and museums. These messenger organizations and businesses function as another target audience for the Attachment #1 Page 20 of 32 R13169.docx Page 19 of 30 PPI. As government agencies that work to reduce flood risk, we need to provide these messengers with the best information available that is tailored to Santa Clara County needs. In other words, the PPI needs to include trainings that convey the information that the messengers will need. This will be implemented by presentations to groups, website postings and newsletter articles. While all of the messages need to be conveyed to messengers from time to time, some messages are more pertinent than others. For instance, lenders need detailed understanding of flood insurance, but neighborhood associations would be more interested in how to protect people and property from a flood. All of these audiences can be reached through a combination of messages from the District, the cities and county and the American Red Cross. VI. OTHER PUBLIC INFORMATION EFFORTS In order to develop an effective Program for Public Information, the Committee inventoried a broad sample of current initiatives, programs, and trainings that focus on raising the community’s awareness of local flood hazards and encouraging them to take action that will reduce risks. Outside activity by non-government agencies and organizations in Santa Clara County relating to flood protection generally falls into one of four categories: (1) training and courses, (2) community based engagement events, (3) traditional and social media messaging, and (4) mailers. Many community events feature at least one agency providing information on disaster preparedness and safety. The information in all four categories is usually provided on websites as well, so it is readily available. Telephone and tablet apps have become particularly popular. The American Red Cross has developed a series of free apps related to disaster awareness such as flood protection, first aid, earthquake and fire. The content of this messaging usually covers general hazard awareness and safety, with an increasing emphasis on preparedness, planning, and mitigation. Much of this applies to flood preparedness and safety. Table 2: Other Public Information Efforts Agency/Organization Project/Effort Message American Red Cross Silicon Valley Chapter Trainings: Personal preparedness, organizational preparedness. Audience: Adults, Seniors, Youth/Kids Community events: Regularly staff booths at community events and company health fairs to provide information about American Red Cross services and preparedness. Social media messaging: Facebook, Twitter posts with updates on current disaster responses, seasonal tips on safety, preparedness. Website: downloadable materials Telephone and tablet apps General hazard/disaster awareness, safety, and preparedness. The importance of preparing a family emergency plan. Attachment #1 Page 21 of 32 R13169.docx Page 20 of 30 Agency/Organization Project/Effort Message CADRE (Collaborating Agencies Disaster Relief Effort) Monthly meetings and workshops Annual Conference – includes training sessions Disaster readiness and preparedness. CERT (Community Emergency Response Training) Trainings: Personal preparedness. Disaster readiness and preparedness. Pacific Gas & Electric (PG&E) Utility Bill inserts Radio safety ads Safety tips related to winter storms. Santa Clara County Department of Public Health Website: downloadable materials San Jose Fire Department (Office of Emergency Services) Trainings: Personal preparedness. VII. COMMUNICATION STRATEGY, PROJECTS, AND INITIATIVES The focus of the Multi-Jurisdictional PPI Plan is to encourage flood preparedness best practices for the following key audiences: The community at large; Special Flood Hazard Area (SFHA) communities; and Messengers to other target audiences. The committee selected nine key messages that need to be disseminated to the various audiences. The first six are the same as the six priority messages for the CRS. Three more were added by the committee. CRS Priority Messages (Outreach Projects): 1. Know your flood hazard; 2. Insure your property for your flood hazard; 3. Protect people from the flood hazard; 4. Protect your property from the flood hazard; 5. Build responsibly; and 6. Protect natural floodplain functions. Added Key Messages (Flood Response Preparation Projects): 7. Develop a Family Emergency Plan; 8. Download disaster apps; and 9. Understand shallow flooding risks––don’t drive through standing water. Numerous projects have been carried out over the past several years. Since they match the key audiences and are effective means to disseminate the eight key messages, they will continue. Each mailer includes one or more of the key messages. 1. Mailers a. The City of Milpitas sends two mailers a year to residents and businesses within SFHA. One mailer encourages residents to purchase flood insurance. Attachment #1 Page 22 of 32 R13169.docx Page 21 of 30 b. The City of Mountain View sends postcards to residents of SFHA. It includes information on the importance of purchasing flood insurance, flood safety and flood risk. The City of Mountain View sends information on flood risk, flood safety and the importance of buying flood insurance in the Winter version of the City’s newsletter, The View. The View is sent to all postal addresses in the City of Mountain View (over 17,000 addresses). c. The City of Morgan Hill sends flood related information in its general newsletter. The annual newsletter is sent out to all residents and businesses in the City of Morgan Hill. The newsletter informs the public of: Flooding within the City of Morgan Hill, Special Flood Hazard Areas (SFHAs), local flood hazards, City flood services, recent and planned improvements (to help flooding 10-25 years), status of the Upper Llagas Creek Improvements (PL566 for 100 year flood), property protection measures, food insurance information (CRS 7 rating and elevation certificates), and provides City contact information for the public to inquire about flooding in the City. d. The City of Los Altos sends one mailer a year to the residents and businesses within SFHA. A newspaper ad is also published annually. e. The City of San Jose sends an annual flyer to properties in Repetitive Loss Areas. This flyer informs property owners that their property is located in a flood- prone area. The flyer also details ways property owners can protect themselves and their property; such as be informed and know your flood risk, how to reduce this risk, how to protect your property, and to practice flood safety. f. The City of Sunnyvale sends two mailers and one newsletter article per year. The first mailer is targeted to all residents and businesses within the SFHA informing them of the requirement to purchase flood insurance and the automatic 15% discount. The second mailer is targeted to real estate agents informing them of the client’s responsibility for identification and purchase of flood insurance and the availability of the 15% discount. The newsletter article promotes flood safety awareness and highlights the City’s website. g. The City of Cupertino publishes flood notices to the local newsletter (The Cupertino Scene) which is mailed to all residential and commercial properties within Cupertino’s jurisdiction. These notices provides information on flood risks and flood safety, and informs property owners on ways to protect themselves and their property. h. Palo Alto inserts Flood Information on Utility Bills every year to all residents in Palo Alto and annual fliers regarding flooding are mailed to repetitive loss properties. Real estate agencies are sent letters every year informing them of their responsibility to identify flood hazard areas, to take advantage of the flood zone look up in the Cities website, and inform clients the necessity to purchase flood insurance i. Santa Clara Valley Water District sends a mailer to all residents and businesses within SFHA in Santa Clara County. This is an extensive mailer that includes language on all the messages, such as contact numbers for mapping services for Attachment #1 Page 23 of 32 R13169.docx Page 22 of 30 each of the communities and what to do before, after and during a flood. Every community submits this for CRS credit. It is sent out in October to remind people of the up-coming wet season and urge them to prepare. Last year it was sent to about 69,000 addresses. It is also available on the flood protection page of the District’s website. It should be noted that this is not necessarily a mailer to every creekside owner. Many properties are adjacent to creeks, but not in the SFHA and would not receive this mailer. j. Santa Clara Valley Water District includes flooding messages in an annual mailer sent to every postal address in the county. This is a general mailer whose topics cover the full range of services the Water District carries out, so the topics vary from year to year. The importance of buying flood insurance is always mentioned. k. Santa Clara Valley Water District sends thousands of flyers each year to residents and businesses located near a capital or maintenance project site. These flyers contain a message to discourage illegal dumping in creeks and advertise a pollution reporting hotline. 2. Flood Awareness Media Campaign The Water District conducts an annual flood awareness media campaign, reaching the community at large. This campaign typically includes newspaper ads, radio spots, and on-line banner ads, which run between October and April depending on the weather. This year’s campaign will encourage FEMA’s “Turn Around Don't Drown®” message and to develop a Family Emergency Plan. 3. Do Not Dump Program a. Storm Drain Stenciling - Santa Clara County has had a program to paint “Do Not Dump” stencils at storm drains for more than 20 years. This program, which helps prevent shallow flooding, should continue. b. Pollution Hotline number is listed in all Neighborhood Notices. c. The Cities of Los Altos, Sunnyvale, and Mountain View require all developments modifying or constructing new catch basins to stencil the “No Dumping Flows to Bay”. In addition, all bid documents for capital projects which are modifying or constructing new catch basins, require the contractors to install the same stencil. The program is also highlighted on the City’s website. 4. Information for Use During and After a Flood The Santa Clara Valley Water District maintains public outreach materials for use during and after a flood including safety messages, how to file insurance claims, the need for permits, etc. These materials are also available on our website. The committee identified several new initiatives that can be carried out by entities represented in the PPI committee: 1. A standardized flood message will be prepared for each CRS city to include flood messages in utility bills each year. This year the message will be to prepare a family emergency plan and to advertise Apps. In other years, different message will be chosen. Attachment #1 Page 24 of 32 R13169.docx Page 23 of 30 2. Cities could pursue FEMA Matching Funds Grants for severe Repetitive Loss Areas. 3. A contest for children and youth may be organized to promote developing family Emergency Plans. 4. The committee will endeavor to recruit a celebrity to help disseminate key messages. The first priority will be to encourage people to prepare family emergency plans. 5. The Santa Clara Valley Chapter of the American Red Cross will include flood preparedness messages in its emergency preparedness presentations throughout the county. These will include the importance of buying flood insurance and preparing a family emergency plan. Opportunity to download the American Red Cross App will be included in each presentation. A variety of staff from the Santa Clara Valley Water District and cities will assist with American Red Cross presentations. 6. In the past, the Water District has sent a mailer to 15,000 creek side residents, called “You are the Solution to Water Pollution.” This effort could be revived pending funding review. 7. The Water District operates an active school outreach program, which reaches more than 20,000 students a year. Youth-oriented flood messages can be inserted into packets provided to students and their parents. 8. The Cities of Mountain View, San Jose, Palo Alto, and Sunnyvale will continue to send an annual postcard to residents in the SFHA. 9. A FIRMette is a full-scale section of a FEMA Flood Insurance Rate Map (FIRM) that can be created online. It is formatted to fit on printers commonly found in offices. PPI Committee members representing the real estate community will use realtors’ association newsletters to promote awareness of FEMA’s FIRMette website. 10. To address the dangers of driving through shallow flooded areas, the committee will contact each city to install permanent “Subject to Flooding” warning signs at 2 (two) key locations per community, as applicable. VIII. ADOPTION The Multi-Jurisdictional PPI will be considered fully adopted after it has been approved by the elected body of each of the participating communities. Each CRS community is encouraged to use the standard staff report, so that all of the elected officials are receiving the same information and to save staff time and resources. IX. ANNUAL EVALUATION The Santa Clara County Multi-Jurisdictional PPI Committee will meet at least once per year to evaluate the PPI Plan and incorporate any needed revisions. This meeting will be coordinated through the ongoing CRS User’s Group meetings which are expected to occur at least quarterly. The evaluation will cover: Reviewing projects that were completed; Evaluation of progress toward outcomes; Recommendations on projects that have not been completed; Recommendations for new projects not previously identified; Target Audience changes; and Impact of program during a real flood event, if one has occurred. Attachment #1 Page 25 of 32 R13169.docx Page 24 of 30 A report will be prepared by the District or through a sub-committee of the CRS Users Group for submission with annual CRS recertification packages. X. REFERENCES 1. Washington Multi-Jurisdictional PPI 2. Snohomish County, City of Monroe, City of Sultan Multi-Jurisdictional Program for Public Information 2013 3. Flood Futures Report Attachment #1 Page 26 of 32 25 of 30 Appendix A. The Multi-Jurisdictional PPI Worksheet for Santa Clara County Target Audience 1 Message Outcome Project(s) Proposed to Support the Messages Assignment 2 Proposed Schedule 3 Stakeholder CRS Community Community At Large (CAL) The PPI Committee recognized that the entire community that lives and/or works in Santa Clara County is subject to impacts due to flooding. The CRS typically focuses on residential flooding, but here, flooding of businesses and roads is also very important. Topics 1, 2, 3, 4, 5, 6, 7, 8, & 9 Message: Know your flood risk and be prepared; buy flood insurance Educate our community on flood protection and preparedness measures CAL OP #1. Flood messages inserted in and/or printed on Utility Bills. All SCC Public Works Depts. (PWD) All SCC CRS Coordinators District Communications (for South County Unincorporated areas) October – March Utility companies (water, electric, waste) All City of Palo Alto CAL OP #2. Post Utility Bill messages on websites (Element 352 WEB1) CAL OP#3. Winter Preparedness Briefing District Field Operations October NOAA, Cities Emergency Managers & Public Works Directors, Santa Clara County OES, Cal Fire, CCC, DWR All CAL OP #4. Post “Winter Preparedness Briefing” notice and materials on website (Element 352 WEB1) October - November CAL OP#5. “Emergency Preparedness Workshop” District Emergency Services November CAL OP #6. Post “Emergency Preparedness Workshop” notice and materials on website (Element 352 WEB1) November - December Topics 1, 2, 3, 4, 5, 6, 7, 8, & 9 Message: Know your flood risk and be prepared; buy flood insurance. Flood Insurance will cover damage from flooding that most homeowner’s policies don’t cover Educate our community on flood protection and preparedness measures CAL OP #7. Develop newsletters with articles on flood protection and preparedness measures that urge residents and businesses to purchase flood insurance. These would include paper and electronic versions. These will be more extensive than messages included in utility bills. District‘s annual county-wide mailer (CWM) will include language on flood protection and preparedness measures. City of Sunnyvale will distribute yearly newsletter article called “Know how to be Flood Safe in Sunnyvale” (Element 352 WEB1 and 2) All SCC CRS Coordinators or Communications staff District Communications Gilroy Chamber of Commerce October – March Insurance agencies Gilroy Chamber of Commerce District Grantee Organizations All City of Morgan Hill City of Cupertino City of Sunnyvale City of Mountain View Gilroy Chamber of Commerce CAL OP #8. Post newsletters/articles/District’s CWM on websites (Element 352 WEB1 and 2) Topics 4 & 6 Message: Keep debris and trash out of our streams. It’s illegal to dump into streams Cleaner streams and fewer dumping violations Fewer debris blockages during high-flow events CAL OP #9. “Do Not Dump” message is sent each year to all Santa Clara County residents in the District’s CWM District Communications All SCC CRS Coordinators June/July 2015 (CWM) Adopt-A-Creek Organizations District Grantee Organizations All CAL OP #10. Post “Do Not Dump” messages on website (Element 352 WEB1) CAL OP #11. “Illegal Dumping” - District Community Project Review Unit (CPRU) Water Resource Protection Ordinance No. 08-2 amending Ordinance No. 83-2 District Community Projects Rerview Unit and Communications Santa Clara Valley Urban Runoff Pollution Prevention Program (SCVURPPP) All SCC CRS Coordinators Year-Round Adopt-A-Creek Organizations District Grantee Organizations All CAL OP #12. Post Water Resource Protection Ordinance on website (Element 352 WEB1) CAL OP #13. “No Dumping” signage on District project sites District Watersheds Operations & Maintenance Santa Clara Valley Urban Runoff Pollution Prevention Program (SCVURPPP) All SCC CRS Coordinators Year-Round Santa Clara Valley Urban Runoff Pollution Prevention Program (all communities that drain to San Francisco Bay) All City of Los Altos City of Sunnyvale City of Mountain View CAL OP #14. “Pollution Hotline 1-888-510-5151” to report all illegal dumping messages are included in Neighborhood Work Notices (target outreach – 6 points per topic) District Communications All SCC CRS Coordinators Santa Clara Valley Urban Runoff Pollution Prevention Program (SCVURPPP) Year-Round Santa Clara Valley Urban Runoff Pollution Prevention Program Watershed Watch Organization San Francisco Estuarine Institute Oakland Museum All CAL OP #15. Post Project notices with “Pollution Hotline” on website (Element 352 WEB1) CAL OP #16. Creek side Property Program – Creek Wise brochure handed out at community fairs (target outreach – 6 points per topic) District Communications Year-Round Fair Sponsors Attendees of community events who visit information booths SCVURPPP All 1 Message Topics: Outreach Projects (OP): Topic 1 – Know your flood hazard; Topic 2 – Insure your property for your flood hazard; Topic 3 – Protect people from the flood hazard; Topic 4 – Protect your property from the hazard; Topic 5 – Build responsibly; Topic 6 – Protect natural floodplain functions Flood Response Preparations (FRP): Topic 7 – Develop a Family Emergency Plan; Topic 8 – Download disaster electronic Apps; Topic 9 – Understand shallow flooding risks – “Don’t drive through standing water.” 2 Each September, all deliverables need to be reported to District for tracking purposes. 3 A stakeholder can be any agency, organization, or person (other than the community itself) that supports the message. Stakeholders can be: an insurance company that publishes a brochures on flood insurance, even if it is set out at City Hall; a local newspaper that publishes a flood or hurricane season supplement each year; FEMA, if, for example, a FEMA brochure is used as an informational material; schools that implement outreach activities; a local newspaper; a neighborhood or civic association that sponsors and hosts a presentation by a community employee; a utility company that includes pertinent articles in its monthly bills; or presentations made by state or FEMA staff at a Risk Map meeting. Attachment #1 Page 27 of 32 Appendix A. The Multi-Jurisdictional PPI Worksheet for Santa Clara County 1 Message Topics: Outreach Projects (OP): Topic 1 – Know your flood hazard; Topic 2 – Insure your property for your flood hazard; Topic 3 – Protect people from the flood hazard; Topic 4 – Protect your property from the hazard; Topic 5 – Build responsibly; Topic 6 – Protect natural floodplain functions Flood Response Preparations (FRP): Topic 7 – Develop a Family Emergency Plan; Topic 8 – Download disaster electronic Apps; Topic 9 – Understand shallow flooding risks – “Don’t drive through standing water.” 2 Each September, all deliverables need to be reported to District for tracking purposes. 3 A stakeholder can be any agency, organization, or person (other than the community itself) that supports the message. Stakeholders can be: an insurance company that publishes a brochures on flood insurance, even if it is set out at City Hall; a local newspaper that publishes a flood or hurricane season supplement each year; FEMA, if, for example, a FEMA brochure is used as an informational material; schools that implement outreach activities; a local newspaper; a neighborhood or civic association that sponsors and hosts a presentation by a community employee; a utility company that includes pertinent articles in its monthly bills; or presentations made by state or FEMA staff at a Risk Map meeting. 26 of 30 Target Audience 1 Message Outcome Project(s) Proposed to Support the Messages Assignment 2 Proposed Schedule 3 Stakeholder CRS Community CAL OP #17. Post Project Creek side Mailer on website (Element 352 WEB1) CAL OP#18. Organize volunteers for creek clean-ups through District’s Adopt-A-Creek Program or organized city clean-ups, such as City of Santa Clara’s, Adopt-A-Spot Program District Communications All SCC CRS Coordinators Year-Round Community Organizations Residents Schools Businesses Creek Connections Action Group (CCAG) All City of Santa Clara CAL OP #19. Post District’s Adopt a Creek Program and cities clean-up programs on website (Element 352 WEB1) CAL OP#20. Organize volunteers for National River Cleanup Day and California Coastal Cleanup Day District Communications All SCC CRS Coordinators May 16, 2015 and September 2015 All City of San Jose CAL OP #21. Post volunteer information and results on website (Element 352 WEB1) CAL OP # 22. Installation of trash booms District’s Safe Clean Water Implementaiton Unit All SCC Public Works Dept. Late Summer/ Fall Santa Clara Valley Urban Runoff Pollution Prevention Program (SCVURPPP) California Regional Water Quality Control Board All CAL OP #23. Stenciling storm drains “Do Not Dump - Flows Into Bay” All SCC CRS Coordinators Year-Round All City of San Jose CAL OP #24. Inserts into inlets All SCC Public Works Dept. Late Summer/ Fall Santa Clara Valley Urban Runoff Pollution Prevention Program (SCVURPPP) All CAL OP #25. Hot Spot Assessment and Clean-ups District Watersheds Operations & Maintenance All SCC Public Works Dept. Santa Clara Valley Urban Runoff Pollution Prevention Program (SCVURPPP) Year-Round CAL OP #26. Send out yearly newsletter article discussing efforts to ready the storm drainage system for fall rains – cleaning out storm drains, and discusses “No Dumping” that reaches all households in the City or County District Communications All SCC CRS Coordinators Late Summer/ Fall All City of Sunnyvale CAL OP # 27. Post newsletter article on efforts to ready storm drainage system for fall rains – cleaning out storm drains, and “No Dumping” on website (Element 352 WEB1) All City of Sunnyvale Topics 1,2,3,4,7, 8 & 9 : Download disaster electronic Apps Messages: Be prepared for flood and other disasters; Know how to access needed information quickly during an emergency Increase in ‘hits’ on Apps and less stress during emergencies CAL OP #28. Advertise District, County Public Health Department, and American Red Cross electronic Apps District Communications All SCC CRS Coordinators County Public Health Dept. Gilroy Chamber of Commerce, and American Red Cross Year-Round Community Organizations, including American Red Cross and Gilroy Chamber of Commerce Residents who download the apps. Attendees of community events who visit information booths Teachers /students visited by District’s School Outreach Program All CAL OP #29. Post disaster apps information on website (Element 352 WEB1 and 2) CAL OP #30. Instruct people to download apps at personal preparedness trainings CAL OP #31. Post instruction on how to download apps. on websites and electronic newsletters (Element 352 WEB1) District Communications City representatives CAL OP #32. Promote ALERT SCC - Santa Clara County Emergency Alert System All SCC CRS Coordinators District Communications Year-Round District and All SCC Participating Communties All CAL OP #33. Post ALERT SCC - Santa Clara County Emergency Alert System on District and cities websites http://www.sccgov.org/sites/alertscc/Pages/home.aspx (Element 352 WEB1 and WEB2) Attachment #1 Page 28 of 32 Appendix A. The Multi-Jurisdictional PPI Worksheet for Santa Clara County 1 Message Topics: Outreach Projects (OP): Topic 1 – Know your flood hazard; Topic 2 – Insure your property for your flood hazard; Topic 3 – Protect people from the flood hazard; Topic 4 – Protect your property from the hazard; Topic 5 – Build responsibly; Topic 6 – Protect natural floodplain functions Flood Response Preparations (FRP): Topic 7 – Develop a Family Emergency Plan; Topic 8 – Download disaster electronic Apps; Topic 9 – Understand shallow flooding risks – “Don’t drive through standing water.” 2 Each September, all deliverables need to be reported to District for tracking purposes. 3 A stakeholder can be any agency, organization, or person (other than the community itself) that supports the message. Stakeholders can be: an insurance company that publishes a brochures on flood insurance, even if it is set out at City Hall; a local newspaper that publishes a flood or hurricane season supplement each year; FEMA, if, for example, a FEMA brochure is used as an informational material; schools that implement outreach activities; a local newspaper; a neighborhood or civic association that sponsors and hosts a presentation by a community employee; a utility company that includes pertinent articles in its monthly bills; or presentations made by state or FEMA staff at a Risk Map meeting. 27 of 30 Target Audience 1 Message Outcome Project(s) Proposed to Support the Messages Assignment 2 Proposed Schedule 3 Stakeholder CRS Community Topic 7 : Develop a Family Emergency Plan Messages: Be prepared for flood and other disasters Increase in Family Emergency Plan and less stress during emergencies More people know what to do in an emergency CAL OP#34. Workshop/contest to promote developing family Emergency Plans; Reaching out to a celebrity to carry our message District Communications All SCC CRS Coordinators with assistance from Stakeholders Year-Round Schools American Red Cross Celebrity, TBD FEMA California Volunteers.org All CAL OP #35. Post Family Emergency Plan template form on website (Element 352 WEB1 and 2) Family Disaster Plans – http://www.redcross.org/images/MEDIA_CustomProd uctCatalog/m12140360_ARC_Family_Disaster_Plan_T emplate_r083012.pdf?campmedium=internal_link_do wnload&campname=family_disaster_plan_english or http://www.californiavolunteers.org/familyplan/pdf/f amily_plan.pdf Make a Plan – includes Commuter, Family , School and Workkplace plans http://www.ready.gov/make-a-plan CAL OP#36. Include message “What to Do….Before – Prepare a Family Emergency Plan….” in District’s CWM District Communications All SCC CRS Coordinators October – March All SCC Participating Communties All CAL OP #37. Post message “What to Do….Before – Prepare a Family Emergency Plan….” on website (Element 352 WEB1 and 2) CAL OP#38. Promote the official site of the NFIP Floodsmart.gov for flood preparation and recovery messages District Communications All SCC CRS Coordinators Year-Round FEMA Gilroy Chamber of Commerce All CAL OP #39. Post message “NFIP Floodsmart.gov Flood Preparation and Recovery….” on website (Element 352 WEB1 and 2) https://www.floodsmart.gov/floodsmart/pages/preparati on_recovery/before_a_flood.jsp Topics 1, 3, & 4 Messages: Protect people and property from flood hazards Less damage due to the floods; improve sandbag distribution CAL OP #40. Sandbags available at various site throughout county District Vegetation Unit All SCC Public Works Dept. November through April All SCC residents and people who work in county Community organizations (SF Creek JPA, Rotary, Boys Scouts, etc.) All City of Palo Alto CAL OP #41. Post sandbag information on website, including How to Use Sandbags, sandbag webcams to view availability, etc. (Element 352 WEB1 and 2) District Communications All SCC CRS Coordinators Year-Round Topics 1 & 9: Know your flood hazard; Understand shallow flooding risks Messages: Drive slowly; Avoid shallow moving water; 2 ft. water moves vehicles; FEMA’s message: “Turn Around Don't Drown®.” Fewer accidents and rescues CAL OP #42. Permanent street signage (2 signs/City/year); each City will determine best location for signage and will install them. “Subject to Flooding” (Cities to coordinate common standard message design) All SCC Public Works Dept. County Planning Gilroy Chamber of Commerce Year-Round FEMA Caltrans Gilroy Chamber of Commerce American Red Cross All SCC residents and people who work in county All CAL OP#43. Include messages “What to Do….Before, During & After and FEMA’s Turn Around Don’t Drown®….” in mailers District Communications All SCC CRS Coordinators All CAL OP #44. Post messages “What to Do….Before, During & After and FEMA’s Turn Around Don’t Drown®….” on website http://www.bing.com/videos/search?q=Turn+around+Do n%27t+Drown+Campaign&Form=VQFRVP#view=detail&m id=99E3368939954084942299E33689399540849422 Attachment #1 Page 29 of 32 Appendix A. The Multi-Jurisdictional PPI Worksheet for Santa Clara County 1 Message Topics: Outreach Projects (OP): Topic 1 – Know your flood hazard; Topic 2 – Insure your property for your flood hazard; Topic 3 – Protect people from the flood hazard; Topic 4 – Protect your property from the hazard; Topic 5 – Build responsibly; Topic 6 – Protect natural floodplain functions Flood Response Preparations (FRP): Topic 7 – Develop a Family Emergency Plan; Topic 8 – Download disaster electronic Apps; Topic 9 – Understand shallow flooding risks – “Don’t drive through standing water.” 2 Each September, all deliverables need to be reported to District for tracking purposes. 3 A stakeholder can be any agency, organization, or person (other than the community itself) that supports the message. Stakeholders can be: an insurance company that publishes a brochures on flood insurance, even if it is set out at City Hall; a local newspaper that publishes a flood or hurricane season supplement each year; FEMA, if, for example, a FEMA brochure is used as an informational material; schools that implement outreach activities; a local newspaper; a neighborhood or civic association that sponsors and hosts a presentation by a community employee; a utility company that includes pertinent articles in its monthly bills; or presentations made by state or FEMA staff at a Risk Map meeting. 28 of 30 Target Audience 1 Message Outcome Project(s) Proposed to Support the Messages Assignment 2 Proposed Schedule 3 Stakeholder CRS Community (Element 352 WEB1 and 2) CAL OP #45. Post shallow flooding risks information on websites (Element 352 WEB1 and 2) District Communications Cities Communications All CAL OP #46. Promote City’s online “Flood Zone Lookup” tool on Website (Element 352 WEB1 and 2) City of Palo Alto Public Works Palo Alto residents City of Palo Alto Topics 1, 2, 3, 4, 5, 6, 7, 8, & 9 Message: Know your flood risk and be prepared; buy flood insurance Educate our community on flood protection and preparedness measures Increase in ‘hits’ on District and cities Flood Protection Resources pages and improve District’s Flood Campaign results CAL OP #47. Flood Awareness Campaign, including radio and bus ads. For this year, we are preparing to have radio ads ready to place, but will only be placed if/when there are major storm systems in the forecast District Communications All SCC CRS Coordinators October-April FEMA Radio Stations Valley Transportation Authority American Red Cross All CAL OP #48. Post Flood Awareness Campaign elements on various social media (Element 352 WEB1 and 2) Year-Round Facebook, Twitter, Google+, LinkedIn, Instagram, etc. All CAL OP #49. Post Flood Awareness Campaign information on websites (Element 352 WEB1 and 2) CAL OP 50. Distribute flood prevention materials at fairs District Communications All SCC CRS Coordinators Year-Round Fair Sponsors All All CAL OP #51. Social Media Messaging (such as Facebook, Twitter, LinkedIn, Instagram, etc.) Fair Sponsors SCC Residents who share posts Facebook, Twitter, Google, LinkedIn, Instagram, etc. CAL OP #52. Post social media messages on websites (Element 352 WEB1 and 2) CAL OP #53. Staffing booths at fairs Fair Sponsor Residents who attend booths Special Flood Hazard Area (SFHA) Communities The PPI Committee identified several geographic areas that are particularly prone to flooding. Topics 4 & 6 Message: Keep debris and trash out of our streams. It’s illegal to dump into streams Cleaner streams and fewer dumping violations SFHA OP #1. “Do Not Dump” message is sent each year to all SFHA residents county-wide in the District’s annual Floodplain Mailer (FPM) (2014 FPM reached 71,000 residents & businesses) (target outreach – 6 points per topic) District Communications All SCC CRS Coordinators October/ November 2015 FEMA SCVURPPP All Less flooding damage due to debris build-up SFHA OP #2. Post Floodplain Mailer on website (Element 352 WEB1 and 2) District Communications All SCC CRS Coordinators Year-Round All Topics 3 & 5 Message: Protect your family and property from flooding Educate our community on flood protection and preparedness measures SFHA OP #3. “What to Do – Protect Your Family and Property from Flooding” message is sent each year to all SFHA residents in the District’s annual FPM October - November All Reduce number of claims SFHA OP #4. Post Floodplain Mailer on website (Element 352 WEB1 and 2) Year-Round SFHA OP #5. Maintain the ALERT System District Communications All SCC CRS Coordinators Year-Round peak time October - April County of Santa Clara All City of Palo Alto Keep families safe SFHA OP #6. ALERT System – Post real-time gauge information on website so users can see current water levels, and where available, flood height predictions (Element 352 WEB3) SFHA OP #7. Post cards sent to floodplain residents; this is in addition to the District’s Annual FPM. City of Sunnyvale sends out postcards annually that includes a link to flood insurance agent referrals. District Communications All SCC CRS Coordinators FEMA Lenders Real Estate Brokers Silicon Valley Realtors Association All City of San José City o f Sunnyvale City of Gilroy County of Santa Clara City of Sunnyvale City of Mountina View City of Los Altos SFHA OP #8. Post postcards on website (Element 352 WEB1 and 2) Attachment #1 Page 30 of 32 Appendix A. The Multi-Jurisdictional PPI Worksheet for Santa Clara County 1 Message Topics: Outreach Projects (OP): Topic 1 – Know your flood hazard; Topic 2 – Insure your property for your flood hazard; Topic 3 – Protect people from the flood hazard; Topic 4 – Protect your property from the hazard; Topic 5 – Build responsibly; Topic 6 – Protect natural floodplain functions Flood Response Preparations (FRP): Topic 7 – Develop a Family Emergency Plan; Topic 8 – Download disaster electronic Apps; Topic 9 – Understand shallow flooding risks – “Don’t drive through standing water.” 2 Each September, all deliverables need to be reported to District for tracking purposes. 3 A stakeholder can be any agency, organization, or person (other than the community itself) that supports the message. Stakeholders can be: an insurance company that publishes a brochures on flood insurance, even if it is set out at City Hall; a local newspaper that publishes a flood or hurricane season supplement each year; FEMA, if, for example, a FEMA brochure is used as an informational material; schools that implement outreach activities; a local newspaper; a neighborhood or civic association that sponsors and hosts a presentation by a community employee; a utility company that includes pertinent articles in its monthly bills; or presentations made by state or FEMA staff at a Risk Map meeting. 29 of 30 Target Audience 1 Message Outcome Project(s) Proposed to Support the Messages Assignment 2 Proposed Schedule 3 Stakeholder CRS Community SFHA OP# 9. City of Sunnyvale sends out postcards annually that offers flood protection assistance site visits. City of Sunnyvale CRS Coordinator City of Sunnyvale SFHA residents and businesses City of Sunnyvalle Sunnyvale SFHA OP #10. Post postcards that offers flood protection assistance site visits on website (Element 352 WEB1 and 2) City of Sunnyvale CRS Coordinator City of Sunnyvale SFHA residents and businesses City of Sunnyvalle Sunnyvale SHA OP #11. Inserts into District’s School Outreach Program material District Communications All SCC CRS Coordinators Year-Round Schools Teachers/students/parents All SFHA OP #12. Post School Outreach Program materials on website (Element 352 WEB1) Topics 1, 2, 3, 4, 5, 6, 7, 8, & 9 Message: Know your flood risk and be prepared; buy flood insurance Increase in the number of inquiries for purchasing flood insurance SFHA OP #13. “Do You Need Flood Insurance” message is sent each year to all SFHA residents in the District’s annual FPM District Communications All SCC CRS Coordinators October/ November 2015 Lenders Real Estate Brokers Flood insurance customers All Topics 1, 2, 3, 4, 5, and 7 Message: Flood Insurance will cover damage from flooding that most homeowner’s policies don’t’ covers. Standard homeowner or commercial policies will not cover damage to structures or contents caused by natural flooding. Flood insurance is the only sure way to be reimbursed for some of your flood loses Increase in number of flood insurance policies in the SFHAs and in the county in general SFHA OP #14. Post Floodplain Mailer on website (Element 352 WEB1) Year-Round Prospective buyers understand flood risks SFHA OP #15. Mail out mailer(s) regarding flood insurance (District’s via FPM) and elevation certificates District Communications All SCC CRS Coordinators Fall Lenders Real Estate Brokers Flood insurance customers All City of Milpitas City of Los Altos City of Mountain View SFHA OP #16. Post mailers on website (Element 352 WEB1) Year-Round SHA OP #17. Mailer (brochure published by insurance company) sent to all real estate agents and lenders (can be set out at City Hall) – requirement to purchase flood insurance and discount. All SCC CRS Coordinators Year-Round Lenders, real estate agents or boards, developers/contractors and appraisers ; organizations or agencies that serve communities at risk for flooding include PG&E, American Red Cross, Community Emergency Response Teams (CERT), neighborhood associations, schools, churches, hospitals and museums All City of Sunnyvale City o f San Jose City of Palo Alto Topic 1: Know your flood hazard Message: A FIRMette is a full-scale section of a FEMA Flood Insurance Rate Map (FIRM) that you create online. A FIRM indicates if property is in a Special Hazard Flood Area Increase in the number of inquiries from prospective buyers asking about the flood designation of property SFHA OP #18. Presentation and training to realtors at Realtor’s Association Meetings and/or write-up in realty association newsletters District Communications All SCC CRS Coordinators Silicon Valley Realtors Association Year-Round Insurance companies Lenders Brokers Alain Pinel Realtors and other realty companies SCC residents who access FEMA Map Service Center Silicon Valley Realtors Association All SFHA OP #19. Post training presentation on website (Element 352 WEB1) SFHA OP #20. Publicize FEMA’s Flood Map Service Center website District Communications All SCC CRS Coordinators Year-Round FEMA Realtors Lenders Brokers SCC residents who access FEMA Map Service Center All SFHA OP #21. Post link to FEMAs Flood Map Service Center on website https://msc.fema.gov/portal (Element 352 WEB1) Topics 3, 4, & 5 Message: Retrofit or elevate your home/building to reduce future flood damage. Contact your local planning department to determine what steps should be taken to protect your property. Contact Public Works CRS Coordinator to find out if grant assistance is available Increase in inquires on retrofitting measures. Decrease the number of repairs and elevations without permits. Increase number of repairs with permits SFHA OP #22. Annual letters mailed to repetitive loss properties and real estate agencies. The District’s FPM also includes a message regarding repairs or improvements greater than 50 percent of a structure’s value need to meet NFIP requirements and the message that special permits are required. District Communications All SCC CRS Coordinators Year-Round Real Estate Agencies All SCC residents who share message All City of San Jose City of Palo Alto City of Sunnyvale City of Morgan Hill Increase number of elevation certificates on file, and structures repaired with permits; decrease the number of repetitive loss Attachment #1 Page 31 of 32 Appendix A. The Multi-Jurisdictional PPI Worksheet for Santa Clara County 1 Message Topics: Outreach Projects (OP): Topic 1 – Know your flood hazard; Topic 2 – Insure your property for your flood hazard; Topic 3 – Protect people from the flood hazard; Topic 4 – Protect your property from the hazard; Topic 5 – Build responsibly; Topic 6 – Protect natural floodplain functions Flood Response Preparations (FRP): Topic 7 – Develop a Family Emergency Plan; Topic 8 – Download disaster electronic Apps; Topic 9 – Understand shallow flooding risks – “Don’t drive through standing water.” 2 Each September, all deliverables need to be reported to District for tracking purposes. 3 A stakeholder can be any agency, organization, or person (other than the community itself) that supports the message. Stakeholders can be: an insurance company that publishes a brochures on flood insurance, even if it is set out at City Hall; a local newspaper that publishes a flood or hurricane season supplement each year; FEMA, if, for example, a FEMA brochure is used as an informational material; schools that implement outreach activities; a local newspaper; a neighborhood or civic association that sponsors and hosts a presentation by a community employee; a utility company that includes pertinent articles in its monthly bills; or presentations made by state or FEMA staff at a Risk Map meeting. 30 of 30 Target Audience 1 Message Outcome Project(s) Proposed to Support the Messages Assignment 2 Proposed Schedule 3 Stakeholder CRS Community increase homes Messengers to Other Target Audiences (TA) Lenders, real estate agencies or boards, developers/contractors and appraisers all serve as a messenger to people who are at risk of flooding as they provide their respective business service. In addition, organizations or agencies that serve communities at risk for flooding include PG&E, the American Red Cross, and Community Emergency Response Teams (CERT), neighborhood associations, schools, churches, hospitals and museums. Topics 1, 2, 3, 4, 5, 6, 7, 8, & 9 Message: Know your flood risk and be prepared; buy flood insurance Educate our community on flood protection and preparedness measures TA OP #1. Have American Red Cross include the topic of flood protection in their presentations. Have engineers accompany American Red Cross to community meetings (2/city/year) American Red Cross District Communications All SCC CRS Coordinators Year-Round American Red Cross Neighborhood Associations Service Clubs (e.g. Notary, Kiwanas, etc.) Chamber of Commerce Silicon Valley Realtors Association American Red Cross Neighborhood Associations Service Clubs (e.g. Rotary, Kiwanas, etc.) Chamber of Commerce Silicon Valley Realtors Association Agents, lenders, and brokers All City of San Jose TA OP #2. Post presentations on website (Element 352 WEB1) All Sunnyvale Jose Palo Alto All City of Sunnyvale City of San Jose City of Palo Alto Topic 2: Insure your property for your flood hazard Message: Standard homeowner or commercial policies will not cover damage to structures or contents caused by natural flooding. Flood insurance is the only sure way to be reimbursed for some of your flood loses. A discount on your flood insurance premium is available. Flood insurance is also available for renters and commercial properties. There is a mandatory 30-day waiting period for flood insurance to become effective Increase the number of real estate agents who will advise their clients that they are interested in a home that’s in a floodplain area TA OP #3. Annual mailer targeted towards real estate agents, lenders, and brokers with this message District Communications All SCC CRS Coordinators Lenders Realtors Brokers All Message: A discount is available. Flood insurance is also available for renters and commercial properties. There is a mandatory 30-day waiting period for flood insurance to become effective TA OP #4. Post annual mailer targeted towards real estate agents, lenders, and brokers on website (Element 352 WEB1) All City of Sunnyvale City of San Jose TA OP #5. Include flood protection and preparedness messages in newsletters of organizations or agencies that serve communities at risk for flooding; District and City staff would draft messages for insertion into newsletters Topics 1, 2, 3, 4, 5, 6, 7, 8, & 9 Message: Know your flood risk and be prepared; buy flood insurance Improve SFHA disclosure during real estate process TA OP #6. Post newsletters on websites (Element 352 WEB1) District Communications All SCC CRS Coordinators Community Organizations All City of Sunnyvale City of San Jose City of Palo Alto Increase in number of policies in the SFHAs and in the county in general TA OP# 7. Speaker’s Bureau made-up of staff from CRS Communities presents at events organized by various community groups. The goal is for each CRS Community to speak at a minimum of 2 events per year or more. All Educate our community on flood protection and preparedness measures TA OP#8. Post Speaker’s Bureau presentations on website and/or share on social media. (Element 352 WEB1) References 1. Washington Multi-Jurisdictional PPI 2. Snohomish County, City of Monroe, City of Sultan Multi-Jurisdictional Program for Public Information 2013 3. Flood Futures Report Attachment #1 Page 32 of 32 CITY OF PALO ALTO OFFICE OF THE CITY CLERK June 8, 2015 The Honorable City Council Palo Alto, California Appointment of One Candidate to the Architectural Review Board for One Unexpired Term Ending December 15, 2017 On Monday, June 8, 2015 the Council will vote to appoint one Board Member to the Architectural Review Board for One Unexpired Term Ending December 15, 2017. Voting will be by paper ballot. The first candidate to receive at least five votes (required) will be appointed. 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 provided to Council Members directly. The Candidates are as follows: Peter Baltay Wynne Furth Kenneth Huo Flore Schmidt BACKGROUND The City Council is scheduled to interview four candidates for the Architectural Review Board on Thursday, June 4, 2015. 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) Attachment E: Public Letter to Council (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 | City Clerk's Office | 5/26/2015 7:55 AM Carnahan, David From:Neilson Buchanan <cnsbuchanan@yahoo.com> Sent:Saturday, May 23, 2015 3:01 PM To:Council, City Subject:June 4 Appointment of ARB Vacancy Dear City Council, I am writing to support Wynne Furth's appointment to the ARB. Over a year ago I was introduced to Wynne as DTN residents struggled for solutions for neighborhood quality and parking. Throughout the past months, Wynne has been one of the most thoughtful, reasoned advisors to me and other neighborhood leaders. She understands city government and the art of the possible. Her advice to me has always been practical and has kept me focused on long-term, systematic reform of various city policies. She understand public engagement. Most importantly, she will provide leadership for good solutions requiring analysis, compromise and a more timely decision making by city staff, ARB and Council. Thank you for considering Wynne. Neilson Buchanan 155 Bryant Street Palo Alto, CA 94301 650 329-0484 650 537-9611 cell cnsbuchanan@yahoo.com City of Palo Alto (ID # 5814) City Council Staff Report Report Type: Action Items Meeting Date: 6/8/2015 City of Palo Alto Page 1 Summary Title: Resolution Increasing Water Rates by 8% Title: PUBLIC HEARING: Staff Recommendation that the City Council Adopt a Resolution Amending Rate Schedules W-1 (General Residential Water Service), W-2 (Water Service from Fire Hydrants), W-3 (Fire Service Connections), W-4 (Residential Master-Metered and General Non-Residential Water Service), and W-7 (Non-Residential Irrigation Water Service) to Increase Average Water Rates by 8 Percent From: City Manager Lead Department: Utilities Recommendation Staff requests Council adopt a resolution (Attachment B) Amending Rate Schedules W-1 (General Residential Water Service), W-2 (Water Service from Fire Hydrants), W-3 (Fire Service Connections), W-4 (Residential Master-Metered and General Non-Residential Water Service), and W-7 (Non-Residential Irrigation Water Service) to increase average water rates by 8%. Executive Summary On April 7, 2015 the Finance Committee unanimously recommended approval of a 12% water rate increase. Subsequently, the California Court of Appeal published a decision providing additional guidance on constitutionally compliant water rate design. Staff asked Raftelis Financial Consultants, Inc. (RFC) to review the City’s water rate methodology and structure to ensure that each continued to equitably recover the City’s costs to provide water service. RFC examined and validated both the City’s methodology and rate structure, and recommended minor adjustments be made to the rates. The attached revised rate schedules incorporate those adjustments. In April, as required by the California Constitution, the City provided the public with notice of the originally proposed water rate increase prior to the June 8 public hearing at which Council will consider the rates. Increasing water rates by the 12% recommended by the Finance Committee, while also adjusting the residential tiers as recommended by the City’s consultant, would result in the Tier 1 residential rate exceeding the amount published in the public notices City of Palo Alto Page 2 sent in April. The Council may adopt rates equal to or lower than those in the published notice, but not higher. As a result, the revised rate schedules include an 8% water rate increase, rather than the 12% increase the Finance Committee recommended in April. Since an 8% rate increase is insufficient to recover costs, staff will return with a proposal for an additional 4% increase to become effective September 1, 2015. This second increase will require a separate, additional 45 day advance notification to customers prior to Council consideration. Background In the FY 2016 Water Utility Financial Plan staff projected the need for a 12% rate increase on July 1, 2015 and 8% rate increases each year through FY 2019. The primary driver for these increases is an increase in wholesale water rates. On April 7, 2015 the Finance Committee unanimously recommended approval of the FY 2016 Financial Plan and rate schedules to implement the 12% rate increase (Staff Report 5591). Staff mailed notices of the rate increase to all water utility customers, as required by Article XIIID of the California Constitution (added by Proposition 218 in 1996). In addition to requiring mailed notices of rate increases, Article XIII of the California Constitution also requires that water rates reflect the cost to serve customers. Since the City commissioned the 2012 water rate cost of service study, several California courts have issued published decisions providing additional guidance on constitutionally compliant water rate design. In light of this new jurisprudence and California’s ongoing drought, staff asked Raftelis Financial Consultants, Inc. (RFC) to review the City’s water rate methodology and structure to ensure that each continued to equitably recover the City’s costs to provide water service. Discussion The City’s current rates are based on the 2012 Palo Alto Water Cost of Service & Rate Study by RFC (Staff Report 2676). In designing the City’s water rate structure and the rate increase proposed for July 2015, the City has adhered to the overriding principle that all rates must be based on the cost to serve customers. After additional review, RFC concluded that the City’s rate setting methodology equitably reflected the cost to serve customers. Costs are allocated according to the cost of maintaining the distribution system capacity to serve each customer’s usage pattern. A certain amount of distribution capacity is required to serve year-round baseload customer consumption. Additional capacity is required to serve summer peak customer consumption, and the remaining capacity is required to provide emergency fire service during peak flow periods. Most of the cost of operating, maintaining, and replacing capacity associated with summer peak flows is allocated to customers whose usage patterns create the need for that capacity. Those customers are primarily residents with summer irrigation use, whose consumption falls into the second residential rate tier (rate schedule W-1, tier 2), as well as non-residential irrigation customers (rate schedule W-7). Customers with consumption in the first residential rate tier City of Palo Alto Page 3 (rate schedule W-1, tier 1) and other non-residential use (rate schedule W-4) do not contribute as much to the summer peak, and are therefore allocated less of the cost of operating and maintaining that additional capacity, though they are still allocated some of those costs. RFC examined and validated both the City’s methodology and rate structure, and recommended three adjustments be made to ensure continued equitable collection of the City’s costs to serve each customer class: First, RFC recommended updating the peaking factors for each customer group to reflect more recent (FY 2014) data. This resulted in a small shift in peaking costs away from the irrigation customer class. Second, RFC recommended that more peaking costs should be allocated to the Tier 1 residential rate based on its review of the most recent usage records available. When RFC analyzed Tier 1 annual consumption, they found that Tier 1 users contributed a small amount to the summer peak, and therefore the City should allocate a small portion of the peaking capacity to Tier 1. Third, RFC updated the model to more clearly show how peaking costs were allocated among customer classes and residential tiers based on supply, baseload delivery, and peak capacity components. These divisions were present in the original study, but not as clearly shown. RFC’s findings are detailed in a memo (Attachment A). Staff recommends incorporating RFC’s recommended cost of service-based adjustments into the July 1, 2015 rate change. As noted earlier, the City must provide notice to its customers before it adopts any rate changes. This is commonly referred to as a Prop 218 notice. The City may subsequently adopt rates lower those shown in the notice, but not higher. In April, prior to reviewing the cost of service methodology, the City provided notice of a rate increase of up to 12%. The proposed consumption charges included in the Prop 218 notice are shown in Column B of Table 1, below. To incorporate the recommended adjustment to the rate structure while still achieving a 12% increase in revenue, the City must increase the Tier 1 residential rate slightly and decrease the Tier 2 rate from the rates shown in the Prop 218 notice. This results in the Tier 1 residential rate exceeding the rate published in the notices, as shown in column C of Table 1. 8% is the maximum the Council may increase rates consistent with the cost of service methodology while keeping all rates within the limits published in the notice. As shown in Column D, an 8% increase (with the adjustments to the rate structure) results in a Tier 1 residential rate exactly equal to the Prop 218 notice, and all other rate schedules lower than the notice. City of Palo Alto Page 4 Table 1: Summary of Existing and Proposed Rates Rate Class Water Rates (A) (B) (C) (D) Existing Rates 12% Increase in Prop 218 Notice (without new cost of service alignment) 12% Increase with new cost of service alignment Recommended: 8% Increase with new cost of service alignment W-1 Res. (Tier 1) 4.99 5.70 5.93 5.70 W-1 Res. (Tier 2) 7.58 8.38 8.38 8.08 W-4 (Non-residential) 6.15 6.97 6.92 6.66 W-7 (Non-res Irrigation) 7.52 8.46 8.29 7.99 Staff recommends adopting an 8% increase effective July 1, 2015. An 8% increase will not adequately recover the water utility’s costs to provide service, so staff will return with a proposal for an additional 4% increase to become effective September 1, 2015. The City’s water rates are comprised of a commodity charge, based on a user’s consumption, and a monthly service charge. Tables 2 through 4 show the proposed rates and the percentage change in each rate component. While an 8% overall increase is proposed, individual rate components will change by different amounts. Most rate components are increasing by 8% to 9%, but because some additional peaking costs are being allocated to the first residential tier, the percentage increase for the first tier is higher than the increase for the second tier. Table 2: Water Commodity Charges (Current and Proposed) Current Rates (7/1/13) Proposed Rates (7/1/15) Change $/CCF % W-1 (Residential) Volumetric Rates ($/CCF) Tier 1 Rates 4.99 5.70 $0.71 14% Tier 2 Rates 7.58 8.08 $0.50 7% W-2 (Construction) Volumetric Rates ($/CCF) Uniform Rate 6.15 6.66 $0.51 8% W-4 (Commercial) Volumetric Rates ($/CCF) Uniform Rate 6.15 6.66 $0.51 8% W-7 (Irrigation) Volumetric Rates ($/CCF) Uniform Rate 7.52 7.99 $0.47 6% City of Palo Alto Page 5 Table 3: Current and Proposed Monthly Water Service Charge Meter Size Monthly Service Charge ($/month based on meter size) Change Current (7/1/13) Proposed (7/1/15) $/mo % 5/8” 14.67 15.54 0.87 6% 3/4” 19.51 20.88 1.37 7% 1” 29.18 31.58 2.40 8% 1 ½” 53.37 58.32 4.95 9% 2” 82.39 90.40 8.01 10% 3” 174.29 192.01 17.72 10% 4” 309.72 341.74 32.02 10% 6” 633.80 700.04 66.24 10% 8” 1,165.86 1,288.28 122.42 11% 10” 1,843.02 2,036.96 193.94 11% 12” 2,423.45 2,678.68 255.23 11% Table 4: Current and Proposed Monthly Fire Service Charges Meter Size Monthly Fire Service Charge ($/month based on meter size) Change Current (7/1/13) Proposed (7/1/15) $/mo % 2” 3.03 3.38 0.35 12% 4” 18.78 20.94 2.16 12% 6” 54.55 60.82 6.27 11% 8” 116.24 129.61 13.37 12% 10” 209.03 233.09 24.06 12% 12” 337.65 376.51 38.86 12% Bill Impact of Proposed Rate Changes Table 5 shows the impact of the proposed July 1, 2015 rate changes on the median residential bill. This comparison assumes that customers do not reduce their consumption. Historically, however, customers have looked for ways to conserve after their bills have increased, so not all customers will experience the same bill increase. The average increase is roughly 8%, but residential customers with low bills will see higher increases due to the allocation of peaking costs to the first tier discussed earlier. City of Palo Alto Page 6 Table 5: Impact of Proposed Water Rate Changes on Residential Bills Usage (CCF/month) Bill under Existing Rates Bill under Proposed Rates Change $/mo. % 4 34.63 38.34 3.71 11% (Winter median) 7 52.19 57.82 5.63 11% (Annual median) 9 67.35 73.98 6.63 10% (Summer median) 14 105.25 114.38 9.13 9% 25 188.63 203.26 14.63 8% Table 6 shows the impact of the proposed July 1, 2015 rate changes on various representative commercial customer bills. As with residents, this comparison assumes that customers do not decrease consumption. Table 6: Impact of Proposed Water Rate Changes on Commercial Bills Usage (CCF/month) Bill under Current Rates Bill under Proposed Rates Change $/mo. % Commercial (W-4) (5/8” meters) (Annual median) 12 88.47 95.46 6.99 8% (Annual average) 64 408.27 441.78 33.51 8% Irrigation (W-7) (1 ½” meters) (Winter median) 9 121 130 9 8% (Summer median) 37 332 354 22 7% (Winter average) 56 474 506 32 7% (Summer average) 199 1,550 1,648 98 6% Timeline If Council adopts the attached rate schedules, they will become effective July 1, 2015. Staff will return to the Utilities Advisory Commission and the Finance Committee for recommendations for an additional 4% increase in June. At the same time, drought rates will be proposed for consideration. If the Finance Committee recommends approval, staff will mail notification of the additional proposed rate increase and potential drought rates to customers as required by Proposition 218. The rate schedules will then go to the City Council for adoption in August, at which time a public hearing will be held. All residents and other interested persons may submit written or oral testimony at the hearing, and may also submit written protests to any or all of the proposed rate increases. Council may adopt the proposed rates unless written protests are filed by a majority of the affected customers. The rate increase would become effective September 1, 2015. Any drought rates, if approved, would be imposed by Council when required. City of Palo Alto Page 7 Resource Impact Normal year sales revenues for the Water Utility are projected to increase by roughly 8% ($3 million) as a result of these rate increases. A second 4% increase (if approved by Council at a later date) would increase normal year sales revenue by another $1.5 million. If this second rate increase is not adopted it will result in a decrease in reserves by $1.5 million, resulting in higher rate increases in future years. As discussed above, staff anticipates taking this 4% increase to the UAC and Finance Committee in June, issuing a Prop 218 notice in July, and taking rates to Council for adoption in August, which will result in an September 1, 2015 effective date. If the June Finance meeting is canceled, it may delay the 4% increase to November 1, 2015 or later, resulting in $400,000-500,000 in lost revenue for the water utility. Actual revenue will be lower in the short term because sales volumes are expected to be lower due to drought restrictions. The entire revenue increase will be offset by an increase in wholesale water supply costs, as discussed in the FY 2016 Water Utility Financial Plan. The Fiscal Year 2016 Proposed revenue budget for the water fund was developed in March and early April and assumed a 12% rate increase. Based on the changes described in this report, staff now recommends an 8% rate increase and plans to bring forth a 4% rate increase in fall. Due to these various factors which impact the Fiscal Year 2016 Water Fund revenue budget, staff expects to bring forth adjustments to the budget for City Council consideration as part of the Fiscal Year 2016 Midyear budget review report. Policy Implications The proposed rate adjustments are intended to ensure the City’s water rates conform to the requirements of the California Constitution. Environmental Review The Council’s adoption of the proposed rate adjustments is categorically exempt from the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8). (adoption of rates to meet operating expenses, purchase supplies, meet reserve needs and obtain capital improvement funds), thus, no environmental review is required. Attachments: Attachment A: May 20, 2015 Memo from Raftelis Financial Consultants titled "Proposed Water Rates" (DOCX) Attachment B: Resolution Amending Rate Schedules W-1, W-2, W-3, W-4, and W-7 (PDF) Attachment C: Rate Schedules W-1, W-2, W-3, W-4, and W-7 (PDF) 201 S. Lake Avenue Suite 301 Pasadena, CA 91101 Phone 626 . 583 . 1894 Fax 626 . 583 . 1411 www.raftelis.com Raftelis Financial Consultants Memorandum TO: Jon Abendschein, Senior Resource Planner FROM: Sudhir Pardiwala/Hannah Phan DATE: May 20, 2015 SUBJECT: Proposed Water Rates The City of Palo Alto (City) engaged Raftelis Financial Consultants, Inc. (RFC) to review the cost of service methodology and water rate structure described in our 2012 rate study1 to ensure its continued compliance with Proposition 218. This memo summarizes the methodology and development of the proposed water rate methodology and tiered rate structure. Proposed Water Rates The following subsections detail the methodology and calculation related to the proposed water rates for fiscal year (FY) 2016. Cost of Service Analysis Adjustments At the City’ request, RFC reviewed the cost of service analysis methodology used in its 2012 rate study, to ensure its continued compliance with Proposition 218’s substantive requirements for water rates. The methodology and rate structure described in the 2012 cost of service study remains fundamentally sound. Upon review, we have refined our analysis and recommend that the following adjustments be made to ensure that the rates proposed continue to equitably recover the City’s costs of providing water service: 1.RFC updated the customer class peaking factors using FY 2014 data. Peaking costs are one of the elements used to differentiate rates amongst different classes of customers. Different customers impose different demands on the system, and the portion of the costs related to peaking are applied proportionally to the peaking factors. As discussed below, peaking factors for the customer classes have shifted since the last study, and the new peaking factors should be reflected in the proposed rates. 2.RFC analyzed the usage characteristics for residential Tiers 1 and 2 usage in order to update the peaking-related costs to be allocated to each tier. The boundary between Tier 1 and Tier 2 use, 6 CCF, represents the median winter monthly usage for residential customers (winter is consider January through March). Analyzing winter usage is a common way to calculate indoor, year- 1 Palo Alto Water Cost of Service and Rate Study Report dated March 2012 ATTACHMENT A City of Palo Alto May 20, 2015 Page 2 round, base load use. Usage above this level typically is related to irrigation. As a result, the 2012 cost of service study did not allocate any peaking factors to Tier 1, because the customers with usage solely in that tier were presumed not to have a usage peak. Upon further study, RFC has determined that Tier 1 customers do have a small peaking factor that occurs as a result of their slightly higher summer use. As a result, RFC recommends refining the 2012 cost of service analysis to allocate a small share of peaking factor costs to Tier 1. This change will more equitably recover system design and operational costs associated with Tier 1 customers’ peak demands upon the system. 3. RFC adjusted the model to more clearly delineate the difference between base (delivery), peaking, and the cost of purchased water from San Francisco Public Utilities Commission (SFPUC). While this does not necessarily affect the cost allocation between customer classes, it does more clearly show the costs being allocated among customer classes and residential tiers. The adjustments were made to the model used to calculate the City’s existing rates, which has been updated to reflect FY 2016 budget requirements. Adjustment 1: Peaking Factors for Customer Classes Table 1 shows the peaking factors by customer class, based on the maximum month factors calculated from each customer class’ water usage in FY 2014, compared to the peaking factors used in the 2012 study. These were calculated using the same methodology as in the 2012 cost of service study. The primary differentiator of rates amongst different customer classes is based on the demand that they put on the system. This demand is expressed in terms of the maximum day and maximum hour factors. These are the demands expressed as a ratio of the maximum demand to the average demand for each customer class. For example, if the maximum demand for a customer class were 10,000 CCF per day, and the average annual demand were 5,000 CCF per day, the peaking ratio would be 2.0. Residential customers generally have higher peaking factors than commercial customers, and irrigation customers have the highest peaking factors. The max day factor for each customer class is based on the maximum month demands. The ratio of the max hour and max day for the whole system is used to estimate the max hour factor for each customer class. Since usage in the Construction – W2 class is intermittent and varies based on the construction activity in the City, customers in the Construction – W2 class are considered to be the same as the Commercial – W4 class for the purpose of calculating variable charges. These two classes are differentiated only in the fact that temporary hydrant meters are used for construction customers, while commercial customers have permanent services. City of Palo Alto May 20, 2015 Page 3 Table 1 Revised Peaking Factors by Customer Class The change to the peaking factors by customer class shifts the capacity or peaking-related costs among the customer classes, to equitably reflect their demands on the system and recover the City’s cost of providing service. The peaking factors for the W-4 customer class has remained the same (when normalized).2 The peaking factor for the W-1 customer class as a whole has also remained the same, though the peaking factors for the residential tiers have been adjusted as discussed below. The W-7 customer class peaking factor has changed. Adjustment 2: Peaking Factors for Residential Rate Tiers In order to equitably allocate the peaking related costs to residential Tiers 1 and 2, RFC analyzed the water usage per month per account for FY 2014. Since the maximum month usage for residential customers occurs in August, the August usage in each tier was compared with the average usage in each tier to determine the relative peaking factor for each tier. Table 2 shows the calculation of the peaking factor for each tier, representing the amount of extra capacity needed on the system to serve customers in that tier. The peaking factor for Tier 1 is 1.06 (i.e., the peak is 1.06 times the average or 6 percent above the average Tier 1 usage.) Similarly, the peak for Tier 2 is 69 percent above the average for Tier 2 usage. The delivery cost, or average cost of providing service, is recovered from the average component, and the peak cost recovered from the peak component. Based on the analysis, Tier 2 requires approximately 12 times (0.69/0.06) more peaking capacity than Tier 1. Conversely, in the 2012 study, no peaking cost was allocated to Tier 1, thus putting 100 percent of the peaking costs on Tier 2. 2 Normalization is done so that W-1 equals 2.0. This normalization is performed to make it easier to see differences between customer class peaking factors and how those peaking factors change over time. Using the normalized peaking factors results in the same cost allocation as would result if the non-normalized peaking factors were used. Customer Specific Peaking Factors 2012 Max Day (MD) 2012 Max Hour (MH) 2014 Max Day (MD) 2014 Max Hour (MH) Residential - W1 1.49 2.34 1.45 2.27 Master MFR/Commercial - W4 1.30 2.04 1.27 1.99 Irrigation - W7 2.25 3.53 1.81 2.84 Construction - W2 1.30 2.04 1.27 1.99 Customer Specific Peaking Factors 2012 MD Normalized 2012 MH Normalized 2014 MD Normalized 2014 MH Normalized Residential - W1 2.00 3.14 2.00 3.14 Master MFR/Commercial - W4 1.75 2.75 1.75 2.75 Irrigation - W7 3.00 4.71 2.50 3.92 Construction - W2 1.75 2.75 1.75 2.75 City of Palo Alto May 20, 2015 Page 4 Table 2 Peaking Factors for Tiers 1 and 2 Adjustment 3: Presentation of Underlying Rate Components These changes discussed above result in the calculated rates shown in Table 3 for FY 2016, assuming a 12 percent revenue increase. Each rate has three components: supply rate, delivery rate, and peaking rate. The supply rate represents the cost of purchased water from the SFPUC, which is applied to all customer classes and tiers equally since the City only has one source of water. Note that the supply rate component includes the fixed meter costs (about 2 percent of total costs) and losses (about 8 percent of purchased water). The delivery rate represents the City’s fixed costs of operating the water system to serve year-round base load consumption, excluding any peaking related costs. This component is also applied to all customer classes and tiers equally. The peaking rate represents the capacity related costs of the system necessary to serve peak load, and it differs per customer class and tier based on the calculated peaking factors for each customer class and tier, as shown in Tables 1 and 2. Table 4 shows the existing rates and how they underlying rate components were previously displayed. Table 3 Proposed FY 2016 Commodity Rate Peaking Factor Analysis for W1 Customers Max Month Usage Bills in Tier Usage per Bill Average Usage Peaking Factor Tier 1 - 0-6 CCF 73,173 13,124 5.58 5.27 1.06 Tier 2 - over 6 CCF 154,329 11,739 13.15 7.78 1.69 Customer Class Tier (ccf)Supply Rate ($/ccf) Delivery Rate ($/ccf) Peaking Rate ($/ccf)Rate ($/ccf) Residential - W1 Tier 1 6 $4.61 $1.10 $0.22 $5.93 Tier 2 over 6 $4.61 $1.10 $2.67 $8.38 Average Rate $3.87 $7.36 Master MFR/Commercial - W4 $4.61 $1.10 $1.21 $6.92 Irrigation - W7 $4.61 $1.10 $2.58 $8.29 Construction - W2 $4.61 $1.10 $1.21 $6.92 City of Palo Alto May 20, 2015 Page 5 Table 4 Existing Commodity Rate Components The proposed rates are shown in Table 5 for both an 8 percent and a 12 percent revenue increase. The monthly meter service charge includes customer service, metering, and billing charges as well as the costs associated with the service connection and a portion of the distribution system capacity. Fire service meter charges include costs associated with maintaining system capacity to serve firefighting flows for private fire meters. Customer Class Tier (ccf)Supply Rate ($/ccf) Delivery Rate ($/ccf) Peaking Rate ($/ccf)Rate ($/ccf) Residential - W1 Tier 1 6 $3.41 $1.58 $0.00 $4.99 Tier 2 over 6 $3.41 $1.58 $2.59 $7.58 Average Rate $6.41 Master MFR/Commercial - W4 $3.41 $1.58 $1.16 $6.15 Irrigation - W7 $3.41 $1.58 $2.53 $7.52 Construction - W2 $3.41 $1.58 $1.16 $6.15 City of Palo Alto May 20, 2015 Page 6 Table 5 Proposed FY 2016 Water Rates General Monthly Meter Service Charge Meter Size Existing Rates Updated COS Rates (8.2%) Updated COS Rates (12.1%) 5/8"$14.67 $15.54 $16.03 3/4"$19.51 $20.88 $21.50 1"$29.18 $31.58 $32.45 1 1/2"$53.37 $58.32 $59.83 2"$82.39 $90.40 $92.67 3"$174.29 $192.01 $196.70 4"$309.72 $341.74 $350.00 6"$633.80 $700.04 $716.82 8"$1,165.86 $1,288.28 $1,319.07 10"$1,843.02 $2,036.96 $2,085.57 12"$2,423.45 $2,678.68 $2,742.56 Monthly Fire Meter Service Charge Meter Size Existing Rates Updated COS Rates (8.2%) Updated COS Rates (12.1%) 2"$3.03 $3.38 $3.43 4"$18.78 $20.94 $21.22 6"$54.55 $60.82 $61.63 8"$116.24 $129.61 $131.34 10"$209.03 $233.09 $236.20 12"$337.65 $376.51 $381.52 Commodity Rate ($/ccf) Existing Rates Updated COS Rates (8.2%) Updated COS Rates (12.1%) Residential - W1 Tier 1 0 - 6 ccf $4.99 $5.70 $5.93 Tier 2 over 6 ccf $7.58 $8.08 $8.38 Master MFR/Commercial - W4 $6.15 $6.66 $6.92 Irrigation - W7 $7.52 $7.99 $8.29 Construction - W2 $6.15 $6.66 $6.92 Attachment B *NOT YET APPROVED * 150220 mf 6053253 1 Resolution No. _____ Resolution of the Council of the City of Palo Alto Adopting a Water Rate Increase and Amending Rate Schedules W-1 (General Residential Water Service), W-2 (Water Service from Fire Hydrants), W-3 (Fire Service Connections), W-4 (Residential Master-Metered and General Non-Residential Water Service), and W-7 (Non-Residential Irrigation Water Service) R E C I T A L S A. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the City of Palo Alto may by resolution adopt rules and regulations governing utility services, fees and charges. B. Pursuant to Article XIIID Sec. 6 of the California Constitution, on ________, 2015, the City of Palo Alto held a public hearing to consider all protests against the proposed water rate amendments. C. The total number of written protests presented by the close of the public hearing was less than fifty percent (50%) of the total number of customers and property owners subject to the proposed water rate amendments. The Council of the City of Palo Alto RESOLVES, as follows: SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-1 (General Residential Water Service) is hereby amended to read as attached and incorporated. Utility Rate Schedule W-1, as amended, shall become effective July 1, 2015. SECTION 2. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-2 (Water Service from Fire Hydrants) is hereby amended to read as attached and incorporated. Utility Rate Schedule W-2, as amended, shall become effective July 1, 2015. SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-3 (Fire Service Connections) is hereby amended to read as attached and incorporated. Utility Rate Schedule W-3, as amended, shall become effective July 1, 2015. SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-4 (Residential Master-Metered and General Non-Residential Water Service) is hereby amended to read as attached and incorporated. Utility Rate Schedule W-4, as amended, shall become effective July 1, 2015. SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-7 (Non-Residential Irrigation Water Service) is hereby amended to read as attached and incorporated. Utility Rate Schedule W-7, as amended, shall become effective July 1, 2015. *NOT YET APPROVED * 150220 mf 6053253 2 SECTION 6. The Council finds that the revenue derived from the adoption of this resolution shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. SECTION 7. The Council finds that the fees and charges adopted by this resolution are charges imposed for a specific government service or product provided directly to the payor that are not provided to those not charged, and do not exceed the reasonable costs to the City of providing the service or product. SECTION 8. The Council finds that the adoption of this resolution changing water rates to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ___________________________ ___________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ ___________________________ Senior Deputy City Attorney City Manager ___________________________ Director of Utilities ___________________________ Director of Administrative Services ATTACHMENT C City of Palo Alto MEMORANDUM TO: City Council DATE: June 4, 2015 SUBJECT: Additional Information Pertaining to the Fiscal Year 2016 Proposed Budget Recommendation to eliminate three positions as recommended by the Finance Committee During the Finance Committee budget wrap-up on May 26, 2015, the Finance Committee included a motion directing the City Manager to identify three General Fund funded positions for elimination reflecting the Committee's concerns with long-term employee pension and retiree healthcare costs. As outlined in the Fiscal Year 2016 Proposed Operating Budget, staff recommended adding net 7.3 Full- Time Equivalent (FTE) positions in comparison to the Fiscal Year 2015 Adopted Budget (13.3 FTEs in comparison to the Fiscal Year 2015 Adjusted Budget) in response to City Council priorities and library patrons' requests to extend library hours. It should be noted that during the last ten years, the City reduced approximately 49 FTEs or 7.5 percent in the General Fund while service demands increased. Staff recognizes and shares the Committee's concern regarding future pension and retiree healthcare costs and related unfunded liabilities. The Finance Committee will review projected pension and retiree healthcare costs and possible strategies for controlling these in September. Potential strategies include sharing future increases in pensio.n and retiree healthcare costs with employees, which will require negotiations with City bargaining groups; increasing pension and retiree healthcare contributions above the annual required contribution to reduce unfunded liabilities; as well as an organizational review to identify alternative service delivery strategies that could reduce required staffing levels for existing services including increased use of technology and alternative service delivery models. To facilitate the organizational review, the Finance Committee approved staffs recommendation in the Fiscal Year 2016 Proposed Budget for implementation of the priority based budgeting approach. As part of this approach, City departments are analyzed at a programmatic level to identify whether potential outsourcing and alternative service delivery model opportunities exist. These next steps, as outlined above, reflect a continuum of Council direction to address rising pension and healthcare costs in an effort to achieve a sustainable approach to employee benefits. During the past five years, the City has successfully reduced employee pension benefit formulas through a tiered structure, increased employee pension contribution amounts, and capped the City's contribution for medical insurance for most employee groups. In response to the Finance Committee's direction and an internal review of the existing positions and recommended position additions, staff recommends eliminating 2.0 FTEs which include 1.0 Code Enforcement -Lead and 1.0 Sr. Technologist and freezing 1.0 Community Service Officer (CSO) for Fiscal Year 2016, as discussed in more detail below. 1 Code Enforcement -Lead The Planning & Community Environment and Development Service Departments proposed the addition of 1.0 FTE Code Enforcement -Lead. This position would help prioritize the work of the 2.0 FTE Code Enforcement Officers and expand the amount of work that the code enforcement team could accomplish by 50 percent. With the expanded capabilities, the program would be able to respond aggressively to more citizen complaints in a timely manner and be able to enforce conditions of approval and Planned Community zoning ordinances. According to the Service Efforts and Accomplishments report submitted by the City Auditor's Office, the number of code enforcement cases has increased from 473 in Fiscal Vear 2005 to 609 in Fiscal Vear 2014, a 29 percent increase. The number of re-inspections has increased from 796 in Fiscal Vear 2005 to 1,398 in Fiscal Year 2014, a 77 percent increase. In the Fiscal Vear 2014 National Citizens Survey, only 60 percent of Palo Alto resident's ranked their satisfaction with the City's code enforcement program as "good or excellent." Senior Technologist The Police and Fire Departments, along with the Office of Emergency Services and the Information Technology Department proposed the addition of 1.0 FTE Senior Technologist position to become an expert in public safety technology and coordinate implementation, management, and maintenance of related technology projects. The position would supervise two Business Analysts; work with the Information Technology (IT) Department to manage the public safety technology infrastructure, systems/network, and applications; and assess public safety needs for business processes and technology solutions. As an alternative to immediately adding this new position, s~aff recommends conducting an expedited needs assessment (to be rnmpleted within 60 days) to determine if adding a new position is the most effective approach to meeting the public safety departments' information technology support needs. Staff recommends budgeting $183,000 (the cost of the position) in the IT Department as a place holder for possible contractual services or an additional position, depending upon the outcome of the study. Staff intends to return to the City Council with a recommendation by the end of the calendar year or sooner. Community Service Officer The Fiscal Year 2016 Proposed Revised Operating Budget includes 9.0 Community Service Officers (CSOs) FTEs in the Police Department. CSOs are responsible for enforcing the City's parking regulations, generating approximately $1.6 million in revenue annually. In 2011, Stanford University initiated reconstruction of the Stanford Medical Center, which reduced the number of publically available parking spaces traditionally enforced by the CSOs. As a result, the Police Department has not filled a vacant CSO position during the reconstruction period. As the Medical Center continues to come online, which should be mostly completed in 2017, additional public parking will become available and likely restore the need for parking enforcement in the area. During the construction period staff is committed to exploring opportunities for increased efficiency in parking enforcement through the use of new technology and route optimization. For Fiscal Year 2016, the budget includes funding to replace the current inventory of handheld parking citation devices with smartphones that have GPS and parking tracking applications. The GPS function may allow the Department to adjust parking beats to maximize efficiencies and may increase parking citation related revenue. Further, in Fiscal Year 2016, staff intends to evaluate other technologies, which may create additional efficiencies for CSOs and may result in budget recommendations for Fiscal Year 2017. Therefore, staff recommends freezing 1.0 FTE of the 9.0 CSOs FTEs, for Fiscal Year 2016. After exploring and possibly implementing various efficiency measures, staff will evaluate the appropriate staffing level 2 and whether the City needs to fill the vacant position when the Medical Center reconstruction project is completed. Based on these additional recommendations, staff is providing an updated position change table below. In comparison to the Fiscal Year 2015 Adopted Budget, the City's FTE position count is net increasing by 5.30 FTEs from 1,033.80 FTEs to 1,039.10 FTEs with 1.0 CSO FTE frozen. In comparison to the Fiscal Year 2015 Adjusted Budget, the increase is 11.30 FTEs, with 1.0 CSO FTE frozen. Fiscal Ye~r 2016 Proposed Operating Budget Position Ch,a_nges. ~y Fund Type General Enterprise Other Total Fund Funds Funds* Fiscal Vear 2015 Adopted Budget 588.58 358.34 86.88 1,033.80 Fiscal Year 2015 Approved Adjustments** 1.00 (5.75) (1.25) (6.00) Fiscal Year 2015 Modified Budget 589.58 352.59 85.63 1,027.80 I I Proposed Fiscal Year 2016 Increase 9.60 1.00 1.70 12.30 Proposed Fiscal Year 2016 Decrease (0.70) (0.30) -(1.00) Proposed Fiscal Year 2016 Reallocation (0.17) (2.20) 2.37 0.00 Fiscal Year 2016 Proposed Budget*** 598.31 351.09 89.70 1,039.10 •*other Funds i~~lude Internal Service Funds, Special Re~~nue Funds, and th~ Capital l~provement Fund · **.S_treet SVllE!eping Program positions tha_twere eliminated due to outsourcing were funded in Enterprise and Othe_r Funds, not just Enterprise Furids aspr(!viously rep()rted. ***Gene,~alFund includes 1.0_FTE CSO frozen for Fiscal Year 2()16pef1ding the ~valuation of the ri7ed for the p()sition . . Note: Thistable doe,s n()t include Hourly positions 3 City of Palo Alto (ID # 5813) City Council Staff Report Report Type: Action Items Meeting Date: 6/8/2015 City of Palo Alto Page 1 Council Priority: City Finances Summary Title: Fiscal Year 2016 Budget Adoption Title: PUBLIC HEARING AND PROPOSITION 218 HEARING: Adoption of Budget Amendment Ordinance for Fiscal Year 2016, including Adoption of Operating and Capital Budgets and Municipal Fee Schedule; Adoption of five Resolutions, including: Adopting a Dark Fiber Rate Increase of 2.7 Percent and Amending Utility Rate Schedules EDF-1 and EDF-2; Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage) to Increase Storm Drain Rates by 2.7 Percent Per Month Per Equivalent Residential Unit for Fiscal Year 2016; Adopting a Wastewater Collection Fee Increase of 9.0 Percent and Amending Utility Rate Schedules S-1, S-2, S-6, and S-7; Adopting Residential Refuse Rate increases ranging between 9.0 percent and 19.0 percent, and Amending Utility Rules and Regulations 2, 3, 11, and 24; Amending the Salary Schedule attached to the 2014-2016 Compensation Plan for Management and Professional Employees, as Amended by Resolution No. 9053 to Add One New Position and Change The Title of Two Positions; Amending the 2013-15 Memorandum of Agreement Service Employees International Union (SEIU), Adopted by Resolution No 9398 to Add One Position and Correct the Salary of One Position; and Amending the Terms for the Utility Management Professional Association, as Amended by Resolution Nos. 9492 & 9503 to Correct the Salary for One Position and Add Two New Positions; and Refer to the Finance Committee a discussion of changes to the Public Art Ordinance to simplify the calculation of the Public Art Fee and a discussion of usage and replacement of pool vehicles. From: City Manager Lead Department: Administrative Services Recommendation Staff and the Finance Committee recommend that Council approve the following: City of Palo Alto Page 2 A. Budget Amendment Ordinance (Attachment A), which includes: 1. Exhibit 1: the City Manager’s Fiscal Year 2016 Proposed Operating and Capital Budget, previously distributed at the April 27th Council meeting 2. Exhibit 2: Amendments to the City Manager’s Fiscal Year 2016 Proposed Operating and Capital Budget 3. Exhibit 3: Revised City Table of Organization 4. Exhibit 4: Fiscal Year 2016 Proposed Municipal Fee Changes B. Resolution of the Council of the City of Palo Alto Adopting a Dark Fiber Rate Increase of 2.7 Percent and Amending Utility Rate Schedules EDF-1 and EDF-2 (Attachment B) C. Resolution of the Council of the City of Palo Alto Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage) to Increase Storm Drain Rates by 2.7 Percent Per Month Per Equivalent Residential Unit for Fiscal Year 2015 (Attachment C) D. Resolution of the Council of the City of Palo Alto Adopting a Wastewater Collection Rate Increase of 9.0 Percent and Amending Utility Rate Schedules S-1, S-2, S-6 and S-7 (Attachment D) E. Resolution of the Council of the City of Palo Alto Adopting a Refuse Rate Increase of 9.0 Percent and Amending Utility Rate Schedule R-1 (Attachment E) F. Resolution of the Council of the City of Palo Alto Amending Salary Schedules for the Management, Professional, and Confidential Unit, the Utilities Managers of Palo Alto Professional Association, and the Service Employees International Union (Attachment F) 1. Exhibit 1: Amended Salary Schedule for the Management, Professional, and Confidential Unit 2. Exhibit 2: Amended Salary Schedule for the Utilities Managers of Palo Alto Professional Association 3. Exhibit 3: Amended Salary Schedule for the Service Employees International Union G. Refer to the Finance Committee a discussion of changes to the Public Art Ordinance to simplify the calculation of the Public Art Fee and a discussion of usage and replacement of pool vehicles. Executive Summary In April 2015, the Finance Committee reviewed and recommended for approval to the City Council various utility rate changes. In May, the Finance Committee reviewed and recommended the Fiscal Year 2016 Proposed Operating and Capital budgets, as revised, for approval to the City Council and reviewed changes to the Municipal Fee schedule. The attached documents outline the amendments to the City Manager’s Fiscal Year 2016 Operating and Capital Proposed Budgets, utility rate changes, municipal fee schedule, and amendments to various employee compensation plans to align these plans to recommended budget proposals. As part of the approval of the Fiscal Year 2016 Proposed Operating budget, as recommended to the Council, the Finance Committee included a motion asking the City Manager to identify three General Fund funded positions for elimination. Staff will provide the Council with a recommendation of three position eliminations via a memorandum to be distributed next City of Palo Alto Page 3 week. Background In April 2015, the Finance Committee reviewed and recommended for approval to the City Council the various utility rate changes and staff proceeded with the Proposition 218 process, as applicable, which includes informing rate payers of the proposed rate changes. The City Manager’s Fiscal Year 2016 Proposed Operating Budget and the Fiscal Year 2016 Proposed Capital Budget were submitted to City Council on April 27, 2015. During the month of May, the Finance Committee held hearings and reviewed the Proposed Budget, including the General Fund, Enterprise Funds, Internal Service Funds, Capital Improvement Programs, and the Municipal Fee Schedule. A total of five public hearings were held on May 5, 7, 12, 14, and 26 during which the Committee reviewed and discussed the City’s operating and capital expenditures for the next year. As a result of the hearings, the Finance Committee and staff has recommended changes to the Fiscal Year 2016 Proposed Budget, as discussed below. Detail for these transactions is listed in the Amendments to the City Manager’s Fiscal Year 2016 Proposed Operating and Capital Budget (Attachment A, Exhibit 2). Discussion This staff report focuses primarily on the budgetary changes recommended by the Finance Committee and staff during the public hearing process that followed the submission of the original proposed budget. Certain key non-financial changes are also highlighted in this report. The budget wrap memorandum (Appendix 1), which was distributed on May 21st to the Finance Committee for the May 26th meeting summarizes budgetary changes recommended by the Finance Committee. Adjustments to Date This section summarizes actions approved by the Finance Committee on May 26th. Detail in this section is organized by fund and then by department. A summary of full-time equivalent (FTE) position changes is presented following the fund detail. As part of the approval of the Fiscal Year 2016 Proposed Operating budget, as recommended to the Council, the Finance Committee included a motion asking the City Manager to identify three General Fund funded positions for elimination. Staff will provide the Council with a recommendation of three position eliminations via a memorandum to be distributed next week. General Fund The Fiscal Year 2016 Proposed Budget presented to City Council on April 27th reflected a balanced budget. Changes approved by the Finance Committee resulted in a net budget surplus of $460,000. This increases the projected Budget Stabilization Reserve (BSR) balance from $34.250 million to $34.71 million, or 18.7 percent of the revised Proposed Budget of $185.6 City of Palo Alto Page 4 million. The City’s adopted reserve policy stipulates that a reserve range of 15-20 percent of General Fund operating expenditures, with a target of 18.5 percent, shall be maintained. The BSR balance of $34.71 million exceeds the 18.5 percent target by $368,000. It should be noted that savings generated from potential elimination of three additional positions would further increase the Budget Stabilization Reserve (BSR). Date Dept Description Expenses Revenues Net Proposed Budget - BSR Change $0 $0 $0 Actions Proposed by Finance Committee 5/5 COU Council meals for extra meetings funding increase $5 ($5) 5/26 CSD Special event funding increase 50 (50) 5/26 SUS Office of Sustainability consultant funding reduction (190)190 5/26 PCE/DS 1.0 Code Enforcement Lead elimination (120)120 Subtotal - Actions Proposed by Finance Committee ($255)$0 $255 Actions Proposed by Staff 5/14 PWD San Franscisquito Creek JPA $27 $27 - 5/26 POL/FIR Reallocate Police Chief from Fire - Stanford Revenue Impact (50)($50) 5/26 IT/Safety Move Senior Technologist for Public Safety to IT 0 0 5/26 PWD Urban Forest Study 122 (122) 5/26 CMO Palo Alto Animal Services Transition Funding 250 (250) 5/26 NON Additional Infrastructure transfer (alignment w/ TOT revenue)325 (325) 5/26 NON Revised Property Tax projection 525 525 5/26 Various FY 2015 budget surplus to offset Council meals, Stanford revenue - revenue impact, Urban Forest Study, & PAAS transition 427 427 Subtotal - Actions Proposed by Staff $724 $929 205 Revised Proposed Fiscal Year 2016 Budget Surplus $469 $929 $460 Council reviewed and approved the Fiscal Year 2015 Midyear Budget on April 20, 2015. The Fiscal Year 2015 midyear budget includes a $5.3 million contribution to the BSR. Based on updated information, staff projects a Fiscal Year 2015 General Fund surplus of approximately $8 million, which includes projected salary savings of $2.0 million, additional Documentary Transfer Tax of $3.3 million, forthcoming recommendations in June to set aside $1.0 million for the Palo Alto History Museum and fund $1.0 million for the Silicon Valley Regional Interoperability Authority (SVRIA) Radio Replacement. Including the Finance Committee’s approved changes to the Proposed Budget, the revised Fiscal Year 2016 Proposed Budget assumes that $2.1 million in one-time items will be funded with the Fiscal Year 2015 Budget Surplus carry forward. The Fiscal Year 2016 Proposed Budget projected a BSR ending balance of $34.25 million or 18.5 percent of the General Fund Proposed Operating Budget of $185.1 million. As outlined in the previous table, Finance Committee and staff recommended changes result in a budgetary surplus of $460,000 and an increased BSR projected ending balance of $34.71 million. City of Palo Alto Page 5 Fiscal Year 2016 Revised Proposed Budget – Position Changes During the Finance Committee hearings, the Finance Committee raised concern regarding the total city-wide position additions in the Fiscal Year 2016 Proposed budget of 13.3 Full Time Equivalents (FTEs) and its impact on long-term pension and retiree healthcare unfunded liabilities. The Finance Committee recommends not moving forward with the proposal to add 1 FTE Code Enforcement Officer – Lead. Parallel with that recommendation, as part of the approval of the Fiscal Year 2016 Proposed Operating budget, as recommended to the Council, the Finance Committee included a motion asking the City Manager to identify three General Fund funded positions for elimination. Staff will provide the Council with a recommendation of three position eliminations via a memorandum to be distributed next week, which may include the elimination of the 1.0 FTE Code Enforcement Officer – Lead position. In addition to eliminating the proposed addition of the Code Enforcement Officer - Lead from the budget, the Finance Committee approved staff’s recommendation to reallocate of 0.5 FTE Police Chief from the Fire Department to the Police Department, and the reallocation of 1.0 FTE Senior Technologist from the Police and Fire Departments to the Technology Department. The table below groups the recommended position additions by category – Council Priority/Initiative, Enhancing Existing Services, and Enhancing Operational Efficiencies. It is important to note that some position additions may be included in more than one category. 12.30 FTE TOTAL Positions Fund Department Council Priority/ Initiatives Enhancing Existing Services Enhancing Operational Efficiencies FTE En t e r p r i s e , C a p i t a l , In t e r n a l S e r v i c e , a n d Sp e c i a l F u n d s Positions Engineer Capital Fund Public Works X 0.90 Airport Operations Manager Enterprise Funds Public Works X X 1.00 Facility Manager Capital Fund Public Works X 0.10 Enterprise Funds Utilities -0.30 Parking Operations Lead Parking Funds Planning & Community Environment X X 0.70 Technology Fund Information Technology X 1.00 3.40 Assistant Chief Building Official General Fund Development Services X X 1.00 General Fund Development Services -0.70 Planning Manager General Fund Development Services X X 1.00 1.30 General Fund Auditor's Office X 0.50 Library Positions (Multiple)General Fund Library X 3.30 General Fund Community Services X X X 1.50 General Fund Planning & Community Environment X X 0.30 General Fund Planning & Community Environment X X 1.00 General Fund Public Works X 0.90 General Fund Public Works X 0.10 7.60 Ge n e r a l F u n d En t e r p r i s e , C a p i t a l , In t e r n a l S e r v i c e , a n d Sp e c i a l F u n d s De d i c a t e d Re v e n u e Green Building Planner Engineer Senior Technologist Performance Auditor Traffic Operations Parking Operations Lead Green Building Planner Recreation and Arts Staffing Facility Manager Engineer Finance Committee Recommended Changes to the City Manager’s Proposed Budget Council Meals for Extra Meetings, $5,000 budget increase (offset with Fiscal Year 2015 Budget City of Palo Alto Page 6 Surplus) On May 5th, the Finance Committee tentatively approved a recommendation to the City Council to increase the City Council budget for meals by $5,000 due to the increased number of meetings compared to previous years. This additional expense will be offset by Fiscal Year 2015 Budget Surplus. Citywide Special Event Funding, $50,000 budget increase At the May 26, 2015 Finance Committee meeting, the Committee approved a recommendation to the City Council to add an additional $50,000 to the Community Services Department Budget for citywide special events. With the City Manager’s proposal of $35,000 for special events funding as identified in the Fiscal Year 2016 Proposed Operating Budget, funding for special events is proposed to increase by $85,000 from $82,000 to $167,000. The City currently produces nine annual special events which include the Moonlight Run, Senior Bash, Mayor’s State of the City, and Holiday Tree lighting. In Fiscal Year 2015, five one-time special events have been produced by the City and include the Mitchell Park Library and Community Center Grand Opening, Hackathon, and Our Palo Alto events. Further, the Community Services Department produces approximately seventeen program specific events that include the Senior Services Summit, Clay Glass Festival, Bridal Faire, and Summer Camp Registration Faire. With this additional funding, the number of special events and program special events will increase in Fiscal Year 2016. Office of Sustainability Consultant Funding, $190,000 budget decrease At the May 26, 2015 Finance Committee meeting, the Committee approved a recommendation to the City Council to eliminate the proposed increase in the Office of Sustainability’s consultant budget. The elimination of this funding will result in a $190,000 benefit to the General Fund. Code Enforcement Officer – Lead, $120,000 budget decrease At the May 26, 2015 Finance Committee meeting, the Committee initiated a proposal to eliminate the proposed addition of the Code Enforcement Officer – Lead position. The funding for the position would have been split 0.2 FTE in Development Services ($22,925) and 0.8 FTE in Planning & Community Environment Depart ($97,075). The elimination of this position will result in a $120,000 benefit to the General Fund. Staff Recommended Changes to the City Manager’s Proposed Budget San Francisquito Creek JPA Budget, $27,000 (offset with Fiscal Year 2015 Budget Surplus) The Board of Directors of the San Francisquito Creek Joint Powers Authority (JPA) approved the JPA’s Fiscal Year 2016 operating budget on Thursday, April 23rd. The Fiscal Year 2016 budget increased the annual member agency contribution by $27,000, from $118,000 to $145,000, in order to allow the JPA to hire an additional staff person. Therefore, staff recommends increasing the annual JPA contribution which is funded in the Public Works Department’s General Fund budget, by $27,000 to cover the additional cost. The increased expense is recommended to be funded via increased Fiscal Year 2015 budget surplus carry-forward funds. City of Palo Alto Page 7 Police and Fire Department, net $50,200 budget impact During recruitment for a new Fire Chief in Fiscal Year 2013, the Full-Time Equivalent (FTE) for the Police Chief was evenly split between the Police Department and the Fire Department. The Fire Chief was hired in November 2012. Staff proposes to fully allocate the Police Chief position to the Police Department. This change results in a 0.5 FTE shift, or $165,710, from the Fire Department to the Police Department. As a result of this shift, $50,200, or 30.3 percent of the cost for this position, will no longer be reimbursed by Stanford University as part of the Fire Services agreement between the City and the University. The Fiscal Year 2016 Adopted Budget will show the Fire, Police, and Office of Emergency as separate departments versus one umbrella public safety department. Senior Technologist for Public Safety, net zero budget impact At the May 26, 2015 Finance Committee meeting, per the City Manger’s request, the Committee moved the proposed Senior Technologist position from the General Fund (split between Fire and Police Departments) into the Technology Fund. This adjustment results in a salary and benefits decrease of $183,000 in the General Fund, and adds a corresponding increase in allocated charges expense in the Fire and Police Departments. Urban Forest Study, $122,000 budget increase (offset with Fiscal Year 2015 Budget Surplus) On May 11, 2015 staff brought the Urban Forest Master Plan to City Council for adoption. Due to the timing of the City Council’s consideration of the plan, funding was not included in the 2016 Proposed Operating Budget for the first year of the plan ($122,000). At the May 26, 2015 Finance Committee Meeting, the Committee recommended the addition of one-time funding for the first year costs of this plan based on the City Council’s adoption of the plan offset with Fiscal Year 2015 budget surplus funds. Funding in the amount of $78,000 will support hiring of hourly and contract staffing to supplement current staffing levels to allow permanent staff to focus on programmatic elements of the plan such as investigation of reasons for less canopy in south Palo Alto and to develop strategies to address this; coordination with nearby jurisdictions and agencies regarding trees within the El Camino Real Corridor; and tree permitting and regulations for Private Development. Contract dollars in the amount of $44,000 will fund a contract with Canopy to develop an on-line tree library, outreach materials and staff training. Palo Alto Animal Services Transitional Funding, $250,000 budget increase (offset with Fiscal Year 2015 Budget Surplus) Staff recommends continuing operation of an animal shelter in Palo Alto and retaining the Animal Control Officer (ACOs) functions. Staff also recommends that the City seeks out a non- profit partner to operate the shelter. As discussed with the committee on April 22, 2015, in order to transition to an alternative service delivery model for the shelter, staff recommends allocating approximately $250,000 in one-time transition costs in Fiscal Year 2016, offset by a projected Fiscal Year 2015 Budget Surplus carry-forward amount. At the May 26, 2015 Finance Committee, the committee moved approval, subject to regular reporting on the status of the City of Palo Alto Page 8 shelter operation, use of consultants, and eventual transition to non-profit partner running the facility. Additional Infrastructure Funding from Transient Occupancy Tax (TOT), $325,000 revenue increase The Fiscal Year 2016 Proposed Budget transfers $18.7 million from the General Fund to infrastructure. Of this transfer $5.0 million is attributed to the 2 percent TOT tax increase and new hotels to be opened during the fiscal year. Staff has reviewed the total amount for TOT tied to the 2 percent TOT tax increase and new hotels. The estimated TOT receipts related to these two sources is $5.3 million. Therefore, staff proposes an increase to the transfer to infrastructure by $0.325 million, bringing the total transfer to $5.325 million. Property Tax Revenue Estimate Increase, $525,000 revenue increase As reported in the City Manager Monthly Report for May 2015, in a onetime windfall, the City’s General Fund recently received $3.3 million in documentary transfer taxes for Fiscal Year 2015 as a result of the sale of several major and high quality commercial property assets. These included facilities purchased along El Camino Real (Palo Alto Square), Page Mill Road, Porter Drive, and Hillview and Miranda Avenues. The purchaser was Hudson Pacific Properties which acquired other properties up and down the Peninsula. Due to these property transfers as well as updated information from the County Assessor’s Office, staff recommends increasing the Property Tax estimate by $0.525 million, from $34.542 million to $35.067 million. Infrastructure/Capital Fund At the May 26, 2015 Finance Committee meeting, the Committee requested additional information regarding the Highway 101 Pedestrian/Bicycle Overpass Project (PE-11011). Specifically, the Committee was interested in seeing a breakdown of the total project cost by phase, with the City salary and benefit costs shown separately rather than combined, as shown in the Proposed Capital Budget document. Additionally, the Finance Committee was concerned that the construction cost of the project had increased from the $8,000,000 figure that had previously been discussed with the City Council. A breakdown of the current cost estimates for this project is included below, and shows that the cost estimate for the project included in the budget document remains predicated upon an $8,000,000 estimate for construction. Additionally, the total cost of $11.9 million in the budget document includes a feasibility study ($280,000), design costs ($2.7 million), and City staff time to support the construction of the project ($919,000). Although the feasibility study cost of $280,000 is included below in the costs for the project, it has not been part of the estimated project costs that have been presented to Council. The costs for the feasibility study preceded Council’s direction to proceed with design of the project. Per Council direction at the March 16, 2015 meeting at which the Council selected the Moffatt & Nichol team’s design for a low- profile signature bridge, staff is currently evaluating the constructability and likely project costs for the Moffatt & Nichol team design. This evaluation may result in increases to the current project cost estimates provided below, particularly related to requirements such as right-of- City of Palo Alto Page 9 way transfers, environmental treatments, and stakeholder outreach. Any such increases will be discussed with the Council at the appropriate milestones, including when a design contract is brought to the Council for its consideration. Phase Consultant and Contractor Costs City Salary and Benefit Costs Total Feasibility Study $110,981 $168,527 $279,508 Design $2,109,899 $637,018 $2,746,917 Construction $8,000,000 $919,173 $8,919,173 Total $10,220,880 $1,724,718 $11,945,598 Staff Recommended Changes to the City Manager’s Proposed Capital Budget Infrastructure Plan The Proposed Capital Budget included Fiscal Year 2015 Expenditure Estimates for the New Public Safety Building Project, Fire Station 3 Replacement, and New Downtown Parking Garage projects. These expenditure estimates were based on the assumption that staff would bring a recommendation to the City Council in spring 2015 to establish these projects and appropriate funds for design and site selection work through the budget amendment ordinance process. The funding source for these initial appropriations would have been the infrastructure reserve. Due to a number of factors, including timing constraints, staff did not bring forward these recommendations for City Council approval and the funding remained in the infrastructure reserve and will be carried forward to Fiscal Year 2016. The design work and site selection work will still be required, and is now anticipated to commence early in Fiscal Year 2016. Therefore, staff recommended revising the budgets for the following projects in Fiscal Year 2016 as follows: New Public Safety Building: Increase Fiscal Year 2016 budget by $100,000, offset by a reduction to the Infrastructure Reserve Fire Station 3 Replacement: Increase Fiscal Year 2016 budget by $700,000, offset by a reduction to the Infrastructure Reserve New Downtown Parking Garage: Increase Fiscal Year 2016 budget by $400,000, offset by a Transfer from the Downtown Parking In-Lieu Fund. In the Downtown Parking In- Lieu Fund, a corresponding action to establish a Transfer to the Capital Improvement Fund is recommended offset by a reduction to the Ending Fund Balance. The recommended project adjustments were approved on May 26, 2015 by the Finance Committee for inclusion in the Proposed Capital Budget. City of Palo Alto Page 10 These actions will have no impact to the Infrastructure Reserve levels assumed in the Proposed Capital Budget as these expenditures were assumed to occur in Fiscal Year 2015 and are now simply being moved to Fiscal Year 2016 Reappropriations As described in the Proposed Capital Budget document and discussed during the Finance Committee Budget Hearings, the City Council-approved change in the method for accounting for capital budget reappropriations is included in the 2016-2020 Proposed Capital Budget Improvement Program (CIP). Previously, any unspent capital funds were carried forward from one fiscal year to the next automatically, as long as the project was active. As a result of an October 2014 change to the Municipal Code, City Council authorization is now required for reappropriations. The Proposed Capital Budget included approximately $43 million in reappropriated funds, across all city funds. In the time between the development of the Proposed Budget figures (late winter and early spring of 2015) and the April 2015 release of the document, departments have re-reviewed current year estimates and the reappropriation amounts built into the proposed CIP. In some instances, additional reappropriations were recommended, as project expenditures originally anticipated to occur before the end of Fiscal Year 2015 will now likely occur in Fiscal Year 2016. Additionally, some expenditures not anticipated to occur until Fiscal Year 2016 and therefore reappropriated in the budget document to Fiscal Year 2016 have been realized in Fiscal Year 2015, requiring downward adjustments for Fiscal Year 2016. Cumulatively, this re-review of projects has resulted in staff’s recommendation to increase the Fiscal Year 2016 Proposed Budget by a net total of $8.3 million, from $115.1 million to $123.4 million, and are recommended in the following funds: Fund Recommended Fiscal Year 2016 Funding Adjustment Capital Improvement Fund $5,380,541 Storm Drainage Fund $3,165,216 Vehicle Replacement and Maintenance Fund $(431,059) Electric Fund $168,006 Total All Funds $8,282,704 These adjustments, as outlined in detail in Attachment A, Exhibit 2, will ensure that funds are available at the onset of Fiscal Year 2016 for projects that have experienced delays in the current year and will reduce the Fiscal Year 2016 Proposed budget for projects that experienced higher than anticipated expenditure levels within Fiscal Year 2015. City of Palo Alto Page 11 Internal Service Funds Finance Recommended Changes to the City Manager’s Proposed Budget Vehicle Replacement – Pool Cars, $60,000 budget decrease May 26, 2015 Finance Committee recommended approval of the Vehicle Replacement Fund capital budget with the exception of the proposed 2016 replacement of two sedans, used in the City’s vehicle pool, from the Scheduled Vehicle and Equipment Replacement – Fiscal Year 2016 project (VR-16000). The net result of this reduction is a $60,000 benefit to the Vehicle Replacement Reserve, as the estimated replacement cost for each of the sedans is $30,000. The Committee recommended that staff return to the Finance Committee with a discussion of the usage and replacement of pool cars. Table of Organization Amended pages to the Fiscal Year 2016 Table of Organization is included with this report (see Attachment A, Exhibit 3). The table has been revised to reflect the staffing changes presented in this report. Changes reflected in the Table of Organization will be incorporated into the relevant department organization charts and the revised organization charts will be published in the adopted budget. The changes are as follows: • Reallocate 0.5 FTE Police Chief to the Police Department from the Fire Department, $165,710 budget reallocation from the Fire Department to the Police Department, resulting in a $50,200 revenue decrease from the Stanford Fire Services contract. • Reallocate 1.0 FTE Senior Technologist position from the General Fund (0.5 FTE in Fire and 0.5 FTE Police), and into the Technology Fund. This action results in a $183,000 salary and benefit decrease in the General Fund, and adds a corresponding increase in allocated charges expense in the Fire and Police Departments. • Eliminate the proposal to add 1.0 FTE Code Enforcement Officer – Lead, split between the Development Services Department, 0.2 FTE, $24,000, and 0.8 FTE in Planning, $96,000, for a total expenditure reduction of $120,000 in the General Fund Compared to the Fiscal Year 2015 Adopted Budget, the Proposed Budget presented has a net 6.30 FTE increase. However, in comparison to the Fiscal Year 2015 Modified Budget, the net increase is 12.30 FTEs. Below is a summary by fund of these changes. It is important to note that this table does not include any additional position reductions as recommended by the Finance Committee. Staff will provide the Council with a recommendation of the total three position eliminations, which may include the elimination of the Finance Committee recommended 1.0 Code Enforcement – Lead position via a memorandum to be distributed the week of June 1st. City of Palo Alto Page 12 General Fund Enterprise Funds Other Funds*Total Fiscal Year 2015 Adopted Budget 588.58 358.34 86.88 1,033.80 Fiscal Year 2015 Approved Adjustments 1.00 (7.00) - (6.00) Fiscal Year 2015 Modified Budget 589.58 351.34 86.88 1,027.80 Fiscal Year 2016 Proposed Increase 9.60 1.00 2.70 13.30 Fiscal Year 2016 Proposed Decrease (0.70) (0.30) - (1.00) Fiscal Year 2016 Proposed Reallocation (0.13) (2.19) 2.32 0.00 Fiscal Year 2016 Proposed Budget 598.35 349.85 91.90 1,040.10 *Other Funds include Internal Service Funds, Special Revenue Funds, and the Capital Improvement Fund Note: This table does not include Hourly positions Municipal Fee Schedule On May 14th, the Finance Committee recommended that the Council adopt the changes to the Fiscal Year 2016 Proposed Municipal Fee Schedule with amendments (Attachment A, Exhibit 4). Major changes made to the Fiscal Year 2016 Proposed Municipal Fee Schedule include a 3.6 percent fee increase for average salary and benefits, and adjustments to achieve cost recovery in the Administrative Services, Development Services, Police, Fire, and Public Works departments; facility rental increases in the Community Services Department; and adjustments to Planning and Community Environment Impact Fees in accordance with Municipal Codes. Additionally, as detailed in the attached City Manager’s Report, the Finance Committee approved eleven new fees; 89 fees adjusted either (1) by a factor greater than 3.6% to attain a cost higher recovery level consistent with other fees, (2) lowered to align to a 100% cost recovery level, (3) increased based on a market study, or (4) technical adjustments to a fee (as listed in Attachment A, Exhibit 4); and deleted eleven fees. Public Art Fee The Public Art Fee requirement was established by the City Council in 2013 and required developers to construct or install on-site public art valued at 1 percent of the first $100 million construction valuation, adjusted annually by increases in the Consumer Price Index for all urban consumers, and 0.9 percent of construction valuation for valuation in excess of $100 million. For Fiscal Year 2015, adjusting by the Consumer Price Index for all urban consumers, the 1 percent Public Art Fee applies to the first $102,200,000 in construction valuation and 0.9 percent of construction valuation in excess of this amount. For Fiscal Year 2016, based upon the Fiscal Year 2015 revised calculation, adjusting by the Consumer Price Index for all urban consumers, as directed by the Municipal Code, the requirement for Fiscal Year 2016 is 1 percent of the first $105,102,500 in construction valuation and 0.9 percent of construction valuation in excess of this amount. The Finance Committee approved a motion accepting the technical adjustment to the Public Art Fee by increasing the valuation floor for private developments from $100 million of construction valuation to $105.1 million of construction valuation for Fiscal Year 2016. Further, City of Palo Alto Page 13 the Finance Committee approved a motion for staff to return to the Finance Committee with changes to the Public Art Ordinance to simplify the calculation of the Public Art Fee. It should be noted that there have been no developments over $100 million that would impact prior collections of this fee. Rate Changes Staff and the Finance Committee recommend that Council approve the Utility Rate Changes listed below. These rate changes were approved by the Finance Committee in April 2015 and incorporated in the Fiscal Year 2016 Proposed Budget. Fiber Optic Rate Increase (Attachment B): rates are adjusted annually based on the Consumer Price Index (CPI). The Fiber Optic Rate will increase 2.7 percent to reflect the annual CPI change. See Attachment B for more information. Storm Drain Rate Increase (Attachment C): rates are adjusted annually based on the Consumer Price Index (CPI). The Storm Drain Rate will increase 2.7 percent to reflect the annual CPI change. See Staff Report ID #5592 for additional information. Wastewater Collection Rate Increase (Attachment D): rates are proposed to be increased 9 percent due to changes in operating costs and capital projects in the fund. See Staff Report ID #5598 for additional information Refuse Rate Increase (Attachment E): rates are proposed to increase by 9 percent for residential users due to The Fiscal Year 2016 Water Financial Plan approved by the Finance Committee on April 7, 2015 prescribed a 12 percent water rate increase for Fiscal Year 2016, with wholesale water rate increases being the primary driver. However, as a result of an update to the water Cost of Service Analysis (COSA) completed subsequent to the Financial Plan, Council is only able to adopt an 8 percent water rate increase effective July 1, 2015, the maximum rate increase based on the updated COSA and within the Proposition 218 notice requirements. Council will consider the recommendation for the 8% rate increase on June 8, 2015 in Staff Report #5814, separate from the Budget Adoption report. If approved, the water rate increase and rate schedule adjustments will be continued to the June 15, 2015 Council Meeting for adoption in alignment with the adoption of the Fiscal Year 2016 Proposed Revised Operating Budget. An additional 4% water rate increase, which is necessary to cover increasing costs in the Water Fund, and align rates with the initial 12 percent recommended rate increase, is proposed for implementation on September 1, 2015. Compensation Plans Changes in the proposed Fiscal Year 2016 Operating Budget result in these amendments to the following compensation plans: Management and Professional (Attachment F, Exhibit 1): Add Assistant Chief Building Official classification Add Manager Budget classification City of Palo Alto Page 14 Add Manager Facilities classification Add Manager Treasury, Debt & Investments classification Add Performance Auditor I classification Add Superintendent Recreation classification Add Supervising Librarian classification Remove Legal Services Administrator classification Title change Human Resource Assistant classification to Human Resources Technician classification Title change Manager Parking classification to Manager Transportation Planning classification Title change Performance Auditor classification to Performance Auditor II classification Service Employees International Union (SEIU) (Attachment F, Exhibit 2): Add Parking Operations Lead classification Add Traffic Operations Lead classification Title change Utility Account Representative classification to Utility Marketing Program Administrator Utilities Management Professional Association of Palo Alto (UMPAPA) (Attachment F, Exhibit 3): Title change Manager Customer Service and Meter Reading classification to Manager Customer Service classification Title change Principal Management Analyst classification to Principal Business Analyst Follow Up Items for the Finance Committee Library Digital Services – Library Department At the May 12, 2015 Finance Committee meeting, the Committee requested a study session regarding Library Digital Services. This Palo Alto City Library: E-books, Digital Resources, and Digital Literacy study session has been tentatively scheduled for September 28, 2015 and will discuss digital resources, use and promotion, and the Library’s plans for digital literacy, as it appears in the Library Strategic Plan, and in comparison with other libraries. Palo Alto Animal Services Consultant Services Progress Report As discussed with the Finance Committee, staff will bring forth monthly progress reports to the Finance Committee regarding staff’s efforts to potentially transition animal services to a public- private partnership service model. Public Art Fee – Planning and Community Environment At the May 26, 2015 Finance Committee meeting, the Committee moved approval of a City of Palo Alto Page 15 technical adjustment to the Public Art Fee, but asked for a staff referral to come back to the Finance Committee with suggested amendments to the Public Art Ordinance to simplify the calculation and administration of the Public Art Fee. Single Story Overlay Fee Waiver – Planning and Community Environment At the March 23, 2015 City Council meeting, Councilmember DuBois moved, seconded by Mayor Holman, to agendize a discussion of temporarily suspending the fees associated with a single story overlay. No action was taken after the Motion since the item in question was not agendized. Because some Councilmembers have indicated a desire to waive or reduce fees for single story overlays to prevent two story homes in designated areas, staff is seeking direction from the Finance Committee on this issue. At the May 26, 2015 Finance Committee meeting, the Committee requested that staff come back at a later date to the Finance Committee with a separate item to consider the Single Story Overlay Fee Waiver policy. Cubberley Center Master Plan At the May 26, 2015 Finance Committee meeting, the Committee moved approval of the Cubberley Property Infrastructure Fund, and requested that staff return to Finance Committee with additional information and a timeline on the plan for the site, in consideration of the need for immediate facility repairs and with Foothill College soon to be leaving the site. Staff believes that capital project (CB-16001) Cubberley Community Center Master Plan, proposed for funding in the Fiscal Year 2016 Capital Plan, will address these issues as the project develops. The project provides funding to develop a Master Plan for the Cubberley complex, including updating condition assessments, providing prioritization for future projects, and supporting tenant needs. The project detail page can be found on pp. 275-276 of the Fiscal Year 2016 Proposed Capital Budget. California Avenue Maintenance and Parking Fees As discussed at the May 26 Finance Committee meeting, in Fiscal Year 2016 staff intends to review the costs of ongoing maintenance at California Avenue as well as parking fees. Staff will develop a workplan and identify any funding gaps. Resource Impact The Fiscal Year 2016 Revised Proposed Budget has a surplus of $460,000, which includes a $2.1 million contribution from the BSR from projected Fiscal Year 2015 budget surplus to fund one- time items. Based on the Finance Committee’s recommendations, the Fiscal Year 2016 projected ending BSR balance will be $34.71 million, or 18.7 percent of the Fiscal Year 2015 revised proposed Operating Budget. The projected Fiscal Year 2016 ending BSR balance falls within the 15 to 20 percent range of the adopted reserve policy and exceeds the 18.5 percent target. The Proposed Capital Budget described a projected Infrastructure Reserve ending balance of $20.9 million in Fiscal Year 2016 for the Capital Improvement Fund. The $20.9 million figure assumes a $5.0 million transfer from the General Fund in Fiscal Year 2016 from the voter- City of Palo Alto Page 16 approved two percentage point increase to the transient occupancy tax (TOT), as well as TOT revenues from new hotels. The amount of TOT revenue that is anticipated from the increase and new hotels is $5.325 million. As a result of the Finance Committee recommended increase of $0.325 million in the transfer from the General Fund to the Capital Improvement Fund, the anticipated Infrastructure Reserve balance at the end of Fiscal Year 2016 would by $21.2 million. The other changes recommended by the Finance Committee, which will reappropriate unspent funds from Fiscal Year 2015 to Fiscal Year 2016, are not anticipated to impact the Infrastructure Reserve. Environmental Review The adoption of the City’s Annual Budget is not a project under the California Environmental Quality Act. Attachments: Attachment A - FY 2016 Budget Adoption Ordinance (PDF) Attachment A, Exhibit 1 - FY 2016 Proposed Budget & Muni Fee Previously Distributed (PDF) Attachment A, Exhibit 2 - Amendments to Proposed Budget (PDF) Attachment A, Exhibit 3 - Table of Organization Revisions (PDF) Attachment A, Exhibit 4 - Municipal Fee Schedule Amendments for FY 2016 Changed Fees (PDF) Attachment B - Resolution to Amend Dark Fiber Rates (PDF) Attachment C - Storm Drain Fee Increase Reso and Rate Schedule (PDF) Attachment D - Wastewater Collection Reso and Rate Schedule (PDF) Attachment E - Refuse Fee Increase Reso and Rate Schedule (PDF) Attachment F - Resolution Amending Various Salary Schedules (PDF) Attachment F, Exhibit 1 - Changes to 2014-2015 Management, Prof & Conf Salary Schedule (PDF) Attachment F, Exhibit 2 - Change to 2014-2015 SEIU Salary Schedule (PDF) Attachment F, Exhibit 3 - Changes to UMPAPA Salary Schedule (PDF) Appendix 1 - Budget Wrap Memo (PDF) Appendix 2 - At Places Memoranda (PDF) Appendix 3 - Presentations to Finance Committee (PDF) Appendix 4 - Finance Committee Meeting Draft Minutes (PDF) ATTACHMENT A 1 ORDINANCE NO. XXXX ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO ADOPTING THE BUDGET FOR FISCAL YEAR 2016 SECTION 1. The Council of the City of Palo Alto finds and determines as follows: A. Pursuant to the provisions of Section 6(g) of Article IV of the Charter of the City of Palo Alto and Chapter 2.28 of the Palo Alto Municipal Code, the City Manager has prepared and submitted to the City Council, by letter of transmittal, a budget proposal for Fiscal Year 2016; and B. Pursuant to the provisions of Section 12 of Article III of the Charter, the Council did, on June 8 and 15, 2015, hold public hearings on the budget after publication of notice in accordance with Section 2.28.070 of the Palo Alto Municipal Code; and C. In accordance with the provisions of Chapter 8 of Division 1, of Title 7, commencing with Section 66016 of the Government Code, as applicable, the Council did on June 8 and 15, 2015, hold a public hearing on the proposed amendments to the Municipal Fee Schedule, after publication of notice and after availability of the data supporting the amendments was made available to the public at least 10 days prior to the hearing. SECTION 2. Pursuant to Chapter 2.28 of the Palo Alto Municipal Code, the following documents, collectively referred to as “the budget” are hereby approved and adopted for Fiscal Year 2016: (a) The budget document (Exhibit “1”) containing the proposed operating and capital budgets submitted on April 27, 2015, by the City Manager for Fiscal Year 2016, entitled “City of Palo Alto ‐ City Manager’s Fiscal Year 2016 Proposed Budget” covering General Government Funds, Enterprise Funds and Internal Service Funds, a copy of which is on file in the Department of Administrative Services, to which copy reference is hereby made concerning the full particulars thereof, and by such reference is made a part hereof; and (b) The Amendments to the City Manager’s Fiscal Year 2016 Proposed Budget, attached hereto as Exhibit “2,” and made a part hereof; and ATTACHMENT A 2 (c) Changes and revised pages in the Table of Organization, attached hereto as Exhibit “3,” and made a part hereof; and (d) Fee changes of the Municipal Fee Schedule attached hereto as Exhibit “4”; and SECTION 3. The sums set forth in the budget for the various departments of the City, as herein amended, are hereby appropriated to the uses and purposes set forth therein. SECTION 4. All expenditures made on behalf of the City, directly or through any agency, except those required by state law, shall be made in accordance with the authorization contained in this ordinance and the budget as herein amended. SECTION 5. Appropriations for the Fiscal Year 2015 that are encumbered by approved purchase orders and contracts for which goods or services have not been received or contract completed, and/or for which all payments have not been made, by the last day of the Fiscal Year 2015 shall be carried forward and added to the fund or department appropriations for Fiscal Year 2016. SECTION 6. The City Manager is authorized and directed to make changes in the department and fund totals and summary pages of the budget necessary to reflect the amendments enumerated and aggregated in the budget as shown in Exhibit “2” and the Fiscal Year 2015 appropriations carried forward as provided in Section 5. SECTION 7. As specified in Section 2.04.320 of the Palo Alto Municipal Code, a majority vote of the City Council is required to adopt this ordinance. SECTION 8. As specified in Section 2.28.140(b) of the Palo Alto Municipal Code, the Council of the City of Palo Alto hereby delegates the authority to invest the City’s funds to the Director of Administrative Services, as Treasurer, in accordance with the City’s Investment Policy for Fiscal Year 2016. SECTION 9. The Council of the City of Palo Alto adopts the changes to the Municipal Fee Schedule as set forth in Exhibit “4”. The amount of the new or increased fees and charges is no more than necessary to cover the reasonable costs of the governmental activity, and the manner in which those costs are allocated to a payer bears a fair and reasonable relationship to the payer’s burden on, or benefits received from, the governmental activity. All new and increased fees shall go into effect immediately; provided that pursuant to Government Code Section 66017, all Planning & Community Environment Department and Development Services Department fees relating to a “development project” as defined in Government Code Section 66000 shall become effective sixty (60) days from the date of adoption. ATTACHMENT A 3 SECTION 10. Fees in the Municipal Fee Schedule are for government services provided directly to the payor that are not provided to those not charged. The amount of this fee does not exceed the reasonable costs to the City of providing the services. Consequently, pursuant to Art. XIII C, Section 1(e)(2), such fees are not a tax. SECTION 11. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption. SECTION 12. 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. ATTACHMENT A 4 INTRODUCED AND PASSED: Enter Date Here AYES: NOES: ABSENT: ABSTENTIONS: NOT PARTICIPATING: ATTEST: _________________________ ___________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: City Attorney City Manager Director of Administrative Services Attachment A, Exhibit 1 Fiscal Year 2016 City Manager’s Proposed Operating & Capital Budget These documents were originally distributed in Council Packet of April 27, 2015. Printed copies are available upon request for $27 per book. These documents may be viewed at any City of Palo Alto Library or the City’s website: www.cityofpaloalto.org/gov/depts/asd/budget.asp Changes to the Municipal Fee Schedule were distributed in Council Packet on April 30, 2015. The City Manager’s Staff Report can be viewed on the City’s website: http://www.cityofpaloalto.org/civicax/filebank/documents/47142 ATTACHMENT A, EXHIBIT 2 5/28/2015 Category Amount Description GENERAL FUND Property Tax 525,000 As reported in the City Manager Monthly Report for May 2015,in a onetime windfall,the City’sGeneral Fund recently received $3.3 million indocumentary transfer taxes for Fiscal Year 2015 asa resultof the sale of several major and high quality commercial propertyassets.Theseincludedfacilities purchasedalong El CaminoReal (PaloAlto Square),PageMill Road,Porter Drive,and Hillview and Miranda Avenues.The purchaser was Hudson Pacific Properties which acquired other properties up and down the Peninsula.Due to these property transfers as wellas updated information from the County Assessor’s Office,staff recommends increasing the Property Tax estimate by $0.525 from $34.542 million to $35.067 million. 525,000 Transfer Out 325,000 The Fiscal Year 2016 Proposed Budget transfers $18.7 million from the General Fund to infrastructure.Of this transfer $5.0 million isattributed to the 2 percent TOT tax increaseand new hotelstobeopenedduringthe fiscal year.Staff has reviewed the total amount for TOT tied to the 2 percent TOT tax increase and new hotels.The estimated TOT receipts related to these two sources is $5.3 million.Therefore,staff proposes an increase to the transfer to infrastructure by $0.325 million, bringing the total transfer to $5.325 million. 0 325,000 200,000$ General Expense 5,000 Increase City Council food budget by $5,000 for meals related to Council Meetings due to the increased number of meetings. 5,000 (5,000)$ Adjusts the Fiscal Year 2016 allocation for this project. The Proposed Budget document assumed a higher level of reappropriation than is now currently anticipated to be necessary due to higher than anticipated Fiscal Year 2015 expenses. Therefore, the Fiscal Year 2016 budget for this project is recommended to be reduced, with no net change to the Infrastructure Reserve level included in the Proposed Capital Budget.CITY MANAGER'S OFFICE Contract Services 250,000 Staff recommends continuing operation of an animal shelter in Palo Alto and retaining the Animal Control Officer (ACOs) functions. Staff also recommends that the City seeks out a non-profit partner to operate the shelter. As discussed with the Finance Committee on April 22, 2015, in order to transition to an alternative service delivery model for the shelter, staff recommends allocating approximately $250,000 in one-time transition costs in Fiscal Year 2016, offset by a projected Fiscal Year 2015 Budget Surplus carry-forward amount. 250,000 (250,000)$ Contract Services (190,000) At the May 26,2015 Finance Committee meeting,the Committee approved a recommendation initiated by the Committee to the City Council to eliminate the proposedincrease in the Office of Sustainability’s consultantbudget.The budget wrap-up memorandum provides a summary of the intended uses for the consultant budget. (190,000) 190,000$ Contract Services 50,000 At theMay26,2015Finance Committee meeting,the Committee initiated and approved a recommendation to the City Council to add an additional $50,000totheCommunityServicesDepartment Budgetfor citywide special events.Withthe City Manager’s proposal of $35,000 for special events funding as identified in the Fiscal Year 2016 ProposedOperating Budget, funding for special events is proposed to increase by $85,000 from $82,000 to $167,000. 50,000 (50,000)$ Net Changes To (From) Reserves Use Changes CITY COUNCIL OFFICE OF SUSTAINABILITY Source Changes NON-DEPARTMENTAL CITY OF PALO ALTO AMENDMENTS TO THE CITY MANAGER'S 2016 PROPOSED BUDGET Use Changes Net Changes To (From) Reserves Use Changes Net Changes To (From) Reserves COMMUNITY SERVICES Use Changes Net Changes To (From) Reserves Use Changes Net Changes To (From) Reserves ATTACHMENT A, EXHIBIT 2 5/28/2015 Category Amount Description CITY OF PALO ALTO AMENDMENTS TO THE CITY MANAGER'S 2016 PROPOSED BUDGET Charges for Services (50,200) During the recruitment for a new Fire Chief in Fiscal Year 2013, the Full-Time Equivalent (FTE) for the Police Chief was evenly split between the Police Department and the Fire Department. The Fire Chief was hired in November 2012. Staff proposes to fully allocate the Police Chief position back to the Police Department in Fiscal Year 2016, which results in a 0.50 FTE and $165,710 shift from the Fire Department to the Police Department. As a result of this shift, $50,200 or 30.3 percent of the cost for this position will no longer be reimbursed by Stanford University as part of the Fire Services agreement between the City and the University. The Fiscal Year 2016 Adopted Budget will show the Fire Department, Police Department, and Office of Emergency Services separately versus one Public Safety Department. (50,200) Allocated Charges 91,500 Increase in Allocated Chargestooffset the transferoffundingfor this position from theGeneral Fundtothe Information Technology Fund.The funding for these additional allocated charges will be evenly split between the Police and Fire Departments, this action has no additional impact to the General Fund. Salaries and Benefits (165,710) During the recruitment for a new Fire Chief in Fiscal Year 2013,the Full-Time Equivalent (FTE)for the Police Chief was evenly splitbetweenthePolice Department and the FireDepartment.The Fire Chief washiredinNovember 2012.Staff proposes to fully allocate the Police Chief position back to the PoliceDepartment in Fiscal Year 2016,which results in a 0.50 FTE and $165,710 shift from the Fire Department to the Police Department. Salaries and Benefits (91,500) Remove 0.5 Senior Technologist Position (0.5 FTE also in Fire). This action funds a Senior Technologist position to coordinate implementation, management, and maintenance of technology projects related to public safety. Staff recommends that the position be funded in the Information Technology Department and dedicated to support the public safety departments offset with increased allocated charges from the General Fund to the Information Technology Fund. The funding for these additional allocated charges will be evenly split between the Police and Fire Departments therefore this action has no additional impact to the General Fund. (165,710) 115,510$ Allocated Charges 91,500 Increase in Allocated Chargestooffset the transferoffundingfor this position from theGeneral Fundtothe Information Technology Fund.The funding for these additional allocated charges will be evenly split between the Police and Fire Departments, this action has no additional impact to the General Fund. Salaries and Benefits 165,710 During the recruitment for a new Fire Chief in Fiscal Year 2013,the Full-Time Equivalent (FTE)for the Police Chief was evenly splitbetweenthePolice Department and the FireDepartment.The Fire Chief washiredinNovember 2012.Staff proposes to fully allocate the Police Chief position back to the PoliceDepartment in Fiscal Year 2016,which results in a 0.50 FTE and $165,710 shift from the Fire Department to the Police Department. Salaries and Benefits (91,500) Remove 0.5 Senior Technologist Position (0.5 FTE also in Fire). This action funds a Senior Technologist position to coordinate implementation, management, and maintenance of technology projects related to public safety. Staff recommends that the position be funded in the Information Technology Department and dedicated to support the public safety departments offset with increased allocated charges from the General Fund to the Information Technology Fund. The funding for these additional allocated charges will be evenly split between the Police and Fire Departments therefore this action has no additional impact to the General Fund. 165,710 (165,710)$ Salaries and Benefits (22,925) At the May 26,2015 Finance Committee meeting,the Committee initiated aproposal to eliminatetheproposed addition of the Code Enforcement Officer –Lead position,resulting in a budget decrease of $120,000.The proposed Code Enforcement Officer -Lead position was split 0.2 FTE in Development Services and 0.8 FTE in Planning and Community Environment.The budget wrap-up memorandum providesa summaryof the performance outcome for the City Manager recommended addition of this position. (22,925) 22,925$ Salaries and Benefits (97,075) At the May 26,2015 Finance Committee meeting,the Committee initiated aproposal to eliminatetheproposed addition of the Code Enforcement Officer –Lead position,resulting in a budget decrease of $120,000.The proposed Code Enforcement Officer -Lead position was split 0.2 FTE in Development Services and 0.8 FTE in Planning and Community Environment.The budget wrap-up memorandum providesa summaryof the performance outcome for the City Manager recommended addition of this position. (97,075) 97,075$ Net Changes To (From) Reserves Net Changes To (From) Reserves Use Changes PLANNING & COMMUNITY ENVIRONMENT DEVELOPMENT SERVICES Use Changes Use Changes Net Changes To (From) Reserves POLICE Net Changes To (From) Reserves Source Changes Use Changes FIRE ATTACHMENT A, EXHIBIT 2 5/28/2015 Category Amount Description CITY OF PALO ALTO AMENDMENTS TO THE CITY MANAGER'S 2016 PROPOSED BUDGET Contract Services 27,000 At the May 26, 2015 Finance Committee Meeting, the Committee approved a staff recommendation to increase the annual JPA contribution which is funded in the Public Works Department’s General Fund budget by $27,000. The Board of Directors of the San Francisquito Creek Joint Powers Authority (JPA) approved the JPA’s Fiscal Year 2016 operating budget on Thursday, April 23rd. The Fiscal Year 2016 budget increased the annual member agency contribution by $27,000 from $118,000 to $145,000 in order to allow the JPA to hire an additional staff person. Therefore, staff recommends increasing the annual JPA contribution which is funded in the Public Works Department’s General Fund budget by $27,000 to cover the additional cost. The increased expense is recommended to be funded via increased Fiscal Year 2015 budget surplus carry-forward funds. Contract Services 122,000 At the May 26, 2015 Finance Committee Meeting, the Committee approved a staff recommendation to increase one-time funding for Urban Forestry Master Plan by $120,000. On May 11, 2015 staff brought the Urban Forest Master Plan to City Council for adoption. Due to the timing of the City Council’s consideration of the plan, funding was not included in the 2016 Proposed Operating Budget for the first year of the plan in the amount of $122,000. The recommendation is to provide one-time funding for the first year costs of this plan based on the City Council’s adoption of the plan offset with FY 2015 budget surplus funds. Funding in the amount of $78,024 will support hiring of hourly and contract staffing to supplement current staffing levels to allow permanent staff to focus on programmatic elements of the plan such as investigation of reasons for less canopy in south Palo Alto and to develop strategies to address this; coordination with nearby jurisdictions and agencies regarding trees within the El Camino Real Corridor; and tree permitting and regulations for Private Development. Contract dollars in the amount of $44,000 will fund a contract with Canopy to develop an on- line tree library, outreach materials and staff training. 149,000 (149,000)$ Total General Fund Changes to BSR 5,800$ 454,000 Fiscal Year 2015 Budget Surplus to fund one-time items 459,800$ Revised Fiscal Year 2016 Budget Surplus PUBLIC WORKS Use Changes Net Changes To (From) Reserves ATTACHMENT A, EXHIBIT 2 5/28/2015 Category Description 400,000 Transfers funding to the Capital Improvement Fund to support the new Downtown Garage Project. Use Changes 400,000 (400,000) Charges to Other Funds 183,000 Increase in charges to the General Fund to offset the transfer of funding for this position from the General Fund to the Information Technology Fund. The funding for these additional allocated charges will be evenly split between the Police and Fire Departments,this action has no additional impact to the General Fund. 183,000 Salary and Benefits 183,000 Funding for a Senior Technologist position, orginally located in the proposed budget in Public Safety. Fudning will be transferred from General Fund, $91,500 from Police and $91,500 from Fire to the Technology Fund to fund the Senior Technologist position Use Changes 183,000 - Downtown Parking In-Lieu Fund INFORMATION TECHNOLOGY FUND Net Changes To (From) Reserves Net Changes To (From) Reserves CITY OF PALO ALTO AMENDMENTS TO THE CITY MANAGER'S 2016 PROPOSED BUDGET SPECIAL REVENUE FUNDS INTERNAL SERVICE Source Changes Attachment A, Exhibit 2 5/28/2015 Project Funding Title Number Revenue Expense Source Comments Amendments to Project Budgets - Expense New Public Safety Building PE-15001 $ 100,000 Infrastructure Reserve Increases the Fiscal Year 2016 budget for the New Public Safety Building project by $100,000, offset by a reduction to the Infrastructure Reserve. The Proposed Capital Budget assumed that this expenditure would occur during Fiscal Year 2015, however due to timing constraints staff was not able to seek City Council authorization for these expenses. Fire Station 3 Replacement PE-15003 $ 700,000 Infrastructure Reserve Increases the Fiscal Year 2016 budget for the Fire Station 3 Replacement project by $700,000, offset by a reduction to the Infrastructure Reserve. The Proposed Capital Budget assumed that this expenditure would occur during Fiscal Year 2015, however due to timing constraints staff was not able to seek City Council authorization for these expenses. New Downtown Garage PE-15007 $ 400,000 $ 400,000 Transfer from the Downtown Parking In-Lieu Fund Increases the Fiscal Year 2016 budget for the New Downtown Parking Garage project by $400,000, offset by a transfer from the Downtown Parking In- Lieu Fund. The Proposed Capital Budget assumed that this expenditure would occur during Fiscal Year 2015, however due to timing constraints staff was not able to seek City Council authorization for these expenses. Subtotal - Project Adjustments $ 400,000 $ 1,200,000 Amendments to Project Budgets - Revenue Transfer from the General Fund N/A $ 325,000 $ - Transfer from the General Fund Increases the budgeted transfer from the General Fund to the Capital Improvement Fund to fully account for the amount of TOT revenue tied to the two percentage point TOT tax increase, as well as the TOT increas associated with new hotels. Subtotal - Revenue Adjustments $ 325,000 $ - Reappropriation Adjustments Art Center Auditorium Audio, Visual, and Furnishings AC-14000 $ 92,347 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Open Space Trails and Amenities OS-00001 $ 6,000 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Library and Community Centers- Temporary Facilities PE-09010 $ 124,813 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Charleston/Arastradero Corridor Project PE-13011 $ 38,452 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. El Camino Park Restoration PE-13016 $ 92,234 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. El Camino Median Landscape Improvements PE-13017 $ 26,073 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Lucie Stern Building PE-14015 $ 2,456,117 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Civic Center Waterproofing Study and Repairs PE-15020 $ 78,492 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Palo Alto Community Gardens Irrigation Systems PE-15022 $ 50,394 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Baylands Nature Interpretive Center Facility Improvements PE-15029 $ 28,959 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Street Maintenance PE-86070 $ 1,687,193 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. AMENDMENTS TO THE CITY MANAGER'S 2016 PROPOSED CAPITAL BUDGET CITY OF PALO ALTO CAPITAL IMPROVEMENT FUND Attachment A, Exhibit 2 5/28/2015 Project Funding Title Number Revenue Expense Source Comments AMENDMENTS TO THE CITY MANAGER'S 2016 PROPOSED CAPITAL BUDGET CITY OF PALO ALTO Roofing Replacement,PF-00006 $ 284,831 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Building Systems Improvements PF-01003 $ 41,631 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Facility Interior Finishes Replacement PF-02022 $ 51,334 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Fire Station 1 Improvements PF-14002 $ (39,189)Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project. The Proposed Budget document assumed a higher level of reappropriation than is now currently anticipated to be necessary due to higher than anticipated Fiscal Year 2015 expenses. Therefore, the Fiscal Year 2016 budget for this project is recommended to be reduced, with no net change to the Infrastructure Reserve level included in the Proposed Capital Budget. University Avenue Parking Improvements PF-14003 $ 20,372 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Rinconada Pool Locker Room PF-15000 $ 23,068 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Emergency Facility Improvements PF-15005 $ 198,770 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Americans with Disabilities Act Compliance PF-93009 $ (202,352)Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project. The Proposed Budget document assumed a higher level of reappropriation than is now currently anticipated to be necessary due to higher than anticipated Fiscal Year 2015 expenses. Therefore, the Fiscal Year 2016 budget for this project is recommended to be reduced, with no net change to the Infrastructure Reserve level included in the Proposed Capital Budget. Tennis and Basketball Court Resurfacing PG-06001 $ (83,950)Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project. The Proposed Budget document assumed a higher level of reappropriation than is now currently anticipated to be necessary due to higher than anticipated Fiscal Year 2015 expenses. Therefore, the Fiscal Year 2016 budget for this project is recommended to be reduced, with no net change to the Infrastructure Reserve level included in the Proposed Capital Budget. Benches, Signage, Fencing, Walkways, and Perimeter Landscaping PG-06003 $ (13,343)Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project. The Proposed Budget document assumed a higher level of reappropriation than is now currently anticipated to be necessary due to higher than anticipated Fiscal Year 2015 expenses. Therefore, the Fiscal Year 2016 budget for this project is recommended to be reduced, with no net change to the Infrastructure Reserve level included in the Proposed Capital Budget. Park Maintenance Shop Remodel PG-09003 $ 10,000 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Stanford/Palo Alto Playing Fields Netting PG-12001 $ (47,200)Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project. The Proposed Budget document assumed a higher level of reappropriation than is now currently anticipated to be necessary due to higher than anticipated Fiscal Year 2015 expenses. Therefore, the Fiscal Year 2016 budget for this project is recommended to be reduced, with no net change to the Infrastructure Reserve level included in the Proposed Capital Budget. Golf Course Tree Maintenance PG-12002 $ 6,818 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Safe Routes to School PL-00026 $ 120,388 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Attachment A, Exhibit 2 5/28/2015 Project Funding Title Number Revenue Expense Source Comments AMENDMENTS TO THE CITY MANAGER'S 2016 PROPOSED CAPITAL BUDGET CITY OF PALO ALTO Bicycle and Pedestrian Transportation Plan Implementation Projects PL-04010 $ (194,149)Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project. The Proposed Budget document assumed a higher level of reappropriation than is now currently anticipated to be necessary due to higher than anticipated Fiscal Year 2015 expenses. Therefore, the Fiscal Year 2016 budget for this project is recommended to be reduced, with no net change to the Infrastructure Reserve level included in the Proposed Capital Budget. Traffic Signal and Intelligent Transportation System Upgrades PL-05030 $ 151,658 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Dinah Summerhill Pedestrian Improvements PL-11001 $ 116,052 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Street Lights Improvements PO-05054 $ (41,160)Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project. The Proposed Budget document assumed a higher level of reappropriation than is now currently anticipated to be necessary due to higher than anticipated Fiscal Year 2015 expenses. Therefore, the Fiscal Year 2016 budget for this project is recommended to be reduced, with no net change to the Infrastructure Reserve level included in the Proposed Capital Budget. Sign Reflectivity Upgrade PO-11000 $ 40,953 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Sidewalk Repairs PO-89003 $ 238,435 Infrastructure Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Subtotal - Project Reappropriations $ - $ 5,364,041 TOTAL CAPITAL IMPROVEMENT FUND CIP ADJUSTMENTS $ 725,000 $ 6,564,041 Attachment A, Exhibit 2 5/28/2015 Project Funding Title Number Revenue Expense Source Comments AMENDMENTS TO THE CITY MANAGER'S 2016 PROPOSED CAPITAL BUDGET CITY OF PALO ALTO PROJECT REAPPROPRIATIONS Communications System Improvements EL-89031 $ 168,006 Electric Reserve Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Total $ - $ 168,006 TOTAL ELECTRIC FUND CIP ADJUSTMENTS $ - $ 168,006 PROJECT REAPPROPRIATIONS Storm Drain System Replacement and Rehabilitation SD-06101 $ 9,874 Storm Drainage Fund Ending Fund Balance Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Channing Avenue/Lincoln Avenue Storm Drain Improvements SD-11101 $ 3,155,342 Storm Drainage Fund Ending Fund Balance Adjusts the Fiscal Year 2016 allocation for this project, reappropriating funding from Fiscal Year 2015 to Fiscal Year 2016. Total $ - $ 3,165,216 TOTAL STORM DRAINAGE FUND CIP ADJUSTMENTS $ - $ 3,165,216 Amendments to Project Budgets - Expense Scheduled Vehicle and Equipment Replacement- Fiscal Year 2016 VR-16000 $ (60,000)Vehicle Replacement Fund Ending Fund Balance Reduces the funding available for vehicle replacement in Fiscal Year 2016 due to the Finance Committee's recommendation to not fund the scheduled replacement of two pool sedans. Subtotal - Project Adjustments $ - $ (60,000) PROJECT REAPPROPRIATIONS Citywide Fuel Transaction and Inventory Management System Replacement VR-06801 $ (46,529)Vehicle Replacement Fund Ending Fund Balance Adjusts the Fiscal Year 2016 allocation for this project. The Proposed Budget document assumed a higher level of reappropriation than is now currently anticipated to be necessary due to higher than anticipated Fiscal Year 2015 expenses. Therefore, the Fiscal Year 2016 budget for this project is recommended to be reduced, with no net change to the Vehicle Replacement Fund Reserve levels as outlined in the proposed budget document, as expenses are simply being moved from one fiscal year to the next. Municipal Services Center Fuel Station Demolition VR-14002 $ (154,183)Vehicle Replacement Fund Ending Fund Balance Adjusts the Fiscal Year 2016 allocation for this project. The Proposed Budget document assumed a higher level of reappropriation than is now currently anticipated to be necessary due to higher than anticipated Fiscal Year 2015 expenses. Therefore, the Fiscal Year 2016 budget for this project is recommended to be reduced, with no net change to the Vehicle Replacement Fund Reserve levels as outlined in the proposed budget document, as expenses are simply being moved from one fiscal year to the next. VEHICLE REPLACEMENT FUND ELECTRIC FUND STORM DRAINAGE FUND Attachment A, Exhibit 2 5/28/2015 Project Funding Title Number Revenue Expense Source Comments AMENDMENTS TO THE CITY MANAGER'S 2016 PROPOSED CAPITAL BUDGET CITY OF PALO ALTO Scheduled Vehicle and Equipment Replacement- Fiscal Year 2014 VR-14000 $ (88,358)Vehicle Replacement Fund Ending Fund Balance Adjusts the Fiscal Year 2016 allocation for this project. The Proposed Budget document assumed a higher level of reappropriation than is now currently anticipated to be necessary due to higher than anticipated Fiscal Year 2015 expenses. Therefore, the Fiscal Year 2016 budget for this project is recommended to be reduced, with no net change to the Vehicle Replacement Fund Reserve levels as outlined in the proposed budget document, as expenses are simply being moved from one fiscal year to the next. Scheduled Vehicle and Equipment Replacement- Fiscal Year 2015 VR-15000 $ (141,989)Vehicle Replacement Fund Ending Fund Balance Adjusts the Fiscal Year 2016 allocation for this project. The Proposed Budget document assumed a higher level of reappropriation than is now currently anticipated to be necessary due to higher than anticipated Fiscal Year 2015 expenses. Therefore, the Fiscal Year 2016 budget for this project is recommended to be reduced, with no net change to the Vehicle Replacement Fund Reserve levels as outlined in the proposed budget document, as expenses are simply being moved from one fiscal year to the next. Subtotal - Project Reappropriations $ - $ (431,059) TOTAL VEHICLE REPLACEMENT FUND CIP ADJUSTMENTS (491,059)$ TABLE OF ORGANIZATION TABLE OF ORGANIZATION • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET 472 TABLE OF ORGANIZATIONTable of Organization FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change FTE FY 2016 Change % General Fund Development Services Administrative Assistant 0.00 0.00 1.00 1.00 0.00 0.00% Administrative Associate II 0.00 0.00 3.02 3.02 0.00 0.00% Administrative Associate III 0.00 0.00 1.01 1.01 0.00 0.00% Assistant Chief Building Official 0.00 0.00 0.00 1.00 1.00 0.00% Assistant Director Public Works 0.00 0.00 0.02 0.02 0.00 0.00% Associate Engineer 0.00 0.00 0.16 0.16 0.00 0.00% Associate Planner 0.00 0.00 0.90 0.90 0.00 0.00% Building Inspector Specialist 0.00 0.00 3.00 4.00 1.00 33.33% Building/Planning Technician 0.00 0.00 1.80 1.80 0.00 0.00% Chief Building Official 0.00 0.00 1.00 1.00 0.00 0.00% Chief Planning Official 0.00 0.00 0.20 0.20 0.00 0.00% Code Enforcement Officer 0.00 0.00 0.50 0.40 -0.10 (20.00)% Deputy Chief/Fire Marshall 0.00 0.00 0.84 0.85 0.01 1.19% Development Project Coordinator II 0.00 0.00 2.00 2.00 0.00 0.00% Development Project Coordinator III 0.00 0.00 3.00 3.00 0.00 0.00% Development Services Director 0.00 0.00 1.00 1.00 0.00 0.00% Engineer 0.00 0.00 0.62 0.62 0.00 0.00% Engineering Technician III 0.00 0.00 2.10 2.10 0.00 0.00% Fire Fighter 0.00 0.00 1.00 1.00 0.00 0.00% Fire Inspector 0.00 0.00 4.00 4.00 0.00 0.00% Hazmat Inspector 0.00 0.00 1.90 1.90 0.00 0.00% Industrial Waste Inspector 0.00 0.00 0.01 0.01 0.00 0.00% Industrial Waste Investigator 0.00 0.00 0.21 0.21 0.00 0.00% Inspector, Field Services 0.00 0.00 0.70 0.70 0.00 0.00% Management Analyst 0.00 0.00 0.01 0.01 0.00 0.00% Manager Development Center 0.00 0.00 1.00 1.00 0.00 0.00% Manager Environmental Control Program 0.00 0.00 0.10 0.10 0.00 0.00% Manager Planning 0.00 0.00 1.80 2.00 0.20 11.11% Manager Urban Forestry 0.00 0.00 0.04 0.04 0.00 0.00% Manager Watershed Protection 0.00 0.00 0.05 0.05 0.00 0.00% Planner 0.00 0.00 0.80 0.25 -0.55 (68.75)% Planning Arborist 0.00 0.00 0.25 0.25 0.00 0.00% Plans Check Engineer 0.00 0.00 1.00 0.00 -1.00 (100.00)% Project Engineer 0.00 0.00 0.15 0.13 -0.02 (13.33)% Project Manager 0.00 0.00 0.07 0.07 0.00 0.00% Senior Engineer 0.00 0.00 0.68 0.68 0.00 0.00% Senior Industrial Waste Investigator 0.00 0.00 0.01 0.01 0.00 0.00% ATTACHMENT A, EXHIBIT #3 TABLE OF ORGANIZATION 473 TABLE OF ORGANIZATION • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET Senior Management Analyst 0.00 0.00 1.00 1.00 0.00 0.00% Senior Planner 0.00 0.00 0.40 0.36 -0.04 (10.00)% Senior Technologist 0.00 0.00 0.50 0.00 -0.50 (100.00)% Supervisor Inspection and Surveying 0.00 0.00 0.27 0.27 0.00 0.00% Surveyor, Public Works 0.00 0.00 0.47 0.00 -0.47 (100.00)% Total Development Services 0.00 0.00 38.59 38.12 -0.47 (1.22)% Fire 40-Hour Training Battalion Chief 0.00 0.00 1.00 1.00 0.00 0.00% 40-Hour Training Captain 1.00 1.00 0.00 1.00 1.00 0.00% Administrative Assistant 0.50 1.50 1.50 1.00 -0.50 (0.33)% Administrative Associate II 4.00 3.00 2.00 2.00 0.00 0.00% Battalion Chief 3.00 3.00 3.00 3.00 0.00 0.00% Business Analyst 0.40 0.80 0.80 0.80 0.00 0.00% Deputy Chief/Fire Marshall 0.84 0.84 0.00 0.00 0.00 0.00% Deputy Director Technical Services Division 0.20 0.20 0.20 0.20 0.00 0.00% Deputy Fire Chief 2.00 2.00 2.00 2.00 0.00 0.00% Emergency Medical Service Director 1.00 1.00 1.00 1.00 0.00 0.00% Emergency Medical Service Data Specialist 1.00 1.00 1.00 1.00 0.00 0.00% Fire Apparatus Operator 30.00 30.00 30.00 30.00 0.00 0.00% Fire Captain 22.00 22.00 22.00 21.00 -1.00 (4.55)% Fire Chief 1.00 1.00 1.00 1.00 0.00 0.00% Fire Fighter 41.00 41.00 40.00 40.00 0.00 0.00% Fire Inspector 4.00 4.00 0.00 0.00 0.00 0.00% Geographic Information System Specialist 1.00 0.50 0.50 0.50 0.00 0.00% Hazardous Materials Inspector 1.90 1.90 0.00 0.00 0.00 0.00% Police Chief 0.50 0.50 0.50 0.00 -0.50 (100.00)% Public Safety Dispatcher-Lead 0.40 0.00 0.00 0.00 0.00 0.00% Senior Management Analyst 0.50 0.50 1.00 1.00 0.00 0.00% Total Fire 116.24 115.74 107.50 106.50 -1.00 (0.93)% Office of Emergency Services Director Office of Emergency Services 1.00 1.00 1.00 1.00 0.00 0.00% Office of Emergency Services Coordinator 1.00 1.00 1.00 1.00 0.00 0.00% Program Assistant 1.00 1.00 1.00 1.00 0.00 0.00% Total Office of Emergency Services 3.00 3.00 3.00 3.00 0.00 0.00% TABLE OF ORGANIZATIONTable of Organization FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change FTE FY 2016 Change % ATTACHMENT A, EXHIBIT #3 TABLE OF ORGANIZATION TABLE OF ORGANIZATION • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET 474 Planning and Community Environment Administrative Assistant 1.00 2.00 1.00 1.00 0.00 0.00% Administrative Associate I 1.00 1.00 1.00 1.00 0.00 0.00% Administrative Associate II 3.80 3.80 1.00 1.00 0.00 0.00% Administrative Associate III 1.00 2.00 2.00 2.00 0.00 0.00% Assistant Building Official 1.00 0.00 0.00 0.00 0.00 0.00% Assistant Director PCE 1.00 1.00 1.00 1.00 0.00 0.00% Associate Engineer 1.00 1.00 1.00 1.00 0.00 0.00% Associate Planner 0.00 1.00 0.10 0.10 0.00 0.00% Building Inspector 4.00 0.00 0.00 0.00 0.00 0.00% Building Inspector Specialist 1.00 3.00 0.00 0.00 0.00 0.00% Building/Planning Technician 2.00 2.00 0.20 0.20 0.00 0.00% Business Analyst 0.00 0.00 1.00 1.00 0.00 0.00% Chief Building Official 1.00 1.00 0.00 0.00 0.00 0.00% Chief Planning Official 1.00 1.00 0.80 0.80 0.00 0.00% Chief Transportation Official 1.00 0.90 0.50 0.50 0.00 0.00% Code Enforcement Officer 2.00 2.00 1.50 1.60 0.10 6.67% Coordinator Transportation Systems Management 0.50 0.50 0.90 0.85 -0.05 (5.56)% Deputy City Manager 0.50 0.00 0.00 0.00 0.00 0.00% Development Project Coordinator II 0.00 2.00 0.00 0.00 0.00 0.00% Development Project Coordinator III 3.00 3.00 0.00 0.00 0.00 0.00% Development Services Director 1.00 1.00 0.00 0.00 0.00 0.00% Director Planning/Community Environment 1.00 1.00 1.00 1.00 0.00 0.00% Engineer 1.00 1.00 0.00 0.00 0.00 0.00% Engineering Technician II 1.00 0.00 0.00 0.00 0.00 0.00% Management Analyst 0.50 0.40 0.40 0.40 0.00 0.00% Manager Development Center 1.00 1.00 0.00 0.00 0.00 0.00% Manager Planning 2.00 3.00 1.20 2.00 0.80 66.67% Parking Operations-Lead 0.00 0.00 0.00 0.30 0.30 0.00% Planner 3.75 3.75 3.15 3.00 -0.15 (4.76)% Plans Check Engineer 2.00 1.00 0.00 0.00 0.00 0.00% Plans Examiner 1.00 0.00 0.00 0.00 0.00 0.00% Project Engineer 1.00 1.00 1.65 1.65 0.00 0.00% Senior Management Analyst 1.00 2.00 1.00 1.00 0.00 0.00% Senior Planner 7.00 7.00 7.60 7.64 0.04 0.53% Senior Project Engineer 0.00 1.00 0.20 0.00 -0.20 (100.00)% Traffic Operations-Lead 0.00 0.00 0.00 1.00 1.00 0.00% Transportation Planning Manager 0.00 0.00 0.00 0.20 0.20 0.00% TABLE OF ORGANIZATIONTable of Organization FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change FTE FY 2016 Change % ATTACHMENT A, EXHIBIT #3 TABLE OF ORGANIZATION 475 TABLE OF ORGANIZATION • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET Total Planning and Community Environment 49.05 50.35 28.20 30.24 2.04 7.23% Police Administrative Assistant 0.50 0.50 0.50 1.00 0.50 100.00% Administrative Associate II 3.00 3.00 3.00 3.00 0.00 0.00% Animal Control Officer 3.50 4.00 3.00 3.00 0.00 0.00% Animal Control Officer-Lead 0.00 0.00 1.00 1.00 0.00 0.00% Animal Services Specialist II 2.00 2.00 2.00 2.00 0.00 0.00% Assistant Police Chief 1.00 1.00 1.00 1.00 0.00 0.00% Business Analyst 0.60 1.20 1.20 1.20 0.00 0.00% Code Enforcement Officer 1.00 1.00 1.00 1.00 0.00 0.00% Communications Technician 1.00 1.00 1.00 1.00 0.00 0.00% Community Service Officer 8.50 8.50 8.50 8.50 0.00 0.00% Court Liaison Officer 1.00 1.00 1.00 1.00 0.00 0.00% Crime Analyst 1.00 1.00 1.00 1.00 0.00 0.00% Deputy Director Technical Services Division 0.80 0.80 0.80 0.80 0.00 0.00% Geographic Information System Specialist 0.00 0.50 0.50 0.50 0.00 0.00% Police Agent 19.00 19.00 19.00 19.00 0.00 0.00% Police Captain 2.00 2.00 2.00 2.00 0.00 0.00% Police Chief 0.50 0.50 0.50 1.00 0.50 100.00% Police Lieutenant 5.00 5.00 5.00 5.00 0.00 0.00% Police Officer 49.00 50.00 50.00 50.00 0.00 0.00% Police Records Specialist II 6.00 6.00 6.00 6.00 0.00 0.00% Police Records Specialist-Lead 1.00 1.00 1.00 1.00 0.00 0.00% Police Sergeant 14.00 14.00 14.00 14.00 0.00 0.00% Program Assistant II 1.00 1.00 1.00 1.00 0.00 0.00% Property Evidence Technician 2.00 2.00 2.00 2.00 0.00 0.00% Public Safety Communications Manager 0.00 0.00 0.00 1.00 1.00 0.00% Public Safety Dispatcher I 2.00 2.00 2.00 2.00 0.00 0.00% Public Safety Dispatcher II 14.00 14.00 14.00 14.00 0.00 0.00% Public Safety Dispatcher-Lead 4.60 4.00 4.00 4.00 0.00 0.00% Public Safety Manager I 3.00 2.00 2.00 0.00 -2.00 (100.00)% Public Safety Manager II 0.00 1.00 1.00 0.00 -1.00 (100.00)% Public Safety Program Manager 0.00 0.00 0.00 2.00 2.00 0.00% Senior Management Analyst 1.50 1.50 1.00 1.00 0.00 0.00% Superintendent Animal Services 1.00 1.00 1.00 1.00 0.00 0.00% Veterinarian 1.00 1.00 1.00 1.00 0.00 0.00% TABLE OF ORGANIZATIONTable of Organization FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change FTE FY 2016 Change % ATTACHMENT A, EXHIBIT #3 TABLE OF ORGANIZATION TABLE OF ORGANIZATION • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET 476 Veterinarian Technician 2.00 2.00 2.00 2.00 0.00 0.00% Volunteer Coordinator 0.50 0.00 0.00 0.00 0.00 0.00% Total Police 153.00 154.50 154.00 155.00 1.00 0.65% Total General Fund 579.71 579.70 588.58 598.35 9.77 1.66% Enterprise Funds Total Enterprise Funds 357.82 354.55 358.34 349.85 -8.49 (2.37)% Other Information Technology Administrative Assistant 1.00 1.00 1.00 1.00 0.00 0.00% Assistant Director Administrative Services 0.20 0.10 0.10 0.00 -0.10 (100.00)% Business Analyst 0.00 0.00 0.00 1.00 1.00 0.00% Desktop Technician 5.00 5.00 5.00 5.00 0.00 0.00% Director Administrative Services/CFO 0.20 0.10 0.10 0.10 0.00 0.00% Director Information Technology/CIO 1.00 1.00 1.00 1.00 0.00 0.00% Management Analyst 2.00 1.00 1.00 0.00 -1.00 (100.00)% Manager Information Technology 4.00 4.00 4.00 4.00 0.00 0.00% Manager Information Technology Security 1.00 1.00 1.00 1.00 0.00 0.00% Principal Business Analyst 0.00 0.00 0.00 1.00 1.00 0.00% Principal Management Analyst 1.00 1.00 1.00 0.00 -1.00 (100.00)% Senior Business Analyst 1.00 2.00 0.00 2.00 2.00 0.00% Senior Management Analyst 0.00 0.00 2.00 1.00 -1.00 (50.00)% Senior Technologist 12.00 12.00 13.50 16.00 2.50 18.52% Technologist 3.00 4.00 2.00 2.00 0.00 0.00% Total Information Technology 31.40 32.20 31.70 35.10 3.40 10.73% Total Other 77.82 87.00 86.88 91.90 5.02 5.78% Total Citywide Positions 1,015.35 1,019.35 1,033.80 1,040.10 6.30 0.61% TABLE OF ORGANIZATIONTable of Organization FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change FTE FY 2016 Change % ATTACHMENT A, EXHIBIT #3 Attachment A, Exhibit 4: Municipal Fee Schedule Amendments for FY 2016 Community Services Department Fee Title % Change Fee Change Justification Locker Rental - Small 13% Fee increase from $15.00 per season to $17.00 per season to align with market value. Locker Rental - Large 8% Fee increase from $26.00 per season to $28.00 per season to align with market value. Resident Fee Non-Resident Fee Resident Fee Non-Resident Fee $119.00 per hour $179.00 per hour $131.00 per hour $197.00 per hour Resident Fee Non-Resident Fee Resident Fee Non-Resident Fee $77.00 per hour $116.00 per hour $85.00 per hour $128.00 per hour Resident Fee Non-Resident Fee Resident Fee Non-Resident Fee $50.00 per hour $75.00 per hour $55.00 per hour $83.00 per hour Resident Fee Non-Resident Fee Resident Fee Non-Resident Fee $34.00 per hour $51.00 per hour $37.00 per hour $56.00 per hour Resident Fee Non-Resident Fee Resident Fee Non-Resident Fee $77.00 per hour $116.00 per hour $85.00 per hour $128.00 per hour Resident Fee Non-Resident Fee Resident Fee Non-Resident Fee $77.00 per hour $116.00 per hour $85.00 per hour $128.00 per hour Resident Fee Non-Resident Fee Resident Fee Non-Resident Fee $102.00 per hour $153.00 per hour $112.00 per hour $168.00 per hour Resident Fee Non-Resident Fee Resident Fee Non-Resident Fee $50.00 per hour $75.00 per hour $37.00 per hour $56.00 per hour Resident Fee Non-Resident Fee Resident Fee Non-Resident Fee $50.00 per hour $75.00 per hour $37.00 per hour $56.00 per hour Resident Fee Non-Resident Fee Resident Fee Non-Resident Fee $50.00 per hour $75.00 per hour $37.00 per hour $56.00 per hour Fee increase from $119.00 per hour to $131.00 per hour for Residents and from $179.00 per hour to $197.00 per hour for Non-Residents to align with market value. Fee increase from $77.00 per hour to $85.00 per hour for Residents and from $116.00 per hour to $128.00 per hour for Non-Residents to align with market value. Fee increase from $50.00 per hour to $55.00 per hour for Residents and from $75.00 per hour to $83.00 per hour for Non-Residents to align with market value. Fee increase from $34.00 per hour to $37.00 per hour for Residents and from $51.00 per hour to $56.00 per hour for Non-Residents to align with market value. Fee increase from $77.00 per hour to $85.00 per hour for Residents and from $116.00 per hour to $128.00 per hour for Non-Residents to align with market value. Fee increase from $77.00 per hour to $85.00 per hour for Residents and from $116.00 per hour to $128.00 per hour for Non-Residents to align with market value. Fee increase from $102.00 per hour to $112.00 per hour for Residents and from $153.00 per hour to $168.00 per hour for Non-Residents to align with market value. Reducing fee from $50.00 per hour to $37.00 per hour for Residents and from $75.00 per hour to $56.00 per hour for Non-Residents to increase demand for this space. Reducing fee from $50.00 per hour to $37.00 per hour for Residents and from $75.00 per hour to $56.00 per hour for Non-Residents to increase demand for this space. Reducing fee from $50.00 per hour to $37.00 per hour for Residents and from $75.00 per hour to $56.00 per hour for Non-Residents to increase demand for this space. Art Center: Studio A Art Center: Studio B Art Center: Project LOOK! Studio Art Center: Auditorium Art Center: Historic Courtyard Art Center: Green Room Art Center: Kitchen/Pre-school Art Center: Lobby Art Center: Meeting Room Art Center: Sculpture Garden 10% / 10% 10% / 10% 10% / 10% 9% / 9% 10% / 10% 10% / 10% 10% / 10% -26% / -25% -26% / -25% -26% / -25% $15.00 per season $26.00 per season FY 2015 Adopted Fee FY 2016 Proposed Fee $17.00 per season $28.00 per season Attachment A, Exhibit 4: Municipal Fee Schedule Amendments for FY 2016 Community Services Department Fee Title % Change Fee Change Justification Resident Fee Non-Resident Fee Resident Fee Non-Resident Fee $50.00 per hour $75.00 per hour $37.00 per hour $56.00 per hour Resident Fee Non-Resident Fee Resident Fee Non-Resident Fee $50.00 per hour $75.00 per hour $85.00 per hour $128.00 per hour Resident Fee Non-Resident Fee Resident Fee Non-Resident Fee $11.00 per use $16.50 per use $12.00 per use $18.00 per use Resident Fee Non-Resident Fee Resident Fee Non-Resident Fee $81.00 per use $121.50 per use $85.00 per use $128.00 per use Resident Fee Non-Resident Fee Resident Fee Non-Resident Fee $11.00 per use $16.50 per use $12.00 per use $18.00 per use Resident Fee Non-Resident Fee Resident Fee Non-Resident Fee $65.00 per use $97.50 per use $72.00 per use $107.00 per use Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $22.00 per hour $18.00 per hour $23.00 per hour $19.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $25.00 per hour $21.00 per hour $26.00 per hour $22.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $25.00 per hour $21.00 per hour $26.00 per hour $22.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $1,320.00 each package $924.00 each package $1,400.00 each package $980.00 each package Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $320.00 each additional performance $224.00 each additional performance $335.00 each $235.00 each Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $110.00 per hour $77.00 per hour $115.00 per hour $81.00 per hour Fee increase from $25.00 per hour to $26.00 per hour for Basic Rates and from $21.00 per hour to $22.00 per hour for Non-Profits to align with market value. Fee increase from $25.00 per hour to $26.00 per hour for Basic Rates and from $21.00 per hour to $22.00 per hour for Non-Profits to align with market value. Fee increase from $1,320.00 each package to $1,400.00 each package for Basic Rates and from $924.00 each package to $980.00 each package for Non-Profits to align with market value. Fee increase from $320.00 each additional performance to $335.00 each additional performance for Basic Rates and from $224.00 each additional performance to $235 each additional performance for Non-Profits to align with market value. Fee increase from $110.00 per hour to $115.00 per hour for Basic Rates and from $77.00 per hour to $81.00 per hour for Non-Profits to align with market value. Reducing fee from $50.00 per hour to $37.00 per hour for Residents and from $75.00 per hour to $56.00 per hour for Non-Residents to increase demand for this space. Fee increase from $50.00 per hour to $85.00 per hour for Residents and from $75.00 to $128.00 for Non-Residents to align with market value. Fee increase from $11.00 per use to $12.00 per use for Residents and from $16.50 per use to $18.00 per use for Non-Residents to align with market value. Fee increase from $81.00 per use to $85.00 per use for Residents and from $121.50 per use to $128.00 per use for Non-Residents to align with market value. Cubberley: Dressing Room - M2 Cubberley: Performance Day Package Cubberley: Additional Performance Hours Past Four per Performance Coffee Urn Grand Piano Portable Public Address System Built-in Digital Projector System Cubberley: Dressing Room - M3 Art Center: Children's Clay Studio Art Center: Children's Outdoor Classroom Cubberley: Additional Performance Cubberley: Dressing Room - M4 Fee increase from $11.00 per use to $12.00 per use for Residents and from $16.50 per use to $18.00 per use for Non-Residents to align with market value. Fee increase from $65.00 per use to $72.00 per use for Residents and from $97.50 per use to $107.00 per use for Non-Residents to align with market value. Fee increase from $22.00 per hour to $23.00 per hour for Basic Rates and from $18.00 per hour to $19.00 per hour for Non-Profits to align with market value. 5% / 5% 5% / 6% 4% / 5% 4% / 5% 6% / 6% 5% / 5% 70% / 70% 9% / 9% 5% / 5% 9% / 9% 11% / 10% -26% / -25% FY 2015 Adopted Fee FY 2016 Proposed Fee Attachment A, Exhibit 4: Municipal Fee Schedule Amendments for FY 2016 Community Services Department Fee Title % Change Fee Change Justification Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $190.00 per hour $133.00 per hour $210.00 per hour $147.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $1,100.00 each package $770.00 each package $1,200.00 each package $840.00 each package Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $160.00 per hour $112.00 per hour $180.00 per hour $126.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $810.00 each package $567.00 each package $850.00 each package $595.00 each package Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $110.00 per hour $77.00 per hour $130.00 per hour $91.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $32.00 per hour $25.00 per hour $33.00 per hour $26.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $39.00 per hour $32.00 per hour $40.00 per hour $33.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $51.00 per hour $40.00 per hour $53.00 per hour $41.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $24.00 per hour $19.00 per hour $25.00 per hour $20.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $92.00 per hour $57.00 per hour $95.00 per hour $59.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $40.00 per hour $35.00 per hour $41.00 per hour $36.00 per hour Fee increase from $40.00 per hour to $41.00 per hour for Regular Weekly Rental Basic Rates and from $35.00 per hour to $36.00 per hour for Regular Weekly Rental Non-Profits to align with market value. Fee increase from $32.00 per hour to $33.00 per hour for Regular Weekly Rental Basic Rates and from $25.00 per hour to $26.00 per hour for Regular Weekly Rental Non-Profits to align with market value. Fee increase from $39.00 per hour to $40.00 per hour for Regular Weekly Rental Basic Rates and from $32.00 per hour to $33.00 per hour for Regular Weekly Rental Non-Profits to align with market value. Fee increase from $51.00 per hour to $53.00 per hour for Regular Weekly Rental Basic Rates and from $40.00 per hour to $41.00 per hour for Regular Weekly Rental Non-Profits to align with market value. Fee increase from $24.00 per hour to $25.00 per hour for Regular Weekly Rental Basic Rates and from $19.00 to $20.00 for Regular Weekly Rental Non-Profits to align with market value. Fee increase from $92.00 per hour to $95.00 per hour for Regular Weekly Rental Basic Rates and from $57.00 per hour to $59.00 per hour for Regular Weekly Rental Non-Profits to align with market value. Fee increase from $190.00 per hour to $210.00 per hour for Basic Rates and from $133.00 per hour to $147.00 per hour for Non-Profits to align with market value. Fee increase from $1,100.00 each package to $1,200.00 each pacakge for Basic Rates and from $770.00 each package to $840.00 each package for Non-Profits to align with market value. Fee increase from $160.00 per hour to $180.00 per hour for Basic Rates and from $112.00 per hour to $126.00 per hour for Non-Profits to align with market value. Fee increase from $810.00 each package to $850.00 each package for Basic Rates and from $567.00 each package to $595.00 each package for Non- Profits to align with market value. Fee increase from $110.00 per hour to $130.00 per hour for Basic Rates and from $77.00 per hour to $91.00 per hour for Non-Profits to align with market value. Regular Rental: Dance Studio Cubberley: Additional Production Hours Past Ten Cubberley: Rehearsal Day Package Cubberley: Additional Rehearsal Hours Past Ten Regular Rental: Meeting Room - Small (Less than 1,000 sq. ft.) Regular Rental: Meeting Room - Medium (1,000 - 2,000 sq. ft.) Regular Rental: Meeting Room - Large (2,000 - 4,000 sq. ft.) Regular Rental: Amphitheater (Grass) Regular Rental: Auditorium (Includes Kitchen) Cubberley: Additional Performance Hours Past Ten Cubberley: Production Day Package 3% / 4% 3% / 3% 18% / 18% 3% / 4% 3% / 3% 4% / 3% 4% / 5% 11% / 11% 9% / 9% 13% / 13% 5% / 5% FY 2015 Adopted Fee FY 2016 Proposed Fee Attachment A, Exhibit 4: Municipal Fee Schedule Amendments for FY 2016 Community Services Department Fee Title % Change Fee Change Justification Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $83.00 per hour $54.00 per hour $85.00 per hour $56.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $90.00 per hour $61.00 per hour $93.00 per hour $63.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $53.00 per hour $42.00 per hour $55.00 per hour $43.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $118.00 per hour $92.00 per hour $122.00 per hour $95.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $39.00 per hour $31.00 per hour $40.00 per hour $32.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $50.00 per hour $42.00 per hour $52.00 per hour $43.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $64.00 per hour $50.00 per hour $66.00 per hour $52.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $35.00 per hour $26.00 per hour $36.00 per hour $27.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $136.00 per hour $95.00 per hour $140.00 per hour $98.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $52.00 per hour $44.00 per hour $54.00 per hour $45.00 per hour Fee increase from $52.00 per hour to $54.00 per hour for Infrequent Rental Basic Rates and from $44.00 per hour to $45.00 per hour for Infrequent Rental Non-Profits to align with market value. Fee increase from $39.00 per hour to $40.00 per hour for Infrequent Rental Basic Rates and from $31.00 per hour to $32.00 per hour for Infrequent Rental Non-Profits to align with market value. Fee increase from $50.00 per hour to $52.00 per hour for Infrequent Rental Basic Rates and from $42.00 per hour to $43.00 per hour for Infrequent Rental Non-Profits to align with market value. Fee increase from $64.00 per hour to $66.00 per hour for Infrequent Rental Basic Rates and from $50.00 per hour to $52.00 per hour for Infrequent Rental Non-Profits to align with market value. Fee increase from $35.00 per hour to $36.00 per hour for Infrequent Rental Basic Rates and from $26.00 per hour to $27.00 per hour for Infrequent Rental Non-Profits to align with market value. Fee increase from $136.00 per hour to $140.00 per hour for Infrequent Rental Basic Rates and from $95.00 per hour to $98.00 per hour for Infrequent Rental Non-Profits to align with market value. Fee increase from $83.00 per hour to $85.00 per hour for Regular Weekly Rental Basic Rates and from $54.00 per hour to $56.00 per hour for Regular Weekly Rental Non-Profits to align with market value. Fee increase from $90.00 per hour to $93.00 per hour for Regular Weekly Rental Basic Rates and from $61.00 per hour to $63.00 per hour for Regular Weekly Rental Non-Profits to align with market value. Fee increase from $53.00 per hour to $55.00 per hour for Regular Weekly Rental Basic Rates and from $42.00 per hour to $43.00 per hour for Regular Weekly Rental Non-Profits to align with market value. Fee increase from $118.00 per hour to $122.00 per hour for Regular Weekly Rental Basic Rates and from $92.00 per hour to $95.00 per hour for Regular Weekly Rental Non-Profits to align with market value. Infrequent Rental: Meeting Room - Small (Less than 1,000 sq. ft.) Infrequent Rental: Meeting Room - Medium (1,000 - 2,000 sq. ft.) Regular Rental: Gym A Regular Rental: Gym B Regular Rental: H-1 Lecture Room Regular Rental : Pavilion Infrequent Rental: Dance Studio Infrequent Rental: Auditorium (Includes Kitchen) Infrequent Rental: Amphitheater (Grass) Infrequent Rental: Meeting Room - Large (2,000 - 4,000 sq. ft.) 3% / 3% 4% / 2% 3% / 3% 3% / 3% 4% / 2% 3% / 4% 3% / 4% 2% / 4% 3% / 3% 4% / 2% FY 2015 Adopted Fee FY 2016 Proposed Fee Attachment A, Exhibit 4: Municipal Fee Schedule Amendments for FY 2016 Community Services Department Fee Title % Change Fee Change Justification Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $101.00 per hour $67.00 per hour $104.00 per hour $69.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $121.00 per hour $79.00 per hour $125.00 per hour $81.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $66.00 per hour $52.00 per hour $68.00 per hour $54.00 per hour Basic Rate Non-Profit Rate Basic Rate Non-Profit Rate $147.00 per hour $121.00 per hour $151.00 per hour $125.00 per hour Fee increase from $101.00 per hour to $104.00 per hour for Infrequent Rental Basic Rates and from $67.00 per hour to $69.00 per hour for Infrequent Rental Non-Profits to align with market value. Fee increase from $121.00 per hour to $125.00 per hour for Infrequent Rental Basic Rates and from $79.00 per hour to $81.00 per hour for Infrequent Rental Non-Profits to align with market value. Fee increase from $66.00 per hour to $68.00 per hour for Infrequent Rental Basic Rates and from $52.00 per hour to $54.00 per hour for Infrequent Rental Non-Profits to align with market value. Fee increase from $147.00 per hour to $151.00 per hour for Infrequent Rental Basic Rates and from $121.00 per hour to $125.00 per hour for Infrequent Rental Non-Profits to align with market value. Infrequent Rental: Pavilion Infrequent Rental: H-1 Lecture Room Infrequent Rental: Gym B Infrequent Rental: Gym A 3% / 3% 3% / 3% 3% / 3% 3% / 4% FY 2015 Adopted Fee FY 2016 Proposed Fee Attachment A, Exhibit 4: Municipal Fee Schedule Amendments for FY 2016 Development Services Department Fee Title % Change Fee Change Justification Strong Motion Instrument Program: Commercial 33% Fee increased from $21.00 per $100,000 permit valuation to $28.00 per $100,000 per permit valuation due to SB 861 (Chapter 35, statutes of 2014) which amended Section 2705 of the Public Resources Code to increase the seismic fee for building permits effective July 1, 2014 for increased mapping of faults. Strong Motion Instrument Program: Residential 30% Fee increased from $10.00 per $100,000 permit valuation to $13.00 per $100,000 per permit valuation due to SB 861 (Chapter 35, statutes of 2014) which amended Section 2705 of the Public Resources Code to increase the seismic fee for building permits effective July 1, 2014 for increased mapping of faults. Building Permit Fees: F. $100,000.01 - $500,000.00 4% Base fee increased from $1,723.03 to $1,789.20 for the first $100,000.00 in valuation to adjust for a technical correction to the fee tier structure. The intent of the fee structure is to carry forward the maximum amount that can be charged at each valuation range as the base fee for the next valuation range. Building Permit Fees: H. $1,000,000.01 and Up 4% Base fee increased from $9,695.56 to $10,058.55 for the first $1,000,000.00 in valuation to adjust for a technical correction to the fee tier structure. The intent of the fee structure is to carry forward the maximum amount that can be charged at each valuation range as the base fee for the next valuation range. For valuations exceeding $5,000,000.00, the Chief Building Official is authorized to set fees in order to achieve full cost recovery. Grading and Excavation: B. 1,001 - 10,000 cubic yards 1% Base fee increased from $1,470.00 to $1,480.00 for first 1,000 cubic yards to adjust for a technical correction to the fee tier structure. Grading and Excavation: C. 10,001 or more cubic yards 4% Base fee increased from $2,842.00 to $2,960.00 for first 10,000 cubic yards to adjust for a technical correction to the fee tier structure. Storm Drain Plan Check Fee 25% Fee increased from $381.00 per project to $476.00 per project. Staff proposes to increase the fee by 25% annually for six years until cost recovery is met. Storm Drain Inspection Fee 25% Fee increased from $349.00 to $436.00 per inspection. Staff proposes to increase the fee by 25% annually for four years until cost recovery is met. $9,695.56 for the first $1,000,000.00 $1,470.00 for the first 1,000 cubic yards plus $148.00 for each additional 1,000 cubic yards or fraction thereof $2,842.00 for the first 10,000 cubic yards plus $148.00 for each additional 10,000 cubic yard or fraction thereof $381.00 per project $349.00 per inspection (up to 4 hours) plus $82.00 per hour thereafter $21.00 per $100,000.00 permit valuation ($0.50 minimum) $10.00 per $100,000.00 permit valuation ($0.50 minimum( $1,723.03 for the first $100,000.00 plus $9.68 for each additional $1,000.00 or fraction thereof, to and including $500,000.00 FY 2015 Adopted Fee FY 2016 Proposed Fee $2,960.00 for the first 10,000 cubic yards plus $148.00 for each additional 10,000 cubic yard or fraction thereof $476.00 per project $436.00 per inspection (up to 4 hours) plus $82.00 per hour thereafter $28.00 per $100,000.00 permit valuation ($0.50 minimum) $13.00 per $100,000.00 permit valuation ($0.50 minimum) $1,789.20 for the first $100,000.00 plus $10.03 for each additional $1,000.00 or fraction thereof, to and including $500,000.00 $10,058.55 for the first $1,000,000.00 plus $6.72 for each additional $1,000.00 or fraction thereof. If valuation exceeds $5,000,000.00, an alternative fee arrangement may be established by the Chief Building Official to achieve full cost recovery. $1,480.00 for the first 1,000 cubic yards plus $148.00 for each additional 1,000 cubic yards or fraction thereof Attachment A, Exhibit 4: Municipal Fee Schedule Amendments for FY 2016 Planning & Community Environment Department Department Fee Title % Change Fee Change Justification Planning & Community Environment Parking Permit: Commercial/Construction - Wide Load/Heavy Vehicle -27%Fee is being reduced from $22.00 per occurrence to $16.00 per occurrence to be consistent with applicable state law. Planning & Community Environment Public Art Fee 5% Fee is being increased from $100 million to $105.1 million to satisfy the requirements of the Palo Alto Municipal Code. The Fee was established in FY 2014 and was not adjusted in FY 2015. The revised fee amount accounts for the technical correction that should have occurred in FY 2015. $16.00 per occurrence 1% of the first $105.1 million construction valuation and 0.9% of construction valuation in excess of $105.1 million FY 2015 Adopted Fee FY 2016 Proposed Fee 1% of the first $100 million construction valuation and 0.9% of construcation valuation in excess of $100 million $22.00 per occurrence Attachment A, Exhibit 4: Municipal Fee Schedule Amendments for FY 2016 Police Department Fee Title % Change Fee Change Justification Carnival -34% This infrequently charged fee is being reduced from $2,433.00 per day plus bond to $1,600.00 per day plus bond to align the fee to a cost recovery level of 100%. Circus -34% This infrequently charged fee is being reduced from $2,433.00 per day plus bond to $1,600.00 per day plus bond to align the fee to a cost recovery level of 100%. Fire Arms Dealer Master Permit - Renewal -54% This infrequently charged fee is being reduced from $865.00 to $400.00 per year to align the fee to a cost recovery level of 100%. Massage Establishment - New -60% This infrequently charged fee is being reduced from $750.00 to $300.00 per year to align the fee to a cost recovery level of 100%. Originally adopted fees adjusted after initial implementation period. Massage Establishment - Renewal -78% This infrequently charged fee is being reduced from $450.00 to $100.00 per year to align the fee to a cost recovery level of 100%. Originally adopted fees adjusted after initial implementation period. Massage Establishment - Sole Proprietor (New) -57% This infrequently charged fee is being reduced from $350.00 to $150.00 per year to align the fee to a cost recovery level of 100%. Originally adopted fees adjusted after initial implementation period. Massage Establishment - Sole Proprietor (Renewal) -50% This infrequently charged fee is being reduced from $150.00 to $100.00 per year to align the fee to a cost recovery level of 100%. Originally adopted fees adjusted after initial implementation period. Massage Establishment - Non-Certified (New) -60% This infrequently charged fee is being reduced from $750.00 to $300.00 per year to align the fee to a cost recovery level of 100%. Originally adopted fees adjusted after initial implementation period. Massage Establishment - Non-Certified (Renewal) -78% This infrequently charged fee is being reduced from $450.00 to $100.00 per year to align the fee to a cost recovery level of 100%. Originally adopted fees adjusted after initial implementation period. Massage Technician - New 100% This infrequently charged fee is being increased from $75.00 to $150.00 each to align the fee to a cost recovery level of 100%. Originally adopted fees adjusted after initial implementation period. Massage Technician - Renewal 33% This infrequently charged fee is being increased from $75.00 to $100.00 each to align the fee to a cost recovery level of 100%. Originally adopted fees adjusted after initial implementation period. $75.00 per year $350.00 per year $150.00 per year $750.00 per year $450.00 per year $75.00 per year $2,433.00 per day plus bond $2,433.00 per day plus bond $865.00 per year $750.00 per year $450.00 per year FY 2015 Adopted Fee FY 2016 Proposed Fee $150.00 per year $100.00 per year $1,600.00 per day plus bond $1,600.00 per day plus bond $400.00 per year $300.00 per year $150.00 per year $100.00 per year $300.00 per year $100.00 per year $100.00 per year Attachment A, Exhibit 4: Municipal Fee Schedule Amendments for FY 2016 Police Department Fee Title % Change Fee Change Justification Massage Practitioner - Non-Certified (New) -50% This infrequently charged fee is being reduced from $300.00 to $150.00 per year to align the fee to a cost recovery level of 100%. Originally adopted fees adjusted after initial implementation period. Massage Practitioner - Non-Certified (Renewal) -33% This infrequently charged fee is being reduced from $150.00 to $100.00 per year to align the fee to a cost recovery level of 100%. Originally adopted fees adjusted after initial implementation period. Massage Establishment - Sale or Transfer of Interest -24% This infrequently charged fee is being reduced from $132.00 to $100.00 per occurrence to align the fee to a cost recovery level of 100%. Originally adopted fees adjusted after initial implementation period. Rodeo - New -34% This infrequently charged fee is being reduced from $2,433.00 per day plus bond to $1,600.00 per day plus bond to align the fee to a cost recovery level of 100%. Animal Services: Animal Control Officer/Veterinary Technician 29% This fee is being increased from $56.00 per hour to $72.00 per hour to align the fee to a cost recovery level of 100%. Animal Services: City Veterinarian 30% This fee is being increased from $108.00 per hour to $140.00 per hour to align the fee to a cost recovery level of 100%. $56.00 per hour $108.00 per hour $300.00 per year $150.00 per year $132.00 per year $2,433.00 per day plus bond FY 2015 Adopted Fee FY 2016 Proposed Fee $150.00 per year $100.00 per year $100.00 per occurrence $72.00 per hour $1,600.00 per day plus bond $140.00 per hour Attachment A, Exhibit 4: Municipal Fee Schedule Amendments for FY 2016 Public Works Department Fee Title % Change Fee Change Justification Street Cut Fees: Pavement Condition - Good 18% Fee increased from $11.00 per sq. ft. to $13.00 per sq. ft. to align the fee to a cost recovery level of 100%. Street Cut Fees: Pavement Condition - Fair 25% Fee increased from $8.00 per sq. ft. to $10.00 per sq. ft. to align the fee to a cost recovery level of 100%. Street Cut Fees: Pavement Condition - Poor 80% Fee increased from $5.00 per sq. ft. to $9.00 per sq. ft. to align the fee to a cost recovery level of 100%. Encroachment Permit: Dumpster, Container 10% Fee increased from $153.00 each to $168.00 each. Staff proposes to increase the fee by 10% annually for two years until 100% cost recovery is met. Encroachment Permit: Fence 25% Fee increased from $153.00 each to $191.00 each. Staff proposes to increase the fee by 25% annually for five years until 100% cost recovery is met. Encroachment Permit: Residential 10% Fee increased from $455.00 each to $501.00 each. Staff proposes to increase the fee by 10% annually for two years until 100% cost recovery is met. Flood Zone Determination Letter 15% Fee increased from $60.00 per letter to $69.00 per letter. Staff proposes to increase the fee by 15% annually for four years until 100% cost recovery is met. Temporary Discharge to Storm Drain from Construction Site Dewatering 15% Fee increased from $145.00 per request to discharge to $167.00 per request to discharge. Staff proposes to increase the fee by 15% annually for four years until 100% cost recovery is met. Regular Time Overtime & Holiday Regular Time Overtime & Holiday Fee increased from $98.00 per hour to $107.00 per hour for regular time and $147.00 per hour to $161 per hour for overtime to meet 100% cost recovery. $98.00 per hour $147.00 per hour $107.00 per hour $161.00 per hour Regular Time Overtime & Holiday Regular Time Overtime & Holiday Fee reduced from $95.00 per hour to $89.00 per hour for regular time and $143.00 per hour to $134.00 per hour for overtime to meet 100% cost recovery. $95.00 per hour $143.00 per hour $89.00 per hour $134.00 per hour Regular Time Overtime & Holiday Regular Time Overtime & Holiday Fee reduced from $90.00 per hour to $87.00 per hour for regular time and $135.00 per hour to $131.00 per hour for overtime to meet 100% cost recovery. $90.00 per hour $135.00 per hour $87.00 per hour $131.00 per hour Regular Time Overtime & Holiday Regular Time Overtime & Holiday Fee increased from $84.00 per hour to $103.00 per hour for regular time and $126.00 per hour to $155.00 per hour for overtime to meet 100% cost recovery. $84.00 per hour $126.00 per hour $103.00 per hour $155.00 per hour Regular Time Overtime & Holiday Regular Time Overtime & Holiday Fee increased from $97.00 per hour to $128.00 per hour for regular time and $146.00 per hour to $192.00 per hour for overtime to meet 100% cost recovery. $97.00 per hour $146.00 per hour $128.00 per hour $192.00 per hour Construction & Repair Sweeping Services Traffic Control/Graffiti Services Tree Services Supervision -6% / -6% 9% / 9% -3% / -3% 23% / 23% 32% / 32% $153.00 each $455.00 each $60.00 each $145.00 per request to discharge plus $82.00 per month of discharge FY 2015 Adopted Fee $11.00 per sq. ft. $8.00 per sq. ft. $5.00 per sq. ft. $153.00 each FY 2016 Proposed Fee $168.00 each $9.00 per sq. ft $10.00 per sq. ft. $13.00 per sq. ft. $501.00 each $69.00 per letter $167.00 per request to discharge plus $82.00 per month of discharge $191.00 each Attachment A, Exhibit 4: Municipal Fee Schedule Amendments for FY 2016 New Fees Department Fee Title Fee Change Justification Police Business Location Change Fee All Business Location Change fees are being consolidated into one fee. The new fee for FY 16 is $870.00 per occurrence. Public Works Off Hour Inspection Fee Upon approval of weekend or after hours work this fee allows for City inspection of work in the City right of way during non-business hours. Basic Rate Non-Profit Rate $355.00 each $249.00 each Basic Rate Non-Profit Rate $4,000.00 each $2,800.00 each Basic Rate Non-Profit Rate $200.00 per hour $140.00 per hour Basic Rate Non-Profit Rate $115.00 per hour $81.00 per hour Resident Fee Non-Resident Fee $150.00 per week $150.00 per week Resident Fee Non-Resident Fee $75.00 per week $75.00 per week Resident Fee Non-Resident Fee $37.50 per week $37.50 per week New package category for the Cubberley Theatre. This is an addition to the Full Week Package for rentals that need more than four performances. Cubberley: Additional Performances FY 2016 Proposed Fee $870.00 per occurrence $209.00 per hour Cubberley: Additional Performance Hours Beyond Four Hours per Performance New package category for the Cubberley Theatre. This is an addition to the Full Week Package for rentals that need additional performance hours past four hours per performance. Cubberley: Package Discount - Off Peak A 20% discount is given for the Cubberley Theatre for bookings on off- peak days (Monday through Thursday). Community Services Cubberley: Full Week Package New package category for the Cubberley Theatre. Full Week Package includes exclusive use of the Theatre for seven consecutive days, with up to ten hours of usage per day, and up to four performances, of up to four hours each, during that time. Cubberley: Additional Hours Past Ten Daily New package category for the Cubberley Theatre. This is an addition to the Full Week Package for rentals that need additional hours past ten hours daily. New fee for facilitation of short term rentals for the Cubberley Artist Studio Program. Cubberley: Art Studio Short Term, Quarter Studio New fee for facilitation of short term rentals for the Cubberley Artist Studio Program. Cubberley: Package Discount - Half Day A 20% discount is given for the Cubberley Theatre for half-day rentals (five or less hours either concluding before 2 p.m. or starting after 4 p.m.) or rentals of five hours or less booked before or after an existing rental on the same day. This discount will not apply to multi-day bookings where the client's technical setup does not allow for other clients to rent between bookings. Cubberley: Art Studio Short Term, Whole Studio New fee for facilitation of short term rentals for the Cubberley Artist Studio Program. Community Services 20% Discount 20% DiscountCommunity Services Cubberley: Art Studio Short Term, Half Studio Community Services Community Services Community Services Community Services Community Services Community Services Attachment A, Exhibit 4: Municipal Fee Schedule Amendments for FY 2016 Deleted Fees Department Fee Title Fee Change Justification Police Valet Parking: 0 - 1 Hour This fee is no longer needed as the City does not staff parking garages with attendants for hourly lots. Police Valet Parking: 1 - 3 Hours This fee is no longer needed as the City does not staff parking garages with attendants for hourly lots. Police Valet Parking: 3 - 4 Hours This fee is no longer needed as the City does not staff parking garages with attendants for hourly lots. Police Valet Parking: Over 4 Hours This fee is no longer needed as the City does not staff parking garages with attendants for hourly lots. Police Valet Parking: Daily Maximum This fee is no longer needed as the City does not staff parking garages with attendants for hourly lots. Police Hot Tub/Sauna: Business Location Change Fee All Business Location Change fees are being consolidated into one fee. The new fee for FY 16 is $870.00 per occurrence. Police Massage Establishment: Business Location Change Fee All Business Location Change fees are being consolidated into one fee. The new fee for FY 16 is $870.00 per occurrence. Resident Fee Non-Resident Fee $297.00 - $541.00 per party Fee plus up to 50% Resident Fee Non-Resident Fee $50.00 per hour $75.00 per hour Resident Fee Non-Resident Fee $77.00 per use $116.00 per use Regular Time Overtime & Holiday $23.00 - $27.00 per hour $35.00 - $41.00 per hour Cubberley: Theatre Ushers FY 2015 Adopted Fee Free $2.00 $4.00 $9.00 $9.00 $870.00 per occurrence $750.00 per occurrence Community Services Art Center: Grand Piano Purging duplicated fee as the Grand Piano Fee is applicable. Community Services Removing Fee as service to be self provided by renter. Community Services Childrens Theatre: Birthday Party Admission Purging duplicated fee as the Birthday Party Admission fee is applicable. Community Services Art Center: Ceramics Studio Facility no longer available for rentals as it is primarily being used for education purposes. *NOT YET APPROVED * Resolution No. _________ Resolution of the Council of the City of Palo Alto Adopting a Dark Fiber Rate Increase by Amending Rate Schedules EDF-1 (Dark Fiber Licensing Services) and EDF-2 (Dark Fiber Connection Fees) RECITALS A. The City of Palo Alto administers three different fiber rates. Fiber Rate schedule EDF-1 applies to customers with fiber optic licenses that began prior to September 18, 2006, and is closed to new customers. Fiber rate schedule EDF-2, applies to customer engineering, construction and connection expenses. B. The original Council-approved Dark Fiber Licensing Agreement annually increases both the EDF-1 and EDF-2 rates by the Consumer Price Index for all Urban Consumers for the San Francisco-Oakland-San Jose Metropolitan Statistical Area (CPI). Since 2006, new fiber customers have been enrolled under rate schedule EDF- 3, which has no CPI adjustment factor. C. The last time Council adopted a resolution incorporating CPI-adjusted rates into the EDF-1 and EDF-2 rate schedules was June 16, 2014. The Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule EDF-1 (Dark Fiber Licensing Services) is hereby amended to read as attached and incorporated. Utility Rate Schedule EDF-1, as amended, shall become effective July 1, 2015. SECTION 2. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule EDF-2 (Dark Fiber Connection Fees) is hereby amended to read as attached and incorporated. Utility Rate Schedule EDF-2, as amended, shall become effective July 1, 2015. SECTION 3. The Council finds that the revenue derived from the adoption of this resolution shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. SECTION 4. The Council finds that the adoption of this resolution increasing dark fiber rates by the Consumer Price Index to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to 6053325 ATTACHMENT B *NOT YET APPROVED * California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ___________________________ ___________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ ___________________________ Senior Deputy City Attorney City Manager ___________________________ Director of Utilities ___________________________ Director of Administrative Services 6053325 ATTACHMENT B DARK FIBER LICENSING SERVICES UTILITY RATE SCHEDULE EDF-1 A. APPLICABILITY: This rate schedule applies to customer accounts established prior to September 18, 2006, unless the customer elects to apply the EDF-3 rate to the entire customer account. This rate applies to Fiber Optic services from the City of Palo Alto Utilities (CPAU) pertaining to the City's network (Backbone and associated connections). B. TERRITORY: Within the incorporated limits of the City of Palo Alto and land owned or leased by the City. C. FEES: 1.DARK FIBER BACKBONE LICENSE FEES: The values or ranges for each of these price components are shown below: (1) Fiber Price………………………………………………………………. $336.36345.35/FM/month (2) Quantity discount ……………………………………………………… $0 to $59.84/FM/month (3) Buffer tube discount……………………………………………………….. $0 to $59.84/FM/month (4) Route length discount…………………………………………………….. $0 to $77.80/FM/month (5) Ring topology discount………………………………………………………$0 to $23.94/FM/month (6) Length of term discount…………………………………………………… $0 to $46.80/FM/month Minimum Backbone License Fee $508.73522.32/month Project Minimum Backbone Fees apply to any project proposal signed after September 18, 2006 in which the project connects with the Backbone. Description for Discounts: Quantity discount: based on an array of discounts for quantities of fiber licensed on a specific path. Buffer tube discount: discount for numbers of full buffer tubes licensed on a specific path. Route length discount: based on the route length licensed on a specific project. Ring topology discount: The ring topology discount for customers contracting for complete rings. Term discount: based on an array of discounts for contracts greater than one and less than ten years. 2.DARK FIBER LATERAL CONNECTION FEES: Customer responsibilities and fees for drop and custom cable construction are described in the CPAU Rules and Regulations, Rate Schedule EDF-2, project proposals and other associated documents. In all cases, the Licensee shall pay an annual Drop/Custom Cable Management Fee based on the follow per foot fees: (1) Drop Cable Management Fees (for the first 12-Fibers) …………………………… $0.03- $0.067/ft/month (2) Custom Cable Management Fees (for the first 12-Fibers)……………………….. $0.33/ft/month (3) Fees for additional Drop or Custom Cable fibers (each additional set of 12-Fibers) $0.067/ft/month CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No EDF-1-1 Effective 07-01-20145 dated 7-01-20134 Sheet No. EDF-1-1 ATTACHMENT B DARK FIBER LICENSING SERVICES UTILITY RATE SCHEDULE EDF-1 Minimum Drop or Custom Cable Management Fees ........................................................ $251.37258.09/month Minimum Drop Cable Management Fees apply to any project proposal signed after September 18, 2006. CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No EDF-1-2 Effective 07-01-20145 dated 7-01-20134 Sheet No. EDF-1-2 ATTACHMENT B DARK FIBER LICENSING SERVICES UTILITY RATE SCHEDULE EDF-1 3.EARLY TERMINATION FEES: If the Licensee chooses to terminate for convenience the License Agreement or the term of any project under the License Agreement, then the Licensee shall pay the applicable termination payment as specified in this schedule or in the License Agreement, as provided below. Unless otherwise provided in the License Agreement, the Licensee shall pay a termination fee in one of the following amounts, whichever is less: •Annual fee of the contract year that the Licensee chooses to terminates in full without term discounts, or •Remaining fees of the project term as indicated in the License Agreement. D. SPECIAL NOTES: 1.All fees must be paid to the City in accordance with the terms of the Dark Fiber License Agreement, the customer’s project proposals and all the applicable Utilities Rates, Rules, and Regulations. 2.All fees and minimum charges are subject to Consumer Price Index (CPI) adjustments, to be applied annually, except as defined by Section D.3 of this Rate Schedule. Discounts will not be modified by changes to CPI. 3.The CPI adjustment will be based on the Consumer Price Index for All Urban Consumers (CPI-U) for the San Francisco-Oakland-San Jose MSA, published by the U.S. Department of Labor, Bureau of Labor Statistics. The adjustment is calculated by dividing the most recent calendar year December CPI by the December CPI in the year rates last changed. In the event that the change between December CPI’s indicates an adjustment of less than 1% is required, a change to rate schedules may not be made for the upcoming year. Future rate changes will take the last year of change as the new base year for purposes of calculation. {End} CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No EDF-1-3 Effective 07-01-20145 dated 7-01-20134 Sheet No. EDF-1-3 ATTACHMENT B DARK FIBER SERVICE CONNECTION FEES UTILITY RATE SCHEDULE EDF-2 A. APPLICABILITY: This schedule applies to all connections, expansions, and upgrades to the City's Dark Fiber network (Backbone). B. TERRITORY: All territory within the incorporated limits of the City and land owned or leased by the City. C. FEES: 1. ADVANCE ENGINEERING FEES: Advance engineering (AER) fees must be paid to start the engineering process and are non-refundable. The fees will be credited against the estimated project cost prior to the collection of the project construction fees. (1) Commercial/Industrial AER minimum fee ..................................................................... $803825.00 (2) Special conditions (requiring expert assessment) ........................................................... By Estimate 2. ESTIMATED SERVICE CONNECTION AND RECONFIGURATION FEES All estimated service connection and reconfiguration fees must be paid prior to the scheduling of any construction or reconnections to the City's Dark Fiber network. (1) Service connection (Interconnection) fee ...................................................... By Estimate (2) Reconfiguration Fees ..................................................................................... By Estimate Labor rates are subject to change as stated in the Utility Rate Schedule C-1. D. NOTES: 1. The Customer is responsible for the installation and maintenance of all ducts and pathways from the facility to the property line in compliance with City of Palo Alto Utilities Rules and Regulations and contract agreements. 2. The City shall not be held liable for delays or interruptions in service, but will make reasonable efforts to provide timely continuous service. 3. All fees are subject to Consumer Price Index (CPI) adjustments, to be applied annually. The CPI adjustment will be based on the Consumer Price Index for All Urban Consumers (CPI-U) for the San Francisco-Oakland- San Jose MSA, published by the U.S. Department of Labor, Bureau of Labor Statistics. The adjustment is calculated by dividing the most recent calendar year December CPI by the December CPI in the year rates last changed. In the event that the change between December CPI’s indicates an adjustment of less than 1% is required, a change to rate schedules may not be made for the upcoming year. Future rate changes will take the last year of change as the new base year for purposes of calculation. {End} CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No EDF-2-1 Effective 7-01-20154 dated 7-01-20134 Sheet No. EDF-2-1 ATTACHMENT B NOT YET APPROVED 1 150225 mf 00710563 Resolution No. ______ Resolution of the Council of the City of Palo Alto Amending Utility Rate Schedule D‐1 (Storm and Surface Water Drainage) to Increase Storm Drain Rates by 2.7% Per Month Per Equivalent Residential Unit for Fiscal Year 2016 The Council of the City of Palo Alto RESOLVES, as follows: SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule D‐1 (Storm and Surface Water Drainage) is hereby amended to read in accordance with sheet D‐1‐1, attached hereto and incorporated herein. The foregoing Utility Rate Schedule, as amended, shall become effective July 1, 2015. SECTION 2. The Council finds that this rate increase is being imposed to offset the effects of inflation on labor and material costs pursuant to the annual inflationary fee escalator provision of the Storm Drainage Fee ballot measure, which was approved by a majority of Palo Alto property owners on April 26, 2005. SECTION 3. The Council finds that the revenue derived from the authorized adoption enumerated herein shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. / / / / / / / / ATTACHMENT C NOT YET APPROVED 2 150225 mf 00710563 SECTION 4. The Council finds that modification and approval of this change to the Utility Rate Schedule D‐1 (Storm and Surface Water Drainage) for the purpose of meeting operating expenses is statutorily exempt from California Environmental Quality Act (CEQA) review, pursuant to Public Resources Code Section 15273(a). INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: _______________________________________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ _____________________________ Senior Asst. City Attorney City Manager _____________________________ Director of Public Works _____________________________ Director of Administrative Services ATTACHMENT C GENERAL STORM AND SURFACE WATER DRAINAGE UTILITY RATE SCHEDULE D-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2015 Supersedes Sheet No.D-1-1 dated 7-1-2014 Sheet No.D-1-1 A. APPLICABILITY: This schedule applies to all storm and surface water drainage service, excepting only those users and to the extent that they are constitutionally exempt under the Constitution of the State of California or who are determined to be exempt pursuant to Rule and Regulation 25. B. TERRITORY: Inside the incorporated limits of the city of Palo Alto and land owned or leased by the city. C. RATES: Per Month: Storm Drainage Fee per Equivalent Residential Unit (ERU) .......................................................$12.63 D. SPECIAL NOTES: 1. An Equivalent Residential Unit (ERU) is the basic unit for computation of storm drainage fees for residential and non-residential customers. All single-family residential properties shall be billed the number of ERUs specified in the following table, based on an analysis of the relationship between impervious area and lot size for Palo Alto properties. RESIDENTIAL RATES (Single-Family Residential Properties PARCEL SIZE (sq.ft.) ERU <6,000 sq.ft. 0.8 ERU 6,000 - 11,000 sq.ft. 1.0 ERU >11,000 sq.ft. 1.4 ERU All other properties will have ERU's computed to the nearest 1/10 ERU using the following formula: No. of ERU = Impervious Area (Sq. Ft.) 2,500 Sq. Ft. 2.For more details on the storm drainage fee, refer to Utilities Rule and Regulation 25. {End} ATTACHMENT C *NOT YET APPROVED * 150223 mf 6053246 Resolution No. _____ Resolution of the Council of the City of Palo Alto Amending Rate Schedules S-1 (Residential Wastewater Collection and Disposal), S-2 (Commercial Wastewater Collection and Disposal), S-6 (Restaurant Wastewater Collection and Disposal) and S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger) R E C I T A L S A. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the City of Palo Alto may by resolution adopt rules and regulations governing utility services, fees and charges. B.Pursuant to Article XIIID Sec. 6 of the California Constitution, on ________, 2015, the City of Palo Alto held a public hearing to consider all protests against the proposed wastewater collection rate amendments. C. The total number of written protests presented by the close of the public hearing was less than fifty percent (50%) of the total number of customers and property owners subject to the proposed wastewater collection rate amendments. The Council of the City of Palo Alto RESOLVES, as follows: SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-1 (Residential Wastewater Collection and Disposal) is hereby amended to read as attached and incorporated. Utility Rate Schedule S-1, as amended, shall become effective July 1, 2015. SECTION 2. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-2 (Commercial Wastewater Collection and Disposal) is hereby amended to read as attached and incorporated. Utility Rate Schedule S-2, as amended, shall become effective July 1, 2015. SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-6 (Restaurant Wastewater Collection and Disposal) is hereby amended to read as attached and incorporated. Utility Rate Schedule S-6, as amended, shall become effective July 1, 2015. SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger) is hereby amended to read as attached and incorporated. Utility Rate Schedule S-7, as amended, shall become effective July 1, 2015. ATTACHMENT D *NOT YET APPROVED * 150223 mf 6053246 SECTION 5. The Council finds that the revenue derived from the adoption of this resolution shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. SECTION 6. The Council finds that the fees and charges adopted by this resolution are charges imposed for a specific government service or product provided directly to the payor that are not provided to those not charged, and do not exceed the reasonable costs to the City of providing the service or product. SECTION 7. The Council finds that the adoption of this resolution changing wastewater collection rates to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ___________________________ ___________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ ___________________________ Senior Deputy City Attorney City Manager ___________________________ Director of Utilities ___________________________ Director of Administrative Services ATTACHMENT D RESIDENTIAL WASTEWATER COLLECTION AND DISPOSAL UTILITY RATE SCHEDULE S-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No S-1-1 Effective 7-1-20125 dated 7-1-20112 Sheet No S-1-1 A. APPLICABILITY: This schedule applies to each occupied residential dwelling unit. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides wastewater service. C. RATES: Per Month Each domestic dwelling unit .................................................................................................. $29.3131.95 D. SPECIAL NOTES: 1. Any dwelling unit being individually served by a water, gas, or electric meter will be considered continuously occupied. 2. For two or more occupied dwelling units served by one water meter, the monthly wastewater charge will be calculated by multiplying the current wastewater rate by the number of dwelling units. 3. Each developed separate lot shall have a separate service lateral to a sanitary main or manhole. {End} ATTACHMENT D COMMERCIAL WASTEWATER COLLECTION AND DISPOSAL UTILITY RATE SCHEDULE S-2 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No S-2-1 Effective 7-1-20125 dated 7-1-20112 Sheet No S-2-1 A. APPLICABILITY: This schedule applies to all commercial establishments other than those served under Utility Rate Schedule S-1 (Domestic Wastewater Collection and Disposal), Rate Schedule S-6 (Restaurant Wastewater Collection and Disposal) or Rate Schedule S-7 (Commercial Establishments Wastewater Disposal – Industrial Discharger). B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides wastewater services. C. RATES: 1. Minimum Charge per connection per month .............................................................$29.3131.95 2. Quantity Rates, per 100 cubic feet (See Section D.1) .............................................$5.656.16D. SPECIAL NOTES: 1. The monthly charge for the quantity rate set forth in Section C.2 of this rate schedule will be based upon the average water usage for the months of January, February and March, and applied in the following July. If a water meter is identified as exclusively serving irrigation landscaping, such meter will be exempted from wastewater charge calculations. Customers without an applicable usage history will be charged at the minimum monthly charge until such time as such usage may reasonably be established by the City of Palo Alto Utilities Department. 2. The City of Palo Alto Utilities Department may require wastewater metering facilities, in which case service will be governed by terms of a special agreement between the City and the Customer. {End} ATTACHMENT D RESTAURANT WASTEWATER COLLECTION AND DISPOSAL UTILITY RATE SCHEDULE S-6 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No S-6-1 Effective 7-1-20125 dated 7-1-2012 Sheet No S-6-1 A. APPLICABILITY: This schedule applies to all restaurants. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides wastewater services. C. RATES: 1. Minimum charge per connection per month ......................................................... $29.3131.95 2. Quantity Rates, per 100 cubic feet of monthly metered water usage .........................$ 8.739.52 D. SPECIAL NOTES: 1. The City of Palo Alto Utilities Department may require wastewater metering facilities, in which case service will be governed by terms of a special agreement between the City and the Customer. {End} ATTACHMENT D COMMERCIAL WASTEWATER COLLECTION AND DISPOSAL –INDUSTRIAL DISCHARGER UTILITY RATE SCHEDULE S-7 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No S-7-1 Effective 7-1-20125 dated 7-1-2012 Sheet No S-7-1 A. APPLICABILITY: This schedule applies to any establishment requiring sampling of industrial discharges in excess of 25,000 gallons per day, or special discharge monitoring, as defined in Rule and Regulation 23, Section D. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides wastewater services. C. RATES: 1. Collection System Operation, Maintenance, and Infiltration Inflow: $2,077.54 per million gallons ($1.5578 per 100 cubic feet of metered water use). 2. Advanced Waste Treatment Operations and Maintenance Charge: $1,403.74 per million gallons ($1.05 per 100 cubic feet of metered water use 3. $ 247.56 per 1000 pounds (lbs) of COD (Chemical Oxygen Demand) 4. $ 596.62 per 1000 lbs of SS (Suspended Solids) 5. $ 3,983.85 per 1000 lbs of NH3 (Ammonia) 6. $ 14,781.25 per 1000 lbs of toxics (chromium, copper, cyanide, lead, nickel, silver, and zinc) D. SPECIAL NOTES: 1. Water usage will be determined as defined in Rule and Regulation 23, Section D. If a water meter is identified as exclusively serving irrigation landscaping, such meter will be exempted from wastewater charge calculations. 2. The City of Palo Alto Utilities Department may require wastewater metering facilities, in which case service will be governed by terms of a special agreement between the City of Palo Alto and the Customer. 3. Charges for large discharges will be determined on the basis of sampling as outlined in Utilities Rule and Regulation 23, Section D. However, for purposes of arriving at an accurate flow estimate, discharge meters, if installed, can be utilized to measure outflow for billing purposes. Annual charges will be determined and allocated monthly for billing purposes. {End} ATTACHMENT D NOT YET APPROVED 150501 jb 00710614 Resolution No. ____ Resolution of the Council of the City of Palo Alto Amending Utilities Rules and Regulations 2 (Definitions and Abbreviations), 3 (Description of Utility Services), 11 (Billing, Adjustments, and Payments of Bills), and 24 (Special Refuse Service Regulations) Governing the Provision of Utilities and Public Works Services A. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, the City Council may by resolution adopt rules and regulations governing utility services and the fees and charges therefor. B. The amendments to Rules and Regulations 2 (Definitions and Abbreviations), 3 (Description of Utility Services), 11 (Billing, Adjustments, and Payments of Bills), and 24 (Special Refuse Service Regulations) include new definitions, updates to the refuse service billing adjustments and new service guidelines and requirements to reflect new zero waste services. The Council of the City of Palo Alto RESOLVES, as follows: SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 2 (Definitions and Abbreviations), as amended, attached hereto and incorporated herein, is hereby approved and adopted. The foregoing Utilities Rule and Regulation, as amended, shall become effective on July 1, 2015. SECTION 2. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 3 (Description of Utility Services), as amended, attached hereto and incorporated herein, is hereby approved and adopted. The foregoing Utilities Rule and Regulation, as amended, shall become effective on July 1, 2015. SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 11 (Billing, Adjustments, and Payments of Bills), as amended, attached hereto and incorporated herein, is hereby approved and adopted. The foregoing Utilities Rule and Regulation, as amended, shall become effective on July 1, 2015. SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utilities Rule and Regulation 24 (Special Refuse Service Regulations), as amended, attached hereto and incorporated herein, is hereby approved and adopted. The foregoing Utilities Rule and Regulation, as amended, shall become effective on July 1, 2015. SECTION 5. Except as specifically amended by this resolution, all existing Utilities Rules and Regulations shall remain in full force and effect. SECTION 6. The Council finds that the adoption of this resolution does not meet the ATTACHMENT E NOT YET APPROVED 150501 jb 00710614 California Environmental Quality Act’s definition of a project, pursuant to California Public Resources Code section 21065, therefore, no environmental assessment is required. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED __________________________ __________________________ City Clerk Mayor APPROVED AS TO FORM: __________________________ City Manager __________________________ __________________________ Senior Assistant City Attorney Director of Public Works ATTACHMENT E A. APPLICABILITY: This schedule applies to each occupied domestic dwelling as required by City ordinance, including separate single-family domestic dwelling and multi-unit dwellings (4 units or less). An occupied dwelling unit is defined as any home, apartment unit, cottage, flat or duplex unit, having kitchen, bath, and sleeping facilities, and to which gas or electric service is being rendered. B. TERRITORY: Within the incorporated limits of the City of Palo Alto and on land owned or leased by the City. C. RATES: The refuse rates below provide weekly collection, processing and disposal of materials properly deposited in the number of garbage containers indicated below, as well as weekly collection and processing of recyclables from blue carts (standard service includes one 64-gallon blue cart), weekly collection and processing of compostables (yard trimmings, food scraps, and food soiled paper) from green carts (standard service includes one 96-gallon green cart), ongoing maintenance of the closed Palo Alto Landfill, zero waste programs, street sweeping service, the household hazardous waste program, and the annual Clean Up Day. Monthly Refuse Services Cost Garbage Cart Sizes Mini-can/20-gallon cart * 24.30 1 32-gallon cart** 43.75 1 64-gallon cart 87.51 1 96-gallon cart 131.26 *Mini-can service cannot be combined with any other cart service **Standard cart service is one 32-gallon cart. D. SPECIAL ITEM CHARGES: 1.Stove/washer/dryer/water heater pick up * ...................................................................... 25.00 2.Freezer/refrigerator/air conditioner/garbage compactor pick up * .................................. 35.00 ATTACHMENT E 3.Upholstered furniture pick up (per unit) * ....................................................................... 15.00 4.Mattress pick up * ............................................................................................................ 15.00 5.Tire pick up (per tire, limit of 4 tires) * ........................................................................... 20.00 6. Pallet pick up *................................................................................................................. 5.00 * “Surcharge special” fee (see E5. below) applies when special item is not collected under the annual Clean Up Day Program guidelines. E. SPECIAL LABOR CHARGES: 1. Return trip (next day service)……………………………………………………. ......... 24.00 2.Return trip (same day service) ……………………………………………………. ....... 36.00 3.Urgent special (for service outside standard weekly collection; charged per cubic yard) 55.00 4.Miscellaneous 2 person service rate (waiting time) ................................................... 3.20/min 5.Miscellaneous 1 person service rate (pull out service) ............................................. 2.20/min 6.Surcharge special (one time pick up of large or non-standard items; or delivery of containers for special events) ………….... ................................................................................. 77.00 7.Repair rate ................................................................................................ 2.20/min + material 8.Extra can………………………………………………… ................................................ 10.60 9.Back/side yard collection of garbage (monthly charge per residence – available to current back/side yard service customer only) ………………. ................................................... 3.66 F. SPECIAL CART CHARGES: 1. 32-gallon cart rental*** …………………………… .........................................................3.00 2. 64-gallon cart rental*** …………………………… .........................................................3.00 3. 96-gallon cart rental*** …………………………… .........................................................3.00 4. 20-gallon cart purchase ......................................................................................................60.00 5. 32-gallon cart purchase…………………………………………………………… ........ 51.00 6. 64-gallon cart purchase……………………………………………………………. ...... 57.00 7. 96-gallon cart purchase…………………………………………………………….. ...... 62.00 8.Cart wash ………………………………………………………………………….. ...... 25.00 9.Cart clean out (by hand)……………………………………………………………. ...... 15.00 10.Recycling cart contamination (entire cart dumped)……………………………….. ....... 30.00 11.Damaged cart exchange (one allowed per customer each calendar year at no cost). ...... 20.00 12. Monthly key service (customer provided lock) ………………………………………. . 15.00 13. Lock (Collector provided) …………………………………………………………....... 25.00 14. Cart lock installation………………………………………………………………. ....... 40.00 *** Monthly charge for each additional cart of service above three carts for the compostable materials or recycling cart. ATTACHMENT E *NOT YET APPROVED* Resolution No. ____ Resolution of the Council of the City of Palo Alto Amending Salary Schedules for the Management, Professional, and Confidential Unit, the Utilities Managers of Palo Alto Professional Association, and the Service Employees International Union The Council of the City of Palo Alto RESOLVES as follows: SECTION 1. The Salary Schedule attached to the 2014-2016 Compensation Plan for Management and Professional Personnel, as adopted by Resolution No. 9476 and amended by Resolution No. 9503, is hereby amended as set forth in Exhibit “1”, attached hereto and incorporated herein by reference. SECTION 2. The Salary Schedule for the Utilities Managers of Palo Alto Professional Association, as imposed by Resolution No. 9359 and amended by Resolution Nos. 9492 and 9503, is hereby amended as set forth in Exhibit “2”, attached hereto and incorporated herein by reference. SECTION 3. The Salary Schedule in the 2013-2015 Memorandum of Agreement with the Service Employees International Union, as adopted by Resolution Nos. 9398 and amended by Resolution No. 9431 is hereby amended as set forth in Exhibit “3”, attached hereto and incorporated herein by reference, effective with the pay period including July 1, 2015. SECTION 4. The Director of Administrative Services is authorized to implement the amended salary schedules set forth in Sections 1, 2 and 3. SECTION 5. The Council 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: ABSENT: ABSTENTIONS: ATTEST: ___________________________ ______________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ ______________________________ City Attorney City Manager _____________________________ Director of Administrative Services ____________________________ Chief People Officer 1 ATTACHMENT F ATTACHMENT F, EXHIBIT 1 Job Code FLSA Status Classifications Grade Codes Min Hourly Rate Mid Point Hourly Rate Max Hourly Rate Approx Mid- Point Monthly Salary Approx. Mid- Point Annual Salary 190 Non-Exempt Accountant 690P 32.08$ 40.10$ 48.12$ 6,950.67$ 83,408.00$ 76 Exempt Administrative Assistant 750P 27.68$ 34.59$ 41.51$ 5,995.60$ 71,947.20$ 115 Exempt Assistant Chief Building Official (new position) 405M 44.95$ 56.19$ 67.43$ 9,739.60$ 116,875.20$ 132 Exempt Assistant Chief of Police 100A 73.59$ 91.98$ 110.38$ 15,943.20$ 191,318.40$ 108 Exempt Assistant City Attorney 165A 62.38$ 77.97$ 93.57$ 13,514.80$ 162,177.60$ 109 Exempt Assistant City Clerk 630M 36.30$ 45.37$ 54.45$ 7,864.13$ 94,369.60$ 107 Exempt Assistant City Manager/Chief Operating Officer 20E 76.44$ 95.55$ 114.66$ 16,562.00$ 198,744.00$ 73 Exempt Assistant Director Administrative Services 120A 62.89$ 78.61$ 94.34$ 13,625.73$ 163,508.80$ 126 Exempt Assistant Director Community Services 150A 60.20$ 75.25$ 90.30$ 13,043.33$ 156,520.00$ 1007 Exempt Assistant Director Human Resources 155A 58.20$ 72.74$ 87.29$ 12,608.27$ 151,299.20$ 2001 Exempt Assistant Director Library Services 160A 57.59$ 71.98$ 86.38$ 12,476.53$ 149,718.40$ 10 Exempt Assistant Director Planning & Community Environment 130A 61.68$ 77.10$ 92.52$ 13,364.00$ 160,368.00$ 143 Exempt Assistant Director Public Works 140A 60.96$ 76.20$ 91.44$ 13,208.00$ 158,496.00$ 168 Exempt Assistant Fleet Manager 585M 38.15$ 47.68$ 57.22$ 8,264.53$ 99,174.40$ 102 Exempt Assistant Manager WQCP 240D 49.28$ 61.60$ 73.92$ 10,677.33$ 128,128.00$ 30 Exempt Assistant to the City Manager 390M 47.63$ 59.53$ 71.44$ 10,318.53$ 123,822.40$ 118 Exempt Chief Building Official 290M 58.52$ 73.15$ 87.78$ 12,679.33$ 152,152.00$ 2008 Exempt Chief Communications Officer 135A 61.36$ 76.69$ 92.03$ 13,292.93$ 159,515.20$ 112 Exempt Chief Planning Official 220D 52.30$ 65.37$ 78.45$ 11,330.80$ 135,969.60$ 95 Exempt Chief Procurement Officer 235D 49.48$ 61.84$ 74.21$ 10,718.93$ 128,627.20$ 2010 Exempt Chief Sustainability Officer 435M 53.41$ 66.76$ 80.12$ 11,571.73$ 138,860.80$ 82 Exempt Chief Transportation Official 204M 204D 55.03$ 68.78$ 82.54$ 11,921.87$ 143,062.40$ 96 Exempt Claims Investigator 660P 33.71$ 42.13$ 50.56$ 7,302.53$ 87,630.40$ 24 Exempt Communication Specialist 615M 36.51$ 45.63$ 54.76$ 7,909.20$ 94,910.40$ 89 Exempt Contracts Administrator 585P 38.15$ 47.68$ 57.22$ 8,264.53$ 99,174.40$ 186 Non-Exempt Coordinator Library Circulation 675M 32.14$ 40.17$ 48.21$ 6,962.80$ 83,553.60$ 191 Exempt Deputy Chief/Fire Marshall 125A 62.15$ 77.68$ 93.22$ 13,464.53$ 161,574.40$ 9 Exempt Deputy City Attorney 480P 44.23$ 55.28$ 66.34$ 9,581.87$ 114,982.40$ 71 Exempt Deputy City Clerk 720M 29.08$ 36.34$ 43.61$ 6,298.93$ 75,587.20$ 195 Exempt Deputy Director Technical Services Division 200D 61.96$ 77.45$ 92.94$ 13,424.67$ 161,096.00$ 20 Exempt Deputy Fire Chief 110A 64.76$ 80.94$ 97.13$ 14,029.60$ 168,355.20$ 81 Exempt Director Administrative Services/Chief Financial Officer 50E 73.28$ 91.59$ 109.91$ 15,875.60$ 190,507.20$ 72 Exempt Director Community Services 45E 73.84$ 92.29$ 110.75$ 15,996.93$ 191,963.20$ 1012 Exempt Director Development Services 145A 64.83$ 81.03$ 97.24$ 14,045.20$ 168,542.40$ 133 Exempt Director Human Resources/Chief People Officer 55E 69.83$ 87.28$ 104.74$ 15,128.53$ 181,542.40$ 128 Exempt Director Information Technology/Chief Information Officer 25E 76.30$ 95.37$ 114.45$ 16,530.80$ 198,369.60$ 131 Exempt Director Libraries 60E 69.11$ 86.38$ 103.66$ 14,972.53$ 179,670.40$ 2005 Exempt Director Office of Emergency Services 215D 54.22$ 67.77$ 81.33$ 11,746.80$ 140,961.60$ 49 Exempt Director Office of Management and Budget 120A 62.89$ 78.61$ 94.34$ 13,625.73$ 163,508.80$ 134 Exempt Director Planning & Community Environment 40E 74.00$ 92.50$ 111.00$ 16,033.33$ 192,400.00$ 135 Exempt Director Public Works/City Engineer 30E 74.96$ 93.69$ 112.43$ 16,239.60$ 194,875.20$ 121 Exempt Director Utilities 10E 96.06$ 120.07$ 144.09$ 20,812.13$ 249,745.60$ 2002 Exempt Division Head Library Services 260D 45.23$ 56.53$ 67.84$ 9,798.53$ 117,582.40$ 172 Exempt Division Manager Open Space, Parks & Golf 245D 48.62$ 60.77$ 72.93$ 10,533.47$ 126,401.60$ 1005 Exempt Executive Assistant to the City Manager 705M 31.31$ 39.13$ 46.96$ 6,782.53$ 81,390.40$ 139 Exempt Fire Chief 35E 74.55$ 93.18$ 111.82$ 16,151.20$ 193,814.40$ 163 Exempt Hearing Officer 480M 44.23$ 55.28$ 66.34$ 9,581.87$ 114,982.40$ 101 Exempt Human Resources Representative 735P 28.36$ 35.45$ 42.54$ 6,144.67$ 73,736.00$ 90 Exempt Landscape Architect Park Planner 510M 42.10$ 52.62$ 63.15$ 9,120.80$ 109,449.60$ 2015 Exempt Legal Fellow 755P 36.20$ 45.24$ 54.29$ 7,841.60$ 94,099.20$ 69 Exempt Legal Services Administrator 555M 39.19$ 48.98$ 58.78$ 8,489.87$ 101,878.40$ 171 Exempt Management Analyst 585M 38.15$ 47.68$ 57.22$ 8,264.53$ 99,174.40$ City of Palo Alto Management, Professional and Confidential Salary Schedule Effective pay period including 07/01/2015 5/27/2015 ATTACHMENT F, EXHIBIT 1 Job Code FLSA Status Classifications Grade Codes Min Hourly Rate Mid Point Hourly Rate Max Hourly Rate Approx Mid- Point Monthly Salary Approx. Mid- Point Annual Salary City of Palo Alto Management, Professional and Confidential Salary Schedule Effective pay period including 07/01/2015 79 Exempt Manager Accounting 235D 49.48$ 61.84$ 74.21$ 10,718.93$ 128,627.20$ 2007 Exempt Manager Airport 210D 54.23$ 67.78$ 81.34$ 11,748.53$ 140,982.40$ TBD Exempt Manager Budget (reclass: new title ) 360M 52.52$ 65.64$ 78.77$ 11,377.60$ 136,531.20$ 38 Exempt Manager Communications 525M 41.08$ 51.34$ 61.61$ 8,898.93$ 106,787.20$ 154 Exempt Manager Community Services 630M 36.30$ 45.37$ 54.45$ 7,864.13$ 94,369.60$ 169 Exempt Manager Community Services Sr Program 585M 38.15$ 47.68$ 57.22$ 8,264.53$ 99,174.40$ 1013 Exempt Manager Development Center 495M 43.16$ 53.94$ 64.73$ 9,349.60$ 112,195.20$ 63 Exempt Manager Economic Development 220D 52.30$ 65.37$ 78.45$ 11,330.80$ 135,969.60$ 44 Exempt Manager Employee Benefits 450M 44.69$ 55.86$ 67.04$ 9,682.40$ 116,188.80$ 45 Exempt Manager Employee Relations & Training 235D 49.48$ 61.84$ 74.21$ 10,718.93$ 128,627.20$ 93 Exempt Manager Environmental Control Program 419M 45.76$ 57.20$ 68.64$ 9,914.67$ 118,976.00$ TBD Exempt Manager Facilities (new position) TBD 45.36$ 56.69$ 68.03$ 9,826.96$ 117,923.52$ 127 Exempt Manager Fleet 255D 45.82$ 57.27$ 68.73$ 9,926.80$ 119,121.60$ 2018 Exempt Manager Human Services 540M 40.08$ 50.09$ 60.11$ 8,682.27$ 104,187.20$ 32 Exempt Manager Information Technology 230D 50.58$ 63.22$ 75.87$ 10,958.13$ 131,497.60$ 2006 Exempt Manager Information Technology Security 420M 45.86$ 57.32$ 68.79$ 9,935.47$ 119,225.60$ 158 Exempt Manager Laboratory Services 495M 43.16$ 53.94$ 64.73$ 9,349.60$ 112,195.20$ 78 Exempt Manager Library Services 565M 37.67$ 47.08$ 56.50$ 8,160.53$ 97,926.40$ 92 Exempt Manager Maintenance Operations 469M 42.27$ 52.83$ 63.40$ 9,157.20$ 109,886.40$ 26 Exempt Manager Parking Manager Transportation Planning (new position)345M 49.47$ 61.83$ 74.20$ 10,717.20$ 128,606.40$ 51 Exempt Manager Planning 435M 45.81$ 57.26$ 68.72$ 9,925.07$ 119,100.80$ 103 Exempt Manager Real Property 235D 49.48$ 61.84$ 74.21$ 10,718.93$ 128,627.20$ 2011 Exempt Manager Revenue Collections 250D 46.48$ 58.09$ 69.71$ 10,068.93$ 120,827.20$ 160 Exempt Manager Solid Waste 330M 50.04$ 62.55$ 75.06$ 10,842.00$ 130,104.00$ TBD Exempt Manager Treasury, Debt & Investments (reclass: new title) TBD 49.48$ 61.84$ 74.21$ 10,718.93$ 128,627.20$ 86 Exempt Manager Urban Forestry 436M 44.39$ 55.48$ 66.58$ 9,616.53$ 115,398.40$ 178 Exempt Manager Water Quality Control Plant 205D 55.68$ 69.60$ 83.52$ 12,064.00$ 144,768.00$ 39 Exempt Manager Watershed Protection 330M 50.04$ 62.55$ 75.06$ 10,842.00$ 130,104.00$ 1008 Exempt Office of Emergency Services Coordinator 525M 41.08$ 51.34$ 61.61$ 8,898.93$ 106,787.20$ TBD Exempt Performance Auditor I (reclass: new title) 750P 27.68$ 34.59$ 41.51$ 5,995.60$ 71,947.20$ 100 Exempt Performance Auditor Performance Auditor II (new title)585M 38.15$ 47.68$ 57.22$ 8,264.53$ 99,174.40$ 148 Exempt Police Chief 15E 82.88$ 103.60$ 124.32$ 17,957.33$ 215,488.00$ TBD 2021 Exempt Principal Attorney TBD 101A 75.48$ 94.34$ 113.21$ 16,352.27$ 196,227.20$ 2016 Exempt Principal Business Analyst 310M 52.74$ 65.92$ 79.11$ 11,426.13$ 137,113.60$ 2003 Exempt Principal Management Analyst 360M 52.52$ 65.64$ 78.77$ 11,377.60$ 136,531.20$ 2009 Exempt Project Manager 570M 38.40$ 48.00$ 57.60$ 8,320.00$ 99,840.00$ 2012 Exempt Public Safety Communications Manager 540M 40.08$ 50.09$ 60.11$ 8,682.27$ 104,187.20$ 166 Exempt Public Safety Program Manager 585M 38.15$ 47.68$ 57.22$ 8,264.53$ 99,174.40$ 117 Exempt Senior Accountant 555M 39.10$ 48.87$ 58.65$ 8,470.80$ 101,649.60$ 152 Exempt Senior Assistant City Attorney 105A 68.61$ 85.76$ 102.92$ 14,865.07$ 178,380.80$ 2013 Exempt Senior Business Analyst - M 420M 45.86$ 57.32$ 68.79$ 9,935.47$ 119,225.60$ 11 Exempt Senior Deputy City Attorney 375M 48.82$ 61.02$ 73.23$ 10,576.80$ 126,921.60$ 187 Exempt Senior Engineer 300M 52.58$ 65.72$ 78.87$ 11,391.47$ 136,697.60$ 106 Exempt Senior Executive Assistant 450M 44.69$ 55.86$ 67.04$ 9,682.40$ 116,188.80$ 157 Exempt Senior Human Resources Administrator 545M 38.96$ 48.69$ 58.43$ 8,439.60$ 101,275.20$ 14 Exempt Senior Management Analyst 465M 44.65$ 55.81$ 66.98$ 9,673.73$ 116,084.80$ 130 Exempt Senior Performance Auditor 510M 42.10$ 52.62$ 63.15$ 9,120.80$ 109,449.60$ 53 Exempt Senior Project Manager 300M 52.58$ 65.72$ 78.87$ 11,391.47$ 136,697.60$ 33 Exempt Senior Technologist 420M 45.86$ 57.32$ 68.79$ 9,935.47$ 119,225.60$ 155 Exempt Superintendent Animal Services 540M 40.08$ 50.09$ 60.11$ 8,682.27$ 104,187.20$ 83 Exempt Superintendent Community Services 480M 44.23$ 55.28$ 66.34$ 9,581.87$ 114,982.40$ 5/27/2015 ATTACHMENT F, EXHIBIT 1 Job Code FLSA Status Classifications Grade Codes Min Hourly Rate Mid Point Hourly Rate Max Hourly Rate Approx Mid- Point Monthly Salary Approx. Mid- Point Annual Salary City of Palo Alto Management, Professional and Confidential Salary Schedule Effective pay period including 07/01/2015 TBD Exempt Superintendent Recreation (new position) TBD TBD Exempt Supervising Librarian (new position) TBD 32.26 40.32 48.39 6,988.80$ 83,865.60$ 161 Exempt Supervisor Facilities Management 600M 37.30$ 46.62$ 55.95$ 8,080.80$ 96,969.60$ 113 Exempt Supervisor Inspection and Surveying 540M 40.08$ 50.09$ 60.11$ 8,682.27$ 104,187.20$ 146 Exempt Supervisor Warehouse 660M 33.71$ 42.13$ 50.56$ 7,302.53$ 87,630.40$ 181 Exempt Supervisor Water Quality Control Operations 525M 41.08$ 51.34$ 61.61$ 8,898.93$ 106,787.20$ 184 Exempt Veterinarian 555M 39.10$ 48.87$ 58.65$ 8,470.80$ 101,649.60$ Confidential Classifications Job Code FLSA Status Classifications Grade Codes Min Hourly Rate Mid Point Hourly Rate Max Hourly Rate Approx Mid-Point Monthly Salary Approx. Mid- Point Annual Salary 905 Non-Exempt Human Resource Assistant - Confidential Human Resources Technician 830C 24.46$ 30.57$ 36.69$ 5,298.80$ 63,585.60$ 903 Non-Exempt Legal Secretary-Confidential 820C 25.07$ 31.33$ 37.60$ 5,430.53$ 65,166.40$ 67 Exempt Secretary to City Attorney 800C 29.80$ 37.24$ 44.69$ 6,454.93$ 77,459.20$ 1004 Non-Exempt Senior Legal Secretary - Confidential 810C 27.68$ 34.59$ 41.51$ 5,995.60$ 71,947.20$ $43.15 - $64.72 Hourly - PENDING APPROVAL (Update after May 26th) 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual 206 Non‐exempt Account Assistant Step 1 20.61$ Step 2 21.69$ Step 3 22.83$ Step 4 24.04$ Step 5 25.30$ 4,385.33$ 52,624.00$ 204 Non‐exempt Acct Spec Step 1 24.07$ Step 2 25.34$ Step 3 26.67$ Step 4 28.08$ Step 5 29.56$ 5,123.73$ 61,484.80$ 207 Non‐exempt Acct Spec‐Lead Step 1 25.77$ Step 2 27.12$ Step 3 28.55$ Step 4 30.05$ Step 5 31.64$ 5,484.27$ 65,811.20$ 294 Non‐exempt Administrative Associate I Step 1 23.67$ Step 2 24.91$ Step 3 26.22$ Step 4 27.60$ Step 5 29.05$ 5,035.33$ 60,424.00$ 295 Non‐exempt Administrative Associate II Step 1 25.72$ Step 2 27.07$ Step 3 28.50$ Step 4 30.00$ Step 5 31.57$ 5,472.13$ 65,665.60$ 296 Non‐exempt Administrative Associate III Step 1 27.57$ Step 2 29.02$ Step 3 30.54$ Step 4 32.15$ Step 5 33.84$ 5,865.60$ 70,387.20$ 277 Non‐exempt Animal Attendant Step 1 22.61$ Step 2 23.80$ Step 3 25.05$ Step 4 26.37$ Step 5 27.76$ 4,811.73$ 57,740.80$ 276 Non‐exempt Animal Control Off Step 1 24.22$ Step 2 25.50$ Step 3 26.84$ Step 4 28.25$ Step 5 29.74$ 5,154.93$ 61,859.20$ 312 Non‐exempt Animal Control Off Lead Step 1 25.92$ Step 2 27.28$ Step 3 28.72$ Step 4 30.23$ Step 5 31.82$ 5,515.47$ 66,185.60$ 263 Non‐exempt Animal Services Spec Step 1 23.89$ Step 2 25.14$ Step 3 26.47$ Step 4 27.86$ Step 5 29.33$ 5,083.87$ 61,006.40$ 275 Non‐exempt Animal Services Spec II Step 1 26.34$ Step 2 27.72$ Step 3 29.18$ Step 4 30.72$ Step 5 32.34$ 5,605.60$ 67,267.20$ 244 Non‐exempt Assoc Buyer Step 1 30.85$ Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 Step 2 32.47$ Step 3 34.18$ Step 4 35.98$ Step 5 37.87$ 6,564.13$ 78,769.60$ 333 Non‐exempt Assoc Engineer Step 1 38.00$ Step 2 40.00$ Step 3 42.11$ Step 4 44.32$ Step 5 46.66$ 8,087.73$ 97,052.80$ 353 Non‐exempt Assoc Planner Step 1 35.17$ Step 2 37.03$ Step 3 38.97$ Step 4 41.03$ Step 5 43.18$ 7,484.53$ 89,814.40$ 247 Non‐exempt Assoc Power Engr Step 1 40.46$ Step 2 42.59$ Step 3 44.83$ Step 4 47.19$ Step 5 49.67$ 8,609.47$ 103,313.60$ 269 Non‐exempt Assoc Res Planner Step 1 39.18$ Step 2 41.24$ Step 3 43.41$ Step 4 45.70$ Step 5 48.10$ 8,337.33$ 100,048.00$ 330 Non‐exempt Asst Engineer Step 1 34.41$ Step 2 36.22$ Step 3 38.13$ Step 4 40.13$ Step 5 42.25$ 7,323.33$ 87,880.00$ 256 Non‐exempt Asst Power Engr Step 1 36.52$ Step 2 38.45$ Step 3 40.47$ Step 4 42.60$ Step 5 44.84$ 7,772.27$ 93,267.20$ 268 Non‐exempt Asst Res Planner Step 1 35.37$ Step 2 37.23$ Step 3 39.19$ Step 4 41.25$ Step 5 43.42$ 7,526.13$ 90,313.60$ 299 Non‐exempt Bldg Inspector Step 1 34.63$ Step 2 36.45$ Step 3 38.37$ Step 4 40.39$ Step 5 42.51$ 7,368.40$ 88,420.80$ 300 Non‐exempt Bldg Inspector Spec Step 1 36.96$ Step 2 38.91$ Step 3 40.96$ Step 4 43.11$ Step 5 45.38$ 7,865.87$ 94,390.40$ 370 Non‐exempt Bldg Serviceperson Step 1 20.56$ Step 2 21.64$ Step 3 22.78$ Step 4 23.98$ Step 5 25.24$ 4,374.93$ 52,499.20$ 371 Non‐exempt Bldg Serviceperson‐L Step 1 22.00$ Step 2 23.16$ Step 3 24.38$ Step 4 25.66$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 Step 5 27.02$ 4,683.47$ 56,201.60$ 355 Non‐exempt Bldg/Plg Technician Step 1 28.52$ Step 2 30.02$ Step 3 31.60$ Step 4 33.27$ Step 5 35.02$ 6,070.13$ 72,841.60$ 340 Non‐exempt Business Analyst Step 1 46.84$ Step 2 49.30$ Step 3 51.89$ Step 4 54.63$ Step 5 57.50$ 9,966.67$ 119,600.00$ 3400 Non‐exempt Business Analyst ‐ S Step 1 46.84$ Step 2 49.30$ Step 3 51.89$ Step 4 54.63$ Step 5 57.50$ 9,966.67$ 119,600.00$ 212 Non‐exempt Buyer Step 1 33.96$ Step 2 35.75$ Step 3 37.63$ Step 4 39.61$ Step 5 41.70$ 7,228.00$ 86,736.00$ 464 Non‐exempt Cathodic Protection Tech Assistant Step 1 32.20$ Step 2 33.89$ Step 3 35.67$ Step 4 37.55$ Step 5 39.53$ 6,851.87$ 82,222.40$ 536 Non‐exempt Cathodic Tech Step 1 39.53$ Step 2 41.61$ Step 3 43.80$ Step 4 46.10$ Step 5 48.53$ 8,411.87$ 100,942.40$ 208 Non‐exempt CDBG Coordinator Step 1 37.60$ Step 2 39.58$ Step 3 41.66$ Step 4 43.85$ Step 5 46.16$ 8,001.07$ 96,012.80$ 408 Non‐exempt Cement Finisher Step 1 28.88$ Step 2 30.40$ Step 3 32.00$ Step 4 33.68$ Step 5 35.45$ 6,144.67$ 73,736.00$ 409 Non‐exempt Cement Finisher Lead Step 1 30.89$ Step 2 32.52$ Step 3 34.23$ Step 4 36.03$ Step 5 37.93$ 6,574.53$ 78,894.40$ 502 Non‐exempt Chemist Step 1 34.56$ Step 2 36.38$ Step 3 38.29$ Step 4 40.31$ Step 5 42.43$ 7,354.53$ 88,254.40$ 297 Non‐exempt Chf Elec Undg Inspec Step 1 38.31$ Step 2 40.32$ Step 3 42.45$ Step 4 44.68$ Step 5 47.03$ 8,151.87$ 97,822.40$ 239 Non‐exempt Chf Inspec WGW Step 1 37.04$ Step 2 38.99$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 Step 3 41.04$ Step 4 43.20$ Step 5 45.48$ 7,883.20$ 94,598.40$ 301 Non‐exempt Code Enforcement Off Step 1 33.26$ Step 2 35.01$ Step 3 36.85$ Step 4 38.79$ Step 5 40.83$ 7,077.20$ 84,926.40$ 306 Non‐exempt Comm Tech Step 1 35.37$ Step 2 37.24$ Step 3 39.20$ Step 4 41.26$ Step 5 43.43$ 7,527.87$ 90,334.40$ 702 Non‐exempt Community Serv Offcr Step 1 25.25$ Step 2 26.58$ Step 3 27.98$ Step 4 29.45$ Step 5 31.00$ 5,373.33$ 64,480.00$ 320 Non‐exempt Community Service Officer ‐ Lead Step 1 27.01$ Step 2 28.43$ Step 3 29.93$ Step 4 31.50$ Step 5 33.16$ 5,747.73$ 68,972.80$ 341 Non‐exempt Coor Trans Sys Mgmt Step 1 35.74$ Step 2 37.62$ Step 3 39.60$ Step 4 41.69$ Step 5 43.88$ 7,605.87$ 91,270.40$ 3410 Non‐exempt Coor Trans Sys Mgmt ‐ S Step 1 35.74$ Step 2 37.62$ Step 3 39.60$ Step 4 41.69$ Step 5 43.88$ 7,605.87$ 91,270.40$ 255 Non‐exempt Coord Library Prog Step 1 32.56$ Step 2 34.27$ Step 3 36.08$ Step 4 37.98$ Step 5 39.98$ 6,929.87$ 83,158.40$ 342 Non‐exempt Coord Pub Wks Proj Step 1 33.96$ Step 2 35.75$ Step 3 37.63$ Step 4 39.61$ Step 5 41.69$ 7,226.27$ 86,715.20$ 317 Non‐exempt Coord Rec Prog Step 1 29.17$ Step 2 30.70$ Step 3 32.32$ Step 4 34.02$ Step 5 35.81$ 6,207.07$ 74,484.80$ 343 Non‐exempt Coord Util Saf & Sec Step 1 38.58$ Step 2 40.62$ Step 3 42.75$ Step 4 45.00$ Step 5 47.37$ 8,210.80$ 98,529.60$ 3430 Non‐exempt Coord Util Saf & Sec ‐ S Step 1 38.58$ Step 2 40.62$ Step 3 42.75$ Step 4 45.00$ Step 5 47.37$ 8,210.80$ 98,529.60$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 344 Non‐exempt Coord Utility Proj Step 1 36.67$ Step 2 38.60$ Step 3 40.63$ Step 4 42.77$ Step 5 45.02$ 7,803.47$ 93,641.60$ 3440 Non‐exempt Coord Utility Proj ‐ S Step 1 36.67$ Step 2 38.60$ Step 3 40.63$ Step 4 42.77$ Step 5 45.02$ 7,803.47$ 93,641.60$ 242 Non‐exempt Coord Zero Waste Step 1 32.61$ Step 2 34.32$ Step 3 36.13$ Step 4 38.03$ Step 5 40.03$ 6,938.53$ 83,262.40$ 205 Non‐exempt Court Liaison Officer Step 1 32.87$ Step 2 34.60$ Step 3 36.42$ Step 4 38.34$ Step 5 40.36$ 6,995.73$ 83,948.80$ 214 Non‐exempt Crime Analyst Step 1 32.87$ Step 2 34.60$ Step 3 36.42$ Step 4 38.34$ Step 5 40.36$ 6,995.73$ 83,948.80$ 415 Non‐exempt Cust Srv Specialist‐L Step 1 30.09$ Step 2 31.67$ Step 3 33.34$ Step 4 35.09$ Step 5 36.94$ 6,402.93$ 76,835.20$ 218 Non‐exempt Cust Svc Represent Step 1 25.58$ Step 2 26.93$ Step 3 28.34$ Step 4 29.84$ Step 5 31.41$ 5,444.40$ 65,332.80$ 217 Non‐exempt Cust Svc Spec Step 1 28.14$ Step 2 29.62$ Step 3 31.18$ Step 4 32.82$ Step 5 34.54$ 5,986.93$ 71,843.20$ 260 Non‐exempt Desktop Technician Step 1 30.66$ Step 2 32.28$ Step 3 33.98$ Step 4 35.77$ Step 5 37.65$ 6,526.00$ 78,312.00$ 514 Non‐exempt Development Project Coordinator I Step 1 26.60$ Step 2 28.00$ Step 3 29.47$ Step 4 31.02$ Step 5 32.65$ 5,659.33$ 67,912.00$ 515 Non‐exempt Development Project Coordinator II Step 1 30.22$ Step 2 31.81$ Step 3 33.49$ Step 4 35.25$ Step 5 37.11$ 6,432.40$ 77,188.80$ 516 Non‐exempt Development Project Coordinator III Step 1 33.33$ Step 2 35.08$ Step 3 36.93$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 Step 4 38.87$ Step 5 40.92$ 7,092.80$ 85,113.60$ 533 Non‐exempt Elec Asst I Step 1 26.40$ Step 2 27.79$ Step 3 29.25$ Step 4 30.79$ Step 5 32.41$ 5,617.73$ 67,412.80$ 267 Non‐exempt Elec Undgd Inspec Step 1 32.82$ Step 2 34.55$ Step 3 36.37$ Step 4 38.28$ Step 5 40.30$ 6,985.33$ 83,824.00$ 345 Non‐exempt Electric Project Engineer Step 1 48.47$ Step 2 51.02$ Step 3 53.70$ Step 4 56.53$ Step 5 59.50$ 10,313.33$ 123,760.00$ 3450 Non‐exempt Electric Project Engineer ‐ S Step 1 48.47$ Step 2 51.02$ Step 3 53.70$ Step 4 56.53$ Step 5 59.50$ 10,313.33$ 123,760.00$ 292 Non‐exempt Electric Underground Inspector ‐ Lead Step 1 35.11$ Step 2 36.95$ Step 3 38.90$ Step 4 40.95$ Step 5 43.10$ 7,470.67$ 89,648.00$ 530 Non‐exempt Electrician Step 1 35.31$ Step 2 37.17$ Step 3 39.12$ Step 4 41.18$ Step 5 43.35$ 7,514.00$ 90,168.00$ 529 Non‐exempt Electrician‐Appren Step 1 33.42$ Step 2 35.18$ Step 3 37.03$ Step 4 38.98$ Step 5 41.03$ 7,111.87$ 85,342.40$ 535 Non‐exempt Electrician‐Lead Step 1 37.80$ Step 2 39.79$ Step 3 41.88$ Step 4 44.09$ Step 5 46.41$ 8,044.40$ 96,532.80$ 399 Non‐exempt Emergency Med Svs Data Specialist Step 1 27.57$ Step 2 29.02$ Step 3 30.54$ Step 4 32.15$ Step 5 33.84$ 5,866.09$ 70,393.10$ 311 Non‐exempt Eng Tech I Step 1 25.73$ Step 2 27.08$ Step 3 28.51$ Step 4 30.01$ Step 5 31.59$ 5,475.60$ 65,707.20$ 332 Non‐exempt Engineer Step 1 42.80$ Step 2 45.06$ Step 3 47.43$ Step 4 49.92$ Step 5 52.55$ 9,108.67$ 109,304.00$ 323 Non‐exempt Engr Tech II Step 1 27.84$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 Step 2 29.31$ Step 3 30.85$ Step 4 32.47$ Step 5 34.18$ 5,924.53$ 71,094.40$ 319 Non‐exempt Engr Tech III Step 1 31.08$ Step 2 32.71$ Step 3 34.43$ Step 4 36.25$ Step 5 38.16$ 6,614.40$ 79,372.80$ 257 Non‐exempt Environmental Spec Step 1 36.59$ Step 2 38.52$ Step 3 40.55$ Step 4 42.68$ Step 5 44.93$ 7,787.87$ 93,454.40$ 211 Non‐exempt Equip Maint Serv Per Step 1 22.03$ Step 2 23.19$ Step 3 24.41$ Step 4 25.69$ Step 5 27.05$ 4,688.67$ 56,264.00$ 396 Non‐exempt Equip Operator Step 1 26.71$ Step 2 28.11$ Step 3 29.59$ Step 4 31.15$ Step 5 32.79$ 5,683.60$ 68,203.20$ 397 Non‐exempt Equip Operator ‐ Lead Step 1 28.58$ Step 2 30.08$ Step 3 31.67$ Step 4 33.33$ Step 5 35.09$ 6,082.27$ 72,987.20$ 250 Non‐exempt Equip Parts Tech Step 1 23.95$ Step 2 25.21$ Step 3 26.53$ Step 4 27.93$ Step 5 29.40$ 5,096.00$ 61,152.00$ 203 Non‐exempt Facilities Asst Step 1 22.15$ Step 2 23.31$ Step 3 24.54$ Step 4 25.83$ Step 5 27.19$ 4,712.93$ 56,555.20$ 374 Non‐exempt Facilities Carpenter Step 1 28.88$ Step 2 30.40$ Step 3 32.00$ Step 4 33.68$ Step 5 35.45$ 6,144.67$ 73,736.00$ 375 Non‐exempt Facilities Elect Step 1 29.25$ Step 2 30.79$ Step 3 32.41$ Step 4 34.12$ Step 5 35.91$ 6,224.40$ 74,692.80$ 373 Non‐exempt Facilities Maint‐L Step 1 37.32$ Step 2 39.28$ Step 3 41.35$ Step 4 43.52$ Step 5 45.81$ 7,940.40$ 95,284.80$ 376 Non‐exempt Facilities Mech Step 1 28.88$ Step 2 30.40$ Step 3 32.00$ Step 4 33.68$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 Step 5 35.45$ 6,144.67$ 73,736.00$ 377 Non‐exempt Facilities Painter Step 1 28.88$ Step 2 30.40$ Step 3 32.00$ Step 4 33.68$ Step 5 35.45$ 6,144.67$ 73,736.00$ 462 Non‐exempt Field Service Pers WGW Step 1 26.76$ Step 2 28.17$ Step 3 29.65$ Step 4 31.21$ Step 5 32.85$ 5,694.00$ 68,328.00$ 383 Non‐exempt Fleet Svcs Coord Step 1 28.54$ Step 2 30.04$ Step 3 31.62$ Step 4 33.28$ Step 5 35.03$ 6,071.87$ 72,862.40$ 489 Non‐exempt Gas System Tech Step 1 29.15$ Step 2 30.68$ Step 3 32.30$ Step 4 34.00$ Step 5 35.79$ 6,203.60$ 74,443.20$ 463 Non‐exempt Gas System Tech II Step 1 30.61$ Step 2 32.22$ Step 3 33.92$ Step 4 35.70$ Step 5 37.58$ 6,513.87$ 78,166.40$ 398 Non‐exempt Geographic Inform Syst Specialist Step 1 39.32$ Step 2 41.39$ Step 3 43.57$ Step 4 45.86$ Step 5 48.27$ 8,366.80$ 100,401.60$ 390 Non‐exempt Heavy Equip Oper Step 1 30.24$ Step 2 31.84$ Step 3 33.51$ Step 4 35.27$ Step 5 37.13$ 6,435.87$ 77,230.40$ 391 Non‐exempt Heavy Equip Oper‐L Step 1 32.35$ Step 2 34.05$ Step 3 35.84$ Step 4 37.73$ Step 5 39.72$ 6,884.80$ 82,617.60$ 508 Non‐exempt Ind Waste Inspec Step 1 30.74$ Step 2 32.36$ Step 3 34.07$ Step 4 35.86$ Step 5 37.75$ 6,543.33$ 78,520.00$ 258 Non‐exempt Ind Waste Invtgtr Step 1 34.55$ Step 2 36.37$ Step 3 38.28$ Step 4 40.30$ Step 5 42.42$ 7,352.80$ 88,233.60$ 365 Non‐exempt Industrial Waste Technician Step 1 27.76$ Step 2 29.22$ Step 3 30.76$ Step 4 32.38$ Step 5 34.08$ 5,907.20$ 70,886.40$ 227 Non‐exempt Inspector, Field Svc Step 1 33.44$ Step 2 35.20$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 Step 3 37.05$ Step 4 39.00$ Step 5 41.06$ 7,117.07$ 85,404.80$ 308 Non‐exempt Instrum Elec Step 1 33.29$ Step 2 35.04$ Step 3 36.89$ Step 4 38.83$ Step 5 40.87$ 7,084.13$ 85,009.60$ 293 Non‐exempt Junior Museum & Zoo Educator Step 1 26.09$ Step 2 27.47$ Step 3 28.91$ Step 4 30.43$ Step 5 32.03$ 5,551.87$ 66,622.40$ 503 Non‐exempt Laboratory Tech Wqc Step 1 30.91$ Step 2 32.53$ Step 3 34.25$ Step 4 36.05$ Step 5 37.95$ 6,578.00$ 78,936.00$ 413 Non‐exempt Landfill Technician Step 1 33.90$ Step 2 35.69$ Step 3 37.57$ Step 4 39.54$ Step 5 41.62$ 7,214.13$ 86,569.60$ 254 Non‐exempt Librarian Step 1 26.29$ Step 2 27.68$ Step 3 29.13$ Step 4 30.67$ Step 5 32.28$ 5,595.20$ 67,142.40$ 252 Non‐exempt Library Associate Step 1 24.16$ Step 2 25.43$ Step 3 26.77$ Step 4 28.18$ Step 5 29.66$ 5,141.07$ 61,692.80$ 222 Non‐exempt Library Asst Step 1 20.94$ Step 2 22.04$ Step 3 23.20$ Step 4 24.42$ Step 5 25.71$ 4,456.40$ 53,476.80$ 253 Non‐exempt Library Specialist Step 1 22.85$ Step 2 24.05$ Step 3 25.32$ Step 4 26.65$ Step 5 28.05$ 4,862.00$ 58,344.00$ 541 Non‐exempt Lineper/Cable Spl Step 1 41.54$ Step 2 43.73$ Step 3 46.03$ Step 4 48.46$ Step 5 51.01$ 8,841.73$ 106,100.80$ 542 Non‐exempt Lineper/Cable Spl‐L Step 1 44.47$ Step 2 46.81$ Step 3 49.27$ Step 4 51.86$ Step 5 54.59$ 9,462.27$ 113,547.20$ 531 Non‐exempt Lineperson/Cable Spl‐T Step 1 39.57$ Step 2 41.66$ Step 3 43.85$ Step 4 46.16$ Step 5 48.59$ 8,422.27$ 101,067.20$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 532 Non‐exempt Lineperson/Cable Spl‐TL Step 1 42.33$ Step 2 44.56$ Step 3 46.91$ Step 4 49.37$ Step 5 51.97$ 9,008.13$ 108,097.60$ 528 Non‐exempt Lnper/Cbl Spl‐Appren Step 1 35.69$ Step 2 37.57$ Step 3 39.54$ Step 4 41.63$ Step 5 43.82$ 7,595.47$ 91,145.60$ 213 Non‐exempt Mailing Svcs Spec Step 1 20.14$ Step 2 21.20$ Step 3 22.32$ Step 4 23.49$ Step 5 24.73$ 4,286.53$ 51,438.40$ 505 Non‐exempt Maint Mech Step 1 34.01$ Step 2 35.80$ Step 3 37.69$ Step 4 39.67$ Step 5 41.76$ 7,238.40$ 86,860.80$ 291 Non‐exempt Maintenance Mechanic‐Welding Step 1 32.16$ Step 2 33.86$ Step 3 35.64$ Step 4 37.51$ Step 5 39.49$ 6,844.93$ 82,139.20$ 346 Non‐exempt Management Assistant Step 1 29.94$ Step 2 31.52$ Step 3 33.18$ Step 4 34.92$ Step 5 36.76$ 6,371.73$ 76,460.80$ 3460 Non‐exempt Management Assistant ‐ S Step 1 29.94$ Step 2 31.52$ Step 3 33.18$ Step 4 34.92$ Step 5 36.76$ 6,371.73$ 76,460.80$ 216 Non‐exempt Marketing Eng Step 1 42.80$ Step 2 45.06$ Step 3 47.43$ Step 4 49.92$ Step 5 52.55$ 9,108.67$ 109,304.00$ 241 Non‐exempt Meter Reader Step 1 23.91$ Step 2 25.17$ Step 3 26.50$ Step 4 27.89$ Step 5 29.36$ 5,089.07$ 61,068.80$ 240 Non‐exempt Meter Reader‐Lead Step 1 25.58$ Step 2 26.93$ Step 3 28.34$ Step 4 29.84$ Step 5 31.41$ 5,444.40$ 65,332.80$ 369 Non‐exempt Meter Shop Lead Step 1 28.40$ Step 2 29.89$ Step 3 31.47$ Step 4 33.12$ Step 5 34.87$ 6,044.13$ 72,529.60$ 552 Non‐exempt Metering Technician Step 1 39.17$ Step 2 41.23$ Step 3 43.40$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 Step 4 45.69$ Step 5 48.09$ 8,335.60$ 100,027.20$ 551 Non‐exempt Metering Technician – Apprentice Step 1 37.07$ Step 2 39.02$ Step 3 41.07$ Step 4 43.24$ Step 5 45.51$ 7,888.40$ 94,660.80$ 553 Non‐exempt Metering Technician – Lead Step 1 41.91$ Step 2 44.12$ Step 3 46.44$ Step 4 48.89$ Step 5 51.46$ 8,919.73$ 107,036.80$ 384 Non‐exempt Mobile Service Tech Step 1 33.90$ Step 2 35.68$ Step 3 37.56$ Step 4 39.54$ Step 5 41.62$ 7,214.13$ 86,569.60$ 381 Non‐exempt Motor Equip Mech‐L Step 1 34.54$ Step 2 36.36$ Step 3 38.27$ Step 4 40.28$ Step 5 42.40$ 7,349.33$ 88,192.00$ 286 Non‐exempt Motor Equipment Mechanic I Step 1 29.90$ Step 2 31.47$ Step 3 33.13$ Step 4 34.87$ Step 5 36.71$ 6,363.07$ 76,356.80$ 287 Non‐exempt Motor Equipment Mechanic II Step 1 32.28$ Step 2 33.98$ Step 3 35.77$ Step 4 37.66$ Step 5 39.64$ 6,870.93$ 82,451.20$ 230 Non‐exempt Offset Equip Op Step 1 22.84$ Step 2 24.04$ Step 3 25.31$ Step 4 26.64$ Step 5 28.04$ 4,860.32$ 58,323.84$ 543 Non‐exempt Overhead Underground Troubleman Step 1 41.57$ Step 2 43.76$ Step 3 46.06$ Step 4 48.49$ Step 5 51.04$ 8,846.93$ 106,163.20$ 452 Non‐exempt Park Maint ‐ Lead Step 1 29.27$ Step 2 30.81$ Step 3 32.43$ Step 4 34.14$ Step 5 35.93$ 6,227.87$ 74,734.40$ 451 Non‐exempt Park Maint Person Step 1 25.24$ Step 2 26.57$ Step 3 27.97$ Step 4 29.44$ Step 5 30.99$ 5,371.60$ 64,459.20$ 281 Non‐exempt Park Ranger Step 1 28.35$ Step 2 29.85$ Step 3 31.42$ Step 4 33.07$ Step 5 34.81$ 6,033.73$ 72,404.80$ 243 Non‐exempt Parking Enf Off Step 1 23.81$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 Step 2 25.07$ Step 3 26.39$ Step 4 27.78$ Step 5 29.24$ 5,068.27$ 60,819.20$ 282 Non‐exempt Parking Enf Off‐L Step 1 25.47$ Step 2 26.81$ Step 3 28.22$ Step 4 29.71$ Step 5 31.27$ 5,420.13$ 65,041.60$ TBD Non‐exempt Parking Operations Lead (new position) Step 1 42.80$ Step 2 45.05$ Step 3 47.42$ Step 4 49.92$ Step 5 52.55$ 9,108.67$ 109,304.00$ 460 Non‐exempt Parks/Golf Crew‐Lead Step 1 27.46$ Step 2 28.91$ Step 3 30.43$ Step 4 32.03$ Step 5 33.72$ 5,844.80$ 70,137.60$ 348 Non‐exempt Payroll Analyst Step 1 28.71$ Step 2 30.23$ Step 3 31.82$ Step 4 33.49$ Step 5 35.25$ 6,110.00$ 73,320.00$ 3480 Non‐exempt Payroll Analyst ‐ S Step 1 28.71$ Step 2 30.23$ Step 3 31.82$ Step 4 33.49$ Step 5 35.25$ 6,110.00$ 73,320.00$ 352 Non‐exempt Planner Step 1 37.60$ Step 2 39.58$ Step 3 41.66$ Step 4 43.85$ Step 5 46.16$ 8,001.07$ 96,012.80$ 347 Non‐exempt Planning Arborist Step 1 40.50$ Step 2 42.64$ Step 3 44.88$ Step 4 47.24$ Step 5 49.73$ 8,619.87$ 103,438.40$ 3470 Non‐exempt Planning Arborist ‐ S Step 1 40.50$ Step 2 42.64$ Step 3 44.88$ Step 4 47.24$ Step 5 49.73$ 8,619.87$ 103,438.40$ 304 Non‐exempt Plans Check Engr Step 1 41.56$ Step 2 43.75$ Step 3 46.05$ Step 4 48.47$ Step 5 51.02$ 8,843.47$ 106,121.60$ 321 Non‐exempt Police Records Specialist ‐ Lead Step 1 26.15$ Step 2 27.53$ Step 3 28.97$ Step 4 30.50$ Step 5 32.10$ 5,564.00$ 66,768.00$ 313 Non‐exempt Police Records Specialist I Step 1 23.21$ Step 2 24.44$ Step 3 25.72$ Step 4 27.07$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 Step 5 28.50$ 4,940.00$ 59,280.00$ 314 Non‐exempt Police Records Specialist II Step 1 24.44$ Step 2 25.72$ Step 3 27.08$ Step 4 28.50$ Step 5 30.00$ 5,200.00$ 62,400.00$ 246 Non‐exempt Power Engr Step 1 45.70$ Step 2 48.10$ Step 3 50.63$ Step 4 53.30$ Step 5 56.10$ 9,724.00$ 116,688.00$ 270 Non‐exempt Prod Arts/Sci Prog Step 1 31.62$ Step 2 33.28$ Step 3 35.03$ Step 4 36.88$ Step 5 38.82$ 6,728.80$ 80,745.60$ 232 Non‐exempt Prog‐Analyst Step 1 37.84$ Step 2 39.83$ Step 3 41.93$ Step 4 44.14$ Step 5 46.46$ 8,053.07$ 96,636.80$ 231 Non‐exempt Program Analyst Step 1 40.45$ Step 2 42.58$ Step 3 44.82$ Step 4 47.18$ Step 5 49.66$ 8,607.73$ 103,292.80$ 265 Non‐exempt Program Assistant Step 1 24.59$ Step 2 25.89$ Step 3 27.25$ Step 4 28.68$ Step 5 30.19$ 5,232.93$ 62,795.20$ 302 Non‐exempt Program Assistant I Step 1 26.09$ Step 2 27.47$ Step 3 28.91$ Step 4 30.43$ Step 5 32.03$ 5,551.87$ 66,622.40$ 303 Non‐exempt Program Assistant II Step 1 28.04$ Step 2 29.52$ Step 3 31.07$ Step 4 32.71$ Step 5 34.43$ 5,967.87$ 71,614.40$ 368 Non‐exempt Program Coordinator Step 1 27.30$ Step 2 28.74$ Step 3 30.25$ Step 4 31.84$ Step 5 33.52$ 5,810.13$ 69,721.60$ 349 Non‐exempt Project Engineer Step 1 46.06$ Step 2 48.49$ Step 3 51.04$ Step 4 53.73$ Step 5 56.56$ 9,803.73$ 117,644.80$ 3490 Non‐exempt Project Engineer ‐ S Step 1 46.06$ Step 2 48.49$ Step 3 51.04$ Step 4 53.73$ Step 5 56.56$ 9,803.73$ 117,644.80$ 209 Non‐exempt Property Evid Tech Step 1 25.27$ Step 2 26.60$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 Step 3 28.00$ Step 4 29.47$ Step 5 31.03$ 5,378.53$ 64,542.40$ 238 Non‐exempt Pub Safety Disp‐Flex Step 1 27.15$ Step 2 28.58$ Step 3 30.08$ Step 4 31.66$ Step 5 33.33$ 5,777.20$ 69,326.40$ 315 Non‐exempt Public Safety Dispatcher ‐ Lead Step 1 36.35$ Step 2 38.27$ Step 3 40.28$ Step 4 42.40$ Step 5 44.63$ 7,735.87$ 92,830.40$ Step 6 45.75$ Step 7 46.89$ 298 Non‐exempt Public Safety Dispatcher I Step 1 30.76$ Step 2 32.38$ Step 3 34.08$ Step 4 35.88$ Step 5 37.76$ 6,545.07$ 78,540.80$ Step 6 38.71$ Step 7 39.68$ 316 Non‐exempt Public Safety Dispatcher II Step 1 32.39$ Step 2 34.09$ Step 3 35.88$ Step 4 37.77$ Step 5 39.76$ 6,891.73$ 82,700.80$ Step 6 40.75$ Step 7 41.77$ 262 Non‐exempt Resource Planner Step 1 46.49$ Step 2 48.93$ Step 3 51.51$ Step 4 54.22$ Step 5 57.07$ 9,892.13$ 118,705.60$ 366 Non‐exempt Restoration Lead Step 1 32.35$ Step 2 34.05$ Step 3 35.84$ Step 4 37.73$ Step 5 39.71$ 6,883.07$ 82,596.80$ 554 Non‐exempt SCADA Technologist Step 1 45.98$ Step 2 48.40$ Step 3 50.95$ Step 4 53.63$ Step 5 56.46$ 9,786.40$ 117,436.80$ 385 Non‐exempt Senior Fleet Services Coordinator Step 1 32.77$ Step 2 34.49$ Step 3 36.31$ Step 4 38.22$ Step 5 40.23$ 6,973.20$ 83,678.40$ 461 Non‐exempt Sprinkler Sys Repr Step 1 25.67$ Step 2 27.02$ Step 3 28.45$ Step 4 29.94$ Step 5 31.52$ 5,463.47$ 65,561.60$ 360 Non‐exempt Sr Buyer Step 1 34.33$ Step 2 36.14$ Step 3 38.04$ Step 4 40.05$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 Step 5 42.15$ 7,306.00$ 87,672.00$ 3600 Non‐exempt Sr Buyer ‐ S Step 1 34.33$ Step 2 36.14$ Step 3 38.04$ Step 4 40.05$ Step 5 42.15$ 7,306.00$ 87,672.00$ 224 Non‐exempt Sr Chemist Step 1 38.41$ Step 2 40.43$ Step 3 42.56$ Step 4 44.80$ Step 5 47.15$ 8,172.67$ 98,072.00$ 544 Non‐exempt Senior Industrial Waste Investigator Step 1 36.96$ Step 2 38.91$ Step 3 40.96$ Step 4 43.11$ Step 5 45.38$ 7,865.87$ 94,390.40$ 512 Non‐exempt Sr Instrum Elect Step 1 36.36$ Step 2 38.27$ Step 3 40.29$ Step 4 42.41$ Step 5 44.64$ 7,737.60$ 92,851.20$ 251 Non‐exempt Sr Librarian Step 1 29.86$ Step 2 31.43$ Step 3 33.09$ Step 4 34.83$ Step 5 36.66$ 6,354.40$ 76,252.80$ 504 Non‐exempt Sr Mech Step 1 36.57$ Step 2 38.49$ Step 3 40.52$ Step 4 42.65$ Step 5 44.90$ 7,782.67$ 93,392.00$ 361 Non‐exempt Sr Mkt Analyst Step 1 42.65$ Step 2 44.90$ Step 3 47.26$ Step 4 49.75$ Step 5 52.37$ 9,077.47$ 108,929.60$ 3610 Non‐exempt Sr Mkt Analyst ‐ S Step 1 42.65$ Step 2 44.90$ Step 3 47.26$ Step 4 49.75$ Step 5 52.37$ 9,077.47$ 108,929.60$ 506 Non‐exempt Sr Operator Wqc Step 1 36.98$ Step 2 38.93$ Step 3 40.98$ Step 4 43.14$ Step 5 45.41$ 7,871.07$ 94,452.80$ 318 Non‐exempt Sr Planner Step 1 43.44$ Step 2 45.72$ Step 3 48.13$ Step 4 50.66$ Step 5 53.33$ 9,243.87$ 110,926.40$ 280 Non‐exempt Sr Ranger Step 1 31.38$ Step 2 33.03$ Step 3 34.77$ Step 4 36.60$ Step 5 38.52$ 6,676.80$ 80,121.60$ 261 Non‐exempt Sr Util Field Svc Rep Step 1 35.01$ Step 2 36.85$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 Step 3 38.79$ Step 4 40.83$ Step 5 42.98$ 7,449.87$ 89,398.40$ 501 Non‐exempt Sr Water Sys Oper Step 1 36.98$ Step 2 38.93$ Step 3 40.98$ Step 4 43.14$ Step 5 45.41$ 7,871.07$ 94,452.80$ 405 Non‐exempt St Maint Asst Step 1 22.97$ Step 2 24.18$ Step 3 25.45$ Step 4 26.79$ Step 5 28.20$ 4,888.00$ 58,656.00$ 392 Non‐exempt St Sweeper Op Step 1 26.66$ Step 2 28.06$ Step 3 29.54$ Step 4 31.10$ Step 5 32.73$ 5,673.20$ 68,078.40$ 393 Non‐exempt St Sweeper Op‐Lead Step 1 28.52$ Step 2 30.03$ Step 3 31.61$ Step 4 33.27$ Step 5 35.02$ 6,070.13$ 72,841.60$ 248 Non‐exempt Storekeeper Step 1 25.06$ Step 2 26.38$ Step 3 27.77$ Step 4 29.23$ Step 5 30.77$ 5,333.47$ 64,001.60$ 288 Non‐exempt Storekeeper‐L Step 1 26.82$ Step 2 28.24$ Step 3 29.72$ Step 4 31.29$ Step 5 32.93$ 5,707.87$ 68,494.40$ 545 Non‐exempt Street Light, Traffic Signal and Fiber – Apprentice Step 1 35.45$ Step 2 37.32$ Step 3 39.28$ Step 4 41.35$ Step 5 43.52$ 7,543.47$ 90,521.60$ 547 Non‐exempt Street Light, Traffic Signal and Fiber – Lead Step 1 40.09$ Step 2 42.20$ Step 3 44.42$ Step 4 46.76$ Step 5 49.22$ 8,531.47$ 102,377.60$ 546 Non‐exempt Street Light, Traffic Signal and Fiber Technician Step 1 37.47$ Step 2 39.44$ Step 3 41.52$ Step 4 43.70$ Step 5 46.00$ 7,973.33$ 95,680.00$ 549 Non‐exempt Substation Electrician Step 1 40.88$ Step 2 43.03$ Step 3 45.29$ Step 4 47.67$ Step 5 50.18$ 8,697.87$ 104,374.40$ 548 Non‐exempt Substation Electrician ‐ Apprentice Step 1 38.69$ Step 2 40.72$ Step 3 42.87$ Step 4 45.12$ Step 5 47.50$ 8,233.33$ 98,800.00$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 550 Non‐exempt Substation Electrician ‐ Lead Step 1 43.74$ Step 2 46.04$ Step 3 48.46$ Step 4 51.01$ Step 5 53.70$ 9,308.00$ 111,696.00$ 326 Non‐exempt Surveying Asst Step 1 31.10$ Step 2 32.74$ Step 3 34.46$ Step 4 36.28$ Step 5 38.19$ 6,619.60$ 79,435.20$ 325 Non‐exempt Surveyor, Public Wks Step 1 33.84$ Step 2 35.62$ Step 3 37.50$ Step 4 39.47$ Step 5 41.55$ 7,202.00$ 86,424.00$ 309 Non‐exempt System Op/Sched Step 1 38.27$ Step 2 40.28$ Step 3 42.40$ Step 4 44.63$ Step 5 46.98$ 8,143.20$ 97,718.40$ 362 Non‐exempt Technologist Step 1 46.84$ Step 2 49.30$ Step 3 51.89$ Step 4 54.63$ Step 5 57.50$ 9,966.67$ 119,600.00$ 3620 Non‐exempt Technologist ‐ S Step 1 46.84$ Step 2 49.30$ Step 3 51.89$ Step 4 54.63$ Step 5 57.50$ 9,966.67$ 119,600.00$ 229 Non‐exempt Theater Specialist Step 1 33.83$ Step 2 35.61$ Step 3 37.49$ Step 4 39.46$ Step 5 41.54$ 7,200.27$ 86,403.20$ 406 Non‐exempt Traf Cont Maint I Step 1 26.89$ Step 2 28.31$ Step 3 29.80$ Step 4 31.36$ Step 5 33.01$ 5,721.73$ 68,660.80$ 412 Non‐exempt Traf Cont Maint Ii Step 1 24.89$ Step 2 26.20$ Step 3 27.58$ Step 4 29.03$ Step 5 30.56$ 5,297.07$ 63,564.80$ 407 Non‐exempt Traf Cont Maint‐L Step 1 28.76$ Step 2 30.28$ Step 3 31.87$ Step 4 33.55$ Step 5 35.31$ 6,120.40$ 73,444.80$ TBD Non‐exempt Traffic Operations Lead (new position) Step 1 42.80$ Step 2 45.05$ Step 3 47.42$ Step 4 49.92$ Step 5 52.55$ 9,108.67$ 109,304.00$ 435 Non‐exempt Tree Maint Asst Step 1 24.20$ Step 2 25.47$ Step 3 26.81$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 Step 4 28.23$ Step 5 29.71$ 5,149.73$ 61,796.80$ 434 Non‐exempt Tree Maintenance Specialist Step 1 28.24$ Step 2 29.72$ Step 3 31.29$ Step 4 32.93$ Step 5 34.67$ 6,009.47$ 72,113.60$ 430 Non‐exempt Tree Trim/Ln Clr Step 1 27.80$ Step 2 29.26$ Step 3 30.80$ Step 4 32.42$ Step 5 34.13$ 5,915.87$ 70,990.40$ 431 Non‐exempt Tree Trim/Ln Clr‐L Step 1 29.74$ Step 2 31.31$ Step 3 32.95$ Step 4 34.69$ Step 5 36.51$ 6,328.40$ 75,940.80$ 432 Non‐exempt Tree Trm/Ln Clr Asst Step 1 26.20$ Step 2 27.58$ Step 3 29.03$ Step 4 30.56$ Step 5 32.17$ 5,576.13$ 66,913.60$ 215 Non‐exempt Util Acct Rep Utility Marketing Program Administrator Step 1 32.67 $37.57 (reclass: new title) Step 2 34.39 $39.55 Step 3 36.20 $41.63 Step 4 38.10 $43.82 Step 5 40.11 $46.13 6952.40 $8,001.6783428.8 $96,012.8 223 Non‐exempt Util Acctg Tech Step 1 26.02$ Step 2 27.38$ Step 3 28.83$ Step 4 30.34$ Step 5 31.94$ 5,536.27$ 66,435.20$ 272 Non‐exempt Util Comp Tech Step 1 40.09$ Step 2 42.20$ Step 3 44.42$ Step 4 46.76$ Step 5 49.22$ 8,531.47$ 102,377.60$ 273 Non‐exempt Util Comp Tech‐L Step 1 42.89$ Step 2 45.15$ Step 3 47.53$ Step 4 50.03$ Step 5 52.66$ 9,127.73$ 109,532.80$ 219 Non‐exempt Util Credit/Col Spec Step 1 30.99$ Step 2 32.62$ Step 3 34.34$ Step 4 36.14$ Step 5 38.05$ 6,595.33$ 79,144.00$ 310 Non‐exempt Util Engr Estimator Step 1 40.23$ Step 2 42.35$ Step 3 44.58$ Step 4 46.93$ Step 5 49.39$ 8,560.93$ 102,731.20$ 486 Non‐exempt Util Fld Svcs Rep Step 1 32.73$ Step 2 34.45$ Step 3 36.27$ Step 4 38.18$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 Step 5 40.18$ 6,964.53$ 83,574.40$ 480 Non‐exempt Util Install/Rep Step 1 31.92$ Step 2 33.59$ Step 3 35.36$ Step 4 37.22$ Step 5 39.18$ 6,791.20$ 81,494.40$ 481 Non‐exempt Util Install/Rep Ast Step 1 27.07$ Step 2 28.49$ Step 3 29.99$ Step 4 31.57$ Step 5 33.23$ 5,759.87$ 69,118.40$ 479 Non‐exempt Util Install/Rep‐L Step 1 34.83$ Step 2 36.66$ Step 3 38.59$ Step 4 40.63$ Step 5 42.76$ 7,411.73$ 88,940.80$ 363 Non‐exempt Util Key Acct Rep Step 1 39.56$ Step 2 41.64$ Step 3 43.83$ Step 4 46.14$ Step 5 48.56$ 8,417.07$ 101,004.80$ 271 Non‐exempt Util Locator Step 1 30.04$ Step 2 31.62$ Step 3 33.29$ Step 4 35.04$ Step 5 36.88$ 6,392.53$ 76,710.40$ 364 Non‐exempt Util Mkt Analyst Step 1 35.74$ Step 2 37.62$ Step 3 39.60$ Step 4 41.69$ Step 5 43.88$ 7,605.87$ 91,270.40$ 233 Non‐exempt Util Rate Analyst Step 1 36.23$ Step 2 38.13$ Step 3 40.14$ Step 4 42.25$ Step 5 44.48$ 7,709.87$ 92,518.40$ 307 Non‐exempt Util Syst Oper Step 1 42.41$ Step 2 44.65$ Step 3 47.00$ Step 4 49.47$ Step 5 52.07$ 9,025.47$ 108,305.60$ 284 Non‐exempt Utilities Engineer Estimator Lead Step 1 43.05$ Step 2 45.31$ Step 3 47.70$ Step 4 50.21$ Step 5 52.85$ 9,160.67$ 109,928.00$ 3630 Non‐exempt Utility Key Account Rep ‐ S Step 1 39.56$ Step 2 41.64$ Step 3 43.83$ Step 4 46.14$ Step 5 48.56$ 8,417.07$ 101,004.80$ 290 Non‐exempt Utl Install Repair Lead‐Welding Cert Step 1 35.65$ Step 2 37.52$ Step 3 39.50$ Step 4 41.58$ Step 5 43.76$ 7,585.07$ 91,020.80$ 289 Non‐exempt Utl Install Repair‐Welding Cert Step 1 33.17$ Step 2 34.92$ 5/27/2015 ATTACHMENT F, EXHIBIT 2 JobCode FLSA Job Title Steps Rate Approx.Monthly Approx.Annual Appendix F-2 MOA Between City of Palo Alto and SEIU 2014-2015 Salary Schedule Salary EffecƟve 2014‐PP26 Step 3 36.75$ Step 4 38.69$ Step 5 40.73$ 7,059.87$ 84,718.40$ 278 Non‐exempt Veterinarian Tech Step 1 24.74$ Step 2 26.05$ Step 3 27.42$ Step 4 28.86$ Step 5 30.38$ 5,265.87$ 63,190.40$ 274 Non‐exempt Volunteer Coord Step 1 28.71$ Step 2 30.23$ Step 3 31.82$ Step 4 33.49$ Step 5 35.25$ 6,110.00$ 73,320.00$ 482 Non‐exempt Water Meter Rep Asst Step 1 23.34$ Step 2 24.57$ Step 3 25.86$ Step 4 27.22$ Step 5 28.65$ 4,966.00$ 59,592.00$ 484 Non‐exempt Water Meter Repair Step 1 25.85$ Step 2 27.21$ Step 3 28.64$ Step 4 30.15$ Step 5 31.73$ 5,499.87$ 65,998.40$ 499 Non‐exempt Water Sys Oper I Step 1 28.55$ Step 2 30.05$ Step 3 31.64$ Step 4 33.30$ Step 5 35.05$ 6,075.33$ 72,904.00$ 507 Non‐exempt Water Sys Oper II Step 1 32.62$ Step 2 34.33$ Step 3 36.14$ Step 4 38.04$ Step 5 40.04$ 6,940.27$ 83,283.20$ 500 Non‐exempt WQC Plt Oper I Step 1 28.55$ Step 2 30.05$ Step 3 31.64$ Step 4 33.30$ Step 5 35.05$ 6,075.33$ 72,904.00$ 509 Non‐exempt WQC Plt Oper II Step 1 32.62$ Step 2 34.33$ Step 3 36.14$ Step 4 38.04$ Step 5 40.04$ 6,940.27$ 83,283.20$ 510 Non‐exempt WQC Plt Oper Trn Step 1 25.13$ Step 2 26.45$ Step 3 27.84$ Step 4 29.31$ Step 5 30.85$ 5,347.33$ 64,168.00$ 226 Non‐exempt Wtr Mtr Crs Cn Tec Step 1 26.51$ Step 2 27.91$ Step 3 29.38$ Step 4 30.92$ Step 5 32.55$ 5,642.00$ 67,704.00$ 5/27/2015 ATTACHMENT F, EXHIBIT 3 Job Code Classifications Grade Codes Min Hourly Rate Mid Point Hourly Rate Max Hourly Rate Approx Mid‐Point Monthly Salary Annual Salary 2076 Administrative Assistant ‐ U 700 30.08$ 37.59$ 45.11$ 6,515.60$ 78,187.20$ 1002 Assistant Director Utilities ‐ Customer Support 230 63.42$ 79.27$ 95.13$ 13,740.13$ 164,881.60$ 1003 Assistant Director Utilities ‐ Engineering 190 70.46$ 88.07$ 105.69$ 15,265.47$ 183,185.60$ 6 Assistant Director Utilities ‐ Operations 210 70.46$ 88.07$ 105.69$ 15,265.47$ 183,185.60$ 65 Assistant Director Utilities ‐ Resource Management 190 70.46$ 88.07$ 105.69$ 15,265.47$ 183,185.60$ 84 Division Manager/Manager of Communications 380 45.72$ 57.14$ 68.57$ 9,904.27$ 118,851.20$ 129 Engineering Manager, Electric 231 60.48$ 75.59$ 90.71$ 13,102.27$ 157,227.20$ 120 Engineering Manager, Water, Gas & Wastewater 231 60.48$ 75.59$ 90.71$ 13,102.27$ 157,227.20$ 179 Manager, Customer Service and Meter Reading Manager Customer Service (new title)300 48.56$ 60.70$ 72.84$ 10,521.33$ 126,256.00$ 185 Manager, Electric Operations 270 59.22$ 74.02$ 88.83$ 12,830.13$ 153,961.60$ 1114 Manager, Utilities Credit & Collection 300 48.56$ 60.70$ 72.84$ 10,521.33$ 126,256.00$ 150 Manager, Utilities Marketing Services 300 48.56$ 60.70$ 72.84$ 10,521.33$ 126,256.00$ 156 Manager, Utilities Operations WGW 290 59.14$ 73.92$ 88.71$ 12,812.80$ 153,753.60$ 48 Manager, Utilities Telecommunications 250 53.47$ 66.83$ 80.20$ 11,583.87$ 139,006.40$ 13 Senior Business Analyst 340 43.86$ 54.82$ 65.79$ 9,502.13$ 114,025.60$ 188 Senior Electrical Engineer 291 55.33$ 69.16$ 83.00$ 11,987.73$ 143,852.80$ 2187 Senior Engineer ‐ U 710 52.64$ 65.79$ 78.95$ 11,403.60$ 136,843.20$ 2014 Senior Management Analyst ‐ U 350 42.74$ 53.42$ 64.11$ 9,259.47$ 111,113.60$ 64 Sr. Resource Planner 271 54.02$ 67.52$ 81.03$ 11,703.47$ 140,441.60$ 27 Supervising Electrical Project Engineer 341 51.42$ 64.27$ 77.13$ 11,140.13$ 133,681.60$ 28 Supervising Project Engineer 360 47.75$ 59.68$ 71.62$ 10,344.53$ 124,134.40$ 1115 Supervisor, Inspection Services 390 36.72$ 45.89$ 55.07$ 7,955.44$ 95,465.30$ 1011 Utilities Compliance Manager 290 59.14$ 73.92$ 88.71$ 12,812.80$ 153,753.60$ 114 Utilities Supervisor 680 51.32$ 64.14$ 76.97$ 11,117.60$ 133,411.20$ 2020 Principal Management Business Analyst‐ U(new title)TBD 46.93$ 58.66$ 70.40$ 10,167.73$ 122,012.80$ 2017 Utility Safety Officer TBD 34.91$ 43.63$ 52.36$ 7,562.53$ 90,750.40$ UMPAPA Salary Schedule 5/27/2015 City of Palo Alto M E M O R A N D U M TO: Finance Committee DATE: May 21, 2015 SUBJECT: Additional Information Pertaining to the Fiscal Year 2016 Proposed Budget and Wrap‐Up Discussion of Outstanding Issues from Prior Budget Hearing Meetings This staff report includes additional information pertaining to the Capital Improvement Fund Budget (Agenda Item #1) and Palo Alto Animal Services (Agenda Item #2), summarizes changes to the City Manager’s Fiscal Year 2016 Proposed Budget, brings forth recommended actions to revise the Fiscal Year 2016 Proposed Budget, and responds to questions raised by the Finance Committee during previous budget hearings. Please refer to the table of contents below for specific items. Contents Additional Information Pertaining to the Fiscal Year 2016 Proposed Budget (Agenda Item #1) ................. 2 City Council Infrastructure Plan ............................................................................................................... 2 Planning and Transportation Review of the Capital Improvement Program .......................................... 2 Amendments to the Proposed Capital Budget ........................................................................................ 3 Palo Alto Animal Services Transition Funding (Agenda Item #2) .................................................................. 4 Wrap‐Up Discussion of Outstanding Issues from Prior Budget Hearing Meetings (Agenda Item #3) .......... 5 Summary of Changes to the Proposed Budget ........................................................................................ 5 Staff Recommended General Fund Actions ............................................................................................. 6 Fiscal Year 2016 Projected Ending General Fund Budget Stabilization Reserve (BSR) Balance .............. 7 Fiscal Year 2015 Projected General Fund Year‐End Budget Surplus ....................................................... 7 Budget Process Parking Lot ...................................................................................................................... 8 Additional Information Requested by the Committee .......................................................................... 12 Additional Information Provided by Staff .............................................................................................. 17 Finance Committee Changes to the City Manager’s Proposed Budget ................................................. 17 Staff Recommended Changes to the City Manager’s Proposed Budget ............................................... 21 Capital Budget Reappropriations ........................................................................................................... 21 Referral Items for Staff to Return to Finance Committee at a Later Date ............................................. 23 Related Memos Distributed At Places ................................................................................................... 23 List of Attachments ................................................................................................................................ 24 - 1 - APPENDIX 1 Additional Information Pertaining to the Fiscal Year 2016 Proposed Budget (Agenda Item #1) City Council Infrastructure Plan The Finance Committee will review the General Fund Capital Budget on May 26, 2015. The Fiscal Year 2016‐2020 Capital Improvement Program (CIP) includes for the first time the Infrastructure Plan projects as approved by the Council in June 2014. For reference purposes, staff is providing a financial summary (Source and Use of Funds Statement for the Capital Improvement Fund) for the Infrastructure Plan projects and supporting revenue sources. (Attachment A) The scheduling for the Infrastructure Plan projects as reflected in the Fiscal Year 2016‐2020 Proposed Capital Improvement Plan was completed with several factors in mind: (1) the time necessary for design; (2) condition of current infrastructure; (3) staff’s ability to complete the work; (4) and the City Council’s direction that the new Public Safety Building be prioritized ahead of all other Infrastructure Plan projects. It should be noted that a City Council study session on the Public Safety Building was held on May 6, 2015. While no formal direction was given on a site, preliminary feedback indicated a preference for the Sherman Avenue site in the California Avenue area. Staff will continue work to determine the optimal site for the building and expects to bring forward a recommendation for site selection in late summer or early fall 2015. Should the Sherman Avenue site ultimately be selected as the location for the Public Safety Building, the sequencing of projects may need to be revisited in order to allow for the construction of a parking garage in the California Avenue area sooner than originally planned. A portion of the funding for the Infrastructure Plan relied upon the issuance of debt, supported by a November 2014 voter approved two percentage point increase to the Transient Occupancy Tax (TOT), as well as additional TOT receipts anticipated from new hotels. The plan, as originally approved by the City Council in June 2014, relied upon debt issuance of $64.5 million, however the plan included in the proposed capital budget includes debt issuance of $63.3 million, with the difference being funded from the Infrastructure Reserve. The plan does not call for debt to be issued until Fiscal Year 2018. As various projects funded in the Infrastructure Plan move through the site evaluation and design phases and costs are further refined, the timing of the necessity for debt issuance will become clearer, which may result in adjustments to the plan outlined in Attachment A. Planning and Transportation Review of the Capital Improvement Program On Wednesday, May 13th, the Planning and Transportation Commission (PTC) reviewed the 2016‐2020 Capital Improvement Program for compliance with the Comprehensive Plan, per Municipal Code requirements. The PTC unanimously approved a motion finding the plan to be in compliance with the Comprehensive Plan. Attached is a letter from the Chair of the Planning and Transportation Commission (PTC) summarizing the Commissions review of the Fiscal Year 2016‐2020 proposed Capital Improvement Plan (Attachment B) as well as the minutes from the meeting (Attachment C). Included in the letter summarizing the PTC’s review of the 2016‐2020 CIP were three suggestions: 1) Funds be allocated in the 2016 budget for an Environmental Impact Review (EIR), as the next step in the San Francisquito Creek Joint Powers Authority study on tidal flooding and sea level rise and to ensure matching funding is available should grant opportunities arise; 2) As part of the City’s effort in updating the Comprehensive Plan, include in the Governance Element, policies or programs relating to prioritization of Capital Improvement Programs; and 3) When possible, CIP projects should be measured against a Comprehensive Plan policy allowing the City to prioritize capital projects based on their potential to address a stated objective. - 2 - APPENDIX 1 Staff does not recommend funding for the EIR associated with the San Francisquito Creek Joint Powers Authority study on tidal flooding at this time. As part of the Fiscal Year 2015 Capital Budget, a Baylands Levee Improvement Feasibility Study in the amount of $500,000 was funded, as suggested by the Planning and Transportation Commission during their review of the 2015‐2019 Proposed CIP for compliance with the Comprehensive Plan. The Feasibility Study, which will outline potential improvements to the Bayfront levees within Palo Alto, will identify potential alternative methods and alignments for levee improvements, estimated project costs, and preliminary environmental impacts, mitigation measures, and permitting requirements. Following the completion of the Feasibility Study, the next steps would be to advance the project’s design sufficiently to allow completion of California Environmental Quality Act (CEQA) review. While funding for design work and CEQA review is likely to be requested at some point during Fiscal Year 2016 if the Feasibility Study is completed in 2015, the cost of this additional work is not yet known. The 1998‐2010 Comprehensive Plan is in the process of being updated. As the Comprehensive Plan is reviewed by staff, the public, the PTC, the City Council, and others, the PTC’s suggestion regarding the Governance Element about including policies or programs relating to prioritization of capital projects can be considered. Staff currently aligns each capital project to the Comprehensive Plan, notating the specific alignment for each capital project within the budget document. Upon adoption of the updated Comprehensive Plan, staff will consider the PTC’s recommendation to measure capital projects against Comprehensive Plan policies and determine whether policies have a target embedded for which a meaningful, sustainable, and usable measure can be developed for particular CIP projects. Amendments to the Proposed Capital Budget In reviewing the proposed capital budget and 2015 estimated expenditure levels, a limited number of revisions to the Fiscal Year 2016 Proposed Capital Budget are recommended as described below. Infrastructure Plan The Proposed Capital Budget included Fiscal Year 2015 Expenditure Estimates for the New Public Safety Building Project, Fire Station 3 Replacement, and New Downtown Parking Garage projects. These expenditure estimates were based on the assumption that staff would bring a recommendation to the City Council in spring 2015 to establish these projects and appropriate funds for design and site selection work through the budget amendment ordinance process. The funding source for these initial appropriations would have been the infrastructure reserve. Due to a number of factors, including timing constraints, staff did not bring forward these recommendations for City Council approval and the funding remained in the infrastructure reserve and will be carried forward to Fiscal Year 2016. The design work and site selection work will still be required, and is now anticipated to commence early in Fiscal Year 2016. Therefore, staff recommends revising the budgets for the following projects in Fiscal Year 2016 as follows: New Public Safety Building: Increase Fiscal Year 2016 budget by $100,000, offset by a reduction to the Infrastructure Reserve Fire Station 3 Replacement: Increase Fiscal Year 2016 budget by $700,000, offset by a reduction to the Infrastructure Reserve - 3 - APPENDIX 1 New Downtown Parking Garage: Increase Fiscal Year 2016 budget by $400,000, offset by a Transfer from the Downtown Parking In‐Lieu Fund. In the Downtown Parking In‐Lieu Fund, a corresponding action to establish a Transfer to the Capital Improvement Fund is recommended offset by a reduction to the Ending Fund Balance. These actions will have no impact to the Infrastructure Reserve levels assumed in the Proposed Capital Budget as these expenditures were assumed to occur in Fiscal Year 2015 and are now simply being moved to Fiscal Year 2016 Palo Alto Animal Services Transition Funding (Agenda Item #2) To facilitate the Finance Committee’s review of this item, the information from the May 7th At‐Places memorandum is repeated here: On April 22, 2015 the Finance Committee reviewed the City Auditor’s report on the Police Department’s Animal Services Unit. The audit found that the unit faces challenges that are unlikely to be resolved if it continues operating as a solely a city‐managed function without significant increase in General Fund subsidy, donations, and/or revenue‐generating contracts. The City Manager agrees with the audit findings and proposed action plans for each recommendation. Based on the audit and Finance Committee discussion, staff recommends continuing operation of an animal shelter in Palo Alto and retaining the Animal Control Officer (ACOs) functions. Staff also recommends that the City seeks out a non‐profit partner to operate the shelter. As discussed with the committee on April 22, 2015, in order to transition to an alternative service delivery model for the shelter, staff recommends allocating approximately $250,000 in one‐time transition costs in Fiscal Year 2016, offset by a projected Fiscal Year 2015 Budget Surplus carry‐ forward amount. Based on informal solicitations with several consultants, staff is estimating the average hourly rate for a consultant will be $125 per hour, which equates to approximately $250,000. The consultant will be used to guide staff with the implementation of best practices, develop a scope of work for a Request for Proposal, lead the evaluation of proposals from non‐profit partners, draft agreements, and develop a transition plan. In addition, the consultant will engage local community groups and regional animal services partners to ensure that all stakeholders are involved with shaping the future service model. Finally, the consultant will serve as a liaison with staff and the community to advance conversations about the renovation or remodel of the Palo Alto shelter. It is expected that the consultant will be hired early fall 2015 and that the transition to a qualified non‐profit provider will occur in Fiscal Year 2017. - 4 - APPENDIX 1 Wrap‐Up Discussion of Outstanding Issues from Prior Budget Hearing Meetings (Agenda Item #3) This section describes Finance Committee recommended changes made to the budget along with follow‐up items as discussed at the Finance Committee budget hearings held on May 5, 7, 12, and 14. The following section describes staff‐recommended changes to the proposed budget document. The items in this memorandum and any additional changes made during the May 26th budget hearing will be incorporated into the budget adoption staff report scheduled to be presented to the City Council on June 8, 2015. Summary of Changes to the Proposed Budget General Fund The Fiscal Year 2016 Proposed Operating Budget is balanced. In addition to the parking lot items listed in the table below, the Finance Committee tentatively approved increasing the Council budget by $5,000 for meal expense related to extra Council and Committee meetings and $27,000 member contribution for the San Francisquito Creek Joint Powers Authority (JPA). The additional JPA membership fees are offset by addition Fiscal Year 2015 General Fund budget surplus funds. Date Dept Description Expenses Revenues Net Proposed Budget ‐ BSR Change $0 $0 $0 Tentatively Approved by Finance Committee 5/5 COU Council meals for extra meetings $5 ($5) 5/14 PWD San Franscisquito Creek JPA 27 $27 ‐ Subtotal ‐ Tentatively Approved Changes to Proposed Budget $32 $27 ($5) Staff Proposed Actions to be Presented on May 26: 5/26 POL/FIR Reallocate Police Chief from Fire ‐ Stanford Revenue Impact ($50) ($50) 5/26 PWD Urban Forest Study $122 (122) 5/26 POL Palo Alto Animal Services Transition Funding 250 (250) FY 2015 budget surplus to offset Council meals, Stanford revenue ‐ 5/26 Various revenue impact, Urban Forest Study, & PAAS transition 427 427 5/26 NON Additional Infrastructure transfer (alignment w/ TOT revenue)325 (325) 5/26 NON Revised Property Tax projection 525 525 Subtotal ‐ Staff Proposed Actions $697 $902 $205 Revised Proposed Fiscal Year 2016 Budget Surplus as Recommended $729 $929 $200 Parking Lot Items 5/5 CSD Recreation Superintendent $178 ($178) 5/7 SUS Office of Sustainability consultant funding 190 (190) 5/7 PD/FIR Sr. Technologist for Public Safety 183 (183) 5/12 DS/PCE Code Enforcement Officer ‐ Lead 115 (115) Total Parking Lot Items $666 ‐ ($666) - 5 - APPENDIX 1 Staff Recommended General Fund Actions In addition to the items that the Finance Committee tentatively approved or placed into the parking lot, staff recommends additional actions for the Committee’s tentative approval, totaling net $0.205 million as discussed below. In addition to these proposed changes to the General Fund, staff has included additional actions for Capital Budget Reappropriations and the Municipal Fee Schedule at the end of this memo. Police and Fire Department: $50,000 budget impact offset by FY 2015 Budget Surplus During recruitment for a new Fire Chief, in Fiscal Year 2013, the Full‐Time Equivalent (FTE) for the Police Chief was evenly split between the Police Department and the Fire Department. The Fire Chief was hired in November 2012. Staff proposes to fully allocate the Police Chief position to the Police Department. This change results in a 0.5 FTE shift, or $165,710, from the Fire Department to the Police Department. As a result of this shift, $50,200 or 30.3 percent of the cost for this position will no longer be reimbursed by Stanford University as part of the Fire Services agreement between the City and the University. The Fiscal Year 2016 Adopted Budget will show the Fire, Police, and Office of Emergency as separate departments versus one umbrella public safety department. Urban Forest Study: $122,000 budget impact offset by FY 2015 Budget Surplus On May 11, 2015 staff brought the Urban Forest Master Plan to City Council for adoption. Due to the timing of the City Council’s consideration of the plan, funding was not included in the 2016 Proposed Operating Budget for the first year of the plan in the amount of $122,000. Included in this action is a recommendation to provide one‐time funding for the first year costs of this plan based on the City Council’s adoption of the plan offset with FY 2015 budget surplus funds. Funding in the amount of $78,024 will support hiring of hourly and contract staffing to supplement current staffing levels to allow permanent staff to focus on programmatic elements of the plan such as investigation of reasons for less canopy in south Palo Alto and to develop strategies to address this; coordination with nearby jurisdictions and agencies regarding trees within the El Camino Real Corridor; and tree permitting and regulations for Private Development. Contract dollars in the amount of $44,000 will fund a contract with Canopy to develop an on‐line tree library, outreach materials and staff training. Palo Alto Animal Services Transitional Funding: $250,000 budget impact offset by FY 2015 Budget Surplus As discussed in this memo, staff recommends continuing operation of an animal shelter in Palo Alto and retaining the Animal Control Officer (ACOs) functions. Staff also recommends that the City seeks out a non‐profit partner to operate the shelter. As discussed with the committee on April 22, 2015, in order to transition to an alternative service delivery model for the shelter, staff recommends allocating approximately $250,000 in one‐time transition costs in Fiscal Year 2016, offset by a projected Fiscal Year 2015 Budget Surplus carry‐forward amount. Additional Infrastructure Funding from Transient Occupancy Tax (TOT) The Fiscal Year 2016 Proposed Budget transfers $18.7 million from the General Fund to infrastructure. Of this transfer $5.0 million is attributed to the 2 percent TOT tax increase and new hotels to be opened during the fiscal year. Staff has reviewed the total amount for TOT tied to the 2 percent TOT tax increase and new hotels. The estimated TOT receipts related to these two sources is $5.3 million. Therefore, staff proposes an increase to the transfer to infrastructure by $0.325 million, bringing the total transfer to $5.325 million. - 6 - APPENDIX 1 Property Tax Revenue Estimate Increase As reported in the City Manager Monthly Report for May 2015, in a onetime windfall, the City’s General Fund recently received $3.3 million in documentary transfer taxes for Fiscal Year 2015 as a result of the sale of several major and high quality commercial property assets. These included facilities purchased along El Camino Real (Palo Alto Square), Page Mill Road, Porter Drive, and Hillview and Miranda Avenues. The purchaser was Hudson Pacific Properties which acquired other properties up and down the Peninsula. Due to these property transfers as well as updated information from the County Assessor’s Office, staff recommends increasing the Property Tax estimate by $0.525 from $34.542 million to $35.067 million. Fiscal Year 2016 Projected Ending General Fund Budget Stabilization Reserve (BSR) Balance To date, the Finance Committee has made tentative changes to the Proposed Budget that result in a $5,000 draw from the Budget Stabilization Reserve (BSR). As discussed in this memo, staff proposes an additional $0.205 million in adjustments, increasing the projected BSR balance from $34.25 million to $34.45 million, or 18.6 percent of the Proposed Budget. The General Fund BSR policy maintains a reserve level of 15‐20 percent of the General Fund operating budget, with a targeted goal of 18.5 percent. This amount is $0.2 million above the 18.5 percent target. Fiscal Year 2015 Projected General Fund Year‐End Budget Surplus Council reviewed and approved the Fiscal Year 2015 Midyear Budget on April 20, 2015. The midyear budget includes a $5.3 million contribution to the BSR. Based on updated information, staff projects a Fiscal Year 2015 General Fund surplus of approximately $8.0 million, which assumes projected salary savings of $2.0 million, additional Documentary Transfer Tax of $3.3 million, forthcoming recommendations in June to set aside $1.0 million for the Palo Alto History Museum and fund $1.0 million for the Silicon Valley Regional Interoperability Authority (SVRIA) Radio Replacement. The Fiscal Year 2016 Proposed Budget includes a Fiscal Year 2015 Budget Surplus carry forward amount of $1.67 million to fund Fiscal Year 2016 one‐time funding needs. In the May budget hearings, the Committee tentatvely approved utilizing $27,000 of Fiscal Year 2015 budget surplus to fund the San Francisquito Creek JPA membership fees. In additon to this, staff recommends that the Finance Committee approve use of the Fiscal Year 2015 budget surplus to fund: 1) additional budget for extra Council and Committee meeting meals, $5,000; 2) the Stanford revenue impact of reallocating the Police Chief to the Police Department, $50,000; 3) the Urban Forest study, $122,000; and 4) Palo Alto Animal Service transitional funding, $250,000. These items total $0.205 million and assuming the Finance Committee approves these actions, the Fiscal Year 2015 Budget Surplus carry forward amount will be increased to $2.124 million. With this, the remaining Fiscal Year 2015 budget surplus will be $5.9 million and can be used towards the City’s unfunded pension and retiree healthcare liability, infrastructure, or other potential funding needs. Enterprise Funds and Other Funds In addition to the tentatvely approved changes to the proposed budget for the General Fund, the Finance Committee placed the following into the parking lot, pending additional information. The additional information requested by the Committee is included in this memorandum. Fiber Optic Fund: Fiber Optic Rebuild (FO‐16000), $1.150 million (May 7th) Stanford Development Agreement Fund: Project Safety Net, $487,000 (May 12th) - 7 - APPENDIX 1 Budget Process Parking Lot During the budget hearing, the Finance Committee moved to make various changes to the proposed budget by moving items to the parking lot. Below staff listed each parking lot item and provided additional information as requested from the Finance Committee or to clarify the proposed budget request. Staff hopes that this additional information will facilitate the committee’s review, discussion, and approval of these items. General Fund CSD Recreation Superintendent: 1 FTE, $178,000 At the May 5, 2015 Finance Committee meeting, the Community Services Department proposal for a 1.0 FTE Recreation Superintendent position was placed into the parking lot for further discussion. The department is requesting a Recreation Superintendent position to fill critical business and operational needs for the Recreation Division, which includes a diverse range of programs, services, facilities, and supervision of the Division’s 18.0 full‐time equivalents, 270 seasonal part‐time employees, and contract service providers for recreational programs and services. The critical business need for a Recreation Superintendent is a result of numerous management and non‐management staffing reductions over the past ten years within the Recreation Division, while simultaneously needing to keep up with increased public demand and expectations for the same or enhanced programs and services. Attachment D provides a more detailed description on the expected duties and responsibilities of the Recreation Superintendent. The Recreation Division is highly productive but needs the benefit of a Recreation Superintendent to sustain and grow revenues, enhance programs and provide effective and efficient oversight of division functions. A dedicated senior management position for the Recreation Division would improve customer service, coordinated communications, revenue generation, cash handling risk management, and marketing and community outreach at multiple centers. The Recreation Superintendent will expand the capacity of Community Services programs by increasing participation, revenue, staff training and monitoring, and cost recovery through evaluation of program delivery, marketing, branding, and increased partnerships. It is expected that within three years new revenue generated through enhanced programs, services, non‐profit support and fundraising will more than recover the cost of adding this strategic position to Community Services. The Recreation Superintendent will also lead the City’s special events program and will help increase the effectiveness and capacity of Community Services staff and contractors to carry out not only our current portfolio of events but coordinate an inter‐department City team for planning, marketing, and execution of new events. In addition, the Recreation Superintendent would work closely with the Palo Alto Recreation Foundation, the key support organization for fundraising in the private sector, for expanded special events production. With the additional special event funding in the amount of $45,000 as tentatively approved by the Finance Committee, the Recreation Superintendent would support the City’s traditional special events and lead production of non‐annual special events as they arise through special requests by the City Council, City Manager’s Office, and/or in partnership with local organizations. Possible additional events being considered include reviving prior events such as the Black & White Ball, new events such as a technology festival, and an event series requested by the Mayor with movie, dance, and music themes. Attachment D provides a detailed listing of special events offered by the City in Fiscal Year 2015. - 8 - APPENDIX 1 Office of Sustainability Consultant Funding: $190,000 The Finance Committee reviewed the Office of Sustainability budget on May 7th and placed $190,000 of consultant contractual funding into the parking lot, pending additional information and discussion. Sustainability Consultants will complement City staff in leading transportation related programs, such as Electric Vehicle (EV) readiness and mobility ($40,000, to further develop the Silicon Valley “MaaS” (Mobility as a Service) ecosystem, develop MaaS pilots, and advance EV readiness), further developing the Council directed Sustainability Climate Action Plan ($50,000, for additional research, design and analysis, and Council briefings), engaging and training the community and City staff ($35,000, for four live and ongoing virtual events related to sustainable City operations and to the Sustainability Climate Action Plan), implementation of sustainability initiatives in purchasing and other City systems ($30,000, to embed total cost of ownership (TCO), externalities pricing and sustainability priorities), third party verification of the City's emissions reporting to The Climate Registry ($15,000, previously budgeted under Utilities), and other sustainability‐related strategies as needed ($20,000, for needs to be determined). The intended use of the existing budget for contract/consultant funding includes funding for policy research ($15,000), EcoDistrict pre‐planning ($20,000), and ecological footprint analysis ($20,000). The Office of Sustainability has pursued grant funding whenever available and developed sustainability program partnerships with other local cities to obtain the best program value while minimizing City outlay of funds. Palo Alto has received an offer letter from the California Energy Commission (CEC) for $53,000 towards Electric Vehicle Education and Outreach. The City has already obtained an award of $33,950 to fund 4 EV Charging Stations from the Bay Area Climate Collaborative. The project is underway in collaboration with the Public Works Department. In addition to the direct receipt by the City of outside funding towards projects, the Office of Sustainability has brought Palo Alto into partnerships with other local cities to help leverage grant funding. Palo Alto is part of a team of cities that will benefit from a grant awarded to Santa Clara County from the Strategic Growth Council for Regional Alternative Mobility programs. Palo Alto is also part of five‐city collaboratives that will share $145,000 in Urban Sustainability Directors Network (USDN) Innovation Funding towards Future of Urban Mobility strategies and Green Cities California program funding for Landscape Water Behavior Change and Energy Benchmarking and Disclosure. Staff has submitted applications for several other grants and will report back to Council pending the award of any funds. Public Safety Senior Technologist: 1 FTE, $183,000 In the Police and Fire Departments budget review on May 7th, the Finance Committee placed the proposal for 1.0 FTE Senior Technologist for Public Safety in the parking lot. This action funds a Senior Technologist position to coordinate implementation, management, and maintenance of technology projects related to public safety. The position will supervise two Business Analysts, and assess public safety needs for business process and technology solutions. Some of the major projects that the position will be working on include, but are not limited to, finishing implementation of the Police Records Management System (RMS), planning the replacement of the current Fire Station Ringdown System, purchasing and deploying the Police Body‐worn Cameras, and coordinating regional public safety projects. Staff recommends that the position be funded in the Information Technology - 9 - APPENDIX 1 Department and dedicated to support the public safety departments offset with increased allocated charges from the General Fund to the Information Technology Fund. The funding for these additional allocated charges will be evenly split between the Police and Fire Departments therefore this action has no additional impact to the General Fund. PCE/Development Services Code Enforcement Lead: 1 FTE, $115,000 The Planning & Community Environment and Development Service Departments proposed the addition of 1.0 FTE Code Enforcement Lead. This item was placed in the parking lot on May 7th, pending additional information and discussion. This position will help prioritize the work of the 2.0 FTE Code Enforcement Officers and will expand the amount of work that the code enforcement team can accomplish by 50 percent. With the expanded capabilities, the program will be able to respond aggressively to more citizen complaints in a timely manner and will also be able to enforce conditions of approval and Planned Community zoning ordinances. According to the Service Efforts and Accomplishments report submitted by the City Auditor’s Office, the number of code enforcement cases has increased from 473 in Fiscal Year 2005 to 609 in Fiscal Year 2014, a 29 percent increase. The number of re‐inspections has increased from 796 in Fiscal Year 2005 to 1,398 in Fiscal Year 2014, a 77 percent increase. In the Fiscal Year 2014 National Citizens Survey, only 60 percent of Palo Alto resident’s ranked their satisfaction with the City’s code enforcement program as “good or excellent.” This is a measure the Planning & Community Environment Department would like to improve upon. This position is split between the Planning & Community Environment Department (0.8 FTE) and the Development Services Department (0.2 FTE), similar to the existing 2.0 FTE Code Enforcement Officers who respond to community concerns regarding building activity that may be occurring without a permit. When activity occurs without a permit, code enforcement staff coordinates with the Development Services Department Building Division on compliance. The Code Enforcement Lead position will also provide training, direction, and coordination of the code enforcement function to ensure compliance with the Palo Alto Municipal Code. The Departments’ goals of increasing customer satisfaction and responsiveness will not be attainable without this lead position. Fiber Optic Fund Fiber Optic Network System Improvements and Rebuild (CIP FO‐16000): $1,150,000 During the May 7th Finance Committee meeting, the Finance Committee placed the Fiber Optic System Rebuild project (CIP FO‐16000, pp. 415‐416 of the Proposed Capital Budget) into the parking lot and requested additional information regarding this project. Attached for the Committee’s reference is a map of the dark fiber network (Attachment E). The blue and green lines denote the dark fiber backbone. The red lines with the “F” labels are portions of the dark fiber ring proposed to be rebuilt, mainly comprised of the Stanford Research Park, Palo Alto Internet Exchange, and Downtown areas. The fiber system was constructed about 20 years ago with the majority of the system placed in existing spare infrastructure or in electric facilities. Expanding capacity and rebuilding the system will require installation of new underground substructures (i.e. boxes, conduits). The Fiber Optic System Rebuild project (FO‐16000) includes funds for system capacity improvements. The rebuild project will install new aerial duct or substructures (conduit and boxes) and additional fiber backbone cable to increase capacity for sections of the dark fiber ring that are at or near capacity and allow the Utilities Department to meet customer requests for service. The rebuild project should be completed with the budget funds requested for Fiscal Year 2016 ($1.15 million) and Fiscal Year 2017 ($1.25 million), for a project total of $2.4 million over two years. The remainder of the $4.9 million project cost originally shown on Capital Budget p. 415 represents a placeholder for future expansion as identified by Columbia Telecommunication’s (CTC) fiber‐to‐the‐premise study and development of a Fiber Master Plan for the - 10 - APPENDIX 1 City. Staff recommends removing funding for this project starting with Fiscal Year 2018 and will return to Council in subsequent years for approval with revised estimates and project descriptions. The Capital Budget p. 415 for the Fiber Optic System Rebuild Project FO‐16000 has been revised to reflect only the funding in Fiscal Years 2016 and 2017 (Attachment F). CIP FO‐16000 project areas are shown on points F1‐F3 & F6‐F7 points on the project map (Attachment E). System reliability improvement projects are budgeted under the Fiber Optics Network System Improvements project (CIP FO‐10001, pp. 407‐408 of the Proposed Capital Budget). The projects will install aerial duct and new fiber cable to replace damaged cable from squirrels eating the insulation of the cable, and underground a section of overhead cable in the downtown ring also damaged by squirrels. A revision to CIP FO‐10001 to clarify the project description on Capital Budget p. 407 is also included in Attachment F. The Fiber Optics Network System Improvements project is shown on points F4 & F5 on the attached project map. (Attachment E) Stanford Development Agreement Fund Project Safety Net: $487,000 At the May 14th Finance Committee budget hearing, the committee voted to place the budget for Project Safety Net in the parking pending further information regarding changes to the program. Project Safety Net (PSN) is a community collaborative of over 30 partner agencies and affiliations. Each partner agency is engaged in the “work” of suicide prevention and/or youth well‐being on a daily basis. Since the inception of PSN in 2009, City staff has been at the forefront of leadership of the collaborative, both in planning and execution. A more detailed explanation of PSN activities and the TrackWatch program is found in Attachment D. At the request of the Policy and Services Committee in fall 2014, PSN has been actively working over the last several months on identifying a more sustainable ongoing structure and staffing model for the Collaborative, and will be presenting their findings to the Policy and Services Committee on June 9, 2015. Key among the findings (based on research and the advice of national experts on other successful community collaboratives) is the need for a backbone structure staffed by a full time high capacity leader who is not embedded as an employee in one of the key partner agencies. If approved, a transition to a new PSN organizational and staffing structure will take time, therefore, it is staff’s recommendation to the Policy & Services Committee on June 9, 2015 that the City issue a Request for Proposal (RFP) for a contracted transitional leader to guide PSN through the next steps needed to implement this new structure. Future City funding of the ongoing PSN Executive Director in the new structure is yet to be determined, but could include annual seed funding from the Health & Safety funding set aside for PSN. - 11 - APPENDIX 1 In the Fiscal Year 2016 Proposed Budget, total funding for Project Safety Net increased by $245,602 compared to the Fiscal Year 2015 Adopted Budget. The Fiscal Year 2015 Adopted Budget for Project Safety Net includes funding for 1.0 FTE Project Safety Net Director and a 0.45 FTE hourly Project Safety Net Administrative Specialist. The proposed staffing model in the Fiscal Year 2016 Proposed Budget eliminates the 1.0 FTE hourly Project Safety Net Director and shifts the funding of $106,458 to contractual services for a contracted transitional leader to guide PSN through the next steps as stated above. In addition, the Fiscal Year 2015 Adopted Budget includes $25,000 for program expenses and $15,000 for supplies, totaling $40,000. Of this amount, $12,000 is reallocated to contract services in the Fiscal Year 2016 Proposed Budget to augment the proposed staffing model. In total, $118,458 is available to contract with an external agency or individual for the Public Safety Net Director position. The Fiscal Year 2015 Adopted Budget for Project Safety Net included $75,000 for TrackWatch and is increased by $240,000 in the Fiscal Year 2016 Proposed Budget, bringing the total funding for TrackWatch to $315,000. The original Fiscal Year 2015 funding provides one year of security services at two track locations: East Meadow Drive and Charleston Road for nine hours per day. On April 6, 2015, Council approved a supplemental appropriation of $175,000 for additional TrackWatch services through the remainder of Fiscal Year 2015 to pay for enhanced services at existing locations and add two more locations (Churchill Avenue and California Avenue) with an increase in hours to 21 hours per day at all locations). The additional funding included in the Fiscal Year 2016 Proposed Budget will continue the enhanced security services for six months (July through December) described above. Additional Information Requested by the Committee The Finance Committee has requested staff provide additional information on the following items. May 14, 2015 Salary/Benefit Change Analysis During the Fiscal Year 2016 Proposed Operating Budget Overview presentation to the Finance Committee on May 5th, it was noted that Citywide Salaries and Benefits in all funds increased by $8.5 million from the Fiscal Year 2015 Adopted Operating Budget of $150.1 million to the Fiscal Year 2016 Proposed Budget of $158.6 million, a 5.66 percent increase. A version of the table below was given to FY 2015 Adopted FTE FY 2016 Proposed FTE $ Change Salary & Benefits Project Safety Net Director $104,934 1.00 $0 0.00 ($104,934) Project Safety Net Coordinator $22,031 0.45 $25,883 0.45 $3,852 Total Salary & Benefits $126,965 $25,883 ($101,082) Total Supplies $15,000 $3,000 ($12,000) Contract Services Program Expenses $25,000 $25,000 $0 TrackWatch $75,000 $315,000 $240,000 Contract Staffing for Director $0 $118,458 $118,458 Total Contract Services $100,000 $458,458 $358,458 Total Allocated Charges $0 $226 $226 $241,965 1.45 $487,567 0.45 $245,602 - 12 - APPENDIX 1 the Finance Committee as part of the May 14th at‐places memorandum and showed the five main salaries and benefits categories broken down into the changes from the Fiscal Year 2015 Adopted Budget, to the Fiscal Year 2016 Base Budget, and then to the Fiscal Year 2016 Proposed Budget. The table distributed on May 14th only showed Fiscal Year 2016 Base Budget to Fiscal Year 2016 Proposed Budget costs for the recommended net 13.3 FTE position additions in all funds, approximately $2 million. The revised table below includes other salary related proposals of approximately $501,000 for hourly position increases (e.g.: tempory staffing for the Library Department and the Airport Fund) and reclassifications of full time positions as recommended in the Fiscal Year 2016 Proposed. These proposed budget additions were inadvertently categorized as base changes in the May 14th table as staff focused on the net 13.30 FTE position additions. The revised table below more accurately reflects the salary and benefit changes for the FY 2016 Base Budget of $6.0 million, which are discussed below. Before discussion specific salary and benefits components, it is important to describe the processes for establishing the annual salary and benefits budget. Late February/early March, the Office of Management and Budget downloads salary and health beneifts information of all employees on the payroll. Based on the actual data for filled positions, OMB establishes the cost for the upcoming fiscal year for each employee such as pension, healthcare, retiree healthcare, and other benefits costs as well as contractually obligated step increases, general salary increases, and average merit increases, as applicable. For vacant positions, based on analysis of hiring data, salaries are either budgeted at Step 3 (e.g.: SEIU, PAPOA, or IAFF represented positions) or at mid‐point (e.g.: UMPAPA Management and Professional employee positions). Staff has included a Timeline of Budget Process and Labor Contract Approval (Attachment G) to illustrate the timine of the development of the base budget compared to labor contract approval, which will be discussed further below. The graph below describes the Fiscal Year 2015 and Fiscal Year 2016 budgeting of salary and related pension costs for the General Fund and Non‐General Fund departments. Due to timing of establishing the Fiscal Year 2015 base salary and benefits budget and Council approval of labor contracts, and market/benchmark studies (Attachment G) staff included certain salary and benefit costs into the General Salary and Benefit Reserve as detailed in the graph below. As reported to the Finance - 13 - APPENDIX 1 Committee as part of the review of the Fiscal Year 2015 Proposed Budget, the General Fund Salary and Benefits reserve included funding for salary and pension costs related to market and benchmark studies, step increases, and general salary increases for planning purposes only. As of the 3rd Quarter of Fiscal Year 2015, staff has not allocated these dollars from the Salary and Benefits Reserve to the General Fund department budgets. In addition, after approval of the Fiscal Year 2015 budget, in December 2014, the City Council approved the Management and Professional Compensation Plan with a 2 percent general salary increase and a market & benchmark study affecting a few classifications in the Management and Professional group and UMPAPA, retroactive to July 1, 2014. The Fiscal Year 2015 Adopted salary and pension budgets for all departments does not include the full costs as approved for SEIU in March and for the Management and Professional Group in December 2014. The referenced market adjustments were based on a market study to align SEIU salaries in Palo Alto with comparable local agencies. FY 2015 Adopted FY 2016 Proposed General Fund Department Budgets Contractually obligated salary increases for SEIU: 2% effective 7/1/14; 2.5% effective 12/1/14 General Fund Department Budgets Alignment w/ 2014 approved market & benchmark studies and general salary increases (SEIU & Mgmt) Step increases (SEIU, IAFF, PAPOA) Pay for performance (Mgmt, FCA, PMA) 2.5% General salary increase (Mgmt) General Fund Salary and Benefits Reserve Market & Benchmark studies (SEIU & Mgmt) Step increases (SEIU, IAFF, PAPOA) Pay for performance (Mgmt, FCA, PMA) General salary increase for planning purposes only (all groups except SEIU) General Fund Salary and Benefits Reserve General salary increase for planning purposes only (groups other than Mgmt) Non‐General Fund Departments (no reserves) Items not included in adopted budget: General salary increase, 2% (SEIU, Mgmt) General salary increase, 2.5 % (SEIU effective Dec. 1, 2014) Market & Benchmark studies (SEIU, Mgmt, UMPAPA) Step increases (SEIU) Pay for performance (Mgmt & UMPAPA) Non‐General Fund Departments (no reserves) Items included in the proposed budget: Alignment w/ 2014 approved market & benchmark studies and general salary increases (SEIU, Mgmt, & UMPAPA) Pay for performance (Mgmt & UMPAPA) General salary increase (Mgmt & UMPAPA) Step increases (SEIU) The Fiscal Year 2016 Proposed Budget represents a more accurate alignment of contractually approved labor contracts and amounts assumed for budget planning purposes with the department budgets. With the development of the Fiscal Year 2016 Base Budget, the payroll census includes the costs of the approved increases as well as step and merit increases as indicated with the arrow in the graphic above. Further, department budgets are increased based on approved contracts or compensation plans for our employee groups for all departments’ salary and pension budgets which includes step increases, average pay for performance increases, and general salary increases. In the General Fund, for planning purposes only, funds are set aside for salary increases for the bargaining units the City is currently in negotiation (e.g.: PAPOA, IAFF) and is scheduled to negotiate a successor contract (e.g.: SEIU). Due to timing issues regarding the development of the Fiscal Year 2015 budget with implementation of approved labor contracts/compensation plans and OMB staff further refining department budgets by fully loading costs into department budgets, from a Fiscal Year 2015 Adopted Budget to Fiscal Year 2016 - 14 - APPENDIX 1 Proposed Budget comparison, it appears that employees, in general, received significant salary increases. However, for SEIU and the Management and Professional Group, these increases span over two labor contract years and compensation plan years, respectively. Salary Salaries increased $2.4 million or 2.61 percent from the Fiscal Year 2015 Adopted Budget to the Fiscal Year 2016 Base Budget. As discussed above, this increase is due to several factors which include funding for step increases for positions eligible to receive them, funding for salary increases for employee groups that have Council approved contractual increases, and funding for potential employee group increases that are in negotiations and have not been approved by the Council. The overall base salary change and the base salary changes in departments and funds total to the same amount; however, when comparing the overall change to the changes in individual departments and funds, as identified in the budget document, there are variations in the percent salary changes due to timing of approved increases and where the increases are budgeted. In the development of the Fiscal Year 2016 Base Budget, step increases for eligible employees and a 2.5 percent salary increase for Management employees as well as an average merit increase of 1.5 percent as of July 1, 2015 were allocated to departments, because the Management and Professional Compensation Plan was approved through the end of Fiscal Year 2016. Similar to Fiscal Year 2015, the General Fund portion of anticipated increases for other employee groups (e.g.: PAPOA, IAFF) that are still in negotiations or the contract is scheduled to end during Fiscal Year 2016 (e.g.: SEIU) have been set aside in the General Fund Salary and Benefits Reserve in Non‐Departmental for planning purposes only. No special reserve is set up for non‐general funds at this time. Allocations of these funds, if budgetarily necessary, will be brought forward for Council approval, after the City and the respective bargaining groups agreed to the terms of a successor memorandum of understanding. Pension Comparing the Fiscal Year 2015 Adopted Budget to the Fiscal Year 2016 Base Budget, pension costs increased by $1.4 million or 5.69 percent, which accounts for the CalPERS rate increases of 2.2 percentage points for the Miscellaneous Plan (27.7 percent to 29.9 percent) and 3.2 percentage points for the Public Safety Plan (41.9 percent to 45.1 percent) as well as the additional pension costs related to base budget salary changes discussed above. Healthcare Healthcare costs increased by $1.0 million or 5.95 percent between the Fiscal Year 2015 Adopted Budget and Fiscal Year 2016 Base Budget, with higher budgeted health care escalation costs for employee groups with the 90/10 health cost sharing model vs. the flat City health care contribution amount. Groups that are on the 90/10 cost sharing model include the International Association of Fire Fighters (IAFF), the Palo Alto Police Officers’ Association (PAPOA), the Fire Chiefs’ Association (FCA), the Police Management Association (PMA), and the Utilities Management and Professional Association of Palo Alto (UMPAPA). Since CalPERS does not provide the City with the calendar year 2016 healthcare plan costs until summer 2015, for groups under the 90/10 cost sharing model, the budget assumes an eight percent rate for the second half of Fiscal Year 2016. For groups under the flat medical cost model such as the Service Employees International Union (SEIU) and Management and Professional employees, the budget assumes a 4 percent medical healthcare cost increase for the second half of the Fiscal Year. It is important to note that the actual City contributation amount for calendar year 2016 is subject to negotiations with SEIU. The current contract with SEIU is scheduled to end December 1, 2015. - 15 - APPENDIX 1 Retiree Healthcare & Other Benefits Compared to the Fiscal Year 2015 Adopted Budget, retiree healthcare costs are increasing by $0.8 million or 6.61 percent based on the costs outlined in the actuarial study completed by Bartel Associates for the City in June 2014. Other benefits are increasing by $0.4 million or 8.70 percent mainly due to budgeting sworn retention pay in accordance with the MOA between the City and PAPOA. Sworn employees who have been with the City for 5 years receive a 3 percent increase in pay and if they are with the City for 10 years they receive a 6 percent increase in pay. Municipal Fee Follow Ups Athletic Fields Fees – Community Services Department At the May 14, 2015 Finance Committee meeting, the Finance Committee requested an overview on Athletic Playing Field rental fees to provide user groups with an understanding of how fees and fee increases are assessed. Fees have been set in comparison to market pricing of athletic fields in the surrounding area, with fees for Palo Alto fields established close to the median. Fees for athletic playing fields are charged on an hourly rate where the rate per hour is based on the type of field and the type of group renting the field. The current fee range and fees are in the table below and are posted on the City of Palo Alto website: Fee Category Fee Range: Grass (per hour) FY16 Fee: Grass (per hour) Fee Range: Artificial Turf (per hour) FY16 Fee: Artificial Turf (Per hour) Palo Alto based youth non‐profit organizations with participant residency above 50% $3.00 ‐ $27.00 $7.00 $33.00 ‐ $54.00 $33.00 Palo Alto based non‐ profit $25.00 ‐ $54.00 $25.00 $44.00 ‐ $108.00 $44.00 Resident $46.00 ‐ $81.00 $46.00 $61.00 ‐ $162.00 $61.00 Non‐resident $83.00 ‐ $162.00 $83.00 $138.00 ‐ $216.00 $138.00 The fee structure provides a range of subsidy based on the type of organization that is renting a field. Palo Alto based youth non‐profit organizations are provided the greatest subsidy where as non‐ regular/non‐typical field use such as a special events that use athletics fields that may require additional park space and or services such as additional garbage pick‐up receive a lower subsidy. In 2012, a comparison of fees for Palo Alto based youth non‐profit organizations determined that Palo Alto’s fee, which at the time was $2.00 per hour, was substantially lower than neighboring communities. Consequently, at that time organized sports organizations were informed that fees would be raised annually over the following three years. Fees were subsequently raised annually to the now current fee of $7.00 per hour which falls within the $3.00 to $27.00 per hour range for Palo Alto based youth non‐ profit organizations with high resident participation. Each sports season staff and field user groups meet to discuss and coordinate field scheduling, and fee changes are discussed at this time so that all user groups can plan their program pricing accordingly. Fees for non‐youth user groups were raised 10 percent in 2013 and have not been raised since. - 16 - APPENDIX 1 For Fiscal Year 2016, there are no plans to raise fees currently charged for playing fields; however, with the adoption of the User Fee Cost Recovery Policy by Council, the Community Services Department will further evaluate fees for programs and services and may recommend additional fee adjustments for Council approval at that time. Should fees be raised, field user groups will be informed during the seasonal field brokering meetings to provide advance notice and the updated fees will be posted on the City’s website. Additional Information Provided by Staff Pension Pre‐Payment As a cost savings measure, the Fiscal Year 2016 Proposed Budget assumes a pre‐payment towards the City’s pension annual required contribution, totaling $28.2 million Citywide. As opposed to paying the city’s pension contribution every pay period, this lump sum payment, to be paid in July 2015, will result in a $1 million pension expense savings citywide, of which $0.66 million is savings in the General Fund. The savings are calculated by CalPERS which assumes an average 7.5 percent investment return versus the City’s estimated return on its investment portfolio of 1.85 percent. These savings are partially offset by a return on investment loss of approximately $0.265 million citywide, or $0.152 million in the General Fund, based on the City’s average portfolio interest rate of 1.85 percent. It is important to note that the City is bound by a very conservative investment policy which prohibits investments in equities and that in fiscal year 2014 CalPERS earned 18.4 percent on its investments. Finance Committee Changes to the City Manager’s Proposed Budget The items listed below summarize motions made and/or action items made by the Finance Committee as of May 14 that result in a fiscal change or other recommended change to the Fiscal Year 2016 Proposed Budget. General Fund City Attorney Motion: On May 5, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 City Attorney budget (4‐0) City Auditor Motion: On May 7, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 City Auditor budget. (4‐0) City Clerk Motion: On May 5, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 City Clerk budget. (4‐0) City Council Motion: On May 5, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 City Council budget. (4‐0) Motion: On May 5, 2015, the Finance Committee moved to tentatively increase the budget for council and commission meals by $5,000. (4‐0) - 17 - APPENDIX 1 City Manager Motion: On May 5, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 City Manager budget. (4‐0) Office of Sustainability Motion: On May 7, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Office of Sustainability budget. (4‐0) Motion: On May 7, 2015, the Finance Committee moved to place the $190,000 in contract funds into the parking lot for further review, resulting in a net benefit to the General Fund of $190,000. (4‐0) Administrative Services Department Motion: On May 14, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Administrative Services Department budget. (3‐0, 1 absent) Community Services Department Motion: On May 5, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Community Services Department budget. (4‐0) Motion: On May 5, 2015, the Finance Committee moved to move the addition of 1.0 FTE Recreation Superintendent into the parking lot for further review, resulting in a net benefit to the General Fund of $178,000. (4‐0) Development Services Department Motion: On May 12, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Development Services Department budget. (4‐0) Motion: On May 12, 2015, the Finance Committee moved to place the addition of 0.2 FTE Code Enforcement Officer – Lead into the parking lot for futher review, resulting in a net benefit to the General Fund of $114,640. (4‐0) Fire Department Motion: On May 7, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Fire Department budget. (4‐0) Motion: On May 7, 2015, the Finance Committee moved to place the addition of 0.5 FTE Senior Technologist into the parking lot for further review, resulting in a net benefit to the General Fund of $91,500. (4‐0) Library Department Motion: On May 12, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Library Department budget. (4‐0) Human Resources Department Motion: On May 5, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Human Resources Department budget. (4‐0) - 18 - APPENDIX 1 Office of Emergency Services Motion: On May 7, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Office of Emergency Services budget. (4‐0) Planning and Community Environment Department Motion: On May 12, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Planning and Community Environment Department budget. (4‐0) Motion: On May 12, 2015, the Finance Committee moved to place the addition of 0.8 FTE Code Enforcement Officer – Lead into the parking lot for futher review, resulting in a net benefit to the General Fund of $91,710. (4‐0) Police Department Motion: On May 7, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Police Department budget. (4‐0) Motion: On May 7, 2015, the Finance Committee moved to place the addition of 0.5 FTE Senior Technologist into the parking lot for further review, resulting in a net benefit to the General Fund of $91,500. (4‐0) Public Works Department Motion: On May 14, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Public Works Department budget. (3‐0, 1 absent) Motion: On May 14, 2015, the Finance Committee accepted staff’s recommendation to increase the annual member agency contribution to the San Francisquito Creek Joint Powers Authority (JPA) from $118,000 to $145,000, offset by Fiscal Year 2015 budget surplus The JPA member contribution was increased by the JPA Board of Directors on April 23, 2015. (3‐0, 1 absent) Non‐Departmental Motion: On May 7, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Non‐Departmental budget. (4‐0) Enterprise Funds Utilities Department Motion: On May 7, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Utilities Department budget which includes the Electric, Fiber Optics, Gas, Water, and Wastewater Collection Funds. (4‐0) Motion: On May 7, 2015, the Finance Committee moved to place the Fiber Optic System Rebuild capital project (FO‐16000), totaling $1.15 million into the parking lot for further review, resulting in a net benefit to the Fiber Optics Fund of $1.15 million. (4‐0) - 19 - APPENDIX 1 Storm Drain Fund Motion: On May 14, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2015 Storm Drain Fund operating and capital budgets. (3‐0, 1 absent) Refuse Fund Motion: On May 14, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Refuse Fund budget. (3‐0, 1 absent) Wastewater Treatment Fund Motion: On May 14, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Wastewater Treatment Fund operating and capital budgets. (3‐0, 1 absent) Airport Fund Motion: On May 14, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Airport Fund budget. (3‐0, 1 absent) Internal Service Funds Information Technology Department Motion: On May 12, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Information Technology Department budget. (4‐0) Vehicle Replacement Fund Motion: On May 14, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Vehicle Replacement Fund operating and capital budgets. (3‐0, 1 absent) Employee Benefits Funds Motion: On May 7, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 General Benefits, Workers’ Compensation, and Retiree Medical Funds budget. (4‐0) General Liability Fund Motion: On May 7, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 General Liability Fund budget. (4‐0) Printing and Mailing Fund Motion: On May 14, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Printing and Mailing Fund budget. (3‐0, 1 absent) Capital Project Fund The Capital Project Fund budget will be preseted to the Finance Committee on May 26th. Special Revenue Funds Motion: On May 12, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Special Revenue Fund budgets, except for Project Safety Net portion of budget in the Stanford Development Agreement Special Revenue Fund. (4‐0) - 20 - APPENDIX 1 Motion: On May 12, 2015, the Finance Committee moved to place Project Safety Net portion of budget in the Stanford Development Agreement Special Revenue Fund into the parking lot for futher review, resulting in a net benefit to the Stanford Development Agreement Special Revenue Fund of $487,340. (4‐0) Municipal Fee Schedule Motion: On May 14, 2015, the Finance Committee recommended tentative approval of the Fiscal Year 2016 Municipal Fee Schedule. (3‐0, 1 absent) Staff Recommended Changes to the City Manager’s Proposed Budget Listed below is a summary of items presented to the Finance Committee at places up through the May 19, 2015 Finance Committee meetings that result in a financial change as well as additional staff recommended revisions to the Fiscal Year 2016 proposed operating and capital budgets. Public Works The Board of Directors of the San Francisquito Creek Joint Powers Authority (JPA) approved the JPA’s Fiscal Year 2016 operating budget on Thursday, April 23rd. The Fiscal Year 2016 budget increased the annual member agency contribution by $27,000 from $118,000 to $145,000 in order to allow the JPA to hire an additional staff person. Therefore, staff recommends increasing the annual JPA contribution which is funded in the Public Works Department’s General Fund budget by $27,000 to cover the additional cost. The increased expense is recommended to be funded via increased Fiscal Year 2015 budget surplus carry‐forward funds. In addition to these items, during the May 26th budget hearing, staff proposes the following changes to the Fiscal Year 2016 Proposed Budget. These items are discussed earlier in this memo: Police and Fire Department: $50,000 budget impact offset by FY 2015 Budget Surplus Urban Forest Study: $122,000 budget impact offset by FY 2015 Budget Surplus Palo Alto Animal Services Transitional Funding: $250,000 budget impact offset by FY 2015 Budget Surplus Additional Infrastructure Funding from Transient Occupancy Tax (TOT): additional $325,000 Property Tax Revenue Estimate Increase: additional $525,000 Capital Budget Reappropriations As described in the Proposed Capital Budget document and discussed during the Finance Committee Budget Hearings, the City Council‐approved change in the method for accounting for capital budget reappropriations is included in the 2016‐2020 Proposed Capital Budget Improvement Program (CIP). Previously, any unspent capital funds carried forward from one fiscal year to the next automatically, as long as the project was active. As a result of this October 2014 change to the Municipal Code, City Council authorization is now required for reappropriations. The Proposed Capital Budget includes approximately $43 million in reappropriated funds, across all funds. In the time since the Proposed Budget figures were developed (late winter and early spring of 2015), departments have re‐reviewed current year estimates and the reappropriation amounts built into the - 21 - APPENDIX 1 proposed CIP. In some instances, additional reappropriations are recommended, as project expenditures originally anticipated to occur before the end of Fiscal Year 2015 will now likely occur in 2016. Additionally, some expenditures not anticipated to occur until Fiscal Year 2016 and therefore reappropriated in the budget document to Fiscal Year 2016 have been realized in Fiscal Year 2015, requiring downward adjustments for Fiscal Year 2016. Cumulatively, this re‐review of projects has resulted in staff’s recommendation to increase the Fiscal Year 2016 Proposed Budget by a net total of $8.6 million, from $115.1 million to $123.7 million, and are recommended in the following funds: Fund Recommended Fiscal Year 2016 Funding Adjustment Capital Improvement Fund $5,380,541 Storm Drainage Fund $3,165,216 Vehicle Replacement and Maintenance Fund (105,882) Electric Fund $168,006 Total All Funds $8,607,881 These adjustments, as outlined in detail in Attachment H, will ensure that funds are available at the onset of Fiscal Year 2016 for projects that have experienced delays in the current year and will reduce the Fiscal Year 2016 Proposed budget for projects that experienced higher than anticipated expenditure levels within Fiscal Year 2015. Municipal Fee Schedule Public Art Fee – Planning and Community Environment Upon further review of the proposed Fiscal Year 2016 proposed Municipal Fee Schedule, it has come to staff’s attention that the Public Art Fee requirement needs to be adjusted in accordance with Municipal Code 16.61.040. The Public Art Fee requirement was established by Council in 2013 requiring a developer to construct or install on‐site public art valued at 1 percent of the first $100 million construction valuation, adjusted annually by increases in the Consumer Price Index for all urban consumers, and 0.9 percent of construction valuation for valuation in excess of $100 million. For Fiscal Year 2015, adjusting by the Consumer Price Index for all urban consumers, as directed by the Municipal Code, the requirement for Fiscal Year 2015 should have been 1 percent of the first $1,022,000 in construction valuation and 0.9 percent of construction valuation in excess of this amount. For Fiscal Year 2016, based upon the Fiscal Year 2015 revised calculation, adjusting by the Consumer Price Index for all urban consumers, as directed by the Municipal Code, the requirement for Fiscal Year 2016 is 1 percent of the first $1,051,025 in construction valuation and 0.9 percent of construction valuation in excess of this amount. It should be noted that there have been no developments over $100 million that would impact prior collections of this fee. - 22 - APPENDIX 1 Single Story Overlay Fee Waiver – Planning and Community Environment At the March 23, 2015 City Council meeting, Councilmember DuBois moved, seconded by Mayor Holman, to agendize a discussion of temporarily suspending the fees associated with a single story overlay. No action was taken after the Motion since the item in question was not agendized. Because some Councilmembers have indicated a desire to waive or reduce fees for single story overlays to prevent two story homes in designated areas, staff is seeking direction from the Finance Committee on this issue. Staff is recommending that: (1) the Finance Committee approve a temporary or permanent fee waiver authorizing the City Manager to waive all or a portion of the fee as outlined below; (2) defer this action to the City Council for discussion and/or action as part of budget adoption; (3) request staff to return to the Finance Committee with additional information; (4) or other direction as agreed to. Should the Finance Committee elect to approve a temporary or permanent fee waiver, staff is proposing the following amendment to the Fiscal Year 2016 Proposed Municipal Fee Schedule: At the recommendation of the Planning and Community Environment Director, the City Manager may waive all or a portion of a Single Story Overlay Fee upon receipt of a written request submitted in association with a qualified application. The City Manager will report to the City Council about fee waivers granted pursuant to this provision as part of closing the Fiscal Year 2016 budget. This fee waiver will expire at the end of Fiscal Year 2016 subject to reauthorization by the City Council. It is important to note that staff rarely processes applications for a single story overlay; however, staff believes that at least two neighborhood groups currently are considering applying for such an application. The proposed Fiscal Year 2016 fees for a single story overlay include $6,118.00 for an initial deposit for a Regular Zone Change; $1,401.00 per application for Legal Review of a Zone Change; and a $697.00 Public Noticing fee per occurrence for a minimum total of $8,216.00 per application. Should the fee waiver be adopted, the General Fund will be subsidizing the cost of this activity in‐lieu of fee revenue from the applicants directly paying for this review process. Referral Items for Staff to Return to Finance Committee at a Later Date At the May 12, 2015 Finance Committee meeting, the Committee requested a study session regarding Library Digital Services. This Palo Alto City Library: E‐books, Digital Resources, and Digital Literacy study session has been tentatively scheduled for September 28, 2015 and will discuss digital resources, use and promotion, and the Library’s plans for digital literacy, as it appears in the Library Strategic Plan, and in comparison with other libraries. Related Memos Distributed At Places May 5, 2015 Operating Budget Page References for May 5th and May 7th Meetings Summary of Position Changes Revised Proposed Operating Budget Pages Revised Proposed Capital Budget Pages - 23 - APPENDIX 1 May 7, 2015 Affordable Care Act Impact on Healthcare Costs Retiree Healthcare Fund – Payment of Annual Required Contributions Animal Services Transition Funding May 12, 2015 Proposed Library Department Weekly Operating Hours Consolidated Special Revenue Funds Table California Avenue Parking Permit Fund Capital Expenditures Location and Number of Automatic External Defibrillators (AEDs) Contingency Account Review May 14, 2015 Revised Proposed Operating Budget Pages Summary of Position Changes Summary of Citywide Salary and Benefit Changes San Francisquito Creek Joint Powers Authority Annual Contribution Storm Drainage Fund Oversight Committee List of Attachments Attachment A Capital Improvement Fund Source & Use Statement, p. 26 Attachment B Planning & Transportation Commission Review of the 2016‐2020 Proposed Capital Improvement Plan, p. 27 Attachment C Planning & Transportation Commission Draft Verbatim Minutes, May 13, 2015, pp. 28‐ 51 Attachment D Supplemental Information Provided by the Community Services Department for the Recreation Superintendent and Project Safety Net, pp. 52‐56 Attachment E Map of the City’s Fiber Optic Backbone, pp. 57 Attachment F Replacement pages for the Fiber Optic System Rebuild (FO‐16000) and Fiber Optic System Improvements (FO‐10001) Capital Projects, pp. 58‐61 Attachment G Timeline of Budget Development and Labor Contracts, p. 62 Attachment H Capital Budget Reappropriations, pp. 63‐65 - 24 - APPENDIX 1 DEPARTMENT HEAD: LALO PEREZ Director, Administrative Services/CFO CITY MANAGER: JAMES KEENE City Manager - 25 - APPENDIX 1 2016‐2020 Capital Improvement Program City Council Infrastructure Plan Project Number Project FY 2014 Actuals FY 2015 Estimate FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Infrastructure Reserve - 14,659,414 13,802,575 16,524,000 20,419,000 19,269,700 11,728,000 0 14,659,414 13,802,575 16,524,000 20,419,000 19,269,700 11,728,000 General Fund Contributions Transfer from General Fund - additional hotels and 2 percentage point TOT increase - - 4,700,000 4,700,000 - - - Total General Fund Contributions 0 0 4,700,000 4,700,000 0 0 0 Other Revenues Certificates of Participation - - - - 54,716,000 8,600,000 - Transfers from Downtown Parking In- Lieu Fund - 400,000 900,000 2,741,000 - - - Fund - - - - 2,800,000 - - Transfers from SUMC Fund (Stanford Infrastructure)- 800,000 1,100,000 19,422,000 750,000 - - Transfers from SUMC Fund (Stanford Sustainability)1,200,000 1,200,000 1,200,000 1,200,000 5,200,000 1,200,000 1,200,000 Total Other Revenues 1,200,000 2,400,000 3,200,000 23,363,000 63,466,000 9,800,000 1,200,000 Total Sources 1,200,000 17,059,414 21,702,575 44,587,000 83,885,000 29,069,700 12,928,000 AC-86017 Art in Public Spaces- Infrastructure Plan Projects - - 32,000 172,000 525,300 171,700 128,000 PL-04010 Bicycle & Pedestrian Transportation Plan - Implementation Project 135,827 796,839 2,706,575 1,200,000 1,200,000 1,200,000 1,200,000 PE-18006 Byxbee Park Completion - - - - 280,000 2,520,000 - PE-13011 Charleston Arastradero Corridor Project - - - 1,500,000 - 3,000,000 3,000,000 PE-15003 Fire Station 3 Replacement - 700,000 - 6,000,000 - - - PE-18004 Fire Station 4 Replacement - - - - 750,000 6,750,000 - PE-11011 Highway 101 Pedestrian/Bicycle Overpass Project - 1,260,000 440,000 - - - - PE-18000 New California Avenue Area Parking Garage - - - - 300,000 700,000 8,600,000 PE-15007 New Downtown Parking Garage - 400,000 900,000 11,700,000 - - - PE-15001 New Public Safety Building - 100,000 1,100,000 2,800,000 50,000,000 3,000,000 0 Reserve for Infrastructure Plan: Bicycle and Pedestrian - - - - 11,560,000 - - Reserve for Infrastructure Plan: Contingency - - - 796,000 - - - Total Expenses 135,827 3,256,839 5,178,575 24,168,000 64,615,300 17,341,700 12,928,000 Ending Fund Balance (Balance of Infrastructure Reserve Contribution)1,064,173 13,802,575 16,524,000 20,419,000 19,269,700 11,728,000 0 Total Uses 1,200,000 17,059,414 21,702,575 44,587,000 83,885,000 29,069,700 12,928,000 Source of Funds Use of Funds Total Beginning Fund Balance: Infrastructure Reserve Contributions Beginning Fund Balance: Infrastructure Reserve Contributions ATTACHMENT A - 26 - APPENDIX 1 ATTACHMENT B - 27 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 1 Planning and Transportation Commission 1 Draft Verbatim Minutes 2 May 13, 2015 3 4 EXCERPT 5 6 Public Hearing 7 1. CIP Review: Recommendation to the City Council Regarding the Comprehensive Plan 8 Compliance with the 2016-2020 Proposed Capital Improvement Program. For more information 9 contact Chitra Moitra at Chitra.moitra@cityofpaloalto.org. 10 11 Chair Tanaka: So let’s start with the first item which is the Capital Improvement Program (CIP) review 12 and our recommendation to City Council regarding the Comprehensive Plan compliance with the 2016-13 2020 proposed CIP. So does staff have a presentation they’d like to go over? 14 15 Jonathan Lait, Assistant Director: Thanks, Chair. Again, I’ll just start off again and then introduce other 16 staff to continue the presentation. This is a, the Planning and Transportation Commission (PTC) annually 17 reviews the Capital Improvement Projects for consistency with the Comprehensive Plan. This year the 18 2016-2020 proposed Capital Budget documents, document includes 24 new CIP projects that have not 19 been previously reviewed by the PTC and therefore have not had a recommendation for Comprehensive 20 Plan compliance. It is those 24 new projects that we would request the Planning Commission focus its 21 attention specifically on with respect to rendering a, the Comp Plan consistency. Before being included in 22 the Capital Budget these projects were reviewed for potential health and safety implications, consistency 23 with the City Council’s top four priorities, and the City Council approved Infrastructure Plan as well as 24 alignment with historical expenditures and expenditure levels for recurring projects. 25 26 Seated before you tonight is Walter Rossman, Director Office of Management and Budget. We have 27 sitting next to him Eric Bilimoria, Senior Management Analyst with the Administrative Services 28 Department. And next to Eric is Brad Eggleston, did I get that right? Eggleston, thank you. He’s the 29 Assistant Director of Public Works. And to my right is Chitra Moitra, who is the Planner in our division 30 who is helping assist with the Comprehensive Plan consistency findings. I’m going to turn it over to Eric 31 right now so he can have a brief presentation and then after Eric I believe Chitra will speak for a few 32 moments. Thank you. 33 34 Eric Bilimoria, Senior Management Analyst: Thank you, Jonathan. Good evening Chairman Tanaka, Vice-35 Chair Fine, and members of the committee. Before going through the finances and new projects included 36 in the proposed Capital Budget I’d like to spend just a few moments describing the changes made to the 37 budget process and document as part of the 2016 proposed Capital Budget. First, you may have noticed 38 that the budget document is significantly larger than the 2015 adopted budget. This is mostly due to a 39 City Council approved change in the way funds are carried forward or reappropriated from one year to 40 the next for uncompleted projects. Previously at the conclusion of any fiscal year (FY) any unspent funds 41 were carried forward automatically as long as the project was active. As a result the annual Capital 42 Budget was not fully representative of all capital activity anticipated to occur as the budget only needed 43 to call out changes to projects. Starting with FY 2016 the annual reappropriation of unused capital funds 44 requires City Council approval. This change resulted in 66 projects being included in the budget 45 document that otherwise would not have appeared under the previous practice. 46 47 The proposed budget also includes a multi-page fund overview for each Capital Fund that includes 48 historical expenditure levels, budget comparisons to prior years, a summary of the infrastructure related 49 to that particular fund, and a discussion of major capital projects grouped by category. Additionally, the 50 proposed budget includes a source and use of funds statement for the Capital Improvement Fund 51 including beginning and ending fund balances as part of an effort to provide a more complete picture of 52 available funding and the Infrastructure Reserve. For the other funds the same presentation is used; 53 however, beginning and ending balances are not included as these other funds include a mix of operating 54 and capital expenditures. 55 - 28 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 2 1 The project pages were redesigned for this budget with additional information on each project provided. 2 While previous budget documents displayed the current schedule for each project the proposed budget 3 now also incorporates the original schedule with any significant deviations explained in the newly added 4 significant changes section. The project pages have also been reconfigured to display the total project 5 cost including prior year expenses, current year estimates, and any expenses falling beyond the five year 6 CIP. As with the schedule any significant deviations to the total project cost are outlined in the significant 7 changes section. 8 9 The City’s overall investment towards capital projects in FY 2016 is $115.1 million, nearly double the $58 10 million funding level of the FY 2015 adopted budget. The City’s nine Enterprise Funds represent the 11 largest slice of the pie and include the various Utility Funds as well as the Wastewater Treatment, Refuse, 12 Storm Drainage, and Airport Funds, but the largest investments coming in the Utility Funds and the 13 Wastewater Treatment Fund. Total FY 2016 proposed expenditures in the Enterprise Funds are $63.5 14 million or 55 percent of the overall 2016 Capital Budget and are primarily supported by rate payers and 15 new users connecting to the utility systems. The second largest slice of the pie representing 16 approximately 36 percent or $41 million of the 2016 Capital Budget is for the Capital Improvement Fund 17 and Cubberley Property Infrastructure Fund, which are supported primarily by annual transfers from the 18 General Fund. Projects budgeted within these funds allow for improvements to streets and sidewalks, 19 parks and open space, buildings and facilities, traffic and transportation, as well as Cubberley Community 20 Center. Finally, approximately nine percent or $11 million of the FY 2016 Capital Budget is in the Vehicle 21 Replacement and Technology Internal Service Funds. This funding allows the timely replacement of 22 vehicles and equipment that are approaching age, mileage, and utilization thresholds as well as for needs 23 such as radios and library technology improvements. 24 25 Overall spending throughout the five years of the CIP greatly exceeds the FY 2015 adopted budget as 26 evidenced by the chart on this slide. Planned expenditures in the FY 2016-2020 CIP of $544 million are 27 $213 million higher than the current adopted CIP with the increase primarily attributable to three factors. 28 First, the aforementioned change in the way funds for yet to be completed projects are carried forward 29 from one year to the next resulting in additional expenditures of $43 million. Secondly, $45 million in 30 additional funding is allocated for the replacement and rehabilitation of the City’s wastewater treatment 31 plant infrastructure. And the final largest driver of the increase is the $126 million City Council approved 32 Infrastructure Plan. 33 34 The Infrastructure Plan provides funding for numerous high profile capital projects as listed on this slide. 35 The first five projects on the slide are new to the CIP and have been reviewed by staff for conformance 36 with the Comprehensive Plan. These projects are all accounted for within the Capital Improvement Fund 37 and are spread throughout all five years of the CIP. The plan is supported by several funding sources, 38 most notably being a voter approved two percentage point increase to the Transient Occupancy Tax 39 (TOT) and TOT proceeds from several new hotels built or soon to be built within Palo Alto. 40 41 Of the 213 projects included in the proposed CIP all but 24 have previously been approved by the PTC for 42 compliance with the Comprehensive Plan. These 24 new projects are outlined in the City Manager’s 43 report before you this evening. Significant new projects in the CIP include the majority of the 44 Infrastructure Plan projects outlined on the previous slide, the planned replacement of lighting in the City 45 Hall parking garage with LED lights, improvement at Bol Park, a study of flooding conditions at [Bud pie] 46 Creek, and a modernization to the elevator located at the High and Alma garage often referred to as Lot 47 Q. Within the Enterprise Funds there are three new projects at the airport to improve the overall safety 48 conditions and begin to bring infrastructure to the desired level following the August 2014 takeover of 49 operations from Santa Clara County. The Household Hazardous Waste Station Improvements Project 50 budgeted in the Refuse Fund will allow for the installation of a canopy to reduce the potential of 51 contaminated runoff into the storm drains. Within the Electric Fund the installation of capacitor banks at 52 electric substations and distribution lines is proposed as is funding for an evaluation of options for 53 providing security at electric substations. Finally, funds are allocated to replace and rebuild electrical 54 equipment in areas that were installed underground and not part of underground districts and in the 55 Fiber Optics Fund for the replacement and rebuilding of portions of the dark fiber optic network. With 56 - 29 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 3 that I’d like to turn the presentation over to Chitra from the Planning and Community Environment 1 Department. 2 3 Chitra Moitra, Planner: Good evening, Commissioners. I’m Chitra Moitra, Planner, Advance Planning 4 Section. Tonight staff recommends that the PTC find the proposed 2016-2020 CIP consistent with the 5 Comprehensive Plan and forward the findings to the Finance Committee and the City Council. This year’s 6 proposed Capital Budget document has listed 213 projects of which only 24 are new. Like last year we 7 have done the same analysis and metrics and we have aligned each of these 24 new CIP projects with 8 the primary Comprehensive Plan element, a section, the goals, policies, and programs. Staff has added 9 the types of information needed for board review, commission review, and if any environmental review is 10 required. 11 12 This year the staff is requesting the Commission to review the 24 CIP’s added. All the rest of the CIP’s 13 has been reviewed by PTC last year. The new CIP’s has been described by Eric at length and these are 14 listed in the staff report from Pages 3 to 6. The findings are the majority of the new CIP’s are in 15 compliance with the Natural Environment Element and the Community Services and Facilities Element. 16 The slide there shows the number of projects and the alignment of the projects with the sections of the 17 Comprehensive Plan. To show the compliance this year staff has done the same analysis and have 18 grouped the analysis into three major groups. The first group comprises of number of citations made 19 from the Comprehensive Plan, the most cited elements, the most cited goals, policies, and programs. 20 The second study has been done by Comprehensive Plan elements and budget. That refers to the 21 different types of funds used by element. And the third part includes aligning City Council priorities to 22 the CIP and budget. So from this 2015 Council priorities about 84 percent of the budget is invested for 23 infrastructure, strategy, and implementation. 24 25 All of the above analysis of the proposed CIP has led to the findings that the proposed CIP’s are 26 consistent with the City’s Comprehensive Plan and staff requests PTC to forward these findings to the 27 Finance Committee and City Council. This concludes staff’s presentation and I think next we’ll be happy 28 to answer any questions you have. Thank you. 29 30 Chair Tanaka: Thank you for your presentation. At this point in time I would like to open public 31 comment. Do we have a card? 32 33 Vice-Chair Fine: We have one card, Mr. Arthur Keller. 34 35 Chair Tanaka: Ok, so I’ll give the speaker five minutes. 36 37 Arthur Keller: Thank you, Chair Tanaka, Commission. It’s been a pleasure to be back before you and I 38 actually got to sit in on eight of these CIP hearings in my time at the Planning Commission. So I know 39 how much in detail and involved it was. One of the things that we did on Planning Commission early in 40 my being on the Commission is we reviewed the CIP a number of years ago and we identified the need 41 for building a bicycle bridge over 101 and now we’re seeing the fruition of that effort. And by initiating 42 that at the Planning Commission level it went through and there was a $100,000 put aside for studying 43 that and now we’re seeing somewhere on the order of $10 million being put forward to building it partly 44 due to the initiation that we did several years ago. 45 46 Last year this Commission recommended that the City also initiate another process, which is to study tidal 47 flooding and sea level rise for which somewhere in the order of 2,000 or so parcels in the City of Palo 48 Alto, much of it homes, but also things like our Regional Quality, Regional Water Quality Control Plant 49 and other facilities that are City facilities that would be in danger of being inundated by tidal flooding 50 should sea level rise and also they [unintelligible] tidal flooding now; there’s a risk of that. So that 51 funding was recommended by the Planning Commission, was approved by the City Council, and the 52 money went to the San Francisquito Creek Joint Powers Authority (JPA) to do that study along with the 53 study that they were doing in Menlo Park and East Palo Alto. The next step is to actually do an 54 Environmental Impact Report (EIR). I think you’re all familiar with EIR’s. You probably have all seen 55 them by now. And that California Environmental Quality Act (CEQA) analysis for the EIR is so that the 56 - 30 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 4 alternatives identified by the JPA study can then be analyzed and costs can be put together on them and 1 then recommended best alternative can be chosen. Once that is done then it is more possible to identify 2 potential funding. 3 4 Last November the State of California had a water bond issue and a small but not insignificant part of 5 that was for dealing with flood protection. And there is some potential that that money for flood 6 protection might go towards dealing with the tidal flooding and seal level rise in the Bay Area and 7 possibly to the funding that we identified, to funding the needs for Palo Alto. So there’s a potential for 8 that, but the project has to be ready in order to at the same time so we have our mouth open to catch 9 the money when the money is thrown. So basic, we need to basically be there at the right time. So I am 10 recommending that the PTC request that the PTC recommend to the City Council that there be funding 11 set aside in the CIP or other process for doing the EIR once the JPA study is done. 12 13 Now this is for tidal flooding or sea level rise, it’s similar. This is independent from the work that is being 14 done to deal with the San Francisquito Creek flooding itself. Unfortunately that is being held up along 15 with the golf course because they’re still trying to get the City to reorganize that. So these are going on 16 two different tracks. This won’t slow down the other track, it will just allow for the sea level rise/tidal 17 flooding process to continue. Thank you. 18 19 Chair Tanaka: Seeing that we have no other cards I’m going to close the public hearing for this item and 20 move it back to the Commission. So what I’d like to do is so we’ll start off the way we’ll have this item is 21 we’ll start off with questions and answers (Q&A). So if there’s any questions that the Commission has for 22 staff [so only] ask those questions. And then what we want to do is we want to start going through any 23 issues in particular. So what I’ll also be doing is keeping tally of which issues that the Commission 24 members think there’s things that we want to discuss and then we’ll go through each one of those items 25 one by one. So what I’d like to do is just ask for any Commissioners who have questions on any of these 26 items that staff has presented to hit the lights and I’ll call on you. And each Commission member will 27 have three minutes. Any questions? Ok, seeing there’s no questions… oh, ok. Commissioner Gardias. 28 29 Commissioner Gardias: Thank you, Mr. Chairman. If I can digress for a moment and just address the 30 speaker. Arthur, it is always nice to have you back. You should come more often. It’s lots of fun, so 31 please come again. Thank you. 32 33 So going to the questions about the CIP, if you could explain this $43 million carryover, what was the 34 [unintelligible] that this being used for carrying it over and how it’s going to affect the future years? 35 What’s the change from the, from this what used to be and how it affect, would affect the CIP in 2016 36 and the different that it between this method that we have right now? So that’s the general question. 37 38 And the other question is more of a particular subject. There is a still certain amount for the library for 39 this FY. Is it for funding the bonds? What’s the purpose of this expenditure in CIP? Thank you. 40 41 Mr. Bilimoria: Thank you for the question on the carryover. The method on the $43 million and how that 42 figure was arrived was departmental staff and staff from Administrative Services Department did a 43 thorough review of all projects and really tried to determine how much funding would be required for the 44 remainder of the FY. Any unspent funding that wouldn’t be used this FY, but still be required for the 45 project was carried forward and that basically comprises the $43 million in terms of a reappropriation. 46 Those dollars would have been carried forward at the conclusion of the FY sometime in the fall time 47 frame and what we’re doing is we’re making sure those funds are available on July 1st and really trying to 48 provide an accurate estimate of how much funding would be available in the current year. 49 50 Brad Eggleston, Assistant Director, Public Works Engineering: And then with respect to the question 51 about the libraries I think you’re referring to Rinconada Library and Mitchell Park Library where we’ve 52 allocated $100,000 and $200,000 for Rinconada and Mitchell in the next FY. And basically with those two 53 projects finished so recently and being large projects there’s no specific plan for using that funding, but 54 we’re still in warranty periods on these projects. We’re still ironing out small issues that come along so 55 we’ve wanted to maintain some level of funding to address issues that might arise. And you were 56 - 31 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 5 specifically asking about the bond so I’d point out that the $76 million the library bond the accounting on 1 that is not finalized, but currently it looks like we’re in the range of using about $72 million of that. 2 3 Commissioner Gardias: Ok, and this (interrupted) 4 5 Mr. Eggleston: [Unintelligible] in addition to the bond, this is part of that. 6 7 Commissioner Gardias: I see. Ok, and the $8 million I think in 2015 from Mitchell Park I think it’s 8 probably for accomplishment of the works that were completed, for payment for the works that were 9 completed last year, right, I would guess? Because there was nothing done this year, right? So, ok. 10 11 Mr. Eggleston: That’s correct. 12 13 Commissioner Gardias: Ok, thank you. Thank you. 14 15 Chair Tanaka: Ok, are there any other questions otherwise? Commissioner Michael. 16 17 Commissioner Michael: So I wanted to extend compliments to the staff on an amazingly thorough and 18 comprehensive work and excellent presentation. This is sort of a sea change from the conditions that 19 promote a, prompted the creation of the Infrastructure Blue Ribbon Commission (IBRC) when there was 20 an anticipated backlog of unfunded projects of almost a half a billion dollars. So this looks like it’s 21 honoring the commitment of Council and the community to move ahead on this proactively. So thank 22 you very much for all that. 23 24 In terms of our purview this evening and this is sort of a rhetorical question, you talked about the 25 budget, but it’s not within our purview to comment on the budget, right? Right, ok. But looks like you’ve 26 got a lot of funding to allocate. One question that does relate at least tangentially to the Comprehensive 27 Plan is to what extent were you able with all the work that went into this to do some logic of prioritizing? 28 When the Comprehensive Plan promotes a lot of virtues in the City was anything dropped off the list for 29 lack of funds or were there, what were the competing factors that caused you to come up with this 30 wonderful list? 31 32 Mr. Eggleston: Well, I’d say that in putting the plan together this year the focus was really on making 33 sure that we had the funding for the Council Infrastructure Plan projects. And in fact last year when that 34 plan was adopted by the Council there was about $126 million in projects, but the revenues that were 35 allocated were $7.5 million short. And so through a lot of work on this plan what we’ve actually been 36 able to put together a plan that closes that gap and then another big emphasis was that you referenced 37 Commissioner Michael the work of the IBRC. So we are still using and updating those spreadsheets of 38 keep up and catch up that were developed at that time and a number of new projects and additional 39 funding to projects come from keeping up and from selecting what we’re seeing as some of the top 40 priorities on catch up projects and putting them into the budget. 41 42 Commissioner Michael: So that was actually going to be my next question because I understood a lot of 43 attention had been placed on the importance of catching up and keeping up on the maintenance of the 44 City’s infrastructure and I was curious what’s the status of the project to develop a more sophisticated 45 Infrastructure Management System (IMS) to replace the spreadsheet that we had. 46 47 Mr. Eggleston: So completing the IMS continues to allude us, but we’ve done a lot of work on it over the 48 past year. We completed a needs assessment study with our consultants Plante Moran kind of last fall 49 time frame. Since then we have them under contract to help us with the next phase. I should say in the 50 needs assessment we identify two existing City software applications that are used, one of which is the 51 software application that’s being used for developing the Capital Budget now and so we’ve identified how 52 we’re going to use those to create the IMS. we’re currently working on the first piece of that with 53 maintenance connection and right now in the past weeks we’re developing a statement of work for the 54 contract with them, we’re defining the reports that will be generated by the system and the integrations 55 that are needed, that sort of work. 56 - 32 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 6 1 Commissioner Michael: Excuse me. 2 3 Mr. Eggleston: So really I think it’s probably this summer that we’ll actually begin rolling out and our first 4 task is going to be taking a lot of that information from the spreadsheets plus additional information and 5 adding that to the asset registry that we’ll have in the maintenance connection application. 6 7 Commissioner Michael: Ok and just a couple more questions. One is I understood for one of the like the 8 State of the City report from City Manager Jim Keene that great progress had been made on the like 9 pavement condition index in streets, sidewalks, and whatnot. So that’s fabulous, but on IBRC one of the 10 things that I was involved with was the like the buildings, the and one of the questions I had was in the 11 IMS was there attention, adequate attention to the useful life of the buildings because it seemed like that 12 was not part of the analysis in a rigorous way such that there were, there was kind of a surprise that 13 buildings had to be replaced entirely like Fire Stations 3 and 4 and the Public Safety Buliding and but so 14 this notion that depreciating the useful life of the facilities seem to be something that might avoid 15 unpleasant surprises. 16 17 Mr. Eggleston: One of the things we’ve been talking in the discussion about reports and information that 18 could be generated by the system and specifically thinking about buildings we’re looking at best industry 19 standards for annual maintenance investments relative to the current replacement value of buildings. 20 And so that is one metric that we’re looking to build into this where we would track the current 21 replacement value of our buildings and look at the investments we’re making in terms of that industry 22 standard percentage and have some sense of to what extent we’re investing in a way that’s going to 23 make the buildings last. I think that’s a little different than your question. We’ll also be looking at 24 building in more regular condition assessments for facilities and I think some of that work will lead to 25 working quantifying the remaining life of some of these facilities. 26 27 Commissioner Michael: Thank you very much. 28 29 Chair Tanaka: Commissioner Rosenblum. 30 31 Commissioner Rosenblum: Yeah, I also want to thank you for this really comprehensive report. I think, I 32 think the last time I reviewed this was my first time on the PTC and I remember in addition to whatever 33 other onboarding documents I got I got the massive tome and had to somehow wheel with it on my bike 34 and I remember that being my strongest impression of my first PTC meeting. It was like 50 pounds of 35 materials on my bicycle. Fortunately it was a one off thing. I didn’t know that that wouldn’t be 36 happening every week. 37 38 I struggled that time and I struggle this time also to fulfill the task, which is to determine whether or not 39 this is in line with the Comprehensive Plan because what you’ve done at the request of the PTC in the 40 past is bucket every item against a specific item in the Comprehensive Plan and show that everything can 41 be tied together, which I agree is a good thing to do. The thing that I realize though is and I think I 42 asked for this last time. It’s very hard to compare what is our allocation of funds look like versus others 43 and then how is that influenced by our Comprehensive Plan? And by that I mean Palo Alto is trying to be 44 a different kind of city than other cities and that’s encapsulated in our Comprehensive Plan. We’re trying 45 to reduce reliance on automobile dependence. I actually just pulled up the Comprehensive Plan to look 46 at some of the specific items. We’re trying to enhance neighborhood character or we’re trying to provide 47 for diverse housing needs. There’s a number of things encapsulated in our Comprehensive Plan that I 48 would imagine if you looked at the Comprehensive Plan of Santa Barbara that they wouldn’t necessarily 49 have some of these things. Not to call them out specifically, but just to say that we’re trying to build a 50 particular kind of city. And I think what would be useful is to be able to say where do we skew our 51 investment in Palo Alto as a result of having a unique Comprehensive Plan vision that would be different 52 from other cities. So I would be happy to hear one of you respond to that. Where do you think we 53 spend more relatively speaking in our Capital Improvement Budget to other cities because of adherence 54 to our Comprehensive Plan? 55 56 - 33 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 7 Mr. Eggleston: So not having in front of me the Comprehensive Plan elements we were just discussing 1 that we think one area might be the large investment as part of the Infrastructure Plan that we’re making 2 for implementing the Bike and Pedestrian Plan in Palo Alto. So you might be familiar that when the Bike 3 and Pedestrian Plan was passed it was a $35 million plan. The Highway 101 bike bridge that Arthur 4 Keller was mentioning a few minutes ago that is a $10 million project that’s part of that plan and then the 5 CIP has $25 million in funding for other projects that are part of the plan as well. So I do think that’s an 6 example without citing the specific element where there’s Palo Alto specific goals that we’re pursuing in 7 the CIP. 8 9 Chair Tanaka: Vice-Chair Fine. 10 11 Vice-Chair Fine: Thank you, Mr. Chairman, and thank you, staff. I really appreciate the presentation and 12 I felt the document was really put together well. I do not envy you, those of you who had to look at the 13 previous document it sounds like you guys improved a lot. I really appreciate that. It also seems like 14 you did a lot of outreach to like the Finance Committee and to different City departments, which is a 15 huge task. I’m wondering if there was any input from the public just in terms of items of their interest or 16 objections or any comments in that regard. 17 18 Mr. Eggleston: I’m not thinking of any part of the development that has a public process. Our process is 19 usually that the City Manager develops the budget and then this particular piece of the budget comes to 20 the PTC, but it’s the City Manager that develops it and then sends it on to the Council (interrupted) 21 22 Vice-Chair Fine: I guess I’m asking do you know if like they’ve received any feedback that’s passed on to 23 you just as a head’s up or? I was just looking on the web and I saw a number of points to write in and 24 things like that. 25 26 Mr. Eggleston: Right, so Walter makes a good point that for many of the projects that are in the CIP 27 there were public processes that went into other reports; so for instance, the Bike and Pedestrian Plan, 28 the IBRC process, and probably others as well. And to the question of whether we got comments from 29 the public, no, I’m not aware of any that have been received. 30 31 Vice-Chair Fine: Thank you. 32 33 Chair Tanaka: Commissioner Gardias. 34 35 Commissioner Gardias: Thank you, Mr. Chairman. I would like to address different topic, which is pretty 36 much emphasizing certain significant public projects in terms of their and their meaning in the City 37 structure. So before I, before I say, before that I would like to just take you back for and to, to a couple 38 of projects that were accomplished recently, the libraries and some other projects and some public 39 comments that were about those and successes, recent success of the competition that we had with the 40 overpass over 101 that to my knowledge received lots of applause from the public and was taken very, 41 very well. So building on this and also referring to the Mayor’s priorities about building better planning 42 and better planned spaces and architectural spaces as well I was thinking about including in the budget 43 for certain significant public projects funds that would be allocated for organizing planning and 44 architectural design competitions that would pretty much be open to certain group of professionals that 45 would be for, for pretty much for better outcome of those open spaces and those buildings. 46 47 So if I go through the list there are a few items that you marked as new I believe that may be a subject 48 of such competition. [And one of those] I see that there are a couple of fire stations that are due to that 49 are decapitalized and they’re up for replacement and if you go to Mountain View you can see how great a 50 fire station they have. So I would, I don’t know if this was a subject of a competition or a dedicated 51 design, but we would like to have a building like that here, right? So these two fire stations of course 52 there is a, there is a public safety building that could become subject of a competition as well. Those 53 would be the most significant ones. And then from the minor competitions you can also include some 54 parking structures that could be subject of those as well and improvement to the Baylands that is called 55 Baylands structure and the pier that just protrudes, goes toward to the wetlands out of this. It’s maybe 56 - 34 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 8 minor improvement, but it could be also subject of a competition as well. So pretty much if I can just 1 wrap it up, my proposal is just to dedicate funding in the CIP for significant public projects that could be 2 a subject of a planning or an architectural design. Thank you. 3 4 Chair Tanaka: So I know we’re in a Q&A session, but I did write down that issue that you brought up so 5 I’ve captured that. After Q&A is done I’ll be asking if anyone else has issues that they want to discuss. 6 In the meantime, Commissioner Downing, please. 7 8 Commissioner Downing: So I have a couple of comments and I do want to thank you guys for putting 9 this together. This is amazing, is an amazing product of work. And I have comments and they’re not all 10 necessarily geared towards you so much as they’re geared toward Council and what they’re going to do 11 with this. To that extent one of the things that struck me the most is there was a chart in here that 12 talked about the proportion of funds used for land use and community design and transportation. And 13 together those things came up to seven percent. And I, I know that in many ways we’re kind of playing 14 catch up with our infrastructure, but those are kind of the two biggest issues that I see come to us. 15 Those are the two biggest resident complaints that we have. And it seems like that’s a really small 16 percentage to be allocating to that because those are, those are the most kind of future looking things 17 that we have to do, right? It’s figuring out what we want our City to look like, how we want people to 18 get around, right, like there’s nothing in the budget for example for like any visioning exercises, right? So 19 we’re doing a Comprehensive Plan for example, but I don’t see anything in here about we’re going to 20 bring in a couple of designers who are going to give us images of what the City might look like, right, so 21 that there’s actually something tangible that people can look at and say to themselves yes, that looks 22 pretty. I could do that or I’m into that or I don’t like that, right? I don’t think we have anything like that. 23 24 And again with transportation I think we’re going to have a senior population that’s something over 50 25 percent by 2030, something like that and there’s really nothing in here that’s dedicated towards 26 accessibility for seniors. And that seems like that would be a program we should have, right? How do 27 we deal with the fact that there’s going to be lots of people for whom all of this parking and traffic stuff is 28 going to stop mattering because they can’t drive, right? So I guess for me I would love to see as time 29 goes on that we deal with those infrastructure projects, but that we also become much more future 30 looking and forward looking because seven percent I think is not enough for a City that wants to call 31 itself visionary. 32 33 There’s also another thing that I wanted to bring up which it may just not be on this particular budget, 34 but I remember seeing it as part of Council priorities, which was to get technology for our parking 35 garages so that people could know how many spaces were actually filled and which parking garages had 36 capacity. I don’t see that listed as part of the requirements for the Cal Ave. or the Downtown garage, 37 but I don’t know if that’s because it’s missing or just because there was a decision not to do that. But I 38 know that it was one of the Council priorities and it’s not in the budget. 39 40 Mr. Lait: So I think probably a couple of us can take an answer at some of those… your, your questions 41 blend different City functions and I think what we’re looking at here are physical improvements that we’re 42 making to infrastructure or programs to make changes to the City, which is laid out in the CIP. And your 43 first comments were related to the visioning and exercises like that to plan for the City. We got the 44 Comp Plan going underway; that is underway. And a lot of that there is money that is earmarked for 45 those efforts, but they are drawn out not in the CIP but into specific department budgets. So the 46 Planning and Community Environment Department has budget for a number of the items that you were 47 talking about to carry out those initiatives. When a vision is formed and a plan is developed and we want 48 to do something that comes out of that vision it would likely then get into the CIP or money would be 49 dedicated to it, but you’re right we’re still kind of having part of that dialogue. And maybe Jessica can 50 speak to some of the other components about inventory of parking spaces and how we have other 51 funding that we’re using to advance other transportation strategies. 52 53 Jessica Sullivan, Title: Sure, thanks Jon. So Commissioner Downing to I think add some color to a little 54 bit of what Jonathan was talking about so we actually do have specifically related to parking and traffic 55 and parking occupancy we have a couple of new CIP’s that were created this FY and you don’t see them 56 - 35 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 9 listed here because they’re not, essentially they’re contracts, they’re associated with projects that we’re 1 kicking off right now which will generate engineering estimates which will be funded as part of a 2 subsequent budget cycle. So things like parking, parking way finding, parking guidance systems, the 3 parking technology, and the garages all of that is, that is moving forward as far as design goes and we’ll 4 be bringing that back I think in a subsequent budget review. Also as Jonathan mentioned we have some 5 funds set aside in the Operating Budget to do a comprehensive analysis of parking pricing in the 6 Downtown. So we’ll be proposing that, doing a comprehensive analysis this year and looking at one of 7 our biggest parking management strategies is pricing. So that will be happening this year too. So I think 8 there is, there’s a huge amount of effort focused on this. It may not appear in these specific project 9 oriented CIP’s right now. 10 11 Commissioner Downing: Ok, thank you. 12 13 Chair Tanaka: Ok, I see no other lights for questions. I have a couple of issues captured already from 14 folk’s comments that we could dive into more, but I wanted to see if anyone else had issues that they 15 wanted to talk about? And if so just hit your lights and [wheel]. Commissioner Rosenblum. 16 17 Commissioner Rosenblum: Yeah, I just had one additional issue around the airport. So those are new 18 items this time, right? Because we just took over the management of the airport itself. And as part of 19 that discussion about whether or not to approve Palo Alto resuming control or assuming control of the 20 airport it was the airport itself was supposed to be self-sustaining meaning that the money for airport 21 operations [the leads] were paid for by usage fees of people using the airport. Does that include the 22 capital improvements? Are these funded by revenues generated by the airport, but included in our 23 budget and our funding sources in general, but ultimately we intend or believe that this will get paid by 24 airport usage fees? 25 26 Mr. Eggleston: So that’s a very good question. At the current time the airport improvements are being 27 funded by the Capital Fund via the General Fund, but that is being tracked as part of the loans from the 28 General Fund to the airport that are helping it get off the ground for the first I’m not sure how many 29 years we’re thinking. There is a plan for the airport that’s being implemented to bring revenues up to 30 expenses and bring the airport into the black. So in the meantime the capital projects happening at the 31 airport are part of the loans to the Airport Enterprise Fund, but they are being tracked and the plan is to 32 eventually have the Enterprise Fund pay back the General Fund. 33 34 Walter Rossman, Director Office of Management and Budget: So if I may, Walter Rossman, Budget 35 Director. What happens in the airport environment it gets heavily supported by the Federal Aviation 36 Administration (FAA) so we apply for grants from the, to the FAA for capital projects and if awarded we 37 get 90 percent of the cost gets reimbursed to the City. So the City has to pay our 10 percent of the cost 38 of an airport project and then we get reimbursed 90 percent. But this takes time so we have this 39 planned in the capital project right now and we will start doing this project as we get the grant awards 40 from the FAA. 41 42 Commissioner Rosenblum: So there’s some controls in place that say we don’t start spending this money 43 until we have FAA guarantees in place (interrupted) 44 45 Mr. Rossman: That’s correct. 46 47 Commissioner Rosenblum: [Unintelligible] repayment from (interrupted) 48 49 Mr. Rossman: Yes, we do. 50 51 Chair Tanaka: Ok, are there any other issues that you guys wish for us to discuss in further depth? Ok. 52 So I’ll list, I’ll read off the list. So and if you guys don’t want to discuss it further I’ll X it off the list and 53 we’ll call it done. So airport so self-sustaining from Commissioner Rosenblum. We have I don’t know if 54 we still want this Commissioner Downing, but technology for parking garages? I don’t know if you want 55 to discuss that further or you’re, you’re ok? Ok, cross that off. Kind of I guess around the seven percent 56 - 36 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 10 was that enough visioning the around transportation and the senior population? I don’t know if you want 1 to discuss that more? You do? No, ok. We’re ok to cross that off too. Commissioner Gardias you’re 2 advocating for a design competition. Do you want to know if you want to discuss that more in terms of 3 because we have to make a recommendation eventually to get this approved. So… yes? Ok. 4 5 Commissioner Gardias: Sure, I mean yeah I mean from the specific language, right, it would be fund 6 allocation for the, for planning an architectural design competitions for significant public projects. 7 8 Chair Tanaka: Ok, we’ll talk about it more. I just wanted right now just go through the list. 9 10 Commissioner Gardias: Ok. 11 12 Chair Tanaka: And this is something that and I’m not sure you wanted this to be an explicit topic that 13 Commissioner Rosenblum talked about prioritization and how was stuff prioritized. So I don’t know if we 14 want to talk about that more further, but I actually agree with you on that. Is that it’s you have stressed 15 funds you want to prioritize correctly. The other two here are actually ones that I put down. So one is 16 our former colleague Commissioner Keller or former Commissioner Keller recommended the EIR tidal 17 flooding. So I think we should talk about that, see if we want to do that or not. And then I think one of 18 the biggest topics and I’ll go into more depth on this later is whether there’s parking is one of the biggest 19 issues going on right now in Downtown Palo Alto as well as Cal Ave. and I know there’s certain budgets 20 for parking garages, but is it enough? 21 22 So those are, that’s the list I have so far. Does, does anything, anyone else have anything else? 23 Otherwise let’s walk through this list and try to tackle one at a time. Ok. So let’s start since we just 24 talked about airports I don’t know if you had a specific proposal or specific question or specific 25 recommendation that you think we should pass along to Council, but Commissioner Rosenblum do you 26 want to talk anything about the airports that you want to recommend? 27 28 Commissioner Rosenblum: I don’t think anything, I [unintelligible] the question about the airport as long 29 as this is confirmed this is main concern. There’s a fairly large expenditure that’s now on our books and 30 to understand the flow of money to make sure that what was promised i.e. that the airport is self-31 sustaining and that the users of the airport are essentially paying for both capital improvements and 32 operations at the airport that that is indeed still the case that’s projected and you’ve already represented 33 that that is, that is. So that wasn’t included in this package. This package is for adherence to the 34 Comprehensive Plan, but I think it would be useful to note that this is not an additional fee, that this fee 35 gets paid back. If there are any other things like that, for example, you do have notes for example that 36 there are additional sources of funds for example, parking in lieu fees supports part of the construction of 37 a parking garage so but on the airport section it never mentioned that 90 percent of this will get 38 reimbursed. So if there are issues around different pockets of money being applied to this in the future 39 or being expected in the future then I think this document should be amended to make that clear. 40 41 Mr. Rossman: If I may respond Commissioner Rosenblum, first the [anti] Airport Fund that’s discussed in 42 the Operating Budget as you probably assumed it’s an Enterprise Fund. We are not yet self-sustaining 43 with the Airport Fund and the main reason for that is as we took over the airport last summer from the 44 County we’re still dealing with contracts for fixed base operators. Those are the contractors which supply 45 services to airport users at the airport. These contracts do expire in 2017 and our goal is for next year is 46 to start a Request for Proposal (RFP) process to find new fixed base operators and therefore use some of 47 the fees we’re getting and increase the level of funding the airport receives. With that we believe we can 48 actually have the airport being self-sustaining without relying on loans from the General Fund. Further 49 we have granted loans from the general fund to the Airport Fund and we do also expect to get those 50 funds back over the next few years. 51 52 The last question you had was about the FAA requirement is the Page Numbering 2.2? Yeah. So I 53 believe Eric is going to quickly point you to the page I do believe we describe in the project pages the 54 FAA reimbursement of about 90 percent. 55 56 - 37 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 11 Mr. Bilimoria: Yeah, if I could just point you quickly to Page 289 as well as Page 293 and Page 295. We 1 describe the 90 percent FAA match under the supplemental information section there. 2 3 Chair Tanaka: Do any other Commissioners have comment on this item or does Commissioner Rosenblum 4 do you have any specific recommendations you have? 5 6 Commissioner Rosenblum: No, if it’s included on Page 289, 292 [note-293], etcetera that should be fine. 7 I do think though given that it’s brought up as a new item that those are the items that are most heavily 8 scrutinized are things that have been added that would be useful to have that in front as well. 9 10 Mr. Rossman: And I appreciate by the way the comment Commissioner Rosenblum because indeed we 11 do attempt to show and we unfortunately didn’t here whenever we get grant reimbursements and to talk 12 about the flow of money that’s important to understand as well the City has to front the money, we have 13 to pay the bills, and then we get reimbursed from the federal government. 14 15 Chair Tanaka: Ok, let’s move on to the next item which is Commissioner Gardias’ idea for design 16 competition specifically for the fire stations, public safety building, and the pier. So I think Commissioner 17 Gardias has already kind of framed that pretty well. I think I just want to see if any Commissioners have 18 any comments on that whether they think this is something that they support or do not support. I think 19 it’d be a good time to comment on that so hit your lights if you have something to say about this. Vice-20 Chair. 21 22 Vice-Chair Fine: Thank you, Mr. Chairman. So I actually do support the idea in principle and in 23 philosophy I think it also links up with Commissioner Downing’s idea about some of these visioning 24 exercises around land use, transportation, and community design. That being said I don’t know exactly 25 how we build it into this document, but I do want to just voice support for that idea of visioning 26 exercises, design projects run by communities or by competition. 27 28 Mr. Rossman: And we appreciate the comment. We definitely will [unintelligible] you can put this in your 29 letter Chair Tanaka to the Committee and to the Council and then the Council could deliberate on that. 30 Appreciate that. 31 32 Chair Tanaka: Yeah, I guess I don’t know how many other Commissioners support that or don’t support 33 it. it would be good to actually know. Commissioner Rosenblum. 34 35 Commissioner Rosenblum: Yeah, I’m in support of this. I, the only oddness is that this is an 36 infrastructure budget. There are funds allocated as Arthur Keller noted for study and so I would assume 37 that there could be funds allocated for running competitions for great design around public safety, fire 38 buildings. So if we’re going to do it then we should stage it and have the funds be made available, but I 39 don’t know how that budgeting process actually works. 40 41 Mr. Rossman: So to respond to you Commissioner Rosenblum what will happen if the Council directs staff 42 to include a design phase for that we would accordingly bring forward a budget [unintelligible] and which 43 would allocate costs for such a purpose. 44 45 Chair Tanaka: Commissioner Michael. 46 47 Commissioner Michael: So the encouragement to conduct design competitions I think is valid and I think 48 the City recently in relationship to the bike bridge actually did a pretty public and enthusiastic design 49 competition so this is a technique which I think is embraced by the City when it’s feasible and 50 appropriate. I wonder if maybe we’re straying from our purview this may be more directly related to the 51 Architectural Review Board (ARB) then the PTC’s review of the Comprehensive Plan consistency of the 52 CIP. So I think it may be a wonderful idea, but it may be a topic for a future agenda. Maybe if we have 53 a joint meeting with the ARB this would be something that would be fruitful to discuss in that sort of a 54 study session with a joint meeting between the two commissions because it doesn’t seem to be in any 55 - 38 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 12 way controversial or opposed by the City. It seems to be a good idea, but not germane to this topic this 1 evening. 2 3 Chair Tanaka: Does staff have any comment on Commissioner Michael’s comment? Is it purview or no? 4 Yes, no? 5 6 Mr. Lait: So with respect to the Commission’s purview our focus has been what we’ve tried to do to 7 improve the efficiency of the Commission’s review is to focus in on the 24 new projects that are being 8 reviewed and haven’t been reviewed for consistency. So the primary responsibility in state law and also 9 under our local ordinance is to review projects for consistency with the Comprehensive Plan. If the, if the 10 Commission has ideas of improvements to the CIP which you don’t see in the program it is appropriate 11 for you to share those, those comments and again it would be in the form of the letter that would be 12 transmitted through the Chair to the I believe the Finance Committee is where this goes, and then, and 13 then on to the Council. So if there’s Commission interest, majority Commission interest in that 14 perspective then that could be communicated in the correspondence. 15 16 Chair Tanaka: Commissioner Alcheck. 17 18 Commissioner Alcheck: So I’m curious if was it contemplated in our in like I can’t recollect, was it 19 contemplated in the last in the previous version that the bike bridge would be a design competition? Was 20 that something that had to be sort of spelled out in the CIP budget that dealt with the, it may not have 21 been last year, it might have been two years ago. 22 23 Mr. Eggleston: It was actually several years ago. I think at the time we had first completed a feasibility 24 study when the City Council suggested that we investigate using a design competition for that project. 25 26 Commissioner Alcheck: So that was like formally incorporated into the way the CIP plan was sort of 27 worded at the time? 28 29 Mr. Eggleston: No, I don’t believe it was fully incorporated into the CIP. 30 31 Commissioner Alcheck: Ok, so it wasn’t (interrupted) 32 33 Mr. Eggleston: I could be mistaken, but it was Council direction to staff to look into that and come back 34 to them and we did that, came back to them with a recommendation (interrupted) 35 36 Commissioner Alcheck: Outside of the CIP process; outside of this budget process. 37 38 Mr. Eggleston: Outside of the budget process, yes. 39 40 Commissioner Alcheck: Ok. 41 42 Mr. Eggleston: As part of times that we came to the Council with items specific to that project. 43 44 Commissioner Alcheck: I mean I like the idea. I think it’s worth having the discussion. I, there’s pieces 45 of information I think would be really helpful to know number one, what did it cost to do that from the 46 perspective of staff as well as maybe just the general cost that was to host that competition for the bike 47 bridge so maybe we can… I don’t think it’s that wouldn’t necessarily affect our decision, but it would be 48 interesting to sort of understand what’s involved in that process and then whether or not the process of 49 suggesting that any of these projects be suitable for a design competition could that be done more 50 informally outside of this process and to what extent would the answer to that suggestion be no because 51 there weren’t enough funds to support it. Does that make sense? I guess that’s a good question for 52 you; did they have to tap some odd source of funds to accommodate the design competition? 53 54 Mr. Eggleston: No, Commissioner Alcheck. I’m trying to recall exactly what the cost was. I think it was 55 on the order of $150,000 roughly to conduct the design competition and that came from the project 56 - 39 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 13 funds in this case. I would also mention that while it was an exciting process it used a tremendous 1 amount of staff time. So as a manager of CIP projects it does make me nervous when I hear people say 2 this is great we should do all projects this way, but I certainly think it has its place and is a great process. 3 4 Commissioner Alcheck: Right, ok. So I, my thoughts on this maybe this would be a good item to have 5 sort of a lengthier discussion about as opposed to potentially suggesting a change now without having 6 that discussion in more depth. So I agree with Commissioner Michael. 7 8 Chair Tanaka: Ok, I also agree with Commissioner Michael. I think I’m not sure every project needs to 9 be a design competition although in general I think it’s a good idea. And I do support the thought, but I 10 don’t know whether it has to be in this exact process. So kind of on this item so far I have kind of like 11 three yeses, three nos. I don’t know if Commissioner Downing has any feeling about it, but if you do it 12 would be great to know. 13 14 Commissioner Downing: I agree that I think the design competition probably should be a separate 15 conversation that we have and with a little bit greater input because I agree I think it’s a great thing and 16 I think it’s really great for getting community involvement, but it’s costly for us to run. It’s costly for staff 17 to run and frankly you’re adding to the cost of the project. When a designer they’re going to charge you 18 for that work one way or another, right? And you’re going to pay for it. So I think it probably merits 19 more discussion although I like the conversation. 20 21 Chair Tanaka: Ok, great. So let’s move on to the next item which is an item that Commissioner 22 Rosenblum brought up which is prioritization. So do you want to help frame it for us and especially if you 23 had any specific recommendation? 24 25 Commissioner Rosenblum: Yeah, I think this has, I think this dovetails well with Commissioner Downing’s 26 comment about the overall proportion of funds spent on transportation, community design. So it is a 27 shockingly small number. This is an odd time because of all the infrastructure that’s being funded, but it 28 goes also full circle to the comment I made, the question I had earlier, which is how would we compare 29 against others? And what about our Comprehensive Plan would skew us versus other cities? And the 30 example that was given was for example, our investment in biking and pedestrian infrastructure, which I 31 do think is true, but you wouldn’t see that really in the plan I don’t think, at least not in the percentages 32 and part of that is because it’s getting overwhelmed with a lot of infrastructure projects. So I think it 33 does get a bit buried. But as a percentage those portions seem to be rather small. 34 35 And so in terms of prioritization the advice I would give and what I’d love to be able to see is for staff to 36 be able to articulate what we think the Comprehensive Plan, what about it makes us different from other 37 cities that would lead to a different expenditure of funds versus the peanut butter approach of putting 38 some a little bit everywhere. And if possible and I don’t know if there are planning tools available to put 39 this in a context. So how do we allocate our budget percentage wise towards major project types versus 40 other similarity sized cities? Because ultimately at least for our purview to say does this adhere to the 41 Comprehensive Plan or not the only way of really being able to fulfill that mission is to be able to say 42 well, does this plan push us towards the vision outlined in the Comprehensive Plan? Versus the exercise 43 that we do have here, which is making sure that we can draw a line between everything suggested and 44 some item in the Comprehensive Plan, which again as I mentioned that is necessary. 45 46 So in terms of prioritization my ask would be to say given that our Comprehensive Plan was written with 47 these goals in mind here are some things that got prioritized more highly in Palo Alto than perhaps they 48 are in other cities as evidenced by the difference in our average spend on these items versus other cities. 49 And to normalize it it’s either as a percentage or per capita so that we know what we spend here versus 50 other places. I don’t know if that, you guys are the professional staff and I don’t know if that’s 51 something that is done, but I will say that otherwise it’s incredibly difficult to fulfill our duty of saying this 52 does adhere, this does not adhere to the Comprehensive Plan. And when I think about prioritization 53 that’s what I’m thinking is like what is prioritized more highly in a place like Palo Alto because of our 54 Comprehensive Plan that would help me fulfill my duty to say yes, this adheres or doesn’t adhere. 55 56 - 40 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 14 Mr. Rossman: Walter Rossman, Budget Director. So I appreciate your comment Commissioner 1 Rosenblum. I think the challenge we have definitely with this CIP and even last year’s that we’re in flux 2 with the Comprehensive Plan as we all know. Once we have a revision of that I think overlaying the 3 goals with the infrastructure plan in the future I think is definitely an idea we can look at. 4 5 You also asked about comparison to other cities. That’s very difficult since we all do not categorize 6 information the same way. I came from San Jose 18 months ago and I can tell you San Jose’s CIP is 7 quite different and categorization is quite different between here. 8 9 And lastly I think in regarding to the size of the budget if you look up at the Enterprise Funds I think I 10 already mentioned it’s about more than 50 percent of the budget goes to the Enterprise Funds. So those 11 are your Water Funds, Wastewater Collection Fund, the wastewater treatment, the gas mains. These are 12 all [we have a build] out infrastructure in the City. The majority of funds in the CIP go towards 13 rehabilitation and maintenance of the infrastructure. A very small part goes towards new buildings. We 14 had an exception this year with the Infrastructure Plan. We had an exception a few years ago with the 15 libraries. 16 17 And the last piece which I want to point you to is Page 205. We do have in the CIP some planning for 18 the vision which Commissioner Downing talked about. So we started I believe a few years ago a Parks, 19 Trails, Open Space and Recreation Master Plan. So that’s how we usually start the visioning process in 20 the City that we look at a certain section perhaps not comprehensively with Commissioner Downing’s 21 referring to, but we do look at sections of the infrastructure and we say, what shall we do next? And 22 parks is really our next effort. The plan is going to be, it’s in its final stages, it’s getting reviewed by 23 Parks Commission. I’m sure we’ll make it through the process in the City and I do not exactly know 24 when it’s coming to the Council, but I do know our goal is to complete it by winter 2016. Eric is nodding? 25 Yeah, ok, great. Thank you. 26 27 So the other item of master plan which you will see forthcoming is also in the process for a treatment 28 plant. Our treatment plant is 50 years plus old and it’s our [unintelligible] we tried to incorporate new 29 technologies, new way of treating water, and meeting environmental regulations. So those are the how 30 we go about the visioning, but we don’t do it necessarily as one city. Now where we do it as one City 31 who do we want to be as we grow up is Our Palo Alto, which you see the Mayor and the City Council has 32 engaged with the residents in the last few months and plans to continue to do so as part of the 33 Comprehensive Plan effort. 34 35 Chair Tanaka: Ok, so what we’re going to do now is Commissioner Rosenblum has put forward a proposal 36 of trying to make prioritization a little bit more understandable or the CIP more understandable. And so I 37 would love to get people’s comments on Commissioner Rosenblum’s thoughts. Oh, sure. 38 39 Commissioner Rosenblum: So first I just wanted to respond very quickly and maybe this would help. As 40 you were speaking I was thinking of some specific things that might be helpful. So if this were a 41 business I think the executive summary of the budget would have some metrics you’re trying to achieve 42 and the budget that allows you to achieve those metrics. And those metrics would be manifestations of 43 are we achieving what we set out to do in our Comprehensive Plan? So for example, when we say we try 44 to make the City more bike and pedestrian friendly the metric is percent of trips made by bike or 45 pedestrian or walking and we track that as a City. We actually have information around this and goals 46 around this. In terms of our availability of parks and open spaces the Comprehensive Plan has a goal of 47 square meters of park per person and there’s a gap there. And so the thing that I think would be helpful 48 is, is saying these investments allow us to close that gap or to achieve this next reduction in single 49 occupancy vehicle trips and therefore be able to tie it more directly to goals as set out in the 50 Comprehensive Plan. And so that’s my advice is I think it would be easier for both PTC and for Council to 51 be able to say this does seem like you’re in line with goals set out in the Comprehensive Plan or if those 52 metrics don’t exist to try to interpret the goals of the Comprehensive Plan towards a measurable outcome 53 that can be tied to a budget. Otherwise I do think we’re always going to have the same conversation 54 about gosh this is really hard. It seems like everything has a corresponding item in the Comprehensive 55 Plan somewhere, but it’s difficult to have a meaningful conversation about without having a metric that 56 - 41 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 15 we’re trying to achieve that is tied to the Comprehensive Plan. So anyway I hope that helped clarify and 1 it’s something I think would help. 2 3 Mr. Lait: Excuse me, Chair? May I just interrupt? So Jessica Sullivan has to leave and I just wanted to 4 see if there were any questions (interrupted) 5 6 Chair Tanaka: Yeah, I had a topic about the garages. 7 8 Mr. Lait: Ok. 9 10 Chair Tanaka: So yes, I guess when does she have to leave? 11 12 Mr. Lait: Yes, she’s needing to leave. So if there’s any transportation or parking or Safe Routes to School 13 is one of the items, the Bike Pedestrian Plan is one of the items, the Traffic Signalization Modernization 14 Program (interrupted) 15 16 Chair Tanaka: Ok. 17 18 Mr. Lait: I believe that’s (interrupted) 19 20 Chair Tanaka: I hate to do it to you guys, but because we have someone that’s leaving soon I’m going to 21 press pause on this, this thread although I hate to do that, I hate to switch threads on us. And perhaps 22 it is good for us to jump to the part that Jessica can address, which is and so let me, this is my topic so 23 let me help frame it. 24 25 So as we all know parking is one of the big issues today in Downtown Palo Alto. It’s also a big issue on 26 Cal Ave. and it’s something that a lot of the taxpayers complain about, rightfully. And so definitely it’s 27 good to see it on the City Council Infrastructure Plan and both are listed, but I guess the question is, is 28 whether, whether this is enough? This is one of the big issues that affects a lot of people and so I’d love 29 to hear staff’s opinion about it to see how this came about and whether it’s sufficient. Because some, 30 someone would argue that we actually have a deficiency right now and that, and that this problem needs 31 to be addressed in a big way. So maybe (interrupted) 32 33 Mr. Lait: So actually I might jump in before Jessica and I don’t know if anybody else has anything to 34 note. I mean the, [to be] clear there’s a lot of conversation taking place about Downtown and Cal Ave. 35 and there have been I think some discussions about parking structures in Cal Ave. that have surfaced. 36 It’s incorporated into the CIP this time and there’s also some money reserved for Downtown parking 37 structure I believe as well. So these, you’re asking us how is the money is the amount of funding 38 appropriate for the problem that exists and I think that’s a difficult question for us to answer. We’re 39 responding to what the Council has directed in terms of programs and where they want to see those 40 opportunities established, but if the Commission has a perspective that the CIP is deficient in the amount 41 of funding available that’s a comment that I think you could forward on to the Finance Committee and on 42 to City Council. I don’t know that we have a perspective about whether there’s sufficient funding for 43 parking deficiency. 44 45 Chair Tanaka: I think it would be a useful conversation to hear from Jessica would be around so how did 46 this come about? Like how did, how were these numbers derived? And if the process for deriving them 47 was sufficient then it’s probably sufficient, if not then maybe, maybe not. 48 49 Ms. Sullivan: Thank you, Chair Tanaka. Can I, can I just clarify whether you’re referring to the money 50 that’s proposed as part of for new parking garages specifically or you’re referring to other improvements 51 that we’re proposing? 52 53 Chair Tanaka; Yeah, I guess my, my comment is more general which is certainly parking structures could 54 help. I think necessarily Commissioner Downing’s point of better parking technologies might give us 55 more leverage, better utilization, it could also be valet programs; there’s a lot of different things. But 56 - 42 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 16 basically I think if you were to ask the average citizen here in Palo Alto what are some big issues a lot of 1 people would say there’s a parking issue. And so we only do this once a year and I just want to make 2 sure that we’re ok here. And so I’d love for you to say we’re ok. 3 4 Ms. Sullivan: Ok, I’m going to try to respond and keep the conversation around the CIP specifically. So 5 just to clarify I mean a couple of things. So we have, we’ve been spending a lot of resources and time 6 and I think intention around the parking and traffic challenges. They won’t all be solved by throwing 7 money at them. One piece that I think we are moving forward with which will start to generate some 8 change is starting to aggressively manage existing parking supply. We can build, we can throw lots of 9 money at building new parking garages or parking lots, but that’s not, that’s not the type of City that we 10 want to be. And I think as we redevelop the Comp Plan and we start to talk about what are we really 11 trying to do here we’re going to Transportation Demand Management (TDM) is going to become a very 12 big piece of that. 13 14 That said we’re still lacking a lot of the infrastructure, sort of the base level infrastructure to appropriately 15 manage parking. so the CIP’s that we created a couple of project specific CIP’s that have been created in 16 FY 2015 around the parking way finding, parking guidance systems, and parking technology in the 17 Downtown. They are right now funded for consultant work to identify the scope of project that would 18 ultimately be implemented and I don’t, I don’t really, I don’t know how much some of this stuff will cost, 19 but I can tell you it will be a significant amount of money. And then next year you’ll come back and say 20 oh my God, you’re spending so much money on parking. So I think, I think you might have just caught 21 us at sort of an interesting we have to sort of strategize how these projects get presented to you and get 22 developed into CIP’s, but there’s a huge amount of effort that is being sort of focused on this right now 23 and I’m just, I’m just wondering if maybe it’s not just reflected in the few CIP’s that you see here. 24 25 I don’t know if that makes sense or if I’m missing something here, but I guess my, I guess what I’m 26 saying is we are moving forward on all cylinders to address these issues. We’ve funded and will be 27 asking for more funding for several projects that are, that are supporting these ideas. So I’m not, I’m 28 not sure what else I can add. Brad if you want to talk about parking garages? 29 30 Mr. Eggleston: Let me just jump in to say that if part of your question is you’d like to understand the kind 31 of origin and derivation for where these numbers came from, the budgets for these projects, I could 32 speak to that. I’m not sure if your question is already answered or? 33 34 Chair Tanaka: Yeah, I guess what I’m trying to say is and I don’t know if we even have this figure, but 35 I’m trying to understand like as a maybe even as percentage of the CIP like how much is are we trying to 36 spend on solving some of these parking issues? Because some of these issues could be solved maybe 37 through maybe ways that cost no money, but in general this problem’s got to be solved with some sort of 38 money, right? Some sort of funds. And it’s kind of somewhat tied to Commissioner Rosenblum’s 39 comment about prioritization which is in the Comp Plan things aren’t necessarily paired, right? It’s just a 40 big laundry list of here’s what we’d like to have and so it’s but I think, I think in general if like I said if 41 people were to think about what are the issues facing the City one of the biggest issues is, is parking. I 42 think most people would admit that. And so I just want to make sure that we are putting sufficient 43 resources on this problem to make sure that this problem is being solved because I think a lot of folks 44 really want this to be solved. So that’s where I’m coming from. I mean it would be great to know and 45 understand the process of how do we get to these numbers, but my main point is just more like making 46 sure that, that as a City we are listening and we are trying to make sure that like this issue is being 47 addressed. 48 49 Mr. Eggleston: So one way I would characterize these projects and I think it goes back to something that 50 Jessica was saying that really it’s part of a multi-pronged approach to try to address the parking issues in 51 the City and I would say that it was the City Council through its Infrastructure Committee that actually 52 suggested adding these parking garages to the Infrastructure Plan. And I was there through that 53 process. There was no sort of finding by the City Council that they knew a specific number of spaces 54 that needed to be added, so what we have here comes down a little more to the funding that was 55 available to provide the garages. And I think the sense was that we know there’s a lot of work and a lot 56 - 43 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 17 of different efforts that were needed to go on to address the parking issue, but they felt that one piece of 1 it was to do something to increase supply and that’s where this is coming from. 2 3 Chair Tanaka: Ok, I’ve, I want to now turn to my fellow Commissioners to weigh in on this topic. So I 4 see a bunch of lights here. So I’m entirely sure which one is first so I’m just going to call it down the line 5 so Commissioner Michael. 6 7 Commissioner Michael: So sometimes I wonder if we’re doing our job as an advisory body to the Council 8 in the best possible way and I wonder if what if the Council is looking to us for advice on the budget, if 9 they’re looking to us for advice on priorities, or if it’s really as simple as they want to know if the 10 proposed CIP is consistent with the Comprehensive Plan which may be a rather more simple and shorter 11 discussion. So when I look through the 707 pages of this report, congratulations, and compare it to the 12 300 some odd pages of the Comprehensive Plan in the limited time available before the meeting I went 13 through sort of a pretty superficial query of was if I could find any of the 24 new projects that was not 14 supported by the Comprehensive Plan. And I couldn’t find a single one that wasn’t supported by the 15 Comprehensive Plan. So perhaps we’re done. 16 17 However, the question of consistency with the Comprehensive Plan is really an important matter in the 18 community. And it’s really important that the Planning Commission and we’re about to go into the 19 Summit and the Council has made this a priority to update with Council involvement the Comprehensive 20 Plan. And at the recent Council meeting on to move forward on that Council Member Filseth proposed as 21 sort of a first draft a I think what he referred to as a dynamic model to try to apply Comp Plan sort of 22 objectives to metrics and also be able to analyze whether there would be budgetary tradeoffs. And he 23 used the example of a Comp Plan policy about how many parks we should have in relationship to how 24 many residents we have. And he says well we’re going ahead 15 years, what should be the goal? And is 25 this the right goal? Does this mean we have to buy more land or does [we would have to] change the 26 metric because the amount of land available in relationship to the population projection is such that 27 you’re not going to have the same acreage per person per capita. And so the Council is very much trying 28 to model this in a much more analytic way and I submit that that’s maybe in parallel to our discussion 29 this evening, but maybe that’s not our job to do that. 30 31 I think the passion and the enthusiasm you’re hearing from some of these questions is that since we 32 can’t find anything in here that’s not consistent with the Comprehensive Plan we want to get on to the 33 next topic which is can we weigh in on priorities? Which we love to do, and can we propose metrics 34 which we think are a great tool? And we wonder about the amount of budget dollars available this year, 35 which is much more than in prior years. So that’s a wonderful thing. And if it were up to us how would 36 we spend that money? And is that our agenda tonight? Because I’d love to have that discussion, but I 37 just I think we’re maybe about to have a Motion about is this consistent with the Comp Plan and the 38 answer may be pretty simple, but the letter that the Chair may sort of provide to Council could maybe 39 explore some of the nuances of this. 40 41 Chair Tanaka: Commissioner Gardias. 42 43 Commissioner Gardias: This is old light, so we moved on. 44 45 Chair Tanaka: Ok, Commissioner Downing. 46 47 Commissioner Downing: I was also going to speak to priorities per Commissioner Rosenblum. So I don’t 48 know if this is… 49 50 Chair Tanaka: Vice-Chair. 51 52 Vice-Chair Fine: Thank you, Mr. Chairman. Yeah, just to sum up this area, this issue and kind of bring a 53 couple of people’s ideas together I think just a one shot at this parking issue how many spots is $23 54 million going to buy us between two parking garages? How much does that accomplish the 55 [unintelligible] that we might have identified and we’ve made a goal in the Comp Plan? So I kind of 56 - 44 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 18 concur with Commissioner Michael here that maybe this is something worth mentioning in the letter in 1 terms of assigning metrics to each of the CIP projects and how it links up to the policy in the Comp Plan. 2 So what’s the metric we’re trying to measure? What are we going against and how much does this buy 3 us? I think that might be a fair recommendation. 4 5 Chair Tanaka: Ok, seeing no other lights let’s move back down to the prioritization topic that Rosenblum 6 was talking about. So I think the two folks that wanted to speak about it was Commissioner Gardias, no? 7 Ok. Commissioner Downing, do you want to speak about that? 8 9 Commissioner Downing: Yeah, I really can’t express my enthusiasm for that concept enough. I mean I 10 have to say having been to quite a few Council meetings, having been on this PTC, I could give you a list 11 of what I think are like the top 100 issues for our residents and I don’t think the golf course would be on 12 that list, for example, right? And so I do, I do wonder about how we make those priorities. How we 13 decided that we were going to spend $11 million on a golf course, but that $11 million probably would 14 have been enough for another small park. We could have bought one, right? So I do wonder about that. 15 I do wish that there were more answers here and I fully support those comments. 16 17 Chair Tanaka: I’ll also weigh in on the prioritization. So I fully agree with Commissioner Rosenblum. I 18 think that prioritization is a great thing. I love the idea of metrics and trying to make this thing more 19 penetrable because it’s just as it is you have a ton of data and it’s hard to know what’s good and what’s 20 bad. Everything’s relative so I support those comments. I think that makes, I think that makes a lot of 21 sense. Do any other Commissioners have comments on this topic? Otherwise we’ll move on to the next 22 one. 23 24 Mr. Rossman: Chair Tanaka may I respond to a few comments? 25 26 Chair Tanaka: Sure. 27 28 Mr. Rossman: Thank you very much. Regarding I appreciate your comments Vice-Chair Fine. Regarding 29 the parking garages we’re still in a design phase so therefore we really don’t know how many garages or 30 [plots] we’re going to have, but it’s definitely our intent where it’s reasonable to add information such as 31 you’re requesting to put this into the CIP. Because that’s not just for us, but also for the Council to 32 understand what’s the impact. I think that’s what you’re asking. 33 34 Vice-Chair Fine: Absolutely and I think to run with that that’s the kind of ask I would have that our 35 Commission sends to the Council in terms of a recommendation letter. Personally I’m happy with most of 36 these projects. I think it would be nice to have a numerator and a denominator for each of these 37 projects even if it’s an estimate in terms of $23 million more (interrupted) 38 39 Mr. Rossman: And it may be difficult way of dealing with it, but 260 projects, that’s right so (interrupted) 40 41 Vice-Chair Fine: Maybe just the, maybe just starting with these new 24 ones. 42 43 Mr. Rossman: I understand what you’re saying. Regarding the golf course Commissioner Downing that 44 really goes back several years when the Council decided to renovate the golf course and brought this, 45 asked staff to do that and Brad probably can talk more to that. There’s an urgency there that we [have 46 needs] the irrigation system is broken and we need to renovate it as part of the conversation asked that 47 we look at reconfiguring the entire golf course project. So what I’m trying to say to you a lot of things 48 happen in the CIP which are driven out of forces it’s more so a conclusion of other processes. Whether 49 it’s the Master Plan for parks which you’ll see forthcome I’m sure in the future, when it’s IBRC, where it’s 50 Infrastructure Plan [unintelligible] we have done outreach to the public as part of other processes and 51 the City is coming together in this budget. 52 53 Chair Tanaka: Vice-Chair. 54 55 Vice-Chair Fine: [Unintelligible] 56 - 45 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 19 1 Chair Tanaka: Ok, last one. EIR tidal flooding; so I think everyone heard former Commissioner Keller’s 2 comments. Does anyone want to speak about that or have comments/thoughts/suggestions? Yay/nay? 3 Commissioner Rosenblum. 4 5 Commissioner Rosenblum: I’m supportive. I think it’s very logical if we’re going to take step one into the 6 study then we should make sure funds are available for or sorry, we should make sure the funds are 7 available for the study and as he mentioned this could open up state grants, etcetera. But I think that 8 the request is quite logical and should be added to make that move be able to be carried through all the 9 way. 10 11 Chair Tanaka: Commissioner Gardias. 12 13 Commissioner Gardias: Thank you, Mr. Chairman. In the same spirit supporting this addition and pretty 14 much it would be just a sign of continuity. We agreed to have it back then one year ago or a few months 15 ago so I think we should have it now. Thank you. 16 17 Chair Tanaka; Vice-Chair. 18 19 Vice-Chair Fine: I’m also in support of this. I wasn’t on the Commission at the time, but it seems that we 20 spent some money and putting some effort it’s worth following through on it and I’d also put it to the 21 Commission if there were other issues that have been lost in the woodwork in terms of projects started 22 but hasn’t been continued that would be interesting to hear too. 23 24 Chair Tanaka: Ok, I don’t see other lights so I’m not sure if anyone has comments, but I’ll weigh in on it. 25 I also support it. I think it makes sense. So ok, great. So I think we’re done with the issues, right? So 26 let’s see… I think although I didn’t hear everyone weigh in on the prioritization so I’m not sure how many 27 people fully support Commissioner Rosenblum’s, but I think there’s at least three people who say yes. 28 On the tidal flooding I think there’s at least four of us that say yes. And on the garages only really two of 29 us weighed in. Well actually three of us did. So I think Commissioner Fine, Vice-Chair Fine, myself, and I 30 think in prioritization I think Commissioner Michael was no on weighing in on this stuff. At least from 31 what I heard. Alcheck. 32 33 Commissioner Alcheck: Since I didn’t speak to the prioritization I’ll just touch on it right now. I sort of 34 think that everything in this is a priority. And I think maybe one, I think something that is hard to 35 appreciate from the report is just how complex some of the what like this example with the golf course. 36 What seems like a rather indulgent expense, right, is part of it is a major effort in conjunction with 37 actually a flooding issue, right? So there’s a major component of the golf course redesign that has to do 38 with the very flooding that sea level rise concerns that Mr. Keller raised tonight as well. 39 40 So I think part of the issue is it would be sort of nice as a participant in this process to sort of know what 41 the low hanging fruit is. What are the pieces of this puzzle that we will see kind of come together and 42 what are sort of fantasies if you will from the perspective of staff? And I think that may be very 43 politically problematic to sort of discuss because again they are all priorities that the City has. But I think 44 I wonder how many of these ultimate projects the City staff would be delighted to sort of begin or work 45 on, but there’s so much complexity in the process that the idea of prioritizing them is sort of redundant, 46 it’s futile because you can sort of suggest for example that the security station or what are we calling it? 47 The public safety headquarters (HQ) is an incredible priority and we really need it and oh my gosh, it’ll 48 save lives, but that won’t necessarily make it go any more quickly because of the tremendous complexity 49 in navigating the public process. And to some extent there may be items there that are “low hanging 50 fruit,” but that may not be priorities and if we put them at the bottom of the list, but accomplish them 51 someone could suggest that we were really not focusing on the items that we should be. But we or the 52 staff isn’t focusing on the items that they should be where maybe the staff is actually articulating an 53 effort to accomplish what they can as opposed to not what they would like to. 54 55 - 46 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 20 So I think this is sort of a complicated conversation because from my perspective I think every single 1 thing on here is a priority. And to the extent that every year that goes by that we don’t continue to 2 invest in some of these infrastructure needs that were highlighted by the Blue Ribbon Commission then 3 we’ll see that it’ll just keep growing. So I’m not opposed to the idea of looking, prioritizing, but I wonder 4 if it would be interesting to hear if staff had thoughts about whether that would be helpful or not or 5 arduous. 6 7 Chair Tanaka: Commissioner Rosenblum. 8 9 Commissioner Rosenblum: Yeah, I just have one more comparison to make to the extent that this is 10 helpful and this may be the worst thing I could say, but imagine like if I was back in my old job at Google 11 and we’re reviewing the strategic plan and budget. And earlier in the year we had a mission that said 12 that we want to increase our penetration in mobile and we want to do better in video ad sales. We had 13 some general direction. That’s our Comp Plan. We want to start to invest more in these areas. That 14 would be translated into some manifestation. It would mean well we need more daily mobile users and 15 we need to make our mobile experience faster and so there would be some projects. And then when you 16 view the budget the first thing that would come is ok so here’s the number of projects where we’re going 17 to put engineers and we’re increasing relatively mobile plus video versus other projects which are going 18 to be decreased and here’s how that will manifest itself in its budget and its [unintelligible] allocations. 19 And then as a group we could say oh yes, this does conform to what we said about mobile and video. 20 21 And so my comparison here is our Comp Plan makes some statements about what Palo Alto wants to be 22 and then what we get is to me is hundreds of pages of kind of line items. And then we have to reconcile 23 them and say does this fit our Comp Plan’s thrust? And I’m saying there’s this middle layer that’s missing 24 that translates the intent of the Comp Plan into major thrusts and allocations that would be easier to 25 grapple with because if that layer was missing in the corporate context for example, if we said we want 26 to invest more in video and then you give me 700 pages of line items of every person in the company 27 where they’re allocated I could certainly draw a line between each of those people and something 28 important in the plan, but it doesn’t show me how we’re shifting as a group towards an intention that’s 29 manifest in the Comp Plan. 30 31 So to make this, to try to square the circle also with what Commissioner Michael had said I agree this 32 could be a really simple exercise if everything on the page is represented somewhere in the Comp Plan 33 then it’s a one, if not then zero. But and I think everything there is in the Comp Plan so it passes that 34 level of scrutiny. What is really hard is to say the Comp Plan actually makes implications around a skew 35 or a thrust that we might make that we wouldn’t otherwise make unless this was emphasized in the 36 Comp Plan. And so my ask is that either before the Commission meets or the Council meets or before 37 the next time we review that there’s an attempt to build this middle layer. To say based on the Comp 38 Plan we think that we should be over indexing on these areas and that is shown by the fact that we’ve 39 upped our commitment to these areas, we’ve cut our commitment to these other areas, and those are 40 the hard tradeoffs that we made. And I think that would make it much easier for us to see the tradeoffs 41 of prioritization that we made because of our unique Comp Plan. And I don’t know if that metaphor 42 helps, but that I was trying to think about how this would map to other things that we’re asked to review 43 that sometimes are easier. 44 45 Mr. Rossman: Commissioner Rosenblum I actually appreciate your metaphor you are using and the 46 similes to a private sector and first of all there’s a timing issue. Comp Plan the next one is scheduled to 47 be done within a year or so, [unintelligible] six to nine months. So we start our Capital Budget process 48 for 1721 [Note-2017 to 2021?] in mid-September this month. So we’re actually starting already the work 49 before we complete the Comp Plan, but beyond the timing issue there’s really a larger complexity we’re 50 facing. In Google you have one revenue source [unintelligible] many revenue sources. It’s a pot of 51 money which you can divvy out towards the various initiatives and strategic initiatives the company 52 wants to face and pursue [the fine] one, five, ten years. 53 54 We don’t have that. We have a Gas Fund. Gas rate payers can only be used for gas related 55 expenditures. We have refuse rates which you pay on your refuse bill, can only be used for refuse 56 - 47 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 21 related expenditures and it can go into Enterprise Funds, which you have in your Capital Budget 1 document. And then we have the taxpayer with the general purpose dollars. It’s a property tax 2 residents pay, the sales tax we receive, etcetera. And of that portion we primarily support our operating 3 [unintelligible]. It’s your Fire Department, your Police Department, it’s the Planning staff that is City 4 Council receiving some support, etcetera. And of that large portion we actually very fortunate in Palo 5 Alto we take about good 10 percent of the General Fund Budget and move it over toward the Capital Plan 6 every year. That’s really what we have to play with. It’s $18 million this year which we are transferring 7 over. We are issuing some debt as part of infrastructure planned in the next few years, but we really 8 don’t have that much to play with. And that’s that challenge we’re facing. It’s really a funding challenge 9 we have. It’s $115 million this year, but the items which you’re referring to is a very small portion where 10 we can start reallocating towards Bike Plan, buildings, street maintenance, etcetera. So that’s the 11 challenge we’re facing. 12 13 Now the other thing I think I’m not sure whether the Commission mentioned this or Assistant Director, 14 sorry, Jon. I’m like [unintelligible] just talked to him before at Whole Foods for dinner. So what Jon was 15 saying is that the Comprehensive Plan doesn’t really prioritize the funding. I think prioritization of how 16 we use existing dollars and align it with the Comp Plan that’s really what the Council gives staff direction 17 on that whether they do this as a master plan they approve, which is they approved Urban Forest Plan 18 just last week. We’ll see funding for that coming through mostly through the Operating Budget or 19 whether the Council [unintelligible] says here’s Infrastructure Plan that’s what we want to do $126 million 20 now execute through the Capital Budget process. 21 22 Chair Tanaka: Commissioner Michael. 23 24 Commissioner Michael: So my comments are that I’m about to make are in complete sympathy with 25 Commissioner Rosenblum and my colleagues on the Commission and our passion for prioritizing, but my 26 concern is that we’re sort of trying to cut with a dull knife. So we got the Comp Plan that is our Comp 27 Plan that’s still in effect was adopted in the mid-Nineties, the 1998 to 2010 Comp Plan. Here we are in 28 2015 and we’re being asked to say to what extent are the policies adopted in the mid-Nineties applicable 29 to CIP’s in the years 2016 to 2020. So we’ve got these words that were written in 1998, debated years 30 prior to that and wondering how prescient they were relative to the really specific things that have to be 31 done almost 30 years after this great community involvement in the current Comp Plan. 32 33 One of the elements that was not forwarded to the Council in an updated draft form was a Governance 34 Element. So this is work to be done and I would propose that this is a wonderful opportunity to 35 introduce into the Governance Element something relative to a methodology for prioritizing the visions, 36 the policies, and the programs that appear elsewhere in this very important and lengthy document. The 37 Council is going to meet on Monday to take some make a resolution relative to the formation of a Comp 38 Plan Committee. I would hope that some representative of the PTC, Chair Tanaka perhaps, appear next 39 Monday and suggest the importance of introducing into the next update of the Comp Plan a some policy 40 relative to and the methodology about prioritizing and perhaps this can be addressed at the Summit on 41 later this month on May 30th. 42 43 But I think that one of the things that was missing to me in the 1998 plan is that it begins with there 44 were many visions for the City. No one vision can say it all. And I think that that’s sort of the 45 fundamental flaw of the current Comp Plan adopted in 1998 is that there isn’t a vision. There’s many 46 visions. And so then how do you set priorities with many visions? It could be this, could be that. And I 47 think this is a wonderful time to encourage the City to come together about putting a stake in the 48 ground. What’s the vision? And then in the Governance Element let’s incorporate the language in 49 whatever program, policy, format is appropriate of encouraging and maybe following up on Council 50 Member Filseth’s dynamic Excel spreadsheet model that can balance parks and residents or affordable 51 housing and population trends and parking spaces or whatnot. 52 53 But this is an opportunity to get more analytical a la the private sector in a way that honors transparency 54 and governance, but I think that missing from the 1998 Comp Plan was an overall vision, an explicit stake 55 in the ground. It was very pluralistic in that respect. The Governance Element has yet to be updated. 56 - 48 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 22 That’s the place to put it in. And we’ve got some, a committee being formed, a Summit happening, and 1 a Council meeting on Monday and this is the time to bring it up. Not necessarily tonight, but in the days 2 and weeks to follow. 3 4 Chair Tanaka: Ok, so seeing no other lights on this we’re now at that time in the meeting where we just 5 need to make a decision. We could recommend, not recommend. We could recommend and make a 6 bunch of amendments. Does anyone have any Motions they wish to make? Commissioner Gardias. 7 8 MOTION #1 9 10 Commissioner Gardias: I can make it a Motion? Yes, so before I make one supporting CIP I would like to 11 come back to the item and include in the Motion what I proposed before and turning to my colleague 12 Commissioner Michael understanding the process that you discussed in terms of the design competition 13 which is the right comment and of course there needs to be a process needs to be discussed with the 14 Council with ARB. The reason that I proposed a fund, allocation of funds to the in this CIP for some 15 significant public project was just to pretty much send signal that this is the right thing to do. And just 16 with the respect, right, if you would support just adding this to this funding it may be not very organized 17 manner it would still allow just sending the signal to, to the Council and to ARB that pretty much we’re in 18 supportive of this. We will of course have some other meetings as you suggested where we would polish 19 and discuss this process farther, but this would be just pretty much just sending signal that this is the 20 right thing to do. 21 22 So if that would be fine I would like to just propose a Motion to submit this CIP Budget as proposed to 23 approve the CIP Budget as proposed to and submit it to the City Council with addition of the flood 24 funding as proposed by our former colleague Arthur Keller with allocation of funding for the significant 25 projects and also if I don’t know if Commissioner Rosenblum would like to add bullet point to this in 26 terms of the prioritization, but this is pretty much the Motion. 27 28 Chair Tanaka: Ok, so we have a Motion on the floor. Does anyone want to second it? I see two lights, 29 I’ll ask Commissioner Downing. 30 31 Commissioner Downing: I was just going to suggest that perhaps the best course of action we do owe 32 the City Council a letter based on this and so perhaps the best course of action would be to kind of 33 summarize the conversation that we’ve had today in that letter and I think that can be part Commissioner 34 Gardias’ and Commissioner Rosenblum’s comments can be part of that letter. That might be easier than 35 for the staff trying to divine a Motion out of all these comments. 36 37 Chair Tanaka: The Motion is for us to make. So I guess so we have a Motion on the floor, we need a 38 second for it to be considered. So this well actually Commissioner Michael has his light. 39 40 Commissioner Michael: If there isn’t an immediate second I’d like to propose a Substitute Motion. Is that 41 timely or? 42 43 MOTION #1 FAILED 44 45 Chair Tanaka: Well, I think there’s no Substitute Motion because this Motion has only, there’s no one that 46 seconded it so far. Ok, seeing no second, does anyone else want to make a Motion? 47 48 MOTION 49 50 Commissioner Michael: So I would propose the Motion that the PTC finds the CIP program for 2016-2020 51 consistent with the Comprehensive Plan and forward the finding to the Finance Committee and the City 52 Council. Period. Also that Chair Tanaka deliver in a letter transmittal to the Council the significant ideas 53 and suggestions that emerged from this discussion this evening. 54 55 Chair Tanaka: Does anyone want to second it? 56 - 49 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 23 1 SECOND 2 3 Commissioner Rosenblum: Second. 4 5 Chair Tanaka: Ok. Does the maker of the Motion want to speak to the Motion? Seconder of the Motion? 6 7 Commissioner Rosenblum: Yeah, I think I actually agree with Commissioner Gardias as well just that I 8 don’t know if we want to put the pen on for this one item just to, to fulfill our duty that this as put 9 forward adheres to the Comprehensive Plan, but that we had a number of comments for them to 10 consider that would be captured in the letter and then they will have the option of asking for additional 11 information or inserting other items. 12 13 Chair Tanaka: Hit your lights if you have any other comments on it. I see a light from the Vice-Chair. 14 15 Vice-Chair Fine: Thank you, Mr. Chairman. Just to add on that I think to make it explicit seems like the 16 three items we had somewhat of a consensus on that might be included in the letter are a design 17 competition maybe budgeting for that, prioritization of the CIP projects, and then the EIR for the creek. 18 19 Chair Tanaka: Are there any other comments on this before we take a vote? Ok, so seeing no lights all in 20 favor say raise their hand. Oh. 21 22 Mr. Lait: That’s fine, I mean it’s fine. I just wanted to clarify so the letter is kind of part of the Motion 23 and I heard the three points just is that what you’re voting on those three points to be the substance of 24 the letter? 25 26 Chair Tanaka: No, that wasn’t part of the Motion. That was just a comment that the Vice-Chair made. 27 28 Mr. Lait: Ok, so it would be helpful (interrupted) 29 30 Chair Tanaka: But the maker of the Motion did say that there’s a letter coming so, but the contents of the 31 letter Vice-Chair tried to summarize some of that, but there was not a Motion on that per se. 32 33 Mr. Lait: Ok, and that’s fine if you want to break it up into two different Motions that’s fine. The timing of 34 this is such that we would need a letter by noon on Monday in order to get to the Finance Committee and 35 we can help draft it and send a first draft to you Chair Tanaka. It would be helpful for us to know what 36 those components are that you want the letter to be framed around. Alternatively you can take the 37 dialogue that you’ve heard today and compose the letter and submit that to us by noon on Monday and 38 the challenge there though is that the rest of the Commission hasn’t had a chance to see that. So. 39 40 VOTE 41 42 Chair Tanaka: Ok, well let’s talk one thing at a time; so we have a Motion on the floor from Commissioner 43 Michael and so we’re about to take a vote on it. I see no other lights for comments so let’s take a vote. 44 So all in favor raise your hand. Ok, unanimous vote. 45 46 MOTION PASSED (7-0) 47 48 Chair Tanaka: So I think this item’s closed although staff brought up a point of should we really nail down 49 some of the comments in the letter or do you guys say eh, we’re good on this? Commissioner Michael. 50 51 Commissioner Michael: So I think that I and I’m sure colleagues have complete confidence in you as 52 Chair and if you would prefer to take initiative and draft up an outline of the letter and submit it to staff 53 or if you prefer them to do that and submit it to you I give you my total support in whatever you decide 54 is appropriate. 55 56 - 50 - APPENDIX 1 ATTACHMENT C City of Palo Alto Page 24 Chair Tanaka: Ok, any other comments on this topic? Commissioner Downing. 1 2 Commissioner Downing: If you volunteer to draft the letter I will look at it and offer comments and then 3 that might capture all of our comments. 4 5 Chair Tanaka: Ok, well here’s what I’m going to do. What I think I’m going to do on this is staff has 6 graciously offered to draft the letter. So I’m going to take them up on that offer. And I think the Vice-7 Chair and I will take the first look at it and then shortly thereafter send it to the rest of the Commission 8 so that the rest of the Commission can see that we’re pretty clear on this. 9 10 Cara Silver, Senior Assistant City Attorney: Unfortunately we can’t get that agendized before the Monday 11 deadline so it has been the typical practice is to have the Chair and Vice-Chair work together on 12 (interrupted) 13 14 Chair Tanaka: Ok, well sorry guys. Ok guys, we’re done on this item so we’re now going to Item 2. 15 16 Mr. Lait: I’m sorry Chair. I just need to know what is expected of staff. Do you want us to draft the 17 letter? 18 19 Chair Tanaka: Oh, yeah. So draft the letter, send it to Vice-Chair and myself. 20 21 Mr. Lait: And would it be those three points that Vice-Chair Fine noted as being the key components of 22 that? 23 24 Chair Tanaka: Yeah, so we talked about several topics here. So just clearly just to quickly summarize so 25 I think airport we’re good on. I think the visioning we’re good on. The design competition we actually 26 had four people speak against it, three people who said yes. So but that’s still good to have in the letter. 27 I mean you could talk about what the feel of the Commission was. On the prioritization we had five 28 people that spoke on it so three were yes: Rosenblum, myself, and Downing. And then I guess it’s not 29 really a no, but Commissioner Michael had an alternative suggestion which was hey get it in the 30 Governance which is not a bad idea. And Alcheck I think kind of spoke about having it in this. Tidal 31 flooding we didn’t have any no’s, but we had four people that supported that. So and then on the just 32 parking in general only two people spoke, spoke about that is myself and the Vice-Chair, but so that 33 wasn’t a lot of people that weighed in. That’s, that’s how I captured it. I don’t know if people here 34 heard it differently, but that’s how I heard it. 35 36 Mr. Lait: Ok, we’ll draft something and send it to the two of you for your review and we’ll try to get that 37 out to you in the next day or two for return on Monday by noon. Thank you 38 - 51 - APPENDIX 1 Community Services Department Supplemental Information 1.Recreation Superintendent Staffing Reductions: The staffing reductions within the Recreation Division have included the elimination or removal of the following positions: Recreation Superintendent, Manager of Programs for At Risk Youth, Business Manager, Recreation Supervisor, Special Events Manager, Special Events Coordinator, two Custodians and two Customer Service positions. While the staffing reductions on the whole were strategic and necessary, and have resulted in increased efficiency, productivity and needed savings, the Recreation Division staff, Palo Alto Recreation Foundation, customer service, staff development, performance and risk management, programs and service coordination have not had the benefit of a dedicated leader to oversee and manage division operations to develop staff and volunteer capacity to strategically enhance programs and services within the Recreation Division for the public. With the elimination of numerous Recreation Management positions from the Recreation Division (listed above) the Assistant Director position has assumed many of the responsibilities of the eliminated positions, while concurrently continuing to manage Assistant Director responsibilities which include department-wide organizational development and training, board and commission liaison responsibilities for the Parks and Recreation Commission, Friends of Palo Alto Parks and Golf Advisory Committee, oversight of the department capital budget, project management for large department and interdepartmental initiatives such as the reconfiguration of the municipal golf course, planning for the future of Cubberley Community Center and Project Safety Net Community Collaborative among others. Moreover, the vision for the new Assistant Director will be to provide oversight and direction to both the Recreation and Parks Divisions to cultivate greater collaboration, customer responsiveness and efficiency within Community Services. Ongoing Business Needs: Returning to the business need within the Recreation Division for a Superintendent, it is helpful to understand in FY 2015 Adopted Budget the Recreation Division is responsible for generating $2.6 million in revenues, which is 51% of the Community Services Department total annual revenue expectation, and managing 25% of the department’s overall expense budget, while having approximately 40% of the department’s staff. Included for discussion is an organizational chart showing the wide range of program and service operational responsibilities for the proposed Recreation Superintendent position and a list of current special events produced that will benefit from this new position. In order to create efficiencies and follow best practices, the Assistant Director will also have responsibilities for oversight of Recreation, Parks, Open Space & Golf. - 52 - ATTACHMENT D APPENDIX 1 Recreation Superintendent Adult ProgramsYouth Programs Special NeedsFacilities Special Events Athletic Fields Lucie Stern Center Mitchell Park Center Special Interest Classes Recreation Camps Sports Camps Aquatics Youth & Teen Programs Special Interest Classes Sports Aquatics Seniors Therapeutics Intervention May Fete Parade Senior Bash Cubberley Open House Chili Cook-Off Moonlight Run Summer Concerts Summer Camp Registration Faire World Music Day Bridal Faire Martin Luther King Jr Day of Service Others Cubberley Center Operations Maintenance Theatre Special Events: Regarding Special Events, a Community Services (Program) Manager position was considered as an alternative to a Recreation Superintendent position. Such a position would add value as a dedicated staffer for producing special events, however, this alternative would address only one need, namely the need for increasing capacity for special events, and not the need to sustain and build capacity within the Recreation Division more broadly. Staff also considered the salary cost of a Community Services (Program) Manager position in comparison to the more senior level position of a Superintendent. The mid-point salary difference between the two is $20,000. In factoring the relatively minor salary difference, the return on investment for the higher level Recreation Superintendent Position outweighs the increase in cost, as the Superintendent Positon not only provides the needed special event coordination but also addresses critical business and operation gaps, providing greater division oversight, program and staff development, revenue generation and increased cost recovery. - 53 - ATTACHMENT D APPENDIX 1 CSD & Citywide Special Events City of Palo Alto Annual Special Events Community Services Department Program Specific Events FY 15 One Time Special Events 1.Moonlight Run 2.Senior Bash 3.May Fete Parade 4.Chili Cook Off 5.Holiday Tree Lighting 6.Summer Twilight Concerts 7.Mayor’s State of the City 8.World Music Day 9.Martin Luther King Jr. Day of Service 10.Youth Forums 11.Senior Services Summit 12.Cubberley Community Center Open House 13.Clay Glass Festival 14.Youth Art Exhibit with PAUSD 15.Youth Speaks Out Art Show 16.4 Sunday Family Days at Art Center 17.4 Friday Nights at the Art Center 18.Exhibition Openings and Programming (approximately 12 per year) 19.8-12 Family Days at JMZ 20.160 Performances at Children’s Theatre 21.Cubberley Artist Studio Program – 2 Open Houses per year 22.Teen dances, Poetry Slams and Open Mic Events 23.Big Read – 6 events per year 24.Summer Camp Registration Faire 25.Bridal Faire 26.Park, Playground and Public Art Opening Celebrations 27.Mitchell Park Library and Community Center Sneak Peak Tours and Grand Opening 28.British Invasion 29.Hackathon 30.Apps Challenge 31.Our Palo Alto Events - 54 - ATTACHMENT D APPENDIX 1 2. Project Safety Net and Track Watch Project Safety Net Staffing: City staff and the Project Safety Net Collaborative realized for the Collaborative to have greater impact on the work of suicide prevention and youth well-being, it needed a full time leader who’s daily job it was not only to work with the Collaborative partners to enhance and support their efforts towards meeting PSN’s goals, but to also provide leadership across sectors to address large scale issues such as access to care and mental health stigma reduction. With the use of Stanford University Medical Center Development Agreement Health and Safety funds, the City was able to hire a full time hourly PSN Program Director, a social worker by trade, in March 2012. During her tenure, she spent a great deal of time on relationship building amongst Collaborative partners and leading a strategic planning effort. She resigned in August 2013 and key among the reasons stated was the lack of medical benefits, but there was also frustration in her lack of progress in moving the Collaborative forward organizationally to meet its desired outcomes. In retrospect, staff believes a PSN Director with experience in collaborative facilitation is more likely to move the Collaborative forward than a director with clinical experience. City staff recruited for the position directly thereafter, but a suitable candidate was not found. A second round of recruitment produced what staff thought was a suitable candidate who was hired in June 2014, but this person only stayed four months, stating a family health crisis and the lack of benefits as the reason for leaving. Between these two staff members and after the departure of the last program director, the Human Services Manager and Director of Community Services have been spending significant time overseeing the work of the Collaborative, especially in regards to administrative/convening functions and leadership in planning next steps for PSN. TrackWatch: Since 2009, a guard has been stationed at the Charleston and East Meadow crossings for this was the location that five teen deaths occurred in the first suicide cluster. From 2009 – 2011, their schedule was from 6:15 pm to 1:15 am as all of the deaths (after the first one) occurred in the evening. No additional teen deaths occurred at the rail line until four incidents between October 2014 and March 2015. After a teen death in October 2014, security coverage was increased to begin at 3:00 pm (high school dismissal time) and the Churchill crossing near the Palo Alto High School campus was added as a precaution. Then another death occurred in early November. Subsequent newspaper reports incorrectly listed a location south of the California Avenue Cal Train station as the location of the death. It was also reported to Community Services staff that some teens had been gathering and a memorial had been erected at the California Avenue Cal Train station. The Project Safety Net (PSN) Leadership Team along with Public Safety staff recognized that the community was at high risk of additional suicides. In consultation with the PSN Leadership Team, Public Safety and City Manager’s Office, Community Services staff increased track security coverage to include the California Avenue Caltrain station and have security guards on duty all hours the Caltrain and freight trains are in operation: 4:15 am –2:30 am (or until the last freight train passes through Palo Alto, which may occur at an earlier time). Therefore, since November 2014, security guards have been stationed at four locations on the rail line (Churchill, East Meadow and Charleston crossings and the California Avenue Caltrain station.) In regards - 55 - ATTACHMENT D APPENDIX 1 to effectiveness, it is often hard to measure deterrent strategies. “Means reduction” (reducing a suicidal person’s access to highly lethal means) is an important part of a comprehensive approach to suicide prevention. It is based on the following understandings: •Many suicide attempts occur with little planning during a short-term crisis. •Intent isn’t all that determines whether an attempter lives or dies; means also matter. •90% of attempters who survive do NOT go on to die by suicide later. •Reducing access to lethal means saves lives. We don’t specifically know how many youth who made a suicide plan turned away from the tracks after seeing a guard. We do know that the track guards have called the Police after making contact with someone who was suicidal. We also know that the guards make contact with any individual who appears to be outwardly in distress, lingers at the tracks, is involved in an argument with another at the tracks, etc. We also have received messages from PAUSD staff, friends and local mental health professionals when they have a concern that someone may have a suicide plan that involves the tracks or in mental health distress. When we receive those calls, we notify all the guards and they are put on high alert and given a description of the individual. In addition, a multi-disciplinary team of City staff, led by City Manager Jim Keene, meets weekly to discuss rail safety issues including fencing, shrub removal, track security, and other deterrent strategies. - 56 - ATTACHMENT D APPENDIX 1 FIBER BACKBONE SPLICE POINT LEGEND FOOT H I L L E X P W Y MIDDLEFIELD RD OR E G O N E X P W Y EMB A R C A D E R O R D JUNI P E R O S E R R A FREEW A Y I - 280 U.S. 101 BAYSHORE F R E E W A Y BAYSHORE FREEWAY U.S. 101 VE N T U R A A V E NE W E L L R D N E W E L L R D PA G E M I L L E X P W Y LO M A V E R D E A V E LO M A V E R D E A V E LO M A V E R D E A V E WAVERLEY ST WAVERLEY ST BAY S H O R E P K W Y WEST BAYS H O R E R D CO L O R A D O A V E EAST C H A R L E S T O N CA L I F O R N I A A V E EM B A R C A D E R O R D UNIVE R S I T Y A V E CHANNI N G A V E CA L I F O R N I A A V E CHAN N I N G A V E ST A N F O R D A V E LAGUNA AVE EA S T M E A D O W D R OR E G O N E X P W Y LOUIS RD WAVERLEY ST WAVERLEY ST CH A N N I N G A V E CHAN N I N G A V E . 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F R A N C I S D R IVY LN GR E E R R D ALANNAH CT HILBA R L N HAMIL T O N A V E RH O D E S D R JA C K S O N D R PA T R I C I A L N WALN U T D R LOI S L N HAY E S D R W A L N U T D R BRET HARTE ST BARBARA DR BELVIEW CT MOR T O N S T SO U T H A M P T O N D R EA S T G R E E N W I C H MARK TWAIN ST SIER R A C T ST. FRANCIS DR CARMEL DR SANTA CATALINA ST SANTA ANA ST GREER RD BLAIR CT EL S I N O R E D R EL CAJON WY EL CAJON WY WAT S O N C T FRONTAGE RD EDGEWOOD DR LAU R A L N EMBARCA D E R O W Y FABER P L GA R L A N D D R PO R T A L P L WES T GRE E N W I C H NO R T H A M P T O N D R SE A L E A V E GUIDA ST NEWELL RD FULTON ST DE SOTO DR ESTACA D A SA L T M O N T E S D R MOA N A C T MIR A N D A G R E E N MIRAND A MESA CTOA K H I L L A V E MESA A V E E M A N U E L A A V E MA N U E L A A V E MANU E L A W Y MANU E L A C T ROBB RD MOC K I N G B I R D L N OL D A D O B E R D OLD TRA C E L N OLD TR A C E RD MIRANDA A V E HA N S E N W Y TIPPAWINGO MA T A D E R O A V E CH I M A L U S A V E JULIE CT JO S I N A A V E KE N D A L L A V E BA R R O N A V E PA U L A V E WHITSELL ST MA T A D E R O A V E BA R R O N A V E LA SELVA DR MIL I T A R Y W Y MAGNOLIA DR CASS WY EL CENTRO ST CARLITOS BA R R O N A V E JE N N I F E R W Y TIMLOTT CT TIM L O T T L N SA N J U D E A V E LA DONNA ST MA G N O L I A D R LA P A R A A V E ARBOL DR EN C I N A G R A N D E D R VILLA VISTA VIL L A RE A L VILLA VERA VIS T A A V E GOBEL LN VERDOSA DR CAMPANA DR SOLANA DR CE R E Z A D R FL O R A L E S D R INTERDALE WY THAIN WY BAKER AVE GE O R G I A A V E ABEL AVE AMARANTA AVE IR V E N C T ALTA MESA AVE CLEMO AVE MA Y B E L L A V E AM A R A N T A C T ORME ST COULOMBE DR LOR A B E L L E C T KEL L Y W Y SUZAN N E D R SUZANNE D R SUZ A N N E C T LOS PA L O S GL E N B R O O K D R LO S P A L O S CIR AVE LO S P A L O S P L FA I R M E D E POMONA AVE CHERRY OAKS PL FRANDON CT MAYBELL WY KING AR T H U R C T DRISCOLL CTDONALD DR GE O R G I A A V E RINC O N C I R WIL L M A R D R GE O R G I A A V E HUBBAR T T D R YNIGO WA L L I S C T CR O S B Y P L LAGUNA AVE MANZANA LN EL C E R R I T O R D EL CERRITO RD SH A U N A L N SA N J O S E A V E IL I M A C T LA CALLE LAG I N A C T LA MATA WY MATA D E R O C T RO B L E R I D G E LA G U N A O A K S P L IL I M A W Y PA R A D I S E W Y McG R E G O R W Y HAW T H O R N E AV E BYRON ST EV E R E T T C T TASSO ST WEBSTER ST BYRON ST TASSO ST RU T H V E N A V E PA L O A L T O A V E BR Y A N T C T AVE AL T O PA L O LY T T O N A V E HIGH ST EV E R E T T A V E RAMONA ST EMERSON ST FLORENCE ST PAU L S E N HA M I L T O N A V E GILMAN ST DOWNING LN KIPLING ST SCOTT ST AD D I S O N A V E LIN C O L N A V E BYRON ST KIN G S L E Y A V E WH I T M A N C T ME L V I L L E A V E MEL V I L L E A V E WEBSTER ST TASSO ST KE L L O G G A V E TEN N Y S O N A V E WEBSTER ST COWPER ST KE L L O G G A V E CO L E R I D G E A V E BRYANT ST EMERSON ST LO W E L L A V E TE N N Y S O N A V E BYRON ST TASSO ST COWPER ST SA N T A R I T A A V E WA S H I N G T O N A V E WA V E R L E Y O A K S SA N T A R I T A A V E SAN T A R I T A A V RIN C O N A D A A V E SE A L E A V E HIGH ST NE V A D A A V E RAMONA ST WA S H I N G T O N A V SOUTH COURT NEV A D A A V E TASSO ST OR E G O N A V E BYRON ST SH E R I D A N A V E GR A N T A V E PERAL ASH ST STBIRCH JA C A R A N D A NOGAL LN BIRCH ST MA Y F I E L D L N CA M B R I D G E A V E MIMOSA LN SEORO LN OX F O R D A V E ST A N F O R D A V E LE L A N D A V E BIRCH ST ASH ST PA R K A V E SEQ U O I A A V E ESCOBITA AVE MADRONO AVE PORTOLA AVE MIR A M O N T E A V E MA N Z A N I T A A V E CASTILLJA AVE MARIPOSA AVE ENC I N A A V E HOM E R A V E URB A N L N WEL L S A V E CO L L E G E A V E BIRCH ST ASH ST CORNELL ST PRINCETON ST WILLIAMS ST YALE ST STAUNTON CT OBERLIN ST HARVARD ST HANOVER ST COLUMBIA ST BOWDOIN STBOWDOIN ST AMHERST ST MEARS CT CO T T R E L L W Y WIN G W Y PETER COUTTS CIR PETER COUTTS RD CATHCART WY RAI M U N D O W Y TO L M A N D R S. T O L M A N L N AL L A R D I C E W Y VERNIER PL OL D P A G E M I L L R D MARION PL GREEN COURT AN T O N C T WEB S T E R S T BRY S O N A V E BYRON ST EL D O R A D O A V E KIPLING ST COWPER ST TO W L E W A Y TOWLE PL WE L L S B U R Y W Y FLOWERS LN AVALON COURT MA R T I N S E N C T GA R Y C T DY M O N O C T MACKALL WY ST ST BRYANT ST RAMONA ST EMERSON ST EL D O R A D O A V E OL I V E A V E PO R T A G E A V E BIRCH ST EL C A R M E L O A V E CH E S T N U T A V E FER N A N D O A V E MA R G A R I T A A V E MA T A D E R O A V E WIL S O N A V E ORINDA ST CA M P A S I N O A V E SOUTH COURT BRYANT ST RAMONA ST EMERSON ST EL V E R A N O A V E PARK BLVD CU R T N E R A V E MA C L A N E SECOND ST TO Y O N P L ST . C L A I R E D R ST. MICHAEL DR ST. MICHAEL DR ASH T O N A V E MURDOCH DR ASHTON CT COW P E R C T ALG E R D R DR ST. MICHAEL DR KIPLING ST SOUTH CT ASH ST ASH ST LA M B E R T A V E AC A C I A A V E PE P P E R A V E MADELINE CT VENTURA MA C L A N E JA C O B S C T WILKIE WY EL CAMINO WAY DA V E N P O R T W Y VIC T O R I A P L BA R C L A Y C T WIL K I E C T TE N N E S S E E L N CAR O L I N A L N WILKIE WY JAM E S R D GEO R G E HOO D L N WILKIE W Y DU L U T H C I R RUTHELMA AVE NEW B E R R Y C T DA R L I N G T O N C T CT ED L E E A V E WAY WH I T C L E M D R PLACE MO N R O E D R MO N R O E D R MO N R O E D R MO N R O E D R DEL MEDIO CT SILVA AVE SIL V A C T DE L M E D I O A V E CALIFORNIA ST MILLER AVE MILLER AVE MILLER CT CESANO CT COLLINS CT FAYETTE DR CENTRAL EXPWY SONDGROTH WY CLA I R E CT AL V I NBYRON CTKE A T S C T NELSON D R EL C A P I T A N P L NEL S O N D R ADO B E P L NELS O N C T BLY P L CARLS O N C T DUNCAN PL BLY P L MUMFORD PL CRE E K S I D E D R PA R K S I D E D R TO I G A C T DIA B L O C T NELSON DR SH A S T A D R FER N E A V E CA L C A T E R R A P L CH R I S T O P H E R DAKE AVE FERNE AVE MARDELL WY DELL AL D E A N A V E NIT A A V E BETLO NITA AVE MACKAY DR FA I R F I E L D C T PONCE DR HE M L O C K C T FE R N E A V E FERNE CT BRIARWOOD WY FER N E A V E BEN L O M O N D D R SC R I P P S C T SCRIPPS AVE BE N L O M O N D D R GRE E N M E A D O W W Y DIXON PL BLY PL LU N D Y L N STARR KING CIR WRIGHT PL LIND E R O D R RAMONA ROOSEVELT CR ROOSEVELT CR BRYANT REDWOOD CR CARLSON CR RAMBOW CT SA N ANT O N I O CIR TERM I N A L B L V D CASEY A V E COAST A V E MA R I N E W Y CO R P O R A T I O N W Y ELW E L L C T GARC I A TRANSPORT S T IN D U S T R I A L A V E CO M M E R C I A L S T LEGH O R N FABIA N S T MONTROSE AVE MAPLEWOOD AVE SEM I N O L E W Y SUTHERLAND DR CHARL E S T O N C T ENS I G N W Y MAY CT GAIL E N C T COR I N A W Y ROSS R D OR T E G A C T MA Y V I E W A V E GROVE AVE CHABOT TR TANLAND DR TANLAND DR CA R D I N A L W Y INDIAN DR AZTEC WY AR R O W H E A D W Y MO R E N O A V E ELMDALE PL GREER RD BURNHAM WY DE N N I S D R CE L I A W Y AGNES WY MO R E N O A V E CO L O N I A L L N AM A R I L L O A V E MET R O CIR MOF F E T T CIR VAN AUKEN CIR VAN AUKEN CIR LAW R E N C E L N SYC A M O R E D R CLARA DR SANDRA PL OTTERSON CT HIGGINS PL COLORADO PL SIMKINS CT MADDUX DR GENEVIEVE CT GREER RD MAD D U X D R MORRIS DR STOCKTON PL BA U T I S T A C T MO R A G E C T PIE R S C T CLIF F T O N C T VERNON TERRACE KEN N E T H D R THO M A S D R KENNETH DR THOMAS DR KEN N E T H D R GR E E R R D JA N I C E W Y JANICE WY WA R R E N W Y MA R S H A L L D R ROSS RD CO A S T L A N D D R MA R I O N A V E MO R E N O A V E WOODROSE DR MARSHALL DR ROSS RD RANDERS CT MIDTOWN CT SA N C A R L O S C T SU T T E R A V E ELL S W O R T H P L SYC A M O R E D R SEVYSON CT EL B R I D G E DAV I D AVE MANCHESTER CT STELLING DR WIN T E R G R E E N W Y CLA R A D R SUT T E R A V E ST E R N A V E PRICE CT LA Y N E C T AL L E N C T LOMA VERDE PL TO R R E R A CT HOLY OAK DR AM E S A V E CORK OAK WY HOLY OAK DR STO N E L N TAL I S M A N D R TALISMAN CT CH R I S T I N E D R DR I F T W O O D D R EVERGREEN DR AS P E N LUPINE DR ARBUTUS DR TA L I S M A N D R TH O R N W O O D D R GRE E R P L AMES CT RORKE WY RORKE WY ROSS RD AM E S A V E RIC H A R D S O N C T . RO S S C T MURRAY WY EAST MEADOW CIR EAST MEADOW CIR SA N A N T O N I O R D . WEST EL C A M I N O R E A L SA N A N T O N I O R D EAST BA Y S H O R E R D FOOT H I L L E X P W Y H I L L V I E W A V E A R A S T R A D E R O R D EM B A R C A D E R O R D ALMA ST CO L O R A D O A V E S A N A N T O N I O R D CH A R L E S T O N R D OR E G O N E X P W Y LOUIS RD MIDDLEFIELD RD ALMA ST ST A N F O R D A V E ARBORETU M R D S A N D H I L L R D EA S T M E A D O W D R PA G E M I L L E X P W Y UN I V E R S I T Y A V E EL CAMINO REAL F A B I A N W A Y WEST BA Y S H O R E R D EL CAMINO R E A L JUNIPERO SERRA BLVD LY T T O N A V E HO M E R A V E PAR K I N S O N A V E COYO T E H I L L R D HANSEN WY EV E R E T T A V E COWPER ST BRYANT ST HA W T H O R N E A V E FO R E S T A V E PARK CO L L E G E A V E QU A R R Y R D P A L M D R BLVD LA M B E R T A V E PARK BLVD HANOVER ST PORTER RD BN AKBT AS AL BV CD BF CA AE BY BX BH BU AO BW AF AN ACAD BI BB AI AA AQ AG AU AZ BA BE AY BG BJ AB AH AJ AP STANFORD CO CN CI CR AA UNDERGROUND FIBER OPTIC BACKBONE 1000' 1 mi. N C A L I F O R N I A A V E DA DB DC EMBARCA D E R O W Y FABER PL HANSEN WY CA L I F O R N I A A V E OVERHEAD FIBER OPTIC BACKBONE DF DM DO DN DQ DT DV AM BM CT BO DG CF DK SP AR CB CS CM DP AW CG BL AV BK CHBR AX AT1 CZ DE DH AT2 DU CJ BS DS DW CK CE BP DR DX BZ DI DJ WAVERLEY ST AV E ALMA ST EV E R E T T C T TASSO ST TASSO ST RU T H V E N A V E BR Y A N T C T LY T T O N A V E HIGH ST EV E R E T T A V E RAMONA ST EMERSON ST FLORENCE ST PA U L S E N HA M I L T O N A V E GILMAN ST DOWNING LN KIPLING ST SCOTT ST AD D I S O N A V E ENC I N A A V E HOM E R A V E URB A N L N WEL L S A V E EL CAMINO R E A L COWPER ST BRYANT ST HA W T H O R N E A V E AW CG BL AV BK CHBR AX AT1 CZ DE DH AT2 DU CJ BS DS DW FIBER OPTIC BACKBONE CITY OF PALO ALTO UTILITIES MIDDLEFIELD RDMIDDLEFIELD RD WAVERLEY ST HARVARD ST WAVERLEY ST CH A N N I N G MANAGER UTILITIES City of Palo Alto 1/17/2013 MIKE MINTZ / PD NTS TOM TING SCALE:DRAWN: ELECTRIC ENGINEERING FIBER OPTIC BACKBONE APPROVED: REV : JAN 2013 ATTACHMENT E - 57 - APPENDIX 1 System Improvements CITY OF PALO ALTO FISCAL YEAR 2016 CAPITAL BUDGET 415 Fiber Optic System Rebuild Fiber Optic System Rebuild Description This system capacity improvement project rebuilds portions of the "dark" fiber optic network around Palo Alto which, in turn, is leased to parties providing telecommunication services to cit- izens and businesses in Palo Alto. The rebuild projects will install new aerial duct or substruc- tures (conduit and boxes), and additional fiber backbone cable to increase capacity for sections of the dark fiber ring that are at or near capacity, and allow the Utilities Department to meet customer requests for service. The rebuild project areas are mainly comprised of the Stanford Research Park, Palo Alto Internet Exchange, and Downtown Areas. Justification The Dark Fiber system was constructed in the early 1990s and started leasing fibers to custom- ers in 1996. Since that time several sections of the dark fiber system have reached capacity and limited the City's ability to serve its customers. This project improves the ability to maintain a competitive market for telecommunications in Palo Alto, accelerating the pace at which high quality, low cost, advanced telecommunications services are delivered to the residents and businesses of Palo Alto. Work included in the project is intended to increase system capac- ity and improve system reliability. Fund: Fiber Optics Category: System Improvements Project Location: Various locations Managing Department: Utilities Initial Project Start: Spring 2016 Initial Project Completion: Spring 2018 Revised Project Start: Revised Project Completion: Project Number: FO-16000 Fiber optic splice closer ready for inspection and work Funding Sources Schedule Funding Source Prior Years FY 2015 Budget FY2015 Est.FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 5 Year CIP Total Beyond 5 Year CIP Total Fiber Optics Fund 0 0 0 1,150,000 1,250,000 0 0 0 2,400,000 0 2,400,000 Total 0 0 0 1,150,000 1,250,000 0 0 0 2,400,000 0 2,400,000 ATTACHMENT F - 58 - APPENDIX 1 System Improvements 416 CITY OF PALO ALTO FISCAL YEAR 2016 CAPITAL BUDGET Operating Impact Expenditure Schedule Project Phase Prior Years FY 2015 Budget FY2015 Est.FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 5 Year CIP Total Beyond 5 Year CIP Total Construction 0 0 0 1,150,000 1,250,000 0 0 0 2,400,000 0 2,400,000 Total 0 0 0 1,150,000 1,250,000 0 0 0 2,400,000 0 2,400,000 Relationship to Comprehensive Plan Primary Connection Element: Business & Economics Section: Growth Goal: B-3 Policy: B-13 Program: B-4 Potential Board/Commission Review: Architectural Review Board Utilities Oversight Committee Environmental Impact Analysis: This project is expected to have a possible exemption from CEQA under Section 15301. ATTACHMENT F - 59 - APPENDIX 1 Capacity Improvements CITY OF PALO ALTO FISCAL YEAR 2016 CAPITAL BUDGET 407 Fiber Optics Network System Improvements Fiber Optics Network System Improvements Description This project will improve reliability within the fiber optic network system. Included in the project is the installation of aerial duct and new fiber cable to replace cable and cable insulation dam- aged by wildlife. A section of damaged overhead cable in the downtown ring will be moved underground. Justification This project promotes the formation of a competitive market for telecommunications in Palo Alto, accelerating the pace at which high-quality, low-cost, advanced telecommunications ser- vices are delivered to the residents and businesses of Palo Alto. It does so while limiting the negative impacts on Palo Alto's environment by using pre-existing conduit and poles. Finally, it enables the Fiber Optics Fund to generate additional revenues through the enhanced use of its conduit and poles. Supplemental Information The Fiber Optics Utility continues to add capital improvements in the form of additional fiber in congested areas as well as areas of predicted growth. Fund: Fiber Optics Category: Capacity Improvements Project Location: Various locations Managing Department: Utilities Initial Project Start: Recurring Initial Project Completion: Recurring Project Number: FO-10001 Fiber optic crew installing new fiber optic cables Funding Sources Schedule Funding Source Prior Years FY 2015 Budget FY2015 Est.FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 5 Year CIP Total Beyond 5 Year CIP Total Fiber Optics Fund N/A 673,990 487,071 200,000 200,000 200,000 200,000 200,000 1,000,000 0 N/A Total N/A 673,990 487,071 200,000 200,000 200,000 200,000 200,000 1,000,000 0 N/A ATTACHMENT F - 60 - APPENDIX 1 Capacity Improvements 408 CITY OF PALO ALTO FISCAL YEAR 2016 CAPITAL BUDGET Operating Impact Expenditure Schedule Project Phase Prior Years FY 2015 Budget FY2015 Est.FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 5 Year CIP Total Beyond 5 Year CIP Total Construction N/A 673,990 487,071 200,000 200,000 200,000 200,000 200,000 1,000,000 0 N/A Total N/A 673,990 487,071 200,000 200,000 200,000 200,000 200,000 1,000,000 0 N/A Relationship to Comprehensive Plan Primary Connection Element: Business & Economics Section: Growth Goal: B-3 Policy: B-13 Program: B-4 Potential Board/Commission Review: Architectural Review Board Utilities Oversight Committee Environmental Impact Analysis: This project is expected to have a possible exemption from CEQA under Section 15302. ATTACHMENT F - 61 - APPENDIX 1 3/1/2014 7/1/2015 4/1/2014 7/1/2014 10/1/2014 1/1/2015 4/1/2015 March 2014 FY 2015 Base Budget Completed & Includes: SEIU 2% on 7/1/14; 2.5% on 12/1/14 SEIU Market Study* March 17, 2014 SEIU Contract Approved*: 2% on 7/1/14 2.5% on 12/1/14 July 1, 2014 Start of FY 2015 March 2015 FY 2016 Base Budget Completed & Includes: Mgmt 2.5% salary, 1.5% merit; SEIU 2%July 1, 2015 Start of FY 2016 12/18/2014 Mgmt Comp Plan Approved** 2% on 7/1/14 Market study Notes: * In development of the FY 2015 Proposed Budget, the SEIU 2% salary increase effective July 1st and the 2.5% salary increase effective December 1st are included in the General Fund Departmental Budgets. In non-General Fund Departments, such as Utilities and Public Works Enterprise Funds, these approved increases were not included in the department budgets. In addition, the SEIU Market Study was included in the General Fund Non-Departmental Reserve and was not allocated to department budgets. ** Changes to the Management Compensation Plan, the 2% salary increase effective July 1, 2014 and compensation alignment resulting from the Management Market Study, were not assumed in the FY 2015 department budgets and was included in the General Fund Non-Departmental Salary Reserve. ATTACHMENT G Timeline of Budget Process and Labor Contract Approval Annual Budget Process Labor Contract Approval - 62 - APPENDIX 1 Attachment H Capital Budget Reappropriations Capital Improvement Fund Project ID Project Title FY 2016 Funding: Proposed Capital Budget Document FY 2016 Funding Adjustment FY 2016 Revised Funding: Proposed Capital Budget AC‐14000 Art Center Auditorium Audio, Visual, and Furnishings $0 $92,347 $92,347 OS‐00001 Open Space Trails and Amenities $184,000 $6,000 $190,000 PE‐09010 Library and Community Centers‐ Temporary Facilities $0 $124,813 $124,813 PE‐13011 Charleston/Arastradero Corridor Project $671,780 $38,452 $710,232 PE‐13016 El Camino Park Restoration $66,423 $92,234 $158,657 PE‐13017 El Camino Median Landscape Improvements $352,153 $26,073 $378,226 PE‐14015 Lucie Stern Building $412,374 $2,456,117 $2,868,491 PE‐15020 Civic Center Waterproofing Study and Repairs $203,096 $78,492 $281,588 PE‐15022 Palo Alto Community Gardens Irrigation Systems $225,422 $50,394 $275,816 PE‐15029 Baylands Nature Interpretive Center Facility Improvements $446,187 $28,959 $475,146 PE‐86070 Street Maintenance $7,388,034 $1,687,193 $9,075,227 PF‐00006 Roofing Replacement, $441,823 $284,831 $726,654 PF‐010003 Building Systems Improvements $241,838 $41,631 $283,469 PF‐02022 Facility Interior Finishes Replacement $788,215 $51,334 $839,549 PF‐14002 Fire Station 1 Improvements $320,215 ($39,189) $281,026 PF‐14003 University Avenue Parking Improvements $397,380 $20,372 $417,752 PF‐15000 Rinconada Pool Locker Room $441,215 $23,068 $464,283 PF‐15005 Emergency Facility Improvements $0 $198,770 $198,770 PF‐93009 Americans with Disabilities Act Compliance $502,118 ($202,352) $299,766 PG‐06001 Tennis and Basketball Court Resurfacing $317,000 ($83,950) $233,050 PG‐06003 Benches, Signage, Fencing, Walkways, and Perimeter Landscaping $185,000 ($13,343) $171,657 PG‐09003 Park Maintenance Shop Remodel $0 $10,000 $10,000 PG‐12001 Stanford/Palo Alto Playing Fields $50,000 ($47,200) $2,800 - 63 - APPENDIX 1 Attachment H Netting Project ID Project Title FY 2016 Funding: Proposed Capital Budget Document FY 2016 Funding Adjustment FY 2016 Revised Funding: Proposed Capital Budget PG‐12002 Golf Course Tree Maintenance $0 $6,818 $6,818 PL‐00026 Safe Routes to School $116,782 $120,388 $237,170 PL‐04010 Bicycle and Pedestrian Transportation Plan Implementation Projects $2,788,578 ($194,149) $2,594,429 PL‐05030 Traffic Signal and Intelligent Transportation System Upgrades $189,303 $151,658 $340,961 PL‐11001 Dinah Summerhill Pedestrian Improvements $0 $116,052 $116,052 PO‐05054 Street Lights Improvements $418,446 ($41,160) $377,286 PO‐11000 Sign Reflectivity Upgrade $134,000 $40,953 $174,953 PO‐11001 Thermoplastic Lane Marking $94,822 $16,500 $111,322 PO‐89003 Sidewalk Repairs $2,274,451 $238,435 $2,512,886 Total Capital Improvement Fund $19,650,655 $5,380,541 $25,031,196 Storm Drainage Fund Project ID Project Title FY 2016 Funding: Proposed Capital Budget Document FY 2016 Funding Adjustment FY 2016 Revised Funding: Proposed Capital Budget SD‐06101 Storm Drain System Replacement and Rehabilitation $1,737,343 $9,874 $1,747,217 SD‐11101 Channing Avenue/Lincoln Avenue Storm Drain Improvements $150,809 $3,155,342 $3,306,151 Total Storm Drainage Fund $1,888,152 $3,165,216 $5,053,368 - 64 - APPENDIX 1 Attachment H Vehicle Replacement and Maintenance Fund Project ID Project Title FY 2016 Funding: Proposed Capital Budget Document FY 2016 Funding Adjustment FY 2016 Revised Funding: Proposed Capital Budget VR‐06801 Citywide Fuel Transaction and Inventory Management System Replacement $94,981 ($46,529) $48,452 VR‐14002 Municipal Services Center Fuel Station Demolition $188,695 ($154,183) $34,512 VR‐11000 Scheduled Vehicle and Equipment Replacement‐ Fiscal Year 2011 $0 $325,177 $325,177 VR‐14000 Scheduled Vehicle and Equipment Replacement‐ Fiscal Year 2014 $149,991 ($88,358) $61,633 VR‐15000 Scheduled Vehicle and Equipment Replacement‐ Fiscal Year 2015 $2,216,442 ($141,989) $2,074,453 Total Vehicle Replacement and Maintenance Fund $2,650,109 ($105,882) $2,544,227 Electric Fund Project ID Project Title FY 2016 Funding: Proposed Capital Budget Document FY 2016 Funding Adjustment FY 2016 Revised Funding: Proposed Capital Budget EL‐89031 Communications System Improvements $100,000 $168,006 $268,006 Total Electric Fund $100,000 $168,006 $268,006 - 65 - APPENDIX 1 FINANCE COMMITTEE MEETING 5/5/2015 [X] Placed Before Meeting [ ] Received at Meeting 5/5/2015 City of Palo Alto M E M O R A N D U M TO: Finance Committee DATE: May 5, 2015 SUBJECT: Additional Information Pertaining to the Fiscal Year 2016 Proposed Budget Operating Budget Page References for May 5th and May 7th Meetings Due to timing of the Council packet, page numbers and recommended timeframes for discussion were not included on the Finance Committee agendas for the May 5th and May 7th Finance Committee meetings. Page numbers for this week’s meetings can be found below: Tuesday, May 5 1)FY 2016 Proposed Budget overview 5:30‐6:15 2)Council Appointed Officials and Council 6:15‐6:45 a)City Attorney, Operating Budget pp. 138‐145 b)City Clerk, Operating Budget pp. 158‐166 c)City Council, Operating Budget pp. 168‐170 d)City Manager, Operating Budget pp. 172‐182 3)Community Services Department, Operating Budget pp. 210‐228 6:45‐7:30 4)Human Resources Department, Operating Budget pp. 248‐258 7:30‐8:00 a)General Liability Fund, Operating Budget pp. 259‐261 b)Employee Benefit Funds i)General Benefits Fund, Operating Budget pp. 464‐468 ii)Workers Compensation Fund, Operating Budget pp. 262‐265 5)Retiree Health Benefit Fund, Operating Budget pp. 470‐471 8:00‐8:15 6)Non‐Departmental, Operating Budget pp. 458‐460 8:15‐8:30 Thursday, May 7 1)City Auditor, Operating Budget pp. 146‐157 5:30‐5:45 2)Office of Sustainability, Operating Budget pp. 184‐185 5:45‐6:00 3)Utilities Department 6:00‐7:00 a)Electric Fund i)Operating Budget, pp. 407‐418 ii)Capital Budget, pp. 297‐396 b)Fiber Optics Fund APPENDIX 2 FINANCE COMMITTEE MEETING 5/5/2015 [X] Placed Before Meeting [ ] Received at Meeting 5/5/2015 i) Operating Budget, pp. 419‐425 ii) Capital Budget, pp. 397‐416 c) Gas Fund i) Operating Budget, pp. 426‐437 ii) Capital Budget, pp. 417‐456 d) Wastewater Collection Fund i) Operating Budget, pp. 438‐445 ii) Capital Budget, pp. 489‐528 e) Water Fund i) Operating Budget, pp. 446‐456 ii) Capital Budget, pp. 561‐616 4) Public Safety Department 7:00‐8:30 a) Fire (Eric), Operating Budget pp. 311‐324 b) Office of Emergency Services (Ken), Operating Budget pp. 325‐332 c) Police (Dennis), Operating Budget pp. 333‐345 Summary of Position Changes (Agenda Item #1) The Fiscal Year 2016 Proposed Budget was transmitted to Council on April 27th. To facilitate the Finance Committee’s review of recommended position additions, this memorandum provides summary worksheets. The attached worksheet, Fiscal Year 2016 Proposed Operating Budget Position Increases/Decreases – Fund (Attachment A), is a summary listing of all proposed position additions organized by fund. Also attached is the Fiscal Year 2016 Proposed Operating Budget Position Increases/Decreases – Department where position additions are organized by department. In total, the proposed budget includes net 13.3 additional Full‐Time Equivalents (FTEs), of which 10.9 FTE are recommended to be added in the General Fund, 0.7 FTE in the Enterprise Funds, and 1.7 FTE in Other Funds. Revised Proposed Operating Budget Pages Citywide Expense (Agenda Item #1) To correct clerical errors, staff has updated the Citywide Expense table in the Proposed Operating Budget, which changes the Fiscal Year 2016 citywide expense budget slightly from $553.7 million to $553.6 million. Attachment B replaces p. 57 of the Proposed Operating Budget document. The corrections include changing the following in the FY 2016 Proposed Budget column: 1) Facilities and Equipment from $1.048M to $0.676M; 2) Salaries and Benefits from $158.897M to $158.597M; 3) Debt Service from $21.132M to $20.957M; 4) Capital Improvement from $103.142M to $104.354M; and 5) the total from $553.730M to $553.556M. General Fund Expense by Category (Agenda Item #1) Attachment C of this memorandum replaces the pie chart on p. 86 of the Proposed Operating Budget with the correct data. APPENDIX 2 FINANCE COMMITTEE MEETING 5/5/2015 [X] Placed Before Meeting [ ] Received at Meeting 5/5/2015 General Benefits Fund Budget Summary (Agenda Item #4) The Budget Summary on p. 465 in the Proposed Operating Budget incorrectly captions Pension expense in the General Benefits Fund as Retiree Medical Expense. The correct page can be found in Attachment D of this memorandum. Public Works Department (5/14 Finance Committee Meeting, Agenda Item #2) Attachment E of this memorandum replaces a series of pages in the Proposed Operating Budget for the Public Works Department to correct clerical errors. Pages 356, 357, 368, 369, 377, and 388 are replaced to align the Staffing Tables with the information shown in the Table of Organization. Page 376 and 378 are replaced to correctly reflect debt service and Capital Improvement Program expenses (Total Dollars by Expense Category table and Adjustments to the Cost of Ongoing Activities). Revised Proposed Capital Budget Pages Airport Capital (5/14 Finance Committee Meeting, Agenda Item #2e) Attachment F of this memorandum replaces the Airport Apron Reconstruction Project to reflect the projected expenditure level in Fiscal Year 2016 and corresponding reimbursement from the Federal Aviation Administration in Fiscal Year 2017. DEPARTMENT HEAD: LALO PEREZ Director, Administrative Services/CFO CITY MANAGER: JAMES KEENE City Manager APPENDIX 2 ATTACHMENT A Fiscal Year 2016 Proposed Operating Budget Full Time Position Increases/Decreases ‐ Fund Fund Department Job Title FTE Employee Group Salary and Benefit Costs Notes General Fund Auditor's Office Performance Auditor II 0.50 MGMT $75,259 Increase position from 0.50 FTE to 1.00 FTE General Fund CSD Administrative Associate III 0.25 SEIU $22,993 Increase position from 0.75 FTE to 1.00 FTE General Fund CSD Program Assistant 0.25 SEIU $33,230 Increase position from 0.75 FTE to 1.00 FTE General Fund CSD Recreation Superintendent 1.00 MGMT $178,476 New Job Classification General Fund Development Services Assistant Chief Building Official 1.00 MGMT $236,522 New Job Classification General Fund Development Services Code Enforcement Lead 0.20 SEIU $22,927 New Job Classification; Other 0.80 FTE in PCE General Fund General Fund Development Services Manager Planning 1.00 MGMT $188,983 General Fund Development Services Planner ‐0.70 SEIU ($96,031) Other 0.30 FTE in Utilities Enterprise Funds General Fund Library Librarian 0.30 SEIU $34,428 Increase position from 0.70 to 1.00 FTE General Fund Library Library Specialist 1.00 SEIU $93,298 General Fund Library Supervising Librarian 2.00 SEIU $228,338 New Job Classification General Fund PCE Code Enforcement Lead 0.80 SEIU $96,909 New Job Classification; Other 0.20 FTE in Development Services General Fund General Fund PCE Parking Operations Lead 0.30 SEIU $44,656 New Job Classification; Other 0.70 FTE in PCE Other Funds General Fund*PCE Traffic Operations Lead 1.00 SEIU $78,924 New Job Classification General Fund Public Safety Senior Technologist 1.00 MGMT $182,981 0.50 FTE in Fire; 0.50 FTE in Police General Fund PW Engineer 0.10 SEIU $15,270 Other 0.90 FTE in PW General Fund Capital General Fund PW Facilities Manager 0.90 MGMT $162,924 New Job Classification; Other 0.10 FTE in PW General Fund Capital Total General Fund**10.90 $1,600,087 * Position will not be filled until January 2016 ** Does not include 0.13 FTE and associated funding reallocation from the General Fund to Other Funds. 5/5/2015 APPENDIX 2 ATTACHMENT A Fiscal Year 2016 Proposed Operating Budget Full Time Position Increases/Decreases ‐ Fund Fund Department Job Title FTE Employee Group Salary and Benefit Costs Notes General Fund Capital PW Engineer 0.90 SEIU $137,427 Other 0.10 FTE in PW General Fund General Fund Capital PW Facilities Manager 0.10 MGMT $18,103 New Job Classification; Other 0.90 FTE in PW General Fund Total General Fund Capital 1.00 $155,530 Residential Parking Permit Program Fund PCE Parking Operations Lead 0.30 SEIU $41,156 New Job Classification; Other 0.30 FTE in PCE General Fund University Avenue Parking Permit Fund PCE Parking Operations Lead 0.40 SEIU $54,875 New Job Classification; Other 0.30 FTE in PCE General Fund Total Other Funds***1.70 $251,561 Airport Fund PW Manager Maintenance Operations 1.00 MGMT $191,345 Electric Fund Utilities Planner ‐0.15 SEIU ($20,578) Other 0.70 FTE in Development Services in General Fund Water Fund Utilities Planner ‐0.15 SEIU ($20,578) Other 0.70 FTE in Development Services in General Fund Total Enterprise Funds****0.70 $150,189 Total All Funds 13.30 $2,001,837 *** Does not include 2.32 FTE and associated funding reallocation to Other Funds from the General Fund (0.13 FTE) and from Enterprise Funds (2.19 FTE). **** Does not include 2.19 FTE and funding reallocation from Enterprise Funds to Other Funds. 5/5/2015 APPENDIX 2 ATTACHMENT A Fiscal Year 2016 Proposed Operating Budget Full Time Position Increases/Decreases ‐ Department Department Job Title FTE Fund Employee Group Salary and Benefit Costs Notes Auditor's Office Performance Auditor II 0.50 General Fund MGMT $75,259 Increase position from 0.50 FTE to 1.00 FTE CSD Administrative Associate III 0.25 General Fund SEIU $22,993 Increase position from 0.75 FTE to 1.00 FTE CSD Program Assistant 0.25 General Fund SEIU $33,230 Increase position from 0.75 FTE to 1.00 FTE CSD Recreation Superintendent 1.00 General Fund MGMT $178,476 New Job Classification Total CSD 1.50 $234,699 Development Services Assistant Chief Building Official 1.00 General Fund MGMT $236,522 New Job Classification Development Services Code Enforcement Lead 0.20 General Fund SEIU $22,927 New Job Classification; Other 0.80 FTE in PCE Development Services Manager Planning 1.00 General Fund MGMT $188,983 Development Services Planner ‐0.70 General Fund SEIU ($96,031) Other 0.30 FTE in Utilities Total DS 1.50 $352,401 Library Librarian 0.30 General Fund SEIU $34,428 Increase position from 0.70 to 1.00 FTE Library Library Specialist 1.00 General Fund SEIU $93,298 Library Supervising Librarian 2.00 General Fund SEIU $228,338 New Job Classification Total Library 3.30 $356,064 * Position will not be filled until January 2016 5/5/2015 APPENDIX 2 ATTACHMENT A Fiscal Year 2016 Proposed Operating Budget Full Time Position Increases/Decreases ‐ Department Department Job Title FTE Fund Employee Group Salary and Benefit Costs Notes PCE Code Enforcement Lead 0.80 General Fund SEIU $96,909 New Job Classification; Other 0.20 FTE in Development Services PCE Parking Operations Lead 1.00 General Fund/ Other Funds SEIU $140,687 0.70 FTE in Other Funds; 0.30 FTE in General Fund PCE Traffic Operations Lead* 1.00 General Fund SEIU $78,924 New Job Classification Total PCE 2.80 $316,520 Public Safety Senior Technologist 1.00 General Fund MGMT $182,981 0.50 FTE in Fire; 0.50 FTE in Police PW Engineer 1.00 General Fund/ GF Capital SEIU $152,697 0.90 FTE in GF Capital; 0.10 FTE in General Fund PW Facilities Manager 1.00 General Fund/ GF Capital MGMT $181,027 New Job Classification; 0.90 FTE in General Fund; 0.10 FTE in General Fund Capital PW Manager Maintenance Operations 1.00 Airport Fund MGMT $191,345 Total PW 3.00 $525,069 Utilities Planner ‐0.30 Electric/Water Funds SEIU ($41,156)Other 0.70 FTE in Development Services Total All Departments*13.30 $2,001,837 * Does not include 2.32 FTE and associated funding reallocation to Other Funds from the General Fund (0.13 FTE) and from Enterprise Funds (2.19 FTE). 5/5/2015 APPENDIX 2 CITYWIDE FUNDS OVERVIEW CITYWIDE FUNDS OVERVIEW • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET 56 Citywide Revenue by Category $0 $50 $100 $150 $200 $250 $300 3 Year Trend ‐Citywide Revenues by Category ($Millions) FY 2014 Actuals FY 2015 Adopted FY 2016 Proposed 1 2 3 4 5 6 7 8 9 10 11 12 13 14 $486.8 Million/FY 2016 Proposed 1. Other Taxes and Fines ‐ $2.23/0.46% 2. Transient Occupancy Tax ‐ $18.80/3.86% 3. From Other Agencies ‐ $2.9/0.60% 4. Sales Taxes ‐ $27.63/5.68% 5. Documentary Transfer Tax ‐ $6.85/1.41% 6. Charges for Services ‐ $28.07/5.77% 7. Return on Investments ‐ $8.14/1.67% 8. Other Revenue ‐ $31.53/6.48% 9. Permits and Licenses ‐ $9.72/2.00% 10. Property Taxes ‐ $39.34/8.08% 11. Utility Users Tax ‐ $11.19/2.30% 12. Net Sales ‐ $272.0/55.87% 13. Charges to Other Funds ‐ $12.92/2.65% 14. Rental Income ‐ $15.47/3.18% APPENDIX 2 CITYWIDE FUNDS OVERVIEW 57 CITYWIDE FUNDS OVERVIEW • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET Total Citywide Expense by Category FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change $ FY 2016 Change % General Expense 15,957 20,296 19,475 18,119 (1,357)(7.0)% Rents & Leases 10,172 11,114 12,405 13,275 870 7.0% Net Transfers (9,315)(299)3,195 11,056 7,861 246.0% Allocated Charges 45,818 41,600 42,533 45,766 3,233 7.6% Contract Services 24,846 26,856 33,047 36,053 3,006 9.1% Facilities & Equipment (1,322)947 669 676 7 1.0% Salary & Benefits 134,364 140,204 150,058 158,597 8,539 5.7% Supplies & Material 6,421 6,594 7,685 8,215 529 6.9% Debt Service 16,996 18,090 21,023 20,957 (66)(0.3)% Capital Improvement Program 71,165 71,194 53,020 104,354 51,334 96.8% Utility Purchase 113,050 119,622 127,231 136,488 9,257 7.3% Total 428,152 456,219 470,341 553,556 83,213 17.7% APPENDIX 2 GENERAL FUND OVERVIEW GENERAL FUND OVERVIEW • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET 86 General Fund Expense by Category $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 3 Year Trend ‐General Fund Expenses by Category ($Millions) FY 2014 Actuals FY 2015 Adopted FY 2016 Proposed 1 2 3 4 5 6 7 8 9 $185.1 Million/FY 2016 Proposed 1. Salary & Benefits ‐ $112.8/61% 2. Contract Services ‐ $17.2/9.3% 3. Supplies & Material ‐ $3.7/2% 4. General Expense ‐ $10.3/5.6% 5. Debt Service ‐ $0.4/0.2% 6. Rents & Leases ‐ $1.5/0.8% 7. Facilities & Equip ‐ $0.6/0.3% 8. Allocated Charges ‐ $16.3/8.8% 9. Transfers ‐ $22.4/12.1% APPENDIX 2 GENERAL FUND OVERVIEW 87 GENERAL FUND OVERVIEW • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET Total General Fund Expense by Department FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change $ FY 2016 Change % Administrative Services 7,042 7,093 7,175 7,635 460 6.4% City Attorney 2,412 2,560 2,578 3,101 524 20.3% City Auditor 984 1,016 1,065 1,175 110 10.3% City Clerk 1,278 1,113 1,276 1,328 52 4.1% City Council 393 494 432 450 18 4.1% City Manager 2,437 2,770 2,728 2,758 30 1.1% Community Services 21,513 22,542 22,764 24,755 1,991 8.7% Development Services ——10,535 11,901 1,366 13.0% Library 6,902 7,340 7,521 8,555 1,034 13.7% Non-Departmental 7,793 8,350 13,274 8,595 (4,679)(35.2)% Office of Sustainability 45 93 273 613 340 124.5% Human Resources 2,855 3,129 3,264 3,555 291 8.9% Planning and Community Environment 12,041 13,264 7,016 8,900 1,884 26.9% Public Safety 60,193 62,437 62,054 64,493 2,439 3.9% Public Works 13,108 13,183 13,397 14,868 1,471 11.0% Total 138,997 145,382 155,350 162,686 7,331 4.7% Transfer to Infrastructure 22,258 17,234 13,659 18,688 5,029 36.8% Operating Transfers-Out 2,832 1,580 2,076 3,689 1,613 77.7% Total 164,089 164,197 171,086 185,133 13,973 8.2% APPENDIX 2 GENERAL BENEFITS FUND GENERAL BENEFITS FUND • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET 464 GENERAL BENEFITS FUNDGeneral Benefits Fund Overview The General Benefits Fund includes funding for employee pension benefits, health benefits (medical, dental, and vision) for current City employees and several other benefits, such as life insurance and the employee assistance program. Funding for retired employees healthcare costs is reflected in the Retiree Health Benefits Fund. There is an overall net $3.95 million increase in employee pension, healthcare costs, and other benefits costs from the Fiscal Year 2015 Adopted Budget amount of $46.35 million to the Fiscal Year 2016 Proposed Budget amount of $50.30 million. This increase is primarily driven by pen- sion rate and health care cost increases and a citywide net increase of 7.3 positions, or less than 1 percent, from 1,033.80 positions in the Fiscal Year 2015 Adopted budget to 1,041.10 positions in the Fiscal Year 2016 Proposed budget. PENSION COSTS CalPERS annually prepares an actuarial analysis to determine the City’s pension liability and annual required contribution for miscellaneous and safety employees. This budget includes the most recent pension rates from CalPERS which, compared to the FY 2015 rates, represent a 1.6 percentage point increase in pension contribution rate for miscellaneous groups (from 26.1 per- cent to 27.7 percent) and 2.4 percentage point increase in the pension contribution rate for safety groups (from 39.5 percent to 41.9 percent) for FY 2016. With the passage of the California Public Employees’ Pension Reform Act (PEPRA), the City has three retirement tiers for Miscellaneous and Safety employees. As of October 2014, 25 percent of the City’s employees are either in Tier 2 and Tier 3. HEALTHCARE The Fiscal Year 2016 budget for healthcare is based on the health plan choices employees made for calendar year 2015. For calendar year 2016, the budget assumes an 8 percent increase in medical costs for labor groups on the 90/10 medical cost plan and a 4 percent annual health care cost increase for the labor groups on the flat rate contribution structure. Further, this bud- get includes a 4 percent increase in dental and vision costs. APPENDIX 2 GENERAL BENEFITS FUND 465 GENERAL BENEFITS FUND • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET Budget Summary FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change $ FY 2016 Change % Revenues Return on Investments 201,579 236,181 274,300 231,100 (43,200)(15.7%) Other Revenue 40,433,007 41,859,826 46,146,886 50,418,919 4,272,033 9.3% Total Revenues 40,634,586 42,096,007 46,421,186 50,650,019 4,228,833 9.1% Dollars by Category Salary & Benefits Healthcare 15,894,757 16,734,070 17,391,945 19,100,124 1,708,179 9.8% Other Benefits 677,164 623,267 820,828 1,066,925 246,097 30.0% Pension 22,214,555 24,799,284 28,034,505 30,623,592 2,589,087 9.2% Salary 1,441,160 (105,553)—19,968 19,968 — Total Salary & Benefits 40,227,635 42,051,069 46,247,278 50,810,609 4,563,331 9.9% Contract Services 65,994 148,596 105,475 192,125 86,650 82.2% Supplies & Material 764 ————— General Expense 897 2,351 ———— Total Dollars by Expense Category 40,295,290 42,202,016 46,352,753 51,002,734 4,649,981 10.0% Budget Reconciliation Positions Expenditures Revenues Net Prior Year Budget —46,352,753 46,421,186 (68,433) Base Adjustments Adjustments to Costs of Ongoing Activities Citywide Pension Adjustments — 2,560,043 — 2,560,043 Citywide Healthcare Insurance Adjustments — 1,398,543 — 1,398,543 Citywide Dental Insurance Adjustments — 280,752 — 280,752 Life Insurance and Deffered Compensation Fees Adjustments — 144,830 — 144,830 Citywide Employee Paid Retirement Adjustments — 29,044 — 29,044 Citywide Vision Insurance Adjustments — 28,884 — 28,884 APPENDIX 2 PUBLIC WORKS PUBLIC WORKS • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET 356 Other Revenue 59,567 18,400 6,000 6,000 ——% Permits and Licenses 1,180,804 867,513 771,667 878,367 106,700 13.8% Total Revenues 3,265,063 2,894,514 2,843,697 3,127,004 283,307 10.0% Positions by Division General Fund Administration 2.95 2.95 2.95 2.95 ——% General Fund Engineering Services 9.90 10.44 6.55 3.47 (3.08)(47.02)% General Fund Public Services: Streets 13.95 14.88 14.88 18.83 3.95 26.52% General Fund Public Services: Structures and Grounds 18.98 18.34 18.34 18.01 (0.33)(1.80)% General Fund Public Services: Trees 13.31 13.31 12.93 12.93 ——% Total 59.09 59.92 55.65 56.19 0.54 0.96% Staffing FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change $ FY 2016 Salary Administrative Assistant 1.00 1.00 1.00 1.00 —78,091 Administrative Associate I 0.50 0.60 0.60 0.60 —33,135 Administrative Associate II 2.85 2.65 2.63 2.63 —172,697 Assistant Director Public Works 1.30 1.30 1.28 0.85 (0.43)134,851 Associate Engineer 0.10 0.30 0.30 0.30 —27,454 Building Serviceperson 1.00 1.00 1.00 1.00 —52,489 Building Serviceperson-Lead 2.00 1.80 1.80 1.80 —101,158 Cement Finisher ———3.00 3.00 219,084 Cement Finisher-Lead ———0.26 0.26 20,515 Coordinator Public Works Projects ———1.00 1.00 70,632 Director Public Works/City Engineer 1.00 1.00 1.00 1.00 —202,648 Electrician 1.00 0.80 0.80 0.80 —72,129 Engineer 0.30 0.30 0.30 0.40 0.10 41,302 Engineering Technician III 3.30 3.20 1.20 1.20 —95,220 Equipment Operator 3.46 3.46 3.46 3.46 —230,408 Budget Summary FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change $ FY 2016 Change % APPENDIX 2 PUBLIC WORKS 357 PUBLIC WORKS • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET Facilities Carpenter 1.00 1.00 1.00 1.00 —73,745 Facilities Maintenance-Lead 2.00 1.85 1.85 1.85 —166,650 Facilities Mechanic 6.00 5.55 5.55 5.55 —397,430 Facilities Painter 2.00 1.75 1.75 1.75 —129,054 Heavy Equipment Operator 1.90 2.13 2.13 2.33 0.20 176,183 Heavy Equipment Operator-Lead 0.85 0.85 0.85 0.85 —70,221 Inspector, Field Services 1.00 1.33 0.83 0.10 (0.73)8,540 Landscape Architect Park Planner ———0.10 0.10 11,769 Management Analyst 0.60 0.60 0.60 0.70 0.10 72,289 Manager Facilities ———0.90 0.90 103,359 Manager Maintenance Operations 2.10 1.95 1.95 1.20 (0.75)160,707 Manager Urban Forestry 1.00 1.00 0.96 0.96 —132,968 Planning Arborist 1.00 1.00 0.75 0.75 —77,583 Project Engineer 0.20 0.30 0.30 0.40 0.10 47,056 Project Manager 1.25 1.70 1.63 1.63 —152,851 Senior Engineer 1.10 2.10 1.47 0.57 (0.90)82,334 Senior Management Analyst 1.11 1.11 1.11 1.11 —150,573 Senior Project Manager 0.10 0.10 0.10 0.10 —14,571 Supervisor Inspection and Surveying 0.80 0.80 0.53 0.10 (0.43)11,387 Surveying Assistant 0.78 ————— Surveyor, Public Works 0.78 0.78 0.31 0.10 (0.21)8,643 Traffic Controller Maintainer-Lead 1.00 1.00 1.00 —(1.00)— Traffic Controller Maintainer I 1.94 1.94 1.94 1.94 —133,222 Traffic Controller Maintainer II 2.00 2.00 2.00 2.00 —127,151 Tree Maintenance Person 1.00 1.00 1.00 1.00 —72,104 Tree Trim/Line Clear 7.00 7.00 7.00 7.00 —496,965 Tree Trim/Line Clear-Lead 1.00 1.00 1.00 1.00 —75,941 Temporary/Hourly 1.77 2.67 2.67 1.90 (0.77)327,302 Total 59.09 59.92 55.65 56.19 0.54 4,832,411 Staffing FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change $ FY 2016 Salary APPENDIX 2 PUBLIC WORKS PUBLIC WORKS • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET 368 Manager Environmental Control Program 1.00 1.00 2.00 3.00 1.00 358,932 Manager Maintenance Operations 0.50 0.46 0.46 0.46 —61,604 Manager Solid Waste 1.00 1.00 1.00 1.00 —138,682 Program Assistant I 1.00 1.00 1.00 1.00 —66,624 Project Manager —0.20 0.20 0.20 —17,824 Senior Accountant 0.10 0.10 0.10 0.10 —11,192 Senior Engineer 0.10 ————— Senior Management Analyst 0.08 0.08 0.08 0.08 —9,947 Senior Technologist 0.11 0.11 0.11 —(0.11)— Street Maintenance Assistant 2.00 ————— Street Sweeper Operator 7.00 5.96 5.96 1.63 (4.33)110,961 Surveying Assistant 0.11 ————— Surveyor, Public Works 0.11 0.11 0.11 0.35 0.24 30,250 Zero Waste Coordinator 2.00 2.00 2.00 2.00 —164,113 Temporary/Hourly 2.44 2.59 2.64 1.63 (1.01)187,985 Total 26.47 21.95 22.00 15.20 (6.80)1,520,746 Staffing FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change $ FY 2016 Salary APPENDIX 2 PUBLIC WORKS 369 PUBLIC WORKS • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET Budget Reconciliation Positions Expenditures Revenues Net Refuse Fund Prior Year Budget 22.00 28,746,034 29,692,232 (946,198) Base Adjustments Adjustments to Costs of Ongoing Activities Salaries and benefits adjustment — 129,870 — 129,870 GreenWaste annual contract increase — 282,600 — 282,700 SmartStation annual contract increase — 112,500 — 113,280 Annualization of Street Sweeping Program Service Delivery Model Change (5.74) (584,827) — (584,827) SMaRT Station Debt Refinancing Savings — (59,802) — (59,802) Residential Refuse Hauling Service Rate Structural Modification — — 790,612 (790,612) LATP Rental Revenue — — 30,000 (30,000) City Hall rent allocated charges adjustment — (10,000) — (10,000) Utility costs allocated charges adjustment — 11,633 — 11,633 Residential Curbside Collection and Compositing Program — 790,880 — 790,880 Changes in capital costs — 1,282,553 150,000 1,132,553 Temporary staffing levels adjustment (1.01) 58,414 — 58,414 Reallocation of 0.05 Chief Sustainability Officer to the General Fund (0.05) (7,635) — (7,635) Interest Earnings Adjustment — — (8,400) 8,400 Reclassification of Management Analyst to Manager of Environmental Control Programs —7,733 —7,733 General Fund cost allocation plan allocated charges adjustment —824 —824 APPENDIX 2 PUBLIC WORKS PUBLIC WORKS • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET 376 Workers' Compensation 2,123 7,609 2,703 6,434 3,731 138.0% Total Salary & Benefits 1,022,145 1,239,863 1,191,750 1,276,448 84,698 7.1% Allocated Charges 932,820 739,196 906,323 995,955 89,632 9.9% Capital Improvement Program 2,924,121 1,269,045 2,809,584 5,654,530 2,844,946 91.5% Contract Services 397,720 367,002 471,379 460,754 (10,625)(2.3)% Debt Service 464,920 435,711 947,283 949,300 2,017 8.4% Facilities & Equipment 5,198 —7,621 7,621 ——% General Expense 11,138 9,234 167,900 171,900 4,000 2.4% Operating Transfers-Out 12,662 41,757 6,142 5,970 (172)(2.8)% Rents & Leases —33,102 39,963 45,079 5,116 12.8% Supplies & Material 110,499 55,339 95,000 95,000 ——% Utility Purchase 36 —————% Total Dollars by Expense Category 5,881,258 4,190,250 6,642,945 9,662,557 3,019,612 45.5% Revenues Charges for Services 94,167 114,308 90,000 90,000 ——% Net Sales 5,955,743 6,064,331 5,953,615 6,112,770 159,155 2.7% Operating Transfers-In 13,473 13,723 ————% Other Revenue 9,728 5,553 ————% Other Taxes and Fines ——2,500 2,500 ——% Return on Investments 160,302 159,627 134,800 129,700 (5,100)(3.8)% Total Revenues 6,233,413 6,357,542 6,180,915 6,334,970 154,055 2.5% Positions by Division CIP Storm Drainage Fund 2.00 2.20 2.20 2.15 (0.05)(2.27)% Storm Drainage Administration 0.69 0.69 0.69 0.65 (0.04)(5.80)% Storm Drainage Operations and Maintenance 6.25 7.00 6.78 6.98 0.20 2.97% Storm Drainage Systems Improvement Flood Control 0.70 0.70 0.52 0.54 0.02 3.85% Total 9.64 10.59 10.19 10.32 0.13 1.29% Budget Summary FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change $ FY 2016 Change % APPENDIX 2 PUBLIC WORKS 377 PUBLIC WORKS • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET Staffing FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change $ FY 2016 Salary Account Specialist 0.15 0.15 0.15 0.15 —9,222 Accountant 0.05 0.05 0.05 0.05 —4,528 Administrative Associate I —0.10 0.10 0.10 —5,867 Administrative Associate II 0.15 0.15 0.15 0.15 —9,849 Administrative Associate III —0.10 0.10 0.10 —6,353 Assistant Director Public Works 0.20 0.20 0.20 0.20 —31,971 Business Analyst 0.02 0.02 0.02 —(0.02)— Electrician 0.10 0.10 0.10 0.10 —7,730 Electrician-Lead 1.00 1.00 1.00 1.00 —96,536 Engineer 1.00 1.00 1.00 1.00 —109,306 Engineering Technician III 0.40 0.30 0.20 0.20 —15,869 Equipment Operator 0.54 0.54 0.54 0.54 —36,828 Heavy Equipment Operator 0.90 0.90 0.90 0.90 —69,517 Heavy Equipment Operator-Lead 1.15 1.15 1.15 1.15 —95,005 Industrial Waste Inspector 0.10 0.20 0.19 0.19 —14,918 Industrial Waste Investigator 1.20 1.20 0.99 0.99 —86,850 Management Analyst 0.10 0.20 0.20 0.20 —19,174 Manager Environmental Control Program 0.10 0.40 0.40 0.40 —46,768 Manager Maintenance Operations 0.50 0.50 0.50 0.50 —53,074 Project Engineer 1.00 0.85 0.81 0.83 0.02 97,642 Project Manager —0.15 0.15 0.15 —13,368 Senior Accountant 0.10 0.10 0.10 0.10 —11,192 Senior Engineer 0.80 0.80 0.76 0.76 —117,382 Senior Technologist 0.02 0.02 0.02 —(0.02)— Technologist —0.30 0.30 0.30 —35,881 Traffic Controller Maintainer I 0.06 0.06 0.06 0.06 —4,120 Temporary/Hourly —0.05 0.05 0.20 0.15 10,625 Total 9.54 10.59 10.19 10.32 0.13 1,009,575 APPENDIX 2 PUBLIC WORKS PUBLIC WORKS • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET 378 Budget Reconciliation Positions Expenditures Revenues Net Storm Drainage Fund Prior Year Budget 10.19 6,642,945 6,180,915 462,030 Base Adjustments Adjustments to Costs of Ongoing Activities Capital expenditure funding adjustment — 2,843,298 — 2,843,298 Interest earnings adjustment — — (5,100) 5,100 Residential Storm Drainage Fee Consumer Price Index increase — — 62,626 (62,626) Industrial Storm Drainage Fee Consumer Price Index increase — — 75,783 (75,783) Commercial Storm Drainage Fee Consumer Price Index increase — — 20,746 (20,746) Hourly staffing adjustment 0.15 10,625 — 10,625 Information Technology staffing realignment (0.02) (3,600)— (3,600) Debt service payment adjustment — 2,017 — 2,017 Storm Rate Rebate Consumer Price Index increase —4,000 —4,000 Salaries and benefits adjustment — 68,696 — 68,696 General Fund cost allocation plan adjustment — 5,980 — 5,980 Rental cost adjustment — 5,116 — 5,116 Reduced transfer to Technology Fund for Utilities Customer Bill System Improvements project —(172)—(172) Technology Fund allocated charges adjustment — 42,847 — 42,847 Liability Insurance allocated charges adjustment — 10,073 — 10,073 Utility Expenses allocated charges adjustment — (4,222)— (4,222) Vehicle Replacement and Maintenance allocated charges adjustment —1,496 —1,496 Printing and Mailing allocated charges adjustment —(149)—(149) Public Works Administration allocated charges adjustment — 33,607 — 33,607 Adjustments to Costs of Ongoing Activities 0.13 3,019,612 154,055 2,865,557 Total FY 2016 Base Budget 10.32 9,662,557 6,334,970 3,327,587 Total FY 2016 Proposed Budget 10.32 9,662,557 6,334,970 3,327,587 APPENDIX 2 PUBLIC WORKS 379 PUBLIC WORKS • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET WASTEWATER TREATMENT FUND Description The City’s Regional Water Quality Control Plant (RWQCP) operates 24 hours a day to treat all wastewater from the five partner cities’ regional service area (Mountain View, Los Altos, Los Altos Hills, Stanford, and East Palo Alto Sanitary District) and to ensure the compliance with regulations protecting the San Francisco Bay and the environment. Accomplishments Commenced implementation of a system to provide temporary and permanent alkalinity adjustments that address regulatory limits in the plant’s treated final effluent after experiencing two pH violations in late 2014. The pH of the Water Quality Control Plant’s effluent has become too low and a new chemical ( a base ) is now being added to raise the pH, make it less acidic, and meet the regulatory limit. This new chemical is a new, ongoing cost to the Water Quality Control Plant. Completed process optimization of the dual media filters and four secondary clarifiers. Reduced salinity in recycled water through source identification and control of infiltration in collection system pipes. Initiatives Complete CEQA for Biosolids Facilities Plan sludge dewatering and truck loadout facility. Expand Polystyrene Ordinance to include food service ware, coolers, and other items. Complete an Environmental Impact Report for a new pipeline system to deliver recycled water to the southwestern portion of Palo Alto. This new system is the third phase of the Master Plan for Recycled Water approved by Council. Goals and Objectives GOAL 1 Protect the environment and the public’s health. APPENDIX 2 PUBLIC WORKS PUBLIC WORKS • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET 388 Revenues Charges for Services ——501,022 40,000 (461,022)(92.0)% From Other Agencies ———126,000 126,000 —% Net Sales ———554,580 554,580 —% Operating Transfers-In ——560,000 304,150 (255,850)(45.7)% Other Revenue ——84,300 93,500 9,200 10.9% Permits and Licenses ——159,500 —(159,500)(100.0)% Rental Income ———134,500 134,500 —% Return on Investments 3,981 3,896 4,500 1,700 (2,800)(62.2)% Total Revenues 3,981 3,896 1,309,322 1,254,430 (54,892)(4.2)% Positions by Division Airport Administration 1.00 1.00 2.00 2.96 0.96 48.00% Airport Operations ———0.50 0.50 —% CIP Airport Fund ———2.42 2.42 —% Total 1.00 1.00 2.00 5.88 3.88 194.00% Staffing FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change $ FY 2016 Salary Management Analyst ——1.00 1.00 —96,976 Manager Airport 1.00 1.00 1.00 1.00 —146,621 Manager Maintenance Operations ———1.00 1.00 133,922 Temporary/Hourly ———2.88 2.88 29,951 Total 1.00 1.00 2.00 5.88 3.88 407,470 Budget Reconciliation Positions Expenditures Revenues Net Airport Fund Budget Summary FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change $ FY 2016 Change % APPENDIX 2 PUBLIC WORKS 389 PUBLIC WORKS • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET Prior Year Budget 2.00 963,111 1,309,322 (346,211) Base Adjustments One Time Prior Year Expenditures Deleted Transition Expenses (advertising, furniture, signage, and tools)— (45,000)— (45,000) General Fund Loan —— (235,000)— One Time Prior Year Expenditures Deleted —(45,000)(235,000)(45,000) Adjustments to Costs of Ongoing Activities Salary and Benefit Adjustments — (159,838) — (159,838) Changes in Capital Costs — 448,884 126,000 322,884 Investment Earnings adjustment — — (2,800) — Airport Tie-Down Fees Revenue Consumer Price Index Adjustment —— 77,758 (77,758) Liability Insurance —523 —— Information Technology allocated charges adjustment — 41,633 —— General Fund Cost Allocation Plan adjustment — 136,400 — 136,400 Printing and Mailing allocated charges adjustment —(216)—(216) Public Works Administration allocated charges — 22,405 — 22,405 Adjustments to Costs of Ongoing Activities —489,791 200,958 243,877 Total FY 2016 Base Budget 2.00 1,407,902 1,275,280 132,622 Budget Adjustments 1 Airport Operations Staffing 3.88 78,845 — 78,845 2 Airport Asphalt Maintenance — 50,000 — 50,000 3 Transfers from the General Fund — — (20,850) 20,850 Total Budget Adjustments 3.88 128,845 (20,850)149,695 Total FY 2016 Proposed Budget 5.88 1,536,747 1,254,430 282,317 Budget Reconciliation Positions Expenditures Revenues Net Airport Fund APPENDIX 2 Airport Taxiways CITY OF PALO ALTO FISCAL YEAR 2016 CAPITAL BUDGET 295 Airport Apron Reconstruction Airport Apron Reconstruction Description This project will allow for the design and eventual reconstruction of the Palo Alto Airport apron within the existing footprint. Fiscal Year 2016 funding will provide for the initial four design tasks of this multi-year program and will include surveying, topographical, minor environmental review and 30% design for a cost of $250,000. The final design, anticipated to total $490,000, will be implemented based on available funding in the Airport Enterprise Fund. The design will develop a 3-5 phased approach to align future construction projects with available Federal Avi- ation Administration (FAA) grant funding. Justification The pavement surfaces at the airport are failing and uneven. The City conducted a Pavement Management Study in Fiscal Year 2015 to determine pavement condition index (PCI) and to assist in prioritization of pavement improvement projects. The need to reconstruct the aircraft parking apron is critical to airport safety. Based on visual inspection, using pavement condition index (PCI) criteria, the average apron PCI value is 36, which indicates a need for full pavement reconstruction. Supplemental Information It is anticipated that this project will be implemented in multiple phases. Staff is seeking FAA grants which will fund at a minimum 90% for both design and construction costs for this proj- ect, with a City obligation for the remaining 10%. Staff will pursue other funding opportunities to offset the City match, if available. FAA funding cycles require submission of applications in the spring with grant approvals in late summer of each year. Priority is given to projects where design is complete and the project is ready for construction. Due to timing of the City's budget adoption staff recommends funding the initial design tasks, with funding for future tasks through 100% design being brought to Fund: Airport Enterprise Fund Category: Airport Taxiways Project Location: Palo Alto Airport Managing Department: Public Works Initial Project Start: Summer 2015 Initial Project Completion: Spring 2021 Revised Project Start: Revised Project Completion: Project Number: AP-16000 Airport Apron, July 2013 APPENDIX 2 Airport Taxiways 296 CITY OF PALO ALTO FISCAL YEAR 2016 CAPITAL BUDGET Council as the Airport Enterprise Fund allows, to position the City for the spring 2016 funding cycle which would be reimbursed in Fiscal Year 2017 and would include reimbursement of costs incurred for design prior to the grant approval. The total design is estimated at $490,000 with construction costs for Phase 1 estimated to be $1.7 million and the total project costs estimated at $12 million. Additionally, the FAA will use the average apron PCI information to prioritize the Palo Alto Air- port against other airport applicants. Due to the condition of the airport infrastructure, staff anticipates that the Palo Alto Airport will rank high in eligibility for grant funding of this project. Significant Changes 2016-2020 CIP: Project Established Operating Impact This project is not anticipated to impact operating expenses. Funding Sources Schedule Funding Source Prior Years FY 2015 Budget FY2015 Est.FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 5 Year CIP Total Beyond 5 Year CIP Total Revenue from the Federal Government 0 0 0 0 225,000 0 0 0 464,420 0 464,420 Airport Fund 0 0 0 285,123 (200,882)0 0 0 84,821 0 84,821 Total 0 0 0 285,123 24,118 0 0 0 549,241 0 549,241 Expenditure Schedule Project Phase Prior Years FY 2015 Budget FY2015 Est.FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 5 Year CIP Total Beyond 5 Year CIP Total Design 0 0 0 285,123 24,118 0 0 0 549,241 0 549,241 Total 0 0 0 285,123 24,118 0 0 0 549,241 0 549,241 Relationship to Comprehensive Plan Primary Connection Element: Community Services & Facilities Section: Parks and Public Facilities Goal: C-4 Policy: C-24 Program: C-19 Environmental Impact Analysis: This project may be exempt from CEQA under Section 15301. APPENDIX 2 FINANCE COMMITTEE MEETING 5/7/2015 [X] Placed Before Meeting [ ] Received at Meeting City of Palo Alto M E M O R A N D U M TO: Finance Committee DATE: May 7, 2015 SUBJECT: Additional Information Pertaining to the Fiscal Year 2016 Proposed Budget Affordable Care Act Impact on Healthcare Costs At the May 5, Finance Committee meeting, the committee asked about the impact on the City’s healthcare cost due to the Affordable Care Act (ACA). City Impact – Minimal City impact: The ACA provides that the City must offer affordable care to 70 percent of full-time employees in 2015 and 95 percent of full-time employees in 2016 or pay a penalty. Given the City’s healthcare benefit, the City meets the 2016 standard. Our benefits advisor, Wells Fargo, is working with a company called Continuous Health to analyze our workforce annually for ACA compliance. Using the “full-time” measure in the ACA of an average of 30 hours per week over a three- month period of time, Wells Fargo identified 10 additional employees who must be offered health care in 2017. The ACA provides that care offered must be affordable, which means a minimum value of 60 percent – the City meets this requirement. The ACA also provides for a “Cadillac Tax” of high-end plans beginning in 2018. Wells Fargo is watching the CalPERS plans for that limit. The City can choose to offer only those plans that are below this limit and thus avoid the tax. CalPERS itself is working on lower cost plans to meet a demand. Nation-wide impact: small positive impact to reduce inflation of care costs. Per capita health care costs have been rising at just under 3 percent a year over the last four years, which is less than half the average annual growth in the preceding eight years. Economists say the recession is the biggest reason for the dip — though many also credit the ACA for a bit of the decline. A report from the White House Council of Economic Advisers, says health care costs would be 0.5 percent higher per year if not for the ACA. , which the CEA says translates to $135 per person in the U.S. in 2013. The per capita cost of health care expenditures in 2012 was $8,915, according to the Centers for Medicare & Medicaid Services. It was $8,170 in 2009, $8,411 in 2010 and $8,658 in 2011. In other words, it’s rising year after year. Retiree Healthcare Fund – Payment of Annual Required Contribution (Agenda Item #2) In response to Committee questions at the May 5 Finance Committee meeting, this memorandum transmits the City Manager’s Report (ID# 4891) titled “Accept the Retiree Healthcare Plan GASB 45 Actuarial Valuation as of June 30, 2013 and Approve Full Funding of the Annual Required Contribution” (Attachment A). On June 9, 2014, the City Council approved the payment of the annual required 5/26/2015 APPENDIX 2 FINANCE COMMITTEE MEETING 5/7/2015 [X] Placed Before Meeting [ ] Received at Meeting contribution (ARC) for Retiree Healthcare for Fiscal Year 2015 and 2016. The Fiscal Year 2016 ARC payment amounts to $14.767 million for all funds. Animals Services Transition Funding (Agenda Item #7) On April 22, 2015 the Finance Committee reviewed the City Auditor’s report on the Police Department’s Animal Services Unit (Attachment B). The audit found that the unit faces challenges that are unlikely to be resolved if it continues operating as a solely a city-managed function without significant increase in general fund subsidy, donations, and/or revenue-generating contracts. The City Manager agrees with the audit findings and proposed action plans for each recommendation. Based on the audit and Finance Committee discussion, staff recommends continuing operation of an animal shelter in Palo Alto and retaining the Animal Control Officer (ACOs) functions. Staff also recommends that the City seeks out a non-profit partner to operate the shelter. As discussed with the committee on April 22, 2015, in order to transition to an alternative service delivery model for the shelter, staff recommends allocating approximately $250,000 in one-time transition costs for Fiscal Year 2016 offset with a higher Fiscal Year 2015 Budget Surplus carry-forward amount. The Fiscal Year 2016 Proposed Budget assumes a $1.67 million Fiscal Year 2015 Budget Surplus carry-forward amount to cover one-time expenditures. With the funding for the animal services transition cost this amount would increase to $1.92 million. Based on informal solicitations with several consultants, staff is estimating the average hourly rate for a consultant will be $125 per hour, which equates to approximately $250,000. The consultant will be used to guide staff with the implementation of best practices, develop a scope of work for a Request for Proposal, lead the evaluation of proposals from non-profit partners, draft agreements, and develop a transition plan. Additionally the consultant will engage local community groups and regional animal services partners to ensure that all stakeholders are involved with shaping the future service model. Finally, the consultant will serve as a liaison with staff and the community to advance conversations about the renovation or remodel of the Palo Alto shelter. Since this is quite an ambitious work effort, it is expected that the consultant will be hired early fall 2015 and that the transition to a qualified non- profit provider will occur in Fiscal Year 2017. DEPARTMENT HEAD: LALO PEREZ Director, Administrative Services/CFO CITY MANAGER: JAMES KEENE City Manager 5/26/2015 APPENDIX 2 City of Palo Alto (ID # 4891) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/9/2014 City of Palo Alto Page 1 Summary Title: Retiree Healthcare Valuation Report Title: Accept the Retiree Healthcare Plan GASB 45 Actuarial Valuation as of June 30, 2013 and Approve Full Funding of the Annual Required Contribution From: City Manager Lead Department: Administrative Services Recommendation Staff and the Finance Committee recommend that Council accept the June 30, 2013 actuarial valuation of Palo Alto’s Retiree Healthcare Plan and approve full funding of the Annual Required Contribution for Fiscal Year 2015 and Fiscal Year 2016. Executive Summary At the May 27, 2014 Finance Committee Meeting, the Finance Committee reviewed the June 30, 2013 actuarial valuation of Palo Alto’s Retiree Healthcare Plan and recommended that the City Council approve full funding of the Annual Required Contribution for Fiscal Year 2015 and Fiscal Year 2016. BACKGROUND GASB 45 requires the City to complete an actuarial study on a biennial basis, to determine the retiree medical liability and how much the City should be setting aside each year to fund the annual required contribution (ARC). DISCUSSION At the May 27, 2014 Finance Committee Meeting, the Finance Committee reviewed the June 30, 2013 actuarial valuation of Palo Alto’s Retiree Healthcare Plan (see Attachment A) and recommended that the City Council approve full funding of the Annual Required Contribution for Fiscal Year 2015 and Fiscal Year 2016 (see Attachment B, Minutes Excerpt). The attached Finance Committee Report and Retiree Healthcare Plan valuation provided by Bartel Associates, the City’s actuary, provides a summary and detail of the current plan status and annually required contributions. For Fiscal Year 2015, the annual required contribution (ARC) is set at $14.3 million for all funds and for Fiscal Year 2016, the annual required contribution is set at $14.7 million. ATTACHMENT A APPENDIX 2 City of Palo Alto Page 2 The report also details the various reasons for the change of the Unfunded Actuarial Liability (UAL). In comparison to the last report, as of June 30, 2011, the UAL net increased by approximately $20 million from $123.3 million to $143.5 million primarily due to the inclusion of a new actuarial standard of practice regarding the implied subsidy. The implied subsidy added $41.4 million to the liability. According to the Bartel Associates’ web site, “CalPERS…blends active employees with pre-Medicare retirees and charges them the same medical premium…However, younger employees on average are…subsidizing older employees and retirees … The Implied Subsidy is the difference between average retiree claims and premiums charged by…CalPERS.” Without this new actuarial standard of practice, the UAL would have decreased. RESOURCE IMPACT The Fiscal Year 2015 Proposed Budget includes the cost to fully fund the Annual Required Contribution of $14.3 million for all funds ($9.6 million for the General Fund). If this report is approved by the City Council, the Fiscal Year 2016 Proposed Budget will include $14.8 million to fund the ARC for all funds ($10.0 million for the General Fund). ENVIRONMENTAL REVIEW The action recommended is not a project for the purposes of the California Environmental Quality Act. Attachments: Attachment A: Retiree Healthcare Valuation Staff Report to Finance Committee May 27, 2014 (PDF) Attachment B: 05-27-14 FCM transcript excerpt (DOCX) APPENDIX 2 City of Palo Alto (ID # 4833) Finance Committee Staff Report Report Type: Action Items Meeting Date: 5/27/2014 City of Palo Alto Page 1 Summary Title: Retiree Healthcare Plan Actuarial Valuation Title: Accept the Retiree Healthcare Plan GASB 45 Actuarial Valuation as of June 30, 2013 From: City Manager Lead Department: Administrative Services RECOMMENDED MOTION The Finance Committee accepts the June 30, 2013 actuarial valuation of Palo Alto’s Retiree Healthcare Plan and recommends that the City Council approve full funding of the Annual Required Contribution (ARC) for Fiscal Year 2015 and Fiscal Year 2016. RECOMMENDATION Staff recommends that the Finance Committee accepts the June 30, 2013 actuarial valuation of the Palo Alto’s Retiree Healthcare Plan and recommends to the City Council to fully fund the Annual Required Contribution for Fiscal Year 2015 and Fiscal Year 2016. EXECUTIVE SUMMARY This report provides the Finance Committee with the actuarial study results required by the Government Accounting Standards Board's (GASB) Statement No. 45, Accounting and Financial Reporting by Employers for Post-Employment Benefits Other Than Pensions. (See Attachment A: June 30, 2013 GASB 45 Actuarial Valuation) The results of this study as compared to the 2011 study show a 9.6 percent increase in citywide costs, with the Annual Required Contribution (ARC) increasing from $13.0 million in FY 2014 to $14.3 million in FY 2015. In addition, the City’s actuarial unfunded liability is valued at $143.6 million as of June 30, 2013, a 16 percent increase over the $123.3 million unfunded liability as of June 30, 2011. The increase in the actuarial unfunded liability is primarily due to an upcoming actuarial standard which requires that actuaries need to account for the “implied subsidy” in the analysis of the unfunded liability. According to the Bartel Associates’ web site, “CalPERS…blends active employees with pre- Medicare retirees and charges them the same medical premium…However, younger employees on average are…subsidizing older employees and retirees … The Implied Subsidy is the difference between average retiree claims and premiums charged by…CalPERS.” Attachment A APPENDIX 2 City of Palo Alto Page 2 BACKGROUND GASB 45 requires the City to complete an actuarial study on a biennial basis, to determine the retiree medical liability and how much the City should be setting aside each year to fund the annual required contribution (ARC). Funding the ARC, as determined by Bartel Associates, City’s actuary, is paramount so that the City pays off the unfunded liability within 30 years. In Fiscal Year 2008, the City established an irrevocable trust with California Employers Retirees Benefit Trust (CERBT) for retiree medical benefits. In Fiscal Year 2008, the City transferred $33.8 million to the trust, with annual contributions each year thereafter. As of June 30, 2013, the market value of the trust was $60.1 million, with a projected June 30, 2014 value of $73.1 million. In comparison, the Actuarially Accrued Liability (AAL) for Retiree Medical was valued for June 30, 2013 at $203.6 million, indicating a 29% funded ratio. For June 30, 2014, that AAL is projected at $213.5 million, indicating a 34% funded ratio per the report submitted by Bartel Associates (see slide 25 of Attachment A). DISCUSSION Bartel Associates completed a June 30, 2013 actuarial valuation for the City on May 20, 2014 (Attachment A) that valued the City's unfunded retiree medical liability at $143.5 million, compared to the unfunded liability of $123.3 million on January 1, 2011 – an increase of $20 million or 16%. The Annual Required Contribution (ARC) associated with the valuation is $14.3 million for FY 2015 for all funds. This is an increase of $1.3 million (10%) over the FY 2014 ARC of $13.0 million. The General Fund’s portion of the citywide ARC is $9.6 million representing a $0.6 million, or 6 percent, increase over the FY 2014 General Fund ARC of $9.1 million. The FY 2016 ARC for all funds is projected at $14.8 million, with the General Fund’s portion at $10.0 million. The net increase in the City’s retiree medical liability between the 2011 and 2013 valuations is attributable to the actuarial valuation changes, demographic changes, and investment returns. The primary increase to the City’s unfunded liability is due to the “implied subsidy”, change in the benefits structure, and mortality improvements partially offset with lower than expected healthcare premiums, positive investment returns, , demographic changes, and the recently approved agreement with the Service Employees International Union (SEIU) contract. 1. Implied Subsidy: The new Implied Subsidy valuation adds $41.4 million to the liability and $3.5 million to the citywide ARC (slide 45). According to the Bartel Associates’ web site, “CalPERS…blends active employees with pre-Medicare retirees and charges them the same medical premium…However, younger employees on average are…subsidizing older employees and retirees … The Implied Subsidy is the difference between average retiree claims and premiums charged by…CalPERS.” Attachment A APPENDIX 2 City of Palo Alto Page 3 Cities will soon be required to account for the “implied subsidy” contained in active employees’ retiree medical premiums, as part of their retiree medical liability. The Actuarial Standards Board’s new Actuarial Standard of Practice (ASOP 6) requires inclusion of the Implied Subsidy for valuations after March 31, 2015. Agencies are also encouraged to make the change earlier if possible. Staff recommends adopting this change as part the FY 2015 ARC calculation. 2. Mortality Improvements: Mortality improvement (people are living longer) projections for actives and retirees added $5.3 million to the unfunded liability and $0.6 million to the ARC. 3. Healthcare Premiums: Less-than-expected increases in CalPERS premiums reduced the unfunded liability by $35.7 million. 4. Investment Return: Increase in market value of the CERBT from $49.2 million on June 30, 2012 to $60.1 million on June 30, 2013 (22 percent increase), due to increased contributions from the City and investment returns. (See slide 22 in Attachment A for details regarding annual returns on CERBT.) 5. Memorandum of Agreement with SEIU The recently adopted agreement with SEIU, which includes fixed healthcare premium amounts for each of the next two years, reduced about $1.9 million of the unfunded liability. The change in the valuation results is summarized by the table on slide 25 of Bartel Associates’ report (see below): Attachment A APPENDIX 2 City of Palo Alto Page 4 RESOURCE IMPACT The Fiscal Year 2015 Proposed Budget includes the cost to fully fund the Annual Required Contribution of $14.3 million for all funds ($9.6 million for the General Fund). If this report is approved by the City Council, the Fiscal Year 2016 Proposed Budget will include $14.8 million to fund the ARC for all funds ($10.0 million for the General Fund). ENVIRONMENTAL REVIEW The action recommended is not a project for the purposes of the California Environmental Quality Act. Attachments: Attachment A: Bartel Associates, Retiree Healthcare Valuation (as of June 30, 2013) Report (PDF) Attachment A APPENDIX 2 CITY OF PALO ALTO RETIREE HEALTHCARE PLAN June 30, 2013 GASB 45 Actuarial Valuation Presented by John E. Bartel, President Prepared by Deanna Van Valer, Assistant Vice President & Actuary Mary Beth Redding, Assistant Vice President & Actuary Adam Zimmerer, Actuarial Analyst Bartel Associates, LLC May 20, 2014 Agenda O:\Clients\City of Palo Alto\Projects\OPEB\2013 Val\Reports\BA PaloAltoCi 14-05-20 OPEB 6-30-13 Final Results.docx Topic Page Benefit Summary 1 Implied Subsidy 6 Participant Statistics 9 Actuarial Assumptions Highlights 15 Actuarial Methods 20 Assets 22 Results 25 Assumption Sensitivities 42 Benefit Sensitivities 47 Actuarial Certification 49 Exhibits 50 Results by Fund and Department E-41 Attachment A APPENDIX 2 May 20, 2014 1 BENEFIT SUMMARY Eligibility Retire directly from the City under CalPERS (age 50 and 5 years of CalPERS service or disability) Medical Provider CalPERS health plans (PEMHCA) CalPERS administrative fees paid by City Retiree Medical Hired < 1/1/04 (1/1/05 SEIU, 1/1/06 PAPOA) GROUP 1: Retired < 1/1/07 (3/1/09 for PAPOA) • Full premium up to family coverage GROUP 2: Retired between 1/1/07 (3/1/09 for PAPOA) and 5/1/11 (12/1/11 for IAFF) • Same as above but premium limited to 2nd most expensive Basic (non-Medicare) medical plan in the Bay Area Region (Blue Shield in 2012 & 2013, United Healthcare for 2014) GROUP 3: Retired ≥ 5/1/11 (12/1/11 for IAFF) • 90% of premium up to 90% of Group 2 cap • PAPOA gets 100% (same as Group 2) • SEIU limited to dollar caps subject to bargaining for 2014 and later (see slide #3) May 20, 2014 2 BENEFIT SUMMARY Retiree Medical Hired ≥ 1/1/04 (1/1/05 SEIU, 1/1/06 PAPOA) GROUP 4: Vesting schedule (based on all CalPERS Service)1: Years of Service % < 10 0% 10 50% ↓ ↓ > 20 100% 100% vesting for disability retirements Vesting applies to 100/90 formula amounts: 2012 2013 2014 Single $ 566 $ 622 $ 642 2-Party 1,074 1,183 1,218 Family 1,382 1,515 1,559 If have 20 years City service do not need to retire directly from City Dental, Vision & Medicare Part B None 1 Minimum 5 years City Service. Attachment A APPENDIX 2 May 20, 2014 3 BENEFIT SUMMARY Surviving Spouse Benefit 100% of retiree benefit continues to surviving spouse if retiree elects CalPERS pension survivor allowance Waived Re- election Waived retirees/beneficiaries may re-elect coverage at a future date Pay-As-You- Go ($000s) (Cash only) FY 2013/14 $8,800 estimated from data FY 2012/13 $8,766 (from CAFR) FY 2011/12 $8,165 (from CAFR) FY 2010/11 $6,216 FY 2009/10 $5,519 SEIU Group 3 Medical Benefit 100% of premium limited to fixed dollar caps (which will be subject to bargaining) 2014 2015 Single $ 688 $ 708 2-Party 1,375 1,415 Family 1,788 1,840 Affects all SEIU Group 3 retirees and active employees May 20, 2014 4 BENEFIT SUMMARY Changes to Prior Valuation Benefit Group Prior Benefit Current Benefit Group 3 Non- Safety Full premium (up to family coverage) limited to 2nd most expensive Basic (non-Medicare) plan in Bay Area Region in 2011 All premium increases starting 1/1/11 shared evenly between City and employee, up to 10% of increase per year 90% of premium (up to family coverage) limited to 90% of 2nd most expensive Basic (non- Medicare) medical plan in the Bay Area Region Group 4 Non- Safety Vesting schedule applied to 2011 100/90 formula amounts All premium & 100/90 formula increases starting 1/1/11 shared evenly between City and employee, up to 10% of increase per year Vesting schedule applied to 100/90 formula amounts (additional detail on slide 2) Attachment A APPENDIX 2 May 20, 2014 5 BENEFIT SUMMARY Monthly Benefit Cap Amounts 2013 20142 Group Single 2-Party Family Single 2-Party Family Group 13 $1,083.11 $2,166.22 $2,816.09 $ 836.59 $1,673.18 $2,175.13 Group 2 784.63 1,569.26 2,040.04 764.24 1,528.48 1,987.02 Group 34 706.17 1,412.33 1,836.04 687.82 1,375.63 1,788.32 Group 45 622.00 1,183.00 1,515.00 642.00 1,218.00 1,559.00 % Decrease from Group 1 Group 2 28% 28% 28% 9% 9% 9% Group 3 35% 35% 35% 18% 18% 18% Group 4 43% 55% 46% 23% 27% 28% 2 Large drop in most expensive premiums in 2014 due to PERS premium methodology change. 3 No cap for Group 1. Amount shown is most expensive Non-Medicare Bay Area region premium. 4 Except PAPOA 5 Assuming 20 years of service/100% vesting May 20, 2014 6 IMPLIED SUBSIDY Background • For PEMHCA, employer cost for allowing retirees to participate at active rates. • GASB 45 defers to actuarial standards of practice. • Actuarial Standards of Practice No. 66 (ASOP 6) allows community rated plans to value their liability using premiums, resulting in no implied subsidy. 6 Measuring Retiree Group Benefits Obligations and Determining Retiree Group Benefits Plan Costs or Contributions. 25 30 35 40 45 50 55 60 65 Blended Premium $610 $610 $610 $610 $610 $610 $610 $610 $610 Cost by Age $343 $398 $442 $486 $586 $652 $752 $885 $1,041 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 Attachment A APPENDIX 2 May 20, 2014 7 IMPLIED SUBSIDY In April 2012, Actuarial Standards Board released 2nd Exposure Draft for ASOP 6: • Would require implied subsidy valued for community rated plans such as PEMHCA. • Timing: First Exposure Draft issued April 2012 (July 15, 2012 comment deadline) Second Exposure Draft issued March 2013 (August 30, 2013 comment deadline) Final Standard issued May 2014 Effective date March 31, 2015 with earlier implementation encouraged Implied Subsidy impact depends on a number of factors including: • CalPERS provided information • Miscellaneous/Safety mix • Active/retiree proportions • Level of pre-funding May 20, 2014 8 IMPLIED SUBSIDY Estimated 2013/14 Implied Subsidy Transfer for Medical Coverage For Illustrative Purposes Only (Amounts in 000’s) Before GASB 45 Actives Retirees Total Total Premium7 $ 15,343 $ 9,006 $ 24,349 Member Contribution8 - (103) (103) Employer Contribution 15,343 8,903 24,246 After GASB 45 Actives Retirees Total Total Premium $ 15,343 $ 9,006 $ 24,349 Member Contribution - (103) (103) Implied Subsidy Transfer (1,852) 1,852 - Employer Contribution 13,491 10,755 24,246 7 Estimated premium based on the 6/30/13 participant data and 2013 &2014 premiums 8 Assumes no member contribution for actives Attachment A APPENDIX 2 May 20, 2014 9 PARTICIPANT STATISTICS Participant Statistics 9 From 1/1/09 Milliman report 10 1 retiree with missing birth date assumed to retire at average retirement age 11 Excludes 3 retirees with missing retirement date 12 All retirements included. Disability retirement data unreliable. 6/30/099 6/30/11 6/30/13 Actives • Count 955 923 948 • Average Age 45.3 44.7 45.2 • Average City Service 11.2 10.8 10.8 • Average PERS Service 13.7 11.7 • Average Salary $103,602 $86,007 $86,271 • Total Salary (000’s) $98,940 $79,384 $81,785 Retirees: • Count 710 860 968 • Average Age10 67.2 67.0 68.2 • Average Retirement Age11 o Service n/a 55.512 57.8 o Disability n/a n/a 45.3 May 20, 2014 10 PARTICIPANT STATISTICS Participant Statistics June 30, 2013 13 Group 3 PAPOA have Group 2 benefits 14 Actual 2012/13 pay paid for those hired < 7/1/12. New hire pay is annualized. 15 1 retiree with missing birth date assumed to retire at average retirement age 16 Excludes 3 retirees with missing retirement date Group 1 Group 2 Group 313 Group 4 Total Actives • Count n/a n/a 518 430 948 • Average Age n/a n/a 49.1 40.6 45.2 • Average Entry Age n/a n/a 32.0 35.4 33.5 • Average City Service n/a n/a 16.5 4.0 10.8 • Average PERS Service n/a n/a 17.1 5.2 11.7 • Average Salary n/a n/a $92,284 $79,027 $86,271 • Total Salary (000’s)14 n/a n/a $47,803 $33,982 $81,785 Retirees: • Count 617 308 34 9 968 • Average Age15 72.6 61.0 56.0 56.1 68.2 • Avg Service Ret Age16 57.9 58.0 55.7 57.5 57.8 • Avg Disability Ret Age 45.2 46.8 47.5 31.1 45.3 Attachment A APPENDIX 2 May 20, 2014 11 PARTICIPANT STATISTICS Participant Statistics June 30, 2013 17 Actual 2012/13 pay paid for those hired < 7/1/12. New hire pay is annualized. 18 1 retiree with missing birth date assumed to retire at average retirement age 19 Excludes 3 retirees with missing retirement date Miscellaneous Police Fire Total Actives • Count 765 82 101 948 • Average Age 46.4 38.5 42.1 45.2 • Average City Service 10.8 10.0 12.2 10.8 • Average PERS Service 11.7 10.8 12.8 11.7 • Average Salary $80,179 $117,217 $107,291 $86,271 • Total Salary (000’s)17 $61,337 $9,612 $10,836 $81,785 Retirees: • Count 690 121 157 968 • Average Age18 68.9 64.4 67.6 68.2 • Avg Service Ret Age19 58.8 52.1 54.5 57.8 • Avg Disability Ret Age 48.4 40.6 47.3 45.3 May 20, 2014 12 PARTICIPANT STATISTICS Participant Statistics June 30, 2011 20 1 retiree with missing birth date assumed to retire at average retirement age 21 Excludes 3 retirees with missing retirement date. All retirements included. Data on disability retirements unreliable. Miscellaneous Police Fire Total Actives • Count 737 82 104 923 • Average Age 45.7 38.2 43.4 44.7 • Average City Service 10.4 10.8 14.0 10.8 • Average PERS Service 13.8 11.4 15.0 13.7 • Average Salary $78,762 $117,924 $112,185 $86,007 • Total Salary (000’s) $58,047 $9,670 $11,667 $79,384 Retirees: • Count 659 87 114 860 • Average Age20 67.5 63.0 67.2 67.0 • Average Retirement Age21 57.2 47.9 52.1 55.5 Attachment A APPENDIX 2 May 20, 2014 13 PARTICIPANT STATISTICS Data Reconciliation 6/30/2011 to 6/30/2013 Actives Retirees Disabled Benefic. Total June 30, 2011 923 787 73 - 1,783 • New Hires/Rehires 143 - - - 143 • Disabled (7) - 7 - - • Terminated22 (62) - - - (62) • Died with Benefic.23 - (56) (3) 59 - • Died, no Beneficiary (28) (2) (30) • Retired (50) 50 - - - • Reinstatement 1 (1) - - - • Retired Disabled (84) 84 - • Adjustment/Other - 34 21 27 82 June 30, 2013 948 702 180 86 1,916 22 All actives in June 30, 2011 valuation and not in June 30, 2013 valuation assumed terminated. 23 Retirees in the June 30, 2011 valuation not in the June 30, 2013 valuation assumed deceased. May 20, 2014 14 PARTICIPANT STATISTICS Medical Plan Participation – January 1, 2014 Non-Waived Participants Retirees Medical Plan Actives < 6524 ≥ 6525 Total Miscellaneous/Safety M S M S M S M S Anthem BC Select 1% 1% 0% 0% 0% 0% 0% 0% Anthem BC Traditional 19% 17% 6% 11% 0% 0% 4% 9% Blue Shield 12% 3% 27% 18% 33% 16% 29% 18% Blue Shield NetValue 6% 4% 1% 4% 0% 0% 0% 3% Kaiser 37% 32% 28% 15% 27% 41% 28% 20% PERS Choice 13% 1% 29% 0% 23% 9% 27% 2% PERS Select 0% 0% 1% 0% 0% 0% 0% 0% PERSCare 2% 1% 2% 2% 16% 22% 6% 6% PORAC 1% 35% 2% 47% 1% 13% 2% 41% United Healthcare 10% 7% 4% 4% 1% 0% 3% 3% Total 100% 100% 100% 100% 100% 100% 100% 100% 24 Only includes employees who retired on or after June 30, 2008. 25 Only includes retirees up to age 70. Attachment A APPENDIX 2 May 20, 2014 15 ACTUARIAL ASSUMPTIONS HIGHLIGHTS June 30, 2011 Valuation June 30, 2013 Valuation Valuation Date June 30, 2011 Fiscal Years 2012/13 & 2013/14 ARCs (end of year) 1 year lag June 30, 2013 Fiscal Years 2014/15 & 2015/16 ARCs (end of year) 1 year lag Funding Policy Full Pre-funding through CalPERS trust (CERBT) Asset allocation #1 beginning 6/30/2011 Same Discount Rate 7.61% (no Margin for Adverse Deviation) Same Sensitivity analysis at 7.25% Payroll Increases Aggregate Increases – 3.25% Merit Increases – CalPERS 1997-2007 Experience Study Same May 20, 2014 16 ACTUARIAL ASSUMPTIONS HIGHLIGHTS June 30, 2011 Valuation June 30, 2013 Valuation Increase to Dollar Caps for SEIU Group 3 N/A ½ of Medical Trend, not less than assumed inflation (3.0%). Increase is for purposes of financial projection only and does not imply any obligation to increase the cap in the future Medical Trend Increase from Prior Year Year Non-Medicare Medicare 2011 Premiums 2012 Premiums 2013 9.0% 9.4% 2014 8.5% 8.9% 2015 8.0% 8.3% 2016 7.5% 7.8% 2017 7.0% 7.2% 2018 6.5% 6.7% 2019 6.0% 6.1% 2020 5.5% 5.6% 2021+ 5.0% 5.0% Increase from Prior Year Year Non-Medicare Medicare 2011 n/a 2012 n/a 2013 Premiums 2014 Premiums 2015 8.0% 8.3% 2016 7.5% 7.8% 2017 7.0% 7.2% 2018 6.5% 6.7% 2019 6.0% 6.1% 2020 5.5% 5.6% 2021+ 5.0% 5.0% Attachment A APPENDIX 2 May 20, 2014 17 ACTUARIAL ASSUMPTIONS HIGHLIGHTS June 30, 2011 Valuation June 30, 2013 Valuation Participation at Retirement DOH < 1/1/04: 100% DOH > 1/1/04: 95% Employees with cost sharing: reduce above %’s by 5% Groups 1 & 2: already retired Group 3: 90% Group 4: 85% May 20, 2014 18 ACTUARIAL ASSUMPTIONS HIGHLIGHTS June 30, 2011 Valuation June 30, 2013 Valuation Retirement, Mortality, Termination, Disability CalPERS 1997-2007 Experience Study Misc Fire Police Benefit 2.7%@55 3%@50 3%@50 2%@6026 ERA27 57.5 54.5 54.0 CalPERS 1997-2007 Experience Study Includes fully generational mortality projected with Scale AA Sensitivity analysis without mortality projection Misc Fire & Police Tier 1 2.7%@55 3%@50 ERA27 59.3 55.7 & 54.5 Tier 2 2%@6026 3%@5528 ERA 61.1 n/a & 59.7 PEPRA29 2.5%@67 2.7%@57 ERA 61.0 n/a & 56.8 26 Applies to non-PEPRA (Classic) employees hired after 7/17/2010 27 Expected Retirement Age 28 Applies to non-PEPRA (Classic) Police employees hired after 12/7/2012 and Fire employees hired after 6/7/2012 29 Applies to employees hired after 1/1/2013 and considered “New Members” under PEPRA Attachment A APPENDIX 2 May 20, 2014 19 ACTUARIAL ASSUMPTIONS HIGHLIGHTS June 30, 2011 Valuation June 30, 2013 Valuation Medical Plan at Retirement & Retirees Attaining age 65 Rates based on elections in June 30, 2011 data (see slide E-34 for further details) Rates based on elections in January 2014 (see slide E-34 for further details) Family Coverage at Retirement Actives • Misc : 10% until age 65 • Safety : 20% until age 65 Retirees: based on current elections until age 65 Actives • Misc : 15% until age 65 • Safety : 40% until age 65 Retirees: based on current elections until age 65 Waived Retiree Re-election N/A Pre-65 – 20% re-elect at age 65 Post-65 – 0% CalPERS Service City service plus ½ service between age 30 and City hire date Actual data May 20, 2014 20 ACTUARIAL METHODS Method June 30, 2011 Valuation June 30, 2013 Valuation Cost Method Entry Age Normal Level % of Pay Same Unfunded Liability Amortization 30 years open period30 30 years closed period Sensitivity analysis: 25 & 20 year periods Actuarial Asset Value Market Value of Assets31 Same Future New Entrants Closed group – no new participants Same Implied Subsidy No implied subsidy valued Implied subsidy valued Sensitivity: no implied subsidy 30 30-year open amortization period meets GASB 45 accounting standards but results in negative amortization and does not meet a funding policy consistent with paying off the City’s unfunded liability. 31 Using Market Value of Assets to determine the ARC will result in more volatile future ARCs than if a smoothed Market Value were used. Attachment A APPENDIX 2 May 20, 2014 21 ACTUARIAL METHODS Method June 30, 2011 Valuation June 30, 2013 Valuation Plan Continuance For purposes of financial projections, the plan and benefits are assumed to continue unchanged. The calculation of this accounting obligation does not imply that there is any legal liability to provide or continue providing the benefits valued. May 20, 2014 22 ASSETS Market Value of Plan Assets – CERBT (Amounts in 000’s) 2010/11 2011/12 2012/13 Projected 2013/1432 MVA (Beg. of Year) $ 34,014 $ 44,774 $ 49,238 $ 60,070 • Contributions 2,447 4,419 5,248 4,149 • Benefit Payments33 - - - - • Admin. Expenses (50) (52) (80) (95) • Investment Return 8,363 97 5,664 9,017 MVA (End of Year) 44,774 49,238 60,070 73,141 Approx. Annual Return 24.4% 0.1% 11.2% 14.7% 32 Projected from actual 12/31/2013 balance using assumed rate of return for last half of fiscal year. 33 Benefit Payments made outside of trust by City. Refer to Slide 3 for fiscal year amounts. Attachment A APPENDIX 2 May 20, 2014 23 ASSETS Historical Assets (Amounts in 000’s) $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 6/30/07 6/30/08 6/30/09 6/30/10 6/30/11 6/30/12 6/30/13 Proj 6/30/14 Market Value of Assets May 20, 2014 24 ASSETS Historical Returns34 34 Projected return for 2013/14 uses actual investment return for first half of fiscal year and assumed rate of return for last half of fiscal year 08/09 09/10 10/11 11/12 12/13 Proj 13/14 Assets -22.5% 15.1% 24.4% 0.1% 11.2% 14.7% Expected Return 7.75% 7.75% 7.75% 7.61% 7.61% 7.61% (30%) (20%) (10%) 0% 10% 20% 30% Attachment A APPENDIX 2 May 20, 2014 25 RESULTS Actuarial Obligations (Amounts in 000’s) 6/30/11 Valuation 6/30/13 Valuation 6/30/11 Projected 6/30/12 6/30/13 Projected 6/30/14 Present Value of Benefits • Actives $ 87,186 $ 105,008 • Retirees 115,644 139,378 • Total 202,830 244,386 Actuarial Accrued Liability • Actives 52,409 64,264 • Retirees 115,644 139,378 • Total 168,053 $ 177,304 203,642 $ 213,458 Actuarial Value of Assets 44,774 52,331 60,070 73,124 Unfunded AAL 123,279 124,973 143,572 140,333 Funded Ratio 27% 30% 29% 34% Normal Cost 5,091 5,674 Pay-As-You-Go Cost (Cash) 8,944 8,903 9,152 Pay-As-You-Go Cost (IS) 1,852 1,916 May 20, 2014 26 RESULTS Historical Funded Status (Amounts in 000’s) $0 $50,000 $100,000 $150,000 $200,000 $250,000 1/1/09 1/1/11 6/30/11 6/30/13 Retiree pay-go Retiree AAL less pay-go Active AAL MVA Attachment A APPENDIX 2 May 20, 2014 27 RESULTS Actuarial Gain/Loss (Amounts in 000’s) AAL (AVA) UAAL Actual 6/30/11 $ 168,053 $ (44,774) $ 123,279 Expected 6/30/14 195,805 (67,114) 128,691 Assumption Changes • Participation at Retirement (6,859) (6,859) • Family Coverage at Retirement 876 876 • Medical Plan Election (897) (897) • Projected Mortality Improvement 5,290 5,290 Contribution (Gain)/Loss (1,095) (1,095) Investment (Gain)/Loss (3,734) (3,734) Plan Changes • Benefit Changes → Slide 4 18,687 18,687 • Implied Subsidy 43,448 43,448 • SEIU Agreement Change (1,944) (1,944) Experience (Gains)/Losses • Premiums/Caps < Expected (35,674) (35,674) • Demographic & Other (5,276) (1,199) (6,475) Total (Gain)/Loss 17,652 (6,011) 11,641 Projected 6/30/14 213,458 (73,124) 140,334 May 20, 2014 28 RESULTS Schedule of Funding Progress (Amounts in 000’s) Actuarial Valuation Date Actuarial Value of Assets (a) Entry Age Actuarial Accrued Liability (b) Unfunded Actuarial Accrued Liability (b-a) Funded Ratio (a/b) Covered Payroll (c) UAAL as Percentage of Covered Payroll ((b-a)/c) 1/1/2011 $ 40,213 $ 165,660 $ 125,447 24.3% $ 98,940 126.8% 6/30/2011 44,774 168,053 123,279 26.6% 80,664 152.8% 6/30/2013 60,070 203,642 143,572 29.5% 81,785 175.5% Attachment A APPENDIX 2 May 20, 2014 29 RESULTS Annual Required Contribution (ARC) (Amounts in 000’s) 6/30/11 Valuation 6/30/13 Valuation 2012/13 2013/14 2014/15 2015/16 ARC - $ • Normal Cost $ 5,091 $ 5,256 $ 5,674 $ 5,880 • UAAL Amortization 7,665 7,779 8,607 8,887 • Total 12,756 13,035 14,282 14,767 Projected Payroll 83,285 85,992 87,187 90,021 ARC - %Pay • Normal Cost 6.1% 6.1% 6.5% 6.5% • UAAL Amortization 9.2% 9.1% 9.9% 9.9% • Total 15.3% 15.2% 16.4% 16.4% May 20, 2014 30 RESULTS Annual Required Contribution (ARC) (Amounts in 000’s) $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 09/10 10/11 11/12 12/13 13/14 14/15 15/16 Normal Cost 3,478 3,478 4,782 5,091 5,256 5,674 5,880 Amortization 6,308 6,308 7,802 7,665 7,779 8,607 8,887 ARC 9,786 9,786 12,584 12,756 13,035 14,282 14,767 Attachment A APPENDIX 2 May 20, 2014 31 RESULTS Amortization Bases & Payments (000’s Omitted) 6/30/2011 Valuation 6/30/2013 Valuation 6/30/2012 6/30/2013 6/30/2014 6/30/2015 UAAL Balance $ 124,973 $ 126,819 $ 140,333 $ 142,405 Amortization Payment - $ 7,665 7,779 8,607 8,887 Amortization Period 30 30 30 29 May 20, 2014 32 RESULTS This page intentionally blank Attachment A APPENDIX 2 May 20, 2014 33 RESULTS Estimated Net OPEB Obligation/(Asset) Illustration (Amounts in 000’s) 6/30/11 Valuation 6/30/13 Valuation CAFR 2012/13 Estimate 2013/14 Estimate 2014/15 Estimate 2015/16 NOO/(NOA) at Beginning of Year $(21,271) $(21,851) $(22,174) $(22,501) Annual OPEB Cost • Annual Required Contribution 12,756 13,035 14,282 14,767 • Interest on NOO (1,619) (1,663) (1,687) (1,712) • NOO Adjustment 2,057 1,340 1,360 1,404 • Annual OPEB Cost 13,194 12,712 13,954 14,459 Contributions • Cash Benefit Payments35 8,766 8,886 9,152 9,841 • Implied Subsidy Benefit Payments36 - - 1,916 2,102 • Trust Funding 5,008 4,149 3,214 2,824 • Total Contributions 13,774 13,035 14,282 14,767 NOO/(NOA) at End of Year (21,851) (22,174) (22,501) (22,809) 35 Estimated cash payments shown for all years after 2012/13. Actual cash payments should be used for OPEB footnote. 36 Use amounts listed here for 2014/15 and 2015/16 OPEB footnotes. May 20, 2014 34 RESULTS Estimated Full ARC Funding Projection (Amounts in 000’s) FYE Begin Year NOO ARC AOC Contribution Pay ARC % of Pay Cash BP IS BP Pre- Funding Total 2015 $(22,174) $14,282 $13,954 $9,152 $1,916 $3,214 $14,282 $87,187 16.4% 2016 (22,501) 14,767 14,459 9,841 2,102 2,824 14,767 90,021 16.4% 2017 (22,809) 15,269 14,984 10,640 2,387 2,242 15,269 92,947 16.4% 2018 (23,095) 15,790 15,529 11,388 2,631 1,771 15,790 95,967 16.5% 2019 (23,356) 16,328 16,096 12,056 2,835 1,437 16,328 99,086 16.5% 2020 (23,587) 16,883 16,684 12,672 3,026 1,185 16,883 102,307 16.5% 2021 (23,786) 17,456 17,294 13,291 3,251 914 17,456 105,632 16.5% 2022 (23,949) 18,047 17,926 13,882 3,507 658 18,047 109,065 16.5% 2023 (24,070) 18,656 18,581 14,545 3,838 273 18,656 112,609 16.6% 2024 (24,145) 19,285 19,261 15,132 4,081 72 19,285 116,269 16.6% Attachment A APPENDIX 2 May 20, 2014 35 RESULTS Actuarial Obligations June 30, 2013 (Amounts in 000’s) Benefits < Age 65 Benefits > Age 65 Total Present Value of Benefits • Actives $ 58,253 $ 46,755 $ 105,008 • Retirees 48,165 91,212 139,378 • Total 106,418 137,968 244,386 Actuarial Accrued Liability • Actives 34,085 30,179 64,264 • Retirees 48,165 91,212 139,378 • Total 82,250 121,391 203,642 Normal Cost 2014/15 3,289 2,386 5,674 May 20, 2014 36 RESULTS Actuarial Obligations June 30, 2013 (Amounts in 000’s) Group 1 Group 2 Group 337 Group 4 Total Present Value of Benefits • Actives $ - $ - $ 74,267 $ 30,741 $105,008 • Retirees 65,602 63,910 8,511 1,355 139,378 • Total 65,602 63,910 82,778 32,096 244,386 Actuarial Accrued Liability • Actives - - 55,118 9,145 64,264 • Retirees 65,602 63,910 8,511 1,355 139,378 • Total 65,602 63,910 63,629 10,500 203,642 Normal Cost 2014/15 - - 2,962 2,712 5,674 NC as % of Payroll 6.3% 6.9% 6.6% 37 PAPOA Group 3 members have Group 2 benefits. There are 39 PAPOA Group 3 active members. Attachment A APPENDIX 2 May 20, 2014 37 RESULTS Actuarial Obligations June 30, 2013 (Amounts in 000’s) Misc Safety Total Present Value of Benefits • Actives $ 74,520 $ 30,488 $ 105,008 • Retirees 90,106 49,272 139,378 • Total 164,626 79,760 244,386 Actuarial Accrued Liability • Actives 47,555 16,709 64,264 • Retirees 90,106 49,272 139,378 • Total 137,661 65,981 203,642 Actuarial Value of Assets38 40,773 19,298 60,070 Unfunded AAL 96,888 46,683 143,572 Normal Cost 2014/15 4,041 1,634 5,674 Pay-As-You-Go Cost 2014/15 7,592 3,476 11,068 38 Allocated in proportion to the Actuarial Accrued Liability before SEIU benefit change. May 20, 2014 38 RESULTS Annual Required Contribution (ARC) 2014/15 Fiscal Year (Amounts in 000’s) Misc Safety Total ARC - $ • Normal Cost $ 4,041 $ 1,634 $ 5,674 • UAAL Amortization39 5,811 2,795 8,607 • ARC 9,852 4,429 14,282 Projected Payroll 65,389 21,799 87,187 ARC - % • Normal Cost 6.2% 7.5% 6.5% • UAAL Amortization 8.9% 12.8% 9.9% • ARC 15.1% 20.3% 16.4% 39 Allocated in proportion to the Actuarial Accrued Liability before SEIU benefit change. Attachment A APPENDIX 2 May 20, 2014 39 RESULTS Actuarial Obligations June 30, 2013 (Amounts in 000’s) FCA IAFF M/C PAPOA PMA SEIU UMPA Total PVB • Actives $ 820 $15,400 $18,811 $12,239 $1,458 $49,863 $6,416 $105,008 • Retirees 814 24,825 43,500 18,502 407 50,307 1,022 139,378 • Total 1,634 40,225 62,311 30,741 1,865 100,170 7,438 244,386 AAL • Actives 721 9,077 11,373 5,380 1,122 31,773 4,818 64,264 • Retirees 814 24,825 43,500 18,502 407 50,307 1,022 139,378 • Total 1,535 33,902 54,873 23,882 1,529 82,080 5,840 203,642 AVA40 449 9,915 16,049 6,985 447 24,517 1,708 60,070 UAAL 1,086 23,987 38,824 16,897 1,082 57,563 4,132 143,572 NC 14/15 25 759 1,122 761 56 2,689 264 5,674 Pay-Go 57 1,745 3,448 1,302 19 4,372 125 11,068 40 Allocated in proportion to the Actuarial Accrued Liability before SEIU benefit change. May 20, 2014 40 RESULTS Annual Required Contribution (ARC) 2014/15 Fiscal Year (Amounts in 000’s) FCA IAFF M/C PAPOA PMA SEIU UMPA Total ARC - $ • Normal Cost $ 25 $ 759 $1,122 $ 761 $ 56 $ 2,689 $ 264 $ 5,674 • UAAL Amort41 65 1,437 2,292 1,015 68 3,470 261 8,607 • ARC 90 2,195 3,414 1,776 124 6,159 526 14,282 Proj. Payroll 642 10,570 21,287 8,805 1,260 39,170 5,454 87,187 ARC - % • Normal Cost 3.9% 7.2% 5.3% 8.7% 4.4% 6.9% 4.8% 6.5% • UAAL Amort 10.1%13.6% 10.7% 11.5%5.4% 8.9%4.8% 9.9% • ARC 14.0% 20.8% 16.0% 20.2%9.8% 15.7% 9.6% 16.4% 41 Allocated in proportion to the Actuarial Accrued Liability before SEIU benefit change. Attachment A APPENDIX 2 May 20, 2014 41 RESULTS Annual Required Contribution (ARC) 2015/16 Fiscal Year (Amounts in 000’s) FCA IAFF M/C PAPOA PMA SEIU UMPA Total ARC - $ • Normal Cost $ 25 $ 783 $1,164 $ 787 $ 58 $ 2,783 $ 280 $ 5,880 • UAAL Amort 67 1,483 2,367 1,049 70 3,581 270 8,887 • ARC 92 2,266 3,531 1,836 128 6,364 550 14,767 Proj. Payroll 663 10,913 21,979 9,091 1,301 40,443 5,631 90,021 ARC - % • Normal Cost 3.7% 7.2% 5.3% 8.7% 4.4% 6.9% 5.0% 6.5% • UAAL Amort 10.1%13.6% 10.8%11.5%5.4% 8.9% 4.8% 9.9% • ARC 13.8% 20.8% 16.1% 20.2% 9.8% 15.7% 9.8% 16.4% May 20, 2014 42 ASSUMPTION SENSITIVITIES Discount Rate Sensitivity (Amounts in 000’s) Discount Rate 7.61% 7.25% PVPB @ 6/30/13 $ 244,386 $ 257,348 AAL @ 6/30/13 • AAL 203,642 212,483 • Assets 60,070 60,070 • Unfunded AAL 143,572 152,413 2014/15 ARC • Normal Cost $ 5,674 $ 6,081 • UAAL Amort. 42 8,607 8,790 • Total ARC 14,282 14,871 • ARC – % of pay 16.4% 17.1% 42 Amortized over 30 years Attachment A APPENDIX 2 May 20, 2014 43 ASSUMPTION SENSITIVITIES Mortality Projection Sensitivity (Amounts in 000’s) Mortality Projection Included Not Included PVPB @ 6/30/13 $ 244,386 $ 236,653 AAL @ 6/30/13 • AAL 203,642 197,379 • Assets 60,070 60,070 • Unfunded AAL 143,572 137,309 2014/15 ARC • Normal Cost $ 5,674 $ 5,484 • UAAL Amort. 43 8,607 8,183 • Total ARC 14,282 13,667 • ARC – % of pay 16.4% 15.7% 43 Amortized over 30 years May 20, 2014 44 ASSUMPTION SENSITIVITIES Amortization Period Sensitivity (Amounts in 000’s) Amortization Period 30 Years 25 Years 20 Years PVPB @ 6/30/13 $ 244,386 $ 244,386 $ 244,386 AAL @ 6/30/13 • AAL 203,642 203,642 203,642 • Assets 60,070 60,070 60,070 • Unfunded AAL 143,572 143,572 143,572 2014/15 ARC • Normal Cost $ 5,674 $ 5,674 $ 5,674 • UAAL Amort. 8,607 9,495 10,873 • Total ARC 14,282 15,169 16,547 • ARC – % of pay 16.4% 17.4% 19.0% Attachment A APPENDIX 2 May 20, 2014 45 ASSUMPTION SENSITIVITIES Implied Subsidy Sensitivity (Amounts in 000’s) Implied Subsidy Included Not Included PVPB @ 6/30/13 $ 244,386 $ 197,307 AAL @ 6/30/13 • AAL 203,642 162,199 • Assets 60,070 60,070 • Unfunded AAL 143,572 102,129 2014/15 ARC • Normal Cost $ 5,674 $ 4,871 • UAAL Amort. 44 8,607 5,942 • Total ARC 14,282 10,813 • ARC – % of pay 16.4% 12.4% 44 Amortized over 30 years May 20, 2014 46 ASSUMPTION SENSITIVITIES Combination Sensitivity (Amounts in 000’s) Discount Rate 7.61% 7.25% Amortization Period 30 Years 25 Years Mortality Projection Yes Yes Implied Subsidy Yes Yes PVPB @ 6/30/13 $ 244,386 $ 257,348 AAL @ 6/30/13 • AAL 203,642 212,483 • Assets 60,070 60,070 • Unfunded AAL 143,572 152,413 2014/15 ARC • Normal Cost $ 5,674 $ 6,081 • UAAL Amort. 8,607 9,749 • Total ARC 14,282 15,830 • ARC – % of pay 16.4% 18.2% Attachment A APPENDIX 2 May 20, 2014 47 BENEFIT SENSITIVITIES Benefit Sensitivity – SEIU Agreement (Amounts in 000’s) Benefits Prior Current Change PVPB @ 6/30/13 $ 246,665 $ 244,385 $ 2,280 AAL @ 6/30/13 • AAL 205,388 203,641 1,747 • Assets 60,070 60,070 - • Unfunded AAL 145,318 143,571 1,747 2014/15 ARC • Normal Cost $ 5,720 $ 5,675 $ 45 • UAAL Amort.45 8,725 8,607 118 • Total ARC 14,445 14,282 163 • ARC – % of pay 16.6% 16.4% 0.2% 45 Amortized over 30 years. Previous estimates amortized SEIU plan change over 15 years. May 20, 2014 48 BENEFIT SENSITIVITIES Benefit Sensitivity – SEIU Agreement (SEIU Only) (Amounts in 000’s) Benefits Prior Current Change PVPB @ 6/30/13 $ 102,450 $ 100,170 $ 2,280 AAL @ 6/30/13 • AAL 83,827 82,080 1,747 • Assets 24,517 24,517 - • Unfunded AAL 59,310 57,563 1,747 2014/15 ARC • Normal Cost $ 2,734 $ 2,689 $ 45 • UAAL Amort. 46 3,588 3,470 118 • Total ARC 6,322 6,159 163 • ARC – % of pay 7.3% 7.0% 0.3% 46 Amortized over 30 years. Previous estimates amortized SEIU plan change over 15 years. Attachment A APPENDIX 2 May 20, 2014 49 ACTUARIAL CERTIFICATION This report presents the City of Palo Alto’s Retiree Healthcare Plan (“Plan”) June 30, 2013 actuarial valuation. The purpose of this valuation is to: Determine the Governmental Accounting Standards Board Statement Nos. 43 and 45 June 30, 2013 Benefit Obligations, Determine the Plan’s June 30, 2013 Funded Status, and Calculate the 2014/15 and 2015/16 Annual Required Contributions. The report provides information intended for reporting under GASB 43 and 45, but may not be appropriate for other purposes. Information provided in this report may be useful to the City for the Plan’s financial management. Future valuations may differ significantly if the Plan’s experience differs from our assumptions or if there are changes in Plan design, actuarial methods, or actuarial assumptions. The project scope did not include an analysis of this potential variation. The valuation is based on Plan provisions, participant data, and asset information provided by the City as summarized in this report, which we relied on and did not audit. We reviewed the participant data for reasonableness. To the best of our knowledge, this report is complete and accurate and has been conducted using generally accepted actuarial principles and practices. Additionally, in our opinion, actuarial methods and assumptions comply with GASB 43 and 45. As members of the American Academy of Actuaries meeting the Academy Qualification Standards, we certify the actuarial results and opinions herein. Respectfully submitted, John E. Bartel, ASA, MAAA, FCA President Bartel Associates, LLC May 20, 2014 Deanna Van Valer, ASA, MAAA, EA, FCA Assistant Vice President Bartel Associates, LLC May 20, 2014 Mary Elizabeth Redding, FSA, MAAA, EA, FCA Assistant Vice President Bartel Associates, LLC May 20, 2014 May 20, 2014 50 EXHIBITS Topic Page Premiums E- 1 Data Summary E- 5 Actuarial Assumptions E-31 Results by Fund E-42 Results by GF Department E-46 Definitions E-50 Attachment A APPENDIX 2 May 20, 2014 E-1 PREMIUMS 2012 PEMHCA Monthly Premiums Bay Area Non-Medicare Eligible Medicare Eligible Medical Plan Single 2-Party Family Single 2-Party Family Blue Shield Access+ $711.10 $1,422.20 $1,848.86 $337.99 $675.98 $1,013.97 Blue Shield NetValue 611.59 1,223.18 1,590.13 337.99 675.98 1,013.97 Kaiser 610.44 1,220.88 1,587.14 277.81 555.62 833.43 PERS Choice 574.15 1,148.30 1,492.79 383.44 766.88 1,150.32 PERS Select 487.39 974.78 1,267.21 383.44 766.88 1,150.32 PERSCare 1,029.23 2,058.46 2,676.00 432.43 864.86 1,297.29 PORAC 556.00 1,041.00 1,323.00 418.00 833.00 1,331.00 May 20, 2014 E-2 PREMIUMS 2013 PEMHCA Monthly Premiums Bay Area Non-Medicare Eligible Medicare Eligible Medical Plan Single 2-Party Family Single 2-Party Family Blue Shield $ 784.63 $1,569.26 $2,040.04 $261.32 $522.64 $ 783.96 Blue Shield NetValue 670.21 1,340.42 1,742.55 261.32 522.64 783.96 Kaiser 668.63 1,337.26 1,738.44 288.37 576.74 865.11 PERS Choice 667.03 1,334.06 1,734.28 325.74 651.48 977.22 PERS Select 487.20 974.40 1,266.72 325.74 651.48 977.22 PERSCare 1,083.11 2,166.22 2,816.09 370.43 740.86 1,111.29 PORAC 581.00 1,088.00 1,382.00 418.00 833.00 1,331.00 Attachment A APPENDIX 2 May 20, 2014 E-3 PREMIUMS 2014 PEMHCA Monthly Premiums Bay Area Non-Medicare Eligible Medicare Eligible Medical Plan Single 2-Party Family Single 2-Party Family Anthem Select $657.33 $1,314.66 $1,709.06 $341.12 $682.24 $1,023.36 Anthem Traditional 728.41 1,456.82 1,893.87 341.12 682.24 1,023.36 Blue Shield Access+ 836.59 1,673.18 2,175.13 298.21 596.42 894.63 Blue Shield NetValue 704.01 1,408.02 1,830.43 298.21 596.42 894.63 Kaiser 742.72 1,485.44 1,931.07 294.97 589.94 884.91 United Healthcare 764.24 1,528.48 1,987.02 193.33 386.66 579.99 PERS Choice 690.77 1,381.54 1,796.00 307.23 614.46 921.69 PERS Select 661.52 1,323.04 1,719.95 307.23 614.46 921.69 PERSCare 720.04 1,440.08 1,872.10 327.36 654.72 982.08 PORAC 634.00 1,186.00 1,507.00 397.00 791.00 1,264.00 May 20, 2014 E-4 PREMIUMS PEMHCA Monthly Premium Increases Bay Area Non-Medicare Eligible Medicare Eligible Medical Plan 2012 2013 2014 2012 2013 2014 Blue Shield 5.3% 10.3% 6.6% 0.1% (22.7%) 14.1% Blue Shield NetValue 5.2% 9.6% 5.0% 0.1% (22.7%) 14.1% Kaiser 7.3% 9.5% 11.1% (1.6%) 3.8% 2.3% PERS Choice 1.9% 16.2% 3.6% 2.0% (15.1%) (5.7%) PERS Select (1.1%) (0.1%) 35.8% 2.0% (15.1%) (5.7%) PERSCare 15.1% 5.2% (33.5%) (0.3%) (14.3%) (11.6%) PORAC 5.5% 4.5% 9.1% 0.0% 0.0% (5.0%) Attachment A APPENDIX 2 May 20, 2014 E-5 DATA SUMMARY Medical Plan Participation – June 30, 2013 Non-Waived Participants Retirees Medical Plan Actives < 65 ≥ 65 Total Miscellaneous/Safety M S M S M S M S Blue Shield 46% 32% 35% 31% 25% 18% 29%24% Blue Shield NetValue 1% 1% 0% 0% 0% 1% 0%0% Kaiser 37% 31% 31% 13% 25% 26% 27%20% PERS Choice 15% 1% 29% 4% 17% 17% 22%11% PERS Select 0% 0% 0% 0% 0% 0% 0%0% PERSCare 0% 0% 3% 20% 33% 34% 21%27% PORAC 1% 35% 2% 33% 0% 5% 1%18% Total 100% 100% 100% 100% 100% 100% 100%100% May 20, 2014 E-6 DATA SUMMARY Medical Plan Participation – June 30, 2011 Non-Waived Participants Retirees Medical Plan Actives < 65 ≥ 65 Total Miscellaneous/Safety M S M S M S M S Blue Shield 47% 32% 34% 28% 20% 25% 27% 27% Blue Shield NetValue 1% 0% 0% 0% 0% 1% 0% 0% Kaiser 36% 28% 30% 13% 24% 23% 27% 18% PERS Choice 16% 2% 26% 8% 18% 11% 22% 9% PERS Select 0% 0% 0% 0% 0% 0% 0% 0% PERSCare 0% 0% 6% 25% 37% 36% 23% 30% PORAC 1% 38% 3% 26% 0% 3% 1% 15% Total 100% 100% 100% 100% 100% 100% 100% 100% Attachment A APPENDIX 2 May 20, 2014 E-7 DATA SUMMARY Active Medical Coverage - Miscellaneous Medical Plan Single 2-Party Family Waived Total Blue Shield 86 72 156 - 314 Blue Shield NetValue 1 1 3 - 5 Kaiser 70 59 123 - 252 PERS Choice 32 26 43 - 101 PERS Select 2 - - - 2 PERSCare - - 1 - 1 PORAC 4 3 2 - 9 Waived - - - 81 81 Total 195 161 328 81 765 % as of June 30, 2013 25% 21% 43% 11% 100% % as of June 30, 2011 21% 22% 47% 10% 100% May 20, 2014 E-8 DATA SUMMARY Active Medical Coverage - Safety Medical Plan Single 2-Party Family Waived Total Blue Shield 13 4 37 - 54 Blue Shield NetValue 1 - - - 1 Kaiser 12 7 33 - 52 PERS Choice - 1 1 - 2 PERS Select - - - - - PERSCare - - - - - PORAC 10 7 42 - 59 Waived - - - 15 15 Total 36 19 113 15 183 % as of June 30, 2013 20% 10% 62% 8% 100% % as of June 30, 2011 23% 10% 64% 4% 100% Attachment A APPENDIX 2 May 20, 2014 E-9 DATA SUMMARY Retiree Medical Coverage47 - Miscellaneous Medical Plan Single 2-Party Family Waived Total <65 65+ <65 65+ <65 65+ <65 65+ Blue Shield 38 54 35 35 15 5 - - 182 Kaiser 38 44 24 46 14 4 - - 170 PERS Choice 34 31 29 33 8 2 - - 137 PERS Select 1 - - - - - - - 1 PERSCare 6 77 2 46 - 1 - - 132 PORAC 3 - 1 1 1 - - - 6 Waived - - - - - - 14 48 62 Total 120 206 91 161 38 12 14 48 690 % as of June 30, 2013 46% 48% 35% 38% 14% 3% 5% 11% 100% % as of June 30, 2011 47% 54% 40% 44% 14% 2% 0% 0% 100% 47 Approximately 69% of retirees have coverage in a Bay Area region plan. The rest are in other state regions or out of state. May 20, 2014 E-10 DATA SUMMARY Retiree Medical Coverage48 - Safety Medical Plan Single 2-Party Family Waived Total <65 65+ <65 65+ <65 65+ <65 65+ Blue Shield 11 13 7 11 20 - - - 62 Blue Shield NetValue - 1 - - - - - - 1 Kaiser 3 14 5 19 8 2 - - 51 PERS Choice 1 8 2 14 2 1 - - 28 PERSCare 15 27 7 18 2 1 - - 70 PORAC 9 2 13 3 18 2 - - 47 Waived - - - - - - 3 16 19 Total 39 65 34 65 50 6 3 16 278 % as of June 30, 2013 31% 43% 27% 43% 40% 4% 2% 11% 100% % as of June 30, 2011 40% 49% 29% 47% 30% 3% 0% 0% 100% 48 Approximately 51% of retirees have coverage in a Bay Area region plan. The rest are in other state regions or out of state. Attachment A APPENDIX 2 May 20, 2014 E-11 DATA SUMMARY Retirees Medical Coverage by Age – Miscellaneous Age Single 2-Party Family Waived Total Under 50 3 - 1 2 6 50-54 14 8 8 6 36 55-59 42 33 16 5 96 60-64 61 50 13 1 125 65-69 61 65 9 12 147 70-74 61 35 2 5 103 75-79 30 32 - 4 66 80-84 24 19 1 13 57 85 & Over 30 10 - 14 54 Total 326 252 50 62 690 Average Age 69.5 68.7 60.3 74.2 68.9 May 20, 2014 E-12 DATA SUMMARY 0 20 40 60 80 100 120 140 160 <50 50-54 55-59 60-64 65-69 70-74 75-79 80-84 ≥85 Nu m b e r Age Retiree Age Distribution Miscellaneous 6/30/11 Valuation 6/30/13 Valuation Attachment A APPENDIX 2 May 20, 2014 E-13 DATA SUMMARY Retirees Medical Coverage by Age – Police Age Single 2-Party Family Waived Total Under 50 2 2 3 - 7 50-54 10 3 7 1 21 55-59 5 4 10 - 19 60-64 11 6 1 1 19 65-69 5 7 2 3 17 70-74 7 4 - 2 13 75-79 4 3 - 1 8 80-84 8 1 - 2 11 85 & Over 4 2 - - 6 Total 56 32 23 10 121 Average Age 66.9 65.3 54.9 69.4 64.4 May 20, 2014 E-14 DATA SUMMARY 0 5 10 15 20 25 <50 50-54 55-59 60-64 65-69 70-74 75-79 80-84 ≥85 Nu m b e r Age Retiree Age Distribution Police 6/30/11 Valuation 6/30/13 Valuation Attachment A APPENDIX 2 May 20, 2014 E-15 DATA SUMMARY Retirees Medical Coverage by Age – Fire Age Single 2-Party Family Waived Total Under 50 1 1 3 - 5 50-54 2 2 15 1 20 55-59 3 9 9 - 21 60-64 5 7 2 - 14 65-69 6 14 2 3 25 70-74 10 14 2 1 27 75-79 14 11 - 2 27 80-84 3 9 - 2 14 85 & Over 4 - - - 4 Total 48 67 33 9 157 Average Age 72.3 69.7 55.4 71.5 67.6 May 20, 2014 E-16 DATA SUMMARY 0 5 10 15 20 25 30 <50 50-54 55-59 60-64 65-69 70-74 75-79 80-84 ≥85 Nu m b e r Age Retiree Age Distribution Fire 6/30/11 Valuation 6/30/13 Valuation Attachment A APPENDIX 2 May 20, 2014 E-17 DATA SUMMARY Retirees Medical Coverage by Age – Total Age Single 2-Party Family Waived Total Under 50 6 3 7 2 18 50-54 26 13 30 8 77 55-59 50 46 35 5 136 60-64 77 63 16 2 158 65-69 72 86 13 18 189 70-74 78 53 4 8 143 75-79 48 46 - 7 101 80-84 35 29 1 17 82 85 & Over 38 12 - 14 64 Total 430 351 106 81 968 Average Age 69.4 68.6 57.6 73.3 68.2 May 20, 2014 E-18 DATA SUMMARY 0 20 40 60 80 100 120 140 160 180 200 <50 50-54 55-59 60-64 65-69 70-74 75-79 80-84 ≥85 Nu m b e r Age Retiree Age Distribution Total 6/30/11 Valuation 6/30/13 Valuation Attachment A APPENDIX 2 May 20, 2014 E-19 DATA SUMMARY Actives by Age and Service – Miscellaneous City Service Age < 1 1-4 5-9 10-14 15-19 20-24 ≥ 25 Total < 25 6 5 - - - - - 11 25-29 10 23 6 1 - - - 40 30-34 9 32 27 14 - - - 82 35-39 8 28 28 29 4 - - 97 40-44 5 21 22 32 12 4 - 96 45-49 3 24 22 34 16 16 4 119 50-54 5 22 23 36 29 28 17 160 55-59 2 13 20 18 16 7 14 90 60-64 - 5 9 16 12 6 3 51 ≥ 65 - 1 3 4 3 5 3 19 Total 48 174 160 184 92 66 41 765 May 20, 2014 E-20 DATA SUMMARY Actives by Age and Service – Police City Service Age < 1 1-4 5-9 10-14 15-19 20-24 ≥ 25 Total < 25 1 - - - - - - 1 25-29 - 4 2 - - - - 6 30-34 2 11 15 - - - - 28 35-39 - 3 1 10 1 - - 15 40-44 2 1 3 4 1 2 - 13 45-49 - - - 1 6 5 - 12 50-54 - 1 1 1 1 1 - 5 55-59 - - - 1 - - 1 2 60-64 - - - - - - - - ≥ 65 - - - - - - - - Total 5 20 22 17 9 8 1 82 Attachment A APPENDIX 2 May 20, 2014 E-21 DATA SUMMARY Actives by Age and Service – Fire City Service Age < 1 1-4 5-9 10-14 15-19 20-24 ≥ 25 Total < 25 - 1 - - - - - 1 25-29 - 7 2 - - - - 9 30-34 - 6 6 1 - - - 13 35-39 - 3 4 1 - - - 8 40-44 - 4 6 11 6 - - 27 45-49 1 - 2 6 10 10 2 31 50-54 - - 1 2 3 1 2 9 55-59 - - - - - - 1 1 60-64 - - - - - 1 1 2 ≥ 65 - - - - - - - - Total 1 21 21 21 19 12 6 101 May 20, 2014 E-22 DATA SUMMARY Actives by Age and Service – Total City Service Age < 1 1-4 5-9 10-14 15-19 20-24 ≥ 25 Total < 25 7 6 - - - - - 13 25-29 10 34 10 1 - - - 55 30-34 11 49 48 15 - - - 123 35-39 8 34 33 40 5 - - 120 40-44 7 26 31 47 19 6 - 136 45-49 4 24 24 41 32 31 6 162 50-54 5 23 25 39 33 30 19 174 55-59 2 13 20 19 16 7 16 93 60-64 - 5 9 16 12 7 4 53 ≥ 65 - 1 3 4 3 5 3 19 Total 54 215 203 222 120 86 48 948 Attachment A APPENDIX 2 May 20, 2014 E-23 DATA SUMMARY 0 20 40 60 80 100 120 140 160 180 <25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-65 ≥65 Nu m b e r Age Active Age Distribution Miscellaneous 6/30/11 Valuation 6/30/13 Valuation May 20, 2014 E-24 DATA SUMMARY 0 50 100 150 200 250 0-4 5-9 10-14 15-19 20-24 >25 Nu m b e r Service Active Service Distribution Miscellaneous 6/30/11 Valuation 6/30/13 Valuation Attachment A APPENDIX 2 May 20, 2014 E-25 DATA SUMMARY 0 5 10 15 20 25 30 <25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-65 ≥65 Nu m b e r Age Active Age Distribution Police 6/30/11 Valuation 6/30/13 Valuation May 20, 2014 E-26 DATA SUMMARY 0 5 10 15 20 25 30 0-4 5-9 10-14 15-19 20-24 >25 Nu m b e r Service Active Service Distribution Police 6/30/11 Valuation 6/30/13 Valuation Attachment A APPENDIX 2 May 20, 2014 E-27 DATA SUMMARY 0 5 10 15 20 25 30 35 <25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-65 ≥65 Nu m b e r Age Active Age Distribution Fire 6/30/11 Valuation 6/30/13 Valuation May 20, 2014 E-28 DATA SUMMARY 0 5 10 15 20 25 30 35 0-4 5-9 10-14 15-19 20-24 >25 Nu m b e r Service Active Service Distribution Fire 6/30/11 Valuation 6/30/13 Valuation Attachment A APPENDIX 2 May 20, 2014 E-29 DATA SUMMARY 0 50 100 150 200 250 <25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-65 ≥65 Nu m b e r Age Active Age Distribution Total 6/30/11 Valuation 6/30/13 Valuation May 20, 2014 E-30 DATA SUMMARY 0 50 100 150 200 250 300 0-4 5-9 10-14 15-19 20-24 >25 Nu m b e r Service Active Service Distribution Total 6/30/11 Valuation 6/30/13 Valuation Attachment A APPENDIX 2 May 20, 2014 E-31 ACTUARIAL ASSUMPTIONS June 30, 2011 Valuation June 30, 2013 Valuation Valuation Date June 30, 2011 Fiscal Years 2012/13 & 2013/14 ARCs (end of year) 1 year lag June 30, 2013 Fiscal Years 2012/13 & 2013/14 ARCs (end of year) 1 year lag Funding Policy Full Pre-funding through CalPERS trust (CERBT) Asset allocation #1 beginning 6/30/2011 Same General Inflation 3.00% Same Discount Rate 7.61% (no Margin for Adverse Deviation) Same Payroll Increases Aggregate Increases – 3.25% Merit Increases – CalPERS 1997-2007 Experience Study Same May 20, 2014 E-32 ACTUARIAL ASSUMPTIONS June 30, 2011 Valuation June 30, 2013 Valuation Increase to Dollar Caps for SEIU Group 3 N/A ½ of Medical Trend, not less than assumed inflation (3.0%). Increase is for purposes of financial projection only and does not imply any obligation to increase the cap in the future. Medical Trend Increase from Prior Year Year Non-Medicare Medicare 2011 Premiums 2012 Premiums 2013 9.0% 9.4% 2014 8.5% 8.9% 2015 8.0% 8.3% 2016 7.5% 7.8% 2017 7.0% 7.2% 2018 6.5% 6.7% 2019 6.0% 6.1% 2020 5.5% 5.6% 2021+ 5.0% 5.0% Increase from Prior Year Year Non-Medicare Medicare 2011 n/a 2012 n/a 2013 Premiums 2014 Premiums 2015 8.0% 8.3% 2016 7.5% 7.8% 2017 7.0% 7.2% 2018 6.5% 6.7% 2019 6.0% 6.1% 2020 5.5% 5.6% 2021+ 5.0% 5.0% Attachment A APPENDIX 2 May 20, 2014 E-33 ACTUARIAL ASSUMPTIONS June 30, 2011 Valuation June 30, 2013 Valuation Mortality, Termination, Disability CalPERS 1997-2007 Experience Study CalPERS 1997-2007 Experience Study Includes fully generational mortality projected with Scale AA Retirement CalPERS 1997-2007 Experience Study Misc Fire Police Benefit 2.7%@55 3%@50 3%@50 2%@6049 ERA50 57.5 54.5 54.0 CalPERS 1997-2007 Experience Study Misc Fire & Police Tier 1 2.7%@55 3%@50 ERA 59.3 55.7 & 54.5 Tier 2 2%@6049 3%@55 ERA 61.1 n/a & 59.7 PEPRA51 2.5%@67 2.7%@57 ERA 61.0 n/a & 56.8 49 Applies to employees hired after July 17, 2010 50 Expected Retirement Age 51 Applies to employees hired after 1/1/13 and considered “New Hires” under PEPRA May 20, 2014 E-34 ACTUARIAL ASSUMPTIONS June 30, 2011 Valuation June 30, 2013 Valuation Medical Plan at Retirement & Retirees Attaining age 65 Miscellaneous: <65 65+ Blue Shield 35% 20% Kaiser 25% 25% PERS Choice 30% 20% PERSCare 10% 35% Safety: <65 65+ Blue Shield 35% 20% Kaiser 25% 25% PERS Choice 20% 20% PERSCare 10% 35% PORAC 10% 0% Miscellaneous: <65 65+ Anthem Tradition 5% 0% Blue Shield 25% 30% Kaiser 30% 25% PERS Choice 30% 25% PERSCare 5% 20% United HC 5% 0% Safety: <65 65+ Anthem Tradition 10% 0% Blue Shield 20% 20% Blue Shield NV 5% 0% Kaiser 15% 35% PERS Choice 0% 10% PERSCare 0% 25% PORAC 45% 10% United HC 5% 0% Attachment A APPENDIX 2 May 20, 2014 E-35 ACTUARIAL ASSUMPTIONS June 30, 2011 Valuation June 30, 2013 Valuation Participation at Retirement DOH < 1/1/04: 100% DOH > 1/1/04: 95% Employees with cost sharing: reduce above %’s by 5% Groups 1 & 2: already retired Group 3: 90% Group 4: 85% Medicare Eligible Rate Actives hired < 4/1/86: • Miscellaneous – 80% • Safety – 90% Actives hired > 4/1/86: 100% Retirees < 65: 90% Everyone eligible for Medicare will elect Part B coverage Same Spousal Coverage at Retirement Currently covered: based on current elections Currently waived: 80% Same May 20, 2014 E-36 ACTUARIAL ASSUMPTIONS June 30, 2011 Valuation June 30, 2013 Valuation Family Coverage at Retirement Actives • Misc : 10% until age 65 • Safety : 20% until age 65 Retirees: based on current elections until age 65 Actives • Misc : 15% until age 65 • Safety : 40% until age 65 Retirees: based on current elections until age 65 Waived Retiree Re-election N/A Pre-65 – 20% re-elect at age 65 Post-65 – 0% CalPERS Service City service plus ½ service between age 30 and City hire date Actual data Attachment A APPENDIX 2 May 20, 2014 E-37 ACTUARIAL ASSUMPTIONS June 30, 2011 Valuation June 30, 2013 Valuation 2014/15 HMO Medical Claims Costs PEMHCA Implied Subsidy Estimate Monthly claims costs estimated from Bartel Associates PEMHCA client database and PEMHCA premiums Bay Area Region – Non-Medicare Eligible BS Access+ BS NetValue Kaiser Age M F M F M F 45 $533 $645 $485 $587 $531 $642 55 890 900 810 819 886 896 60 1,137 1,063 1,034 967 1,131 1,058 Bay Area Region – Medicare Eligible BS Access+ BS NetValue Kaiser Age M F M Age M F 65 $306 $284 $306 $284 $295 $273 70 288 275 288 275 277 265 75 360 322 360 322 347 311 80 386 342 386 342 372 330 85 384 341 384 341 370 329 90 365 319 365 319 352 307 May 20, 2014 E-38 ACTUARIAL ASSUMPTIONS June 30, 2011 Valuation June 30, 2013 Valuation 2014/15 PPO Medical Claims Costs PEMHCA Implied Subsidy Estimate Monthly claims costs estimated from Bartel Associates PEMHCA client database and PEMHCA premiums Bay Area Region – Non-Medicare Eligible PERS Choice PERSCare PORAC Age M F M F M F 45 $518 $567 $563 $616 $526 $577 55 766 741 832 804 780 754 60 920 851 999 924 934 865 Bay Area Region – Medicare Eligible PERS Choice PERSCare PORAC Age M F M Age M F 65 $302 $316 $322 $337 $407 $426 70 288 306 306 326 387 413 75 324 338 346 360 437 455 80 335 348 357 371 452 469 85 331 344 353 367 446 463 90 315 322 335 343 424 433 Missing PERS Group Retirees missing PERS group assumed to be Misc unless fund designates Police or Fire N/A (none missing) Attachment A APPENDIX 2 May 20, 2014 E-39 ACTUARIAL ASSUMPTIONS June 30, 2011 Valuation June 30, 2013 Valuation Surviving Spouse Participation 100% Same Missing Bargaining Unit Retirees missing bargaining unit assumed to be SEIU unless fund designates Police (PAPOA) or Fire (IAFF) Retirees missing bargaining unit assumed to have the same BU as in the prior valuation if available; otherwise, assumed to be SEIU unless fund designates Police (PAPOA) or Fire (IAFF)52 Missing Fund Retirees missing fund assumed to be 80% GF, 10% Elec, and 10% WWT Retirees missing fund assumed to be 90% GF, 5% Elec, and 5% UTL52 52 Fewer than 10% of retirees have missing Bargaining Unit, Fund or Department. Does not affect results, but does affect internal cost allocations used by the City. May 20, 2014 E-40 ACTUARIAL ASSUMPTIONS June 30, 2011 Valuation June 30, 2013 Valuation Missing Department Liability for retirees assumed to be 80% GF from above assumption allocated proportionately across all Departments Liability for retirees assumed to be 90% GF from above assumption allocated proportionately across all Departments52 Spouse Age Actives – Males 3 years older than females Retirees – Males 3 years older than females if spouse birth date not available Same Future New Participants None – Closed Group Same Attachment A APPENDIX 2 May 20, 2014 E-41 RESULTS BY FUND Actuarial Accrued Liability (AAL) (Amounts in 000’s) January 1, 2011 June 30, 2011 June 30, 2013 7.75% 7.61% 7.61% Airport $ - $ - $ - CIP 2,362 2,411 3,058 Elec53,54 16,004 16,216 23,260 Gas53 6,106 6,254 8,596 GF55 115,628 116,987 136,011 ISF – Technology 2,038 2,111 3,921 ISF – Vehicle 1,383 1,422 1,421 ISF – Printing & Mailing - - 825 Refuse 4,835 4,939 6,100 Storm Drain 1,448 1,468 811 Water53 5,087 5,200 5,518 WWC53 2,062 2,165 2,028 WWT 8,707 8,879 12,094 Total 165,660 168,053 203,642 53 AAL for UTL employees allocated to Elec, Gas, Water, and WWC in proportion to each Fund’s AAL 54 Assets for Fiber Optics Fund appropriated to Elec in 1/1/11 & 6/30/11 valuations due to no Fiber Optics employees in data 55 Assets for Printing & Mailing Fund appropriated to GF in 1/1/11 & 6/30/11 valuations due to no P&M employees in data May 20, 2014 E-42 RESULTS BY FUND Annual Required Contribution (ARC) (Amounts in 000’s) 6/30/11 Valuation 6/30/13 Valuation 2012/13 2013/14 2014/15 2015/16 Airport $ - $ - $ 12 $ 12 CIP 214 219 241 249 Elec53,54 1,082 1,106 1,589 1,644 Gas53 450 460 611 636 GF55 8,896 9,084 9,648 9,970 ISF – Technology 218 224 311 320 ISF – Vehicle 116 119 91 93 ISF – Printing & Mailing - - 62 64 Refuse 376 385 375 387 Storm Drain 106 108 65 68 Water53 409 419 294 305 WWC53 196 201 140 146 WWT 691 707 842 873 Total 12,754 13,033 14,282 14,767 Attachment A APPENDIX 2 May 20, 2014 E-43 RESULTS BY FUND Unfunded Actuarial Accrued Liability (UAAL) (Amounts in 000’s) January 1, 2011 June 30, 2011 June 30, 2013 7.75% 7.61% 7.61% Airport $ - $ - $ - CIP 1,796 1,808 2,232 Elec56,57 10,464 10,200 15,520 Gas56 3,950 3,878 5,522 GF58 91,718 90,149 99,712 ISF - Technology 1,106 1,059 2,539 ISF - Vehicle 749 726 526 ISF – Printing & Mailing - - 548 Refuse 3,437 3,400 4,073 Storm Drain 1,161 1,145 340 Water56 3,466 3,399 3,187 WWC56 1,263 1,270 822 WWT 6,338 6,243 8,552 Total 125,448 123,277 143,572 56 UAAL for UTL employees allocated to Elec, Gas, Water, and WWC in proportion to each Fund’s UAAL 57 Assets for Fiber Optics Fund appropriated to Elec in 1/1/11 & 6/30/11 valuations due to no Fiber Optics employees in data 58 Assets for Printing & Mailing Fund appropriated to GF in 1/1/11 & 6/30/11 valuations due to no P&M employees in data May 20, 2014 E-44 RESULTS BY FUND This page intentionally blank Attachment A APPENDIX 2 May 20, 2014 E-45 RESULTS BY GF DEPARTMENT Actuarial Accrued Liability (AAL) (Amounts in 000’s) January 1, 2011 June 30, 2011 June 30, 2013 7.75% 7.61% 7.61% ASD $ 9,051 $ 9,003 $ 7,900 ATT 1,879 1,899 1,876 AUD 137 143 380 CLK 841 849 975 COU 1,787 1,802 1,337 CSD 12,403 12,529 14,375 FIR 31,517 32,030 39,946 HRD 3,066 3,057 2,818 LIB 4,020 4,061 4,750 MGR 1,801 1,829 1,824 PLA 6,826 6,916 7,524 PLN 241 242 - POL 30,928 31,396 38,532 PWD 11,131 11,231 13,776 Total 115,628 116,987 136,012 May 20, 2014 E-46 RESULTS BY GF DEPARTMENT Annual Required Contribution (ARC) (Amounts in 000’s) 6/30/11 Valuation 6/30/13 Valuation 2012/13 2013/14 2014/15 2015/16 ASD $ 585 $ 597 $ 557 $ 574 ATT 148 151 150 155 AUD 13 13 36 37 CLK 78 80 84 86 COU 133 136 86 89 CSD 890 908 981 1,015 FIR 2,374 2,423 2,614 2,699 HRD 202 205 198 205 LIB 458 469 458 466 MGR 146 149 130 134 PLA 546 559 557 576 PLN 11 11 - - POL 2,490 2,544 2,813 2,907 PWD 822 839 986 1,027 Total 8,896 9,084 9,650 9,970 Attachment A APPENDIX 2 May 20, 2014 E-47 RESULTS BY GF DEPARTMENT Unfunded Actuarial Accrued Liability (UAAL) (Amounts in 000’s) January 1, 2011 June 30, 2011 June 30, 2013 7.75% 7.61% 7.61% ASD $ 7,180 $ 6,938 $ 5,790 ATT 1,490 1,463 1,378 AUD 109 111 279 CLK 667 655 717 COU 1,417 1,389 982 CSD 9,838 9,654 10,507 FIR 25,000 24,682 29,328 HRD 2,433 2,356 2,069 LIB 3,189 3,129 3,475 MGR 1,428 1,410 1,339 PLA 5,414 5,329 5,511 PLN 191 186 - POL 24,533 24,194 28,248 PWD 8,829 8,654 10,091 Total 91,717 90,150 99,714 May 20, 2014 E-48 RESULTS BY GF DEPARTMENT This page intentionally blank Attachment A APPENDIX 2 May 20, 2014 E-49 DEFINITIONS GASB 45 Accrual Accounting • Project future employer-provided benefit cash flows for current active employees and current retirees • Discount projected cash flow to valuation date using discount rate (assumed return on assets used to pay benefits) and other actuarial assumptions to determine present value of projected future benefits (PVB) • Allocate PVB to past, current, and future periods using the actuarial cost method • Actuarial cost method used for this valuation is the Entry Age Normal Cost method which determines Normal Cost as a level percentage of payroll (same method used by CalPERS) • Normal Cost is amount allocated to current fiscal year • Actuarial Accrued Liability (AAL) is amount allocated to prior service with employer • Unfunded AAL (UAAL) is AAL less plan assets pre-funded in a segregated and restricted trust PayGo Cost • Cash subsidy is the pay-as-you-go employer benefit payments for retirees • Implied subsidy is the difference between the actual cost of retiree benefits and retiree premiums subsidized by active employee premiums May 20, 2014 E-50 DEFINITIONS Present Value of Benefits Present Value of Benefits (With Plan Assets) Unfunded Actuarial Accrued Future Normal Costs Normal Cost Assets Present Value of Benefits (Without Plan Assets) Unfunded Actuarial Accrued Liability Future Normal Costs Normal Cost Attachment A APPENDIX 2 May 20, 2014 E-51 DEFINITIONS Annual Required Contribution (ARC) • “Required contribution” for the current period including: Normal Cost Amortization of: - Initial UAAL - AAL for plan, assumption, and method changes - Experience gains/losses (difference between expected and actual) - Contribution gains/losses (difference between ARC and contributions) • ARC in excess of pay-as-you-go costs not required to be funded Net OPEB Obligation (NOO) • Net OPEB Obligation is the accumulated amounts expensed but not funded • Net OPEB Asset if amounts funded exceed those expensed Annual OPEB Cost (AOC) • Expense for the current period including: ARC Interest on NOO Adjustment of NOO • NOO adjustment prevents double counting of expense since ARCs include an amortization of prior contribution gains/losses previously expensed Attachment A APPENDIX 2 Attachment B 1 Special Meeting Tuesday, May 27, 2014 AGENDA ITEMS 1. Accept the Retiree Healthcare Plan GASB 45 Actuarial Valuation as of June 30, 2013. Vice Mayor Kniss requested Mr. Bartel discuss approaches for mortality improvement and his preferred approach. John Bartel, Bartel Associates, LLC, reported there were two issues where he recommended changes that increased liability. When actuarial studies determined people were living longer, actuaries improved the mortality rates to take that into account. An actuarial standard of practice required actuaries to do one of two things. Actuaries could indicate mortality would not continue to improve, in which case the actuary did not factor it in. Actuaries could indicate mortality would continue to improve, in which case actuaries had to take it into account. The California Public Employees' Retirement System (CalPERS) relatively recently adopted changes which would increase the City's pension contributions. By and large CalPERS accepted actuaries' recommendation to anticipate future mortality improvement. Actuaries expected mortality to gradually improve, with the bigger improvement happening for people who were 25 today as opposed to people who were 85 today. He recommended the City adopt mortality improvement in the prior valuation; however, the Council decided not to take his recommendation. He was recommending it again, because he felt it was the right approach. The City had a relatively complicated benefits structure based on bargaining group, date of retirement, and date of hire. Historically for agencies that participated in the Public Employees Medical and Hospital Care Act (PEMHCA), the unfunded liability was tied to the premium paid. An actuarial standard of practice allowed actuaries to use premiums to determine the liability under specific circumstances. A subsequent revision to that standard of practice required actuaries not to value using premiums. Under CalPERS the premium for a 60-year-old was the same as the premium for a 25-year-old. The premium for the 60-year- old was not sufficient to cover expected claims. The premium for the 25- year-old was more than sufficient to cover expected claims. Premiums of young, active employees subsidized the medical benefits for older employees and retirees. The difference between the amount of expected claims and the amount of premiums was referred to as the implied subsidy. Because of the actuarial standard of practice, actuaries included an increase in the liability for the difference between expected claims and premiums. The City's liability increased because of that change. However, the City's liability decreased, because CalPERS restructured premiums. APPENDIX 2 MINUTES 2 May 27, 2014 Council Member Burt inquired whether the deficit would remain the same if the City ended the program today, because the City was required to cover everybody in the program. Mr. Bartel answered yes. Council Member Burt asked if a fraction of the deficit would remain should the City reduce the number of incoming employees versus outgoing ones. Mr. Bartel replied theoretically yes. The standard of practice did not allow actuaries to perform the calculation in that manner. In calculating the implied subsidy, the standard of practice required actuaries to take into account the demographics of all PEMHCA participants. Council Member Burt was attempting to frame the reality of the deficit. He wanted to ensure the Finance Committee (Committee) understood the implication of that. Mr. Bartel stated Council Member Burt provided a good description. The implied subsidy would almost certainly be an ongoing benefit. Council Member Burt believed that if the City workforce continued to grow in population, then the City would have over a long period of time more new employees than outgoing employees. Rather than there being a point in time where the City would have a deficit, the City would actually have a rolling process that could favor retirees. On the other hand at the present time, it was properly defined as the implied subsidy was part of an unfunded liability. Mr. Bartel noted the City workforce was becoming more and more mature. The active population in the prior valuation was slightly more than 900 and about 950 in the June 30, 2013 valuation. The City shifted from 860 retirees to 968 retirees. The City had more retirees than active employees. Council Member Burt suggested two factors for that shift. One was the older average age of existing workers. Another was the granting of full retirement benefits at 50 years of age for Public Safety Employees and 55 years of age for non-Public Safety Employees. Mr. Bartel indicated another dynamic in the workforce was more generous benefits for retirees than active employees. Council Member Burt stated over the last decade more employees retired earlier and lived longer. APPENDIX 2 MINUTES 3 May 27, 2014 Mr. Bartel clarified that employees were living longer, but not retiring quite as early. Active employees comprised Group 3 and Group 4, and retirees comprised Group 1 and Group 2. The City had a legacy liability for the retiree population. It was the dynamic of all retirees, particularly the ones in Group 1 and Group 2, that created the legacy liability. Chair Berman asked if Group 5 was the total. Mr. Bartel answered yes, there was no Group 5. Council Member Holman understood there were two ways to look at the issue: unfunded liability and pay-to-play. The issue was not just the average age of the retiree, but their dependents as well. Mr. Bartel found dependents to be similar in ages with some exceptions. Approximately 43 percent of non-Public Safety Employees were active employees with family coverage, and 17 percent were retirees with family coverage. Less than 10 percent of non-Public Safety Employees had family coverage, but the vast majority were under age 65. Public Safety Employees were retiring early and maintaining family coverage. Of the 765 active employees, 107 had more than 20 years of service. The City was hiring younger Public Safety Employees who remained with the City. Vice Mayor Kniss asked if a prior Council made the decision not to accept improved mortality as a factor. Mr. Bartel reported in the last valuation, he factored in mortality but not future improvement. Vice Mayor Kniss inquired whether improvement meant living longer. Mr. Bartel defined improvement as living longer in the future, future life expectancy. Vice Mayor Kniss asked if the difference in cost was based on the Council's not accepting the recommendation regarding improved mortality. Mr. Bartel indicated that was one of the differences. Vice Mayor Kniss felt it was a major difference. Mr. Bartel advised that the single biggest difference was the implied subsidy. APPENDIX 2 MINUTES 4 May 27, 2014 Vice Mayor Kniss understood implied subsidy and improved mortality were associated. Mr. Bartel indicated the implied subsidy stopped when people were eligible for Medicare at age 65. If people lived into their 80s, it did not matter whether they lived to be 83 or 85 from the implied subsidy standpoint. Vice Mayor Kniss stated it was very similar to the Affordable Care Act (ACA). Mr. Bartel agreed. Council Member Burt noted a higher percentage of Fire Employees had more than 20 years of service than Miscellaneous Employees. Mr. Bartel explained that cities typically hired groups of Public Safety Employees. Each group was similar to a bubble working through the system. The City should ensure it had recruits in the pipeline to replace a group at retirement. Council Member Holman recalled a table that showed the City was hiring more younger employees. Mr. Bartel reported that despite having a large number of employees aged 50-54, the City had a relatively flat distribution at the younger ages. Council Member Holman asked if the number of years of service on page E19 meant service with any city or the City of Palo Alto.. Mr. Bartel responded service with the City of Palo Alto. Council Member Holman felt page E23 indicated the City was hiring older employees, while page E25 indicated the City was hiring younger employees. Mr. Bartel indicated the City was not necessarily hiring older people, but that people on average were a little older. He included the implied subsidy in the valuation of the actuarial standard of practice. A change in the amortization period had no impact on the City's 2014-2015 contribution. He recommended not utilizing a rolling 30-year amortization period. Whether or not the City utilized a rolling amortization period, the 2014-2015 contribution would remain the same. For 2015-2016 and beyond, the contribution would be slightly higher with a rolling amortization period. He recommended the Council institute a policy to pay off the unfunded liability. Lalo Perez, Chief Financial Officer, added that not utilizing a rolling amortization period would match CalPERS' policy. APPENDIX 2 MINUTES 5 May 27, 2014 Mr. Bartel reported the valuation included the mortality change and leaving the discount rate (long-term rate of return on plan assets) at 7.61 percent. He would recommend 7 or 7 1/4 percent; however, CalPERS was currently using 7.5 percent. He utilized 7.61 percent because of Council direction from two years ago. He continued the prior valuation's expectation for healthcare increases. The new agreement with Service Employees International Union (SEIU) resulted in a new assumption that the increase in the dollar cap for SEIU would be half of the medical trend. The Committee should not presume benefits would increase, because the information was included for financial purposes. The City invested funds with the California Employers' Retiree Benefit Trust (CERBT), where the investment return with the exception of 2011-12 was quite good. He supported the City setting aside funds for future obligations. He projected the City would be 34 percent funded on June 30, 2014. The City was ahead of most agencies in the state. The column labeled 6/30/13 Valuation contained obligations as of June 30, 2013. They did not include future accruals. The City's liability for people already receiving benefits more than doubled the amount for active employees; therefore, it was important for the City to set aside money. The City set aside $60 million and had an unfunded liability of $143.6 million. He projected the unfunded liability to decrease at June 30, 2014 to approximately $140 million. The City's contribution would increase from $13 million to $14.3 million. The City's liability was slightly larger because he included the implied subsidy. The City's payroll did not grow as much; therefore, the percentage of payroll increased appreciably. Because the City prefunded, the additional amount of prefunding decreased over the next decade. In about 11 years, the City would contribute less than the pay-as- you-go amount. Vice Mayor Kniss asked if other cities were including improved mortality in their valuations. Mr. Bartel reported cities would be required to include improved mortality on the pension side because of CalPERS changes. With respect to the retiree medical obligation, actuaries were beginning to factor in mortality improvement. Virtually all his clients recognized mortality improvement; however, not all actuarial firms were recommending use of improved mortality. Vice Mayor Kniss hoped the Committee would include mortality improvement after hearing Mr. Bartel's explanation. Mr. Bartel indicated improved mortality increased liability. While it was good for the individual, it was not necessarily good for the City. APPENDIX 2 MINUTES 6 May 27, 2014 Mr. Perez advised that the unfunded liability as of June 30, 2011 was $123 million. As of June 30, 2013, the unfunded liability was $143.572 million, which included $43 million for the implied subsidy. One could say that number would have been $100 million without the change; however, it was an actuarial standard of practice requirement. The contribution funded ratio would have been 38 percent versus 29 percent. Staff recommended accounting for the implied subsidy in the current year, even though it was not required until the following year. Council Member Burt noted local newspapers had not appreciated that distinction. The Staff Report did not draw it out clearly. He encouraged Staff to broadcast the message in a clear and simple way. Mr. Bartel agreed the City would have had a significant reduction absent the change. Council Member Holman recalled that CalPERS was currently using 7.5 percent for the discount rate, and Mr. Bartel recommended a 7-7.2 percent rate. She inquired whether the 7.61 percent rate was used because the Council approved it two years ago. Mr. Perez reported CalPERS did not change the rate of return assumption. The third quarter returns for the CERBT was $60 million at the beginning of the fiscal year and earned $7.778 million. He was comfortable with a discount rate of 7.61 percent for the next two years, because the City was closing the amortization period, accepting mortality change, and accepting the implied subside early. Chair Berman asked if Staff recommended accepting the closed amortization period. Mr. Perez answered yes. Chair Berman reiterated that the recommendation was to accept a closed amortization period and mortality rate, retain the discount rate, and change subsidization accounting. Mr. Perez concurred. Mr. Bartel was only 50 percent confident in a discount rate of 7.61 percent, because it did not allow a margin for adverse deviation. Chair Berman recalled the CERBT balance was $60 million and increased by $7 million. He asked how that amount would reach $73.1 million by June 30, 2104. APPENDIX 2 MINUTES 7 May 27, 2014 Mr. Perez explained the $73.1 million amount was a projection of the balance at the end of June 30, 2014. Mr. Keene reported earnings in the first half of the year were much higher than in the second half. The balance probably would not reach the projected amount. Mr. Perez added that the City contributed $4.7 million and would continue to contribute. The projected balance was a combination of earnings and contributions. Chair Berman inquired about the dollar impact of a closed amortization period on 2015-2016. Mr. Bartel indicated a closed amortization period had a minor impact on 2015-2016 and no impact on 2014-2015. The impact modestly increased over the ten-year projection. Closing the amortization period kept the Annual Required Contribution (ARC) as a percentage of pay constant. With a rolling amortization period, the cost relative to pay actually decreased. In about ten years, the City's contribution could be $200,000 or $300,000 higher because of the closure. Chair Berman asked if the City was prefunding more. Mr. Bartel stated that was exactly what the City was doing. It was not just prefunding more; it was a policy to pay off the unfunded liability. Chair Berman believed closing the amortization period was a prudent fiscal policy. Mr. Bartel agreed. MOTION: Chair Berman moved, seconded by Council Member Burt that the Finance Committee accept the June 30, 2013 actuarial valuation of Palo Alto’s Retiree Healthcare Plan and recommend that the City Council approve full funding of the Annual Required Contribution (ARC) for Fiscal Year 2015 and Fiscal Year 2016. MOTION PASSED: 3-0, Kniss Absent APPENDIX 2 FINANCE COMMITTEE MEETING 5/12/2015 All Agenda Items [X] Placed Before Meeting [ ] Received at Meeting City of Palo Alto M E M O R A N D U M TO: Finance Committee DATE: May 12, 2015 SUBJECT: Additional Information Pertaining to the Fiscal Year 2016 Proposed Budget Proposed Library Department Weekly Operating Hours (Agenda Item #2) The FY 2016 Proposed Budget includes a budget adjustment to extend library hours beginning mid- August 2015. Details for this proposal can be found on p. 289 of the FY 2016 Proposed Budget. Attachment A of this memo depicts each of the five library branch’s operating hours by day for the entire week. Overall, this proposal will increase weekly library operating hours by 32 hours, or 14 percent, from 228 hours per week to 260 hours per week. Consolidated Special Revenue Funds Table (Agenda Item #5) Attachment B of this memorandum includes the Consolidated Special Revenue Funds table which was inadvertently omitted from the Proposed Budget document. Staff will include this table in the Special Revenue Funds section of the final adopted budget. The Consolidated Special Revenue Funds table shows revenue and expenditures by category by fiscal year that includes FY 2013 and FY 2014 Actuals, FY 2015 Adopted Budget, and the FY 2016 Proposed Budget. A comparison of the FY 2015 Adopted Budget to the FY 2016 Proposed Budget, with variances by dollar and percentage is also shown. California Avenue Parking Permit Fund Capital Expenditures (Agenda Item #5a) Detail for the California Avenue Parking Permit Fund can be found on p. 116 of the FY 2016 Proposed Budget. The fund summary states that the California Avenue Parking Permit Fund will transfer $83,200 to the Capital Improvement Fund in FY 2016 for parking improvements related to the California Avenue Parking Improvements Project (PL-14004, p. 107 of the FY 2016 Proposed Capital Budget). As correctly reflected in the Capital budget document, this transfer is scheduled to occur in FY 2017 of the Proposed Capital Budget. The adopted operating budget will be updated to correct this clerical error. Location and Number of Automatic External Defibrillators (AEDs) At the May 7 Finance Committee meeting, the Committee inquired about the number and location of AEDs deployed. The City currently operates 78 AEDs. Of the 78 AEDs, twelve are used in Police patrol cars, 18 are deployed on Fire apparatuses and ambulances, and 48 are located in City facilities. The attached map (Attachment C) shows the location of the AEDs operated at the City facilities. Additionally, there are other AEDs operated city-wide by businesses and other institutions, and the PulsePoint mobile phone application displays the location of both the City and privately operated AEDs in Palo Alto. 5/12/2015 APPENDIX 2 FINANCE COMMITTEE MEETING 5/12/2015 All Agenda Items [X] Placed Before Meeting [ ] Received at Meeting Contingency Account Overview During the May 7 Finance Committee meeting, the Committee requested detail of the budgeted contingency accounts. Contingency accounts are used at the discretion of the City Council, City Manager, City Attorney, or Chief People Officer to fund unanticipated expenses. In accordance with the Municipal Code, the City Council approves any use of the City Council contingency, while the City Manager approves the use of all other contingencies. For purposes of organization, the contingency accounts are presented together in the Non-Departmental section of the Operating Budget. The collective balances of the contingency accounts total $0.7 million for FY 2016. Use of the contingency accounts is reported to the City Council quarterly. The table below provides the dollar amounts for each contingency. This information will be included in the FY 2016 Adopted Budget. Fiscal Year 2016 Proposed Contingency Account Beginning Balances City Manager’s Contingency $250,000 City Council Contingency $250,000 City Attorney Contingency $100,000 Innovation and Special Events Contingency $50,000 Human Resources Contingency $50,000 TOAL $700,000 DEPARTMENT HEAD: LALO PEREZ Director, Administrative Services/CFO CITY MANAGER: JAMES KEENE City Manager 5/12/2015 APPENDIX 2 ATTACHMENT A May 12, 2015 FY 2016 Proposed Library Department Operating Hours Current Proposed Net New % Change 228 260 32 14.0% Day of the Week Current Proposed Current Proposed Current Proposed Current Proposed Current Proposed Monday 12pm‐6pm 10am‐6pm closed closed closed closed 12pm‐8pm 10am‐9pm 12pm‐8pm 10am‐9pm Tuesday 10am‐6pm 10am‐6pm 10am‐6pm 10am‐6pm 10am‐6pm 10am‐6pm 10am‐8pm 10am‐9pm 10am‐8pm 10am‐9pm Wednesday 10am‐6pm 10am‐6pm 10am‐6pm 10am‐6pm 10am‐6pm 10am‐6pm 10am‐8pm 10am‐9pm 10am‐8pm 10am‐9pm Thursday 12pm‐6pm 10am‐6pm closed closed 12pm‐6pm 10am‐6pm 12pm‐8pm 10am‐9pm 12pm‐8pm 10am‐9pm Friday 10am‐5pm 10am‐6pm* 10am‐6pm 10am‐6pm 10am‐6pm 10am‐6pm 10am‐6pm 10am‐6pm 10am‐6pm 10am‐6pm Saturday 10am‐5pm 10am‐6pm* 10am‐6pm 10am‐6pm 10am‐6pm 10am‐6pm 10am‐6pm 10am‐6pm 10am‐6pm 10am‐6pm Sunday 1pm‐5pm 1pm‐5pm closed closed closed closed 1pm‐5pm 10am‐6pm 1pm‐5pm 10am‐6pm Total Hours Per Week 46 52 32 32 38 40 56 68 56 68 Cells higlighted in blue denote changed hours Note: *This change took place in January 2015, to better align closing hours Children's (CH) College Terrace (CT) Downtown (DT) Mitchell Park (MP) Rinconada (RI) APPENDIX 2 ATTACHMENT B Consolidated Special Revenue Funds Fund Summary ($000) FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change $ FY 2016 Change % REVENUES Gas Tax 1,495 2,083 1,644 1,416 (228) ‐13.9% Federal & State Grants ‐140 ‐ ‐‐0.0% Federal CDBG 665 468 507 442 (65)‐12.8% Housing In‐Lieu 4,023 1,400 2,500 4,876 2,376 95.0% Traffic Mitigation Fees 3,198 1,335 255 1,717 1,462 573.3% Developer Impact Fees 6,367 2,267 947 1,479 532 56.2% Parking Mitigation Fees 1,885 2,038 1,978 2,398 420 21.2% BID Assessment 110 94 153 140 (13)‐8.5% SUMC 11,733 ‐‐ ‐‐0.0% Interest Income 1,302 1,352 1,133 1,368 235 20.7% Other Revenue 937 525 845 488 (357) ‐42.2% Subtotal Revenue 31,715 11,702 9,962 14,324 4,362 43.8% Transfers In Technology Fund ‐14 12 12 ‐0.0% SUMC 1,720 ‐‐ ‐‐0.0% Utility Admin Fund ‐27 24 24 ‐0.0% Capital Projects Fund ‐260 ‐ ‐‐0.0% General Fund ‐153 230 202 (28)‐12.2% Subtotal Operating Transfers In 1,720 454 266 238 (28)‐10.5% Total Source of Funds 33,435 12,156 10,228 14,562 4,334 42.4% EXPENDITURES General Expense 1,584 3,056 3,487 3,525 38 1.1% SUMC 442 131 267 487 220 82.4% Subtotal Expenditures 2,026 3,187 3,754 4,012 258 6.9% Transfers Out General Fund 1,251 421 425 422 (3)‐0.7% Residential Housing In‐Lieu 1,720 ‐‐ ‐‐0.0% CIP 4,730 4,676 5,170 4,933 (237) ‐4.6% Refuse 581 ‐‐ ‐‐0.0% Subtotal Operating Transfers Out 8,282 5,097 5,595 5,355 (240)‐4.3% Total Use of Funds 10,308 8,284 9,349 9,367 18 0.2% Net To (From) Reserves 23,127 3,872 879 5,195 4,316 491.0% May 12, 2015 APPENDIX 2 4000 600 900 4000 700 600 3700 3800 3900 3800 300 3100 3300 4000 600 500 500 4200 4200 200 500 4100 4100 4100 4000 400 4100 3600 0 4100 4300 400 4200 200 0 4000 4200 300 200 300 200 4100 3800 100 3700 3700 3900 300 300 500 400 400 2500 600 3000 300 4100 4000 3800 700 200 200 3500 100 3400 3300 300 500 3800 500 700 700 2700 400 3100200 3000 2800 2900 2600 100 2500 500 3200 300 400 3000 3100 600 3100 3000 3200 2900 3300 3500 3400 700 3400 3800 3900 900 800 3600 900 4000900 3600 3700 3800 800 700 3300 3100 3200 700 3200 3400 900 3600 3400 3500 1100 3700 1000 1000 2900800 800 2800 700 2700 2800 2900 3000 900 700 800 2600 800 800 3100 900 3100 3300 3400 3200 1000 100032003000 3300 3400 3400 3000 1600 3300 1800 2300 1200 2200 1400 2000 2000 2200 2000 2200 2200 2300 2100 1600 1400 1500 1600 2000 2600 900 600 900 900 4200 700 4100 3700 800 700 1000 800 600 3500 3800 3600 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700 600 700 200200 200 0 100 700 800 500 500 0 100 0 0 300 400 500 400 500 600 700 400 500 600 700 400 500 600 600 700 400 500 600 700 400 0 100 200 300 400 500 200 300 400 500 300 100 200 300 300 400 500 600 700 0 800 900 1000 800 900 900 1000 27004400 4400 4500 2600 4500 4700 2500 4800 2400 4900 5000 5100 2200 2300 2300 2100 600 500 900 Beacon Street0 800 800 Mallet Court1000 South Perimeter Road600 700 South Perimeter Road800 West Perimeter Road 500 West Perimeter Road 600 Redwood Ave300 Redwood Avenue Oak Lane300 Hospital Plaza300S Lane300 Dines Court0 100 100 Newell Court0 100 200 400 0 Los Altos Square0 Los Altos Square100 Resident Lane100 Chapel Lane300 2100 2100 100 200 2100100 200 1900 2000 2100 2200 2300 2400 2000 2100 2200 2300 2400 2500 2500 2600 1100 900 1000 1100 11002100 2000 2000 2000 1100 1000 1000 1000 1100 1000 1100 2100 2100 900 900 1000 1100 1000 1100 1800 1000 1100 1900 17001700 1700 1700 1800 1900 2000 2000 1700 1800 2400 500 24002500 24002500 600 700 800 400 400 500 400 2400 400 2400 2400 2500 400 2400 2500 2500 300 2500 2400 300 2400 2500 300 2400 24002500 2400200 2400 2400 2400 2400 200 200 2400 2400 100 200 2400 100 200 2300 2300 100 2300 2300 200 200 300 400 4300 0 100 2300 2400 2500 2100 2200 100 200 400 500 600 2300 2400 100 100 100 0 0 100 100 100 100 100 100 0100 100 100 0 0 100 200 500 600 2000 2100 2200 300 300 300 400400 300 2200 2200 Royal Oak Court0 Paragon Court0 Wellington Court0 Sheffield Court0 Glenmead Court0Empire Court0 Towne Circle2200 0 100 200 300 400 500 4300 2600 2700 400 400 100200 100 100 200 2600 300 400 500 600 26002700 2500 2600 2600 2700 2600 2700 2600 2600 2600 1900 2000 2300 2400 2500 2600 2700 2800 2900 3000 100 Montelena Court100 100 100 200 300 400 400 500 200 300 Maloney Lane600 500 300 100 200 14500 14500 14200 14200 14300 14400 14500 14500 27200 27100 26700 26800 26900 27000 27600 27700 27000 28200 28300 28400 2100 2200 2000 13400 1100 28100 0 200 20002100 0 0 0 0 100 200 200 0 0 0 0 0 0 100 100 300 400 500 600 800 200 0 0 0 600 400 0 300 600 300 400 3300 3400 0 100 4300400 400 400 3500 3400 0 100 200 300 400 500 300 700 800 800 900 300 600 700 5000 300 2000 Monroe Park Byxbee Par Cameron Park Cornelis Bol Park El Camino Park El Camino Park Esther Clark Park Greer Park Jerry BowdenPark John Boulware Park Kellogg Park Mitchell ParkMitchell Park Mitchell Park Mitchell Park Mitchell Park Eleanor Pardee Park Alexander Peers Park Don JesusRamos Park Rinconada Park Scott Park TermanPark Timothy Hopkins Park WallisPark Weisshaar Park Werry Park Lot A Lot D Lot G Lot HLot F Lot O Lot P Lot T Lot C-6 Lot C-7 Lot C-8 Lot C Lot K Lot WC LotC-9 CogswellPlaza Don SecundinoRobles Park Hansen Way Park BlvdSubstation HanoverSubstation MaybellSubstation ct Lot B Lot K Lot E Johnson Park Train Station, California Avenue Water QualityControl Plant Alma Parkette Welcome Parking Lot Baylands Municipal Golf Course ROW Adobe Creek Substation Pump Station Sterling Canal Adobe CreekPump Station MataderoWell Duncan Well Timothy Hopkins Park Tennis Courts LyttonPlaza Terman Alta Mesa Memorial Park Stanford Shopping Center Substation Parkette El Palo Alto Park Stanford Medical Center Mayfield Park ROW Palo AltoAirport Civic CenterPlaza Channing House Dwtn Child Care Ctr Bryant / Lytton Parking Garage Parking C of CJune 26, 2002 C of C Nov 15, 2000 C of CJune 17, 2002 C of COct 25, 2001 C of COct 31, 2001 C of CJune 24, 2002 C- 1576July 19, 2000Doc 15319770 C of CJan 25, 1999 JordanMiddleSchool Tract No. 5447 C of C- 1206Feb 4, 1992 C of C- 1206Feb 4, 1992 Property Line409 Definedby Grant Deed#7934319Needsfurther review C of C- 1213 July 10, 199 2 C of C10-26-1994 Block Books show UndefinedSSE,PUE & SDE BaylandsAthletic Center Duck Pond Byxbee Park Land Fill Sailing Station Hooks Sand Point C of C 3-27-1984Rec File #80116492Folder 2-52 Flood Ponds Parking C of C C-13418-14-1995Merged LotN958 OR 1609Please note the County has not issued new APN's and still acknowledges 2 Lots. Please refer to COGO to see actual changes CompostingArea VenturaCommunityCenter Gunn High School Gunn High School Hetch Hetchy Right of Way Record Overlap Researched 2-10-1976 PKGPKG Arastradero Preserve Parking 58- LD- 37 1-8-1959 57- LD- 23 6-13-1957Split by Council 10-8-1951 Vacant PM 7919 Hetch Hetchy Right of Way Hanover to Matadero Bike Path Sunse t Magazine FuelStorageArea Calif StateLand CofC8-23-1996 CofC12-19-1995P120OR0679 CofC11-22-1995P106OR0467 CofC CofC6-18-1993M840OR0204 Effluent Channel Emily Renzel Wetlands MunicipalServiceCenter Flood Control Basin Flood Control Basin Flood Control Basin CofCC-1610 CofC16499644 OhloneElementarySchool DuveneckElementarySchool Pool TennisCourt Orchard AddisonElementary Main Library Art Center Walter HayesElementary School Greer Park Palo AltoHigh School SealePark Palo VerdeElementarySchool SC CountyCourthouseand Jail El CarmeloElementarySchool JL StanfordMiddle School FairmeadowElementarySchool HooverElementary Hewlett Packard Hewlett Packard Barron ParkElementary School Veteran's Administration Hospital Alta Mesa Memorial Park Alta MesaMemorial Park Juana BrionesElementarySchool Agilent Flood Gates FoothillReservoir #2 Highway 280 Runway Taxi Way Tower BaylandsInterpretiveCenter Timothy Hopkins Park Timothy Hopkins Park Saint Albertthe GreatChurch Tom CaseyFieldPublic Self-Storage Castilleja School Whole FoodsParking Whole FoodsMarket C of C C of C C of C C of CC of C C of C C of C C of C C of C Oak Court Apartments Midtown Area Cubberley Community Center TIBCO SAP Terman Middle School CPI CPI Heritage Park El Palo Alto ParkTimothy Hopkins Park Williams Park Nixon Elementary School Santa Clara Valley Water District PAMF CLARK BUILDING PAMFPARKINGSTRUCTURE Easement 1023 E91-016 Document 11176071 Mayfield Reservoir Kehillah JewishHigh School CVS Pharmacy Union Bank MiyakeE-Trade Stanford Books VMware Stanford Palo AltoPlaying Fields 10' Path 10' Path10' Path LotC-2 LotC-1 Lot C-3 Parking Garage Lot C-4 Lot C-5 Garage Parking JacarandaCourtyard NewGuineaSculptureGarden HALIPORTROBLEFIELD 01-502MemorialCourt 01-S005Main Quad KENNEDYGROVE FOUNTAINWHITEMEMORIALPLAZA CANFIELDCOURT 14-300RESIDENCES GUEST SUITES 05-750 GOVERNORSCORNER05-730 PUTTINGGREEN DRIVINGRANGE WEST CAMPUSTENNIS COURTS SERRA GROVESEQPLAZA OLD HEALTH RSCH. & POLICY CANTORRODINSCULPTUREGARDEN MEDICALSCHOOL MUNGER GRADUATE RESIDENCE COMPLEX THE OVAL CROWNQUAD GATE 1 GATE 15 GATE 14GATE 2GATE 3GATE 4 GATE 5 GATE 6 GATE 7 GATE 8 GATE 9 GATE 10 GATE 11 GATE 12 EL CAMINO GROVE 09-575 GATE 13 ANGELLFIELD MALONEY FIELD MASTERS GROVE BOYD & JILL SMITHFAMILY STADIUMARTIFICIAL TURFFIELD SUNKEN DIAMOND PAC-10PLAZA STEUBER FAMILYRUGBY FIELD DAN ELLIOTTPRACTICE FIELD CHUCKTAYLORGROVEVARSITY TENNISCOURTS ARRILLAGAPLAZA WOMENS SOFTABLL DIAMOND POLICE COMPOUND IM SOUTH POOL POOL FACILITIESOPERATIONS 09-177T POLICEDEPT.FIREDEPT.RECYCLINGCENTER 09-S151 MANZANITAFIELD FROST AMPHITHEATER08-S600FROSTAMPHITHEATRE MEMORIALAUDITORIUM FORDPLAZA SANDVOLLEYBALL TAUBESOUTH KORETPARK MANZANITAPARK ARIZONACACTUSGARDEN & LAWN MEDICAL SCHOOL JORDANQUAD ARBORETUM GROVE EUCALYPTUS GROVELASUEN GROVE TOYON GROVE GALVEZ FIELD LAGUNITA ESS 05-010 XLAGUNITA COMPLEXCOURTYARD LEVINEFIELD COWELLCLUSTERHOUSES 10-200 XRAINS APARTMENTS THE BUTTERY C A B ESCONDIDO VILLAGE 5(EV-5) (UNITS 127-144) ESCONDIDOVILLAGE EV-4 (UNITS 116-125) EV-3(UNITS 99-115) EV-1EV-1(UNITS 1-54 EV-2(UNITS 55-98) KEYS SCHOOL MIDDLE CAMPUS FRENCHMANSGATE GSB NIGHTMANAGEMENT CENTER (AREA IS UNDER CONSTRUCTION) KORETPLAZA MUDD CHEMGAZEBOS 06-400WILBURHALLCOMPLEX 06-750SCHWABRESIDENTIALCENTER BIOLOGY GREENHOUSESCARNEGIEINSTITUTION STANFORD ATHLETICSSAND HILL FIELDS Bowman Int.School Parcel split 2013 Lot S Lot CC Lot N Lot R Lot Q The Dish MoanaCourt Wallis Ct Donald Drive Encina Grande Drive Cereza Drive Los Robles Avenue Villa Vera Verdosa DriveCampana DriveSolana Drive Georgia Ave Ynigo Way Driscoll Ct ngArthur' Maybell Way Maybell Avenue Frandon Ct Florales Drive Georgia AvenueAmaranta 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Laguna Way ShaunaLane La Para Avenue San Jude Avenue El Centro Street TimlottLa Jennifer Way Magnolia Dr North La Donna Avenue LosRobles Avenue Rinc Manzana Lane onCircle MesaCourt Crosby Pl Georgia Avenue Hubbartt Drive Willmar Drive Donald Drive Arastradero Road Foothill Expressway Miranda Avenue La Para Avenue San Jude Avenue Magnolia Drive Military Way Arbol Drive Orme Street Fernando Avenue Matadero Avenue Lambert Avenue Hansen Way El Camino Real Margarita Avenue Matadero Avenue Wilton Avenue Oxford Avenue Harvard Street California Avenue Wellesley Street Princeton StreetOberlin Street Cornell Street Cambridge Avenue College AvenueWilliams Street Yale Street Staunton Court Oxford AvenueEl Camino Real Churchill Avenue Park Boulevard Park Avenue Escobita Avenue Churchill Avenue Sequoia Avenue Mariposa AvenueCastilleja Avenue Miramonte Avenue Madrono Avenue Portola Avenue Manzanita Avenue Coleridge Avenue Leland Avenue Stanford Avenue Birch Street Ash Street Lowell Avenue Alma Street Tennyson Avenue Grant Avenue Sheridan Avenue Jacaranda Lane El Camino Real Sherman Avenue Ash Street Page Mill Road Mimosa Lane Chestnut Avenue Portage Avenue Pepper Avenue Olive Avenue Acacia Avenue Emerson Street Park Boulevard Orinda Street Birch Street Ash Street Page Mill Road Ash Street Park Boulevard College Avenue Cambridge Avenue New Mayfield Lane Birch Street California Avenue Park Boulevard Nogal Lane Rinconada Avenue Santa Rita Avenue Park Boulevard Seale Avenue Washington Avenue Santa Rita Avenue WaverleyStree Bryant Street High Street Emerson Street Colorado AvenueStreet Emerson Street Ramona Street Bryant Street South Court El Dorado AvenueAlma Street Alma Street HighStreet t Emerson Waverley Oaks Washington Avenue Bryant Street South Court Waverley Street Emerson Street Nevada Avenue North California Avenue Santa Rita Avenue Ramona Street High Street North California Avenue Oregon Expressway Marion Avenue Ramona Street Colorado Avenue Waverley Street Kipling Street South Court Cowper Street Anton CourtNevada Avenue Tasso Street Tasso Street Oregon Avenue Marion Pl Webster Street Middlefield Road Ross Road Warren Way El Cajon Way Embarcadero RoadPrimrose Way Iris Way Tulip Lane Tulip Lane Garland Drive Louis Road Greer Road MortonStreet Greer Road Hamilton Avenue Hilbar LaneAlannah Ct Edge Rhodes Drive Marshall Drive FieldinMoreno AvenueMarshallDrive Dennis Drive Agnes Way Oregon AvenueBlair Court Santa Ana Street Elsinore DriveElsinore Court El Cajon Way Greer RoadNorth California Avenue gDrive Colorado Avenue Sycamore Drive Amarillo Avenue VanAukenCircle Bruce Drive Colonial LaneMoreno Avenue Celia Drive Burnham Way Greer Road Indian Drive Elmdale Pl C Tanland Drive Moreno Avenue Amarillo Avenue West Bayshore Road Sandra Place Clara Drive Colorado Avenue Greer Road Colorado AvenueSimkins Court Otterson Ct Higgins PlaceLawrence Lane Maddux Drive Genevieve Ct MetroCircle MoffettCircleGreer Road East Bayshore Road ardinalWay Santa Catalina Street ArrowheadWayAztec Way Chabot Terrace Oregon Avenue Carmel Drive SierraCourt StFrancisDrive West Bayshore Road Tanland Drive East Bayshore Road woodDrive Edgewood Drive WildwoodLane Ivy Lane East Bayshore Road St Francis Drive Wildwood Lane Watson Court Laura Lane Sandalwood Ct O'Brine Lane (Private) Embarcadero Road FaberPlace Embarcadero Road Geng Road Embarcadero Way Embarcadero Road Quarry Road Welch Road Arboretum Road Quarry Road Sand Hill Road Homer Avenue Lane 8 West Medical Foundation Way Lane 7 West Lane 7 East Embarcadero Road Encina Avenue El Camino Real Urban Lane Wells Avenue Forest Avenue High Street Emerson Street Channing Avenue Alma Street Alma Street PaloAltoA El Camino Real venue Mitchell Lane Hawthorne Avenue Everett Avenue Lytton Avenue Lane 15 E High Street Alma Street Bryant Street Lane 6 E Lane 11 W Lane 21 High Street Gilman Street Hamilton Avenue University Avenue Bryant Court Lane 30 Florence Street Kipling Street Tasso Street Cowper Street Ruthven Avenue Hawthorne Avenue Lane 33 PaloAltoAvenue Everett Avenue Poe Street Waverley Street Tasso Street Cowper Street Palo Alto Avenue Webster Street Everett Court Lytton Avenue Byron Street Fulton StreetMiddlefield Road Churchill Avenue Lowell Avenue Seale AvenueTennyson Avenue Melville Avenue Cowper Street Tasso Street Webster Street Byron Street North California Avenue Coleridge Avenue Waverley Street Bryant Street Emerson Street Kellogg Avenue Kingsley Avenue Portal Place Ross Road Oregon Avenue Garland Drive Lane A West Lane B West Lane B East Lane D West Lane 59 East Whitman Court Kellogg AvenueEmbarcadero Road Kingsley Avenue Lincoln AvenueAddison Avenue Lincoln Avenue Forest Avenue Downing Lane Homer Avenue Lane D East Lane 39 Lane 56 Hamilton Avenue Webster Street Waverley Street Kipling Street Bryant StreetRamona Street Addison AvenueScott Street Byron Street Palo Hale Street Seneca Street Lytton Avenue Guinda Street PaloAltoAvenue Fulton StreetMiddlefield Road Forest Avenue Webster Street Kellogg Avenue Middlefield Road Byron Street Webster Street Cowper Street Tasso Street Cowper Street Addison Avenue Lincoln Avenue Boyce Avenue Forest AvenueHamilton Avenue Homer Avenue Guinda Street Middlefield Road Channing Avenue AltoAvenue Chaucer Street Chaucer Street University Avenue Channing Avenue Addison Avenue Lincoln Avenue Regent Pl Guinda StreetLincoln Avenue Fulton Street Melville Avenue Byron Street Kingsley Avenue Melville Avenue Hamilton AvenueHamilton Court Forest AvenueForest Ct Marlowe Street Maple Street Palm Street Somerset Pl Pitman Avenue Fife Avenue Forest Avenue Dana Avenue Lincoln Avenue University Avenue Coleridge Avenue Lowell Avenue Fulton StreetCowper Street Tennyson Avenue Seale Avenue Northampton Drive West Greenwich Pl Middlefield Road Newell RoadGuinda Street East Greenwich Pl Southampton Drive Webster Street Kirby Pl Kent Place Tevis Pl Martin Avenue Center Drive Harriet Street Wilson S t r e e t Cedar Street Harker Avenue Greenwood Avenue Hutchinson Avenue Channing Avenue Hopkins Avenue Embarcadero Road Ashby Drive Dana Avenue Hamilton Avenue Pitman Avenue Southwood Drive WestCrescentDrive CrescentDrive University Avenue Center Drive EastCrescen Arcadia Place Louisa Court Newell Pl Sharon Ct Erstwild Court Walter Hays Drive Walnut Drive Newell Road Parkinson AvenuePine Street Mark Twain Street Louis RoadBarbara Drive Primrose Way Iris Way Embarcadero Road Walter Hays Drive Lois Lane Jordan Pl Lois Lane Heather Lane Bret Harte Street Stanley Way De Soto DriveDe Soto Drive Alester Avenue Walter Hays Drive Channing Avenue Iris Way tDrive Dana Avenue Hamilton AvenueNewell RoadKings Lane EdgewoodDrive Island Drive Jefferson Drive JacksonDrive Patricia LaneMadison Way EdgewoodDrive Ramona Street Addison AvenueChanning Avenue Waverley Street Tennyson Avenue Seale Avenue Middlefield Road Byron StreetWebster Street Marion Avenue Welch Road Sedro Lane Peral Lane McGregor Way Monroe Drive Silva Avenue Silva Court Miller Court Briarwood Way Driscoll Place Paulsen Ln Community Lane Lane 15 E Court Madeline Ct Arroyo Ct David Ct Green Ct Oregon Expressway Oregon Expressway Sheridan Avenue Page Mill Road Page Mill Road Foothill Expressway Miranda Avenue Foothill Expressway Miranda Avenue Foothill Expressway Cerrito Way Emerson Street Miranda Avenue Lane 20 WLane 20 E Oregon ExpresswayUniversity Avenue Jacob's Ct CalTrain ROW CalTrain ROW CalTrain ROW CalTrain ROW Emerson Street Waverley Street Kipling Street Clark Way Durand Way Sand Hill Road Swain Way Clark Way Mosher Way Charles Marx Way Orchard Lane Vineyard Lane Oak Road Sand Hill Road Sand Hill Road Sand Hill Road Hillview Avenue Arastradero Road Lane 66 Bryant Street Ramona Street Blake Wilbur Drive West Charleston Road Bayshore Freeway Bayshore Freeway Bayshore Freeway West Bayshore Road East Bayshore Road East Bayshore Road East Bayshore Road West Bayshore Road East Bayshore Road Bayshore Freeway Bayshore Freeway Fabian Way Bayshore Freeway Bayshore Freeway Palo Road Shopping Center Way Shopping Center Way Shopping Center Way London Plane Way Plum Lane Sweet Olive Way Pear Lane Lane 66 La Selva Drive Grove Ct Miranda Court Stanford Avenue Lane 12 WLane 5 E Lasuen Street Serra Mall Escondido Road Olmsted Road Phillips Road Pistache Place Santa Ynez Street Lane B Lane C El Dorado Avenue Clara Drive Bellview Dr Everett Avenue Homer Avenue La Calle SAN ANTONIO AVENUE Matadero Ave Colorado Pl Los Robles Avenue Timlott Ct Vista Villa PaloAltoAvenue Lane La Donna Avenue Cass Way Kenneth Drive Fabian Way Page Mill Road Middlefield RoadChristine Drive Louis Road Bayshore Freewa Bayshore Free Chimalus Drive Hanover Street Community Lane Greenwood Avenue Harker Avenue Parkinson Avenue Avenue Maplewood Pl Mackay Drive Santa Teresa Lane Byron Street Varian Way Arastradero Rd Quail Dr Quail Dr Paloma Dr Paloma Dr Trinity Ln Heron Wy Feather Ln Stanislaus LnTuolumne Ln Plover Ln Sandpiper Ln Curlew Ln Mallard LnEgret Ln Klamath Ln Deodar StAlder LnSpruce Ln Rickey's Ln Juniper Way Rickey's Wy Rickey's Wy Rickey's Wy Juniper Lane Emerson Street Boronda Lane Tahoe Lane Lake Avenue Donner Lane Almanor Lane Fallen Leaf Street Berryessa Street Cashel StNoble St Hettinger Ln Pratt Ln Emma Court Galvez Mall Federation Way Abrams Court Allardice Way Alta Road Alvarado Ct Alvarado Row Angell Court Arguello Way ArguelloWay Avery Mall Ayrshire Farm Lane Barnes CourtBonair Siding Bowdoin Street Cabrillo Avenue Cabrillo Avenue Campus Drive Campus Drive Campus Drive Campus Drive Campus DriveCampus Drive Campus Drive Campus Drive Campus Drive Campus Drive Campus Drive Campus DriveCampus Drive Campus Drive Capistrano Way Casanueva Place Cathcart Way Cedro Way Cedro Way Churchill Mall Comstock Circle Aboretum Road Aboretum Road Blackwelder Court Campus Drive Cathcart Way Constanzo Street Cooksey Lane Coronado Avenue Cottrell Way Cottrell Way Cowell Ln Crothers Way Dolores Street Dolores Street Dudley LaneDuena Street Electioneer Road Escondido Mall Escondido Mall Escondido Road Escondido Road Escondido Road Esplanada Way Estudillo Road Frenchmans Road Frenchmans Road Galvez Mall Alvarado Row Galvez Street Galvez Street Galvez Street Gerona Road Gerona Road El Escarpado Gerona Road Hoskins Court Hulme Court Jenkins Court Junipero Serra Boulevard Junipero Serra Boulevard Junipero Serra Boulevard Knight Way Lagunita Drive Lane L Lane W Lasuen Mall Lasuen Mall Lasuen Mall Lasuen Street Lathrop Drive Lathrop Drive Lathrop Place Lathrop Drive Links RoadLinks Road Lomita Drive Lomita Drive Lomita Drive Lomita Drive Lomita DriveLomitaCourt Lomita Mall Los Arboles Avenue Masters Mall Mayfield Avenue Mayfield Avenue Mayfield Avenue Mayfield Avenue Mayfield Avenue Mayfield Avenue McFarland Court Mears Court Mears Court Memorial Way Mirada Avenue Mirada Avenue Museum Way N Service Road N Tolman Ln Nelson Mall Nelson Road North-South Axis Oberlin St Comstock Circle Escondido Mall Olmsted Road Olmsted Road Olmsted Road Olmsted Road Olmsted Road Palm Drive Palm Drive Pampas Lane Panama Mall Panama Mall Panama Street Panama Street Pearce Mitchell Pl Peter Coutts Circle Peter Coutts Road Peter Coutts Road Pine Hill Court Pine Hill Road Quarry Extension Quarry Road Quillen Ct Raimundo Way Raimundo Way Raimundo Way Roble Drive Rosse Lane Roth Way Roth Way Roth Way Running Farm Lane RyanCourt S Service Road S Tolman Ln Salvatierra Street Salvatierra St Salvatierra Walk Samuel Morris Wy San Francisco TerraceSan Francisco Court San Juan St San Juan St San Rafael Pl Santa Fe Avenue Santa Maria Avenue Santa Teresa Street Santa Teresa Street Santa Ynez Street Searsville Road Sequoia Wy Serra Mall Serra Street Serra Street Serra Street Sonoma Terrace Stanford Avenue Stanford Avenue Stock Farm Road Thoburn Court Tolman DriveValdez Place Valparaiso Street Vernier Place Via Ortega Via PalouVia Pueblo Mall Welch Road Wellesley St Wilbur Way Wing Place Yale St Alma Street Alma Street Alma Street Alma Street Alma Street Hawthorne Avenue Lytton Avenue Nathan Abbott Way Sam McDonald Road Sam McDonald Mall Vista Lane Bowdoin Lane Arguello Way Governors Avenue Governors Avenue Governors Avenue S Governors Lane Pasteur Drive Lagunita Drive Alma Village Lane Alma Village Circle R es er voir R oa d Reservoir Road Reservoir Road Ryan Lane O'Connor Lane Gene CtBrassinga Ct Cole Ct Birch Street Arboretum Road Welch RoadPasteur Drive Pasteur Drive This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend Road Centerline (TC) Road Centerline (TC) CITY PARCELS BY OWNER CITY PARCELS BY ID abc CITY OF PA BUILDINGS abc Assessment Parcel Labels (AP) abc Road Centerline Large Text (TC) Aed Loc2 0'3370' CITY O F PALO A L TO I N C O R P O R ATE D C ALIFOR N IA P a l o A l t oT h e C i t y o f A P RIL 16 1894 The City of Palo Alto assumes no responsibility for any errors ©1989 to 2015 City of Palo Alto swillia, 2015-05-11 14:50:20 (\\cc-maps\gis$\gis\admin\meta\view.mdb) ATTACHMENT C APPENDIX 2 FINANCE COMMITTEE MEETING 5/14/2015, All Items [X] Placed Before Meeting [ ] Received at Meeting City of Palo Alto M E M O R A N D U M TO: Finance Committee DATE: May 14, 2015 SUBJECT: Additional Information Pertaining to the Fiscal Year 2016 Proposed Budget Revised Proposed Operating Budget Pages Administrative Services Performance Measures The Administrative Services Department includes a Performance Measure for the Average Processing Time for Purchase Requisitions on p. 200 of the Proposed Operating Budget. Staff has updated the Fiscal Year 2013 and Fiscal Year 2015 data and is issuing a replacement page. This update will also be reflected in the City Auditor’s Fiscal Year 2014 Performance Report scheduled for release later this month. In addition to this change, the performance measure for Citywide Cost Savings Based on Awarded Costs is recommended to be deleted as the data presented should be characterized as an internal tracking item versus a performance measure. A replacement page can be found attached to this memo (Attachment A). Summary of Position Changes The Fiscal Year 2016 Proposed Budget was transmitted to Council on April 27. To facilitate the Finance Committee’s review of recommended position additions, the at places memorandum on May 5, 2015 provided summary worksheets for proposed position additions organized by fund as well as organized by department. To further clarify the overall proposed position changes for Fiscal Year 2016, the attached worksheet, Fiscal Year 2016 Proposed Operating Budget Position Changes by Fund Type (Attachment B), is a summary listing of all proposed position additions, deletions, and funding shifts between City departments and Fund Types (e.g.: General Fund, Enterprise Funds, and Other Funds). In total, the proposed budget includes new 13.3 additional Full-Time Equivalents (FTEs), of which 10.9 FTEs are recommended to be added in the General Fund, 0.7 FTEs in the Enterprise Funds, and 1.7 FTEs in Other Funds. In addition to these FTE increases, there are 2.32 FTEs being shifted between departments and the three Fund Types. Other Funds are increasing by net 2.32 FTE, with net 0.13 FTE from the General Fund and net 2.19 FTE from Enterprise Funds. 5/14/2015 APPENDIX 2 FINANCE COMMITTEE MEETING 5/14/2015, All Items [X] Placed Before Meeting [ ] Received at Meeting Summary of Citywide Salary and Benefit Changes During the Fiscal Year 2016 Proposed Operating Budget Overview presented to the Finance Committee on May 5, it was noted that Citywide Salaries and Benefits in all funds increased by $8.5 million from the Fiscal Year 2015 Adopted Operating Budget of $150.1 million to the Fiscal Year 2016 Proposed Budget of $158.6 million, a 5.66 percent increase. The table below shows the five main salaries and benefits categories broken down into the changes from the Fiscal Year 2015 Adopted Budget, to the Fiscal Year 2016 Base Budget, and then to the Fiscal Year 2016 Proposed Budget. The difference between the Fiscal Year 2016 Base Budget to the Fiscal Year 2016 Proposed Budget is the cost of the recommended net 13.3 FTE position additions in all funds of approximately $2 million. San Francisquito Creek Joint Powers Authority Annual Contribution (Agenda Item 2a) The Board of Directors of the San Francisquito Creek Joint Powers Authority (JPA) approved the JPA’s Fiscal Year 2016 operating budget on Thursday, April 23rd. The Fiscal Year 2016 budget increased the annual member agency contribution by $27,000 from $118,000 to $145,000 in order to allow the JPA to hire an additional staff person. Therefore, staff recommends increasing the annual JPA contribution which is funded in the Public Works Department’s General Fund budget by $27,000 to cover the additional cost. The increased expense is recommended to be funded via increased Fiscal Year 2015 budget surplus carry-forward funds. Storm Drainage Fund Oversight Committee (Agenda Item 2c) On Wednesday, May 6th the Storm Drain Oversight Committee met to review the proposed Storm Drainage Fund budget for Fiscal Year 2016. The Committee unanimously approved a motion finding that the proposed budget reflects the increased fees, CIP projects, and operating expenditures approved in the 2005 property-owner approved ballot measure. A memorandum from the members of the Storm Drainage Oversight Committee is attached for your review. (Attachment C) 5/14/2015 APPENDIX 2 FINANCE COMMITTEE MEETING 5/14/2015, All Items [X] Placed Before Meeting [ ] Received at Meeting DEPARTMENT HEAD: LALO PEREZ Director, Administrative Services/CFO CITY MANAGER: JAMES KEENE City Manager 5/14/2015 APPENDIX 2 ADMINISTRATIVE SERVICES ADMINISTRATIVE SERVICES • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET 200 AVERAGE PROCESSING TIME FOR PURCHASE REQUISITIONS Goal Implement performance management programs to support and enhance communication, accountability, and positive outcomes. Objective Continue developing and implementing Procurement and Inventory process improvements. FY 2013 Actual FY 2014 Actual FY 2015 Adopted FY 2015 Estimated FY 2016 Proposed Track the average time from the receipt of a Purchase Requisition to issuance of a Purchase Order 38 days 30 days n/a 20 days 15 days Description The City is required to follow procurement rules and regulations as outlined in the Municipal Code and State Law to ensure open and fair competition and the most cost-effective use of tax dollars. In compliance with existing rules and regulations, ASD endeavors to provide goods and services as quickly as possible to City departments. Purpose To measure the average processing time for Purchase Requisitions in order to identify processing improvements while being compliant with existing rules and regulations. Status This is a new measure. ATTACHMENT A APPENDIX 2 ADMINISTRATIVE SERVICES 201 ADMINISTRATIVE SERVICES • CITY OF PALO ALTO FISCAL YEAR 2016 PROPOSED BUDGET Workload Measures FY 2013 Actual FY 2014 Actual FY 2015 Adopted FY 2015 Estimated FY 2016 Proposed Number of P-card (City credit card) transactions 18,981 17,885 20,433 18,230 19,000 Number of purchase orders and purchase requisitions processed 1,945 2,047 2,093 2,040 1,750 Total amount of cash and investments (as of June 30)$527.9 million $472.0 million $525.1 million $521.1 million $516.0 million Budget Summary FY 2013 Actuals FY 2014 Actuals FY 2015 Adopted Budget FY 2016 Proposed Budget FY 2016 Change $ FY 2016 Change % Dollars by Division Accounting 1,710,149 1,751,790 1,896,075 1,958,610 62,535 3.3% Administration 840,450 692,367 555,556 686,172 130,616 23.5% Office of Management and Budget 1,054,460 1,231,281 1,296,242 1,393,539 97,297 7.5% Purchasing 1,301,936 1,598,009 1,448,065 1,497,480 49,415 3.4% Real Estate 583,962 532,047 598,997 643,402 44,405 7.4% Treasury 1,551,254 1,287,026 1,380,436 1,455,706 75,271 5.5% Total 7,042,210 7,092,520 7,175,372 7,634,910 459,538 6.4% Dollars by Category Salary & Benefits Healthcare 557,885 575,728 615,879 635,597 19,719 3.2% Other Benefits 249,625 158,000 160,465 169,464 8,999 5.6% Overtime 27,999 24,134 33,723 33,723 ——% Pension 733,199 876,252 948,644 1,030,429 81,785 8.6% Retiree Medical 585,000 381,699 523,211 574,000 50,789 9.7% Salary 3,601,535 3,763,900 3,838,780 4,041,979 203,199 5.3% Workers' Compensation 43,379 85,141 33,216 71,995 38,779 116.7% Total Salary & Benefits 5,798,621 5,864,853 6,153,917 6,557,186 403,269 6.6% Allocated Charges 616,605 393,601 412,149 448,276 36,127 8.8% Contract Services 246,148 535,484 285,875 316,321 30,446 10.7% Facilities & Equipment 15,243 20,506 4,200 6,200 2,000 47.6% General Expense 288,345 221,431 259,569 249,105 (10,464)(4.0)% Rents & Leases 13,574 11,153 12,364 12,364 ——% ATTACHMENT A APPENDIX 2 General Fund Enterprise Funds Other Funds*Total FY 2015 Adopted Budget FTE 588.58 358.34 86.88 1,033.80 FY 2015 Approved FTE Adjustments 1.00 (7.00)- (6.00) FY 2015 Modified Budget FTE 589.58 351.34 86.88 1,027.80 Assistant Director ASD (IT to ASD)0.10 (0.10)0.00 Chief Sustainability Officer (UTL and PW to SUS)0.45 (0.45)0.00 GIS Senior Technologist (DS to IT)(0.50)0.50 0.00 Business Analyst (UTL to IT)(1.00)1.00 0.00 Senior Technologist (UTL to IT)(1.00)1.00 0.00 Project Engineer (DS to PW)(0.02)0.02 0.00 Surveyor, Public Works (DS to PW)(0.47)0.03 0.44 0.00 Various Public Works CIP positions (internal PW shifts)0.31 0.21 (0.52)0.00 FY 2016 FTE Reallocation Sub-Total (0.13)(2.19)2.32 0.00 Performance Auditor II (Auditor's Office incr. from 0.50)0.50 0.50 Administrative Associate III (CSD incr. from 0.75)0.25 0.25 Program Assistant (CSD incr. from 0.75)0.25 0.25 Recreation Superintendent (CSD)1.00 1.00 Assistant Chief Building Official (DS)1.00 1.00 Green Building Planner (0.70 DS, 0.30 UTL)(0.70)(0.30)(1.00) Planning Manager (DS)1.00 1.00 Librarian (Library)0.30 0.30 Library Specialist (Library)1.00 1.00 Supervising Librarians (Library)2.00 2.00 Code Enforcement Lead (0.80 PCE, 0.20 DS)1.00 1.00 Parking Operations Lead (PCE)0.30 0.70 1.00 Traffic Operations (PCE)1.00 1.00 Senior Technologist (Public Safety)1.00 1.00 Airport Operations Manager (PW)1.00 1.00 Engineer (PW)0.10 0.90 1.00 Facilities Manager (PW)0.90 0.10 1.00 FY 2016 FTE Addition/Deletion Sub-Total 10.90 0.70 1.70 13.30 FY 2016 Proposed Budget FTE Adjustments 10.77 (1.49)4.02 13.30 FY 2016 Proposed Budget FTE 600.35 349.85 90.90 1,041.10 *Other Funds are Internal Service Funds, Special Revenue Funds, and the Capital Fund Note: This table does not include Hourly positions Fiscal Year 2016 Proposed Operating Budget Position Changes by Fund Type Legend ASD - Administrative Services CIP - Capital Improvement Program CSD - Community services DS - Development Services IT - Information Technology PCE - Planning & Code Enforcement PW - Public Works SUS - Office of Sustainability UTL - Utilities 5/13/2015 ATTACHMENT B APPENDIX 2 Storm Drain Oversight Committee MEMORANDUM Date: May 6, 2015 To: Honorable Finance Committee of the Palo Alto City Council From: Members of the Storm Drain Oversight Committee Subject: Review of the Proposed FY 2016 Storm Drainage Fund budget As directed by the City Council, we have reviewed the proposed Storm Drainage Fund budget for fiscal year 2016 and compared it with the provisions of the Storm Drainage Fee increase approved by Palo Alto property owners in 2005. Based on this review, we find that the proposed budget reflects the increased fees, CIP projects, and operating expenditures approved in the ballot measure. The Committee met to discuss the proposed budget on Wednesday, May 6, 2015. Prior to the meeting, Storm Drainage staff provided a packet of informational materials about the approved ballot measure and the proposed budget for the Committee’s review. During the meeting, staff presented information regarding the Storm Drainage Fund operating and capital budgets and answered questions from the Committee members. Based upon our review of the materials provided to us by Storm Drainage staff, we find that the attached matrix describing the proposed use of the Storm Drainage Fee increase for FY 2016 and the table providing a side-by-side comparison of the ballot measure and the proposed budget accurately describe the relationship between the budget and the ballot measure. In addition, the attached spreadsheet summarizes the status of the Storm Drainage Fund capital improvement program implementation to-date. Staff and the Committee concur that there will be adequate funding generated by the Storm Drainage Fee increase authorized through the 2005 ballot measure to fully fund the seven capital improvement projects specified for implementation in the ballot measure. Attachments ATTACHMENT C APPENDIX 2 Proposed Use of Storm Drainage Fee Increase for FY 2016 Line Item Revenue Expenditures Fee Increase Revenue SD Fee Increase $4,055,820 Capital Improvements and Program Enhancements A. One-time SD CIP Projects San Francisquito Creek Pump Station $0 Channing/Lincoln Storm Drain $0 Southgate Neighborhood Storm Drains $0 Gailen/Bibbits SD Improvements $0 Clara Drive SD Improvements $0 Matadero Creek Pump Station & Trunks $1,915,000 Alma Street SD Improvements $0 B. Enhanced Maintenance SD Replacement/Rehabilitation CIP $638,000 Augmented SD Maintenance $169,132 C. Innovative SD Projects $154,000 D. Augmented Storm Water Quality $163,715 E. Capital Improvement Program Staffing New CIP Engineer $160,280 CIP Support Staff $36,223 SUBTOTALS $4,055,820 $3,236,350 From Storm Drainage Fund Reserves $529,093 Other storm drain expenses previously covered by General Fund subsidy $1,348,563 TOTALS $4,584,913 $4,584,913 Prepared for the Storm Drain Oversight Committee by Joe Teresi and Gina Magliocco 05/06/2015 ATTACHMENT C APPENDIX 2 Approved Storm Drainage Fee Increase Ballot Measure vs. Preliminary FY 2016 Storm Drainage Fund Budget BALLOT MEASURE 1.Implementation of seven (7) high- priority storm drain capital improvement projects. 2.$ 500,000 annually (adjusted annually for inflation) for storm drain system repair and rehabilitation. 3.$ 90,000 annually for augmented storm drain system maintenance. 4.$ 125,000 annually (adjusted annually for inflation) for innovative projects to reduce storm water runoff and pollutant levels. 5.$ 100,000 annually (adjusted annually for salary increases) to fund storm water quality protection activities formerly funded by the Wastewater Treatment Fund. 6.$ 115,000 annually (adjusted annually for salary increases) for an engineer to assist with implementation of storm drain capital improvement projects. 7.Annual adjustment of fees by local CPI increase or 6%, whichever is lower. 8.Pre-payment of Storm Drainage Fees for City-owned properties to accelerate implementation of storm drain capital improvement projects. PROPOSED BUDGET 1.$1,915,000 for Matadero Pump Station and Trunk Lines Improvements (CIP SD-13003). 2.$ 638,000 for Storm Drain System Replacement and Rehabilitation (CIP SD-06101) 3.$169,132 in additional funding for Storm Drain In-House Maintenance: ($ 90,000 for supplies & materials + 0.45 additional FTE staffing). 4.$ 154,000 allocated to Storm Water Rebate Program for rain barrels, cisterns, permeable pavement, and green roofs. 5.$163,715 in additional funding for Storm Water Quality Protection (0.78 additional FTE staffing, $ 39,000 for non-salary expenses). 6.$196,503 in additional funding for Engineer position (1.0 FTE) and CIP support staff (0.3 FTE) funded in Storm Drain System Improvements. 7.Proposed 2.7% increase per the change in the CPI for San Francisco-Oakland- San Jose for calendar year 2014. 8.No pre-payment for FY 2016; all scheduled pre-payments by General Fund have been made. ATTACHMENT C APPENDIX 2 Proposed Storm Drain Capital Spending Plan SF Creek Pump Station Gailen / Bibbits Alma Street Channing Lincoln Trunk Matadero PS and Trunks Clara Drive Southgate Neighborhood YEARLY PROJECT Year FY $4,500,000 $650,000 $1,500,000 $4,600,000 $3,000,000 $900,000 $2,000,000 TOTAL 1 FY 2005-06 $900,000 $650,000 $180,000 $1,730,000 2 FY 2006-07 $735,000 $735,000 3 FY 2007-08 $7,535,000 ($915,000)$6,620,000 4 FY 2008-09 $700,000 $785,000 $1,485,000 5 FY 2009-10 $820,000 $820,000 6 FY 2010-11 $895,000 $895,000 7 FY 2011-12 $1,590,000 $140,000 $1,730,000 8 FY 2012-13 $1,680,000 $860,000 $2,540,000 9 FY 2013-14 $1,430,000 $315,000 $750,000 $1,026,271 $3,521,271 10 FY 2014-15 $1,840,000 $1,840,000 11 FY 2015-16 $1,915,000 $1,915,000 12 FY 2016-17 $1,990,000 $1,990,000 $9,135,000 $650,000 $785,000 $6,415,000 $6,060,000 $750,000 $2,026,271 $25,821,271 NOTES: 1. Cost figures immediately below project titles reflect Year 2005 cost estimates. Spreadsheet figures represent actual incurred costs & projected future costs. 2. Shaded projects have been completed to-date. 3. Phases 1 & 2 (of 3) of the Channing/Lincoln CIP have been completed. 5/6/15 JT ATTACHMENT C APPENDIX 2 5/26/2015 1 Fiscal Year 2016 Proposed Budget City Council April 27, 2015 Overview Citywide Expenditures General Fund Expenditures and Revenues Investment Highlights 2 Citywide Expenditures $553.7 Million 3 4 Citywide Expenditure Budget (comparison to FY 2015 Adopted Budget) 4 Increase of $83.4 million or 17.7 percent, •Carrying forward of capital funds ($50.7 million) •Utility purchases ($9.3 million) •Salary and benefits ($8.8 million) Net increase of 7.3 FTEs (13.30 FTEs from the FY 2015 Adjusted Budget) General Fund Revenues $183.5 Million 3 6 General Fund Revenues (comparison to FY 2015 Adopted Budget) 6 Increase of $14.1 million or 8.2 percent •Transient Occupancy Tax ($4.6 million; 32.7 % increase) •Property Tax ($2.6 million; 8.2 % increase) •Sales Tax ($1.7 million; 6.4 % increase) •Charges to Services and Permits and Licenses ($2.8 million; 9.9 % increase) APPENDIX 3 5/26/2015 2 FY 2016 General Fund Expenditures $185.1 Million 3 8 General Fund Expenditures (comparison to FY 2015 Adopted Budget) 8 Increase of $14.0 million or 8.2 percent •Infrastructure Fund Transfer ($5.0 million; 36.8 % increase; ) •Planning and Community Environment ($1.9 million; 26.9 % increase; 3.0 FTEs) •Library ($1.0 million; 13.8 % increase; 3.30 FTEs) •Development Services ($1.4 million; 13.0 % increase; net 1.30 FTEs) 9 Investment Highlights Council Priorities –The Built Environment: multi‐modal transportation, parking, and livability –Infrastructure Strategy and Implementation –Healthy City/Healthy Community –Completion of the Comprehensive Plan update with increased focus from Council Organizational Effectiveness 10 Council Priorities Parking and transportation Infrastructure funding Palo Alto Airport 11 Council Priorities Library opening hours Code enforcement Cubberley Community Center Healthy City/ Healthy Community 12 Organizational Efficiencies Information technology –Council Chamber recording system –HelpDesk workorder system Police field patrol body worn cameras Public safety technology staffing Various studies APPENDIX 3 5/26/2015 3 13 Citywide Position Changes *Other Funds are Internal Service Funds, Special Revenue Funds, and the Capital Fund GF ENT Other* Total FY 2015 Adopted Budget 588.58 358.34 86.88 1,033.80 FY 2015 Approved Adjustments 1.00 (7.00) (6.00) FY 2015 Modified Budget 589.58 351.34 86.88 1,027.80 FY 2016 Reallocations (0.13) (2.19) 2.32 ‐ FY 2016 Net Additions 10.90 0.70 1.70 13.30 Subtotal of 2016 Changes 10.77 (1.49) 4.02 13.30 FY 2016 Proposed Budget 600.35 349.85 90.90 1,041.10 13.30 FTE TOTAL Positions Fund DepartmentCouncil Priority/ InitiativesEnhancing Existing ServicesEnhancing Operational EfficienciesFTE En t e r p r i s e , Ca p i t a l , an d Sp e c i a l Fu n d s Positions Engineer Capital Fund Public Works X 0.90 Airport Operations Manager Enterprise Funds Public Works X X 1.00 Facility Manager Capital Fund Public Works X 0.10 Enterprise Funds Utilities ‐0.30 Parking Operations Lead Parking Funds Planning & Community Environment X X 0.70 2.40 Assistant Chief Building Official General Fund Development Services X X 1.00General Fund Development Services ‐0.70 Planning Manager General Fund Development Services X X 1.00 1.30 General Fund Auditor's Office X 0.50 General Fund Public Safety X 1.00 Library Positions (Multiple) General Fund Library X 3.30 General Fund Community Services X X X 1.50 General Fund Planning & Community Environment X X 0.30 General Fund Planning & Community Environment X X 1.00 Code Enforcement Lead General Fund Planning & Community Environment X X 1.00 General Fund Public Works X 0.90 General Fund Public Works X 0.10 9.60 Traffic Operations Parking Operations Lead Green Building Planner Recreation and Arts Staffing Facility Manager Engineer Senior Technologist Performance Auditor Gen e r a l Fu n d En t e r p r i s e , Ca p i t a l , an d Sp e c i a l Fu n d s De d i c a t e d Re v e n u e Green Building Planner Engineer FY 2015 Proposed Capital Budget Document Overview City Council April 27, 2015 15 COUNCIL MEETING__4/27/2015__[X] Placed Before Meeting[ ] Received at MeetingItem #2 Major Changes Carrying funds forward Fund overview Project pages Design and format 16 Fund Overview Summary Narrative Financial Summary Infrastructure Inventory 17 Project Information Project Start and Completion Significant Changes 18 APPENDIX 3 5/26/2015 4 Project Financial Information Prior year actual and FY 2015 Estimate Five‐year CIP budget and plan Beyond five‐year CIP Operating budget impact statement 19 Fiscal Year 2016 Proposed Budget Finance Committee May 5, 2015 Overview Citywide Expenditures General Fund Revenues and Expenditures Investment Highlights Citywide Expenditures $553.6 Million FY 2016 Capital Improvement Program $115.1 Million Citywide Position Changes *Other Funds are Internal Service Funds, Special Revenue Funds, and the Capital Fund GF ENT Other* Total FY 2015 Adopted Budget 588.58 358.34 86.88 1,033.80 FY 2015 Approved Adjustments 1.00 (7.00) (6.00) FY 2015 Modified Budget 589.58 351.34 86.88 1,027.80 FY 2016 Reallocations (0.13) (2.19) 2.32 ‐ FY 2016 Net Additions 10.90 0.70 1.70 13.30 Subtotal of 2016 Changes 10.77 (1.49) 4.02 13.30 FY 2016 Proposed Budget 600.35 349.85 90.90 1,041.10 APPENDIX 3 5/26/2015 5 Citywide Salary & Benefit Changes ($8.5 million) •Salary $4.2 million •Healthcare costs $1.4 million •Pension $1.7 million •Retiree healthcare $0.8 million •Other benefits $0.4 million Pension Expenses Healthcare Expenses Average Annual Healthcare Inflation: 6.2% Rate Payer Cost Increase •Fiber Optics rate increases by 2.7% (based on ConsumerPrice Index). Utility FY 2015 Adjusted Bill Proposed FY 2016 Bill $ Difference % Difference Electric $42.76 $42.76 ‐ 0.0% Water 67.35 75.35 8.00 12.0% Gas 37.98 37.98 ‐ 0.0% Wastewater 29.31 31.95 2.64 9.0% Refuse 40.14 43.75 3.61 9.0% Storm Drain 12.30 12.63 0.33 2.7% User Tax 7.40 7.80 0.40 5.4% Total Monthly Bill $237.24 $252.22 $14.98 6.3% General Fund Balancing Total Revenues $183.5 million Carry‐Forward Fiscal Year 2015 Budget Surplus $1.6 million Total Revenues $185.1 million Total Expenditures $185.1 million Budget Stabilization Reserve (BSR) Projected Fiscal Year 2016 Ending Funding Level: $34.2 M, 18.5% [BSR Range: $27.8 million (15%) to $37.0 million (20.0%)] General Fund Revenues $183.5 Million APPENDIX 3 5/26/2015 6 General Fund Revenues $183.5 Million FY 2016 General Fund Expenditures by Category (185.1 Million) FY 2016 General Fund Expenditures $185.1 Million Investment Highlights •Council Priorities •Organizational Effectiveness Council Priorities •Infrastructure funding •Library opening hours •Parking and transportation •Code enforcement Council Priorities •Healthy City/Healthy Community •Recreation and Special Events position •Development Services •Airport Operations Manager APPENDIX 3 5/26/2015 7 Organizational Efficiencies •City Auditor staffing •Information technology –Council Chamber recording system –HelpDesk workorder system •Public safety technology staffing •Facility Manager •Various studies 13.30 FTE TOTAL Positions Fund DepartmentCouncil Priority/ InitiativesEnhancing Existing ServicesEnhancing Operational EfficienciesFTE En t e r p r i s e , Ca p i t a l , an d Sp e c i a l Fu n d s Positions Engineer Capital Fund Public Works X 0.90Airport Operations Manager Enterprise Funds Public Works X X 1.00 Facility Manager Capital Fund Public Works X 0.10 Enterprise Funds Utilities ‐0.30 Parking Operations Lead Parking Funds Planning & Community Environment X X 0.70 2.40 Assistant Chief Building Official General Fund Development Services X X 1.00 General Fund Development Services ‐0.70 Planning Manager General Fund Development Services X X 1.00 1.30 General Fund Auditor's Office X 0.50 General Fund Public Safety X 1.00 Library Positions (Multiple) General Fund Library X 3.30 General Fund Community Services X X X 1.50 General Fund Planning & Community Environment X X 0.30 General Fund Planning & Community Environment X X 1.00 Code Enforcement Lead General Fund Planning & Community Environment X X 1.00 General Fund Public Works X 0.90 General Fund Public Works X 0.10 9.60 Traffic Operations Parking Operations Lead Green Building Planner Recreation and Arts Staffing Facility Manager Engineer Senior Technologist Performance Auditor Gen e r a l Fu n d En t e r p r i s e , Ca p i t a l , an d Sp e c i a l Fu n d s De d i c a t e d Re v e n u e Green Building Planner Engineer General Fund Positions and Population Growth •Department Presentations (with significant budget proposals only) o Department overview o Accomplishments o Initiatives o Significant budget proposals o Major capital projects, if applicable •Finance Committee Questions Fiscal Year 2016 Finance Committee Review FY 2016 Proposed Operating Budget City Manager Finance Committee May 5, 2015 APPENDIX 3 5/26/2015 8 Department Overview Mission Principles Divisions •Administration and City Management •Place and Neighborhoods •Economic Vitality Accomplishments Our Palo Alto Top 5 Livable City in America by Livability.com Facilitated approval of five‐year Cubberley Community Center lease with PAUSD Advanced Project Safety Net in coordination with CalTrain and other City Departments Launched Business Registry Online tool Completed recruitment of Assistant City Manager positions Fiscal Year 2016 Initiatives Continue partnership with Planning Department on critical land use and transportation initiatives Partner with city departments to increase effectiveness of community outreach and broaden citizen participation Implement Phase 2 of Business Registry Online tool to integrate with other Development Center systems Further San Francisquito Creek JPA flood control project and Golf Course Project Continue to enhance strategic planning, workplans, and performance management FY 2016 Proposed Operating Budget City Attorney Finance Committee May 5, 2015 Department Overview Mission Purpose Divisions •Administration •Consultation and Advisory •Litigation and Dispute Resolution •Official and Administrative Duties Accomplishments Drafted the Residential Preferential Parking and new Business Registry Ordinances Settled Sterling Park v. City of Palo Alto, securing $8 million for the City’s Affordable Housing Fund Negotiated & secured certification of Palo Alto’s Housing Element by the CA Dept. of Housing and Community Development Completed agreements transferring management and control of Palo Alto Airport to the City Updated Transient Occupancy Tax and Telephone User Tax Ordinances APPENDIX 3 5/26/2015 9 Fiscal Year 2016 Initiatives Assist with comprehensive plan update and other land use/transportation programs: –Planned Community Zoning Ordinance –Residential Permit Parking Provide negotiation, drafting and legal support for ongoing Infrastructure Improvements Draft Wireless Communications Facility ordinance to comply with new federal law requirements Significant Budget Proposals Adds funding for 1.0 Principal Attorney •To meet higher demand for legal services. •Ongoing Cost: $282,871 City Attorney Contingency ongoing decrease of $100,000 FY 2016 Proposed Operating Budget Community Services Department Finance Committee May 5, 2015 51 Department Overview Mission Purpose Divisions •Administration and Human Services •Arts and Sciences •Open Space, Parks and Golf •Recreation and Cubberley 52 Accomplishments Opened the new Mitchell Park Community Center Completed construction of the Magical BridgeUniversal Access Playground Increased Arts & Sciences audiences, awards, fundraising and revenue Increased Children’s Theatre revenue and participation in all programming areas for 4th consecutive year Enhanced Open Space Preserves with new trails and further implementation of Foothills Fire ManagementPlan. 53 Fiscal Year 2016 Initiatives Completion of the Parks, Trails, Open Space and Recreation Master Plan Continue Project Safety Net, HSRAP, & homeless service initiatives Work towards development of a Public‐Private Partnership with Friends of the Junior Museum & Zoo The Art Center will take part in a museum assessment and community engagement program with a focus on next generation audiences. 54 APPENDIX 3 5/26/2015 10 Significant Budget Proposals Recreation Division and Special Events Staffing , 1.0 FTE ($223,476) Mitchell Park Teen Center Operating Hours and Teen Program Enhancements ($88,264 offset with revenue) Lucie Stern and Mitchell Park Community Center Facility Staffing ($44,663 offset with revenue) Art Studio Classes and Workshops Service Enhancements ($28,500 offset with revenue) Community Center Furniture Replacement ($25,000) 55 FY 2016 Proposed Operating Budget Human Resources Department Finance Committee May 5, 2015 Department Overview Mission Purpose Divisions Total Compensation Employee and Labor Relations Organization and Employee Development Talent Management Risk Management, Safety, and Workers’ Compensation Accomplishments Completed and implemented total compensation studies for five of the seven employee groups Key recruitments Regional Internship Program Training –74 Sessions plus Skillsoft rollout Ethics Policy Fiscal Year 2016 Initiatives Reduce recruiting cycle times Citywide New department structure to enhance customer service and transactional excellence Succession planning and individual training plans Conduct a Citywide risk assessment Create streamlined benefits/SAP interface Significant Budget Proposals Human Resources Analytics Consultant ($214,000) o Business process improvements, SAP training and improve system functionality General Benefits Fund o Employee Commute Program GoPass ($85,000) o Employee Wellness Program ($33,000, 0.48 FTE) o Ergonomic Evaluations ($30,000) Workers’ Compensation Fund –No proposals General Liability Fund –No budget proposals APPENDIX 3 5/26/2015 11 Non‐Departmental Significant Budget Adjustments & Proposals Reserves Cubberley Not to Develop, ($1,039,776) Cubberley Lease payment adjustment, $14,957 Property Capital Infrastructure, $1,864,248 Infrastructure Transfer, $5,0269,135 City Attorney Contingency Account, ($100,000) Airport Fund transfer, ($255,850) Fiscal Year 2016 Proposed Budget Finance Committee May 7, 2015 OverviewGeneral Liability Employee Benefits: Workers Compensation General Benefits Retiree Medical Non‐Departmental Office of the City Auditor Office of Sustainability Utilities Public Safety: Fire Office of Emergency Services Police 63 Non‐Departmental Significant Budget Adjustments & Proposals Reserves Cubberley Not to Develop, ($1,039,776) Cubberley Lease payment adjustment, $14,957 Property Capital Infrastructure, $1,864,248 Infrastructure Transfer, $5,029,135 City Attorney Contingency Account, ($100,000) Airport Fund transfer, ($255,850) 64 FY 2016 Proposed Operating Budget City Auditor Operating Budget pp. 146‐157 Finance Committee May 7, 2015 65 Department Overview Mission Purpose 66 APPENDIX 3 5/26/2015 12 Accomplishments Association of Government Accountants (AGA) Certificate of Excellence for the City of Palo Alto 2013 Citizen Centric Report Recovered $168,915 in sales and use tax for Fiscal Year 2014 Published Audits of Solid Waste Program; Utility Meter Procurement, Inventory, and Retirement; and Animal Services Triennial External Quality Control Review for period of July 2011 through April 2014 found office in compliance with Government Auditing Standards 67 Fiscal Year 2016 Initiatives Public Benefits Audit Procurement Processes Audit Fee Schedules Audit Disability Rates and Workers’ Compensation Audit Utilities Customer Service –Rate and Billing Accuracy Audit Sales and Use Tax Monitoring Performance Report, National Citizen Survey, and Citizen Centric Reporting (CCR) 68 Performance Audit Staffing Reclassify 1.0 Administrative Assistant to Performance Auditor I Add 0.5 Performance Auditor II, $75,529 Significant Budget Proposals 69 FY 2016 Proposed Operating Budget Office of Sustainability Operating Budget pp. 184‐185 Finance Committee May 7, 2015 70 Department Overview Mission Purpose 71 Accomplishments Launched Sustainability and Climate Action Plan (S/CAP) Reactivated employee “Green Team” to engage staff on incorporating green practices into city operations, procurement processes, and work life Procured Sustainability Dashboard system to streamline collection, analysis and reporting of key sustainability indicators. Held Study Sessions with City Council and UAC 72 APPENDIX 3 5/26/2015 13 Fiscal Year 2016 Initiatives Complete Development of the Sustainability and Climate Action Plan (S/CAP) and Adoption Pilot local and regional “mobility as a service” initiatives Implement Sustainability Dashboard performance tracking system Develop external funding resources for sustainability initiatives 73 Significant Budget Proposals Continue hourly staffing one‐time, $105,508 Contract Funding, $190,000 74 FY 2016 Proposed Operating Budget Utilities Finance Committee May 7, 2015 75 Department Overview Mission: earn high satisfaction of our customers with cost‐competitive provision of safe, reliable, and environmentally sustainable utility services. Divisions •Administration •Customer Support •Engineering •Operations •Resource Management 76 Accomplishments Won the Beacon Award for achieving notable greenhouse gas emissions reductions and energy savings. Awarded Water Utility of the Year by the Silicon Valley Water Conservation Awards Coalition Awarded Public Power Utility of the Year by the Solar Electric Power Association Received Reliable Public Power Provider designation Adopted Local Solar Plan to encourage community solar generation Launched PaloAltoGreen Gas Program 77 Fiscal Year 2016 Initiatives Drought Rate Adjustments, Implement State Mandated Water restrictions Sustainability: Develop Solar Programs, Evaluate Fuel Switching and Electrification Technology: Smart Grid, IT Strategic Plan Workforce Development & Succession Planning Customer Service: Work with Development Services to streamline permit process Capital Improvement Program 78 APPENDIX 3 5/26/2015 14 Utilities Staffing Proposals •Department reclassifications: $70,969 Reclassify 3.0 Utility Account Representative to 3.0 Utility Marketing Program Administrator Add 1.0 Business Analyst and Drop 1.0 Utility Account Rep Reclassify 1.0 Street Light, Traffic Signal and Fiber Apprentice to 1.0 Street Light, Traffic Signal and Fiber Technician Reclassify 1.0 Principal Management Analyst to Principal Business Analyst 79 Fiscal Year 2016 Initiatives: Develop new Local Solar programs Evaluate customer Electrification programs Expand Demand Response program Significant Budget Proposals: Customer Service Support Staffing Reclassifications, $31,792 80 Electric Fund Operating Budget, pp. 407‐418 Electric Fund Capital Budget, pp. 297‐396 Fiscal Year 2016 Capital: $16.3 million Significant Projects: Customer Connections: $3.8 million Underground Rebuild Projects: $3.4 million System Improvements: $3.0 million Undergrounding Projects: $1.9 million Substation Improvements: $0.8 million 81 Fiber Optics Fund Operating Budget, pp. 419‐425, Capital Budget, pp. 397‐416 Fiscal Year 2016 Initiatives: Rebuild City’s Dark Fiber Ring Develop Fiber‐to‐the‐Premise Master Plan Complete Wireless Network Plan Contractual CPI Rate Increase of 2.7% Fiscal Year 2016 Capital: $1.8 million Significant Projects: System Rebuild: $1.2 million 82 Gas Fund Operating Budget, pp. 426‐437 Fiscal Year 2016 Initiatives: Evaluate fuel‐switching cost‐ effectiveness and feasibility Promote PaloAltoGreen Gas Program Gas CIP Master Plan Significant Budget Proposals: Crossbore Inspection Program, $1.0 million 83 Fiscal Year 2016 Capital: $6.8 million Significant Projects: Gas Main Replacement: $4.7 million Customer Connections: $1.1 million Meter Replacements: $0.3 million 84 Gas Fund Capital Budget, pp. 417‐456 APPENDIX 3 5/26/2015 15 Wastewater Collection Fund Operating Budget, pp. 438‐445 Fiscal Year 2016 Initiatives: Wastewater Collection System Rehabilitation/Augmentation projects Reduce number of Sanitary Sewer Overflows by 5% per SWRCB requirements Fiscal Year 2016 Sewer Rate Increase of 9.0% 85 Fiscal Year 2016 Capital: $6.0 million Significant Projects: System Rehabilitation: $4.7 million Lateral/Manhole Rehabilitation: $0.6 million System Improvements: $0.2 million Customer Connections: $0.4 million 86 Wastewater Collection Fund Capital Budget, pp. 489‐528 Water Fund Operating Budget, pp. 446‐456 Fiscal Year 2016 Initiatives: Respond to drought regulations and implement Urban Water Shortage Contingency Plan to meet usage reduction requirements Complete Long Range Water System Master Plan Complete Recycled Water Project EIR and Financial Plan Fiscal Year 2016 Water Rate Increase of 12.0% 87 Water Fund Capital Budget, pp. 561‐616 Fiscal Year 2016 Capital: $10.2 million Significant Project Costs: Water Main Replacements: $7.2 million Meters and Hydrants:$0.6 million Customer Connections: $0.5 million System Improvements: $0.3 million Seismic System Upgrades: $0.2 million Water System Master Plan: $0.2 million 88 FY 2016 Proposed Operating Budget Fire Department Operating Budget pp. 311‐324 Finance Committee May 7, 2015 89 Department Overview Mission Purpose Service Programs •Fire Suppression •Emergency Medical Services •Fire Prevention Bureau •Employee Fire/EMS Certification Training 90 APPENDIX 3 5/26/2015 16 Accomplishments Responded to 4,757 medical/rescue calls 31% increase since FY 2005 90% of EMS calls within 8 minutes Placed paramedic on scene within 12 minutes 98% of the time Responded to 150 fire incidents 86% of responses within 8 minutes Conducted 1,741 fire inspections in FY 2014 69% increase from FY 2009 Enhanced Operational Efficiencies & Regional Cooperation ‐Closest unit dispatching, shared specialty services (haz mat, training) 91 Fiscal Year 2016 Initiatives Measure, report, and continue operational performance enhancements Modernize and replace essential equipment 92 Focus on Strategic Community Risk Reduction Investment in succession training, strategic planning, and enhancing organizational culture Significant Budget Proposals 0.50 Sr. Technologist, $91,000; 0.50 position budgeted in the Police Department Community Public Health, Risk Reduction, and Public Education, $82,000 Regional Fire and Emergency Medical Services Efficiency Studies, $75,000 Fire Station Furniture, Fixtures, and Equipment‐Phase 1, $50,000 International Accreditation‐Phase 1, $25,000 93 FY 2016 Proposed Operating Budget Office of Emergency Services Operating Budget pp. 325‐332 Finance Committee May 7, 2015 94 Department Overview Mission Purpose 95 Accomplishments Conducted over 80 Emergency Services Volunteer and Public Safety Education Sessions Completed the Threat and Hazard Identification and Risk Assessment (THIRA) Various trainings and exercises with community partners Developed the North County Information Sharing and All Hazards Planning Group 96 APPENDIX 3 5/26/2015 17 Fiscal Year 2016 Initiatives Staff development program for Emergency Operations Center (EOC) assigned personnel Implement an Adaptive Planning Model to create and revise emergency plans and protocols Bring new Emergency Operation Plan (EOP) to Council for approval by December 2015 97 Significant Budget Proposals Safe Schools Mapping Project, $80,000 ($40,000 offset by revenue from PAUSD) 98 FY 2016 Proposed Operating Budget Police Department Operating Budget pp. 333‐345 Finance Committee May 7, 2015 99 Department Overview Mission Purpose Divisions 100 •Field Services •Personnel and Training Services •Investigative Services •Technical Services •Traffic, Parking & Special Event Services •Animal Services Accomplishments Received 153 citizen commendations in FY 2014 Implemented the Tri‐City CAD System Overall reduction of Part One crimes Replaced mobile audio‐video system with new state of the art five camera system 101 Increased traffic and downtown patrols Regional preparedness initiatives and exercises Fiscal Year 2016 Initiatives Implementation of New Body Worn Cameras Replace 9‐1‐1 phone equipment Implement new scheduling software Reinstitute the Citizen’s Academy Public Safety Building Location Implement New Records Management System 102 APPENDIX 3 5/26/2015 18 Significant Budget Proposals Police Body Worn Cameras, $95,000 0.50 Sr. Technologist, $91,000; 0.50 position budgeted in the Fire Department Parking Citation Handheld Devices, $32,000 103 FY 2016 Proposed Operating Budget Information Technology Department Operating Budget pp. 266-279 Finance Committee May 12, 2015 104 Department Overview Mission Purpose Divisions •Office of the CIO •IT Project Services •IT Operations •IT Enterprise Services •Information Security Services 105 Accomplishments Palo Alto named 2nd top Digital City for Cities under 75,000 in population Enterprise Resource Planning (ERP) Evaluation Public Safety CAD Implementation Support Enterprise Asset Management System (EAMS) Assessment Virtual Private Network Upgrade Fire Scheduling System Upgrade 106 Fiscal Year 2016 Initiatives Enterprise Resource Planning (ERP) Planning and System Selection Fire Station phone and Police Department network upgrade Cloud‐based Communication and Productivity Suite implementation Enterprise Mobility Management Enterprise Asset Management System (EAMS) Implementation 107 Significant Budget Proposals Council Chamber Recording Equipment, $350,000 Enterprise Resource Planning System Selection, $250,000 Information Technology Service Management System, $200,000 Electronic Signature Application, $25,000 108 APPENDIX 3 5/26/2015 19 FY 2016 Proposed Operating Budget Library Department Operating Budget pp. 280‐290 Finance Committee May 12, 2015 109 Department Overview Mission Purpose Divisions •Public Services Programs •Information Technology, and Collections •Buildings, Support, and Administration 110 Accomplishments Opened Mitchell Park Library and reopened Rinconada Library Completed the Library Strategic Plan, 2015‐2017 Earned Urban Library Council (ULC) recognition for the makeX: Teen Mobile Makerspace program Expanded online digital resources to include streaming video and local historical news 111 Fiscal Year 2016 Initiatives Implementation of the Integrated Library System (ILS) Leverage success of the makeX program to incorporate more STEAM learning opportunities Evaluate workflow with Automated Materials Handling (AMH) machines Develop a catalogue of Library Department staff skills for customer services enhancements 112 Significant Budget Proposals Library Branch Opening Hours and Service Enhancements, 4.80 FTEs (3.30 Full‐Time, 1.50 Temporary), $522,840 Library Digital Services, $100,000 113 Library Branch Summary 114 APPENDIX 3 5/26/2015 20 Mitchell Park & Rinconada 115 FY 2016 Proposed Operating Budget Development Services Department Operating Budget pp. 230‐246 Finance Committee May 12, 2015 116 Department Overview Mission Purpose Divisions •Administration •Planning •Building •Public Works •Green Building •Fire Prevention Bureau 117 Accomplishments Received ISO Class 1 Designation Awarded the 2015 Acterra Sustainability Award and Most Electric Vehicle Ready Community Launched New Construction and Demolition Tool Online and New Green Building Program Enabled 8 of 20 Permits Online via Accela Citizen Access Supported Launch of the Business Registry Certificate Program Completed GIS Accela Integration Introduced GovDelivery Emails to Expand Customer Outreach 118 Fiscal Year 2016 Initiatives Inventory Buildings & Draft Policy to Expedite Seismic Retrofitting Integrate Use & Occupancy Permit Process with BRC Partner with local establishments in the compliance with ADA laws Create Checklist for Business/Commercial Plan Reviews Develop and Implement Electronic Plan Reviews Create Expired Permit Notification Process 119 Significant Budget Proposals Building and Planning Division Staffing 1.0 FTE Assistant Chief Building Official, $222,866 1.0 FTE Planning Manager, $37,787 net cost Green Building Planning and Development Review Alternative Services Delivery, $153,969 fully recovered with revenue Development Services Space Rental and Modifications, $123,385 ISO Certification Training and Community Outreach, $65,000 Green Building Cost Effectiveness Study, $50,000 Development Services Department Fee Study, $40,000 120 APPENDIX 3 5/26/2015 21 Staffing Adjustments 121 41.97 FY 2015 Adopted FTEs 1.00 Assistant Chief Building Official (0.70) Green Building Planner (1.00) Plan Check Engineer 1.00 Building Inspector Specialist (0.50) Senior GIS Technologist 1.00 Planning Manager 0.20 Code Enforcement Lead (0.79) Planning Division Reallocations (0.49) Public Works Division Reallocations 0.01 Fire Prevention Division Reallocations 41.70 FY 2016 Proposed FTEs (0.27) Net Increase/(Decrease) Inspection Counts Contract vs Full‐time 122 FY 2016 Proposed Operating Budget Planning & Community Environment Operating Budget pp. 292‐307 Finance Committee May 12, 2015 123 Department Overview Mission Purpose Divisions •Advance Planning •Transportation & Parking •Current Planning •Code Enforcement •Administration 124 Accomplishments State Certification of the 2015‐2023 Housing Element Adoption of a Citywide Ordinance for Residential Parking Permit Programs & Downtown Specific Program Initiated Formation of a Transportation Management Association Completed Phase I of Downtown CAP Study Initiated Upgrades of the City’s Traffic Signal System 125 Fiscal Year 2016 Initiatives Comprehensive Plan Update: Council & Community Work Sessions; Draft EIR Undertake Zoning Revisions: Retail Preservation; Office CAP Implement Phase I of the Residential Permit Parking Program and Begin Phase II Design Parking Guidance Systems & Access Controls for Downtown Garages Complete a Nexus Study and Update the City’s Housing and Transportation Impact Fees Undertake Peer Review of the IR Process 126 APPENDIX 3 5/26/2015 22 Significant Budget Proposals Planning Department Staffing (3.0 FTEs) o 1.0 FTE Traffic Operations, $150,848 annually o 1.0 FTE Parking Operations, $137,187 annually o 1.0 FTE Code Enforcement, $114,637 annually Paid Parking Study and Website, $107,980 Seismically Vulnerable Buildings Study, $100,000 Traffic Impact Fee Nexus Study, $55,000 127 FY 2016 Proposed Operating Budget Special Revenue Funds Operating Budget pp. 114‐125 Finance Committee May 12, 2015 128 •Special District Funds University Ave Parking Permit Fund, pp. 121‐122 •Shift $0.1 million to the General Fund •Valet Attendant Services Expansion: $0.3 million •Lots N & T Resurfacing: $0.1 million •City Hall Garage LED Project: $0.2 million California Ave Parking Permit Fund, p. 123 •No Change in Activity for FY 2016 Residential Parking Permit Fund •Revenue from RPP permits: $0.2 million •Contract Parking Enforcement: $0.1 million 129 Significant Activity By Fund •Stanford University Medical Center Fund, p. 124‐125 •Project Safety Net Staffing: Contract Model •TrackWatch: $0.2 million •CIP Transfers (Bike & Pedestrian Plan: $1.2 million; Public Safety Building Design: $1.1 million) •Housing In‐Lieu Funds •Revenue is projected to increase by $1.3 million •Legal Services Reduction: $0.1 million •Planning Services Reduction: $0.1 million 130 Significant Activity By Fund •Traffic Mitigation and Parking In‐Lieu Funds University Ave Parking In‐Lieu Fund •Downtown Parking Garage: $0.9 million •Street Improvement Funds Gas Tax Fund •Revenue is projected to decline: $0.2 million •Street Maintenance: $1.3 million •Safe Routes to School: $0.1 million •Federal & State Revenue Funds Community Development Block Grant (CDBG): $881,000 131 Significant Activity By Fund Fiscal Year 2016 Proposed Budget Finance Committee May 14, 2015 APPENDIX 3 5/26/2015 23 Overview Municipal Fee Schedule Public Works Department: General Fund Refuse Fund Storm Drain Fund Wastewater Treatment Fund Airport Fund Vehicle Replacement Fund Administrative Services Department: General Fund Printing and Mailing 133 FY 2016 Proposed Municipal Fee Schedule Finance Committee May 14, 2015 134 Annual Process User Fee Cost Recovery Level Policy Planning & Community Environment Development Services 135 Background •FY 2016 Salary & Benefit adjustment = 3.6% •Fees over 100% adjusted down •Development Impact fee adjustments Construction Price Index = 2.5% •11 new fees •11 deleted fees •88 changed fees Fee Adjustment Recommendations 136 New Fees •Cubberley Community Center Facility Rental Fees Art Studio Fees Off‐Hour Inspections (Public Works) Consolidated Business Location Change Fee (Police) Deleted Fees •Duplicate Fees Children’s Theatre Art Center Grand Piano Parking Lot Attendant Fees (Police) Business Location Change Fees (Police) 137 Fee adjusted to align with market value Art Center: Auditorium Rental – 10% increase Fee adjusted to reach desired cost recovery Encroachment Permit: Dumpster – 10% increase Generate demand for services Art Center: Studios A & B – 25% decrease Technical adjustments 138 Changed Fees APPENDIX 3 5/26/2015 24 FY 2016 Proposed Operating Budget Public Works Finance Committee May 14, 2015 139 Department Overview Mission Purpose Divisions •Administration •Public Services •Environmental Services •Engineering Services •Airport 140 Accomplishments Completed construction of Rinconada Library and Mitchell Park Library & Community Center Took over operations of Palo Alto Airport from Santa Clara County Developed a new refuse rate structure and comprehensive plan for diverting compostable material from landfills Continued progress towards Pavement Condition Index score of 85 141 General Fund Operating, pp. 351‐361 Fiscal Year 2016 Initiatives: American Public Works Association accreditation Continue implementation of the Infrastructure Plan Implementation of operational efficiencies outlined in Facility Study Significant Budget Proposals: University Avenue (twinkle lights, trash receptacles, street furniture), $360,000 Facilities Management Staffing, $164,000 CIP Staffing (cost savings to General Fund), $155,000 142 Refuse Fund Operating, pp. 362‐370; Capital, pp. 457‐469 Fiscal Year 2016 Initiatives: Implement residential food scraps collection program Complete capping of the landfill Implementation of a Commercial Recycling and Composting Ordinance Rate Adjustments Proposed for FY 2016 Residential: 9% average increase (first year of 3‐year strategy to cover cost of services and support food scraps program) Commercial: No adjustments proposed 143 Storm Drainage Fund Operating, pp. 371‐378; Capital, pp. 479‐488 Fiscal Year 2016 Initiatives: Continue working on the seven capital projects outlined in the 2005 Fee ballot measure Work towards potential storm drain funding ballot measure (current fee sunsets in June 2017) Fiscal Year 2016 Capital: $5.6 million Significant Project Costs: Matadero Creek Pump Station Improvements, $3.8 million Annual System Improvements, $1.7 million 144 APPENDIX 3 5/26/2015 25 Wastewater Treatment Fund Operating, pp. 379‐384; Capital, pp. 529‐560 Fiscal Year 2016 Initiatives: Complete CEQA for New Dewatering and Loadout Facility Expand Polysterene Ordinance to include food service ware, coolers, and other items Fiscal Year 2016 Capital: $15.2 million Significant Project Costs: Dewatering and Loadout Facility, $5.1 million Anaerobic Digesters, $3.0 million 145 Airport Fund Operating, pp. 385‐391; Capital, pp. 281‐296 Fiscal Year 2016 Initiatives: Begin design of apron reconstruction project Evaluate leasing models/options in preparation for expiration of the fixed based operators leases Significant Budget Proposals: Reduce General Fund Loan, $256,000 Airport Operations Staffing, $79,000 Fiscal Year 2016 Capital: $0.5 million Significant Project Costs: Airport Apron Reconstruction Design, $0.3 million 146 Vehicle Fund Operating, pp. 392‐398; Capital, pp. 661‐691 Fiscal Year 2016 Initiatives: Replace older vehicles with newer, more efficient equipment More sustainable funding model Fiscal Year 2016 Capital: $5.7 million Significant Project Costs: Scheduled Vehicle Replacements, $5.2 million 147 FY 2016 Proposed Operating Budget Administrative Services Department & Printing & Mailing Fund Operating Budget pp. 192‐209 Finance Committee May 14, 2015 148 Department Overview Mission Purpose Divisions •Administration •Accounting •Purchasing and Contracts •Office of Management & Budget •Property Management and Acquisition •Treasury (incl. Print and Mail Fund) 149 Accomplishments Began Implementation of Citywide Procurement Processes Implemented eSignature for Purchasing, began citywide roll‐out Maintained City’s AAA credit rating Implemented new Questica budgeting system Printing and Mailing maintained California Green Business Certification for 2015 150 APPENDIX 3 5/26/2015 26 Fiscal Year 2016 Initiatives Continue implementation of ASD Strategic Plan Upgrade Revenue Collections Core System Implement eProcurement processes Priority Based Budgeting Study Continue Budget System implementation, including dashboard functionality and performance measure management 151 Significant Budget Proposals Accounting and Treasury Staffing Adjustments, $19,964 Priority Based Budgeting Consultant (assist OMB with programmatic review and developing priority based budget process), $60,000 Postage Meter Replacement, $53,000 152 Fiscal Year 2016 Proposed Budget Finance Committee May 26, 2015 Overview •Capital Improvement Fund (Agenda Item #1) •Animal Services Funding (Agenda Item #2) •Budget Wrap‐up (Agenda Item #3) –Fiscal Year 2016 Revised Proposed General Fund Budget –Additional information provided to the Committee –Staff recommended revisions to the Fiscal Year 2016 Proposed Budget –Parking Lot items Approval of the Fiscal Year 2016 Revised Capital Funds (General Fund and Cubberley) $46.1 million 37% Enterprise Funds $66.5 million 54% Internal Service Funds $10.7 million 9% FY 2016 Proposed Projects By Fund Total FY 2016 Capital Budget: $123.3 Million Transfer: Gas Tax Fund$1.4 million 4% Other Revenue$4.9 million 13% Development Impact/In‐Lieu Fees $0.9 million2%Parking Fees $0.3 million1% SUMC$2.3 million6% COPs$6.1 million17% Transfer: Enterprise Funds$0.6 million2% Interest Earnings $1.0 million3% General Fund$19.0 million52% Proposed FY 2016 Capital Improvement Fund Revenue Total Revenue: $36.5 Million APPENDIX 3 5/26/2015 27 Total FY 2016 Budget: $45.5 Million Buildings and Facilities$12.2 million 27% Streets and Sidewalks $13.2 million29% Parks and Open Space $13.3 million29% Traffic and Transportation$4.7 million 10% Salaries and Benefits (unallocated)$2.1 million 5% FY 2016 Proposed General Fund Projects By Category Budget Overview 5-Year Capital Improvement Fund Planned Expenditures ($ millions) $‐ $20 $40 $60 $80 $100 $120 $140 FY 2015‐2019 CIP FY 2016‐2020 CIP Buildings and Facilities Parks and Open Space Streets and Sidewalks Traffic and Transportation Unallocated‐ Salaries andBenefits Total CIP Funding: $111.8 million Total CIP Funding: $251.6 Million $61 million $70 million $96 million $45 million $31 million$40 million $61 million $83 million $33 million $29 million $21 million $9 million $13 million $12 million $2 million $0 $20 $40 $60 $80 $100 $120 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 General Fund Revenues and Expenditures ($ Millions) Revenues Expenditures InfrastructureReserve City Council Infrastructure Plan •Public Safety Building •Downtown Parking Garage •California Avenue Parking Garage •Replacement of Fire Stations 3 and 4 •Charleston/Arastradero Corridor •Bicycle/Pedestrian Transportation Plan •Highway 101 Bicycle/Pedestrian Bridge •Byxbee Park Completion New Projects Infrastructure Plan projects City Hall Parking Garage LED lighting Bol Park Improvements Buckeye Creek Hydrology Study Parking Lot Q Elevator Modernization Cubberley Community Center Master Plan Fiscal Year 2015 Accomplishments Completed the Rinconada Library and Mitchell Park Library & Community Center projects Completed the California Avenue Streetscape Improvement project Completed Magical Bridge Playground project in coordination with Friends group Replaced traffic signal controller equipment at 100 intersections Began construction of the El Camino Park Restoration project, scheduled for completion in fall APPENDIX 3 5/26/2015 28 Accomplishments (cont’d) Increased Funding for Street Maintenance o FY 2010 Adopted Budget = $1.9 million o FY 2011 Adopted Budget = $3.8 million o FY 2016 Proposed Budget = $6.8 million Improved Pavement Condition Index score o 2010 average PCI score = 74 o 2015 average PCI score = 79 o 2019 goal = 85 (originally projected for 2021) Modeling post‐2019 budgetary needs to maintain 85 PCI once goal has been attained Increase in outreach to the public Infrastructure Management System (IMS) Status Key recommendation of the Infrastructure Blue Ribbon Commission’s 12/2011 Final Report Contracted with Plante Moran in December 2013 Completed Needs Assessment process and report with implementation recommendations Beginning implementation with Maintenance Connection this summer IBRC “Catch‐up” Category IBRC Final Report “Catch‐ up” Backlog “Catch‐up” amount funded to date, or included in Proposed CIP FY 2015‐2019 Backlog Building $5.0 million $2.3 million $2.7 million Cubberley $6.9 million $0.7 million $6.2 million Parks $14.4 million $3.9 million $10.5 million Surface $14.9 million $11.9 million $3.0 million Total $41.2 million $18.8 million $22.4 million Progress of IBRC “Catch-up” Backlog Cubberley Property Infrastructure Fund •Funds transferred from General Fund, previously allocated for Covenant Not to Develop, $1.8 million •FY 2016 Expenditures: $0.6 million; 5‐Year CIP: $2.9 million 2016 Projects: •Master Plan, $0.2 million •Roofing Replacements, $0.4 million Overview •Capital Improvement Fund (Agenda Item #1) •Animal Services Funding (Agenda Item #2) •Budget Wrap‐up (Agenda Item #3) –Fiscal Year 2016 Revised Proposed General Fund Budget –Additional information provided to the Committee –Staff recommended revisions to the Fiscal Year 2016 Proposed Budget –Parking Lot items –Approval of the Fiscal Year 2016 Revised Overview •Capital Improvement Fund (Agenda Item #1) •Animal Services Funding (Agenda Item #2) •Budget Wrap‐up (Agenda Item #3) –Additional information provided to the Committee –Fiscal Year 2016 Revised Proposed General Fund Budget –Staff recommended revisions to the Fiscal Year 2016 Proposed Budget –Parking Lot items –Approval of the Fiscal Year 2016 Revised APPENDIX 3 5/26/2015 29 Salary & Benefit Budget FY 2015 Adopted FY 2016 Proposed General Fund Department Budgets Contractually obligated salary increases forSEIU: 2% effective 7/1/14; 2.5% effective 12/1/14 General Fund Department Budgets Alignment w/ 2014 approved market & benchmark studies and general salary increases (SEIU & Mgmt) Step increases (SEIU, IAFF, PAPOA) Pay for performance (Mgmt, FCA, PMA) 2.5% General salary increase (Mgmt) General Fund Salary and Benefits Reserve Market & Benchmark studies (SEIU & Mgmt) Step increases (SEIU, IAFF, PAPOA) Pay for performance (Mgmt, FCA, PMA) General salary increase for planning purposes only (all groups except SEIU) General Fund Salary and Benefits Reserve General salary increase for planning purposes only (groups other than Mgmt) Non‐General Fund Departments (no reserves) Items not included in adopted budget: General salary increase, 2% (SEIU, Mgmt) General salary increase, 2.5 % (SEIU effective Dec. 1, 2014) Market & Benchmark studies (SEIU, Mgmt,UMPAPA) Step increases (SEIU) Pay for performance (Mgmt & UMPAPA) Non‐General Fund Departments (no reserves) Items included in the proposed budget: Alignment w/ 2014 approved market & benchmark studies and general salary increases (SEIU, Mgmt, & UMPAPA) Pay for performance (Mgmt & UMPAPA) General salary increase (Mgmt & UMPAPA) Step increases (SEIU) 169 Salary Cost Changes Human Resources Storm Drain Fund FY Adopted Budget to FY 2016 Proposed Budget 7.5% FY Adjusted Budget to FY 2016 Proposed Budget •MGMT 2.0 % general salary increase•MGMT 1.5% average merit increase •MGMT benchmark and market study 3.5% FY Adopted Budget to FY 2016 Proposed Budget 6.4% FY Adjusted Budget to FY 2016 Proposed Budget •MGMT 2.0 % general salary increase •MGMT 1.5% average merit increase•MGMT benchmark and market study •SEIU benchmark and market study 2.5% Fiscal Year 2016 Revised Proposed General Fund Budget & Staff Proposed Actions Date Dept Description Expenses Revenues Net Proposed Budget ‐ BSR Change $0 $0 $0 Tentatively Approved by Finance Committee 5/5 COU Council meals for extra meetings $5 ($5) 5/14 PWD San Franscisquito Creek JPA 27 $27 ‐ Subtotal ‐ Tentatively Approved Changes to Proposed Budget $32 $27 ($5) Staff Proposed Actions to be Presented on May 26:5/26 POL/FIR Reallocate Police Chief from Fire ‐ Stanford Revenue Impact ($50) ($50) 5/26 PWD Urban Forest Study $122 (122) 5/26 POL Palo Alto Animal Services Transition Funding 250 (250)FY 2015 budget surplus to offset Council meals, Stanford revenue ‐ 5/26 Various revenue impact, Urban Forest Study, & PAAS transition 427 427 5/26 NON Additional Infrastructure transfer (alignment w/ TOT revenue)325 (325) 5/26 NON Revised Property Tax projection 525 525 Subtotal ‐ Staff Proposed Actions $697 $902 $205 Revised Proposed Fiscal Year 2016 Budget Surplus as Recommended $729 $929 $200 Municipal Fee Schedule •Public Art Fee •Single Story Overlay Fee Waiver Capital Fund •Reappropriations Municipal Fee Schedule & Capital Reappropriations Parking Lot Items General Fund Recreation Superintendent, $178,000 Office of Sustainability consultant funding, $190,000 Senior Technologist for Public Safety, $183,000 Code Enforcement Officer –Lead, $115,000 Fiber Optics Fund Fiber Optic System Rebuild CIP (FO‐16000), $1.15M Stanford Development Agreement Fund Project Safety Net, $487,000 Fiscal Year 2016 Proposed Budget Finance Committee May 26, 2015 APPENDIX #3 APPENDIX 3 FINANCE COMMITTEE DRAFT MINUTES Special Meeting Tuesday, May 5, 2015 Chairperson Schmid called the meeting to order at 5:33 P.M. in the Community Meeting Room, 250 Hamilton Avenue, Palo Alto, California. Present: Filseth, Kniss, Scharff, Schmid (Chair) Absent: Oral Communications None Action Items 1.Fiscal Year 2016 Proposed Budget Overview / Budget Kickoff. James Keene, City Manager: ... the great recession and then the really difficult decisions that we had to make as a City in the aftermath of that. I think it's worth just revisiting very quickly. I think that the Council, our leadership team and their Staff, and certainly Finance and Budget Staff really did a commendable job of working through those difficulties. You recall we didn't dip into and drain any of our reserves to balance the Budget in those difficult times. We significantly reduced staffing. I think it was overall around a 12 percent General Fund reduction just during those couple of difficult years. There's some trend information overall that shows declining staffing in relation to growing population going back almost ten years now. Let me just clarify that that does not include some of the prior fund accounting adjustments we made in the Budgets that actually shifted some General Fund stuff out to other funds. That was prior to that significant drop. The Council made some really leading decisions in the region as far as trying to tackle some of the structural deficit drivers. We restructured our pension plan; one of the first places to institute a Tier 2 program. A lot of our staffing strategy was both around containment and around containing long-range costs. Those were the bad times. Now we're in good times, relatively good times in the sense that our revenues are rising. The state of our economy is much better here in the nearer term. When we were talking about this, we know that you as Council Members Page 1 of 77 APPENDIX 4 DRAFT MINUTES have to be thinking, "Okay, well, the bad times didn't last forever. The good times don't last forever." What does the future hold and what are the implications of the Budget decisions you make on both the annual Budget and the five-year capital plan. What's the future? There's a downturn in the future. We still have specific forecasts that project rising pension cost burdens to the employer side of the equation, growing into the future; OPEB or healthcare and other pension-related benefits that will be on the rise. We always have the implications that if we get into difficulty or a downturn, we're back in the position of having to cut Staff, both the difficulty of doing that sort of thing and the trauma. We don't want to pretend like we're short-sighted as a Staff in our recommendations. I do think that we have to acknowledge that there are some inherent tensions in the Budget that are reflected in our recommendations. I want to make it clear by our thought that we are in good times and it's not "oh, let's spend money" as much as it is we're a Budget that is responding to the demands of the Council and the community. For the most part, what we've focused on are funding items that are based on responsiveness. In many respects, the hyper- responsiveness that is the expectation of our community and in our organization of responding to requests and issues and concerns, desire for really high quality services, investment in our capital facilities, all of those things. There are new planning initiatives in demands and repairs in many ways to our existing planning, land-use policies and structures. You all spent 4 1/2 to 5 hours last night dealing with a small parcel just in the Downtown. I think that's indicative of not only how much is at stake but also how demanding the decision-making process is in our City. This Budget tries to respond to that level of demand. High expectations across the board from the community and reshaping a lot of the plans and policies for how the City's going to look. Third, the infrastructure initiative that the Council has been working on. You've been in a very positive piecemeal way making investments where we could in recent years. Even in the difficulties, we started to begin to work on our street repair program even in very difficult fiscal budget years. Now we've got, as you are well aware, an almost $130 million Infrastructure Plan with the funding. Again, we need to be sure that we're in a position to try to put the attention to deliver those projects, etc. I would say it's a refined word in a sense or a highfaluting word, but it's not really a refined metaphor or description, but in many ways there's a kind of Palo Alto renaissance that is taking place. You have been rebuilding the capital plan of the City. Some folks in our community can still be saying, "Well, why hasn't the City fixed this or fixed that?" I've actually asked our Staff. I'm hard pressed to think that there would be any other eight to ten year period in the City's history, maybe the beginning of the City, when there's been so much attention on reinvesting in the capital side of the City, in improving and expanding services. We're almost having to balance the tensions of demands for the City to get more involved in the human service Page 2 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES side of issues. I don't think that we can neglect the fact that it's not just in our City. In our whole society, the rise of hyper-connectedness and social media has escalated the level of citizen expectation on what we do and how we perform. We'll do this later, but we had a little ELT meeting this morning, just looking very quickly at what we're doing in the Office of Emergency Services that did not exist three or four years ago in the City and how much progress we've made in our emergency preparedness. That's one of many, many examples of this is not a community and these Budgets are not Budgets that reflect a kind of static status quo that's just trying to build in some inflation and a minimal amount of population growth. I think we need to acknowledge that the demand side curve, in my view, is escalating faster even than our positive revenues are. I don't think it will be just as simple as just sort of thinking about, "Okay, wait. How do we reconcile the revenue and cost side of things?" It really is not a question of just balancing the Budget. It's really a question about balancing the Council and the community expectations with the resources that we have. That has been the intent of how we've designed this Budget. With that, I will turn it over to our capable Financial Staff. Lalo Perez, Chief Financial Officer and Director of Administrative Services: Thank you, Jim. Good evening, Vice Mayor Schmid and Members of the Council. Lalo Perez, Chief Financial Officer. I just have a couple of things to add before we have Walter get into the nuts and bolts and the items that you'll probably want to really get into. A suggestion for the Chair. In the past, the Committee has used what we termed a "parking lot." A parking lot, for those of you that have not come through it, is basically a vehicle for us to put items that you're not ready to make a decision on. The rule that you have used in the past and that we suggest you consider is that if two Committee Members decide (inaudible) to have further discussion or consideration. After you deliberate through all the hearings, then it goes in the parking lot. It's your call as a Committee of how you decide what goes into the parking lot. That was just one way that we've done it in the past. Chair Schmid: Yeah, it's been helpful. If we have a controversial issue that has spending on it, maybe you want to park that and then look across and balance with revenues available against what's in the parking lot. I ask my colleagues if they favor that. Council Member Scharff: I think it's a good idea. Council Member Kniss: I think it's policy, isn't it? Mr. Perez: You could adjust it. It's your call whichever way you want. Council Member Kniss: I think you've been doing it (inaudible). Page 3 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Chair Schmid: Yeah. So we move ahead that way. Mr. Perez: Move ahead in that direction. The other point of comment for you is that we will keep track of any changes. Obviously we have a starting balance that we're recommending to you. It comes from the City Manager's Proposed Budget. It gets to you now, and then you start making adjustments as you make your Motions. We will track those Motions. At the end of the hearings or, if the meeting goes too late, at the beginning of the next hearing, we will recap where you're at and what changes you made, including capturing items that go into the parking lot. Chair Schmid: We can see if the balance keeps going down. Mr. Perez: Getting the business side in order, let me just start with a couple of additional points to what City Manager Keene said. One of the things that I think is very sound of the work that has been done over the years, this policy has been in place for a good 20 years probably, it's your Budget Stabilization Reserve. It's a key factor on how rating agencies look at us. It's a key factor on how we operate and how we have funds in case of a need, an emergency. Just to remind you, your Budget Stabilization Reserve for the General Fund is at 15 percent of expenses. That's the floor. The cap is 20 percent. The goal has been set for quite some time at 18.5 percent. I strongly believe that as a result of that policy, the City Manager has made recommendations to you for the last four fiscal years, not counting this year, that have allowed us to transfer $20.5 million to Infrastructure Reserves. They were not planned, but they were as a result of various points that I'm going to make in a minute as to why we have those excess revenues. What I believe we've done right as an organization is continuing to invest in our infrastructure rather than ongoing services, because of the nature of the need of the infrastructure. That's a key point that I think needs to be considered as we continue to make our decisions going forward in how we continue to invest in our infrastructure. From our perspective, there are a couple of reasons why that occurred, that we had those excess revenues. One, obviously the economic recovery. Second, the restructuring of the expenditures that Mr. Keene talked about, the 12-13 percent. Third, including within that restructuring was the ask of employees to contribute towards our benefits and forego some of their salaries. Those three reasons permitted us to put those additional funds into infrastructure. Second point related to infrastructure that we also must be mindful of, and this is from personal experience of going through it 20 years ago with the Infrastructure Plan that we had then, is that things are going to change. Either priorities are going to change, the cost is going to change, the order of priority is going to change, so that a $126 million program, we need to keep it as a target and as a goal. We'd like for you to understand that there could be Page 4 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES changes and we'll need to adjust. That adjustment could impact our Operating Budget and our decisions as we go forward. Third related to that is the bond rating. As a result of making these strong decisions and difficult decisions, we're able to get a AAA rating from S&P and Moody's for our GO Bond financing. That saved us millions of dollars as a result of having such a high rating. Very few communities can talk about having a AAA rating. In terms of dipping a little bit into the Enterprise side, we have a AAA rating as well from S&P for our utilities. We're doing the same type of fiscal management on the other side. The last point is that you know that because you gave us that direction. Now that we're starting to deal with infrastructure and we know that we still have more work to do, we also need to address our unfunded liabilities. Obviously we'll have that discussion commencing with the Budget hearings. It is on our radar, and we know the importance of how that impacts our Budget. With that, unless there's any questions, let me turn that over to Walter so he can go ahead and start the discussion of the Proposed Budget. Walter Rossmann, Director of Office Management and Budget: Good evening, Walter Rossmann, Budget Director. I'm here with Christine Paras here at the table, who is our Principal Management Analyst, as well as my capable Staff right here. Sean O'Shea, Michael Bruckner leaving right now, Eric Bilimoria, and Paul Harper. He'll be back. He's just getting a few things for us. What we'll do today (inaudible) Citywide expenditures in the presentation, then go into General Fund revenues and expenditures, lastly highlight the investments we are proposing in this Budget. Before continuing with the presentation, I would like to acknowledge the artwork in the slides and the Budget documents. All artwork was produced by children enrolled at the Palo Alto Art Center Fine Art camps and classes offered by our Community Services Department (CSD). The Citywide Expenditure Budget of $553 million is increased by $83 million or 17.7 percent in comparison to Fiscal Year 2015. The significant changes are due to increases in the Capital Budget amount and salary and benefits. The major reason for the increase in the Capital Budget amount is a change in the Capital Budget process. Female: Is this the only place it's going to show? Mr. Rossmann: Yes (inaudible). As a change for Fiscal Year 2016 and going forward, estimated unexpended capital project funds from the current year are carried forward through the Budget process. This is a result of nearly doubling the Capital Improvement Program Budget for the Capital Improvement Fund, and it corresponds in $53 million in Fiscal Year 2015 to $103.7 million in this Proposed Budget. Please note that the estimated carry forward amounts are getting further revised as the fiscal year closes. Prior Page 5 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES to adoption of this Budget, Staff intends to bring forward revisions to the carry forward amounts for various capital projects. The second major reason is an increase in salary and benefits costs. In accordance with the applicable Memorandum of Understanding and the Council-approved Management and Professional Compensation Plan, this Budget includes funding for step increases for eligible Staff and/or salary, pension, healthcare, and retiree healthcare cost increases as well as the cost of adding approximately 13 Full-Time Equivalent positions. From Fiscal Year 2015 to Fiscal Year 2016 Proposed Budget, the salary and benefits cost increased from $150 million or 8.5 percent to 5.7 percent on the $58.6 million. As reported in the previous slide, the Capital Budget amount for the Enterprise and Capital Improvement Fund is about $103 million. Adding in the capital expenditures for Internal Service Funds, the total Fiscal Year 2016 Capital Budget amounts to $115.1 million. Through these next two weeks, the Committee will be asked to review the (inaudible) proposed Capital Budget, the Capital Budget for the Internal Service Funds, and Enterprise Funds will be discussed during the presentations of Information Technology, Public Works, and Utility Departments. On May 19th, we will present the Capital Improvement Fund Budget which includes funding for streets, bike lanes, sidewalks, parking, etc. At this time, we also expect to present the Committee with the finding of the Planning and Transportation Committee that the City's Capital Improvement Program is in compliance with the Comprehensive Plan. This chart provides you with an overview of position changes since the Fiscal Year 2015 Budget. In comparison to Fiscal Year 2015, this Budget proposes to add net 7.3 Full-Time Equivalent positions. As you can see from the last column in this chart, at the time of adopting this year's Budget, the City had 1,033.8 Full-Time Equivalent positions in all funds. In October 2014, the City Council approved the outsourcing of street-sweeping services, which resulted in the reduction of 7 FTEs in the Refuse Fund as reflected in the Enterprise Fund column. As part of the approval of the Fiscal Year 2015 Mid-Year Budget Review, the City Council added one Principal Attorney position as shown in the General Fund column. With the addition of the 13 positions proposed in this Budget, the net increase is 7.3 year-over-year. As part of a previous slide, I mentioned the increase in Citywide salary and benefit costs net (inaudible) $8.5 million. As you can see from this breakdown, more than 50 percent of the year-over- year increase is for benefits costs. As shown in this chart, pension expenses of the last few years, pension costs for City employees has risen. As discussed in the last ten-year General Fund financial forecast, pension costs are expected to continue rising. Comparison of Fiscal Year 2015 to the Fiscal Year 2016 Budget, the City's pension contribution rate for Miscellaneous Employees increased by 1.6 percentage points from 26.1 percent to 27.7 percent, and for Safety Employees by 2.4 percentage points from 39.4 percent to 41.9 percent. It's important to note that these pension rates are Page 6 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES blended rates and include the rates for Tier 2 and Tier 3 employees. Long term, as the City hires more and more Tier 2 and Tier 3 employees, it's expected that the growth of the pension rate increases will slow down. As of November 2014, 25 percent of the City's current full-time employees are enrolled in Tier 2 or Tier 3 pension benefits. Shown in this slide, healthcare costs increased on the average 6.2 percent annually through the last ten years. Similarly with the plan changes, the City Council has implemented changes with healthcare benefits. Except for Public Safety unions, all other employee groups have agreed to a flat healthcare contribution amount. With a flat amount, employees have made more affordable healthcare choices. Before discussing details of the General Fund Budget, I would like to quickly speak to increases in rates for the City's utility customers. As discussed with this Committee, this Budget does not include any rate increases for the Electric and Gas Utility. The rates for Water increase by 12 percent, for Wastewater by 9 percent, for Refuse by 9 percent, and for Storm Drain by the Consumer Price Index of 2.7 percent. Additionally, for the City's Fiber Optics customers, the rate will increase by the same CPI adjustment as agreed between the City and its customers. Turning to the General Fund, as was discussed by City Manager Keene, the Fiscal Year 2016 Proposed General Fund Budget is balanced and includes $183.5 million in revenues and the $1.6 million carry-forward Fiscal Year 2015 Budget surplus. These two revenues cover the $181.1 million in expenditures. It is important to note that as of the Fiscal Year 2015 Mid-Year Budget, the Fiscal Year 2015 Budget surplus is projected at $5 million. As our CFO just mentioned, per said Council policy the Budget Stabilization Reserve needs to be maintained between 15 percent of budgeted expenditures or $27.8 million and 20 percent of budgeted expenditures or $37 million with a target level of 18.5 percent or $34.2 million. This Budget projects a Budget Stabilization Reserve for Fiscal Year 2016 yearend at the 18.5 percent target level. As part of the last General Fund Long Range Financial Forecast presented to this Committee and the City Council, Staff estimated all revenue streams based on (inaudible) analysis and historical trends. As part of the development of this Budget, these revenue streams were reviewed and adjusted as necessary, for instance, a slightly increased Property Tax based on the information received from the County Assessor's Office, a decreased Utility User Tax from water sales due to the drought, and the Utility User Tax for telephone due to the voter approved ballot measure. In comparison to the Fiscal Year 2015 Adopted Budget, revenues are increasing by $14.1 million or 8.3 percent, from $169.4 million to $183.5 million. More than half of the increase in revenues or $8.2 million is attributable to increases in tax revenues. It's important to note that a third of the growth in tax revenue, about $2.9 million, is due to the voter approved Transient Occupancy Tax rate increase from 12 percent to 14 percent. The Transient Occupancy Tax revenues are the fastest growing revenues for Fiscal Year Page 7 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES 2016 compared to the current year. In comparison to Fiscal Year 2015, Transient Occupancy Tax receipts are estimated to increase by about a third or $4.6 million, from $14.2 million to $18.8 million. The increase is attributable to the voter approved tax increase, new hotels coming online, and the higher average daily room rate. Property Tax revenues represent the second largest dollar increase for revenues in comparison to the current fiscal year. Based on the latest information from the County Assessor's Office, Staff estimates Property Tax revenue will increase by $2.6 million or 8.2 percent, from $31.9 million in the Fiscal Year 2015 Adopted Budget to $34.5 million in the Fiscal Year 2016 Proposed Budget. The third largest increase in revenues is for Charges for Services. Charges for Services include a multitude of revenue streams starting with providing services to other agencies such as Fire Services to Stanford University, development- related services, or golf course revenues. In comparison to Fiscal Year 2015, Charges for Services increase by $2.4 million or 10 percent, from $23.1 million to $25.4 million primarily due to the golf course being assumed open for the first six months of the fiscal year. As you may recall, the Fiscal Year 2015 Adopted Budget assumed the closure of the golf course which did not happen as the City did not receive the necessary regulatory permits to start the Golf Course Reconfiguration Project. Further, Charges for Services are increasing due to the recommendation for green building inspection fees, increased class revenues from CSD, and the continuation of the Fire Services contract with Stanford University. It's important to note that this Budget assumes a continuation of the Stanford Fire Services contract; although, the current contract is set to expire in October 2015. Staff has been in negotiation with the University to continue providing Fire Services, and it is hopeful that the City and the University can come to an agreement. If a new agreement provides less revenue to the City, Staff will bring forward to the Council a revenue adjustment at the time of agreement approval. This chart shows the General Fund expenditures by category for Fiscal Year 2016. In comparison to Fiscal Year 2015 Adopted Budget, the salary and benefits portion of the Budget is reduced from 63 percent to 61 percent primarily through the additional investments in infrastructure. This Budget, as Lalo and Jim talked about, recommends an additional transfer of $5 million to the Capital Improvement Fund and $1.9 million to the Cubberley Property Infrastructure Fund. Of the $5 million transfer to the Capital Improvement Fund, $4.7 million was used to address the Infrastructure Plan gap of $7.5 million. The remaining $0.3 million reflects the annual Consumer Price Index increase for the transfer to the Capital Improvement Fund. Consistent with the last General Fund forecast, an additional $9.4 million, $4.7 million each in Fiscal Years 2016 and 2017, is proposed to be transferred from the General Fund to the Capital Improvement Fund to support the Infrastructure Plan. These transfers over two fiscal years (inaudible) possible due to the additional TOT receipts closing the Infrastructure Plan funding gap, provides Page 8 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES funding for the Public Art Program related to the Infrastructure Plan, and funds a small reserve for cost increases. Additionally, consistent with the Cubberley Lease Agreement with the Palo Alto Unified School District, $1.9 million will be transferred to the Cubberley Property Infrastructure Fund for capital improvements at the Community Center. For Fiscal Year 2016, some of this funding will be used for a master plan for the center and urgent roofing repair needs. From the Fiscal Year 2015 Adopted Budget to the Fiscal Year 2016 Proposed Budget, the salary and benefits cost for the General Fund increased from $107 million, by $5.9 million or 5.5 percent, to $112.9 million. Three-fourths of this increase or $4.3 million is due to salary and benefits increases as agreed by the City's employee groups. One- fourth, $1.6 million, is for the (inaudible) addition of 10.9 positions. Next let me turn the discussion to the increases in General Fund expenditures by department. As just discussed, transfers out (inaudible) department comprises the largest increase of year-over-year due to additional investments in infrastructure. The second largest investment is proposed in the Planning and Community Environment Department which is responsible for current planning, long-range planning, transportation, parking and Code enforcement. Due to the community and Council's focus on planning and transportation, parking and Code enforcement issues, this Budget proposes increases in positions for (inaudible) and/or non-salary costs. As highlighted during the City Council Budget kickoff, this Budget proposes increasing library hours mainly to Rinconada and Mitchell Park Libraries, by 32 hours or 14 percent per week from 228 hours to 260 hours per week. These additional hours will require an increase of 3.3 full-time benefited positions and 1.5 part-time positions. As discussed by the City Manager, the investments included in the Budget are lines to come from priorities and initiatives as well as to support organizational efficiencies. (inaudible) my presentation today, I discussed increased funding for infrastructure which is primarily possible due to higher Transient Occupancy Tax receipts. The increased funding for infrastructure will close the Infrastructure Plan funding gap over two years. In order to support the implementation of the Infrastructure Plan, we are also recommending to add one Engineer position. We've discussed the increased opening of library hours, especially at the Rinconada and Mitchell Park Libraries. To support the multilayered traffic congestion mitigation plan, this Budget adds one Traffic Operations position to primarily support the new traffic system, one Parking Operations Lead to assist the Parking Manager with many parking-related initiatives. In response to the community and the Council, this Budget also increases Code enforcement staffing by adding one Code Enforcement Lead. This Budget includes some modest funding in the Fire Department for a community public health consultant to conduct a study regarding the health risks for residents based on age, other demographics, and use of emergency medical services. Due to the success of special events, this Budget adds one Page 9 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Recreation Superintendent position to assist with the day-to-day operation of the Recreation Division in the Community Services Department and the coordination of special events. We are also recommending to add $45,000 for special events funding. This Budget net increases staffing in the Development Center by two positions. It recommends to reduce a vacant Green Building Planner position and outsource the work, add one Assistant Building Official and one Planning Manager. The existing Planning Manager position is reassigned (inaudible) Development Services to the Planning and Community Environment Department due to the increased workload of PCE which necessitates the addition of a Planning Manager position in Development Services. Looking at organizational efficiencies recommendations, this Budget includes a recommendation to add half a position of a Performance Auditor II and to reclassify an existing Administrative position into a Performance Auditor I. To continue investment in Information Technology, this Budget recommends replacing current analog media and recording equipment in the Council Chambers with digital equipment and to purchase a new IT Service Management System. Due to the increased reliance on information systems in the Public Safety Department, including the recommended purchase of body-worn cameras and related technology, this Budget recommends adding a Senior Technologist position. As part of the Fiscal Year 2015 Adopted Budget, one- time funding was added in the Public Works Department for an operational study of the Facilities Management Division. The study determined that operational efficiencies and improvements can be achieved. The proposed Facility Manager position will be tasked with implementing improvements identified in the operations study and provide day-to-day support over the Facility Management Division Staff. Finally, this Budget recommends one- time funding for various efficiency studies and resulting support in the Planning and Community Environment, Fire, and Human Resources Departments, a fee study for Development Services and funding to implement the priority-based budgeting process. Since the 13.3 net position additions support various outcomes, we'll fund it from various funding services in various departments. We hope that this chart will be useful to the Committee as you review the recommended position additions. Additionally, as part of today's at-places memorandum, we provide you with a matrix of position additions sorted by department and one matrix sorted by funding source. As City Manager Keene stated, we have carefully evaluated all position additions in order to support community and Council priorities and initiatives. This chart provides context for position changes in the General Fund over the last ten years. As included in the Budget, we're recommending 10.9 positions supported by (inaudible) and fees to be added in the General Fund. With these additions if approved, the General Fund position count will be at 600.35 FTEs for Fiscal Year 2016. In comparison to Fiscal Year 2016, position count at the time was approximately 49 positions Page 10 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES higher or approximately 8 percent higher than today. At the same time as the City decreased the position count in the General Fund over the last ten years, the Palo Alto population had grown by 7 percent from 61,700 to 66,000. consistent with last year's Budget hearings, each Department Director or Council (inaudible) with proposed Budget changes in his or her Budget will make a short presentation to the Finance Committee under the form outlined in the table, going by department overview, accomplishments, initiatives for the next fiscal year, significant Budget proposals, and if applicable major capital projects. After each presentation, it will be the Committee's turn to ask questions. As part of closing this presentation today, I would like to share the Budget schedule for the next two weeks as well as for today. After Council questions on the opening of the Budget, Molly Stump will present her department's Budget and then followed by Community Services and HR. We're scheduled to complete the Budget hearings by Tuesday, May 19th. This completes my presentation, and we're available for Committee questions. Mr. Perez: Let me add a couple of comments, Vice Mayor. I have, when we get to the end, an updated calendar. There was a suggestion to add the approximate times to the items, which we have done. In addition, we have added the update of the Open Budget which gives the community an opportunity to go and look at the Proposed Budget that we have now and five years of actuals going back. That link is on our website. Another protocol to suggest to you. As you approve each of the Budgets that you have in front of you, we suggest that you recommend tentative approval pending any change that you may have when you do your wrap-up at the end. That way, if you want to reconsider something, you're on the record that it's a tentative approval. Chair Schmid: Thank you for your presentations. Your numbers will keep us busy for the foreseeable future. On Item 1, there is no action required by the Finance Committee, but it gives us an opportunity to ask questions on the general overview. Now we're going to spend the next two weeks looking by department, but if there are any questions that come up on the revenues or an overview of the Budget, it would be appropriate to ask now. Are there anything that Council Members want to raise? Council Member Filseth: I just want to ask a question. Net Citywide expenditures include everything. In 2016 it's $553.6 million. Mr. Rossmann: That's correct, yes. Council Member Filseth: Which looks like a 17.7 percent increase over last year. Page 11 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Mr. Rossmann: Uh-huh. Council Member Filseth: What are revenues? Mr. Rossmann: It's balanced, so you have the same amount of revenues there as well. The Utility Funds have some usage of Reserves to balance out the rate increases. Council Member Filseth: How much are we taking out of Reserves for the 2016 Budget? Mr. Rossmann: For the General Fund, we carried forward a Budget surplus. For the Utility Reserves, that would be on page 101. Chair Schmid: You did mention that there was a Reserve carry forward that was new in this Budget which shows up in revenues that did not in past years. Is that right? Mr. Rossmann: In the General Fund, correct. What you have with the change in the Capital Budget process, that's a big part. You have now a beginning balance increasing because we're not using those funds in Fiscal Year 2015. They will be used as a revenue source for Fiscal Year 2016. That's the biggest change actually. It's a Capital Budget process change. If you look at page 101-102, the (inaudible) project is $56 million and the majority of that is for capital improvements. Mr. Keene: Real quickly, let's just explain the rationale for why we made that change. There's a good programming and sort of open government reason for that. Mr. Rossmann: Sure. Until Fiscal Year 2015, we showed those projects in the Capital Budget document which had new funding or a change in funding and new projects. However, through the accounting process, we carried forward about $20 million in the General Fund and $30 million in the Utility Funds to allow existing projects to be continued in the following fiscal year. That's why it's so large this year; it doubled in size. We are actually now showing all projects, the status of the project and the funding source as well. Instead of carrying the funds, we're letting the funds lapse. We won't be using them this fiscal year, and then we're going to reappropriate them through the Budget process the following fiscal year. Mr. Perez: To touch base on the Enterprise Funds as part of the strategy, we can talk about it on Thursday when the Utilities Staff is here. That's how we use the Reserves and the minimums and maximums, kind of like what I talked about the General Fund earlier. They have similar guidelines for the Page 12 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Enterprise Funds. We can get into the discussion as to how strategically that is used to help balance the Budget or set the rates. Council Member Scharff: I have a quick follow-up (crosstalk). I guess I was just looking at a broad issue. I looked at total Citywide revenue by category on page 55. Just so I understand, in 2013 we had $477,153 in actual revenue. Am I correct in understanding that? Then $458,780 in 2014 and then our Adopted Budget for 2015 is $465,295. We don't know the actual revenue yet, because we're still ... Now $486,821 is what we expect to get by total revenue. First of all, what again is the big jump-up that caused the $465 to the $480? When you look at the rest of the years, that's a really big jump-up. Mr. Rossmann: You have $40 million in the General Fund of that amount. It's still $21 [million], but the remaining will be Enterprise Funds. Mr. Keene: It's in the other revenue fund; that's where the big jump is. Mr. Rossmann: Correct. It's the Utility Funds, because you have rate increases. Council Member Scharff: So the big increase is the Utilities, so it's driving that $486. Mr. Rossmann: But the difference is $21 million. $40 million is the General Fund, so that's two-thirds. Council Member Scharff: So $14 million is the General Fund. Mr. Rossmann: Correct. Council Member Scharff: What's driving the General Fund? Mr. Rossmann: The big thing, you have $8.2 million tax revenues, of which the biggest one is Transient Occupancy Tax. That's the biggest jump. Council Member Scharff: This is what confused me. I look at total Citywide expense by category. That would be page 57. When I look at the actuals in 2013, I saw that we had revenue of $477 [million] and expenses of $428 [million]. That sounded good. Then it would go from 2014, we have $458 [million] in revenue and $456 [million] in expenses. Then we get to Adopted 2015, and we have $465 [million] in revenue but $470 [million] Adopted in expenses. So now we're negative $5 million. Mr. Rossmann: What happened there, we used the Reserves to balance the Budget. Page 13 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: Okay. So $5 million we took out of Reserves to balance the Budget. Then I get to 2016 and I'm really confused. Now we're at $486.821 [million], is our revenue; yet, we're spending $553 [million]. I'm really confused. That's like huge amounts of money, like $83 million. Mr. Rossmann: That's correct. It's really the Capital Budget process which makes the change in the changes in total expenditures and revenues. As mentioned just right now, the Capital Budget was going from $53 million to $115 million, because you're rebudgeting the majority of those funds. The gap here of about $60 million or so, the majority of that is just a rebudgeting of existing dollars. That explains the majority of the reasons between the gap of $486 million and $503 million. About $50 million is capital. The rest is using Reserves, which you do in the Utility Funds, as we're smoothing out the rate increases. We are dipping into Reserves. Council Member Scharff: What you're really telling me is that we're not spending more than we're making. Mr. Rossmann: We're not spending more than we're making. Council Member Scharff: If you take out the capital and you take out the utility increases, where are we? Mr. Rossmann: Then you have left the Internal Service Funds which are balanced, because they have to be. In the Vehicle Fund, we are taking down Reserves for equipment replacement. In that Technology Fund (inaudible) I couldn't tell you right now what's plus or minus. In the General Fund, we're just carrying forward the Budget surplus of $1.6 million as a funding source for the next year's Budget. Mr. Keene: Can I ask a question? When we do the Capital Budget piece of this? Are we going to get into a more in-depth description about this? It's probably still a little bit confusing about how we're reconciling the prior fiscal year and the new fiscal year Budget with carrying forward these unspent funds. In the past we were reappropriating after the Budget process so that every time we produce the Capital Budget and the Capital Improvement Program, we're able to show the full cost of all of these projects more completely than we did in our old snapshots of the Capital Program. It'll make sense when we get into more detail in the Capital Budget. There's no Budget smoke and mirrors going on here right now. Council Member Filseth: If you just look at the General Fund, is it accurate to say a quick summary is we're spending $1.6 million more than we're taking in in revenue, and the $1.6 million is coming from the surplus from last year? Do I understand that? Page 14 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Mr. Rossmann: That's correct. It's balanced. The more than $106 million in one-time expenditures, so basically it's one-time to one-time. It's balanced. Mr. Perez: I think that's the best way to look at it. Enterprise Funds by themselves. General Fund by themselves. It gets a little confusing if you combine them, because of the big swings within the Enterprise and how we use Reserves in a different manner than we typically do in the General Fund. Council Member Scharff: Just as a follow-up to that. On the $1.6 million, are we using that for one-time expenses? Mr. Rossmann: That's correct. Chair Schmid: Just a couple of quick questions. You mentioned on page 17 parking and transportation funding, $0.5 million. Does that show up in several different departments? Mr. Rossmann: Yeah. That's interesting. It shows up in several Funds. You have the General Fund portion, and you have a portion in the University Avenue Parking Permit Fund. For instance, the Parking Operations Lead is 30 percent funded in the General Fund and 70 percent funded in the University Avenue Parking Permit Fund. This is an all Funds number. It's not the General Fund number. Chair Schmid: I guess I just have a general question. You go department by department, and it's hard to capture the funding of a particular program that pops its head up in several different places. When it is appropriate to talk about it? Mr. Rossmann: We do it by department. Coming back to the example of the Parking Operations Lead, we're trying to represent the Budget to you. The detailed write-ups tell you 30 percent funding in the General Fund and the rest is funded in other Funds. You can bring it up at any moment in time regarding position additions. We'll make sure that your decision is carried through into Budget hearings when the Fund comes up. Chair Schmid: Where is the most appropriate place for that? Would it be in Planning? Mr. Rossmann: Planning, correct. Mr. Keene: Yes, in the Planning Department. Mr. Perez: We'll have to remember to include the capital portion for Planning on that night. That would be the only one that gets into both. Page 15 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Chair Schmid: The infrastructure spending which (inaudible) of the capital, but that has an impact on our revenues. Since part of our new TOT revenues are dedicated, we have to think of our revenue stream, at least a portion of it, as committed. I guess the Cubberley Fund is in the TOT funds. Can we have a notion of our tax revenues without dedicated funds? How fast has that grown? Mr. Rossmann: From the TOT perspective? Mr. Keene: No, from an overall. He wants to control for these dedicated funds. Chair Schmid: As we look at each department, we think in terms of our tax revenues growing. Part of the tax revenues are already dedicated, so how much is growing without the dedicated funds? Mr. Rossmann: I would have to calculate that. Chair Schmid: That would be helpful to have. Council Member Scharff: Greg, can I just have a follow-up? I had the same issue. I'd like to see a breakdown that says sort of what Greg said. We've dedicated all of that TOT money to infrastructure and we agreed not to lower our previous infrastructure funding in doing that. You can't just take the money and then not use it. I want to have that broken out and make sure we're not spending any of the infrastructure money on any other items in the Budget, like hiring new people for instance. Mr. Perez: Yeah, we can refresh the Committee with the Plan. We have the starting point of the base, I'll call it. Keep in mind that the majority of the increases in departments are going to be driven by salary and benefits and particularly the benefit side. When we talk about that, we'll address that as well, how much is driven by that versus services (crosstalk). Chair Schmid: It's tricky to think through. That would be very helpful. Mr. Keene: I think it'll be clear again when we get into say the infrastructure issue. For example, in the Capital Program, you'll be able to show that in a pretty unfettered way. It's not comingled with operating expenses and those sorts of things per se in different departments. I think what I'm hearing with the Council, for the most part, you want to be able to ensure that the dedicated funds clearly are dedicated to these explicit purposes. We're not even borrowing from them in the short term in any sense. When the project comes on, whether it's in Fiscal Year 2016 or Fiscal Page 16 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Year 2019, the funding as we anticipated it is there available to be spent at that point in time. We don't get caught short. Chair Schmid: I want also the other side of the coin. When we get to Community Services, we want to make sure that we take into account that our revenue is growing at a truncated rate, our available revenues are growing. Mr. Rossmann: Just to add on, Council Member Scharff, on page 15, when you get it, the Capital Budget document, actually don't have to flip right now, but it's just for your own understanding, has a detailed discussion of all the transfers from the General Fund since 2010 and going forward to 2020. We put the graph in there as well as the Capital Budget, not the Operating Budget. We actually described these funding transfers from the General Fund into the Capital Fund. Council Member Scharff: What page was this? Mr. Rossmann: Capital Budget, not Operating. Page 14 has a detailed discussion. 2. Council Appointed Officials & Council (except City Auditor). Walter Rossmann, Director of Office Management and Budget: If I may, Vice Mayor Schmid, just to point you to the at-places memorandum for today. I mentioned to you that we provided to you a matrix of position additions by Fund and by department. We have a few replacement pages for you. We have actual colored ones for you as well, which we can point it to you at the end of the meeting. We found a few errors, which happens unfortunately every year; typos, clerical errors. This is detailed in the memorandum for you to understand. It's minor things like the Citywide Expenditure Budget, we're off by $100,000. We found a slight typo, so we fixed that. As well as some replacement pages in Public Works. In the General Benefits Funds, we had one (inaudible) wrong. Chair Schmid: That's in the material handed out? Mr. Rossmann: We also have for you, which Council Member Kniss asked for, we have tabs for your book. You can attach your tab, or we can do it for you, for the Operating Budget documents and the Capital Budget documents. If you're interested in doing this, we'll be happy to do them for you and prepare them for next week. Molly Stump, City Attorney: Thank you very much, Chair Schmid. Molly Stump, City Attorney. Happy to be here and lead off for departmental Page 17 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES budget discussions. We're a small department on the eighth floor of this building, but we think we punch above our weight class in terms of impact on the City's work. We want to talk with you just a little bit. Our mission is to provide high quality legal services to the City. We have a contribution to make to just about every program, service, initiative that the City is involved in. We do, for Budget purposes, have our small department divided into divisions, which are listed there. Consultation and Advisory is really the heart of what we do or at least our large area. This is transactional work that we do with the City in terms of negotiating, drafting, consultation, training, risk management. The second major piece of what we do is Litigation and Dispute Resolution. This is of course the City's mop-up function. Sometimes things go wrong. There are disputes, and we take those on and resolve them. Sometimes we initiate disputes where City's rights or the rights of Palo Altans need to be enforced. We have a last little category which is called Administrative and Official Duties. It has some Code drafting and Code enforcement-type activities allocated to it. We just wanted to highlight a few of our accomplishments from the last term. As Council Members are aware, they've seen our work on a lot of this. We have assisted the City's Planning Department and the City Manager in initiating the Residential Permit Parking and the Business Registry Ordinances and programs. We did settle a major case of litigation, resolved quite a few pieces of litigation last year, but did settle one that resulted in near full compliance with the disputed responsibility to pay housing fees into our Affordable Housing Fund. That did net approximately $8 million for the City's Affordable Housing account. We assisted the Planning Department in negotiating and securing certification of our Housing Element by the State Housing and Community Development Department. We completed agreements that transferred management and control of the Airport to the City. We did election support work that resulted in Transient Occupancy Tax and telephone User Tax Ordinances going before the voters last fall, both of which were substantially supported by the electorate and did pass. Just looking ahead. We will be involved in all of the Council's major initiatives in the coming year. These, of course, include assisting with the Comprehensive Plan Update and the other land use and transportation programs that the Council is looking at. A couple are listed here, again Residential Permit Parking, the implementation of that, Planned Community Zoning where we are also doing some work on retail preservation, growth caps, etc. The other major initiatives that Council's involved in. We do a lot of work that's more routine. We've included that on this slide. In terms of the ongoing infrastructure improvements, which are really in an operational phase. They do have a legal component, which can involve contract negotiation, but more typically drafting and legal support for the documents that support that work that goes on in the field. We will be bringing to you in the next few weeks a draft Wireless Communications Facility Ordinance Page 18 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES that complies with new Federal legal requirements. This is included as not so much of a major initiative, but an example of the type of work that we do in terms of keeping track of evolving changes in obligations that Palo Alto needs to comply with at the Federal and State level and bringing forward appropriate programs, documents, contracts, and Ordinances that protect the City in light of those changing requirements. Significant for this year, we are really in the last stages of putting in place a few structural changes that the Council has wanted to see in the Legal Office to ensure that we are staffed at a sustainable level to support the complexity of programs and services that the City provides. You added this in your Mid-Year Budget but the full funding is now identified in this Annual Budget for a new Principal Attorney position in my office. We will also be decreasing the City Attorney's Contingency Fund, which I believe actually sits in the City Manager's Budget. These are a secondary source of funds that we tap into later in the year as we need to for outside legal services. Most of those support our work in defending the City in litigation. A smaller amount is expert technical counseling and transactional work that we need to have done that's highly specialized. Questions from the Committee? Council Member Kniss: I would just comment how pleased I am that you have moved ahead with shoring up your Legal Staff. All of us know how hard you all work. I know it was talked about last year, and it sounds like you have acted on it. The person isn't in place yet, am I correct? We're very close? Ms. Stump: The recruitment is under way. We are close. Thank you very much, Council Member Kniss, for your support. That means a lot to me, but even more to all the attorneys who you may not see on a regular basis, who are working away out there to support the City. Thank you for that. Council Member Kniss: They're all so pleasant. Truly. Ms. Stump: Yes, effective and decent people. Thank you for that. Council Member Scharff: Welcome. Yes, I also am pleased that we're moving ahead on hiring. I just wanted to understand some of these numbers. The administration cost that is going up, the increase. That's the Principal Attorney we're hiring and then wage increases basically in the Department. Is that what that is? Ms. Stump: I'm told that the Principal Attorney was allocated entirely to that category, because the position isn't here and working yet. There is no person in my office including myself that is all administration or even a majority administration. I'm a working lawyer, and this individual will also be. Once the person is here, we will allocate the substantive work, the Page 19 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES project-based work, the legal services that that person will do to the other categories. That Administration number will go down by quite a bit. Council Member Scharff: This is really hard to understand. I know enough about the City Attorney's Office to guess that that's where the Principal Attorney is, but it wasn't in salary. I was confused. Or is it in salary? James Keene, City Manager: It's in salary down below. Council Member Scharff: It's in salary as well? Mr. Keene: Under the dollars by category salary. Council Member Scharff: Now I get it. That makes sense to me. What else is in here besides the Principal Attorney? Which is what, two ... Mr. Rossmann: It's as the City Attorney mentioned. It's portions of Staff. They have Support Staff which probably is part of the Attorney's Office which Molly has. These types of FTEs roll up into the Administrative Division. Ms. Stump: It's probably about 10 percent of my position, and then a large percentage of Legal Secretary, the Management Analyst. Council Member Scharff: Where does the rest of your salary go? Ms. Stump: Primarily in Consultation and Advisory, and some in Litigation and Dispute Resolution. That's most of the work that I do every day. Mr. Rossmann: If you'll look at the bottom of page 143, the positions by division, it's not exact positions, but it does show you 1.47 FTEs for Administration in Fiscal Year 2016. One Principal Attorney position is rolled into it. Ms. Stump: Again, that will never reflect the actual amount of Administrative work done in my office. It's much too large. That person will be a working lawyer when they get here, and that one will go away. The amount of positions in Consultation and Advisory and Litigation and Dispute Resolution will go up. Council Member Scharff: I guess the division part was what was throwing me. We have different categories of division where we just break them up. How does that work? I guess I don't understand. Mr. Rossmann: Departments allocate costs to certain parts of the Budget at the Division Legal. This is up to departments, how they would like to do that. As Molly mentioned, since we weren't sure yet how to allocate the cost Page 20 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES of this Principal Attorney position, we just moved it right into Administration function. We will definitely move the cost out as the position is hired, then we'll charge the other cost centers such as Consultation and Advisory and Litigation and Dispute Resolution. We'll see the actuals reflecting much more the activity of this new position. Council Member Scharff: When you hire outside counsel, I assume that goes into Litigation and Dispute Resolution. Is that where that goes? Ms. Stump: That's not reflected. These are in-house Staff. Council Member Scharff: This is all in-house Staff. Where's your budget for outside counsel in all that? Where does that go? Mr. Rossmann: It is in there as well. By division, you see salary and non- salary costs in there. You have non-salary costs, contractual costs for the Attorney's Office of about $340,000. I'm sure that this is ... Ms. Stump: It's not in positions though. Mr. Rossmann: Not positions. It's by the cost. Stacy Lavelle, Senior Management Analyst: Positions by division does not include that. Mr. Rossmann: No, no. The table above that. Ms. Lavelle: I misunderstood your question. Council Member Scharff: Where it says contract expenses, that's the dollars by category. That shows me the outside counsel costs. Mr. Rossmann: That's correct. We're trying to split it in many ways, but there's just so many ways of splitting it. Probably there's a (inaudible) we're not getting for you. Council Member Scharff: Rents and leases, what does that mean? Ms. Stump: It's our storage for our files. Council Member Scharff: I get it. I get it. Now you charged other departments for your services, is that how that works? Ms. Stump: Yes. Page 21 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: You only charged them $26,000? Molly, you have to up your charges. What is that, like $0.50 an hour? Mr. Rossmann: Charges for Services is actually attorney fees which an applicant may have to pay as part of the planning process. This is part of a fee revenue. Charges to other funds is the cost. The cost allocation plan of internal service departments is charged to the Enterprise Funds, to the Internal Service Funds, etc. Council Member Scharff: The Charges for Services are actually money we take in. Charges to other funds are the internal. Mr. Rossmann: That's correct, yes. Council Member Scharff: Other revenue is just miscellaneous stuff that you get in. Mr. Rossmann: Miscellaneous, yeah, drips and drabs. Chair Schmid: A follow-up on that. There's a dramatic decline in charges to other funds that I noted elsewhere. There seems to be a lot of shifting over the last year in how funds charge each other for their services. Mr. Rossmann: Let me delve a little bit into cost allocation planning, if I may. What we have done with the new Budget system, we're actually much more refined in allocating costs out to other funds from internal support departments. That's one reason. If you look at each department, there are some major shifts like here. The second thing is that annually as part of development of the cost allocation plan, we contact the Attorney's Office and say, "Where have your Staff worked in the last year? Have you done more work for the Internal Service Funds, less work or more work for the Enterprise Funds?" Based on that actual activity level, we adjust the cost allocation plan. What you see here is in 2014 actual activity reflected. That's the reason we most likely dropped in the recuperation of dollars. Chair Schmid: If I want to look at this and compare it to the past, I'm going to get discontinuities, because you're doing a different methodology now and you're stating that your new methodology in 2016 is a more accurate reflection (crosstalk). Mr. Rossmann: We're doing the same methodology but more refined. Mr. Keene: I would think if we would go back over time we could see that we have made changes in that same regards. It's not just this year. Page 22 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Chair Schmid: Like the Human Resources (crosstalk) big shifts in how they charge other parts of the organization. Mr. Rossmann: This is essentially determined by us in OMB where we allocate those costs out. Chair Schmid: As we look at each department, we ought to be sensitive to the fact that you are (inaudible) may have differences. Mr. Rossmann: Mm-hmm. Council Member Kniss: Greg, I'm going to guess that Molly doesn't turn anyone down. (crosstalk) I'm really sorry but there's nothing we can do for you this year because we don't have any more Budget. I imagine you figure out how to make it happen. Ms. Stump: Yes, we do. Mr. Keene: As a matter of fact, everybody really works as hard as possible to drive down the hourly rate to almost nothing. Chair Schmid: One last little question. I notice in some of the other departments there are increases in claims for things like, they call it claims, workers' comp, (inaudible) insurance liability issues. Does the legal department get involved in those? Ms. Stump: No. The City's workers' comp system is administered through the People Strategy and Operations Department. Chair Schmid: Okay. Public Works has traffic issues, and they get (crosstalk). Mr. Keene: There's a General Liability Fund also. Ms. Stump: When City workers are out in the world and, as a result of their interaction, a citizen believes they've been injured, personally or their property. They may file what's called a claim against the City. Chair Schmid: Yeah. There's a big jump in those. Are you involved in those? Ms. Stump: Absolutely. We have an employee who's a claims technician who receives those, investigates them. We resolve them where we feel that it's warranted and justified. Where we determine that it is not, we deny them. The claimant has an opportunity, if they still disagree with that, to file a court action. Page 23 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Chair Schmid: That's part of this $613,000 that shows up as a Charge to Services. Ms. Stump: Yes. Chair Schmid: Charge to other funds. Ms. Stump: Yes. Chair Schmid: The new ethics panel, I know you spent some time on that. Was that charged elsewhere? Where would that show up? Ms. Stump: You're speaking of the employee whistleblower hotline. That's a very modest amount of time. When we're asked where we're spending our time, then I'm identifying a certain amount of time. It's in support for the Auditor's Office. I don't know whether there's a charge. Mr. Keene: Can I just add to that? Chair Schmid: Let me add one other thing to it. The Freedom of Information questions flow into the City in all kinds of areas. Some of them being legal, or maybe some of them (inaudible) in place. How does that fit into this flow? Ms. Stump: We do quite a bit of work in that area. Routine requests for documents do not come to my office. If there's any complexity about the request or question about exemption of records, there is an attorney in my office who's assigned and works very closely with the Clerk's Office. We'll give guidance in terms of what documents are responsive, and sometimes we'll review documents for exemption. Mr. Keene: I just wanted to be clear. Just things like the ethics hotline, that represents a very small minority of the kind of issues or complaints we would just normally get, the organization would get, the Attorney's Office or any of us at this level. Same thing on public records requests or whatever. I don't mean this in a sort of smug way. When you get into these small offices, where the majority of the folks are Management Staff and the work demands are such, in one sense it's almost pointless to try to allocate the dollars directly with what the sort of services being provided. Almost everybody is working a lot more than these dollars are allocated as it relates to a 40-hour work week. The truth might be there might be 60 hours worth of work for what they're doing in this area, and the dollars couldn't (inaudible). Page 24 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Chair Schmid: I guess I just wanted to ask the question of is this something that you notice as the big piece in your Budget? Is it growing? Does it demand hours that you planned on spending elsewhere? Ms. Stump: The ethics hotline does not. It's very, very modest. The public records work is significant. It certainly was growing for a time. I would characterize it probably as somewhat stable now, but it's a significant part of what the City does in terms of providing services to the public. Council Member Scharff: Just as a quick follow-up. The Budget should seem pretty stable to me over time, except for the part where we hire outside counsel. I noticed that in 2013-2014 our actuals were at $416,000. Our Adopted Budget was $340,000 which was significantly less than the $416,000 for 2015. Ms. Stump: Where are we? Council Member Scharff: I'm looking on page 143. If you look in 2013 which are actual numbers, I'm assuming that we spent $409,000. I'm assuming this is all outside counsel, but I suppose you could have contracted services for other things. Ms. Stump: That's right. The vast majority would be (crosstalk). That's right. Council Member Scharff: That's what I'm assuming. If you don't mind, we'll just call it that. I'm thinking $409,000, $416,000, and then our Adopted Budget for 2015 was $340,000. I was assuming you thought at that point that we would have less outside counsel use. Fiscal Year 2015 is coming to a close. Are we on track to spend $340,000 or do we expect it to be more? Ms. Stump: A couple of comments. You identify an area of potential volatility. It was interesting when we were looking back at the numbers this afternoon. There is a fair amount of stability, more than I would have expected given the small size of the City. It's important for Council Members to be aware that especially in the area of litigation, we have to respond to things that happen in the world that in many cases are beyond anyone's control in the City. Sometimes they are disputes that result from decisions that the City does make and knowingly takes on a certain level of risk. Whether that matures and becomes an expensive dispute or not, is not something that you can necessarily predict at Budget time. I appreciate that comment very much. It's useful. In terms of whether we are on track to spend that, we are. So the Council is aware, that reflects the base Budget amount. It's a little bit above our base budget for outside counsel. Then Page 25 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES there is this contingency that is available. It can be returned if it's not spent. Council Member Scharff: How much have you spent for the year? Ms. Stump: $373,000 to date for General Fund outside counsel. Council Member Scharff: That's pretty close to the $340,000. You're just carrying over for the next year $340,000. That could be a little bit more? Ms. Stump: Yes. Although, this year in consultation with the Budget Office, we are reducing the Contingency in the expectation that the additional staffing in my office will allow us to do some more of this work in-house. Council Member Scharff: You feel comfortable that that's a pretty good estimation, the $340,000 then for outside counsel? Ms. Stump: I do, for planning purposes with the caveat that things can happen that we need to respond to. In which case, we do come back to the Council. We have not done that in recent years. A number of years back we did need to do that, and then the Council responds in the Mid-Year. Council Member Scharff: You were pretty close last time, $373,000 versus $340,000. That's pretty good. Mr. Rossmann: If I may, Council Member Scharff. The way we budget contingency is in non-departmental. That's the last item for today. The actual expenditures show up in the Attorney's Budget. You always may see a lower Budget amount, but a higher actual expenditure amount. This contingency is transferred in (inaudible) if it's allowed by the City Attorney and with approval of the City Manager. Then expended at the Attorney's Budget. Council Member Scharff: Right. Tell me if I'm wrong, but I assumed that the plan would be to budget what we think it's going to be. If you budgeted perfectly, you wouldn't use any contingency. You'd try and be as accurate as possible. Mr. Rossmann: Correct. Council Member Scharff: One last question. The allocated charges, they're going up by 36 percent. I realize it's a small department, but that's a huge increase. How does allocated charges work, what do they mean? Remind me exactly how we do this. Why is her budget going up 36 percent? Page 26 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Mr. Rossmann: There's several allocated charges. You have charges for utilities in general, which we allocated out by FTEs in this building. We have allocated charges for IT, allocated charges for vehicle which wouldn't affect the Attorney's Office, and allocated charges for workers' compensation and general liability. We have a basis of allocating those out. Based on that, departments get hit with those expenditures. They're also immediately made whole by that, so we're just taking it from Service Fund expenditures and allocating them out by department General Fund Budgets and Enterprise in terms of these Budgets. Council Member Scharff: It made no sense to me. Mr. Rossmann: How shall I put this? The idea of it is that you take like workers' compensation costs, put it in one fund. Based on actual experience, you say, "The Attorney portion should be X; whereas, ASD's portion should be Y," to recuperate the costs for this one. Council Member Scharff: My question then is why is it going up 36 percent. What have they done to make it go up 36 percent? Chair Schmid: I think that's partially the valuation of how (crosstalk). Council Member Scharff: I do want an answer to that question. Mr. Rossmann: Okay, I can tell you. It's on page 145. My Staff reminded me. We actually detailed that out for you. It shows you the base Budget adjustments. If you look at the fourth line down, you have general liability insurance allocated charges adjustment $23,400. The IT allocated charges adjustment is $21,000. There's a reduction for printing and mail. General liability, when we get to this Fund, we can talk about this. We're funding the general liability fund based on actuarial evaluation. That increased the cost for all departments across the City. Council Member Filseth: If you look at the top section of the total expenditures on page 143. 2013 goes from $2.4 million to $2.56 million to $2.6 million. Then there's a $0.5 million increase for this year. It's relatively flat for the last three years, and then there's a $0.5 million increase this year. I assume about half of that is probably the new Principal Attorney. Mr. Rossmann: That's correct. The Principal Attorney is $283,000. Council Member Filseth: A big chunk of the rest is the increase in pension and retiree medical which is about $120,000. Page 27 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Mr. Rossmann: Council Member Filseth, if you look at page 145. That details it out for you. It shows you salary and benefits adjustments of $197,000, the funding for the Principal Attorney of $283,000. Council Member Filseth: If you look on page 143, the line salary for 2016. The budget there is $1,650,672. If I go look on page 144, the total salary is $1,694,385. They're almost the same, but not quite. Why are they different? Mr. Rossmann: What you have on the staffing table on page 144 is an average calculation of salary. It's not the exact salaries for each employee. Council Member Filseth: The total should be the same, right? They're close. Ms. Stump: If I may. We have two positions that are under-filled. For example, we have a Senior Deputy City Attorney position where I actually hired a lower classification and a less expensive employee, a Deputy City Attorney sitting in that position. I believe that may be the type of thing that might cause some difference here. Mr. Rossmann: It could be. What Staff is telling me is this is a new thing we started this fiscal year, where we're trying within the system to map those two tables together. It appears the mapping didn't work 100 percent. They should be the same; I agree with you. That was at least the intent. What you're approving is the Budget Summary. You're not approving the staffing costs. Council Member Filseth: So the one on page 143? Mr. Rossmann: That's right. Council Member Filseth: I understand that the one on 144 may not be exactly correct then. Mr. Rossmann: That's correct. I would go with the one on 143. Council Member Filseth: Let me ask a question about the one on 144 anyway for a moment though. As I look at salaries in here, the salary of the new Principal Attorney is $191,422. If I take that and back it up, so that you see the increase in salary from 2016 of $341,490. If I back out the Principal Attorney of $191,422, then I get a remainder of about $150,518. Does that sound about right? Mr. Rossmann: Mm-hmm, that's right. Page 28 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Council Member Filseth: Not including the Principal Attorney, that's the increase in salary from 2015 to 2016. I assume that's mostly wage increases. Mr. Rossmann: That's correct. Council Member Filseth: The base salary in 2015 was $1,308,733? Mr. Rossmann: Let me add just one more thing there. In Fiscal Year 2015, you have the Legal Fellow which was only funded for six months. In Fiscal Year 2016, the Legal Fellow is funded for a full year. In Fiscal Year 2015, we made the funding available in the Attorney's Office effective January 1. Now we annualize the cost, which should be detailed on the base budget salary page. Council Member Filseth: Of that $150,000, how much do you think was ... Mr. Rossmann: The Legal Fellow was probably a salary of $120,000, so $60,000. Ms. Stump: It's $95,000. Council Member Filseth: If I go $150,000 minus $95,000, that's $55,000. Then the average raise was about 5 percent. Does that sound about right then? Mr. Rossmann: That is probably correct. When you think about it, the Council approved effective July 1, 2014, a 2 percent general salary increase for Management and Professional Staff. Then we have a pay for performance package, and it's up to the Attorney's Office how she raised the pay for her Staff. Usually it fluctuates between 0 percent and 3 percent. I don't know what the terms (crosstalk). Ms. Stump: My comment is that 5 as an average is a little high. Council Member Filseth: I'd originally calculated 11 1/2 before that six months of the Legal Fellow. Ms. Stump: We could certainly get you the actual number. We also have two under-filled positions, one on the Staff side and one on the Attorney side. We have had some vacancies during this time, so we had salary savings as well. I don't know if that is shown here in any way. Mr. Rossmann: That wouldn't be reflected here, because we go Budget to Budget. The only thing you will have is the Attorney's increase which you granted, I think, in December of this year. That's reflected in here as well. Page 29 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Council Member Filseth: I'm looking to department averages. You think that's about 4 percent, between 4 and 5? You said 5 is a little high. Ms. Stump: Yes. I could get you that number. I would say it's somewhere between 4 and 5, perhaps 4 1/2. Council Member Filseth: I wanted to ask one other question. The numbers here aren't huge. I just want to understand this going forward for others. The healthcare increase from '15 to '16 is 3 1/2 percent. Yet, the average in here is 6 or 7 percent or something like that. Mr. Rossmann: I can explain that too. Council Member Filseth: Yet, the other benefits here is a 16 percent increase. How does that all work? When we get to some of the other groups, those numbers are going to be inverted. Mr. Rossmann: What happens is each employee chooses their health plans. Depending on what health plan package they choose, whether (inaudible) medical stipend or healthcare stipend, which doesn't include for instance whether they have the increase in family rate or they move from one plus spouse to open family to single, that all has an effect. Maybe that will help you. We take payroll snapshots in late February of the year. We take everybody's benefit package based on their enrollment, the exact salary increase, the exact salary that they get at that time, and then we build on a position-by-position basis the Budget. We know the increase in health is the first plan plus CPI for health which is between 4 and 8 percent effective six months into the fiscal year. Then we look at SEIU employees plus step increase; we budget for that. We look at the Management and Professional Group, we look at the approval of the Management and Professional Plan, which says effective July 1 a 2 1/2 percent increase and then there may be a pay for performance, which we average in. That's how we build the position Budget; salaries, health benefits, etc. That's really done not just on averages. We do it on a person-by-person basis. Council Member Filseth: If I understand what you just said, then the healthcare change from year-to-year varies somewhat with individual choices. Mr. Rossmann: That's correct. It varies department-by-department. Council Member Filseth: In a small group, we should expect to see considerable variation and how those change from year-to-year. In a large group, they ought to trend towards the (inaudible). Page 30 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Mr. Rossmann: Yeah. That's correct. MOTION: Council Member Kniss moved, seconded by Chair Schmid to recommend the City Council tentative approval of the City Attorney Budget. MOTION PASSED: 4-0 Chair Schmid: Let me note to my colleagues, it's good to have detailed attention, but we are well behind the estimated time. We have the whole evening. Mr. Rossmann: The City Clerk's Department Budget starts at page 158 to page 166. It's important to note that we have no presentation today. Beth Minor, City Clerk, is present. The main reason is because we do not have any Budget proposals for you. We have budgeted adjustments like in other Funds, but there are no additional funding proposed for this department at this time. Chair Schmid: Is there a reason? Mr. Rossmann: The City Clerk didn't request any funding. Chair Schmid: We have no proposed Budget? Beth Minor, City Clerk: We have no changes. Lalo Perez, Chief Financial Officer and Director of Administrative Services: No changes generated by the department other than the normal cost of operations, the increase in salary benefits, cost allocations. Council Member Kniss: Let me do one preemptive question. With Donna having been gone six months and you just stepped into the position, I imagine that that amount of money simply went back into the regular fund. Am I correct? Ms. Minor: That's correct. We had salary savings and it would go back in. Council Member Kniss: Right. Thanks. Council Member Scharff: Welcome to your first Budget. Since you didn't propose any increase, I wanted to ask a question. We seem to have Council meetings that start at 5:00, 5:30, 6:00 plus now we have all these Finance Committee meetings and Policy and Services meeting twice a week. The question is, it seems to me that we're now having, I would say, twice as many Council meetings, I mean Council meetings including Committee meetings, in which the City Clerk's Office has to provide food. I am amazed Page 31 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES that you can continue to provide stuff and not ask for a Budget increase. I was going to ask you if you need a Budget increase on that. Ms. Minor: The Council meals come out of the Council Budget, not out of the City Clerk's Budget. Council Member Scharff: It's not in your Budget? Ms. Minor: It's not in my Budget. It's in Council's Budget. Council Member Scharff: I just wasn't sure where that was. MOTION: Council Member Scharff moved, seconded by Council Member Kniss to recommend to the City Council tentative approval of the City Clerk's Budget. Council Member Kniss: I would have just one request that I would lead into that. I think Greg is right. I think the number of hours that we're moving and spending in the Chambers is considerably more. This is not a demand at all, Beth. If at some point you and David happen to have a break in your schedule, it would be interesting to compare the number of hours we're meeting now with the year before and year before that just to get some sort of baseline. I am concerned about how much you all are working. I see you in there 'til midnight, and you're back again in the morning at 7:30. Ms. Minor: We can get that information. I did look just prior to coming here. This year for Fiscal Year '15, we are looking at 58 City Council meetings that would require some type of a meal and 16 Standing Committee meetings that would require a meal. We do have the two special events, the reorg meeting and the Retreat, that also require food. There is the other stuff, the nuts, the drinks, the coffee, the tea, water, and that is included as part of that Budget. Council Member Kniss: Beth, 58 meetings means you're going through the end of the year. Ms. Minor: That's correct. I was projecting out through June. From July 1st of 2014 to June 30th of this year. Council Member Kniss: That would be 58 meetings? Ms. Minor: Correct. Council Member Kniss: And another 16 Standing Committees and another couple of events. As I said, I'd like to see that compared with year before and year before that. Page 32 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Ms. Minor: We can provide that. Council Member Kniss: Thank you. I know you can. You guys keep great records. Mr. Rossmann: If I may interrupt for a second. On page 179, we have the answer for you. In the workload measure for the City Manager's Office, the City Clerk was kind enough to do an accounting for us. If you look at the bottom of the page, where it says Number of City Council and City Council Committee Meetings, in Fiscal Year 2013 actual, '14 adopted, estimated and proposed, you'll see those numbers there. Mr. Keene: It could be understated. Council Member Kniss: The adopted and the actual are rather interesting. Chair Schmid: I would add to that on page 163, we do have a number of public record requests that seem to have doubled over the last couple of years. Is that because of the new systematic way we're dealing with them? It comes through the Clerk's Office where they did not used to come through. Ms. Minor: No, it's not using the new system that we're going to. We do have better tracking with David Carnahan, the Deputy City Clerk, keeping better track of the requests when they come in. Chair Schmid: I guess that was important because the Council brought up the importance of that. It's an indication that you are setting up systematically a way of tracking the flow of records. Ms. Minor: That's correct. Mr. Keene: If I just might add to that. I don't want us to miss the point here. We probably haven't gotten to 100 percent of funneling all of these through the Clerk's Office. Obviously, given the time requirements of responding within ten days to notify folks, this has been a great improvement. The Clerk's Office pretty much takes them in, sort of bird dogs the response in the departments. Unless it's actually for a record within the Council or something like that, the majority of the actual grunt work is carried out by individual departments. The full cost of what it takes to be responding to these record requests, we don't reflect anywhere in the Budget. Chair Schmid: Right. I guess it is important to know the flow of its coming through so we can make sense of it. Page 33 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Mr. Keene: That gives you a sense of the number of requests. Chair Schmid: I have one question. I noted that the ... Council Member Kniss: Greg, could I just finish up on that. I'm just a bit puzzled. I'm not reading it correctly. I'm on 79. Isn't that what you referenced, Walter? Mr. Rossmann: Yeah. Council Member Kniss: On 179, it lists the number of City Council and City Council Committee meetings. It has an actual which is 103 and so forth as you go through that. Is that the number you were referencing, Beth, or not? You just said there were 58. Perhaps I'm just not reading it correctly. Ms. Minor: Right. The 58 is an estimate of City Council meetings. In addition to that we have an estimated for Standing Committee. Council Member Kniss: Is that number actually proposed 100? Ms. Minor: We were anticipating additional Council meetings due to the requests for the meetings of the whole. Council Member Kniss: Okay. You're still guessing that it'll be 100 for next year, right? Ms. Minor: Correct. Council Member Kniss: Your number of Staff Reports issued is 725. This is in the City Manager's. Are we mixing apples and oranges here or not? Mr. Keene: No, but we're all doing the same work. Can I make a comment about these numbers? I would question them. Council Member Scharff: I'm glad you said that, because I'm like, "no way." Mr. Keene: For just a couple of reasons. We need to take a closer look at this. For example, we're seeing an increase of 500 as adopted in the Budget of number of Staff Reports. The 700 estimated, that's a very significant increase. I wouldn't necessarily say we're whipping through items on the Council meeting agendas faster than before. We have more reports, and we're somehow having less meetings and holding hours steady. It just doesn't track with my experience. Page 34 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: Look at it. 103 in 2013 at 318 hours. Supposedly 700 reports, 97 meetings. So far fewer, 375 hours. None of this really tracks. Ms. Minor: The Council and Standing Committee meetings also included the City School, we had the Technology, we had the Infrastructure. Those were all included in those numbers of the 103. We don't have those right now. Council Member Kniss: Perhaps we need to divvy it into real City Council meetings, Committee meetings, and Special Committees, just so that we can get clarity on it. Is that a possibility? Ms. Minor: Yeah, we can do that. Council Member Kniss: I think that'll give us a really clear picture of where Staff especially has to spend their time as well. Every City Council meeting we have must have, I'm guessing, 20 Staff (inaudible). That's also an inherent cost as well. Ms. Minor: The numbers I was quoting before of the 58 City Council and 16 Standing Committee were ones where we had to provide food. Council Member Kniss: Okay. That might differentiate some of it, right? Ms. Minor: Correct. Chair Schmid: Just one other small question. The contract services for 2016 are down $150,000. Page 180. I'm sorry, that's the City Manager. On page 163, you have administrative citations taking $200,000 of the Budget. What's a citation? Ms. Minor: Under my purview is the Hearing Officer. He hears all the administrative hearings when people want to contest their citations. That falls under that Budget. It's a 3/4 time budgeted person and a 1/2 time admin person. MOTION PASSED: 4-0 Mr. Rossmann: The City Council Budget, page 168 through page 170. Council Member Kniss: I'd say move approval, wouldn't you? Chair Schmid: Did you get a second? Council Member Kniss: I'm listening. Page 35 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: Where would the food be in this budget? Ms. Minor: It comes under the general expense. The numbers that are listed there are not just the food. The general expenses also include, let me pull it up here, special events and awards, travel, meetings. Council Member Kniss: That might be a good one to break down actually. Not now, I mean for the full Council. Council Member Scharff: I guess I'll ask the question again then. It's $52,455. Is that enough money? The Clerk's Office really runs the City Council Budget. You take all our travel expenses. You take all that stuff in, and you buy the food and all that. We don't really see it. There's no one else who does that. Is that correct? Ms. Minor: That's correct. Council Member Scharff: I guess the question is, you can come back to us if you really aren't prepared tonight, is that the right number. Ms. Minor: Out of that amount, $25,000 is for travel and meetings. That's what we use when you go on travel to conferences. I've seen in the past that that has been an okay number. The money for the food in that, last year I got a $2,000 increase. This year I've already had to transfer $3,000 from telephone and non-City to cover additional food costs. We can use more money in there. Council Member Scharff: I don't want us to raise it for no reason. If we're having problems, then I think we need as a Committee to say to ourselves, "What are we actually going to spend?" If we don't want to spend it, we could always say we're not going to provide food at all. One extreme if we wanted too. Or we're only going to provide a certain number of meals if we think it's too much. I think it's foolish to not budget what the real number is. That's all. I guess if we're going to be transferring money from some other funds and you're under pressure, I'd rather do the right Budget number. If we have a policy discussion, that's a different issue. I'd rather know exactly what you think we need. Ms. Minor: That's correct. I have had to move $3,000 this year in addition to the $2,000 that was given to us last year in order to be able to pay for and anticipate the food 'til the end of the fiscal year. Council Member Scharff: You really probably need a $3,000 increase, unless we expect 2016 to be less. Page 36 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Ms. Minor: That's correct. Chair Schmid: I think we have changed our starting time from 7:00 to 6:00. Every time there's a 6:00 meeting ... Council Member Kniss: That changes everything. Council Member Scharff: That's why I'm asking the question. Chair Schmid: There's a policy question. Council Member Scharff: For now, I guess I'll make an amendment that we add $3,000, put it in the parking lot, and think about that as the right number. Council Member Kniss: Greg, I'd second it if you'd go with $5,000. I'm a little concerned that there's so much inherent in the food when we're meeting that often. I hadn't even realized we're meeting that often. Council Member Scharff: I'll change that to $5,000. Chair Schmid: Do we have a Motion on the floor? Council Member Kniss: Yeah, I put one on, but I didn't get a second. Chair Schmid: It needs to be seconded. MOTION: Council Member Kniss moved, seconded by Council Member Scharff to recommend to the City Council tentative approval of the Council Budget. INCORPORATION INTO THE MOTION WITH THE CONSENT WITH THE MAKER AND THE SECONDER to increase the Council Budget by $5,000. Chair Schmid: Let me add one question. I noticed that our healthcare benefits are fairly steady over time. The retiree medical started downward and all of a sudden moved upward. My feeling here is that there's a rule in the City for the last decade that you need ten years of service in order to qualify. There shouldn't be any Council Members who are termed out that qualify. Council Member Scharff: Yeah, but it goes before that. Chair Schmid: Why is that (inaudible). Page 37 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: Larry and Liz both get healthcare. I don't know if you take yours. Council Member Kniss: No, I don't. Council Member Scharff: You'd be eligible for it. Council Member Kniss: No. I still collect from the County. Mr. Keene: Doesn't Larry qualify? Mr. Rossmann: Yeah. Council Member Scharff: But then there's Eurico. Chair Schmid: Right. But they were in it before (inaudible) now. Mr. Rossmann: That's correct. What the actuary does for us, they look at by department and by fund and see what the actual cost would be for retirees who are benefiting from this benefit today or will be in the future. That's how it's calculated. It's for future Council Members who will ultimately receive this benefit. Mr. Perez: Keep in mind that some are eligible that have passed. That should (inaudible). To your point, to be qualified it would be a three-term. Chair Schmid: If you're looking forward, the number should be virtually zero. I would expect it to go down over time. Mr. Rossmann: The other thing that happened is the actuary changed the methodology last year for calculating the unfunded liability for retiree healthcare. That increased the cost across all funds including the City Council Budget. Mr. Perez: (inaudible). Chair Schmid: In the long run, that number should not .. Mr. Rossmann: In the long run, it should reduce the City Council's Budget, that's correct. In other Budgets, not necessarily. Chair Schmid: We'll keep our eye on that. Council Member Filseth: What do we charge other funds? We've got $100,000 in revenue for the Council. Council Member Scharff: That's a good question. Page 38 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Mr. Rossmann: That's correct. What happens is it rolls in. It's the City Council, it's the Utility Funds, Internal Service Funds who paid for the City Council Budget part. Council Member Scharff: Why? Mr. Keene: Because Council does work related to the business of the funds. Council Member Kniss: We're actually productive, Eric. Mr. Perez: (crosstalk) Chair Schmid: We're earning more than we get (inaudible). Mr. Perez: Vice Mayor, a quick question on the Motion. There's was a mention of the parking lot. We want to make sure we put it in the right spot. Did you intend for that $5,000 to be in the parking lot or part of the tentative Motion as well? Council Member Scharff: I'll just make the Motion then. I don't want to come back to it if we don't have to. Mr. Keene: It's a tentative Motion. You still have the opportunity to review those kind of Motions when it comes (crosstalk). MOTION AS AMENDED PASSED: 4-0 Mr. Keene: The City Manager's Budget. Again, essentially no changes, except just operationally, and I'll speak to that. I think the operative pages are page 180 and 181 in particular. I would say that even the initiatives or accomplishments that we identify are really kind of a grab bag of things. Like the City Attorney, the City Manager's Office supports a shifting and wide range of issues and those sorts of things. We just generally try to identify a few things that might have been more distinctive one year than the next or illustrative of some of the variety. On page 181, the FTEs essentially stay the same. There's actually a very slight reduction related to how we're doing some allocations. If you go back to page 180, the total dollars expense is pretty minimal. On the salary line, you'll see we've got a salary increase projected of say $78,000 in this 2016 Budget. I think the big difference here will be when we look at the Adopted Budget for 2015, the actual expenses in that salary area ought to be significantly lower as there are two Assistant City Manager positions that remained essentially unfilled all of the year. The 2016 Budget, as I understand it, includes the Management and Professional overall sort of increase or additional funding Page 39 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES that's being spread in the organization. I think we have actual assistant salary placement in the Proposed Budget included here for the most part. Mr. Rossmann: For the most part, correct. Mr. Keene: For the most part. There's again a little bit of a slight difference right there. I would point out that here tonight are both Ed Shikada and Suzanne Mason, for the first time united. Suzanne's very first day here. She started at 7:30, so we just want to make she understood what she was getting into right off the bat. Obviously we would look to be actually spending this money in 2016 with these folks on board. I think we should see a significant productivity increase. If you just look at things that change and are outliers or whatever, you see the drop in the contract services amount from 2015 to 2016. I think the biggest part of that, as I recall, was we dropped the Our Palo Alto first-year funding in the City Manager's Office Budget to support a lot of the outreach, the materials production, all of those sorts of things. We've gotten through the first year, and I'm assuming that some of those costs are now just distributed and embedded in the work of the departments and the organizations. Mr. Rossmann: We may have to reappropriate some of the funds for next fiscal year. Which happens with separate action (crosstalk). Council Member Scharff: What does that mean? Mr. Rossmann: What that means is when we have funds not spent yet and not encumbered yet. Council Member Scharff: Not spent. Mr. Rossmann: Not spent and not encumbered. Council Member Scharff: We didn't spend the full $150,000? Mr. Rossmann: We don't know. Council Member Scharff: All right, questions. What are the contract services that you plan on spending for 2016, the $311,000? What is that? Mr. Keene: Walter, can you guys help with those? Mr. Rossmann: Sure. You have property contract services in the Office of Economic Development, which are budgeted in here. We're going to have to actually look at that in more detail. I don't know the Manager's Budget that well. Christine is looking. Why don't you ask your next question. Page 40 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: I'll move onto the next question. General expenses, they were a lot in 2014, they were $132. In 2015 the Adopted Budget was half of that. Now you're raising it back up. What are those as a general category? Mr. Keene: Do we have the Know Your Neighbor Grant Program at all in there? Mr. Rossmann: Yeah, that's in the Budget. We actually inadvertently did not include it in the 2015, but it's in the 2016. Mr. Keene: That's what the $25,000 increase is? Mr. Rossmann: That's correct. Mr. Keene: $25,000 grant. Do you remember when Council Member ... Council Member Scharff: Right, I remember. So that's in your budget? Mr. Keene: Yes. Mr. Rossmann: That's correct. Council Member Scharff: Why is it in the City Manager's Budget as opposed to like Community Services? Is there a particular region? Mr. Keene: It's been a Citywide program. It was a startup. Somebody in the office administers the actual grant program with folks. We allocated the funding. It could ultimately be spun off to them. Council Member Scharff: What other things besides that are the general expenses then? Roughly, I mean I don't need a detailed. Mr. Rossmann: You would have travel in there; meeting expenses; training, that's a general expense. We'll have to look at costs in detail. Suzanne Mason is helping out on her first day. She said, "Lobbyist contract?" I said, "Yes, that's correct." We have lobbyist contracts in the City Manager's Office. Council Member Scharff: Those are the State lobbyist and the Federal lobbyist? Mr. Keene: Right. Mr. Rossmann: That's correct. Page 41 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: Any sense roughly what those are? Mr. Rossmann: I think about $100,000, and this is just a memory. Khashayar Alaee, Senior Management Analyst: It's $200,000. Council Member Kniss: For both or one? Mr. Alaee: For both. Mr. Keene: That's under contract services? Mr. Rossmann: That's under contract services. Council Member Scharff: That's actually two-thirds of the $311? Mr. Alaee: Correct. We have social media consultants that are helping, that we're using some salary savings for this fiscal year. Economic Development has a variety of little (crosstalk). Council Member Scharff: What would be an Economic Development thing, contract, if you know? I'm just curious what that entails. Does anyone have an example of what it would be like? Mr. Alaee: Yeah. One thing that Economic Development works closely with the bid and the Chamber is on the street pole signs. We have an ongoing contract with a firm to do that. We fund periodically. We often get contributions from the bid and the Chamber for that, but sometimes we pay more, sometimes less. Council Member Scharff: I was going to ask this on City Council. There's a City Council Contingency Fund and there's a City Manager Contingency Fund. Is that in a separate Budget area? Mr. Keene: It's in a non-departmental. It will (crosstalk) is that correct? Mr. Rossmann: Yeah. Council Member Scharff: That's in the non-departmental? Mr. Keene: Is that where the City Attorney's is also? Molly said it was in the City Manager's, so it's in that same account. Council Member Filseth: Question on page 181. There's zero for Chief Sustainability Officer. Where's Gil? Page 42 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Mr. Rossmann: Here's what happened. You will see his Budget is up for discussion, I believe, on Thursday or next week, Tuesday. What we have done is in 2015 his position was split funded over several funds and departments. In the 2016, we're consolidating his entire budget into his Budget and that's where you see zero now. The City Manager's Office had 0.05 for him and we're taking it out and moving it over there. Council Member Filseth: Where is it if it's not in the City Manager's? Mr. Alaee: Page 184. It's a whole separate chapter. Mr. Keene: (crosstalk) what night? Mr. Alaee: Thursday. Mr. Rossmann: I think it's Thursday or Tuesday of next week. You see, Council Member Filseth, on page 182, the transaction right there. Fourth line down, 0.05 FTE Office of Sustainability Director relocation from the City Manager's Office to the Office of Sustainability. We're trying to document that for you. Chair Schmid: Council Member Kniss, any questions? Council Member Kniss: Nope. Chair Schmid: Let me ask a strategic question. I noticed from the Auditor's Report if you take from Fiscal Year '09 to this year, the City Manager's Staff is down by 12 percent, and yet the expenditures are up by 45 percent. It looks like we're upgrading the City Manager's Office. Is that fair to say? Mr. Keene: I think we have to take a look at that. Maybe we send them a little memo on the piece, because I don't really think so. Chair Schmid: Maybe you're just much more active in spending money on consultants and outside. Mr. Keene: We'll have to look at those pieces, because on the salary side, I mean, back in 2009 we would have had an Assistant City Manager, a Deputy City Manager, and an Assistant to the City Manager at that point in time. It's got to be in some of those contractor, other components. We could get you that if you'd like. Chair Schmid: You don't think the salaries have changed that much (inaudible) two existing, experienced assistants at the City Manager. Page 43 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Mr. Keene: I think we have to look at it. As you recall during that period 2009 through 2011 almost, we were flat on salary increases really. Some of us were taking 4 or 5 percent a year salary cuts. We have to look at what that ... Council Member Kniss: A dramatic personnel drop. I think I counted 30 between '09 and '10. Mr. Keene: Those years, you mean. Not across the organization. Yeah. Chair Schmid: There was a drop of two people. Mr. Keene: What's the Auditor's Report? I'm sorry. We're looking at ... Chair Schmid: It's this piece that finally dropped off at this point in departments. She has ten years of data from each department, and some other measures that are helpful. Mr. Keene: If we get a chance, why don't we look at that and cross-tab that with the Budget a little bit so we can answer that. Is that correct? Chair Schmid: Yeah. I have a vested interest in saying to the City Manager, "You've spent the largest time on strategy." Mr. Keene: Yes. Definitely not anything on food, that's for sure. Chair Schmid: Okay, good. You'll follow up on that? Mr. Keene: Mm-hmm. MOTION: Council Member Kniss moved, seconded by Council Member Scharff to recommend to the City Council tentative approval of the City Manager’s Budget. Council Member Scharff: When we say that's it all tentative, just so we're clear, we have to repeat that it's tentative just to make it clear. Mr. Perez: Yeah. If you'd say that upfront, that's clear. MOTION PASSED: 4-0 3. Community Services Department. Council Member Kniss: Can we do a time check on how we're doing? Chair Schmid: We were supposed to be here at 6:45 and it's 7:40. Page 44 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES James Keene, City Manager: I am hoping that part of this was just beginning to familiarize you with the pages, the structure. These have been tiny, little offices in comparison to where we're going to be going here shortly. Chair Schmid: I think some of the same questions will show up. Walter Rossmann, Director of Office Management and Budget: Sounds great. Next on is Rob de Geus. He is our Community Services Department Director. It's his first year, so good luck with you and your PowerPoint (crosstalk). Mr. Keene: The good news is you have not filled your vacant position that you used to have. Isn't that correct? You could always go back there if you (crosstalk). I'm not saying you did, but if you desire to. Rob de Geus, Community Services Director: Thank you. I'll keep that in mind. Good evening, Council Members. Rob de Geus, Director of Community Services. Good to see you all here. I'm joined with Lam Do. He's our Budget Analyst for the Community Services Department. He's done a lot of work preparing the Budget. We also have Senior Staff from the department behind you over there, from the three divisions that we have in Community Services. They're available if we need more specific answers. I have a quick presentation, so we can get into the questions and discussion quickly here. The Community Services Department's mission is to engage individuals and families to create a strong and healthy community. We do that through parks and recreation services, social services, the arts and sciences. Really I think about the purpose of Community Services in this way. We really try to improve the quality of life for people that live in Palo Alto, that visit Palo Alto, that work here. We're really focused on health and well-being and creative expression in its broadest sense. That's what we do. It's what we do every day. We have some great assets to work with. The Council over many decades has invested in Community Services and parks and recreation, and that's why we have 37 parks and three theaters and a Junior Museum and Children's Theatre. They're just really outstanding Community Services assets that you really don't see in most other cities. Just quickly on accomplishments. Over the last year, with such a large department, very diverse, we did many things. These are just a small sliver of those. We opened up the new Mitchell Park Community Center and Library. Fantastic space. People are really enjoying it. We completed the construction of the Magical Bridge Universal Playground. It was a partnership with Public Works and Community Services and also a nonprofit partner, Friends of Palo Alto Parks. They raised 90 percent of the funds that allowed us to build that playground. I don't know if you've had a chance to Page 45 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES visit there, but it's quite something. Our arts institutions, the Art Center in particular, I just wanted to call them out. Karen Kienzle is the Director of the Art Center. I'm sure you've all met her. She's constantly doing innovative work at the Art Center, and it's just impressive. They continually win state awards, and they're just pushing the envelope with respect to the arts. Children's Theatre continues to grow its program, it's fee-based program in particular. They're focused on recovering more costs, so they're doing very well. In our Open Space and Parks, we added some additional trails to the park system and in Byxbee Park. We're advancing the Foothills Fire Management Plan that the Council adopted in 2009, I believe. Initiatives going forward. We have a few here. Completion of the Parks, Trails, Open Space and Recreation Master Plan. It's a two-year process. We're a little over half way through that. We've done a lot of community outreach. It's going very well. We're about to move into the assessment of all that outreach and begin to prioritize and set some recommendations for Council to review. Our Project Safety Net collaborative for youth well-being continues to be very important to residents and, I know, to the Council and certainly to our department. We're reinvesting in that collaborative and trying to set it on a footing where it can have greater impact into the future as well as some of the other programs you see here, the HSRAP program and homeless services. A number of initiatives there. We're working on an exciting negotiation with the Junior Museum and Zoo. The Friends of the Junior Museum and Zoo is a partner of ours. We have five nonprofit partners that are in existence just to support the Department of Community Services; the Friends of the Junior Museum and Zoo is one of those. They're a very good Board, a strong Board, and they have a vision to rebuild the Junior Museum and Zoo. Very exciting. They would like to have some governance authority over that new Junior Museum and Zoo once it's built, if that can be done. There was a letter of intent that the Council approved, and Staff and the Friends are working on terms that we can then come to Council with. We're in the midst of those negotiations. I'll just mention the Art Center again here. They're working on a variety of different programs, but there's one, an interesting one, where they're assessing the community engagement around next generation audiences in museums, which will be pretty interesting work coming out of the Art Center. Then we go to significant Budget proposals. You've all seen the Budget. There's several things in there that we don't have time to go over in the presentation. I'm sure you wouldn't want that, so we're just going to highlight a few things. The way I would describe it is there's two categories of increases that you see. One category is increased costs for doing business. This increase is in custodial costs and park maintenance costs, animal care, temporary salaries for our instructors for a variety of programs. That's a whole category there. Then there's increased costs for doing something more or new or improved programs and services. That's the second category. What we have also is Page 46 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES new revenues in both of those categories to try and offset as many of those costs as possible. That's the two categories. We have four or five here that we just call out. The first one, I think, is probably the most important one. If I was sitting in your shoes, it'd be the one I'd want to talk about most, because it's adding a Staff person to the Table of Org. It's a management position, and it's expensive. This is the one Staff person we focused on as the critical operational need for our department. Of course, there are other needs. A little history on this one. This relates to the Superintendent of Recreation and to support special event coordination. Community Services has contributed a lot to the cuts of the City Budget over the years. We actually feel pretty good and proud about that. I've worked closely with Lalo over those years. Some challenging and difficult decisions about contracting out. Certainly the Recreation Division did a lot there. We had a dedicated Manager for At-Risk Youth. We had a dedicated Manager for Special Events. We had a Superintendent of Recreation. We had a dedicated Business Manager for Recreational Services. All those positions are gone. We have a much leaner division within Recreation, much more productive. We are sort of left with somewhat of a structural gap and maybe have gone a little bit too far. We don't have quite the oversight that I would like to see in the Recreation Division. This is the largest division of the three divisions. We have an Open Space Division, largely maintenance and our Ranger Staff. We have an Arts and Sciences Division which is the Junior Museum and Zoo, Children's Theatre, and Arts Center and Public Art. We have the Recreation Division which is the community centers and operations of the golf course. That division alone, Cubberley as well, generates $3.5 million in fee-based revenues and rental revenues. It's a lot, and it takes a lot to manage the recreation team, which is a group of really talented Staff. We really do need that Superintendent to hold that team together, to build the brand of the Recreation Division, to provide better oversight of the cash handling at all the different centers. We have a Recreation Foundation that's one of the five nonprofit partners. The Recreation Foundation has a lot of potential to do a lot more and generate a lot more revenue. They need support, and they need support from Staff. We haven't been able to really provide them the support. When you do provide good support to a nonprofit arm, they can do amazing things. We see that at the Art Center. We see it at the Junior Museum and Zoo. This person would invest in that nonprofit partner. I'm not going to talk as much about these other bullet points. Council Member Scharff: No, I'm glad you're talking about it. Mr. de Geus: Yeah, I'm sure you've got lots of questions about it as you should. The other piece other than supporting the operations of the Recreation Division is special events. We used to have about three Staff dedicated to special events some years ago. They've all gone away at this Page 47 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES point. We manage special events as a department, and I tell everybody they're special events staff and they've got to show up. In reality, it takes a lot of coordination and management. They're good for the community; they really do create a sense of place. What I'm hearing from the community and others, Jim, Council Members, is that we want to see even more, do more events where we can bring the community together around celebrations and things like that. What's happening now is we're sort of scrambling to get those events done. We're able to keep the traditional events going. When new events come up, they come up all the time, every year there seems like there's an additional five or ten events that we have to take on. It's like, "Who's on point?" A lot of times we're drawing really from the City Manager's Office, Tommy Fehrenbach, or Kash if he's still here or Claudia Keith. They're involved in actually helping make these events happen and being pulled away from other really important work that they're meant to do. In addition to that, we have members of the public who come forward that want to do events. They have ideas, and then they try and work with the City. It's cumbersome and it's not an easy process and there's no point person. The thought here was that this Superintendent as a senior-level position would be able to coordinate that interest of the member of the public, who comes and wants to do an event, not to run the event for them, but to help them through that process of working with the Police Department and Public Works and City Hall. We think it'd be a really good thing for the City if we had that position doing both of those things. Let me just quickly go over these others, then we can get into the questions. Mitchell Park is another area where we feel like more investment is a good thing. It's offset by revenues, so maybe that makes it a little bit easier. It's a great success, with so many people coming to Mitchell Park and enjoying the space, the Teen Center, the programming there. We want to be sure we are staffed up and can provide the services and the cleanliness and attractiveness that people expect when they arrive there. It's really contract dollars and hourly Staff to support the Mitchell Park Center. The next one is Mitchell Park also and the Lucie Stern Community Center. This is really Facility Attendants. We have a lot of interest in rental activity at both Mitchell Park and Lucie Stern Community Center. We have a limited Budget to hire Facility Attendants to be there on weekends and evenings. Every night of the week we have rentals at these spaces. This is also offset by new rental revenue. The Art Center is doing great and has lots of interesting classes, a lot of wait lists. We want to add some program dollars there for their adult classes in particular, their studio classes offset by revenues. The last one is just furniture replacement. We don't have a fund to replace furniture, which seems silly. This is not a solution to that problem ongoing, but at least it gets us in a better place. I don't know if you've had a meeting at the Lucie Stern Center recently. If you have, you'll notice that all the corners of the tables are chipped. They're all different colors. Sometimes we have people Page 48 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES from out of town, the region. It can be a little embarrassing. In any case, we want to replace some of the worst of the furniture that we have at some of our centers. Alma Plaza is another example. The new community center that we've brought on that we're trying to rent out or have the public use it at no cost. It didn't come furnished. This allows us to buy a few additional tables and chairs for that room. This is a one-time $25,000 request. That's just a preview. I know there's a lot more in the Community Services Budget. I'm available to expand on these areas or answer questions. Council Member Kniss: I have a quick one, Greg. Does the black and white ball fall under the Rec Foundation? Mr. de Geus: It does. When it's done, and they have elected not to do it this last time. That's partly indicative of the Board. They need support and growth. They're struggling a little bit. City Staff are very involved as Minka points out. This is very true. There is some talk about bringing it back. There's interest there. Council Member Kniss: (crosstalk) Mr. de Geus: The Chamber of Commerce. Council Member Kniss: It's a good community. Mr. de Geus: With the new Mitchell Park Center, we've scoped that out as a possible location, using the parking lot for a different venue. I hope to bring it back. Council Member Filseth: The Recreation Division Superintendent, how should we think about that? Should we think about if we do this person, we'll get X more special events per year? How do we think about that? Mr. de Geus: The request for the Superintendent also includes additional contract dollars for special events. Council Member Filseth: $45,000. Mr. de Geus: Right. $10,000 of that $45,000 is really to support summer concerts, which are underfunded. $35,000 would be for additional events. The Superintendent would help support that whether they are City-driven events by Council or members of the public saying, "Hey, I've got an idea. Can you help with this?" It'll happen. Even today we had a meeting; Tommy led the meeting with the Mayor. The Mayor wants to do three new events this summer. They're great, actually a really good idea, but the street closures. One around literacy, one around music, and another dance. Page 49 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES It's to support that type of thing and make those things happen in a more efficient way without drawing Staff from other important work. Council Member Filseth: Some of that you're borrowing. You said Tommy Fehrenbach and Claudia Keith (inaudible). Mr. de Geus: Jim can chime in here. It's not a sustainable model. I think we're asking too much of those people. They're really good, and Tommy has a knack for special events. He's just very good, and he's a can-do kind of guy. He'll just lend a hand wherever it's needed. It's a burden. Mr. Keene: The issue is the workload is picking up in other areas for the folks who have been devoted to doing this. Tom will be spending a lot more time running interference on the Business Registry Program, for example. He would not get out of the special events part. To the extent that he's got these great relationships with different constituent groups, we'd still want to deploy him. I will tell you that I've really come around to the fact that these special events are one of the really distinctive, value adds that the City provides. I think it affects a lot of folks who never have an encounter with the City, who aren't at a Council meeting necessarily. I say this from a series of meetings I've had with different citizens over the past 18 months. I've asked them and they'll go, "I don't know what you guys really do, but I love when Paly won the championship and we had that great parade and the event. We brought our kids out. I'm here because of the quality of the schools and the quality of our neighborhoods." For a lot of people, they see these special events or things we do that really bring the community together around typically things that are shared values or interesting kinds of things. Council Member Scharff: Can I follow up on this particular topic? You haven't convinced me to be honest. You guys have been doing a great job on special events. In the last five years, we've had a ton of special events. They've all gone well. I could name a whole bunch of them, everything from the Hack-A-Thon to the Martin Luther King. What you're really saying to me is we're not adding anything new, we're just going to make it easier on everyone, because it's not a sustainable model. If you said to me instead, "Hey, we need to hire this person and we're going to have these ten extra, great events. We're going to (inaudible) an extra $200,000 for it. It's going to be fantastic. We're going to have movies on the plaza." I'm feeling like this is just spending a huge amount of money in my view on salary without telling me what we're going to get. I sort of feel like you have to go big or go home. Right now it's going home. Page 50 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Council Member Kniss: Greg, that's a really good point. I think you can't keep yanking from within. You can't keep pulling from within your own Staff. I know Tommy will keep doing it, but he's got a child now and other obligations. While we usually don't discuss that in a session like this, we have to acknowledge what Staff can actually do. Greg, I think that's good. When it goes to the whole Council, say this what's going to happen with this money. Council Member Scharff: I'm not actually okay with that, Liz. Council Member Kniss: You're okay with which? Council Member Scharff: What you just said. I actually am happy to put it in the parking lot. I probably will end up supporting it. I want to have a discussion about what we're really going to get. The fact that you're spending $300,000 on Staff and $45,000 on the extra events just doesn't sit well with me. Council Member Filseth: $35,000 because $10,000 ... Council Member Scharff: All right, $35,000. If you came to me and said, "We're going to have some great events. We're going to spend an extra $200,000, $300,000 on staffing, and we're going to spend $150,000, $200,000. It's worth it because we're going to bring the community together. Here's my vision," I'd be good with it. I'm not good with spending $35,000 on the actual events and $300,000 on the Staff. I'm not going to support that. Come up with a bolder and bigger vision for me, and I'll support it. Mr. de Geus: I'm going to push back on it a little bit. Council Member Scharff: That's fine. Mr. Keene: Get the numbers right first of all. This isn't just about special events. When you came to me with Recreation Superintendent, there was a whole range of recreation things you were after. Council Member Kniss: I support you. Council Member Scharff: Great. I appreciate that. Mr. de Geus: The first part of my talk on the Superintendent was what Jim was talking about. Maybe I'll just go over that again. The Recreation Division has reduced four full-time managers within the Division. Council Member Scharff: Say that again slower. Page 51 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Mr. de Geus: The Division has reduced four full-time managers within the Division of Recreation. Council Member Scharff: In 2010, right? Mr. de Geus: Over the years. I've sort of absorbed that work mostly, the Superintendent work, the management work, and all of those things. In reality, it isn't sustainable. What you're saying is, "Everything's fine. It looks fine. You're doing a great job." Council Member Scharff: You're doing a great job. That's why we promoted you. Mr. de Geus: That's not the reality on the ground. Maybe we don't do a good job of that. Frankly, we don't. Actually we never say no. You say, "Come do something." We say, "Okay, we'll do it." We keep doing it. In reality, we don't have the resources or Staff to do it properly. We have burned out Staff. You think we're doing a great job, but in reality we're missing important parts of that job. Inevitably something's going to fall through the cracks at one point. We don't want to wait for that to happen, do we? That there is a disaster, and then you say, "Oh, now I get it. You need this Staff member to actually hold the whole thing together." Council Member Scharff: What would the Staff member actually do? Can you break it out? What is his time is going to be spent on, what's he actually going to do? What are we getting for our money? Mr. de Geus: Let me be sure you understand what's within the Recreation Division. It's the Lucie Stern Community Center, the new Mitchell Park Center, and the Cubberley Community Center, all the activity that occurs in those centers. It's all the special events that we do. It's the aquatics programs. It's all the activity in our parks and fields. In summer camps alone, we have 4,000 kids in our summer program. They generate $3.5 million in revenues as a division. It gives you kind of a sense of what happens in the division. What we need is really someone that holds that division together in that sense, is really working to brand and market the programs as a Recreation Division. We really don't have that. Council Member Scharff: Right now, who is doing that job? Mr. de Geus: I'm doing it. Council Member Scharff: You're doing it. Mr. de Geus: Yeah. Page 52 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: Your replacement, why is that not that person? Mr. de Geus: That person will lend a hand. As I was doing that job, I was also managing the Parks and Rec Commission, the Capital Budget we have, and doing strategic planning. In reality I know I was not giving the time and attention that was needed to the Recreation Division and the Staff there, and building that Staff and that work group. In reality, if we do this and we have the right person, we're going to generate as much revenue as the cost to pay for that person and more. It's going to take time, particularly if we can build the Recreation Foundation to do more than it is doing now. It's really a two part request. For me, I get that the special events piece is the sexy piece. That's what you want to say, "Well, yeah, that I want to fund that, but this other piece not so much." It is the other piece that's more important for operational reasons, really to keep the department humming and secure and risk free. Just to the cash handling that happens at all of these centers that we have and the pool, the money that goes into it. Supporting the golf course and managing just the rounds of golf and marketing that golf course. Council Member Scharff: What golf course? Mr. de Geus: It's still open. We need to spend more time on it, and get out there and market and support the course. I'm not saying we're not doing anything, but we're not doing enough. It's limited resources. Now, that's not to say the special events isn't real. It is real. With this position and this coordination, we are going to see better events, more events. Exactly what they are, I couldn't tell you right now. We'll see more events. Your point about investing in more events, I would not agree with that. That's something we can contract out. Producing events, people do that. We can get that. What we don't have and what you can't contract out is leadership that can steer more than row and move people through a process and clean- up our special events permitting process. I don't know if you've seen it, but it's 20 pages and it's a challenge for anyone to try and fill out to try and run an event. You'll turn around right away when you see that. One of the first things we'll do with this individual is clean that up, create a tiered permitting process. If it's a simple event, it's a one pager. That's one of many things we could have this individual do. Council Member Scharff: I was just on that one issue. Do you have other questions? Ed Shikada, Assistant City Manager: Can I add? Sorry. Mr. Keene: Go ahead, yeah. Page 53 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Mr. Shikada: What we're really talking about is Staff will stretch. Staff will stretch when necessary in order to achieve a goal, especially when an event is new. It's the sustainability to keep that level of effort ongoing. In addition, some of the issues, and Rob pointed out the risk associated with continuing to rely on Staff at that level of effort, would be the labor relations issue, such as the grievances that can come up when a supervisor is not adequately trained and not adequately providing the support for their Staff. There are a number of ways that these issues play out to the negative. One of the line items that was pointed out earlier was the general insurance claims and the like. Those are the types of costs that go up when the type of sustainability that Rob is referring to is not supported. Chair Schmid: I wonder if I could add a layer to this. Looking at the Auditor's ten-year look, there's striking numbers about (inaudible) Community Services Department that indicates things change over time (inaudible) quite dramatically. Theater attendance over the ten years is down by 16 percent, recreation classes by 32 percent, athletic fields down by 30 percent, golf rounds down by 40, special circumstances. At the same time, other activities show very sharp growth, child theatre is up 38 percent, theatre classes up by 38 percent, child rec classes up by that amount, art visitors up by 30. Across this, what shows very dramatically is staffing is down by 15 percent, Staff per resident is down 22 percent, expenditures per capita by the department rose at less than 1 percent. A good indicator that staffing is a critical piece here. It's not just for special events. As you say, it's to keep the activities growing and out there. I guess the athletic fields have been a big issue. We have more and more people want to use it, and there seems to be less fields available. How do we deal with that? How do we reach out and run programs and get permits that are easy to get and run things effectively? If you can articulate that these are the base problems we're trying to deal with, I'd be a real supporter of adding a person that maybe, as you say, special events might be one piece of that, but it's not the whole thing that the department needs. This department is one that seems to have cut back Staff, and Staff per resident is much lower than it has been. Council Member Filseth: Let me ask a question on that which I think is sort of connected to that too. I mean it as an extension of the same things. You've got contract services, which is taking a substantial increase from $3.5 million to $4.1 million next year. It's bumped around a little bit. To what extent does changes in contract services correlate with the question you asked, which is trends in the staffing in terms of outsourcing these kinds of things? Are those related? Page 54 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Mr. de Geus: The biggest jump here that you see is really related to the golf course. We had anticipated the golf course would be closed for a full year. It's going to be open for half a year. It's all contracted out in terms of maintenance and support. Within that are program are service contract dollars. Most of our programs are contracted. This is true. We look at doing alternative service delivery all the time, and I think it's the future actually. It's not about building back up the City Staff to previous times. When I first started with the City, Community Services was over 100 full- time Staff. We're not looking to go back there. This is not in any way the beginning of that, nor do we think it ought to be. I've been a big supporter of looking at alternative service models and led the golf course contracting out of maintenance as an example. It's better. We have better maintenance and it costs less, but we can't do it for everything. In this situation with Recreation Services and special events, I think it's a good investment because it's a leadership position that can then leverage nonprofit partners and the community to do even more as opposed to funding a specific service delivery. Council Member Scharff: I'm thinking this to myself. You're a new department head. What's important to me is that you run it efficiently and that you think to yourself, "How can we save money? What can we outsource when necessary?" Like you did with the golf course. I know you have a record of doing that. If I said, "Let's go ahead and do this," if you have to cut your Budget by 5 percent in other areas, what would you suggest? How would you suggest that you save money to offset this? Mr. de Geus: I would suggest that we generate revenue. What we do in Community Services is extremely high quality and of high interest to the members of the public. There's opportunity to ask for additional fee-based programs for that unique experience that we provide. You see it built in here. We have $1 million of additional revenues in this Budget. I think we could do more with that. I'm sure we can do it within Recreation Services, if it's organized in the right way and it's staffed appropriately. Council Member Scharff: What you believe is that if we hire this person, that he'll more than pay for it. Mr. de Geus: Over time. Council Member Scharff: How long is over time? Mr. de Geus: Three years. Council Member Scharff: What kinds of things would he be doing that would create the new revenue? He's a manager; he's not someone that's actually Page 55 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES doing something. I don't mean that in a negative way. It's directing, looking at the group, as you said holding it together. Mr. Shikada: Perhaps building relationships is an example. Mr. de Geus: Certainly. I'll go to Council Member Schmid's point about the SEA report. If you look at some of those numbers, it troubles me, particularly in the recreation classes and programs. We see a declining number of enrollments and classes being offered. Part of that is we're charging more fees and trying to improve cost recovery, so we're losing a little bit. With a concerted effort to build a brand around Recreation Services and programming, we can see that trend turnaround and start to go up. We'll see additional participation, more fee-based revenue. That would be one thing. The other thing I would point to is the Palo Alto Recreation Foundation. I mentioned it before. One thing we have in this community which is really a great resource is residents. The residents care so much. They really do care. If we can support them and organize them in a way that they can be out there as ambassadors for a particular program or service, there is a lot of money that can help support new programs. The Art Center is a good example. What is it? $4 million a day they raised to help refurbish the Art Center. It's great. We have many examples of that. The Rec Foundation can do that too. Council Member Filseth: I can sort of start to converge on this a little bit. Maybe this isn't the right way to think about it; maybe it is. It seems to me within the mechanical perspective, we can say, "Yes, let's approve this." We can say, "No, let's not approve this." Or we can say, "Let's put it in the parking lot until we see all the other things that are going to go in the parking lot as well." I think all our instincts is that Community Services is one of the things that actually we really want to spend on it in Palo Alto. There's only so much. There's quite a bit of paranoia on this side of the table about increasing expenses in the future, particularly on pension and liability expenses. I don't know that expenses growing as fast or faster than revenue is a sustainable model for the long term, especially given your comments that there's going to be a downturn one of these days and so forth. I think that's the three options. Council Member Scharff: I'm probably in the parking lot. Council Member Filseth: I think I am too. It's all discretionary stuff. I'd like to see what else is going to go in the parking over the next few days. Chair Schmid: If I could just make the case that that Charge for Services of $1 million projected for 2016 is a very powerful number. It diminishes the Page 56 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES cost of one Staff member. Do we want to reach that target or put it in the parking lot? What are you putting in the (crosstalk)? Council Member Filseth: It's not a question of making money. It's a question of how do we deliver more services without (inaudible). Council Member Scharff: I also didn't hear that argument from Rob. I heard that gaining $300,000 is a three-year process. At most I heard it's $100,000 in gaining revenue by hiring this person in the short run. I didn't hear it would impact the $1 million. I'm probably going to support it. I think we can have that discussion when we get to the parking lot. I want to think about it. I don't want to just agree right now. I also would like you to better flesh out the sexy part of this a little bit. Mr. de Geus: Okay. Council Member Scharff: I would. I actually wanted to move on a little bit and just ask you briefly. On Number 2 I have no issue with it. It looks like you're making money on it or it's roughly at break even on the operating hours and the teen (crosstalk). Mr. de Geus: For Mitchell Park? Council Member Scharff: Right. That's what it looks like to me. The Foothills Fire Management Plan, you didn't mention that really. I assume that we've been doing this. It's an important thing we need to do; we should fund it. The Lucie Stern facilities staffing, I was caught by the words "temporary salaries." It cost us $11,000. If it's ongoing, how temporary is it? I guess I don't understand what the word "temporary salaries" means in the context. Mr. de Geus: They're hourly Staff, so they're unbenefited Staff. Council Member Scharff: Is that what we mean by temporary salaries? When we use that term, it just means they're hourly Staff. Mr. de Geus: That's right. Council Member Scharff: I don't have a particular issue with that. The workshops and classes, I think that's fine. I don't really have an issue there. The furniture, I actually did have an issue. My issue is the opposite of your issue probably. It's more that I hate it when as a City we don't build a sustainable model and things fall through the crack. I made this speech at Council the other day. I don't know if any of you remember. It's that we don't maintain everything. It drives me crazy. Page 57 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Mr. de Geus: And what's next, I think you said. Council Member Scharff: Right, and what's next? I actually am not going to support this. I want you to have a fund that replaces the furniture. I want you to come back to us and set up a fund that sustainable that's on an ongoing basis, so that we don't have chipped furniture and you don't have to come to us every month hat in hand and say, "I need to replace the chipped Formica table." I actually want a sustainable plan to get this stuff done. Chair Schmid: Isn't that the Infrastructure Plan? Council Member Scharff: I don't know what it is. I want every department to not be letting things fall apart. Simply put. Mr. Keene: That's beyond this. It's just Community Services as you acknowledge how we look at this in the organization. It probably does get us into IBRC infrastructure territory between what is catch-up versus what is keep-up, to borrow their terms. It very well could be Rob right now saying, "Look, we just got to fix this stuff." It's not just the fund. Then we have to have a way to do it in an ongoing way. It may be this plus more. Again, I think that's an across the organization issue, because you're really talking about a mindset or an orientation. Council Member Scharff: Baby steps, Jim, that's how this stuff happens. Mr. Keene: This is a baby step. Council Member Scharff: No, it's a one-time replacement. Mr. Keene: No, that's a baby step. I would say the baby step plus what you're asking is what we ought to look at. That's just something I think we need to think about. Let me say one other thing. I agree with the idea of putting this stuff in the parking lot. As a matter of fact, I suggest that we try to get a little more efficient right here. We've got about 10 or 12 positions, let's even assume that everyone of those is going to be an issue in some way, find a way to cull that out and not spend 40 minutes talking about each one here and then still putting it in the parking lot. We're having a lot of people still sitting around when we might be able to get through some of these things and know where we're going to really need to look at these. The second thing I would just say is that we are only looking at part of the return on investment. That's what we're really talking about. What is the return on investment if we add a new expense to us? How quickly can we pay it back? Trying to use a private sector profit model. Even then we still haven't really talked about what we're really getting when we do that. It's one of the problems with budgeting. It does tend to look at the marginal Page 58 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES changes. Any time you're asking for something new, we put it through this. We have no process at all for saying, "Have you assessed the costs for quietly assuming new things with your existing capacity all the time? What's the cost of that?" I'll tell you right now, part of the reason I recommended this position, and I’m fine with it in the parking lot, is I have a new Director here who has been in recreation for a long time and who has been a part of doing a lot of cutbacks, who has come in and said, "With all the demands and stuff we have, we really need this position." We haven't done one single assessment of how much time the Assistant Director of Recreation, now the Director, is spending on Project Safety Net, a non-Community Services program in a sense per se, but a necessity because of an issue we have in the community and the capacity for us to be able to say, "Here's somebody who could effectively do it, has built some relationships." I don't know what it is. Maybe Rob spends 40 percent, 50 percent of his time on essentially non-Community Services work. We don't have a good process for saying, "Well, let's not do that, because we're taking away from other capacity," or to say, "How is it that we really can effectively supplement that?" Just in that issue, he's been having to work through all kinds of issues about how could we get a contract person to actually run Project Safety Net with people coming and going. The reality of making stuff happen is up and down all over the place. One of the things we are dealing with, and it is a little back to the special events, we can pick up some slack for a while. It's human nature to not be able to keep doing that on top of everything else. We do a lot of special events, because whoever is Mayor wants to respond to the community. We're not sitting here with a program about all special events. To be honest with you, I collude with everybody. I say, "Come on. I think it'd be really good if we could do that. Can't we eke this out?" It builds up, and when the pressure is rising elsewhere and people are saying why haven't we got this done, everyone starts to go, "How am I supposed to manage all this?" The other challenge we have is actually doing the analysis and quantifying everything to be able to justify what is really happening out there. That's another whole bit of work that people have to stop to do. I'm just trying to express. Rob is not doing this. I can tell you right now, underneath the surface, he's going, "My God. How am I going to get all this done?" Perfect example. Right now we're losing money on the golf course. I'll bet you he and his Staff spends more effort on the golf course right now as we're losing it than when it was just smoothly running. We're running interference on the whole issue of how do we meet with the Water Board. What might have been typically .10 percent of his time, let's say, when he was the Assistant Director, could very well be 35 percent in a year like this. At some point as we go through this process, we've got to find some way to balance that out. I do recognize that one of the key things is this is a difficult issue for the Council. It's a difficult issue for me. I've been saying for years, let's say 1,100 is our number of existing full-time benefited Page 59 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES positions, "We can't have 1,100 people going forward." We said, "Maybe we have to have 800 or 750." I don't know, but it's something even less than we have. It's very difficult for me to recommend these new positions too, because I basically know we're in a problem. We don't have a commensurate way to amp down the demand on the other side. I think we need to think about it as we go through this process, because I don't think you're really asking about this position or that position. You're really dealing about the systemic structural piece. You know what I mean? We've got to really make sure everyone of these is absolutely worth it, because we know every time we're adding it, we're actually digging a hole for ourselves a little bit. I don't have the answer for that, but I'd rather make sure we have it in a concentrated discussion than in each one of these where we could take an hour of time on a position. To be honest with you, we'd have ten people sitting around here who could have been dismissed also. While we're talking about efficiency, we've got to start thinking about that too. Sorry. Council Member Kniss: You still want to park it, huh? Mr. Keene: It's almost 8:30. It's three hours. No, I'm not saying this to dissuade parking lot honestly. Chair Schmid: I think we need a Motion. MOTION: Council Member Scharff moved, seconded by Council Member Filseth to recommend to the City Council tentative approval of the Community Services Department Budget. Council Member Kniss: I normally would support this, but I can see that when we take this back to Council again, we're going to spend another hour on it. Rob has just stepped into this. We finally have some stable footing. I don't think this is that much money that I wouldn't do it this year, reassess it as the years goes along. Council Member Scharff: We can't reassess, because you can't fire people in the City. Never happens. Council Member Kniss: While you can't, you can move people around. Chair Schmid: I'm going to vote against it. Rob really should be coming in triumph tonight. I was out walking over the weekend and noted that there is open or will soon be open the 27 acres in parkland at the Baylands with beautiful trails. Among the hilltops, a beautiful spring day, a wonderful thing for the City. It's a triumph (crosstalk). The Staff of the Recreation Division has been reduced over time. To maintain what we are and to maintain new Page 60 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES parkland, it's appropriate we approve it. I will be voting against the parking lot. Council Member Scharff: You can't by your own rules. I hate to remind you, but the way we actually agreed to do this is two people can put it in the parking lot. If you vote against the Motion, we don't approve his Budget. Mr. Perez: May I make a suggestion, Council Member Scharff? Could you possibly split the two items? It seems like you're all in agreement, if I'm reading this right. If not, that's okay. I'll step out of it. Council Member Scharff: There's no vote on the parking lot. Chair Schmid: Yeah, I'm perfectly happy to have that moved to the parking lot with two members doing it. I just want to say that it should be a triumphal night for Parks and Rec. Council Member Filseth: Can I comment on that briefly? Chair Schmid: Yeah. Council Member Filseth: It may yet be, because one of the outcomes of the parking lot is we give him more than $45,000 worth of programs. Council Member Scharff (crosstalk). Council Member Scharff: That's what I asked you to do. Chair Schmid: That has moved to the parking lot with two members (inaudible) up the rest of the Budget (crosstalk). Council Member Kniss: The rest of the Budget you're going to let go through? Chair Schmid: Yeah. Are we all in favor of that? Mr. de Geus: Can I just give a quick shout out thank you to Mike Bruckner? He's one of the analysts in ASD. He works with a number of departments, and he worked with CSD this year. He was tremendous in helping us work through (inaudible). MOTION PASSED: 4-0 4. PSO, Employee Benefits Funds. Walter Rossmann, Director of Office Management and Budget: Human Resources, that's on pages 248 starting. Kathy Shen will make the Page 61 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES presentation. We're actually talking about several areas here (inaudible) Human Resources Department and the Employee Benefits Funds. Kathy Shen, People Strategy and Operations Director: Good evening, Kathy Shen, Human Resources, People Strategy and Operations. The mission for our department is to recruit, to develop and retain a really diverse work force, well qualified and professional to reflect the high standards of Palo Alto, and to lead departments in positive employee relations, talent management, succession planning and employee engagement. The overview of this Budget is that the head count is not changing. We do have some contracting dollars added to help us do some data analytics and upgrade our community source information system. We'll get to that in a little bit. I did want to comment on the divisions. You see Total Compensation, Employee Relations, Organization Development, etc. We've actually got a different model for service delivery this year. We have Human Resource business partners who work with a group of dedicated departments. In the past, you had managers and employees who had to go to three or four or five different people in the department depending on if they had a recruitment question, a workers' comp question, a grievance, etc. We have one face of Human Resources to each department. We'll probably be changing the way our costs are allocated in future years. Some of our accomplishments. We completed and implemented five total compensation studies for different employee groups, for SEIU, IAFF, POA, the Management and Confidential Group, and Utility Managers. We've completed recruitments of two Assistant City Managers, Community Services Director, City Clerk, Assistant Director of Planning and Community Environment, plus over 100 Staff positions have been filled year to date so far. Our recruitments are really up, almost 30 percent. That reflects increasing (inaudible) of people who are both leaving for other career opportunities and retiring. We've got a great internship program. We have about 25 interns each year. We have rolled out a special training program. We've got 74 sessions year to date of instructor-led training plus Skillsoft which is an e- learning platform. We've rolled out the new ethics policy. Initiatives for this new fiscal year. We really want to focus on recruiting and reduce our cycle time Citywide. The recruiting has taken us over 100 days on average. That's this last month. We want to get it down to 80 days from start to finish. Council Member Kniss: Excuse me. Recruiting in general, Kathy? Ms. Shen: Yes. We've done some benchmarking for other cities. For some hard to fill positions, it's not unusual to take quite a few months to fill. On average, we're a little bit high. We do have a very extensive recruiting platform with several sets of interviews and an extensive background Page 62 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES search. We've got this new department structure to enhance our customer service and our transactional excellence. I've divided up people who do the SAP and the CalPERS and the benefit transactions into a separate team with a dedicated manager and people who do the customer service. We had four different employees making data entries, but they were also answering phones and answering employees. Now we've got some dedicated transactional excellence group working, and that's actually done really well just in the first two months of implementation. We're going to work a lot on succession planning, because we know there will be more retirements and voluntary exits. We want people to have individual development plans, training plans. We plan on conducting a Citywide risk assessment. My Assistant Director, Sandra Blanch, who also serves as our risk manager will be doing that. We want to create a streamlined benefits and SAP interface using our consultant. That's a little bit about what we're planning on doing. I'll take any questions about the Budget. Council Member Scharff: Just briefly. What's the contract services? You have a $58,000 increase. What do you currently do your contract services on? I guess you spent roughly $0.5 million on it. Ms. Shen: We'll take a look at that. Mr. Rossmann: If I may add a few things. One thing which gets budgeted is the HR Department's labor relations contracting, obviously for the advisor which you see in Closed Session and which guides us in our efforts. If you look at page 257, on the top of the page, we reduced contract services by $156,000 for data analytics and we're adding $214,000 of similar work back into the Budget. It's a one-time out and a one-time back in. That's the main difference of the delta you see. Council Member Scharff: That's the $58,000? Mr. Rossmann: That's the $58,000. Council Member Scharff: Got it. That's really helpful. Council Member Filseth: Head count's flat, but salary and benefits is up 7 1/2 to 8 percent. What's in that? Ms. Shen: What's in the salary and benefits is increase in base salary. All of my Staff are members of the Management and Confidential Group, who receive both merit increases of the 2 percent and the 2 1/2 percent as the whole Management Group does. You can see there's an increase in the cost of pension and the retiree medical, just as the Citywide costs have gone up. Page 63 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES James Keene, City Manager: The salary is about the same though. Council Member Filseth: Salary is 7 1/2 percent. Mr. Rossmann: The other thing, Council Member Filseth, where you have one fiscal year to the next, is in Fiscal Year 2015 they are juggling quite a few vacancies. We're budgeted at a certain level for this time. Once we fill the positions pending what the marketplace dictates, we may hire people higher than we budgeted. That's a reflection you'll see in 2016 as well. Mr. Keene: Can I just make that as a general point? Just so we're clear, because we're going to see that. We actually have a wide range in pay scales for particularly Management and Professional. It's about a 40 percent range. If there are vacancies and that sort of thing or we had a new position, we'd budget at the midpoint. Obviously if we brought somebody in at 10 percent of the midpoint, obviously they'll get built-in 10 percent costs (inaudible). Council Member Filseth: This also anticipated somebody leaves and somebody more expensive gets hired into that place Mr. Keene: Yes. What we do is we only budget the midpoint if they are actually at the midpoint or it's a vacant position. Otherwise, we budget the actual salary for that year for those people. Usually if we're going to see something above that baseline built-in increase, that for the most part is going to be driven by the fact that we're having some change and turnover and we're having some people who are coming in overall with a net above midpoint. Mr. Rossmann: That's correct. That's one of the reasons in this department for the changes. Chair Schmid: Question. Scattered through the pages are things that (inaudible) department. On page 251, there's a liability insurance increase of $1 million. On page 255, there's a 280 percent increase in workers' comp. On page 261, there's a $1 million increase in general expense. At the bottom of the page, there's $1.1 million in general liability insurance claims. On page 264, there's a increase of about $1 million between 2013 and 2015 in claims filed. A whole pattern here of between $1 million and $1.5 million. Mr. Rossmann: I can speak to that, Council Member. As we just touched on previously, we have Internal Service Funds such as for general liability, workers' compensation, where we budget the actual claims and costs. Then we charge towards those funds as (inaudible) in HR. It's really a Page 64 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES conversation about how Citywide workers' compensation costs have increased and general liability as well. The reason why the Budget has increased is we changed the budgeting methodology again. We're refining it. What we get annually from an actuary is what we should be budgeting at a 90 percent chance claim for workers' compensation or general liability. That's what we did for those two funds, and that's why you see the drastic increase. As we continue with the Budget methodology, we'll see how the experience is. We'll see a stabilization over the years. Chair Schmid: In fine tuning there's never a smaller number that results. Mr. Rossmann: It depends. I can tell you where it was a smaller number when we fine tuned. We haven't seen Public Safety yet. When you see the Fire Department's Budget, its salary and benefits actually decreased as we fine tuned the methodology. It goes the other way as well. Council Member Schmid: This is really setting up a potential reserve for the flow of future claims? Mr. Rossmann: That is correct. Chair Schmid: It is not increasing claims that are taking (inaudible). Mr. Rossmann: It's budgeted, and if there is leftover funds, it will increase the reserve level for these funds. That's correct. Council Member Scharff: I just have two quick questions. It probably applies to everyone. When we give merit raises, when we have a pool of funds for that. Is that spread out in each department head's Budget for the coming year or where does that money come from? Where would I find that in your Budget? Mr. Rossmann: The way we build merit increases this year for Management and Professional Staff is as follows. First, the average merit increase (inaudible) between 0 percent and 3 percent. We did an actual analysis and we realized that all the Management and Professional Staff, if we were to give everybody, let's say, a 2 percent, we actually don't need a 2 percent. We need the 1/2 percent to grant everybody the midpoint in merit increases. The reason is because you have vacancies. We don't give merits for those. You have first-year employees who don't get merit increases. The way we built the Management and Professional Staff salary, we took the current payroll (inaudible) in late February. We added the 2 1/2 percent for salaries as approved by the Council effective July 1, and an average 1 1/2 percent increase for merit, which will be distributed per the City Manager's review. Page 65 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: I guess I'm going to want at some point, tonight's not the night to do it, an understanding of what that means, distributed per the City Manager's review. My understanding is each department head gets to pretty much make those decisions. Maybe that's changed. I want to understand if there's basically a curve which says, "In your department, you can't give everybody a 3 percent increase and somebody else can give everybody a 1 percent increase," because they just happen to be a tougher department head. I want to understand how this works before I vote for it. I want to know exactly what the metrics are behind it. Lalo Perez, Chief Financial Officer and Director of Administrative Services: We'll make a note. Council Member Scharff: I'm just saying tonight's not the night, but I want to get that on the table as something I want to understand. Mr. Perez: I'm not going to go into it, but to answer your question we do have a process. Council Member Scharff: Good, and I want to understand it. There was that question. Where's the other question I had for you? Maybe it wasn't important. I know what it was. It was the question that Eric asked of Molly. What has the average salary increase been in your department? Ms. Shen: The average salary increase has been around the 2 percent level. I would like to respond to your question actually. It's not entirely up to the Director to say how the merit increases are going to be distributed. We have a review with the City Manager and with the CFO. We look at each department. The Director comes in and defends their performance ratings and what they want. It's not a forced curve. There's not a force ranking, but there is a conversation about, "Gosh, is everybody always above average?" talking about different employees. I think we have a pretty good methodology, and we can talk more about that. Council Member Scharff: I just wanted to understand it. It might be perfectly fine and I might be all good with it. I just wanted to make sure. I know we've had discussions about how that evolved. Council Member Filseth: If it's 2 percent, then where's the other 5 1/2 percent? The average increase is 7 1/2 (inaudible) flat. Theirs is 2 percent. Did it go to the Parks and Rec Department? Ms. Shen: There have been changes in the incumbents who are (inaudible). We've had some recruiting. We've had some people leave. When you hire new people, sometimes they're at a different salary level. Page 66 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Council Member Filseth: That accounts for 5 percent? Mr. Rossmann: No, it does not. There's another piece which is missing. The Management and Professional Compensation Plan is approved by the Council. It authorizes an increase up to 2 1/2 percent effective July 1. Then you have a pay for performance merit increase which will be the 1/2 percent to 2 percent on top of that. Council Member Filseth: That's on top of the 2 percent? Mr. Rossmann: No, no. 2 1/2 percent is the general (inaudible) increase. Then you have a pay for performance increase, a merit increase. We budgeted 1/2. That gets you to 5 percent. The rest is the delta we talked about, about the vacancies per skill set. Council Member Filseth: You've got the 2 1/2 percent and the 1 1/2 on top of that. That takes us to 4. Then you've got a couple more based on what you budgeted in case of moving around in midpoints and so forth. How does that relate to the average 2 percent? Mr. Rossmann: That is past dated. What Kathy talks about is what she has given in the past, not what we will give in the future. Council Member Filseth: Oh, I see. What's the projection for next year? Is it 2 1/2? Mr. Rossmann: It's budgeted for 1/2 percent, but it could be on the average of 2 percent (inaudible) budget on every position they're increased to make it simple. Because we don't know who's going to get the merit, the average increase budgeted is 1 1/2 percent. It includes a vacant position too. It's budgeted for that across the board, which then translates to an approximate 2 percent average for the department. Council Member Filseth: I understand. I don't mean to pick on HR, but I think we're going to see this on every single department that comes in here. I just want to make sure we understand it. Mr. Rossmann: And we're doing it consistently. Mr. Perez: To your point, on the smaller departments it really stands out. Council Member Scharff: Also HR can probably explain it; whereas, I didn't want to pick on like Rob on this. Page 67 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES MOTION: Council Member Scharff moved, seconded by Council Member Kniss to recommend to the City Council tentative approval of the People Strategy and Operation Budget. Chair Schmid: Are we including the Employee Benefit Funds in (inaudible). Council Member Scharff: The Employee what? Chair Schmid: The Employee Benefit Funds. Council Member Scharff: No, I was just doing this one in particular. Council Member Kniss: We're just doing Operating Budget, right? Mr. Rossmann: Yeah. Chair Schmid: Yeah, let's do the HR Budget by itself and then the Employee Funds. MOTION PASSED: 4-0 Council Member Scharff: I got (inaudible). Chair Schmid: Did it show up on page 262, 464 and 460? Council Member Scharff: Okay, I think so. Council Member Kniss: You said you want to look at 262 first? Council Member Scharff: Yeah. 259 to 261 first. Chair Schmid: We just need to talk a little bit about that. Any further comments on (inaudible)? Mr. Keene: I don't want to pressure you, Mr. Chairman, but could you set an end time, like maybe 9:00. That would be 3 1/2 hours. Council Member Kniss: I told him I have to leave at 9:00. Mr. Keene: I mean just in general. We have four meetings this week. Chair Schmid: Yes. I'm sensitive to (inaudible). Mr. Keene: Right, but people have to start at 7:30 and 8:00 tomorrow morning. Chair Schmid: It would be good if we could get through the retiree. Page 68 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: I don't have any questions on this stuff. Mr. Schmid: 464, General Benefit Funds are pretty straightforward. 470, Retiree Health (inaudible). I have a quick question on that. Council Member Kniss: Retiree Health? Chair Schmid: Yes. On page 470 in the middle of the paragraph, it states that 31 percent of the accrued liability occurs to current active employees and 69 percent is attributable to retirees. (inaudible) to current employees when they retire but to the people who have already retired Mr. Perez: Correct. Chair Schmid: 69 percent of what we're paying is for people who are not working. Mr. Perez: You may recall that John Bartel from John Bartel and Associates came and spoke to you at the prior Council about that issue. A lot of it was just to deliver the quick history. We weren't funding retiree medical for the future obligations, but they were going to retire into the future. We were only paying as you go for people in the current. This is the bill for that basically. Chair Schmid: I mean it does reiterate the point that Council Member Scharff was making. When we hire people, we're also hiring a future liability. Mr. Perez: Just to add a little bit to this, without taking us too far here. What we are doing now is funding not only the current retirees, the current employees, and a portion of the current employees' unfunded portion from prior years of service; not the whole amount but some amount of that. Chair Schmid: A quick question. When we hire someone at 50 who maybe works for five to ten years and then retires, are we assuming to pay the bulk of the retirement funds? Mr. Perez: No. It's based on a percentage. You have to have five years in Palo Alto, and you have to have a minimum of ten years to qualify. Let's say if somebody did that and they work until 60, they would get the 50 percent coverage. Mr. Keene: You're talking about healthcare. If you were talking pension, did you say pension? Page 69 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Chair Schmid: We're on the Health Benefit Fund. We would be paying for someone who came at 50 and retired seven or eight years later? Mr. Perez: They would be at the 50 percent formula. Then there'd be the cost-sharing by the employee. Chair Schmid: Up to 20 years. At 20 years (crosstalk). Mr. Keene: It's 100 percent. They don't get anything until they hit ten years vesting. Somebody 50 would have to work until 60 unless they had five years and some other PERS (crosstalk). Chair Schmid: I'm just concerned with the statement that we had earlier that many of these funds have been under-funded. Maybe they've worked 20 years already somewhere else and it's under-funded. When they come here and work for five years, then they get fully funded. Mr. Perez: That was part of the problem that we had. Somebody could work in another PERS agency, come to Palo Alto, spend one day here. It didn't happen literally that way, but the way the vesting system was. If they retire in Palo Alto, then Palo Alto is on the hook for that retired medical obligation. Council Member Kniss: A question in general. As we're looking through this, especially at the retiree health benefits and so forth, and our own health benefits or whomever has this health benefits, do you see the ACA beginning to really kick in somewhere or not? It looked as though I could see it earlier in the book, but I'm not sure that it's really true. Why don't you not answer it tonight, but be thinking about that. It's one of the most important aspects of how we keep healthcare costs down. I hope we are able to take advantage of it in some way or other. I realize it's basically just kicked in fully in 2014. I'd like some more information on has that really made a difference. We're about to head into an election where this will be a huge discussion. Some more data from us, I think, would be helpful Ms. Shen: We'll get that for you. Chair Schmid: I think tonight we're just looking at the tables that are presented which are straightforward, but the issue will come up with each department when we talk about new staff. Mr. Perez: Yes. I think from my opening remarks it's also on your to-do for us to come back and for us to have a further in-depth discussion about retiree medical and pension as well. Page 70 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Chair Schmid: That's in September or October. Mr. Perez: Correct. Chair Schmid: We have to vote on a Budget. Mr. Perez: What we're asking for you to do in the Budget is to approve making the Annual Required Contribution for the active employee and the currently retired and some slight amount into the past services. It's staying in line with what you have approved as a Council before in terms of funding retired medical on an AO basis. From a policy perspective, nothing has changed. Chair Schmid: You're actually asking us to tentatively approve that payment? Mr. Perez: Correct. Mr. Keene: Which would be in keeping with previously directed Council policy. Mr. Perez: Correct. Chair Schmid: The Council directed a valuation (crosstalk). Mr. Keene: No, the Council actually made a decision, I think, on that. Mr. Perez: You're right. We updated the valuations and gave you the newer amounts. You made some changes to some of these assumptions, as you may recall. Chair Schmid: Then I thought we said, "Let's have a look at this." An actuary look at it. Mr. Perez: Right, but you approved the Annual Required Contribution amount, but said, "Let's look at .... ." Chair Schmid: For 2015. Mr. Perez: At that point, Mr. Bartel gave you the future contributions as well and said, "Here's the projected growth of those contributions." We're using his numbers. Council Member Scharff: The only thing I'd say is I'm willing to approve this tentatively. We may want to come back to some of this. Page 71 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Chair Schmid: I agree. Council Member Scharff: I feel a little bit like we're being railroaded to finish this meeting, and I actually resent it a little bit. I think we have to have a discussion regarding what the timeline for the next meetings are and when we should start. I would suggest that we start earlier when we do it. One of the things that bothers me is what you said, you have all your Staff here, it's late and that kind of stuff. I think we should do these meetings much earlier in the day. I'd like to start this meeting at 3:00, and that way your Staff could work and come down as they're needed. For a lot of these meetings, I'm willing to start earlier than that. I would like to just run that by you as the City Manager, and say it would be so much easier on everybody. Mr. Keene: I like that idea. Look, I'm not trying to railroad you into making even a decision. I'd rather you postpone this, but still end by 9:00. That's 3 1/2 hours here. Mr. Chairman, I think that there's a lot of value to this idea of being able to start at 3:00, even for the ability to pull people down as needed. Chair Schmid: What about a Motion to continue this item, and then we can continue the rest of the agenda to finish at 9:00. Then we can talk about next meetings, and see if there's a time. MOTION: Council Member Scharff moved, seconded by Council Member Kniss to continue Items 5-7: 5) General Liability Fund, 6) Retiree Health Benefit Fund, and 7) Non-Departmental to the next Finance Committee Meeting on May 7, 2015. Mr. Keene: May I make another suggestion? Why doesn't the Chair and Lalo and Walter just work with you on the sequences, and then the next meeting is offline with the folks. MOTION PASSED: 4-0 5. General Liability Fund. 6. Retiree Health Benefit Fund. 7. Non-departmental. Future Meetings and Agendas Lalo Perez, Chief Financial Officer and Director of Administrative Services: I was going to give you the agenda copies updated. These have suggested timelines. We can work on the starting time offline like the City Manager suggested. The key thing is to let us know if there's a meeting that you Page 72 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES cannot make. To remind the Committee, we must have three of you to have a quorum. That's why it's important for us to ensure that we know if you can't make a meeting. Chair Schmid: Liz, while you were out, we talked a little bit about starting as early as 3:00. Council Member Kniss: I am not coming at 3:00. Chair Schmid: What time would you be (inaudible). Council Member Kniss: 5:00 is the earliest I know. There's another life out there, I'm sorry to say. Council Member Scharff: Wouldn't you rather spend that life during the day (inaudible)? Council Member Kniss: No, I don't. I'm in the city most of tomorrow doing something completely different. I think we could be a bit more expeditious. Council Member Scharff: I actually think that we should. Council Member Kniss: Should what? Council Member Scharff: Should start earlier. I think it doesn't really work to have all these people hanging around here. Council Member Kniss: You want to start at 3:00 and finish when? Council Member Scharff: I would be happy to finish at 8:00 frankly or 7:30, as opposed to where we're ending on this step. I actually would prefer if we just did this during the day frankly. That way we wouldn't have all these people coming down and sitting. Council Member Kniss: You're wanting to do this Tuesday and Thursday throughout May? Council Member Scharff: No. I actually would prefer that we have one meeting frankly, where we don't have two meetings a day. If I had my druthers, I'd start this meeting at 10:00 in the morning. They bring Staff down as they need to. We would finish once a week as opposed to two meetings for four or five hours. I think that would be the easiest on Staff. Council Member Kniss: It actually is not a bad idea, but you're going to have to find a day when we're all free. Page 73 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES James Keene, City Manager: Could we take that as a suggestion and see what we could do even looking at tomorrow? I think it's a great idea. It'd be better for us to work 12 hours. I hate to say it. With people coming and going, you get more comparison between what you're seeing and the pattern of stuff. Chair Schmid: Yeah. There was not a lot of public participation, so we'd probably need some flexibility for us. Council Member Kniss: On Thursday, we are starting at 5:30? Council Member Scharff: Yeah. Council Member Kniss: I have down the California Avenue Streetscape opening and so forth is that day. Am I correct or am I wrong? Chair Schmid: Next week, we have two meetings scheduled for the 12th and 14th. Mr. Keene: Cal Avenue opening is Thursday, 2:30 or 3:00 P.M. Council Member Kniss: Then on Tuesday the 12th, if we start at 3:00, I'm at VTA. Council Member Scharff: Okay. You're at VTA until what time? Council Member Kniss: My plan was to be back here between 5:30 and 6:00. Council Member Scharff: What time does VTA start? Council Member Kniss: 4:00. Council Member Scharff: Why don't we start it at 10:00 and be finished at ... Council Member Kniss: Let me take a look at the rest of the day. This is Tuesday the 12th. I have a meeting at 11:00, at 12:30, and one at 4:00. Council Member Scharff: Can you change those meetings or not? I mean then we'd be done with it. Council Member Kniss: Greg, I would love to. I am not free those days. I hope we're not on the air. Male: Still recording. Page 74 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Council Member Kniss: Can we go off? Male: No, this is part of the meeting. Council Member Kniss: Me yelling at Greg? Chair Schmid: Tuesday or Thursday, either one of those days? Council Member Scharff: I actually can't do Thursday. I won't be here that Thursday. I can't do it. Council Member Kniss: I hope my mike is off. It is not that easy to just willy-nilly say, "We'll now have a 10:00 to 3:00 in the afternoon." Had we thought about it in February, it might be a great idea. Council Member Scharff: Okay. It's stressful on Staff. I think it's stressful on Staff. It is what it is. Chair Schmid: Can we move it to 5:00? Council Member Kniss: On which day? Council Member Scharff: On Tuesday. Council Member Kniss: You can move it to 5:00; I won't be here. Council Member Scharff: Why? You said you would get back from VTA at 4:30. Chair Schmid: I thought you said 5:00. Council Member Kniss: I can try. It's a joint advisory meeting. It's scheduled from 3:00 to 5:00. What I said is I'd try and be back here by 5:30 to 6:00. You can start without me. Council Member Scharff: We could. I'm fine with that. Council Member Kniss: There will be three of you. I will not be hurt if you start without me. Council Member Scharff: Do you mind if we start at 3:00 without you? Council Member Kniss: If you think you don't need a fourth on our Finance Committee. Chair Schmid: If you're taking one of the days off, it's good to have two together. Page 75 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Council Member Kniss: I shouldn't have bit. I think we should start on a Monday morning and finish up whenever we get done. Council Member Scharff: I'm good with that. You want to do that? Council Member Kniss: We'll just go through the whole thing. Council Member Scharff: Let's do that. Council Member Kniss: Right, the whole Budget. Council Member Scharff: I'm good with that. Do you have a Monday you're available? Council Member Kniss: No. I (inaudible). Council Member Scharff: I do. I will clear my calendar and get it done. Council Member Kniss: I think some year it might be a good idea. If you're at all interested, at the County that is what we did. Greg, we did what you are talking about. Council Member Scharff: I think that's what makes the most sense. Council Member Kniss: But we had budget hearings at night, so public could come. Council Member Scharff: Liz, just so you're clear on this. These meetings will not end at 9:00. They are likely to continue and go to 10:00. I do not believe we will get through this. Council Member Kniss: Isn't that up to us? Council Member Scharff: It is, but it depends on what you want. Council Member Kniss: I think this is very attendee dependent. Council Member Scharff: It does, but it depends on what you view the Budget. I view this as one of the more important things we do as a Council. I don't see us finishing at 8:00, 8:30 given how we do this. Chair Schmid: I think we should close the meeting. I think we've gone as far as we can. Council Member Kniss: I think so. Chair Schmid: Therefore the meeting is finished. Thank you. Page 76 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 DRAFT MINUTES Adjournment: Meeting adjourned at 9:07 P.M. Page 77 of 77 Finance Committee Special Meeting Draft Minutes 5/5/2015 APPENDIX 4 Finance Committee DRAFT MINUTES Special Meeting Thursday, May 7, 2015 Chairperson Schmid called the Finance Committee meeting to order at 5:04 P.M., in the Community Meeting Room, 250 Hamilton Avenue, Palo Alto, California. Present: Filseth, Kniss, Schmid (Chair), Scharff Absent: Chair Schmid: Welcome to the Finance Committee. I guess it's a big evening. We have on the agenda for tonight the Utilities Department, which makes up half of our City Budget. Then we have Public Safety, which makes up two-thirds of the General Fund, at least the salary and benefits piece. A lot of material to go through tonight. Let's see if we can keep it moving along as we progress. Oral Communications None. Action Items Walter Rossmann, Office of Management and Budget Director: Chair Schmid, good evening. Walter Rossmann, Budget Director. I will quickly point out to you the at-places memo, which we gave to you today. You asked at the meeting on Tuesday regarding the impact of the Affordable Care Act on our health benefits costs. We provided you with a summary of that. Additionally, you asked about payment of the Annual Required Contribution for the retiree healthcare benefit fund. We have provided you with a memorandum you approved in June last year which authorized us to pay the Annual Required Contribution for Fiscal Year '15 and '16. Lastly, what we have is, which we'll talk about when the Police Department comes up, a request for transition funding for Animal Services. This was discussed with the Committee during the audit in April when the Auditor brought forth the Animal Services audit. We're asking $250,000 one-time transitional funding, and we'll explain that tonight, later on under Police. Chair Schmid: You'll provide material when that comes? 1 May 7, 2015 APPENDIX 4 Mr. Rossmann: That's correct. The last thing before we dive into the actual agenda is I would like to follow-up on one question Council Member Filseth had on Tuesday regarding the HR salary increase of 7 1/2 percent. We looked into this. There's actually a third reason I did not think about on the fly, but my Staff did point out to me this morning. We had a 7 1/2 percent increase. We talked about 2 1/2 percent authorized effective July 1; 1 1/2 percent budgeted for merit gets us to 4 percent, which gives us a gap of 3 1/2 percent. In Fiscal Year 2015, the Council approved the Management and Professional Compensation Plan after the Budget was adopted. What our practice is here at the City is if no compensation increase has been approved, we take the money and put it into the salary reserve in the non- departmental section. We do not fund departments at that time. Once Council approves those funds, we do sometimes adjust the Budget if we need to, or these funds remain in the fund balance and will be used for other purposes if we don't need them in that fiscal year. The difference of the 3 1/2 percent is the 2 percent increase which you approved as part of the Management and Professional Compensation Plan retroactive to July 1, 2014 and the 1/2 percent again for merit. The HR Department is unique. There are only Management and Professional employees in that department. It was very easy to figure this one out. We'll see similar issues today in the Utilities Department in the Water Fund, where you have another complication with SEIU, which I'll talk about when we get there. I appreciate your comments. It forced us to go back and figure things out. 1. Employee Benefit Funds. A. General Liability Fund, Operating Budget Walter Rossmann, Office of Management and Budget Director: I would like to pick up where we left it off Tuesday. On Tuesday, we discussed the general benefits fund and the workers' compensation fund. However, the Finance Committee did not make a motion on tentatively approving those funds. I believe, if my recollection is correct, you concluded your discussion regarding those two funds. If we can perhaps pick up on that Item first, and take it from there. Chair Schmid: I know the discussion was truncated the other night. Why don't I ask if there are any ... Council Member Scharff: Wait. We're on the Employee Benefits Funds, right? Chair Schmid: Yes. Mr. Rossmann: That's correct. 2 May 7, 2015 APPENDIX 4 Council Member Scharff: I have some questions too. Chair Schmid: We'll start on Number A, the General Liability Fund. You had some questions? Council Member Scharff: Yeah, but go ahead and ask first. Chair Schmid: Good. Let's go. Council Member Scharff: You want me to ask? Chair Schmid: Yes. Council Member Scharff: I guess I was looking at this and, the way I looked at it, it looked to me like it should be renamed the car collision fund. Is that a misnomer? Is that what all of this is for? Mr. Rossmann: No, it's not. Council Member Scharff: We have vehicle collision loss, and that's what it seemed to imply when I read the stuff about it. Mr. Rossmann: I assume you're on page ... Council Member Scharff: I'm on page 260. Mr. Rossmann: 260. The General Liability Fund's primary purpose is to pay claims against the City. If one of our employees got in a car accident, then there's a claim against us because we're at fault. This also could be for any kind of legal claim charged against us as approved under the authority of the Attorney or approved by Council as part of the memorandum. Council Member Scharff: It's all legal claims? Mr. Rossmann: It's all legal claims. That's correct. Council Member Scharff: I mean it's just humorous, because you have 12 car vehicle accidents in 2013 and 12 in 2014, then we thought we were going to have 7, but we're estimating 18. We think that's what we're going to have for this year? Mr. Rossmann: That means we're not doing so well right now. That's what that means. Council Member Scharff: Right. Now we're proposing 15. Mr. Rossmann: We're hoping we can contain it. 3 May 7, 2015 APPENDIX 4 Council Member Scharff: We're proposing we have 15 accidents, right? Lalo Perez, Chief Financial Officer and Administrative Services Department Director: This involves all funds, just to be clear. It's not just General Fund; it's all funds across the City. Council Member Scharff: I wanted to delve, not too long but a little bit, are most of these accidents? Do they break down mostly like Utility, Fire, Police or are these Planning is taking a car out to go visit a site or something like that? What do these accidents typically involve? Mr. Rossmann: I don't know whether the HR Director, Kathy, would know the answer to that question. I sure don't. Council Member Kniss: You mean do they involve another car or do they hit each other? Council Member Scharff: This is my question. There are discretionary vehicles we use in the City. I saw someone from the 7th floor the other day driving one of these cars around town. That to me is a discretionary use of a vehicle in some ways as opposed to our Police cars, which is clearly a non-discretionary use, or a Utilities truck or something like that. That goes to my next question which I'll ask at the same time. On the defensive driving, because we're having all these accidents, we've obviously decided that we want to go from 30 people to 50. Who are these people that are taking it, what cars are they driving, and that kind of stuff? Kathy Shen, People Strategy and Operations Director: I don't have the exact statistics with me this evening, but we've looked at this in great depth in our department. Most of these incidents are in Public Works and Utilities. They're employees who are driving vehicles for City work who either back into something, create a dent. Very, very few of them are actual auto accidents where somebody's hitting something else. Very few are Police and Fire. These are mainly Utilities and Public Works vehicles. Council Member Scharff: Do we think the defensive driving training is effective? Do we have any metrics on that? Ms. Shen: That's a great question. I will take that under advisement and get a little bit more information from Sandra Blanch who is my Risk Manager on the effectiveness. What her theory is is that we need another round of general education for those two departments in particular. Chair Scharff: Last question. I notice that we're increasing the Budget for this by $1 million for the following year. Is that correct? 4 May 7, 2015 APPENDIX 4 Mr. Rossmann: That is correct. Let me speak to that, Council Member. First of all the other piece, I did not mention to you the other cost which is budgeted through this fund, the actual general liability insurance program. We have a self-retention of $500,000 and then we have various layers of excess liability insurance which we purchase, part of which is pooled. That's the other cost in here. The reason why the cost is going up here is annually we have an actuary come in and assess the City's risks. Based on that risk, the actuary tells us "You should budget or plan a certain amount of funding for these activities." We use that actuarial report and change the funding level for this fund. That's the reason for that. Council Member Scharff: Thank you. Chair Schmid: Any other questions? I would just make a note that that number is a very dramatic increase over time, and it captures attention, both the general liability insurance and the number of claims that came through. That's something we can keep our eye on. Any other claims on that? It makes sense for us to go through the other funds and make a general motion on them. Is there anything on the General Benefits Fund, page 464? B) Employee Benefit Funds 1) General Benefits Fund, Operating Budget Mr. Rossmann: I want to quickly talk about the General Benefits Fund. The fund is primarily used to capture and pool all the costs for pension health benefits into this fund. From there, we pay the pension obligation to CalPERS, and we pay our health insurance premium. The other thing which you do see in this fund is various Budget adjustments. The Council has approved the GoPass program in the last two years on a one-time basis. We believe it's successful, so we're recommending to fund it ongoing. We also have an employee wellness program. It's a first step in this direction. In alignment with Healthy City Healthy Community, the City Manager felt we should also look out for our employees, and we'll see how successful this program will be. Ergonomic evaluations which is on page 467, we have realized that we were underfunding this item. We believe it is crucial to ensure and bring lower workers' compensation costs for the City, that we increase that funding level in that fund. Lastly, employee health and safety services, it's a requirement by Cal/OSHA and we're just allocating the funding for that. The Affordable Care Act reporting we talked about today in the at-places memo. That is required by federal law, that we fund this kind of reporting and make sure that we're in compliance with the new ACA. Council Member Kniss: Just a general interest question. Because ergonomics are usually something somebody asks for rather than your going 5 May 7, 2015 APPENDIX 4 by and saying, "I think you need an evaluation," is this just self-referred costs? Mr. Rossmann: What this would cover is for a new employee coming in, we have tall people, small people, etc., to get an ergonomic evaluation. Based on that, we would set up their desk correctly, the height of the computer monitor, etc. It's for that purpose, and it's also for existing employees who have complained that their shoulders may be aching, their hand is hurting, that we have funding to respond to that as well. Council Member Kniss: For all our new employees, we do this? Mr. Rossmann: For people who are at a desk, sitting at a desk, who have this constant sitting arrangement. Council Member Kniss: Makes sense. Thanks. Chair Schmid: Eric. Council Member Filseth: On page 264, the workers' comp, if I’m reading this right ... Council Member Kniss: Back to 264? Council Member Filseth: Back to 264. Looks like workers' comp in 2013 was $2 million, and in 2016 it's $3.1 million. That's like a 50 percent increase in three years. Is it concentrated in any one place or is there anything we can learn from that? Mr. Rossmann: What happened in 2014, we had a very expensive case of a police officer which was about, if I'm correct in my mind, $650,000, $700,000. That would increase the amount for 2014 dramatically from 2013. Council Member Filseth: That was last year, and so next year it's above that? Mr. Rossmann: What we did hear with the $2.7 million, we also felt we should be consistent in our methodology and see what the actuary tells us. The actuary report is done on the general liabilities side and the workers' comp side. We funded it to this actuarial level. We'll see whether we have savings to stay in the fund to allow us to fund it less the following year. Council Member Filseth: These are not actuals after 2014? Mr. Rossmann: 2014 is actuals, but after that they're Adopted Budget numbers. 6 May 7, 2015 APPENDIX 4 Council Member Filseth: Thanks. Council Member Scharff: Greg? Chair Schmid: Further questions? Council Member Scharff: Back on page 467, the employee wellness program. I'm all for employee wellness. I think there'd be nothing better. In reading the description of this, I have a hard time seeing how this will do anything for employee health. We're hiring a consultant, from what I gather, who creates an online program to increase awareness of healthy options both at work and at home. What metrics do we have that this works? What does this really mean? Does this mean don't drink soda, we have water? Take the stairs, don't take the elevator. Ms. Shen: The wellness program is going to be anchored by this Ceridian website which provides healthy eating options, exercise programs, competition, step counters. They provide personal coaching, if you have a particular health problem. They do a personal health assessment. This will be entirely voluntary. The City won't have the information about employees' health. You can do a personal health assessment. You can establish goals. You can have coaching if you want to control your diabetes or lose weight or start an exercise program or continue it to the next level. That's going to be supplemented with more classes here. We've got this multipurpose room that's being renovated. We're going to have yoga, meditation and some other classes. Council Member Scharff: Where's the Budget for that? For more classes, the yoga, where's that Budget? Ms. Shen: That's in the Budget. We're going to leverage our CSD Staff and members of my Staff who can teach classes. Council Member Scharff: It's in CSD's Budget? Ms. Shen: It's in this wellness Budget. Council Member Scharff: It's in the $32,000? Ms. Shen: Yes. Council Member Scharff: It doesn't talk about classes or anything. It says funding will be used to hire an hourly position and work with it to ensure information about the program. It looks like it's about information, it's about creating an online website, it's about telephone consultation. 7 May 7, 2015 APPENDIX 4 Ms. Shen: Right. We're going to leverage existing classes that CSD already gives and that my Staff already give to be part of this whole program. It will be advertised on the website, but we're going to direct everybody to the Ceridian site. Council Member Scharff: Do we have any metrics or information that shows that this has actually made employees healthier in other cities anywhere? Do we have anything to convince me that this isn't just fluff? Ms. Shen: We have a lot of research on wellness programs. Mountain View has a very robust wellness program. Council Member Scharff: I love wellness programs. What we're doing, having a website with online, do we have anything that says anything about this program, what we're going to do, and that this will actually be effective? What I read in here is once I approve this, I will never see it again, because it goes off to little parts of the departments who then get charged. It disappears in the morass, and I never get to ask about it again. Ms. Shen: Yes, there's a lot of research that this kind of program run by a city or an employer, where you get people to sign up, you have incentives, you've got competition, you have a lot of buzz around wellness, you direct people to get a health assessment, understand what's going on for them does actually work. There's a lot of research that goes behind it. We did a formal Request for Proposal and had members from other departments come and help us assess these different vendors and the different programs. We think it is going to work. The goal is about 20 percent participation, which is considered pretty good in the first year. Then you build from that. Mr. Perez: Council Member Scharff, Kathy and I are also participating in discussions with CalPERS among other agencies of California. One of the conditions that we're trying to push with CalPERS is to allow us to have a high deductible plan. They're very concerned about people avoiding going to the doctor. One of the components that we're arguing is that we need to establish a wellness program to help enhance that and convince CalPERS and the Board that they should consider this. I think this is a baby step, if you will, towards us establishing something. As we are working with the League and other agencies, we'll have better metrics and goals. Kathy is right. I've seen articles, and maybe we can provide some of that material for you guys in one of our at-places memos so you can see some of the data. It's an important step in the big picture for us to be able to convince CalPERS to offer us high deductible plans down the road. Chair Schmid: Follow up? Council Member Kniss. 8 May 7, 2015 APPENDIX 4 Council Member Kniss: Several things. First of all, I'm mostly aiming this at Greg. You remember we adopted Healthy City Healthy Community as one of our Priorities this year, which this plays into. There's a lot more that I think Kathy has going on with that that we'll hear about at some point. Secondly, almost any big city now, big county has some program like this. The sad part of ours is that it doesn't play into our insurance. If you were in King County or Cook County or a county like that, you would have metrics that would allow you to pull your insurance premiums down. As you give up smoking, as you lose weight, as you do any of those things and you're tracking them, you actually get a reward. That's one of the saddest parts, I think, of belonging to CalPERS, that we don't have that kind of interaction; therefore, we don't end up with something good in health insurance. In this case, what you really have to do is just motivate people on their own. At the County, we tracked it online, and you could see where people had gone, if they wanted to let you see. Some people really like you to know that they have done this many steps or they've actually climbed that many stairs or something. Getting some sense of excitement in it or whatever ... Council Member Scharff: That's what my Fitbit does. Council Member Kniss: It's your Fitbit. Council Member Scharff: I agree. It absolutely does that. Council Member Kniss: Right. Those of us who like to do the Dish or whatever. You've got to get people started some way. The hardest part with any exercise or health program is getting them started. This is very much a starting thing. The same with putting our Priority on the screen as well. Ms. Shen: If I can add one more thing. The Ceridian program does sync with your Fitbit. Next year, it's going to sync with the Nike Fuel and the Apple. They've got seven others. You can be tracking yourself. You can have a department competition for who's cycling the most miles or walking the most steps, that kind of thing. Council Member Scharff: The employees can do this as a community online through this, is that what you're saying? Ms. Shen: Yes. Council Member Scharff: My concerns, Council Member Kniss, were that it wouldn't be effective and that we aren't just checking the box. I worry sometimes that we just put a program in place that's very ineffective and we just check the box. I want ... 9 May 7, 2015 APPENDIX 4 Council Member Kniss: It's a good comment. Council Member Scharff: That's really my concern here. Obviously if we spend $30,000 and people are healthier, that's clearly worth it. I was unclear. I didn't see any classes involved in this. If this had said to me $30,000 and we're going to have four yoga classes and three gym classes and we're going to set up a workout room where the cafeteria currently is, I would have been like, "Wow." This didn't strike me that way. Council Member Kniss: We're doing a lot of that, which Kathy hasn't spoken to. We're doing a lot of that. Chair Schmid: Of real value is the social component of it. You see your coworkers doing things and want to join. We've talked through three different benefit funds. Is there a motion? MOTION: Council Member Kniss moved, seconded by Chair Schmid to tentatively approve the General Liability Fund Operating Budget, the General Benefits Fund Operating Budget, and the Workers Compensation Fund Operating Budget and recommend City Council approval. Council Member Scharff: It's tentative correct? Chair Schmid: Yes. Council Member Kniss: Pardon? Chair Schmid: Everything is tentative. Council Member Scharff: Everything is tentative. Council Member Kniss: All temporary. That's why I said 'til June, until the final vote. Council Member Scharff: No, no, no. That's not what tentative means. Chair Schmid: No, to our last meeting. Council Member Scharff: Until our last meeting. Chair Schmid: We're not recommending yet. Any final comments? MOTION PASSED: 4-0 2. Retiree Health Benefit Fund, Operating Budget Walter Rossmann, Office of Management and Budget Director: The Retiree Health Benefit Fund is funded at the Annual Required Contribution as 10 May 7, 2015 APPENDIX 4 determined by the City's actuary and as approved by the City Council in June last year. Otherwise, there are no changes. One thing which is important to note on the increase. As you may know, as we're moving employee groups from a 90/10 health benefits contribution to a flat amount, previously the 10 percent employee contribution was benefiting this fund, and that's an offset of that. That's why the increase is actually larger than just the increase of $300,000 from the ARC, but includes $600,000 of that shift. Just as a repeat, we did provide you with the CMR from last year as part of the at- places memo. Chair Schmid: Questions, comments? Let's see. Let me raise one issue. I mentioned the last time that it's concerning that 69 percent of the funding is attributed to retirees, who are no longer benefiting the current taxpayers but are being paid. We are concerned that we don't continue creating that. If you turn to packet page 1516, the transmission letter. There's a ten-year trend on Citywide healthcare. There was a notable change in 2013 where we began to ask for contributions from employees. That came in the first two years at $1.3 million, $1.5 million. Last year it dropped to 0.8 [million], and our '16 Budget has that dropping to 0.3 [million]. Now there's a statement saying that has more people choosing different plans that come in cheaper. As you look at the increase in the employer share, that continues to go up dramatically. What's happening there? Why is that employee contribution not only falling in one year but now trending as a smaller and smaller portion? Mr. Rossmann: Over the last two years, the City Council approved with its bargaining units to change how we pay for health benefits. It started out with SEIU where we moved the employee contribution to a flat amount. By doing this, the 10 percent contribution employees paid was previously transferred and attributed to the retiree healthcare fund. That's the employee contribution you're seeing here. As we're moving employees towards a flat medical amount, which helps us with the health benefits costs as employees are now choosing a different benefit plan, employees are much more economical in choosing a plan which is more appropriate for their needs. We're saving money on the health benefits side; however, we are not anymore receiving this employee contribution from the employees. Chair Schmid: I can understand that the employee contribution would go down because they are paying that directly, but it seems to coincide with the remarkable substantial increase in the employer contribution. They're not choosing cheaper plans for the employer. Mr. Rossmann: The employer contribution, the reason for that going up is really a change in the actuarial methodology. You may recall last year the actuary was giving an alignment of accounting implicit subsidy as part of calculating the Annual Required Contribution. The implicit subsidy means 11 May 7, 2015 APPENDIX 4 that young, active employees consume less healthcare but retirees consume more, but we're both paying the same amount for each one of them. They had to recalculate. As part of the recalculations, the unfunded liability increased. That's what you see now. That increase in unfunded liability increased the Annual Required Contribution, which we have to pay. Did I capture that right? Lalo Perez, Administrative Services Director and Chief Financial Officer: That's correct. It's in the report that we give you. In terms of dollars, to give you a magnitude, our unfunded retiree medical liability is about $140 million. The implied subsidy increased it by $40 million. That's how much of a significant change that is for us. The reason for that is that we're at a one-to-one ratio. We have probably slightly more retirees than active employees. That implied subsidy for us was a huge change. It was a governmental accounting requirement that we take that into consideration starting this year. Our recommendation to you through Barthel last year was instead of going down and then significantly up, let's just acknowledge that it's coming last year when we presented this to you. That's what caused the increase. Chair Schmid: This is an underlying, long-term trend which, if anything, would only increase with time. Mr. Perez: For us it will unfortunately. Council Member Kniss: What you just said, the most significant is we have more retirees than we do active workers. That can only increase, because the actuarials indicate that those people are living longer and longer. The better healthcare they get, the longer they live. Mr. Perez: There's a table that the actuary provided that shows you the growth and then eventually tapers and then it goes down. It's obviously a longer period of time. Chair Schmid: Let—I'm sorry. Council Member Kniss: It's going to be a long time before that evens out. Chair Schmid: I'm trying to think about long-term strategy for dealing with the issue. One way is to increase current employees who then can help cover that longer term retiree cost, but creates more retirees in the future. What is a strategic way of thinking about Staff size? Mr. Perez: That's definitely one strategy, the size of your workforce. You mentioned another one, the contributions that we as employees make towards those plans. Some of the changes that we've made have made us 12 May 7, 2015 APPENDIX 4 aware now of the difference. Instead of having the City fully cover 100 percent of the medical—I'll give you a quick example. I'll use myself. I have a choice of the various plans. If I choose Kaiser, I pay $17 a month; that's my contribution as part of the flat amount. I prefer not to for personal reasons. I want to go to the Palo Alto Medical Foundation. As a result of that choice, I'm paying $340 a month from my side, where the City would have paid that in previous years. Those are significant decisions that now we're making as employees, because we're more aware of the situation and the cost sharing. Chair Schmid: That would then seem to cut the payments made by the City, since you're making that choice on your own. Mr. Perez: That's correct. Chair Schmid: Yet, what we're facing here is the City contribution increasing dramatically. Mr. Perez: To be clear, from the current employees, we hope to get to where we're covering the expense for them. We'll need to talk it through more, how we could get the current employees to pay for some past obligation. Mathematically, it wouldn't work for you to be a competitive employer or retain employees. Chair Schmid: Yeah. There's no connection to our thinking about current employees as a way of resolving the retiree issue. Mr. Perez: Correct. Now there are, to carry this out, other options on how we offer benefits going forward as well. Those are options that we want to return to you. I think we're looking in the September timeline to come back and discuss some alternatives for us to consider as an organization so we can plan for those. Chair Schmid: When we moved to a 90/10, didn't we also include retirees in that? Mr. Perez: We did, yeah. Chair Schmid: Why doesn't that show up as a positive? Mr. Perez: It's a small number, because it's only been in effect a couple of years. We had a large number of retirees already. I'll say maybe 800 out of the 900-plus were already retired. Chair Schmid: It's only the new retirees that would carry that? Mr. Perez: Correct. 13 May 7, 2015 APPENDIX 4 Council Member Kniss: This is truly just a frustration in good part because of PERS and because there's nothing we can do to alter those rates by keeping ourselves well or whomever else. I don't get our health plan, so I'll exclude myself from that. Kathy, what about retirees? Do retirees have any opportunity to get in on your wellness program? Do we do anything for retirees since we have lots of them to work with them on health? Kathy Shen, People Strategy and Operations Director: That's a great question. We do not have retirees as part of the wellness program as we've currently thought about it. We don't have retiree wellness, but that's something we would want to look to for the future. Council Member Scharff: I'm not sure we should look to that. Mr. Perez: Let's use that example that I gave of myself and the $340 difference. We could come back to what if offer a retiree to split some of the savings with them. it becomes an option; we don't have any legal issues. Maybe that's one way to accomplish a win-win. Council Member Kniss: How could we go about that, Lalo? Mr. Perez: We need a lot more discussion. We need legal assistance. We need to really think it out well and present it to you as part of the September plans. Council Member Kniss: I would really like us to look at that. This is a huge long-term liability which we talked about for a long time and one that's not going to lessen. I experience the same thing you do. I know at the County Kaiser was so cheap and everything else was so expensive. Yet, many people would continue to stay, as I have and you have, with a more expensive plan for a whole variety of reasons. Mr. Perez: I just want to make sure I go on record. While it sounds doable, it is complex. There's a lot of issues to work through. It's something we should at least take a look at. Chair Schmid: One concrete thing we're doing is approving the current payment. The question is are we really adequately covering those retiree liabilities in our current payment. There's been a lot of controversy of whether the CalPERS discount rate is correct. There were at least two actuaries, our own and their actuary, who said that rate is understated. We do have an obligation not to understate the liabilities we do have over a long time period. Mr. Perez: You're absolutely correct. Let me try to help with that. For the retiree medical we use a different rate of return assumption than the 14 May 7, 2015 APPENDIX 4 pension side. Off the top of my head, it's about 6.41, but maybe you guys could look at that while I answer the other question. The answer to your first question is yes, we are. What the actuary does is value the benefit for the current employees and calculates, in their industry they call them normal costs. We are contributing the normal costs for all current employees. We are in addition paying the full amount of all our retirees. We're taking care of that obligation as well. There's a slight amount in addition to those two that we're also contributing for the unfunded portion. The question back to us in September is do we want to cover more of that unfunded liability piece. That's part of the discussion we'll have with you. We do want to look at all the assumptions that were made to calculate this Annual Required Contribution to your point, because they do influence that amount. Chair Schmid: There's a fundamental strategic point. We're in a nice budget position this year, and we're adding 13 new Staff members and assuming obligations for them. The question is during this good time should we confront that liability issue so that we can make that choice of Staff size in a strategic sense. Mr. Perez: I can tell you that as an organization we're among the top 20 in terms of the size of cities and budgets. We're among the better ones in terms of addressing this issue. A lot of agencies including the State of California are in deep trouble, because they've hardly addressed it. You may have heard the Governor put forward a proposal to have State employees start contributing to this, because it's a huge unfunded liability at the State level as well. Chair Schmid: Are there any other questions or comments? Do we want to approve the health liability as is? MOTION: Council Member Kniss moved, seconded by Council Member Filseth to tentatively approve the Retiree Health Benefit Fund Operating Budget and recommend City Council approval. Chair Schmid: I have fairly mixed feelings about this. I will vote for a temporary thing that would get us to our last meeting, but that meeting will come after we talk about total Staff size that we're moving ahead with. I'd like to keep those in balance, or at least have a discussion with both of them. I go along with this motion that would get us to that point. MOTION PASSED: 4-0 3. Non-Departmental, Operating Budget Walter Rossmann, Office of Management and Budget Director: Non- Departmental is a section of the Budget document, page 458, which really 15 May 7, 2015 APPENDIX 4 contains several major expenditures. It has the salary and benefits reserve. This reserve is for setting money aside which the Council potentially may award as part of labor negotiations. As you know we're in negotiations with the Palo Alto Police Officers Association and with IAFF, the firefighters' union. SEIU is coming up for negotiations in fall of this year. That's how these funds are set aside. This is for planning purposes only. The Council may decide to use those funds as part of labor negotiations as we move forward with them. Council Member Scharff: Which item? Mr. Rossmann: On page 458, the salary and benefits reserve, what you see on the Budget summary. Council Member Scharff: That's what that is. Mr. Rossmann: Yeah, that's what that is. The other items which you see in here are contract services. That's something the Council approved some time ago for allowing us to support grant opportunities. We've used $15,000 this year primarily in the arts and CSD recreation area. The departments received those funds to pursue grant opportunities with other agencies. Then we have general expense of $6.4 million. That is the Cubberley costs, the Cubberley transfer. Operating transfers out at $1.8 million. That relates to technology transfers. We have a technology fee in our municipal fees. We collect these dollars in the General Fund and transfer them to the IT Fund to fund IT expenditures. Transfer to infrastructure is the regular transfer I talked about in the overview section on Tuesday of $14 million to the Infrastructure Fund. $4.7 million is the TOT transfer. The remainder is the transfer to the Cubberley Property Infrastructure Fund in accordance with the lease agreement with Palo Alto Unified School District. The $100,000 change which we have is described on page 459. The $100,000 change is the City Attorney Contingency. We talked about that, and you approved tentatively to fund the Principal Attorney position and the Attorney was kind of enough to reduce the contingency ongoing pending any unforeseen litigation. She may have to come back to the Council to request money, but she does believe she can live and work with a contingency of $100,000. Chair Schmid: Lalo, you mentioned the non-departmental has the discretionary funds for the Council and the City Manager. Is that right? Lalo Perez, Administrative Services Director and Chief Financial Officer: That's correct. $250,000. Council Member Scharff: Where is that? 16 May 7, 2015 APPENDIX 4 Mr. Perez: Since there's no change, we're not outlining it. It's in the Budget itself. Council Member Scharff: Where in the Budget? Mr. Rossmann: The contingency? Council Member Scharff: Yeah. Mr. Rossmann: In the general expense, we have a contingency for the Council of $250,000, City Manager $250,000 ... Council Member Scharff: Could you break all that out? You said it was for the Cubberley, so I assumed it was all for Cubberley. Mr. Rossmann: We can do that. At-places we can provide you this. We'll be happy to. Chair Schmid: Were there any other major things in there? You mentioned the City Manager and City Council. Mr. Rossmann: Then we have the Attorney $100,000. Mr. Perez: Events. Mr. Rossmann: I have it right here. I mentioned this one. A special events contingency of $50,000. We have the human resources contingency of $50,000. That's it; a total of $700,000. Mr. Perez: The special events, remind me here Walter, it's special events/innovation. Mr. Rossmann: That's correct, special events/innovation. That's correct. Council Member Scharff: What would HR use their $50,000 for? Mr. Rossmann: We set this aside for labor negotiations in case we need it. We have a regular labor negotiations funding amount in the Budget. However, if we have protracted negotiations or we may have fact finding, etc., we would use those funds. Council Member Scharff: Got it. Chair Schmid: Now the non-departmental is part of the General Fund, isn't it? Mr. Rossmann: It's part of the General Fund. That's correct. 17 May 7, 2015 APPENDIX 4 Chair Schmid: What item does it show up on? If I looked at the ... Mr. Rossmann: Page 458. Chair Schmid: No. If I was going to look at the overall Budget ... Council Member Scharff: Which is on which page, Greg? Chair Schmid: Up front, where you present the Budget. Mr. Perez: You're talking about the General Fund summary, where it belongs? Chair Schmid: Yes. Christine Paras, Principal Management Analyst: Page 87. Mr. Rossmann: 87, page 87. Chair Schmid: Yeah, where would it show up there? Mr. Rossmann: On page 87, you have all the department funding amounts in the General Fund. Non-departmental is the middle down, as one of the items. Mr. Perez: Right after Library. Mr. Rossmann: It's alphabetical. Chair Schmid: That comes to $8.6 million. Mr. Rossmann: That's correct. Mr. Perez: Council Member Scharff asked us to give you a breakdown of it, so we'll do that in one of the at-places memos. Chair Schmid: This page here doesn't reach $8.5 million. Mr. Rossmann: Vice Mayor Schmid, you have transfers, that's below the line. If you look on page 87, you have the total by departments, and we break out transfers to other funds such as infrastructure as a separate line item. That's why it rolls up a little different. Chair Schmid: Okay. Maybe just a little note. That would be helpful to identify this. Mr. Rossmann: Yeah, we can do that. Yeah, sure. 18 May 7, 2015 APPENDIX 4 Council Member Kniss: A quick question. The shuttle service had money put aside that didn't get used. Mr. Rossmann: We used very little funds of that this year. As part of reappropriations, we plan to carry forward $0.5 million of this reserve for general planning and transportation parking purposes to set up a contingency. You'll see this coming to you as a request as part of the reappropriations memo which happens in the fall. Chair Schmid: Which department is that? Mr. Rossmann: Would be in Planning. Chair Schmid: Planning. Mr. Rossmann: Yes. We believe the Council may have a lot more requests for Planning for these various three areas. We believe it would be prudent to set one-time funding aside for these purposes. Chair Schmid: Good. That's helpful to know up front where these things show up. Council Member Kniss: Okay. Thanks. Chair Schmid: Any other questions on the non-departmental? Yes, Eric. Council Member Filseth: I hope it's very brief. He said in the general expense bucket, there's 50K for special events. Do you know offhand if we spent that last year? Mr. Rossmann: The funds year-to-date have been used for CSD banners for Downtown which you may have seen; United Nations Association Film Festival, the support we provided; Save Life Connection for the World Cup; and LED display for World Cup and Chili Cook Off. That's all the notes I have from my Staff. I probably would have to ask Tommy Fehrenbach, who oversees this, to give us more detail if you're interested. Council Member Filseth: We did spend it, okay. Chair Schmid: A motion on—go ahead, Lalo. Mr. Perez: One quick comment, and I don't mean to send you sideways. On Tuesday night, you approved a $5,000 increase to your City Council Budget for meals. Something to be considered, not tonight, you don't have to decide tonight. You have a couple of options from our perspective to consider. One, to use part of the $250,000 that you have as a Council Contingency to fund the $5,000. Second, fund it from the Budget 19 May 7, 2015 APPENDIX 4 Stabilization Reserve. That's an appropriate purpose from our perspective. If you intended to ... Council Member Scharff: Or one of these things we don't approve. Mr. Perez: I'm sorry? Council Member Scharff: Or one of these things we don't approve. Mr. Perez: Absolutely. That's your third option. Chair Schmid: Good. We can deal with that. Greg. Council Member Scharff: If I could just have a quick follow-up on what you said. Just to keep it straight in my head, you came to us with CSD and asked for an additional $35,000, because $10,000 is to fund the summer concert series on an ongoing basis. Right? But there's actually $50,000 that we didn't really know about, so it's really $85,000 for events that we already have. I'm really glad I know that now. Mr. Perez: That's why I made a point to say "/innovation." Part of what we want to do too, I'll tell you one item that comes to mind that we did. Automation answering system in the Development Center was an automation request, and we used those funds. It's a mix. Council Member Scharff: Let me ask one other question. Throughout the year you bring us—Eric, I want you to hear this, if you don't mind. Sorry. One of the things we do is we have BAO, Budget Amendment Ordinances, throughout the year. Right? Mr. Perez: Correct. Council Member Scharff: If we were to eliminate those kinds of things, the $50,000, the $50,000 for HR, the $50,000 for this, wouldn't you just come with a Budget Amendment Ordinance when you needed to spend it? If we put that money in the reserves, frankly, it seems like what it really does is allow you guys to spend the money without having to do a Budget Amendment Ordinance. I'm not saying that's the wrong thing to do. That's the effect of it. Is that correct? Mr. Perez: That's correct. Also keep in mind, every quarter we come back and tell you what we did. In the quarterly financial reports, we tell you what you as the Council use, what the City Manager uses, and all of those items. We disclose it after the fact. I think this is an important thing to you. If you come to us and tell us the community wants this done in two weeks and if we have to come back with a Budget Amendment Ordinance, then it's not going to happen. If we have it in the Contingency, we can make it happen. 20 May 7, 2015 APPENDIX 4 Chair Schmid: I think that would be helpful, though, with a footnote where you can tell us the contingency fees we are identifying, City Manager, City Council, Human Resources, and so on. That would be helpful to have upfront. Mr. Perez: Just so I understand, because I want to make sure we do what you ask. Right now we have it in the quarterly report that we provide you. Chair Schmid: No. Just as we go through this Budget process ... Mr. Perez: Oh, absolutely. Yes. Chair Schmid: ... to understand that in the non-departmental are a series of contingency funds. Mr. Perez: We'll list them all for you, and then we'll give you what we historically are using this year so you can have a sense of what are we doing with it. We'll give you one. Chair Schmid: That'd be very helpful. Is there a motion? MOTION: Council Member Scharff moved, seconded by Chair Schmid to tentatively approve the Non-Departmental Operating Budget and recommend City Council approval. Chair Schmid: Any comment? Council Member Scharff: I want to see the breakdown of a lot of that stuff. This one makes me a little uncomfortable, some of these things frankly. I feel a little foolish after grilling poor old what's his name about his events when I realize there's another $50,000 over here for events. Mr. Perez: If it makes you feel better, it used to be $0.5 million, so it's $250,000. Council Member Kniss: Greg, you want to know ahead of time? Council Member Scharff: My issue is that I just think there needs to be transparency and accountability. Council Member Kniss: That means ahead of time. Otherwise, you get a report saying, "We spent this." You're saying, "I want to know ahead of time that you're going to spend it, rather than knowing after the fact that you spent it." Is that correct? Council Member Scharff: Yes and no. Take the events. The events issue I have is we do these. I know we do the United National Film Festival thing 21 May 7, 2015 APPENDIX 4 every year. If we're really going to spend this money every year, why doesn't it just go in? Any part of that that we spend on an ongoing basis should be moved into the regular events Budget as opposed to hidden over here where the money comes out. That's really my only hesitation. It's a small amount of money; it's $50,000. I'm not losing sleep over it. From a feeling of the way Budgets should be done, that contingency should be for things that are unexpected and that we don't necessarily have something in mind for. Therefore, I think you should move that into the real Budget for the events Budget. That's my sense. Council Member Kniss: I'd support that. If it's ongoing, stick it in there. Mr. Perez: I don't want to speak for the City Manager, so I'll have them explain to you. In discussions I've had with him and prior City Managers as well, one of the reasons that it's there is because the office wants to be able to have a call on the events and what's funded and what amounts. If it goes through a department and the Council has a request and the City Manager doesn't have the Budget, then he or she may not have that flexibility. That's why it's been set up that way. Council Member Scharff: Shouldn't it be in the City Manager's Budget? Chair Schmid: I would make the point that we had a Council meeting the other night that went to 12:30. We put things on Consent that people don't want on Consent. There does have to be some tradeoff of certain types of things you need some flexibility (crosstalk). Council Member Scharff: I'm all for flexibility. I'm just saying instead of hidden in non-departmental, which none of us know what that means really. We do now because we're sitting on Finance. If the City Manager needs a Budget of $50,000 for events the City Manager wants to put on and do, I'd support that. Shouldn't that be in the City Manager's Budget, so we all say yes, the City Manager has these funds as opposed to hidden in the non- departmental Budget where it has to be ferreted out after lots of questioning? Mr. Perez: I hear you. If you would indulge me. Given that this is a tentative approval, could we put in there (crosstalk) and we'll have the City Manager also chime in. Council Member Scharff: Oh, absolutely. Chair Schmid: He's going to give us the list of funding. Council Member Scharff: Right. Mr. Perez: So noted, and we'll make it a point to discuss it. 22 May 7, 2015 APPENDIX 4 Chair Schmid: Just before we vote, I would make one general comment as well for transparency. The beginning of our Budget looks at some very important funds and issues that carry with them implications for departmental spending. At some time it might be helpful to look at this after we go. What we need to do is take the lessons from going through these liability budgets, workers' comp budgets, retiree budgets and non- departmental budgets as we look at the departments and make sure we're taking into account the repercussions that might flow through. Council Member Filseth: If I could add one slight coda on this. You guys have done a very clear explanation to this, so thank you very much. At some level, there's some general discomfort with the perception that, "Gee, we got this function and we got a little bit of it over here and little bit over there and maybe there's some more of it over in some other place." How do you see the big picture on this? I think that was part of the discussion. MOTION PASSED: 4-0 4. City Auditor, Operating Budget. Council Member Kniss: Could I ask whether or not it's possible—you just printed them out. Thank you. Council Member Scharff: Do we have this? Is it at-places or not? Council Member Kniss: It's at-places. You know what? It was buried down under, and I didn't see it right away. It looks like this. It's like this for tonight. Council Member Kniss: It's on page 4. Chair Schmid: Right there. Council Member Scharff: Page 4, got it. Harriett Richardson, City Auditor: Good evening, Mr. Chair and Members of the Committee. Harriett Richardson, City Auditor, to present the 2016 Proposed Budget for the City Auditor's Office. As you know, our mission is to promote honest, efficient, effective, economical and fully accountable and transparent City government. We do that by conducting performance audits and non-audit services of City departments and programs that provide independent and objective analyses regarding the use of City resources for the City Council, City management, residents and other stakeholders. Our major accomplishments in Fiscal Year '14, we again received the Association of Government Accountants Certificate for Excellence for the City of Palo Alto 2013 Citizen Centric Report. That's a visually appealing and easy to read summary of the City's financial condition. We recovered $168,915 in sales 23 May 7, 2015 APPENDIX 4 and use taxes during Fiscal Year '14. That was approximately 12 percent more than our Fiscal Year 2013 recoveries of about $151,000. We published audits of the Solid Waste Program, the Utility Meter Procurement, Inventory and Retirement, and Animal Services. We received and passed our triennial external quality control review, which is required by the Government Auditing Standards. For Fiscal Year '16, we have several initiatives. As always, we continue to conduct audits. We have several audits planned for Fiscal Year '16, which we present to the Policy and Services Committee next week. Examples of those are public benefits audit, procurement processes, fee schedules, disability rates and workers' compensation and utilities customer service rate and billing accuracy, which will follow up the work that we did on the meter inventory and will be feeding into the work we do on this audit. We will also continue our monitoring for potential misallocations or underreporting of sales and use taxes and will again prepare the Annual Performance Report, conduct the National Citizens Survey, and prepare the Citizen Centric Report. We have two Budget proposals. The first one is to reclassify our Administrative Assistant to a Performance Auditor I. This has no Budget impact. The pay scale would be exactly the same. My intent in doing this is to increase the efficiency of our office by allowing us to conduct more audits and having our admin assistant be more like 30/70, 30 on admin, 70 percent on performance audits. The other advantage of that is that our office has never had an entry level auditor position. If we have vacancies, it helps with recruiting and being able to bring people in at a lower classification and teach them how to audit. Our next proposal is we've had a part-time, half-time Performance Auditor over the years. That position has fluctuated to various levels of staffing from half to .75 to full- time. During the Mid-Year Budget this year, it was approved to convert it to full-time. Instead of constantly coming back, we're proposing to make that a permanent full-time position. The proposed cost is $75,529. That concludes what I have to present. I'm ready for questions. Chair Schmid: Questions, comments? Council Member Scharff: Sure, I'll ask. I completely get the Administrative Assistant/Performance Auditor. That sounds like a great innovation. Obviously you could always do more audits. If we gave you five more people, you could fill ... Ms. Richardson: Correct. Council Member Scharff: No question in my mind. You've had a half-time person, right? Ms. Richardson: Correct. Council Member Scharff: As an auditor. It's the same person, right? 24 May 7, 2015 APPENDIX 4 Ms. Richardson: Yes. Council Member Scharff: That same person now wants to go full-time? Ms. Richardson: I would like the person to be full-time. We had to do some shuffling this year when we wanted to do the Animal Services audit. Over the years, this has been a position that's constantly gone up and down, up and down. I'm proposing just make it full-time and not do the up-and-down thing that's been done over the years. Council Member Scharff: When you say up and down, you mean sometimes it's been full-time, sometimes it's not or ... Ms. Richardson: Sometimes it's three-quarter time, sometimes it's been half time. There's been different times when it's gone back and forth. It fluctuates. That's what it is. Council Member Scharff: It's really more of an efficiency argument than a workload argument? Ms. Richardson: Yes, yes. Council Member Scharff: Fair enough. Council Member Kniss: I don't have any questions. Chair Schmid: Okay. I have enjoyed reading through and utilizing the materials here. It's fair to use this to ask you some questions. Ms. Richardson: I have my sheet right here. Council Member Kniss: Tell us where you are, because we've got five sheets in front of us now. Chair Schmid: This is the handout that came at the last meeting. Page 29. Number of work products. One of the work products is this report. I did note the other night that I was the only one that had this. I don't think some of the Staff members had it. They were saying, "Where is that material?" That is such a critical piece of the Budget to have a perspective and confidence ... Council Member Scharff: What are you looking at, Greg? Council Member Kniss: It's way deep in here. Chair Schmid: This was handed out before the last meeting. Council Member Scharff: Before the last meeting. 25 May 7, 2015 APPENDIX 4 Ms. Richardson: I sent that by email last week. Chair Schmid: Then it was at-places. Council Member Scharff: Of course I didn't bring it for today. James Keene, City Manager: If I'm not mistaken, there would have been a series of requests for where the Performance Report was and some other things. If I recall, she reported to the Council that she would get the tables out to the Council, right? Ms. Richardson: Correct. Mr. Keene: Which forms the backbone of the report. That's what those are, the tables that the Auditor told you she would get to you. Chair Schmid: Right. My point for the Auditor is this is such a valuable tool for analysis and context. You also have individual audit performance measures for each department which we don't have. It's a big gap. I just want to make the case that we have missed the three months that we usually have with this report. Now the other thing that's striking in the numbers you have here is the percent of audit recommendations implemented. That took a big jump over the last year. It averaged 43 percent and jumped up to 75 percent. Mr. Keene: You're on page 29, I believe, of the ... Chair Schmid: 29, the next to last column under City Auditor. Mr. Keene: Does everybody on the City Council have this? Council Member Scharff: I don’t have this. Council Member Kniss: I do, but we've got so many pages now that it's hard to track it. The front page says, "Good afternoon, Council Members." Chair Schmid: The last number here is Fiscal Year 2014. If you look at the Auditor's operating budget, she says 75 for 2015. Ms. Richardson: We're setting a goal of 75 percent. As we were doing this, I realized what they were counting and what I thought they were counting were two different things. This is to represent the percent of open audit recommendations implemented over the past five years. What they were doing was counting the audits issued during the past five years and whether the recommendation been implemented. There were some recommendations that were older than five years, and they weren't including 26 May 7, 2015 APPENDIX 4 them. I'm setting a goal to try and get those open recommendations closed out so that we can be working towards the 75 percent. Chair Schmid: The 75 percent is a goal? It's not a 2015 ... Ms. Richardson: Correct, correct. Chair Schmid: It was stated in the 2015 Budget that 75 (percent) was the target for last year. Can you talk a little bit about that from your office? What does it mean to get that number up to 75 percent? Ms. Richardson: One of the things that I've been working with the City Manager on is trying to have someone that I can work with directly in his office where we can work on some audit issues. With his new Assistant City Managers on board, he has assigned one to me. I'll be working with that person to ... Council Member Scharff: Which one? Ms. Richardson: Suzanne Mason. I'm hoping that we'll work together throughout the audit process and after the audits are done to get people on a schedule for implementing the recommendations and moving them forward. Chair Schmid: I just noted that is a dramatic shift and an important one. It's good to see cooperation with the City Manager on it. It gives us a target that we can look forward to seeing as we go along. Just wanted to note that change. That is the value of getting good tracking measures and have them available for the Budget discussions as it helps set a context. Ms. Richardson: Correct. Next year you will be getting this sooner. I've mentioned to you a couple of times already that we're revising how we approach the Performance Report to cut down the number of hours we spend on it and focus on key measures and not a lot of filler data in the report. Not too long after we finish this one and the fiscal year has ended, we'll be gathering data for the new one. Chair Schmid: I can tell you I've already got lots of questions about the Citizens Survey and the questions that are going to be on it next year. Walter Rossmann, Office of Management and Budget Director: IF I may add, we're actually going to collaborate with Harriett on this. We're going to use the Budget system to track the performance measures and then publish them in an easy fashion for all of us. There will be a BAO coming to you in fall, because I don't know the cost yet. We'll have to figure this out. The idea is to streamline the process for the Auditor's Office and for us in OMB and for City Staff. Right now the interim performance measures are in the 27 May 7, 2015 APPENDIX 4 Budget document and for Harriet in spreadsheets. We're trying to make this a little easier and focus not on the tracking of measures, but using the measures to manage performance. Chair Schmid: It would make the Budget hearings so much more effective if you could do that before then. Those are my questions and comments. Eric. Council Member Filseth: I'm just making my comment on this 75 percent. Thank you for not sandbagging on that target. If 75 percent isn't realistically achievable in one year, then just in general my personal predilection would be let's get a target that can be a stretch target, but it's something that we could actually achieve. Ms. Richardson: Thank you. MOTION: Council Member Scharff moved, seconded by Council Member Kniss to tentatively approve the City Auditor Operating Budget and recommend City Council approval. Chair Schmid: Any comments? We have a motion. MOTION PASSED: 4-0 5. Office of Sustainability, Operating Budget. Walter Rossmann, Office of Management and Budget Director: Our Chief Sustainability Officer, Gil Friend, will quickly present his Budget to you. Gil Friend, Chief Sustainability Officer: Good evening, Chairman, Council Members, community members. I'm Gil Friend. I'm the Chief Sustainability Officer, and I'd like to present to you the proposed FY 2016 Operating Budget for the Office of Sustainability. The Office of Sustainability leads the organization, residents and visitors in promoting a culture of environmental sustainability by developing, coordinating and leading initiatives Citywide, regionally, and through partnerships with the community. The purpose of the office is to promote and facilitate an environmentally sustainable future in ways that improve quality of life, grow prosperity and build resilience and provide leadership in the region and other communities. We do this with strategic planning, working with all the other City departments, developing and implementing programs and policies that advance the City's sustainability goals, and collaborating with various levels of government and nongovernmental organization to leverage resources and to advance our goals. Some of the accomplishments in the last year, which really is the first year of the Office of Sustainability. We've launched the Sustainability and Climate Action Plan, the first update in our Climate Plan since 2007. We've 28 May 7, 2015 APPENDIX 4 reactivated the employee green team to engage Staff across the City in incorporating good practices, that the Council has acted on in the past, into City operations and procurement processes and work life. We've procured and are now implementing a sustainability dashboard to streamline the collection and analysis and reporting of key sustainability indicators and, in line with the conversation just previously with the City Auditor, to provide metrics that will be helpful in managing more effectively, not just reporting on past accomplishments. We've conducted a series of Study Sessions with the City Council and the Utilities Advisory Commission regarding the Sustainability and Climate Action Plan, the shuttle program, mobility as a service and strategic issues facing City of Palo Alto Utilities. Some of the key initiatives for the coming year are to complete the development of the S/CAP; to pilot locally and regionally mobility as a service initiatives; to implement the sustainability dashboard tracking system; to develop additional external funding sources for sustainability initiatives. I would add to this also to further embed environmentally preferable purchasing and other City council objectives into purchasing and operations across the City wherever feasible. The significant Budget proposals that we're bringing to you tonight are continued temporary staffing of $105,508; and contract funding for a variety of projects in the amount of $190,000. That concludes my presentation. I look forward to your questions. Khashayar Alaee, Senior Management Analyst: Can I add one other thing, Vice Chair? On page 187, the next big shift that occurred is the Chief Sustainability Officer's position this current fiscal year. In Fiscal Year '15 and prior fiscal years, the Chief Sustainability Officer's position was allocated across several different funds. This year the funding has been pooled and dumped into the General Fund and into this Budget. You'll see some changes there. Walter and folks can answer more of that, but I wanted to highlight that for you. Chair Schmid: Thank you. Council Member Kniss. Council Member Kniss: That's helpful, Cash. Thank you. The part that I find puzzling here, Gil, is on page 190 we're looking to continue temporary staffing. You've got a net General Fund of $105,000. This says pursuing foundation, government and other funding for City sustainability. Then down under Number 2, it says identify outside funding for City sustainability initiatives and so forth. Those seem very similar, and I don't know if this is the result of going from across the board to now all within the General Fund. It looks to me as though most of the department is contract funding, except for you. Mr. Friend: We have had this year and we're asking for next year the one hourly employee, basically 1 FTE across the year. It's been divided across two people working half time. We're looking to continue that. One of those 29 May 7, 2015 APPENDIX 4 people is working primarily on implementation of the sustainability dashboard and the reporting opportunities that'll come from that. One is focused primarily on developing additional funding resources. The contract funding is separate from that. It's for specific projects, not ones that Staff would be undertaking. Council Member Kniss: That's how the two differ, one and two? I'm looking on page 190, Number 1 and Number 2. One's contract and one's temporary? Mr. Friend: Number 1 is for the temporary staffing. Number 2 is for contractors for specific, designated projects. Council Member Kniss: Are they both doing somewhat the same thing or are they doing it for—Jim is dying to clarify I can tell. James Keene, City Manager: I'll let you finish your question. Council Member Kniss: As I said, these look so similar. Who are the two people you've had upstairs in the corner? Is that temporary staffing or contract funding? Mr. Friend: That's the temporary staffing. Council Member Kniss: Okay. Mr. Keene: I'm going to help out here. Cash looks like he's eager. Mr. Alaee: I can defer to the City Manager, unless you'd like for me to answer. Mr. Keene: This is show time. Mr. Alaee: Thank you. Council Member Kniss, the way you can look at it is Gil's two hourly employees, one of them is in essence a project manager that works very closely with Gil and works pretty much like his right-hand person. Council Member Kniss: That's the temporary staffing? Mr. Alaee: That's one of the temporary employees. That's half of the $105,000. About $50,000 or $51,000 is used to pay him about 20 hours a week to work with Gil and help him on day-to-day triage and activities and projects. The $51,000 and such is used for another hourly employee to work 20 hours a week over a fiscal year. She's mainly focused on looking for grants and subsidizing both hourly costs. Ideally the whole $105,000 would subsidize Gil's salary and any other programs the City's doing with 30 May 7, 2015 APPENDIX 4 acquiring grants. That's generally what those two are doing. The $190,000 that we have in contract funding is used, for example, for the electric vehicle consultant, the EV consultant we brought on board to work on a very specific program project. There's several other consultants that we've brought on to work on these very specific projects. Gil's probably way more advanced to answer who are the consultants, what have they done and what will they be doing next fiscal year and why he needs the additional $190,000. Mr. Keene: May I add to that just a little bit, put a little more context? The model we have for the Office of Sustainability is a challenging model. It says we'll hire a Chief Sustainability Office. We've had a position for a number of years. We've tried different approaches that would leverage existing capacity in the organization for folks who are working on individual sustainability projects, whether it's Phil and his folks who work down at the Water Quality Treatment Plant working on the composting or the waste energy or the Zero Waste Program or folks in Utilities or whatever. It's not necessarily an easy model to work with, because it says to Gil, "You've got to help coordinate all of these folks and lead initiatives and by the way you don't really have any Staff. You have to depend upon the kindness of others in a sense in the organization." Council Member Kniss: Or grants in that case? Mr. Keene: Right. I asked Gil for a range of options for different levels of advancement we could make, many of which included the adding of additional permanent staffing, all of which I rejected and have not included in the Budget proposal. The first $105,000 is the temporary staffing money. Let's look at the other things, just consultant contract money. That's the easiest way. Picking up on Council Member Kniss' question, I think the language in the Budget document is a little confusing, because it gives the sense that there's this fundraising role that's redundant in both. I don't think that's really the case. On that consultant piece, those also could be funds that we would have had in some individual departments to run some of these projects that we've combined within the Office of Sustainability to give more focus to what it is we're doing. Here's the problem we do have with the $105,000. If you remember last year we put the money in the Budget, and we had some discussion with the Committee that this funding was there in order for Staff to be able to go out and leverage different revenue to be able to make it self-sustaining. That has not been achieved. Some of that has to do with startup issues, what it takes to get some of these relationships and grants working. I had a discussion with Gil saying, "That's the commitment we made. We haven't delivered on it. At best what I will do is continue this one more year." It's $105,000 we've got to prove out and it drops. I'll accept that we have a number of things in process that could play out, but they haven't yet. I do feel that we proposed to the 31 May 7, 2015 APPENDIX 4 Council a model and a concept that we haven't yet been able to deliver on. This Budget is asking you to give us one more year. I will say that there's a reckoning that I would expect we will reach at the end of this year if we're unable to do this. We can't say each year the marketplace is tough on leveraging ongoing funding to support our work. The consultant piece, you may ultimately say, "We don't want to keep adding new money to fund other consultant work. We would like to see you leverage that. We want some entrepreneurial success here." We're just coming back for a small second round of funding on this thing before we say ... Council Member Kniss: (crosstalk) initial funding period? Mr. Keene: Yes. I want to be straight up. This is exactly where we are and what has happened. If we don’t continue this, we are basically saying, "We're going to retrench." In my view, we're not going to see whether or not we can leverage a bunch of additional money. In many ways, we prematurely pull the plug on the experiment that we’ve got going right now as far as how we can advance our sustainability initiatives. There's two things for the most part that are really happening. There are a series of bigger idea initiatives that the office is working on that are connected in many ways to the Climate Action Plan and building an updated database to track our progress and how we're doing. That's in relation to direction that we have from the Council, previous direction we certainly have had from the Council. The second piece that Gil is working on is internal City operations as they relate to sustainability have been uneven across departments. They've been at times ad hoc. They haven't had the discipline and drive that we need to have. I've felt that if we're going to be ultimately asking our community to do more, then our own organization better be at the top in high performance on what we're doing on energy savings, on our own recycling programs, on everything that we do. There are little things we've done such as putting filtered water in or trying to get comprehensible recycling containers and bigger things such as looking at bringing in outside firms to do detailed energy audits on how we might invest in energy and get specific returns on all of our own buildings. That's the kind of big component of the work that he's been charged with doing also this year. We're here to answer more questions, but I just wanted to give you a quick ... Council Member Kniss: It's still a bit of a puzzle to me. I'm sure others want to ask as well. I hear what you're saying, Jim. You're really saying it needs a little more time, and you're asking for that. I'll be interested in what my colleagues say. Chair Schmid: Council Member Scharff. Council Member Scharff: Welcome. I really appreciate the candor about it. It's a difficult decision in many ways, whether or not to continue the funding. 32 May 7, 2015 APPENDIX 4 I'm not sure exactly where I am on that. I'm probably going to end up wanting to put it in the parking lot and think about it a little bit and maybe ask some questions if they come up, when we have that final meeting. I definitely have concerns about that. I wanted a sense of what have those hourly people achieved in the last year and how long have they been working. I don't recall when you hired them. I know you've been here about a year, Gil. I was unclear how long they've been here and what they're doing and that kind of stuff. Mr. Friend: They came on in November, Council Member Scharff. They've been here about six months. One of them has worked with me to develop the RFP and guide the procurement process and onboard the consultant for the sustainability dashboard and has been leading the engagement process with the consultant, IT, Utilities and other departments to get the data assembled and onboard so we can pilot that process. We're in the middle of that now. We expect to have the first phase of that work done in about six weeks, at which point you and departments can start using that data analysis in an active way. That's been the primary part of his work. He's also been working with me to shape the communications strategy around the Sustainability and Climate Action Plan so we can have more active community engagement and discussion in that process. The second hourly person has been focused primarily on identification of funding resources. She has found and brought into the City a database that will let us more effectively track the availability of federal, state, and private foundation funding not just for the Office of Sustainability, but for other departments to help make the whole organization more effective at finding external resources. She has also been serving as the primary liaison on the mobility as a service initiative. As you recall, we have a small contract with a private contractor working on that. We've developed a partnership with Joint Ventures Silicon Valley to convene a regional conversation on mobility as a service, working actively with VTA on that, and are just submitting two additional proposals this week to bring in additional funding for that. That's been the primary focus of both of their activities, those areas. Council Member Scharff: What exactly have you been doing for the last year? Mr. Friend: A bunch of things. Primary focus has been getting the Sustainability and Climate Plan underway. That's been in addition to the work to ... Council Member Scharff: If I could just stop (crosstalk). I did have questions about that. We did one of these before. What's different in terms of how we did it when there wasn't an Office of Sustainability and how it's being done now? 33 May 7, 2015 APPENDIX 4 Mr. Friend: When it was done in 2006-2007, it was done with a Green Ribbon Commission appointed by the Council and a large community engagement process over the course of a couple of years. This time we're trying to do it on a faster track, because the effort is framed by the Comprehensive Plan Update process. We're trying to do an accelerated Climate Plan progress that can match that timetable. It's critically important that these two plans be in sync with each other. We're running a faster process guided more internally with consultants and less with the broader but ultimately slower community-based process. Council Member Scharff: The consultants are reporting to you or to Planning or how ... Mr. Friend: The consultants are reporting to me. We hired them with a proposal in the Budget that you all endorsed. Cash, do you know when that was? Mr. Alaee: It was this fiscal year. I'll get it for you. Mr. Friend: It was the summer. Council Member Scharff: You came to us for that. I remember we talked about it and we agreed to it. That's not within the $190,000, those consultants, correct? Mr. Friend: In the $190,000, we are anticipating that there may be some follow-on work for that. That's to be determined once we have the initial report done. Council Member Scharff: What do you propose using the $190,000 for? Mr. Friend: We've identified a number of possible areas for that. One is additional work on electric vehicle readiness. We need to update the EV policy, which was last updated in 2011, I believe. As I mentioned, an additional phase of work on the Climate Plan, extensive active community engagement around the Climate Plan, both what people want to endorse and how they want to move on it, the work the City Manager mentioned around improving operations and operational efficiency and cost effectiveness here at the City, which is something that we think will yield a positive return on that investment. We're tasked also to do the verification of climate reporting that has previously been done by City of Palo Alto Utilities. We've reserved ... Council Member Scharff: Are you going to have an audit function on the Utilities basically, is that what you mean? What do you mean that's reported by Utilities? 34 May 7, 2015 APPENDIX 4 Mr. Friend: Utilities previously has funded a third-party verifier to verify our reports to the Climate Registry of the City's greenhouse gas emissions. They have proposed that that funding be carried by the Office of Sustainability. That's about $15,000 a year to do that function. We've reserved about 20 or 25 percent of this money to be determined for projects that we expect will emerge over the course of the year based on the activities that we're engaging in. Council Member Scharff: There's lots of community interest in sustainability. I like it when you come to Council and ask for the funding for things. It allows us to see what you're doing. It allows us to determine if that's the right direction. It gets it known out there what you're doing as opposed to having the funding and making the determination of what to do. I have to think a little bit about the best way to structure it. Obviously we don't want to handcuff you. We want you to have good initiatives, but in many ways it's better if you come to Council and say, "This is my plan and this is what I hope to achieve and this is where I'm going to achieve it." I'll give you an example. I love your mobility initiative. On the climate action stuff, I don't think you've achieve much on there frankly. We haven't gotten that far; we would have gotten that far without the Office of Sustainability. Maybe that's unfair, but that's my impression of it. Whereas, my impression is that the mobility initiative is something, you looked at Helsinki, you came up with it. It sounds really interesting. It sounds great. The dashboard, isn't IT handling most of that and actually building it and getting the data? Mr. Friend: No. It's cooperating with us. It's being built by an external consultant who we have engaged after a competitive process to bring proprietary software to us that we can specialize for this purpose, that we can deploy. IT is working with us. Utilities, of course, is critically important, because a lot of the data lives there. We own that process, and we're driving that process. Council Member Scharff: The mobility thing would be huge to me. If the mobility thing actually worked out and you could do that, I'd be amazed and thrilled. I keep reading about what Helsinki's doing and how they're moving forward on it. It seems really exciting, if you could bring that here. Mr. Friend: It does to me to, Council Member. There's a lot of opportunity there. One of the things that has struck me about that is the response that we're getting around the region from others who see this as a way of unsticking the conversation about transportation. I share your excitement about that. It's a big deal potentially. It's certainly a big piece of our carbon footprint that we need to address. I would respectfully disagree with you about not having accomplished much on the Climate Plan. You haven't seen much yet, because we've torn the engine part. 35 May 7, 2015 APPENDIX 4 Council Member Scharff: Maybe that's the issue; I just haven't seen it. Mr. Friend: You could come to the garage and see all the parts scattered around the floor. That work is underway. The consultants are deep now in a process of the quantitative analysis of several hundred initiatives that we've identified as possible initiatives. We're going to be ranking them in terms of return on investment, abatement costs of carbon, strategic feasibility and so forth, and coming back to you as we promised with a series of roadmaps and options that says here are some possible goals, here are the pathways to achieve them, the costs that we think would be required to achieve them, and have that support a future conversation with you and the community about choosing that path of action. There's a lot of work going on there. It's the kind of work that we thought was not productive to show you as work in progress, because it's not cooked enough yet. We'll have pieces of it cooked soon, and we look forward to bringing that back to you. This provides ideally the organizing frame for how we go forward on sustainability strategies in the future. As the City Manager said, we've done a lot of work in the past and in recent years, but a lot of it's been ad hoc. One of the requests to me when I came in is to try to bring a strategic focus to all that, give us a coherent strategy that makes sense to you, makes sense to the community, and allows the departments across the City to align their programs with some strategic goals that we've thought through and decided on and share. Chair Schmid: Council Member Filseth. Mr. Keene: I have some additional context to add. Council Member Filseth: First I might ask a question. The two hourly folks, those are contractors. That does come with the whole City salary benefits, pension plan, all that kind of stuff? Mr. Friend: No, it does not. Council Member Filseth: My thoughts on this. First of all, thank you very much for the direct and terse assessment of this. What you said makes a lot of sense. However, since the City Manager decided to pick on angel investors, I figured I'd better, as a member of band of angels, respond to that one. One of the things that those kinds of people look for is a working prototype. Some piece of thing that's minimal, but you can show, aha, it works and you can actually sell it to somebody. You've got a bunch of different things that you're working on. I'm with Council Member Scharff over here. I thought the Helsinki thing and the hybrid shuttle thing was actually interesting. We hadn't seen a lot of that someplace else, and it wasn't something that Utilities had going on like it. I'd like to see how that one would work. In one sense, there's giving an entrepreneur too much 36 May 7, 2015 APPENDIX 4 money too soon. Like Council Member Scharff, the hourly people, it does make sense to keep them on for the next year and make sure the experiment's going. The 190K increase in consulting, I'm with my colleagues here. Maybe that goes in the parking lot, and we see how things end up on that one. With the existing 50 or 60K of consulting, could you get to a proof of concept on something? Pick one thing, like the Helsinki thing, and see if you can get something concrete that we can all look at. The risk is that we get to a year from now and what you've got is a really interesting PowerPoint presentation, but we don't know what to do with that. That would be my two bits. Mr. Friend: If I could respond, Council Member. I very much appreciate where you're coming from. I don't want to be here with just a bunch of PowerPoints a year from now either. That wouldn't be satisfying to me. It wouldn't fulfill why I’m here. Again, I agree that the mobility as a service is a big play with big potential impact. We need to have the foundation of a strategic plan and a tracking system to understand how well we're doing. Even if I were to focus entirely on mobility as a service across the organization, we have as you know more than 150 other sustainability initiatives that are ad hoc and could be far more effective than they've been. One of the things I've done in my spare time so far is work with the procurement organization to see if we can embed our environmentally preferable purchasing commitments more effectively into that process. We're already finding financial benefit from doing that. We haven't brought that to you as a report on ROI, but that's something we'll do over the coming year and hopefully with some interesting numbers there. I'm trying to leverage my time in that example by bringing together an ad hoc group of people from Public Works and ASD and some other organizations who are involved in purchasing, the City's Chief Procurement Officer as well, to find ways to embed and streamline these processes with an eye to more efficient procurement, better environmental profile and better ROI back to the City. Yeah, we can focus on a couple of big items, but we can't let these other ones drop. The question is how do we most effectively get to them. Another one that we have mentioned already, we have a small initiative underway about electric vehicle advancement. I need your guidance about whether you see that as a low priority that we should let go or something that we should continue to push forward. If so, how do we do that? Mr. Keene: Thank you. Again, just some additional context. First of all, it's important that we acknowledge that what we are trying to do is being done rarely any place else in the world. This is new territory, which is how does a city or a nation systematically advance dramatic improvement and change as it relates to climate change and other environmentally sustainable initiatives. We're already known around the country, in this country, as a leader in this regard. It's not simply because we were able to green up our 37 May 7, 2015 APPENDIX 4 electricity portfolio; it's in a range of areas. Some of the work that we have done before, let's say over the previous decade in more or less the first wave of cities in the country, was adopt a Climate Action Plan in 2007 through a bit of a cobbled together mash-up operation with existing Staff people. Everybody's gung ho, let's do it. We were borrowing pieces of people from their other jobs. Like anything, on an initial initiative you can get a lot of energy, you can get a lot of support, but sustaining that over time, you've got to come back to your job, I know you want to work on these things. Without casting aspersions on our prior work, the rigor of some of our analysis and our data was, I'd say, at a first generation level. At least right now, we are operating under what I think of as a Council directive to continue to improve our performance in this way. In other words, to reduce our carbon footprint even more as a community, etc. We haven't set what those targets would be. You're not saying, "We've arrived. Let's just plateau and keep this thing going." I personally think we should be going in this direction. I'll be less interested in my job here if we want to just plateau on this. That's my own individual perspective. Like anything, the first wave of change and adjustment is usually easier. Like anything, getting returns on an investment can often get harder and harder as you move ahead. That's the phase we're starting to move into which requires a level of integration, much more sophisticated data analysis and reporting for us to incent our work and for those numbers to hold up to scrutiny when we start saying we've achieved this and we've achieve that. That's what a lot of the work is on the analysis related to the plan and the dashboard. As you all know, dashboards are one of the in things these days. One of the nice things about them is it's a pretty easy way to grasp a lot of complicated data in a fairly simple way. Like everything else, getting to that point takes some effort itself. That's one mainstream. The second thing is that we've lost the ability to borrow from people in the organization. I when I got here, we had four people working in a virtual Office of Sustainability in their day jobs. Ultimately they had to go back to their day jobs, so that's why we created the office. We've created a model that is a little bit more like a corporate model and said how could we have a board of directors representing the different departments with Gil essentially working as the executive director or CEO to this board and with me as the chair of the board. How do you get Utilities, Public Works, Transportation, the folks in facilities, communications, all of these people not just going out doing their own thing, but integrating this? The truth is that is not an easy task in any organization, even in the highest performing private-sector organization. I can definitely tell you in a governmental organization that has the very stratified, calcified things where people are pretty good about doing what they've been doing within their own environment, the getting outside and partnering with others is not easy. Even the concept of the mode we're using right now, it's not in a sabotage way, but there's resistance in the organization because it's asking for a sharing of power and authority that people aren't used to, saying "Why do I 38 May 7, 2015 APPENDIX 4 have to listen to Gil asking us to do this stuff? We used to be able to go do it ourselves." Like any company or any initiative that's trying to advance, we've got to be able to build across this area. Lastly, I've been so critical of the word transparency that I hate to use it, but we made more exact what we're doing by having a focus of an Office of Sustainability rather than having it fragmented in all these little pieces. I can guarantee you, before this we would have that same $190,000 with $25,000 in transportation, this in this and that and these different areas, and it wouldn't even be obvious. We're running into this problem. I'll just use this as a commercial. I've seen some recent data. Actually we're seeing data now that increases in transparency in the public sector actually inversely correlate with feelings of trust about how things are going. It's a very interesting thing. The more people know, in many ways they go, "I don't know if I like what is going on here." That's a little bit of what is happening here. On top of which, Gil's one person. He's running around doing this. Number 2, he's coming in as somebody who's been both in the private sector and a company trying to figure out how to make this thing work in an organization. We've got a Council that's really saying, "If we could get a better ongoing sense of what you're doing and what is happening, I think that would make it easier for us to understand things." One take away we would have from here is a structured way to do that. Chair Schmid: You have articulated the issue pretty well. The sense I get is it's really an organizational issue we're talking about, that there's an agreement that sustainability is a critical issue for the City and a critical goal that we want to achieve. We're dealing with this, though, inside a departmental basis. Each of the departments that come have a clearly defined objective. They've got issues they can grapple with. Inside their Budget, there are targets and goals that they have set in the past and try to reach. We can measure their achievements, and they can say here's what the Budget changes will have on those targets. The problem is any measurement of sustainability ends up inside the departments. If we could identify some concrete goals in this department, here are four things we want to achieve this year and here's the resources we need to achieve those, so in 6 months or 12 months we can come back and look at those goals, targets and the amount of resources that you had. Instead, a lot of the activities are coordinating activities across other departments, and the achievements show up in Utilities or Public Works or Development Center. The question is should this be treated as a department with its own initiatives and spending. Is it a part of the City Manager's Office as it was before, where the City Manager has responsibility across departments? Do you want to define the resources you're asking for in terms of tasks that you are setting out to achieve? Here are five things we want to do with that money, instead of trying to cover the whole sustainability world. That's 39 May 7, 2015 APPENDIX 4 what we're grappling with. That moves onto the next step. Is there a motion? MOTION: Council Member Scharff moved, seconded by Council Member Filseth to tentatively approve the Office of Sustainability Operating Budget and recommend City Council approval and to move $190,000 for contract funding into the parking lot for further review. Council Member Kniss: That $190,000? Council Member Scharff: Yeah. Mr. Keene: That's essentially the outside consultant contract money for FY '16. Chair Schmid: The $190,000 gets put in the parking lot and the rest of the Budget gets approved. Council Member Kniss: The $105,000 stays. Council Member Scharff: Tentatively, correct. Chair Schmid: I have a motion and a second. Any further discussion? Since two people have mentioned the parking lot, the $190,000 goes into the parking lot. Mr. Perez: Correct. Council Member Kniss: I'm concurring. MOTION PASSED: 4-0 Mr. Keene: Thanks. Mr. Friend: Thanks, Council Members. 6. Utilities Department. a) Electric Fund i) Operating Budget pp. 407-418 i) Capital Budget pp. 297-396 Valerie Fong, Utilities Director: Thank you very much, Chair Schmid, Council Members Scharff, Kniss and Filseth. We do thank Council Member Scharff. He has been very active in our UAC meetings and our Utilities issues. It has been very helpful to get his insights. I'll quickly walk through our 40 May 7, 2015 APPENDIX 4 department. I do want to note that we have some Utilities Staff here. They have not only been instrumental in working on the Budget, but actually on implementing the many activities and initiatives that we've promised you we would undertake. In terms of our mission, I'll just read it to you. It is to earn high satisfaction of our customers with cost-competitive provision of safe, reliable and environmental sustainable utility services. We have five different divisions. There's the Administration Division. For Council Member Filseth, you might be a little bit less familiar with our department. The Administration Department is basically my immediate office which includes the communications function, our compliance function with all the regulatory agencies, our Budget, our IT strategies, our fiber policy. That's all reporting directly to me right now under different folks. We have a Customer Support Section, which really is overseeing our onsite call center, second floor and first floor here in the building, and our meter reading and credit collection functions. Then we've got our engineering function which does the engineering for five utilities, the water, wastewater, electric, gas and fiber optics utility. The Operations Department which similarly for the five utilities does the operations and maintenance. Our resource management group does all the commodities purchasing for electric, water, and gas; does the rates development. It looks at policies around greenhouse gas reductions and around emerging technologies. That's pretty much how we're organized. Our accomplishments and in a sense what Council has also acknowledged in terms of our efforts really span all of our utilities around greenhouse gas emissions, around things that we've managed in terms of water conservation, what we're doing on the solar front. We are particularly proud of the Public Power Utility Award that we received from the Solar Electric Power Association. We were the one across the nation who got that for a public utility our size. We also were recognized for our electric reliability through the Reliable Public Power Provider. We call it the RP3 designation from the American Public Power Association. As you all know, we've got a local solar plan. On the gas front, we've got our voluntary Palo Alto Green Gas Program. A quick overview of that. With respect to our Fiscal Year 2016 initiatives, we are very much involved with and consumed by the impacts of the drought throughout the state. We are looking at rate adjustments that we are going to have to implement to account for some of the drought impacts. We are definitely in the throes of implementing the State mandated water restrictions. In fact, we're coming to you on Monday night with our compliance proposal. We have many programs around the sustainability front. We have a number of solar programs. I did mention the local solar program. We are looking at, and we did receive a Colleague's Memo at the end of last year, what we call fuel switching or electrification. That's switching out, in the simplest of terms, gas-fired appliances for electric appliances. We are busy with our Smart Grid assessments. We are doing the customer connection pilot for a little over 300 customers which includes some type of use rate piloting. We're also looking at an IT strategic 41 May 7, 2015 APPENDIX 4 plan which encompasses the many changes that are going on in the industry that are leading us toward the Smart Grid front. A big initiative for us is around workforce development and succession planning. We are just like any other department here in the City where we've got really a workforce that has a tremendous amount of knowledge and experience, but is also now fairly eligible to retire and an industry where there aren't a whole lot of new hires out there for us to bring in. We're a little bit challenged by our current compensation package. We noticed our folks tend to go to other agencies. We're a great training ground. They know it. They come and they take our folks. We've made several attempts to hire folks from other agencies or private companies, and we haven't been successful. We're working closely with our Development Services Department on permit streamlining. We do have a very rigorous Capital Improvement Program that we've maintained over many, many years. We are not asking for any additional staffing. We are asking for some reclassifications. It does result in some increased costs. That is the direct result of this changing industry that we're seeing. We have to move out of the old paradigm. We have to move into this world where customers really do want to communicate differently. It's not going to be at the counter; more often than not it's electronically or through other social media interfaces. We have to move with that. We have to get the right folks onboard who are going to develop the systems and develop the ways that we're managing our programs that are in sync with the changing dynamic. I'm going to go directly into the Electric Fund. I don't mean to be rushing this. If you want me to slow down, I will. On the Electric Fund, we've got a number of initiatives for this year. I've already mentioned the local solar programs. I already mentioned the electrification program. We've got another program that actually has been a great learning experience for us and has also been a great selling point when we've talked to legislators, which is the Demand Response program involving six or seven large customers during the summer. This is really to reduce our electric peak. We pay a few large customers who have agreed to participate in this to reduce their demand during high-load days. It's been actually a very successful program. The Budget proposal we've got is one that we already talked about. We aren't asking for extra people. It is going to result in some job reclassifications. For the capital fund, I'm just going to go through it a little bit more carefully. The current Budget request is for $16.3 million, but $7.5 million of that is from prior years. These are projects we have committed to and are still in the works or we need to complete. With respect to customer connections, these are installations that we've put in for new developments. Customers need all the utilities. We go in there and we install them. We charge the customers. We do get some money back on that. For the Electric Fund, out of the $3.8 million we're budgeting, we get about $1.7 million back in fees. As you know, our system has been around for 100 years. We occasionally go through in our Capital Improvement Program and we replace part of the system to make sure it's still a very 42 May 7, 2015 APPENDIX 4 robust system with a lot of integrity. Part of that is what you see in terms of system improvements and undergrounding projects. We have an undergrounding program where we take all of our electric overhead facilities and work with the telecommunications companies to underground the poles and the lines and the other facilities. Those are occurring around the Charleston and El Camino area in the upcoming year, as well as the Middlefield, Webster, Homer and Addison areas. For the Fiber Optic Fund ... Chair Schmid: If I could interrupt for a moment. We have an option of whether to have a presentation on all five funds or to look at each one separately. Council Member Filseth: I move that we look at each one separately. Council Member Scharff: I do too. Chair Schmid: I think it makes sense. Why don't we stop there with the Electric Fund, and spend a couple of minutes seeing if we have any detailed comments. Council Member Filseth, do you want to kick off? Council Member Filseth: Sure. Of course I have to ask this. Revenue is down 5 percent, and salary is up 12 1/2 percent. Why is that? Dave Yuan, Strategic Business Manager: The revenues are realigning for the actuals from the historical years. We've been high in the Budget, so in the last few years we've seen a reduction to about $125-$127 million. Also because the City's pretty much built out, we're not expecting any new load or big commercial customers to come in. The temperature here is pretty mild. Expense wise on the salary and benefits, this year it's more based on actuals. Half the department is in the Electric Fund. Pension costs have gone up about 9 percent, and medical has gone up about 10 percent. Council Member Filseth: It's the pension I can see and so forth. You've got salary going up 12 1/2 percent, if I read that right. Walter Rossmann, Office of Management and Budget Director: Council Member Filseth, if I may add a little bit to what Dave was saying. This goes back to the discussion we just had at the beginning of this meeting today when I explained this HR issue to you. What happens at the Electric Fund and Utilities across the board in most funds is that we have the adjustment for Fiscal Year 2015 and for '16 in one swoop. The other piece, what happened with SEIU is the Council approved in March 17, 2014 two items, a salary increase of 2 percent for the contract year as well as a compensation adjustment based on market. These are all rolled in between '15 and '16. That's why you see this huge jump on salaries of 12 percent. 43 May 7, 2015 APPENDIX 4 Council Member Filseth: If I understand what you said, that's two years and it includes a market rate adjustment. Mr. Rossmann: You have a compensation adjustment based on market and you have two years of increases. That's all coming together. It's a timing issue really, because you have two years of increases. That's what you have. Mr. Yuan: We usually have a lot of vacancies in this fund. Currently we have like 22 vacancies and 13 of them are in the Electric Fund. Compared to actuals, we'll probably have $1 million savings in salary and benefits at the end of the year. Council Member Filseth: I understand. Mr. Yuan: That's why this seems like a spike, but when you true it up at the end of the year ... Council Member Filseth: If you don't fill all the vacancies, it doesn't really hit that number. Mr. Yuan: Right. Council Member Filseth: If you do, then it does. Ms. Fong: It's not for lack of trying that we don't fill all the vacancies, just to be clear. Council Member Filseth: No, I understand. If the answer was we feel we need to make a big adjustment in compensation because we can't keep people from going to PG&E, then if that's what it is, then that's what it is and let's talk about it. The other thing that I noticed that jumped out was, I don't know if this is the right number. It's different from all the other numbers, which is the healthcare expenses, up 30 percent. It's different from the Gas Fund and other departments in the City. I don't know which ones are high and low. Why is that? Mr. Rossmann: I want to point to what Dave talked about, vacancies here. Talking again about the refining of the Budget process, it seems to be a theme this year. If there was a vacant position, we did not budget any healthcare costs in 2015. I realized this doesn't make any sense, because we're underfunding a departmental budget. What happens in '16, we don't know what kind of plan a vacant position will choose, so we budget the highest level. When it comes to the point of people choosing the plan, we adjust the following year. The key thing is we don't want to underfund the department based on those costs. 44 May 7, 2015 APPENDIX 4 Council Member Filseth: Is that the right thing to do? To fund it at the maximum or to pick the most likely? Mr. Rossmann: It's a practice I took over from San Jose. Lalo Perez, Administrative Services Director and Chief Financial Officer: We guard against the departments, not just Utilities but all of them, moving money from salary to non-salary. That's protected. The City Manager approves that. Any monies that are left over, then they go back to reserves at the yearend. Council Member Filseth: I'm going to stop for now and see if my colleagues Council Member Kniss: I'm going to go down a whole different route. This is third year I will have done the Budget, but the second year that I'm getting ready to do it for the following. Valerie, I can remember from the first time we talked that the issue of hiring was an issue. I know each year I've heard you say we're a training ground. We're a place that people like to poach from, not surprisingly. Because it's now the third time I've heard it, the question is what can we do about it. I don't know whether we would look for people who are still in school, whether we're looking for the very beginning aspects of this or where or how we should look. I don't need you to come up with that tonight necessarily. When we come back to this at the end, we'll go over a number of these things again, I'd really to know how can we not be as concerned about it as we have been. A couple of times we've actually been in a crisis, where you've said we don't have enough people to cover this on such-and-such a shift. Our utilities are incredibly important to us as a City. As you say at the beginning of this, we're the only City that does what we do in the utilities area. That's our stock in trade. That's also of great value to us in a whole variety of ways. I'd like at some point to hear how can you come at this issue of the hiring. Ms. Fong: I know this meeting's going a little bit long, but if I could just take this opportunity to let you know we actually, in working with both Kathy Shen and City Manager Keene, have managed to stymie some thefts by other agencies. At some point, we did shoot our whole wad and eventually we did end up losing folks to that agency after they interviewed enough people and we did enough of what we could do retain them. Council Member Kniss: Is it the usual suspect? Ms. Fong: It's the usual suspect. I can't even count it on two hands anymore the number of folks they've taken from us. That is one thing. We have worked very hard with both the City Manager and our Chief People Officer to work through some of this. One of the things that we've done more recently, which actually seems to be fairly effective, is taken some 45 May 7, 2015 APPENDIX 4 temporary positions, and to the extent somebody has said, "I'm going to be retiring in the next year or two," moved that person into a temporary position and brought somebody in to be trained in advance of that person leaving, to have that knowledge transfer so that we could have that transition period before the person actually retires who has all the knowledge and expertise. Both the City Manager and the Chief People Officer as well as the Budget Department have been great at supporting our efforts on that front. We've managed to stymie some movements, but not everything. Council Member Kniss: You can still come back to us with perhaps a three- part thrust in some way that says here is how we're going to deal with this, here is how we're going to stop the bandit to the south. Ms. Fong: You may hold a key, and it may be part of salaries or benefits. I'll say this one other thing. You mentioned hiring people out of college. We have been under-filling a whole lot of positions under the assumption that we will train these people over the next oftentimes three to five years. It takes a long time to bring them to where we really need folks to be. We are doing a lot of that as well. We actually have a multipronged approach right now, where we're more successful on some fronts and less on others. Council Member Filseth: Do you find you're successful at that, at taking somebody (inaudible). Ms. Fong: We have done a lot of it. The question was are we successful at under-filling. We have been hiring a lot of people, and it is a slow process, because your more experienced folks now have to train as opposed to doing the work. It is successful, but it is a slow process. Once they're trained, sometimes these folks are even more attractive to PG&E or an agency a little south of us. James Keene, City Manager: We're just a mid-market team. You know what I mean? We're a little bit like the Oakland A's, and we're scrapping, not as good as Billy Beane or anything. Almost every year we're making the team in a way, and they go off as free agents to the Yankees. Council Member Kniss: Thanks, Valerie. I just wanted to bring that to the fore again and remember that we do struggle with trying to keep a full team in place. I appreciate those efforts, and I'm glad to hear about them at the same time. Mr. Perez: Chair Schmid? Chair Schmid: Council Member Scharff. 46 May 7, 2015 APPENDIX 4 Council Member Scharff: Just briefly. When I look at the total budget summary, I just wanted to make sure that I got this. Our net sales are down by $6 million roughly. That's due to energy efficiency mostly? I assume we haven't lost any big customers or anything. Mr. Yuan: I think we over-budgeted in the past. Council Member Scharff: You've over-budgeted. That's mostly what it was? Mr. Yuan: Right, correct. Council Member Scharff: I was really hoping it was energy efficiency. Mr. Yuan: Some of it is. Ms. Fong: Some of it is. Council Member Scharff: The numbers don't match. We have total expenditures proposed of $153.296 million and total revenues of $127 million. I assume that's the reserves we're taking out. Mr. Yuan: We haven't had a rate increase since 2009, so we've been drawing down the reserves. Because of the drought, we had to buy more market purchase energy. That's about $11 million to it. Council Member Scharff: That puts it in stark obviousness to people that while there's no rate increase this year, it looks like there will be one in the future. We know there is. Ms. Fong: You're saying what I forgot to say. That's absolutely correct. Administrative Services Director Perez reminded me to tell you all that we are staying within the approved reserve guidelines for our reserves. Mr. Rossmann: If I may add one more thing, Council Member Scharff. The third reason is capital budgeting process change. Unused funds will remain in the fund balance and get reappropriated in the next fiscal year. Mr. Perez: Chair Schmid, I just wanted to remind the Committee that we're asking you to also look at the capital side of the fund. Chair Schmid: Yes. Let me raise an issue on the capital side. On Slide 20 of your presentation, you pointed out how the Capital Budget is $16.3 million of which $7.5 million, almost half of it, is carried forward. Funds already voted but not spent carried into the new year. Does that mean that that money is already collected and in our reserve? 47 May 7, 2015 APPENDIX 4 Mr. Rossmann: Correct. What this means is that the funds are in the projects right now. They're not unused, because the unused remain in the fund balance and they get reappropriated in the next fiscal year. Chair Schmid: That's not an impact on revenue raising. Mr. Rossmann: They have been collected. That's correct. Chair Schmid: Let me go back to staffing in the general sense, not the specific needs. If you look at five, ten-year staffing of the utilities, the Electric Fund is the example we have, staffing is up by seven or eight people over the last seven years. Strategically as we look at the future, is there any notion that productivity of Staff would increase? We could look at over the long run staffing growing slower than revenues or expenditures or is this a business where skilled workers are needed and utilized? Are there efficiencies and savings that might come on the Staff side? Ms. Fong: I'll say this. Again this year, we didn’t ask for any new FTEs. Again, we're going to utilize what we've got. Chair Schmid: I'm looking at the last five to ten years. Ms. Fong: Yeah. We did need those positions. Now, we're saying we don't need any this year. We're utilizing those positions. Chair Schmid: I'm trying to look at the wider future; two, three, five years down the road. Mr. Fong: One of the things that drives us to some extent are regulations. Certainly we created reporting to me a Utilities Compliance Manager necessitated by the regulations of all the utilities except the fiber optic utility. Even that one came into play this year when we had a compliance filing we had to do. In conjunction with that, to meet the mandates that are propounded upon us by the regulators, we have had to staff particularly in the operations area. We're having to reduce our gas leaks to the best of our ability and make sure we're properly qualified with all our workers on the water front, reduce any water leaks. Certainly this year, we're going to hire some temporary folks to help with enforcement of the latest mandates. On the wastewater side, sanitary sewer overflows are a huge liability. Chair Schmid: The requirements seem to require people. There's not a technology substitute available. Ms. Fong: That's correct. Chair Schmid: For example, you talk about gas leaks. I guess that comes in the next one. You have people out walking the streets. Is there a 48 May 7, 2015 APPENDIX 4 technology that might come along and say, "We don't need any people doing that"? Ms. Fong: To the extent we can have technology help us, we definitely go that route. It's hard to be fixing somebody's gas leak remotely with some robot right now. Some of it is a customer service matter. Dave has reminded me we hired a couple of what we call trouble men who will respond even late at night when there's customer complaints. We can look at the system remotely to some extent, but not adequately to repair something. Chair Schmid: I was referring back to our earlier discussion on retiree benefits. We're assuming a very large long-term liability. The Utilities account for 350 workers. If that grows at 1 percent per year ... Ms. Fong: It was 250, but we'll take 350. Chair Schmid: Okay. Let's keep the 250 then. I'm just wondering in the long run, in the five-year horizon, are there potentials for thinking of ways of addressing the labor intensity. Ms. Fong: Yes. One example is using voice response units to take more customer calls. That's a two-edged sword. Some people get irritated with it. We are trying to figure out ways. Certainly smart meters; maybe you don't need as many meter readers. These are all on our minds. I would say Tom Auzenne, who is our Customer Support Services Assistant Director, has been talking to his meter readers, saying at some point the game is going to be a little bit different. These things are definitely considered. Chair Schmid: We should be sensitive to opportunities like that. Council Member Scharff: Can I have a follow-up to that? Chair Schmid: Yeah. Council Member Scharff: The one thing that I think we could do as a Utilities Department is I've signed up to pay my bill online, recurring every month. Mr. Keene: (inaudible) credit card every month? Council Member Scharff: No, I don't. Nope, it's stored. Oh, no, it's not a credit card. I use my bank account. I can store it with my bank account. I wish we had the credit card feature, because then I could get the miles. I'm happy to just give my bank account, so it's taken directly out of my bank account. This is where we could save money. You could email me the statement if you really wanted to with all of the inserts and stuff as opposed to mailing it to me. I get the mail thing all the time. 49 May 7, 2015 APPENDIX 4 Ms. Fong: I think that's an option. Would you like us to ... Council Member Scharff: Yeah. Mr. Keene: Can't you sign up online? Council Member Scharff: You can sign up online to do that? Ms. Fong: Through the My Utilities account, you can definitely sign up. Council Member Scharff: Okay, I have to go back. When I first looked at, I missed that. I thought you couldn't. Would that also then get the home water usage sent me to, the home ... Council Member Kniss: The one that says how good or bad you are? Council Member Scharff: Right. The electric one. All of that you can get by email too? Ms. Fong: That one, we'll get back to you. I don't think so, because that's not issued by us. Council Member Scharff: Fair enough. Ms. Fong: That's issued by Power and Water (crosstalk). Council Member Kniss: (crosstalk) impact online. Council Member Scharff: May be. Then I'll stand corrected and I will go check and change my preferences online. Chair Schmid: Let's see, just a couple other short questions. On the large hydro, we have counted on that to be carbon-free electricity. I note when you look at a ten-year average, it comes out to about 52 percent of our electric generation. Those numbers vary over that ten years from 84 to 34 (percent). The question is what is the financial liability we carry in one of those ‘34’ years. How expensive is it to have to substitute renewable energy when there's a dry year? Ms. Fong: Jane Ratchye produces a little report which she shares with the Utilities Advisory Commission every month that shows the additional costs that are incurred. In a drought year like we're having right now, we might incur something like $7 million additional or it might be $10-$12 million to buy the brown power and then to make it renewable. Chair Schmid: She agrees; she shook her head yes. The $10-$12 million is the cost. 50 May 7, 2015 APPENDIX 4 Ms. Fong: Yeah, in a very dry year when we're not getting very much generation. On the other hand, in a very wet year we're flush with generation and we don't ... Chair Schmid: But we don't earn an extra $10 million in a wet year. We just ... Ms. Fong: I think there's been years where we actually have had, and it's not the hydro power that we're selling, but we have had surplus because it's been so wet that we've actually made a few million dollars. Chair Schmid: I guess the problem is though there's a discontinuity in dry years, we pay a lot. In wet years, we get a little. Ms. Fong: That is the phenomenon, yes. Were you going to make a suggestion or did you want us to get rid of ... Chair Schmid: We ought to take into account as we look at our carbon neutral policy that 50 percent hydro, a large hydro might be an exaggeration. Ms. Fong: That is the average. You even said that that was the average over a ten-year period. Chair Schmid: It is from an energy situation, but not from a financial perspective. Ms. Fong: Also you all adopted a cost impact limit that we would incur to carbon-neutralize our portfolio. We've always been within that limit. Jon Abendschein, Senior Resource Planner: When we do our long-term planning, we can actually see as much money in additional revenue when we have large surpluses as we have to pay extra when we have deficits. One of the things that you see is that there's a practical lower limit to how low hydro can go. When it starts to rain, you can get a lot more on the high side than you can on the low side sometimes. That'll drive power prices down a little bit, but you can still see a lot more revenue sometimes on the high side than you can on the low side. It does come pretty close to averaging out actually. Chair Schmid: The revenue comes from being able to reduce your purchases of more expensive, we have RPP contracts so you can't reduce those. You're not buying brown power. Mr. Abendschein: Historically there have been market power transactions. When we have surplus power, we can sell it and we can still keep the (crosstalk). 51 May 7, 2015 APPENDIX 4 Chair Schmid: You can sell at the market rate of that year. Mr. Abendschein: Yeah, exactly. Council Member Scharff: Just a follow-up for Jon. Jon, can you bracket the cost per kilowatt hour for the hydro? In a wet year what are we getting the power at, and in a drought what are we getting it at roughly? Mr. Abendschein: In a wet year versus during a drought? Council Member Scharff: That's what I said, a bracket between the two. Mr. Abendschein: It's interesting, because most of the costs associated with it are fixed. If you're talking about looking at the changing denominator ... Council Member Scharff: It's how much power we get, is the denominator. Mr. Abendschein: Yeah. If you're looking at the denominator, the fixed costs divided by the denominator, it can be anywhere from 30 to 75 or so. Ms. Fong: Jon, just to get to a price per kilowatt hour basis, I think it can go from 2 cents per kilowatt hour up to 4 or 5 cents a kilowatt hour depending on if it's wet or dry. Council Member Scharff: It's still cheaper. I was just going to try and make the point it's still cheaper than solar at 6-7 cents a kilowatt hour. Right? It's still worth having the hydro. It's not worth dumping it. It's not worth worrying about it. That was my only point. Mr. Abendschein: We'll be coming to you with some discussion of some hydro balancing, rate adjustment mechanisms and reserve policies to handle that variability as well. Chair Schmid: That would be helpful and interesting. Last question is on the undergrounding. I had thought a couple of years ago we had stopped undergrounding, but it started again last year. Ms. Fong: No, we've never stopped it. Chair Schmid: Fiscal Year '14. Ms. Fong: We have never stopped undergrounding. What we have certainly told you is that we will in the next few years come to a point where there are no longer easily identified areas where we could readily get cost-sharing from the telecommunications companies. Chair Schmid: I remember that discussion. I thought there was some point in there where AT&T had said no. It seems as though from the projects 52 May 7, 2015 APPENDIX 4 listed in the current Budget most of the projects are in commercial areas. What you have is the residents seem to be subsidizing benefits that show up only in commercial areas. Ms. Fong: It's better to understand that the regulatory bodies between us and AT&T are very different. You regulate us and you set the rules that make sense for our community. AT&T is regulated by the California Public Utilities Commission, and they have real clear rules on where AT&T can clearly achieve cost recovery from AT&T's rate payers. Under those rules, yes, it is far more likely AT&T would get cost recovery in a commercial area. Rarely do they get cost recovery in a residential area. That's when they say they're not going to agree to cost-share on undergrounding the utilities in areas where they can't be guaranteed cost recovery. That's a hit to their shareholders. That's the driver here. Chair Schmid: AT&T is not flexible or the PUC is not flexible on saying a certain share of that should be in residential communities. Ms. Fong: They have described areas and if the areas qualify under these descriptions, I'm going to forget what some of the areas are, but it's like an entryway to a city where there's beautification needed or where there's large businesses. The PUC has actually identified pretty clearly what qualifies for cost recovery. I'm not seeing Tomm Marshall jump up, so I guess he's not going to contradict me. That's really what drives AT&T. No, the PUC isn't that flexible, because every community across the State of California would like to see their whole community undergrounded. That's just not workable. Chair Schmid: Prop 218 doesn't change that, huh? Ms. Fong: No, Prop 218 doesn't apply. Mr. Yuan: One more thing to add. Seventy percent of our revenues from the Electric Fund is from commercial and industrial customers. Chair Schmid: Seventy percent of (crosstalk). Mr. Yuan: It's a majority. Chair Schmid: For electricity. Mr. Yuan: Right. Chair Schmid: That' makes it easier. Thank you. Council Member Filseth: The first one is I noticed that the rent and lease expense up is $1 million. Is that to us? Are we your landlord? 53 May 7, 2015 APPENDIX 4 Mr. Rossmann: That is correct. We are the landlord in the General Fund and we are very welcome of (inaudible) of the Utility Funds. Council Member Filseth: The second one. This is really for Walter. The salary issue with the two years and the market, is that going to be true for all the utilities, not just the electric? I don't have to ask it for gas and water. Mr. Rossmann: That is correct. Council Member Filseth: Thank you. Finally, I wanted to ask back on the subject of talent retention and our ability to keep people that we train a lot instead of having them go off to like some gargantuan (inaudible) somewhere else. Compensation is only one piece of these kinds of things. Do we have a structural compensation problem whereby our total compensation may be similar, but ours is backend loaded with pensions and stuff like that and they pay more upfront and so people go for that? Ms. Fong: I don't know right now for new hires off the street that you would say that there's a backloading of the pension, because ... Council Member Filseth: Because of the Tier 3 and so forth, right? Ms. Fong: Correct, yeah. Definitely from a salary perspective particularly hiring in folks who are earlier in their careers, they look hard at that. If we can't look competitive on that, then they go elsewhere. Council Member Filseth: Do we have a problem such that, because ours is skewed more towards the backend and theirs is skewed more to the frontend, we can't be competitive on salary? Is that one of the contributors? Mr. Keene: Organizationally we have that problem. In the general case that is the case. As you recall, some of the discussions, we unfortunately were handcuffed by PERS regulations in having enough flexibility to adjust that. Obviously there's some key positions in Utilities and a few other places where this problem is exacerbated because of the conditions in the market for those particular jobs, both the number of them in the first place and then the lack of competitiveness. Council Member Filseth: Thanks. Chair Schmid: Motion? MOTION: Council Member Scharff moved, seconded by Council Member Kniss to tentatively approve the Electric Fund Operating and Capital Budgets and recommend City Council approval. 54 May 7, 2015 APPENDIX 4 Chair Schmid: Although it is not easy to carry around, I found that the Capital Budget descriptions were very well laid out, easy and so important for the utilities on the capital side. It was really fun to look through and see. Just wanted to get that note in. MOTION PASSED: 4-0 b) Fiber Optics Fun. i) Operating Budget ii) Capital Budget Ms. Fong: For the Fiber Fund. This is one of the funds that we're a little bit more lightly regulated. It's one of our smaller funds. Our major initiatives for 2016 are rebuilding what's now a 25-year old dark fiber ring. As we noted before, you typically have to come back and rehabilitate existing facilities, and that's what's happening there to increase the capacity and the life of the system. We are, as you all know, developing a Fiber to the Premise Master Plan that will assess our City assets and infrastructure required for a fiber to the premise network and will include an engineering study that will look at the costs and operating business models We also are working on completing our wireless network plan. We have some contracts that are pre-2006 where they still receive a CPI rate increase of 2.7 percent, that's by contract. For our Capital Budget, we're planning to spend about $1.8 million in the fiscal year. Again, that's largely to rehabilitate the dark fiber ring. That's the project. I believe it returns almost a couple million a year into the Fiber Reserves. Chair Schmid: Good. Questions, comments? Council Member Kniss: I've got one. Chair Schmid: Yes, please. Council Member Kniss: This is one of the areas, you recall, that I'm fond of. Looking at a variety of things. I'm on page 421. Looking at the top where it indicates the number of connections that are serving individual users. Talk a little about the 96 and then the resellers. I have some more questions about the resellers. The individual users, are those our connections or are those the wholesale reseller connections? I'm right at the top of the page. It says workload measures. Ms. Fong: I think that 96 is a combination of the resellers and the individual customers, but they are all connected to us. 55 May 7, 2015 APPENDIX 4 Council Member Kniss: There's a big difference in what it means to us financially. If the resellers are buying it from us and reselling it, they're making a profit. Ms. Fong: Yes, they are. A lot of those resellers have those old contracts that are pre-2006. Council Member Kniss: That they're still using and still making money on. Ms. Fong: Right. They have the contracts. Council Member Kniss: That one troubled me last year, and it still troubles me. When do those run out? Dave Yuan, Strategic Business Manager: Most of those contracts are anywhere from 20 to 30 years. One thing the resellers do that we don't do as good of a job is help us market the fiber optics services. We don't have an active team going out there selling. Council Member Kniss: No, but that's been one of my complaints. I don't understand why we're not using this much more aggressively. The 96 that are at the top, the number of connections serving individual users, what does that mean? We have maybe two or three individual users that are in the neighborhoods. Are you talking about the Downtown businesses? Tomm Marshall, Utilities Assistant Director: This is Tomm Marshall, Assistant Director of Utilities. Let me speak a little bit about the customers. There's customers which are directly buying services from the City. There's many of those around the City. I think that's the 70 number or whatever. Those are people who are buying services directly from the City, and they're essentially just leasing a fiber from us. Council Member Kniss: They're usually businesses, correct? Mr. Marshall: That's correct. There's only, like you say, a few individual customers. Council Member Kniss: I can count three or four individuals who are hooked up, right? Mr. Marshall: Right. These are talking about a company who's leasing a fiber directly from the City and there's not a reseller in the middle. Typically on the resellers, those are for smaller customers that may not want to lease an entire fiber and pay all the costs of leasing that fiber. They lease the fiber from a reseller, and they're buying some portion of bandwidth. They're not buying the entire fiber through those links. It's really a question of economics a lot of times for the smaller sellers. They wouldn't want to lease 56 May 7, 2015 APPENDIX 4 a full fiber from the City, because it's too expensive. They lease bandwidth from a reseller. Council Member Kniss: I understand what we're saying and where we're going. I would like to see us look at this differently. I've suggested it a couple of years. As I said, I think this could be far more lucrative than it has been. We have an incredible system, and we're not using it. The guys out there who are very savvy in the community really know that. Thank you, appreciate that. Coming down on the dollars by division and the change for this year in the budget summary, just explain the 58.9, almost 60 percent difference in the dollars. I'm in the middle of the page now, the budget summary, under 2016 percent change. Ms. Fong: That's because we actually are ramping up on our Capital Budget to rehabilitate the existing fiber ring. That was the $1.2 million that we're putting into the Capital Budget. Council Member Kniss: That's coming out of the fund, right? Ms. Fong: Correct, it's coming out of the fund. Council Member Kniss: We rehabbing it in order to do what? Mr. Yuan: Improve the reliability and also increase the capacity. Council Member Kniss: Is it unreliable now? Mr. Yuan: There's potential vulnerable spots. Ms. Fong: It's old, 25 years old. At some point, you really do need to go back in there and really you do need to (crosstalk). Council Member Kniss: I think it's 20 years old. Ms. Fong: I think some of it was ... Council Member Kniss: Yeah, only because I was around then. I'm beginning to get embarrassed about it. Coming back to the rest of this, and you'll probably hear from some of the audience here. This is one of the areas that I hear the most about in the community. I imagine that when Eric was just running, he heard when is the fiber going to be running to the home. There are other cities that are doing it, as you know. I realize it's underway, but I don't think it's any secret that this has frustrated me for a long time. I wish we could be in a different place moving faster. As I said, have it be more of a moneymaking utility. Ms. Fong: It is a moneymaking utility. I'm not arguing with you. It is. 57 May 7, 2015 APPENDIX 4 Council Member Kniss: Yes. I want it to make more. I do think there's great potential here. I've thought so in the past. I realize we've actually got something underway now. We're further along than we have been. As I recall during the middle of the last decade, it got really close and then all of a sudden it got dropped because of the recession. I think I'm right on that, Jim. I hope this time we'll actually make it to the top of that goal that we have. Chair Schmid: Council Member Kniss made the point there's a couple of people from the public who would like to speak. Let me ask Herb Borock to come and talk, to be followed by Jeff Hoel. You have three minutes. Herb Borock: Thank you, Chair Schmid. I'm going to speak just on the capital program. To begin with on the system rebuild, it's unclear. It appears that the text indicates adding additional fiber and rehabilitating some other parts of the system. Sometimes it sounds like what Staff is saying is they'd be replacing the fiber that's there. Is that what the rehabilitation means? For example, if its depreciation schedule is 25 years, does that mean it's time to get rid of it and replace it entirely? Is it just adding fiber? For this amount of money, I would have preferred to have seen in the Budget document a map of the City showing the parts of the fiber backbone that would be rehabilitated. The map that you have is for specific projects. It's not for the rebuild. Indicating whether it's an increase of the number of fibers, say the ones that are 288 going to some other number or the segments that are 144 going to 288, to get some sense. In regard to this rebuilding, you also have to take into account it's interaction with two other projects. One is the fiber to the home. That is, I expect, some kind of decision being made in the fiscal year for which this Budget is being presented. It's a question of how to integrate those two, since the same labor would be putting in backbone fiber for fiber to the premises as well as selling dark fiber. Also in regard to Smart Grid, which is an Electric Fund that you just tentatively approved, in the Electric Fund it's talking about replacing labor. A fiber to the premises system would provide real- time information to customers to change their behaviors in using specific appliances. They're connected in that way. On the map on page 403, it indicates a system improvement in the middle of a residential neighborhood, F-4. Since we have probably just a handful of residential customers, I'm wondering why that's a system that appears to be paid for by the dark fiber fund and not reimbursed as a customer connection. It looks like it's running down Coleridge and then turning on Waverley and going past, I guess it would be Lowell, Tennyson, Seale and Santa Rita and coming by the Jobs residence. I wasn't aware that that's part of the fiber ring, and I'm not sure what that's doing there. It seems to be out of place for something that is not reimbursed as a customer connection cost. In the final 15 seconds, I believe when the fiber to the premise issue, both the City's project and the 58 May 7, 2015 APPENDIX 4 possibility of the Google project, comes to the Council and its Committees and Boards or Commissions, you should be more engaged at the policy level. At least the previous Councils have been more interested in delegating to Staff on how to approach the problem rather than coming from the Council. I would hope that the comments that I've heard from Council Member Kniss and others from time to time would bring a majority of the Council willing to take the lead on this. Thank you. Chair Schmid: Good. Thank you. Jeff Hoel. Jeff Hoel: I agree with many of the things that Herb said. I only found out about this refurbishing of the dark fiber network yesterday, so I'm not really prepared to speak about it very much. It really surprises me that we contemplate spending $4.9 million plus $1 million over five years on refurbishing a network when we haven't seen more than a single paragraph about what the work's going to entail. That surprises the heck out of me. In 2011 in June, UAC saw a report from Staff about how to improve the dark fiber network, which I thought was terribly flawed and I sent Council a long message about it then. You can go back and read it and see if you agree with me. I hope this particular refurbishment isn't going to be essentially that. I would like to see a report that says for each segment of the dark fiber net how many fibers are already used up, how many are left to go as a bare minimum so that we have any idea whatsoever whether increased capacity is the right idea. As far as I know, there has been no attempt to coordinate this refurbishment with the fiber to the premises stuff. Ideally you'd think there should be. I would urge you not to just go ahead and say, "Sure, no problem, go for it." But rather to say something like, "We're not going to approve it unless we see a document first." Thanks very much. Chair Schmid: Good. Thank you for coming. Council Member Scharff. Council Member Scharff: I'll just move that. Council Member Filseth: Second. Chair Schmid: Any comment? Council Member Kniss: I'm uncomfortable doing that. I am uncomfortable not knowing exactly what and how we're going to rebuild the City's dark fiber ring. I'd like us to have more information on that before I can support it. Chair Schmid: I do have a base question on the map that was included in the Capital Budget, where we are increasing spending and spending on those routes. Those routes are clearly focused on businesses, Stanford with one residential street. It appears that the fiber to the premise is open for Google 59 May 7, 2015 APPENDIX 4 to step in and take. That's not appropriate to ask in the Budget, but there are some issues that appear to be hidden in the Budget. If you could get some clarification as to ... Mr. Marshall: I don't have that map right in front of me. You have to remember the fiber system is a series of rings that run around the City. Those rings have to pass through parts of town that may be residential to get back to say the fiber internet center which is Downtown. There has to be pathways to get back. A lot of those pathways will pass through residential neighborhoods. The purpose of them isn't to provide service in those particular neighborhoods; it is to get the traffic back to these main centers where we need to get the fiber back. As far as—go ahead. Chair Schmid: My base question, though, is it appears that the refurbishment, the upgrading is taking place in the business districts while the entire residential section of town is ... Mr. Marshall: That's correct. The places where we're having issues of fiber being used up or having to reallocate fibers in those areas are in the business areas, because that's where the connections have been made. There needs to be improvements in those areas. Other things that we're seeing that you don't know, on the operating side we have areas of town where we have had the fiber, the squirrels in town tend to use it for chewing material. There's a number of places where we have to go in and replace sections of that fiber that have been eaten by the squirrels. We have to put in additional protection. There's areas where we're out of fiber capacity in a few spots in town. In those places we'll be installing additional fibers to correct those. These are just to deal with the issues we have with the backbone and the rings that we have in the City. They are not to deal directly with fiber to the home which is a whole separate set of engineering issues that come about when we do fiber to the home. There's massive amounts of more fiber that will have to go out there to cover fiber to the home. Certainly as we move forward, as we get a better plan on the fiber, we'll be looking at those areas as we do improvements to try to make sure that we provide capacities in areas where they make sense as we move along. Chair Schmid: It would be good to have a base map of where the fiber ring is. All we're seeing is rehabs. Mr. Marshall: I guess we could provide that. I think it is on our website, but we can provide a base map. Council Member Scharff: Maybe by the next meeting. Is that good? Let me add to that. We have to understand that this makes total sense. I would be really concerned if they were extending the fiber ring all throughout the 60 May 7, 2015 APPENDIX 4 residential neighborhoods. We have no residential customers at all. We don't have fiber to the premises. What we need to do is we need to keep the fiber ring, which basically serves businesses. That's who the customers are; that's who we have to provide services to; that's how we make the money. Then we have to decide how we're going to extend that to the fiber to the premises, and that's what we're thinking about. In the meantime, we have to protect the core business and upgrade it and invest in it. It is making all this money. It would be inappropriate not to invest and keep the core group up. Council Member Kniss: I'm surprisingly clear on that. I'm not clear on the amount that's going into the refurbishing. Is that the 1.8, the 1.2? What is the amount? Mr. Marshall: I don’t have the Budget right here in front of me. Council Member Kniss: There are two amounts up here. It says the capital for Fiscal Year 2016 and then you have the system rebuild. I'm going to presume this is the system rebuild at 1.2. Mr. Marshall: I'm guessing the $1.8 million includes the customer connections in there also. Mr. Rossmann: If I may ask the Council Member. Page 415 in the Capital Budget document describes a project, the fiber optic system rebuild, and the funding level requested for Fiscal Year 2016 is $1.15 million. Page 415 in the Capital Budget document. Council Member Kniss: 415, and where are you on it? Mr. Rossmann: In the Capital Budget. Council Member Kniss: Oh, you're on Capital. Just tell me what it says. Mr. Rossmann: Okay. The amount for Fiscal Year 2016 is $1.15 million. Council Member Kniss: It's around 1.2. I would like to put that in the parking lot until I know some more. Council Member Scharff: What do you need to know more? What should they bring us, what information? Council Member Kniss: It's 20 years old. Why hasn't it worn out? Who's been underneath looking at it? Chair Schmid: It's 1.15, but what the Capital Budget says is this is a four-year program totaling $5 million. It is a major expenditure pattern which 61 May 7, 2015 APPENDIX 4 has strategic implications. We have not heard a word at the Council level of the Google program and what they are anticipating. The question is how a business-oriented fiber ring for Palo Alto fits in with the fiber to the premise in the City. Council Member Kniss: This is too much a dark horse for me for the dark fiber at the moment. I want to put this to the side until we know more about it. I'd like to see a report that says this has been nibbled by the squirrels and where. Mr. Yuan: More than likely we'll bring this back to you, because anything over $250,000 will require Council approval. Ms. Fong: With more description. Mr. Yuan: Yes, with the scope of the project. Council Member Kniss: You'll get us more information on this? Mr. Yuan: Right, when we have it planned out. Council Member Kniss: People might be surprised who are using that ring to discover that it's been nibbled on by squirrels. Ms. Fong: Sometimes they know. Council Member Kniss: Do they call and say, "We're having poor service"? Ms. Fong: Yeah. They might get an outage. Chair Schmid: It's funny the squirrels don't seem to appear in any of the residential neighborhoods. Ms. Fong: If it was an electric line that they chewed through, which they also do, we usually find the squirrel. Council Member Kniss: The fiber ring is quite different. Chair Schmid: We have a motion on the floor, which is to approve the Budget. Council Member Kniss, do you have an alternative? Council Member Kniss: Yes. My alternative is to park whatever amount it is here that's going to go next year for the beginning of the rebuild of the dark fiber. I can't figure out exactly what that amount is. Chair Schmid: 1.15. 62 May 7, 2015 APPENDIX 4 Council Member Kniss: If it's 1.15, which is what you're looking at. Looks like it's 1.2 on this. Then I would like to put that in the parking lot until we have more information on exactly what's happening with our fiber at this point. Chair Schmid: I will support that. Council Member Filseth: At what point in time do we think we're going to have that? Is that going to be Walter that (inaudible)? Chair Schmid: All we're doing is putting it in the parking lot for ten days. Council Member Kniss: Putting it in the parking lot and hopefully within the next three to four weeks we'll get ... Council Member Scharff: No, it's the next one to two days. Chair Schmid: Ten days. Council Member Scharff: It's whenever we're doing the ... Mr. Perez: It's the 19th. Council Member Kniss: You're going to have it done ten days from now? Chair Schmid: The 19th is our (crosstalk). Council Member Scharff: I think you need to give direction to let them know what information you want. Council Member Kniss: No, no. Greg, it doesn't come to the whole board until June. Council Member Scharff: That's not how the parking lot works. We recommend it in or we recommend it out to Council. Chair Schmid: Just a clarification. All we're voting on is the parking lot, that it comes back to us on May 19th. We have to make a decision at that point. If there is some interim information that could be provided, that would be helpful. Council Member Kniss: I'm not here on May 19th either. Council Member Scharff: That's what I was asking. What information would you like to see? That way they know what to get you. Council Member Schmid said he wanted a map of the entire fiber ring, and then we can see where the rebuild is. That's that other piece of paper they gave us. I didn't hear what information you wanted. 63 May 7, 2015 APPENDIX 4 Council Member Kniss: I said I want to see some documentation of how much difficulty we're having with the fiber ring. Council Member Scharff: I don’t disagree. There's a lot of these things that come up. Council Member Kniss: I'm just suggesting the parking lot. We'll go have a conversation. Council Member Scharff: But wait. We're rebuilding what, 12 gas mains or some huge number of gas mains. We're rebuilding some substations. We're rebuilding all this stuff in the electric and gas utilities. When our Utilities Department says it's an infrastructure issue, it's not a political issue. We're having system issues on the fiber or we're having issues on the gas and they say it's time to rebuild it, we tend to go okay. Chair Schmid: I will support ... Council Member Kniss: Fiber in our community is political. Chair Schmid: I will support Council Member Kniss' point to put that in the parking lot and it will come back on the 19th. MOTION: Council Member Kniss moved, seconded by Chair Schmid to tentatively approve the Fiber Optics Fund Operating and Capital Budgets and recommend City Council approval, and to move $1.15 million for PO-16000 for the Fiber Optic System Rebuild into the parking lot for further review. Mr. Keene: May I just use this an opportunity to suggest an alternative approach going forward. I'm not saying that that's the case here. Some of the things that Council will ask about are informational or wanting better understanding about what we're doing, a policy or whatever, that may or may not need to get hung up in your actual Budget decision, but could be in addition to information we could either provide as part of the Budget process. Sometimes we'll actually formally write questions. We'll go ahead and we'll send you a report during the process just quickly about what we're doing that you could take a look at. Even if you put something in the parking lot, that doesn't predict what it's outcome will be at Finance or when it goes to the Council. The issue or question can still be there out lingering. Do you know what I mean? There may be a desire even if something's in the Budget and we're ultimately going to need to bring a contract back to the Council that you still may want a more definitive answer about this to (crosstalk). Chair Schmid: That could be the result. Just a request. We have that in the parking lot. 64 May 7, 2015 APPENDIX 4 MOTION PASSED: 4-0 c) Gas Fund. a) Operating Budget b) Capital Budget Ms. Fong: I have to warn you guys. I feel like I'm exhausted and I'm only two-fifths done here. I'll try to keep up with you. Council Member Scharff: I have a suggestion. When we ask questions, I've noticed that Staff talks for five to six minutes sometimes in their responses. Ms. Fong: It's us. You want a yes or no. Council Member Scharff: It actually is a little bit. Ms. Fong: We'll try our best. The Gas Fund on the operating side, we have a number of initiatives. We are looking at fuel switching. I mentioned that earlier. We are continuing to promote our Palo Alto Green Gas, which is a voluntary program to carbon neutralize our gas, which is by the way probably the second largest emitter now for the community. The largest being the transportation sector. We are also working on our Master Plan for infrastructure replacement. We continue to work on our cross bore inspection program. That has been a difficult program for us, partly because we aren't always able to get the cameras fully through the sewer laterals and we've run into field conditions. We are very committed to looking at that on an ongoing basis. That $1 million is, I call it a placeholder in a sense for us as we're performing a lot more analysis on the risks involved with the remaining sewer laterals to be videoed. By the way, we found out of probably at least 11,000 sewer laterals that we've reviewed 26 cross bores. MOTION: Council Member Scharff moved, seconded by Council Member Kniss to tentatively approve the Gas Fund Operating and Capital Budgets and recommend City Council approval. Ms Fong: That includes the Capital. Council Member Scharff: Yeah. Chair Schmid: Any questions on gas? Let me just check my ... Yes. Council Member Filseth: I have to ask this. Gas salaries up 6 percent versus electricity salaries up 12 percent. Why are they different? 65 May 7, 2015 APPENDIX 4 Mr. Rossmann: It could be composition or a difference between the types of employees we have, vacancies in that fund, and the employees which received a higher adjustment for the market study. This is by classification. Really that could be the difference for that. To give you a more definitive answer, I would have to ask my Staff to analyze it. Council Member Filseth: The other question is we're anticipating gas rate increases, significant gas rate increases for the next several years. Ms. Fong: Zero this year. Council Member Filseth: Zero this year, but after that the next few years. Gas revenues are down a little bit this year. Do we anticipate that as the rates go up, total revenues are to continue to go down? Is that a good assumption? Ms. Fong: I'm going to ask Jon Abendschein, if he's still here. Mr. Abendschein: Most of the decreased receipts in gas revenues this year are weather related. We expect as rates go up, revenues will go up. We have a 7 percent next year, and then I believe it's 3 to 4 percent in subsequent years. Council Member Filseth: Got it. The mild winter this year. Thanks. Chair Schmid: Are there any further questions? We have a motion and a second to approve the fund. MOTION PASSED: 4-0 d) Wastewater Collection Fund. ii) Operating Budget iii) Capital Budget Ms. Fong: Probably the only thing I'll say about this fund and then I'll just open it up for questions is that we are proposing a 9 percent rate increase. Chair Schmid: Good. Any questions? Colleagues, if you need a moment. MOTION: Council Member Scharff moved, seconded by Council Member Kniss to tentatively approve the Wastewater Collection Fund Operating and Capital Budgets and recommend City Council approval. Council Member Kniss: We seem to deal with gas and wastewater rather briskfully. 66 May 7, 2015 APPENDIX 4 Council Member Scharff: We need to catch up. Wastewater is not that interesting. IF you have questions, ask. Council Member Kniss: We're coming to the Water Fund and that is (inaudible). Chair Schmid: I had one quick question on wastewater. There is a substantial amount of capital spending taking place on refurbishing, rebuilding, fixing. The question is how you identify the sites that need major refurbishing. I think you report something like 100 leaks a year. Is it from that that pushes the criteria for the major capital spending? Mr. Marshall: We have videotapes of all the sewers. They've all been graded by condition. We've done a condition assessment, and we pick our capital projects based on the condition assessment that we have for the sewer. Chair Schmid: It's from the video that you do. Does that coincide with where problems arise? I assume you have 100 incidents where something happens. Mr. Marshall: There are a variety of reasons for incidents that happen. One of them could be root intrusion. One could be grease from restaurants. The spills don't necessarily always line up with the condition assessment of the pipe. In some cases, they do. In those cases, we'll be replacing the pipe. Chair Schmid: If a root intrudes, that's a unique situation and might not call for the change of a main, rather just a connection. Mr. Marshall: Right, or we'll clear the roots out of the line. We'll cut them out. That's one of the things we do in our maintenance, cut the roots out of the sewer. We do treat the sewer lines also to try to prevent roots from encroaching into the sewer. If it's in really poor condition and parts of the pipe are falling in and the roots are intruding, then that will be on the main replacement program. Chair Schmid: The major capital expenditure, where you dig up the main and replace it, are done through the video scoping. Mr. Marshall: Yeah. That's what identifies it. We don't actually dig it up. We actually do something call pipe bursting, where we just burst the pipe in place. Chair Schmid: Any further questions on the wastewater? If not, there's a motion on the table. MOTION PASSED: 4-0 67 May 7, 2015 APPENDIX 4 e) Water Fund. iv) Operating Budget v) Capital Budget Ms. Fong: On the Water Fund, again I'll jump to questions. I will point out that we are proposing a 12 percent rate increase. Chair Schmid: Questions or comments? Ms. Fong: That's a maximum rate increase we would do under the current proposal. Council Member Kniss: Just a couple of things. I don't think we need to spend a lot of time on this. Probably we'll get though this pretty fast tonight. I do want to call out your accomplishments, because they've been incredible. We're facing a year like none we've seen. When I turn on NPR in the morning, it's probably about water. The question is how do we get through this, what will the long-term solution be. Brown has put in some very strict measures already; I'm sure you all heard this morning. I've forgotten what city it was that has run out of water and they're using bottled water. Scary. I don't think we need to concentrate on this tonight. I do think we'll be discussing this a lot in our regular Council meetings and how do we deal with this. My husband spent yesterday with the fake turf people. I don't think that's the right word. I think it's artificial turf. We were stunned at what it actually costs to put down artificial turf. I don't think there are going to be easy answers to trying to cut back on your water use, other than letting the lawn die. MOTION: Council Member Kniss moved, seconded by Council Member Filseth to tentatively approve the Water Fund Operating and Capital Budgets and recommend City Council approval. Council Member Kniss: I don't think there's a whole lot that we talk about as far as what we're going to do long term. It's going to reveal itself month by month. Chair Schmid: Any other questions or comments? MOTION PASSED: 4-0 68 May 7, 2015 APPENDIX 4 7. Public Safety Department. a) Fire, Operating Budget Walter Rossmann, Office of Management and Budget Director: Before Chief Nickel starts, I do want to just let you know we asked the Fire Chief and Police Chief (inaudible) they're focusing on the changes in the Budget, so shortening the presentation so you can get to your questions right away. Council Member Scharff: I just have one base question. Jim, this is to you. I thought that we no longer had a Director of Public Safety. That we had a Police Chief and a Fire Chief. James Keene, City Manager: That is correct. Council Member Scharff: That's not what the Budget documents says. It says that we have a Director of Public Safety, and you're the Assistant Director of Public Safety. I just wanted to be assured that you were not the Assistant Director of Public Safety, that you were the Fire Chief. Mr. Keene: It says that in the text? Council Member Scharff: It says that in the organizational chart. Mr. Rossmann: In the org chart. Council Member Scharff: Public Safety, on page 309. Council Member Kniss: It was misleading, yeah. Mr. Rossmann: If I may add to this. In reorganizing the Budget document, it was a little too late in the game so we couldn't do this anymore. For '17, we'll have the right Fire Chief and Police Chief. Mr. Keene: Just so we're clear, we're evaluating him and paying him based on being Fire Chief and the same thing with the Police Chief. If we didn't have an audit recommendation or whatever it was from the past that had us have this ridiculous Table of Org process, we could administratively make a change really easily. We'll try to do it faster. Thanks. Eric Nickel, Fire Chief: Good evening. Eric Nickel, Fire Chief. I will keep my comments quite short. The significant Budget proposals that Fire is seeking this year. Based on the conversation we just had, we are in fact proposing sharing a Senior Technologist to handle the technology products that work across both platforms, primarily the CAD system and then the mobile connectivity system. We continue one of our strategic initiatives of community risk reduction and public education. We are proposing to 69 May 7, 2015 APPENDIX 4 continue that part-time funding that we started last Budget year. We are also in collaboration with all of our county fire agency partners, talking about a myriad of regional efficiency approaches. A lot of those approaches require outside consultants to do studies. One of the biggest studies that we are just starting out with right now is a regional fire and emergency medical services communication dispatch center that would regionalize the Cities of San Jose, Mountain View, Palo Alto, and Santa Clara County Fire Department. The level of collaboration that is going on with these groups right now, and not just the literal but figurative boundaries that have dropped between the Chiefs and some of the officials above them, is quite impressive. We have made great gains in the last two years in collaboration. The other study that we're embarking down that you've heard me talk about before is becoming an internationally accredited department. There's about 33,000 fire departments in the United States and Canada. There's about 225 that have gone through an international accreditation. That is outside validation much like a college, a school, a university, a hospital, a laboratory clinic where an outside entity would come in and evaluate everything that we do in about 275 different performance areas and determine are we at the best practice and, If we are not, what is the best way to get there. The last thing that we're proposing next year is to upgrade some of the fire station furniture and fixtures. We recently did a study with my team back here. 70 percent of the furniture including bedding in the fire stations is over 20 years old. The beds are in a state of disrepair. We're proposing $50,000 to start down a multiyear process of refurbishing all the fire stations with newer furniture, newer bedding, newer fixtures. We've accomplished quite a bit in the last year. When I came in front of you last year to talk about the ongoing performance measurement and reporting, we've done those things. We will continue to do that with your quarterly reports. The last thing that I will close my comments, one of the biggest themes this year, we're giving $400,000 back to the General Fund. We're running quite a lean and efficient operation. We seek every opportunity to squeeze additional efficiencies out of the system. Those are my statements. I'm prepared for your questions. Chair Schmid: Thank you. Questions, comments? Council Member Kniss: $400,000 really quiets us down. Chair Schmid: Council Member Scharff. Council Member Scharff: Congratulations on giving us back the $400,000. Appreciate that. First thing, on a positive note. Annette Glanckopf came to Council and was suggesting—what were the devices called again? So I get it right. Mr. Nickel: The AEDs? 70 May 7, 2015 APPENDIX 4 Council Member Scharff: The AEDs. Would that go in your Budget if we wanted to add those in? Where does that go in the Budget, I should say? Mr. Nickel: The first set of AEDs actually came out of Council's discretionary fund, which was a great leadership approach. Moving forward, we haven't had any dialog where the future AEDs come out of. What the Fire Department did take on and out of our Budget is all the training Citywide and community-wide as well as all the ongoing maintenance of the defibrillators. We've built approximately, I want to say it's $15,000 into our annual Budget that we absorb for the ongoing maintenance and upkeep. We haven't had any dialog about who would go out and acquire additional defibrillators. Council Member Scharff: Let me then back up. Do you agree we need additional defibrillators? Mr. Nickel: I do agree. Council Member Scharff: Let's say we wanted to fund the additional defibrillators we needed. I don't really care if we take it out of the Council Contingency or if we take it out of the Fire Department. I do a little bit in that what's the negative to adding money into the Fire Department Budget and having the Fire Department buy it. Isn't that the appropriate thing? I don't really care. I'm looking for where it should go. Mr. Rossmann: If I may make a few suggestions. If it's located in a public facility such as City Hall or if it is at Lucie Stern, this would be handled by facilities. We would probably add it into the Public Works Facility Department since they will be maintaining those. Council Member Scharff: When do we get to that? Mr. Rossmann: Public Works is next week. Council Member Scharff: Next week, okay. Mr. Rossmann: If you want to add something to a fire station, even there we could put it in public facilities, since they maintain the fire stations. Council Member Scharff: I'm interested in making sure that we add the defibrillators in. What I'd like Staff to do is come back to us with how many defibrillators, what they'd cost, where they should be, and how we go about getting it into the Budget. I don't want to make it up on the fly. Mr. Rossmann: We heard your question in April. You asked that, and so we asked Fire and Police to give us the response for that. We have 12 AEDs in police cars, which are roving. We have 48 AEDs in City facilities and parks. 71 May 7, 2015 APPENDIX 4 Then we have 18 AEDs with the Fire Department in the ambulances as well as the apparatuses. A total of 78. Council Member Kniss: 78? Mr. Rossmann: 78 total. Mr. Nickel: That's what we currently have? Mr. Rossmann: What we currently have, yeah. Council Member Scharff: How many more do we need and where should they be? That kind of stuff. Mr. Rossmann: What we can do for you is look at with Public Works where in facilities they're located, unless you know. Ron Watson, Police Captain: I was just going to add in that we would love to put one in every police car. If you are buying, we'll take them. Council Member Scharff: I'm open to that. I'm getting to that age now where I just got to make sure there's one close by. Especially with this stressful job with the City Council. Mr. Nickel: Council Member Scharff, I recall a conversation that I had with Annette and Stephanie Martinson from Racing Hearts. They've done a great deal of that work. I just need to go find that document and get that refreshed, which I'm sure Annette is watching this right now and will probably email me before I clear the dais here. Council Member Scharff: Obviously coordinate with the Police Department about the police cars and that kind of stuff. Mr. Nickel: That's the great thing about this program. You talk about dropping borders between different departments. This truly was a Citywide effort. There were probably a dozen different departments that had fingers on this. Council Member Scharff: Now that I've gone through the nice thing, I have to ask the negative. My understanding of how we're thinking about our technology is that it's really all with our IT Department. I'm not convinced why we should have a separate person who's split between the Police and the Fire and why that should be siloed there as opposed to under Jonathan. I'm happy to hear why. I'd like the City Manager to address it after you address it. This is a Police and Fire issue, so I'd also like to hear from the Police Department if they want to, even though we're not really doing Police, because it's the same issue. 72 May 7, 2015 APPENDIX 4 Mr. Keene: I'm just wondering, Mr. Chairman, if it wouldn't be a little more efficient to make an exception here and let OES, Ken Dueker and Chief Burns speak to it, since it's a proposal that affects each one of them, the particular question. It's on the agenda anyway. Council Member Kniss: Have you thought about coordination? Mr. Keene: The concept is coordination. We'll see how we do up here. Mr. Nickel: I'll go ahead and get it started off and keep my comments quite short while the OES Director gets down here. There are some unique needs of Public Safety technology. Being a 24 hours a day, 7-days a week, 365 days operation where we have some mission critical equipment that are kept in the paramedic units. For example, we have a certain type of heart attack that occurs that our 12-lead monitor can read in the house, relay that via modem through the paramedic unit in a secure fashion, because this is protected healthcare information, to the hospital where the cardiac catheterization team is notified before we even get to the hospital that we're bringing in this certain type of heart attack patient and bypass the emergency room to the lab. There's lots of little technology pieces that don't always work. If that goes down at 9:30 on a Friday night, I can't get into the help desk system and wait until Monday to get that fixed. What we are proposing with all the different technology platforms across the three Public Safety entities is that there is a technologist that is focused solely on the unique needs of Public Safety. Where it houses, whose department it houses in, from my perspective I don't really care. I need somebody there to service our needs on a much more frequent basis. Ken Dueker, Office of Emergency Services Director: Good to see you again. Director Dueker with the Office of Emergency Services. To echo what Chief Nickel just said, he was focused on the timeliness and the after-hours aspect. I'll bring up another element that mitigates in favor strongly of having an IT specialist that is actually dedicated to Public Safety. We have unique systems that require unique training and different skill sets than we typ8ically find in City IT. We also are doing more things regionally now. For example, you're all aware of the tri-cities computer aided dispatch system. We work equally with, of course, Stanford whom we've served for years but also the Cities of Los Altos and Mountain View, and there are other extensions of that for the Emergency Operations Center component that will continue through the Cities of Sunnyvale and Santa Clara eventually. It's frankly an esoteric bit of technology that's going on. It's something that we need to have accountability for, not only because of the late hours but because of the complexity and regional implications. That's from my perspective why we feel that this should be under Public Safety. I'll be happy to have Chief Burns or others come up and add their opinion as well. Thank you. 73 May 7, 2015 APPENDIX 4 Chair Schmid: Thank you. Dennis Burns, Chief of Police: Good evening. Dennis Burns from the Police Department. This position is one we've been seeking for the last 3 1/2 years very much for the same reasons. Public Safety's got different needs, and we are competing against the other 16 departments within the City to get these very valuable IT resources for Public Safety response and so forth. We need somebody who can plan, manage, project manage, implement and maintain these various systems. Just in the last five years, the amount of technology for our fire engines, police cars, motorcycles, ambulances has truly exploded. Our ability to keep up with this, we don't have it in-house. We've done a really good job trying to make ends meet with our existing personnel and with IT. We would hope that this person, if this position was funded, would work closely with IT and we'd have better outcomes. If you have any questions, I can answer those. Chair Schmid: Any follow-up? Council Member Scharff: No. I'm going to hear from everyone else. Council Member Kniss: Good presentation. Thank you. Chair Schmid: Thank you, Chief. Council Member Filseth: Actually, can I ask one question? Chair Schmid: Yeah. Council Member Filseth: (inaudible) there's a line here for charges for other services, about $11 million. Is that all the Stanford contract? Is there anything else in there? Mr. Rossmann: I'm not there with you. There it is. Council Member Filseth: Page 19. Mr. Rossmann: It's $11 million. Stanford would be 7 1/2. Council Member Filseth: What's the rest? Mr. Rossmann: Then you have ambulance—thank you, Christine—a big portion with $3.2 million. There's probably smaller items in there as well. Council Member Filseth. Thank you. Council Member Kniss: Could I just ... Chair Schmid: Yeah, Council Member Kniss. 74 May 7, 2015 APPENDIX 4 Council Member Kniss: ... go back to Council Member Scharff's comments on the defibrillators. In addition to those 78 that we have, do we have any idea how many others are throughout the City in other locations? Mr. Nickel: Yes. That's a great question. Thank you for giving me an opportunity to get up on my soapbox and talk about the Pulse Point app. It's the Fire Department's open government app. If you download Pulse Point, not only does it tell you where we are currently running calls for service, if there is a cardiac or respiratory arrest nearby and you have that app, it will alert you that CPR and AEDs are needed. They have a new feature on there that was actually started homegrown here by Stephanie Martinson, again from Racing Hearts, where all the AEDs are latitude and longitude with a geo-tagged photograph taken here in the community. Right now in the community we probably have 400-500 defibrillators that are logged into the Pulse Point system. Council Member Kniss: That's amazing. Mr. Nickel: Yeah. With lat and long. It is pretty impressive. Council Member Kniss: That is. I know Stephanie has done an incredible job, and Annette has pushed it as well. Mr. Nickel: Absolutely. We have some great community advocates. Council Member Kniss: The same issue that Greg just brought up, I would also underscore whatever we can do. I realize we can't wholesale the defibrillators. As many as we feel we can support as a City, that would be really important. They work. Mr. Nickel: Absolutely. One of the other things that we've talked about doing and we expect to bring back to the Council when we revise the Fire Code is as new businesses start, that that will be one of the requirements under the City Code. Defibrillators are really $1,000 or less. That would be a condition that we would be asking the Council to add on any new businesses that would start, is to add a publicly accessible defibrillator somewhere in the lobby. Council Member Kniss: That's an idea. Again, I really support it. I also know they have to be serviced. Somebody who buys one and just hangs it up and thinks there it is ready to be used—I don't know how often it needs to be serviced, but I know that it needs to be serviced. Chair Schmid: A couple of comments and a question. I notice over the last three years overtime has fallen dramatically in the Fire Department. That's a very, very positive step. I notice also over the last seven years staffing in 75 May 7, 2015 APPENDIX 4 the Fire Department has gone down by 20 people, quite dramatic change. More efficient, effective service is a great outcome. One question. We're talking about technology and the communications side of technology. It is noticeable that on emergency response the Fire Department sets a goal of 8 minutes and the Police Department of 5 minutes. I know responding to fires with the fire apparatus is a much more complex need. You have made the point that emergency medical response is probably 90 percent and that you're looking to hire people who have emergency med certification and are not necessarily sworn fire officers. The question is with the newer technologies is there a way of deploying those resources more effectively around town at the right times and the right places. I know in the recent fire study it was clear that your calls come in bunches at certain times and certain places. The question is could the emergency medical response time be pushed down to the police response time. Mr. Nickel: That's an excellent question. Two things that we're currently doing. We're doing a community risk analysis to identify the risks that we face in the community. It is one of the required documents to become accredited. More importantly, our Staff just finished four days of very intensive training with a very advanced business intelligence and computer modeling program that allows us to input our units, the rules on how we use those units, and it takes all of our historical data for calls for service and tells us where the calls would be. It allows us to move units around town and what does it do to the response times. It's a program that I've been looking for for years. It's finally out there. It's still a little rough. We're one of the first customers, but this is on the cutting edge that will allow us not to just make these gut decisions like, "I think I need to put an ambulance down at University Avenue at 2:00 in the afternoon," but will tell me to the moment how much time it's going to reduce on our calls for service. We are moving aggressively down that path to do that. Chair Schmid: That's a great way of utilizing the new technology. It's one reason why I would support your request to have a technologist there. To have a more efficient, a leaner department responding quicker is a good target to have. Thank you. We're looking for a motion. Council Member Kniss: Are you looking just (inaudible). Mr. Keene: I don't think at this point, in response to Council Member Scharff's point related to the technologist, I'd get into it. The other night my recollection was there's a sense with the Council that the new position adds, you were looking at putting these in the parking lot, so we could look at them in total as we got to the end of the Budget. That could be appropriate. We didn't get into some discussion. We talked about the need. I'd like to be able to have a little more time to say, "Is that something that should be 76 May 7, 2015 APPENDIX 4 placed in IT but dedicated to Public Safety versus put directly into Public Safety." There's pros and cons to both of those. Chair Schmid: You would prefer it in the parking lot, so we can address that. Mr. Keene: That's correct. On that particular one, yes. Council Member Scharff: Can I just have a follow-up? It's not required, but if we're going to have this discussion when we talk about the parking lot, would it be helpful to have Jonathan here for us a little bit? I thought it might be for me, but I didn't want to be too ... Mr. Keene: We can do that. We could be in a position to have more focused discussion around those positions where right now we've got a bunch of other things in the departmental issues and stuff we can talk about it. Not only where we are now, but where are we going, for example, in technology in the future in Public Safety and some other areas. Chair Schmid: I would be in favor of making sure that the dedication is there. That we're hiring someone who can solve the unique issues of Public Safety. Mr. Keene: I'm just saying there's arguments to be made for is it moved out of IT and put in Public Safety or is it a dedicated Public Safety person who is still within IT. There are advantages both ways. We're talking about supplementing existing IT Staff that serves Public Safety. In the case of Public Safety, we have other Staff who serve their systems. This is not designed to take over all of the Public Safety IT functions. We're still going to have that role. This is something on the management side we'd be in a position by the time you get to wrap-up to build that into your report. Chair Schmid: I'd certainly support that. Council Member Kniss: Do you want a motion to that effect? Chair Schmid: Yeah. Mr. Keene: Just the parking lot in there. MOTION: Council Member Kniss moved, seconded by Council Member Scharff to tentatively approve the Fire Department Budget and recommend City Council approval and to move the addition of a Senior Technologist to the parking lot for further review. Chair Schmid: Any further discussion? 77 May 7, 2015 APPENDIX 4 MOTION PASSED: 4-0 b) Office of Emergency Services, Operating Budget. Mr. Keene: We're done with Fire for now, right? Ken, all yours. Mr. Dueker: Good evening again. The City Manager has confirmed my suspicion that you would like to move expeditiously through my presentation. I will, however, hit a few highlights since we have the opportunity in this forum, not in a self-aggrandizing way but just to bring you up-to-date on the evolution of the Office of Emergency Services. As most of you know, that is a relatively new entity in its current structure, having been restructured at the direction of the City Manager in late December 2011. We're a relatively new department. We've been a busy little department. As you know, we really have three elements that concern us in the Office of Emergency Services. A big point is although we're part of Public Safety, we serve the City Manager and his mandate under the Municipal Code as the Director of Emergency Services statutorily. Not only that, we work deliberately with all other City departments and with all members of the community, be they faith-based organizations or medical or schools and beyond that. We're pretty proud of the increase in our volume of community education programs in particular. IF you look at page 327 of the draft Budget, you'll see that in the past fiscal year we conducted over 80 community public safety education presentations including a pretty wide number of drills and exercises in many cases requested by schools or by Stanford Hospital or by the shopping center, ranging from earthquake scenarios to flood scenarios to crime-type scenarios. We've been highly responsive to our community and to our Staff in trying to make sure that we really do prepare the City for all hazards, be they natural disasters, technological or human caused. We're doing that, by the way, with only 3.48 FTEs. In the spirit of efficiency, capital and human, we're here to serve. That concludes my formal remarks. Chair Schmid: Good. Thank you. Yes, Council Member Scharff. Council Member Scharff: You're asking to do a safe schools mapping project. Mr. Dueker: Yes, that's our only request. You'll note that it's an $80,000 request, but I don't believe it's noted in here yet. Thanks to some diplomatic overtures by City Manager Keene, the school district will be paying for half of that. It's a $40,000 hit to the City General Fund. $40,000 paid for by the school district. Council Member Scharff: That's great work. 78 May 7, 2015 APPENDIX 4 Council Member Kniss: Great diplomacy. Council Member Scharff: Yeah, great diplomacy. Congratulations, City Manager Keene, for fine work done. Mr. Keene: It was very easy. The school superintendant was already there. Thank you. Council Member Scharff: I was a little confused by some of this stuff you said here. I was unclear if it's going to map the schools or if we're going to go out and map other critical infrastructure. Is this just the schools right now? Mr. Dueker: In this line item, it's an early phase. This will be focused on just the schools. Later phases will include private schools, other critical infrastructure. We should point out that entities such as the hospitals have a fair bit of this done, if it's a sophisticated operation such as the Stanford Medical Center. They have much of the data, the floor plans, the blueprints, the CAD drawings if you will, all that put together. Council Member Scharff: The purpose of this is what? Mr. Dueker: The end goal will be an interactive, online system so that any first responder, whether it's from the City of Palo Alto or a mutual aid unit coming from another city not familiar with our schools, were they to be called to a school or later another critical facility, would be able to pull up an interactive map that is continually updated as opposed to what we have now which is a hodgepodge of paper maps and obsolete drawings and caricatures that a less ... Council Member Scharff: If we're going to have this system, it was Chief Nickel who suggested that we put AEDs in new buildings. A lot of the critical infrastructure in some ways is also these office buildings we have, like in the Research Park. They obviously have plans and do all the mapping themselves. Can we just upload all that information into this system at some point? Do we have it electronically, do you know? Mr. Dueker: Yes, a lot of it we do. The end goal would be to have all of the critical infrastructure and key resources in the City and in our mutual aid districts loaded into this system. Council Member Scharff: I was just a little confused when you wrote, I get the educational. I get the medical. I thought the Research Park buildings, they're fairly large. Obviously it'd be nice to have all the churches and synagogues mapped, but I didn't view that as the highest priority. I was 79 May 7, 2015 APPENDIX 4 surprised that you put faith-based institutions as one of the things that we'd go out an map right away. It didn’t quite seem in the same league frankly. Mr. Dueker: We look at faith-based institutions, congregations and what not as a resource, if you think about the recovery phase, not the response phase. I had a meeting this morning with a number of interfaith leaders on this very topic. How could we use these facilities that are distributed throughout our City to give us other places to shelter people? Council Member Scharff: An emergency shelter is really what you're thinking. It makes perfect sense. Mr. Dueker: Shelter, kitchens and all that. Not necessarily that we're going to respond there for critical (inaudible), but we hope not. MOTION: Council Member Scharff moved, seconded by Council Member Filseth to tentatively approve the Office of Emergency Services Department Budget and recommend City Council approval. Chair Schmid: Council Member Filseth, do you want to say anything? I'd just add on the mapping project, there's no place more sensitive in the community in emergency situations than our schools. I hope with our communication systems and technologies that we can cut response time down to any emergency at schools to half what it is elsewhere. That's a real community goal to have. Mr. Dueker: That's certainly part of it. Chair Schmid: Council Member Kniss, did you have any comment? Council Member Kniss: No, I don't. MOTION PASSED: 4-0 c) Police, Operating Budget. Chair Schmid: I understand there's an Animal Services component. I don't know whether (crosstalk). Mr. Rossmann: Before Chief Burns starts his presentation, in the at-places memo, there's an additional funding request of $250,000 for transition funding for Animal Services. We can speak more in detail after the Chief's presentation. I just would like to point you to that as well. Chair Schmid: Do you want to treat that separately? Mr. Rossmann: We can treat it separately if the Chair prefers. 80 May 7, 2015 APPENDIX 4 Chair Schmid: That might makes sense to go through these sequentially. Chief Burns. Mr. Burns: Good evening, Committee Members. Dennis Burns for the Police Department. With regard to our requests, our first request is for body-worn cameras. You'll remember that all of our patrol cars are outfitted with, it's called a mobile audio/video system. They capture between 40 and 60 percent of interactions that we have with the public. The next generation or next evolution of cameras are body-worn cameras. They've been pointed out in President Obama's 21st century policing task force and highly recommended for agencies across the United States. This has been on our to-do list for a few years. Last year we completed the replacement of our mobile in-car camera systems. This year we'd like to move forward with this. This project would be interrelated with our in-car system. They'd be manufactured by the same company, and we'd be able to use the same existing architecture and memory systems. There's a variety of reason to do this. Number 1, obviously reduce uses of force and citizens' complaints. Additionally, it's a great liability reduction tool as well. We spoke already about the second request we have, and that's for our Senior Technologist. I can give you a list of projects that we have either underway or planned for this coming year. They are sophisticated, complex and necessary, I would tell you. This position again, without beating the dead horse, would be extremely useful for us. The last item is for our parking team, our Parking Enforcement Officers, a replacement item of some handheld devices so that we can give them an upgraded model. Our existing tool is several years old and requires a tremendous amount of attention and maintenance. We believe it's time to replace these systems. Those are our requests for this fiscal year. Glad to answer any questions. Chair Schmid: Great. Thank you. Council Members? Council Member Scharff: I'll ask one question. I was a little nervous when I read with the GPS tracking function, the department will be able to adjust parking beats to maximize efficiency and increase parking-related revenue. That means more tickets for everyone. I was thinking, "Geez, I'm not sure I want to vote for this." Mr. Burns: I think that's just an enhanced feature that comes along with the technology that is already existing. Council Member Scharff: How does it work? It's probably the most efficient that you could actually install little sensors in each parking lot that would know when a car, I'm sure you could do this, would sit there. As soon as your two hours is up, it automatically notifies you, takes a picture of the license plate, and you get a ticket. You theoretically could have technology 81 May 7, 2015 APPENDIX 4 that does that. You wouldn't even need people to wander around and give tickets. Mr. Burns: You could do that, but we're trying not to get to that phase of Big Brother just yet. Council Member Scharff: Right. That's my only question. How close to that are we moving along with this new system? Ian Hagerman, Senior Management Analyst: Good evening, Members of the Committee. Ian Hagerman, Senior Management Analyst with Police. What we're talking about here are the handheld devices that you might see the Parking Enforcement Officers carrying. The ones we have now actually don't have a GPS functionality in them. We don't actually know with certainty how our officers are actually patrolling and doing their parking enforcement. This will give us the ability to go back and look and see how we're doing these beats and is there a better way to do them, faster, that sort of thing. We're quite a way off from what you described. Council Member Scharff: Thanks. Chair Schmid: Other comments, questions? Let me just raise one issue on the Budget numbers. It's striking that the category other benefits on page 340 has been declining three years in a row, but all of a sudden you are forecasting a doubling. Is there some explanation? Mr. Rossmann: Sure, I can speak to that. Per the contract with POA, the Police Officers Association, the officers get retention pay. I believe it's 3 percent at five years and 6 percent at ten years. Chief? Thank you. What happened in the past, we realized we never budgeted the Police Department for this retention pay, and we're rectifying this issue. This is now properly budgeted for this pay. Chair Schmid: The past budgets were understating what actually ... Mr. Rossmann: Did not include those. Again, Paul Harper over here, who is our salary and benefits guy, is really scrubbing the Budgets. Not only that, the new budget system which the Council approved a year ago really allows us to be much more detailed in our analysis of our budgeting. Chair Schmid: The other thing which seems to be moving quite violently is workers' comp, 1.1 to 1.8 to 1.1 to 1.6. Mr. Rossmann: What happens with workers' compensation is that the allocations by department are based on the actual experience. I believe in 2014 we had a large workers' comp case, one police officer. It was about $600,000-$700,000. That drove the actuals in 2014 which then drives the 82 May 7, 2015 APPENDIX 4 budgeting for 2016. Basically we take the workers' comp total fund allocation and, based on actual experience, we allocate it out for the next Budget year. Is that helpful? Chair Schmid: The '16 Budget is actually reflecting something that took place last year. Mr. Rossmann: In '14, that's correct. Chair Schmid: Those are my questions. Any others? Council Member Kniss. Council Member Kniss: Chief, what about the cameras that are being discussed to be worn? Is that something that we have dealt with and I don't know about it? Is that something that's going to be coming? I don't know the official name for what the camera that is worn is called. Mr. Burns: Back it up just a little bit. The car cameras, we've had those since 2007. Those are called mobile audio/video systems. We just went into our second generation. The new ones that are going to be on the officers are called body-worn cameras. Currently we have ten deployed. Those are on officers who ride the motorcycles and on officers that ride the bicycles, because they do not have any type of recording device on the bike itself or the motorcycle. The body-worn camera, once we purchase it and work out the details with the Police Officers Association about when it will be used and when it won't be used, how long will we retain the information, all the details, we hope to have them deployed throughout the department by the fall. Council Member Kniss: Do you have any item in here to purchase those or is that part of a general purchase? I don't have any idea what they cost, but I know that there's been such a push all across the country for the body- worn cameras. I imagine that there is one specific company if not many that make these. Mr. Burns: There's a half dozen or so that make them. The company that we want to deal with is called Watch Guard. Again, they're the manufacturer of our in-car camera system. We've done a lot of research and testing on this. We've found it to be an outstanding system. Again, the backend works in concert with our mobile audio/video system that we already have, so we're not going to have to buy two disparate systems. We'll have one backend system. We feel very good about that. We are requesting $95,000 for the purchase of those. Council Member Kniss: If I'd just looked right up there, I would have seen it. Thank you. That will cover everyone in the department? 83 May 7, 2015 APPENDIX 4 Mr. Burns: All of the sworn officers, yes. Each officer will have his or her own. Council Member Kniss: Sorry. I'm looking right at it and not reading it. It must be getting to be 9:00 or something, right? Mr. Burns: Exactly. Council Member Kniss: Thanks. That is significant. I'm just amazed how complex it is as well as being something that seems so obvious to do. Yet, the kinds of things that I hear are very mixed about wearing one and about what happens when you do and so forth. It'll be interesting to hear next year what you say about it after they've worn them for a year. Mr. Burns: We'll certainly report back. It's an evolving field in terms of the law and policies across the country. We'll be studying the issue and have a best practice ideally in place before we go live. Council Member Kniss: That's all. Council Member Scharff: I'm good. MOTION: Chair Schmid moved, seconded by Council Member Kniss to tentatively approve the Police Department Budget and recommend City Council approval. Chair Schmid: The emphasis you've made on technology in the past and this year is producing what is a very effective and efficient force. The confidence of the public in the Public Safety operations shows that. MOTION PASSED: 4-0 Chair Schmid: That takes us to Animal Services. Council Member Scharff: Is there an at-places memo on that? Is that what it is? I can't find it. Mr. Rossmann: Yes, we do need to pick up the at-places memo for Animal Services please. Council Member Scharff: Where it is? Mr. Rossmann: It's right on the cover memo. If you look, Council Member Scharff, second page. Council Member Kniss: Is that part of what we're doing tonight and I missed it? 84 May 7, 2015 APPENDIX 4 Chair Schmid: Yeah. It's a part of the Police. It's under Police Services. Council Member Scharff: It's part of the cover memo? Chair Schmid: The back page. Council Member Scharff: Animal Services, I see it. Got it. Khashayar Alaee, Senior Management Analyst: Good evening, Finance Committee Members. Khash, Senior Management Analyst with the Manager's Office, back before you tonight to give you a little bit of background about this item. If you recall several ... Council Member Kniss: Khash, just before you get started, I can't find it in front. Chair Schmid: It's on the back side of that. Council Member Scharff: No, no. It's the first page. There was a lot of stuff here, just so you know. A little too much for at-places. Mr. Rossmann: The majority of it is background material for you, previous remarks which you have received. Chair Schmid: Khash, I think we're caught up. Mr. Alaee: Thank you. If you recall, several weeks ago we were before you to discuss the audit done by Harriett regarding the Animal Services. At that point, we talked about asking for some transition costs. We're back here tonight as part of the Budget process to ask for that. We're seeking $250,000 for transition costs to work with a consultant. Again, the goal is to retain the Animal Control Officers in Palo Alto, keep the physical presence of the shelter here but spin off the shelter operations to a new service model. We need a little bit of resources to do that. Chair Schmid: I would say that the audit itself and the Staff Report that we discussed is appended in the back of the material. If there's any need to look at numbers or data presented, it is there. Mr. Keene: Mr. Chairman, may I just add something to what Khash said? Chair Schmid: Yeah. Mr. Keene: We're really going to have to ask to supplement the Budget with a figure that's like $250,000 without being able to quantify the amount. That being said, we'll be reporting along the way to the Council how much we are spending or needing to allocate as we make the policy decisions 85 May 7, 2015 APPENDIX 4 about who we're bringing in, the timeline, and all of those things. The transition work itself is going to be complicated. There are going to be policy implications that will have to come back to the Council. This would not be a situation where if we fund this, all of a sudden we get the Budget next year, and you say, "Jim, how much of that $250,000 did you guys spend and what was it for?" We'd be in some process, I would think, almost every quarter where we're going to be reporting in some fashion to the Council. I partly say that because, as you well know, people feel as passionate about animals and animal care as almost anything in the community. We'll certainly feel the obligation to keep the Council informed. That said, there are other issues that are at play. We're going to be losing Staff. The Director retired. I don't know if you got into that. We should have salary savings in that position to be able to let us backfill if we need to do that. There's some other operational issues. We've been limping along in some ways. For the most part we can continue to do that limping along. The real effort is what is the strategic assistance on the assessment and the analysis and the research and some of the connections with some of these other entities that we're going to need outside assistance to do. We don't have the expertise really or the time to devote specifically to it. Chair Schmid: The ask tonight in the Budget is for $250,000 for a consultant who could act as an interim operating manager. I don't see a Budget for the Animals Services itself, which already contains a subsidy. Is that right? Mr. Keene: Yeah. We could go ahead and hit the revenues and expenditures and the gap that we anticipate. I just want to clarify that I don't think we would necessarily say that the consultant would end up being an interim manager. It very well may be technical assistance. We may be able to assign somebody on Staff to do some of that interim management work. It's to lead the work on the transition itself. I'll put one other thing out to the Council. I would prefer that you allow us to budget the funds this year in the Budget as opposed to waiting, for a couple of reasons. One, we know we're going to need funding. Two, the community and the stakeholder groups are going to be watching us. The signal of putting the money in will be really important. Technically, if you all really got squeamish and you just didn't like it, we're going to come back with a contract award on whoever we would probably be hiring as a consultant. The truth really is the Council could have a Budget Amendment Ordinance at that point in time, pull the money and set it aside, for whatever reason. I don't think we need that degree of oversight. If that's what you end up wanting to do, I'm just offering it as a possibility. 86 May 7, 2015 APPENDIX 4 Chair Schmid: My question was there are two different requests. One is for the $250,000. The other is for approval of the Fiscal Year '16 Animal Services Budget. Mr. Keene: That is correct, yes. Chair Schmid: Do we have a copy of that or is there a Budget? Mr. Keene: When they did the Police Department Budget, did they approve the Animal Services Budget? Mr. Rossmann: Yes. You approved the Animal Services Budget as part of the Police Department. It's on page 339, Animal Services, the division within the Police Department. The total Budget currently is $1.6 million. Mr. Keene: In a gesture of interdepartmental friendship between Fire and Police, that Fire will be allocating some of that $400,000 savings to that loss we're going to have in Animal Services and the Police Department. Chair Schmid: What we approved was an expenditure without having a sense of revenues. Mr. Rossmann: We are looking up quickly what the revenues are. I don't have it in the Budget document per se, but we have it in our system. We'll see how quick Paul is over here. Chair Schmid: The $1.6 million then does not include the $250,000. You're asking in addition ... Mr. Rossmann: Does not, no. $1.6 million is the base level funding. $250,000 would be a new request. Just to make sure that the Council saw the part in the at-places, the offsetting revenue source we're recommending to use for the $250,000 is the Fiscal Year 2015 Budget Surplus Funds which would be carried forward to the next fiscal year. As of midyear it was $5 million. If you have read the City Manager's report of May, we expect to receive documentary tax revenue of an extra $3 million. Mr. Keene: If I remember correctly, the Proposed Budget already anticipates that we'd take $1.6 million out of the surplus for 2015 and carry that forward to balance the Budget. I believe Council Member Scharff asked the other day pointedly if all of those one-time funds would be spent on one- time expenditures. That is the intention here too, that this is a one-year initiative that we would be funding. We're not asking to fund an ongoing Staff position or ongoing consultant funding. Chair Schmid: Council Member Scharff. 87 May 7, 2015 APPENDIX 4 Council Member Scharff: This is not negative necessarily, but it's late and I feel it's sprung on me and I haven't had a chance to process this. I would like to continue this item. Council Member Kniss: I think that's a great idea. Council Member Scharff: I don't want to rubber stamp it right now, because I'm tired. I wanted to get some sort of thought about it. My only real comment on it is I understand that Animal Services is really difficult. I want you to think, when you come back on it, about why would a nonprofit want to get involved in this. How is that going to help us? Are there examples of nonprofits? It's easy to say when we don't know what to do that we have to do something, so let's spend money and hire a consultant. It's almost a cliché. I'm not saying it's the wrong thing to do. I want a little bit of why. Mr. Keene: We can easily provide that. This isn't a "I hope there's a not- for-profit out there." There's very proven models. The audit will substantiate that. That is fine. Just so that we're clear, you have already approved the Police Department Budget right now. That includes the existing base funding and loss in Animal Services. This question of an additional $250,000 though on top of that we're going to carry forward for follow-up discussion with you. Council Member Scharff: Right. Council Member Filseth: The Budget we just approved includes a full-time Animal Services Superintendant. Right? Mr. Keene: That's correct. Council Member Filseth: Isn't that person retiring soon? Mr. Keene: The person's going to retire at midyear. This is one of the things we were saying. We're going to have to provide some management for the second half of the year. We just expected the salary savings we had in that position could cover that cost. Council Member Filseth: In the 2016 Budget, is there some overlap between that one head count and the consultant you're considering hiring? Would the consultant be the manager for part of 2016? Mr. Keene: That's not my thinking right now, but there's always that possibility. As we dive deeper into it, it could very well be depending upon what we see the problems or the issues and what the responses are from a consultant. 88 May 7, 2015 APPENDIX 4 Mr. Rossmann: In response to one question Council Member Schmid had, the subsidy from the General Fund is $900,000. The expense is $1.6 million; revenue about $700,000. The difference of $900,000 is the subsidy from the General Fund to Animal Services for Fiscal Year 2016. Chair Schmid: That's in the Budget we approved. Mr. Rossmann: It's approved; that's correct. Chair Schmid: Then we're adding the $250,000 on top. Mr. Rossmann: That is correct. Mr. Keene: If you did this, we'd kick it up to $1.15 million as the subsidy. Lalo Perez, Administrative Services Director and Chief Financial Officer: The prior Council target was about $0.5 million, so this is about $400,000 above that. Chair Schmid: You'd like that approval tonight. Council Member Scharff suggested ... MOTION: Council Member Scharff moved, seconded by Council Member Kniss to continue the Animal Services discussion. Mr. Perez: We'll put it in the parking lot and give you more information. Council Member Scharff: I actually said continue the item. Chair Schmid: Yeah, so that next Tuesday we could come back with this. Council Member Scharff: Right, it comes back next Tuesday. Mr. Perez: The reason we're delaying is not because we don't want to do it. We've just got to see if we have the 24-hour window, since tomorrow is a 9/80 Friday. Mr. Keene: We'd bring it back at the soonest the next Budget meeting rather than waiting to the parking lot stuff at the end. (crosstalk) Chair Schmid: If it's continued until a week from tonight. Mr. Perez: It could be Thursday. We just have to work out the timing. Chair Schmid: Just so we can absorb the information. Mr. Perez: That's the agenda timing. 89 May 7, 2015 APPENDIX 4 Council Member Kniss: I don't want to miss this. On Tuesday, it is at 5:00? Chair Schmid: That's the next item, to get all the times. Mr. Perez: I was going to go whenever the Chair's ready. Council Member Kniss: I didn't know whether you had jumped to that. Future Meetings and Agendas Lalo Perez, Administrative Services Director and Chief Financial Officer: The next meeting is Tuesday, May 12th. We are scheduled to start at 5:00 per your prior direction. Council Member Kniss: Which day? Chair Schmid: May 12th. Mr. Perez: That is Tuesday, May 12th. Council Member Kniss: The one I have here still says 5:30, so it's really ... Mr. Perez: 5:00. The following meeting that we have is Thursday, May 14th. That meeting starts at 4:00. Council Member Kniss: That's with the knowledge that I will be at VTA for the beginning. Right? Council Member Scharff: No, no, no. No, no. I'm not here at that meeting. You need to start that meeting when you guys ... Chair Schmid: Which week are you out, Greg? Council Member Kniss: It's the one where I said VTA was ... Council Member Scharff: That's fine. I'm out the 14th, so you should start the meeting when you can get here, whenever that is. Chair Schmid: We're confirmed for 5:00 on the 12th. When are you available? Council Member Kniss: I am sorry. You are absolutely right. It's the 12th that I've got VTA. Mr. Perez: We're good for 5/14 at 4:00, it sounds like. Chair Schmid: 4:00 is okay on the 14th? 90 May 7, 2015 APPENDIX 4 Council Member Kniss: It's fine. 5:00 on the 12th, I mean 4:00 on the 12th. Mr. Perez: 5:00. Chair Schmid: 5:00 on the 12th. Council Member Kniss: And 4:00 on the 14th. Mr. Perez: Yes. Just to remind the Committee, since Council Member Scharff is out, we need the three remaining Committee Members to have quorum. Chair Schmid: The 19th was 2:00. Mr. Perez: 2:00, correct. Council Member Kniss: For some reason it's correct on my phone. I don't know why. Mr. Perez: I had a note that Council Member Kniss may be out that day. Council Member Kniss: I am gone on the 19th. Mr. Perez: 2:00 for the three of you. Council Member Scharff: We'll be here. Mr. Perez: That's all we have for now. Council Member Kniss: Where are we for the 21st? Mr. Perez: There is no meeting on the 21st, because the Committee believes that they can finish it since we start at 2:00. That's what I heard. Council Member Kniss: I'm sure they believe that, but let's say they don't. If it doesn't happen, then what? Mr. Perez: We were suggesting the 20th. James Keene, City Manager: I'm not here on the 21st. Council Member Kniss: I'm not good on the 20th. I'm gone the 19th and the 20th. Council Member Filseth: I'm tied up the evening of the 20th. 91 May 7, 2015 APPENDIX 4 Mr. Perez: Sounds like we would have to look for another evening. What we can do is offline I'll work with the Chair to see what other dates might possibly work. Council Member Kniss: The 21st is fine with me. Chair Schmid: Maybe we could set a meeting during the day, the morning, later in the week. Mr. Perez: On the 21st? Chair Schmid: The next week. Council Member Kniss; Jim, you're gone on the 21st, right? Are you essential? Mr. Keene: I think so, yes. Since it's your final wrap-up amending the Proposed City Manager Budget as required in the Charter, it's probably a good idea that I was here. Mr. Perez: We still have next week to where we could work it out. Chair Schmid: Let's see where we are. The 19th is supposed to be the finale. Council Member Kniss: The 19th, I am not here. Council Member Filseth: The point is well taken. If we don't wrap-up on the 19th, you should be planning now as opposed to (inaudible). Council Member Scharff: Why don't we plan and we can talk a little bit about the issue. Why don't you send out some doodle polls and come up with some (crosstalk). Mr. Perez: Yes, we will do that. Council Member Scharff: I would suggest that all four of us have to attend, because the four of us are more critical than the City Manager if it came down to it. Council Member Kniss: One other thought. I don't know whether we've ever done this or not. Again, Jim, I don't know what your commitment is. Have we ever tried flipping the days, taking up on Tuesday what we might take up Thursday or Thursday on Tuesday? Is it just too far set in advance and we don't have that flexibility? Mr. Perez: Right now we have the agendas out for next week already. 92 May 7, 2015 APPENDIX 4 Council Member Kniss: What you're saying is there is no flexibility. Mr. Perez: We would have to do public noticing. We'd have to look and see if we have enough time. Mr. Keene: Another possibility would be to do the ... Council Member Kniss: Looks like we've been changing this on a regular basis. Mr. Keene: If the doodle thing isn't able to work, we could do the final wrap-up on Tuesday, the 26th. Council Member Scharff: Let's do the doodle polls and see how it goes. Council Member Kniss: On the 26th, we have a regular meeting, correct? Mr. Perez: Not right now. Chair Schmid: The day after Labor Day. Council Member Kniss: Aren't we meeting the day after Labor Day? Chair Schmid: We have a Council meeting. Mr. Keene: I was saying the Tuesday after that meeting. Chair Schmid: Is it possible to meet that Tuesday noon time or 1:00 or 2:00 if necessary? Mr. Keene: On? Chair Schmid: The 25th. Mr. Keene: Yeah. Chair Schmid: As a backup. Council Member Kniss: What would our backup be? Chair Schmid: Tuesday, the 25th at noon time or 1:00 or 2:00. Council Member Kniss: Tuesday, the 25th of what? Chair Schmid: May. Council Member Kniss: I have the 26th. Chair Schmid: The 26th, the day after Memorial Day. 93 May 7, 2015 APPENDIX 4 Council Member Kniss: Do it during the daytime? Chair Schmid: Yeah. Council Member Kniss: What time do we meet that night? I have down 5:00 for a Special City Council Meeting. Somebody does the calendar and it comes right to us, right? That's why these are correct. Thank you. I guess we could come for lunch and just stay. Chair Schmid: Yeah, if we have to. It's a backup meeting. Council Member Scharff: That's the Buena Vista thing too. Mr. Perez: We'll doodle some starting times for the 26th in the daytime. That's what I'm hearing. Chair Schmid: As a backup. Council Member Kniss: Right now I am free all day on the 26th. I could have breakfast, lunch, whatever. Council Member Filseth says he's also free that day. Are you guys free on the 26th? Council Member Scharff: I'm free on the 26th. Council Member Kniss: How about you, Greg? Chair Schmid: I've got a morning meeting. Council Member Kniss: How about say noon? Chair Schmid: Yeah. Council Member Kniss: Without even doodling, four of us are free on the 26th. Council Member Scharff: Why don't you schedule it at 1:00? Council Member Kniss: On the 26th at 1:00. Mr. Keene: That's 1:00, Tuesday the 26th. Mr. Perez: Got it. Adjournment: The meeting was adjourned at 9:20 P.M. 94 May 7, 2015 APPENDIX 4 FINANCE COMMITTEE DRAFT MINUTES Special Meeting Tuesday, May 12, 2015 Chairperson Schmid called the meeting to order at 5:03 P.M. in the Council Chambers, 250 Hamilton Avenue, Palo Alto, California. Present: Filseth, Kniss arrived at 5:36 P.M, Scharff, Schmid (Chair) Absent: Oral Communications None Chair Schmid: ... to the first item followed by the IT. Is that all right with my colleagues? Council Member Scharff: (inaudible) Chair Schmid: With that change in the agenda, we will start with the Library Department. Walter Rossmann, Office of Management and Budget Director: Chair Schmid, Walter Rossmann, Budget Director. As Monique is getting ready, I just would like to point the Committee to the at-places memo from today. It provides the information which you requested from the last two meetings. I will quickly go through those. Monique will make a presentation about the Library Department. One of those recommended changes to the Budget is to increase library hours. We provided you a handout for that. As we go through that, it will be helpful for you to understand those changes. Then we have Attachment B, a consolidated special revenue funds table. It was inadvertently omitted in the Budget document. It provides additional information about special revenue funds by expense and revenue categories. Number 3 on the California Avenue Parking Fund, there's a slight correction for a clerical mistake of funding a proposed Capital Budget item in Fiscal Year 2017 versus 20'16. You asked about information about automated external defibrillators, and we've provided you as Attachment C a map where they exist today. These are the actual physical locations. Additionally, we have AEDs, as we mentioned, roaming in police patrol cars Page 1 of 81 APPENDIX 4 DRAFT MINUTES as well as fire apparatuses and ambulances. The last item in this at-places memo is a detailed breakdown of contingency accounts. You asked about this last week. With that, I will turn it over, if it's the Chair's pleasure, to Monique LeConge Ziesenhenne. Chair Schmid: Thank you very much for the update. Action Items 1. Library Department, Operating Budget pp. 280-290. Monique LeConge Ziesenhenne: Good evening. I'm Monique LeConge Ziesenhenne. I am the Library Director. I did want to mention before we begin that Chairman Schmid had asked for a little overview of how the new branches are doing. I'll do that at the end of the presentation. There's not a slide specifically for that, but I do have some basic information that I can give to you. Briefly, let's start. The mission of the library is to connect and strengthen our diverse community through knowledge, resources and opportunities. We inspire and nurture innovation, discovery and delight. This is a new mission statement developed this year as part of our strategic planning process. Our vision is a flourishing city where people achieve their dreams, and we help the community and the broader Palo Alto world to do this through our public services and programs, information technology and collections, and a building support and administration division. As you know, this year we opened Mitchell Park Library and reopened Rinconada, the library formerly known as Main. We did continue to expand our online offerings and add to the resources that are available 24 hours a day in addition to those located only in the facilities. The MakerSpace earned national recognition for innovation. Again, we worked on the strategic plan. I'm hoping to have a short Study Session with the full Council into the next fiscal year so that we can review that plan so that you'll be more aware of it. In Fiscal Year 2016, a number of our initiatives have to do with completing CIP projects which are part of the IT Budget related to replacing the online computer system, the circulation and database; looking more at how we use technology in the Library, particularly related to the RFID project; looking at incorporating more STEAM or STEM learning opportunities for teens and children; and leveraging the strengths that our Library Department Staff have to offer. These are four of about ten projects on our work plan which go beyond daily operations, look at effectiveness and Staff improvements in addition to our public programs. As you all know, as a result of having such great new buildings, the community would like to be in them more often, and we agree. We have included library branch opening hours and service enhancements related to those open hours as one of the significant Budget proposals as well as beefing up support for library digital services, continuing Page 2 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES with additions that we implemented as part of the growth period during construction. These were initially funded mostly by Library Foundation donations. We'd like to continue again with them for another year. Any gap we will fill in with an upcoming donation from the Foundation. At the end of next year, we'll more carefully assess and evaluate what might be needed to continue. One of the things to pay attention to is the fact that we don't have a full year of data about how these libraries are doing and what the statistics are showing in terms of use. We will have a full calendar year at the end of January 2016. That'll be a full calendar year. We're going to continue tracking very closely our use to refine resource allocations. For example, looking at hourly returns to find peak times when Staff need to be there; looking at post-event needs like story time which can have 40, 50, 60 people attending. You've got moms with strollers; they need assistance. Then the cleanup from that tornado can take up a lot of Staff time. Those are the kinds of things that we're looking at. Slide 6, as we talk about hours, shows in green the current hours. This is for all of the library branches on a day- by-day basis. The current hours, we're open for 22 hours of service on Monday, and we're proposing to be open for 30 hours of service. You can see the difference going through each day of the week. The primary focus is on utilizing Mitchell Park and Rinconada most; however, we are keeping in mind consideration such as evening out the open times so you don't have to think, "Today's Thursday. Does that mean they open at noon or do they open at 10:00? What's going on?" The opening hour would be 10:00 A.M. to keep things as simple as possible. I'll ask if there are any questions about that one first, and then I'll go onto Mitchell Park and Rinconada, which is Slide 7. These are the hours looking at those two larger branches. Currently, for example, they're both open eight hours on Monday. We're proposing that it go to 11 open hours on Monday and so on through the week. The other library that would be open seven days a week is Children's which is currently open seven days a week, and both Downtown and College Terrace would retain their current hours except for adding the two hours on Thursday morning to open at 10:00. That's the end of the formal presentation. I'm happy to answer any questions. In anticipation of this question, I wanted to look at, in a typical week, what the use is like at Mitchell Park and Rinconada and to compare that. We did look at the attendance, hour by hour. Peak hours tend to be sometime between 1:00 and 4:00 P.M. for both of those libraries. On an average day, the attendance at Rinconada is 475, and the average attendance at Mitchell Park is 1,358, about three times the attendance at Mitchell Park. Chair Schmid: Is that attendance just between 1:00 and 4:00 P.M. or through the whole day? Page 3 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Ms. Ziesenhenne: No, that's attendance for the whole day. The peaks tend to happen between 1:00 and 4:00 P.M. The circulation seems to be tracking along with that. The Mitchell Park peak hour of checkout happens at 4:00 in the afternoon, and at Rinconada also at 4:00 in the afternoon. That seems to be when most people are in both buildings and checking out. The circulation at Mitchell Park, on average we're looking at about three to four times the circulation that we had prior to Mitchell Park opening as well. Program attendance is through the roof. The kinds of programming that we're able to offer has also changed. For example, we've added a Girls Who Code Club, making use of the technology room. We've added teen gaming opportunities. We moved the VITA tax assistance to Mitchell Park, and they were able to assist about 300 people this year, filing about 73 income tax filings for low income and seniors in our community. We've expanded the bilingual story times. The number of programs themselves has also increased. We're finding that there's great interest in the use of the community room at Rinconada and in the use of the group study rooms in all of the libraries almost on a continual basis from the moment we open. I don't know if you had any specific questions that you'd like to know about the Budget or the hours. Chair Schmid: Thank you very much. We probably do have some questions. Council Members? Council Member Filseth. Council Member Filseth: Can I ask a question first about programs? Ms. Ziesenhenne: Sure. Council Member Filseth: The program attendance is way, way up. If I look on page 285, if you look at the number of teens who participated in the library's programs for teens, it looks like there's a big drop from 2013 to 2014. Then in 2015 we projected a big increase, but came in well below that. What's going on there? Ms. Ziesenhenne: We had both facilities closed at the same time. Our initial projection was based on Mitchell Park opening sooner. Council Member Filseth: 2016, looks like it's about the same as 2014, but still about half 2013. Why is that? Ms. Ziesenhenne: It depends ... Council Member Filseth: Everything's open now, right? Ms. Ziesenhenne: Everything is open now, so we're still going up incrementally. We're not going to say we're going to go straight up, mostly Page 4 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES because we've started teen advisory groups at both Rinconada and Mitchell Park. We're going to use a lot of their input in terms of planning what the programming is. When 2013 and 2014 happened, we were doing much larger event programs. A one-off event for the debut of a vampire movie or something, we'd tie in the literature. We would do a one-night event. There'd be close to 200 kids. We're focusing on things that are more driven by what they're interested in as well as smaller events with more opportunity for a better experience. We've changed. Council Member Filseth: The number of teens isn't necessarily the right metric. Ms. Ziesenhenne: It might not be, yeah. One of the reasons we chose this is that it supports the 41 Developmental Assets. There's one asset that said teens read three hours a week for leisure. It was one of the ones that the school district felt would be almost impossible to meet, because of how much reading they have to do for school. We are invested in developing lifelong readers who read for pleasure as well as learning. Council Member Filseth: I wanted to ask another question. I'm sorry. You've probably explained this to previous Councils and Finance Committees. Can you explain what are the work rules? How many people are supposed to be at a library in an hour if it's open and what kind of people need to be there and so forth? Ms. Ziesenhenne: You mean for running a library, for operations or for ... Council Member Filseth: Yeah. The libraries are going to be open another 32 hours a week, and that's going to take five people. How does that work? Why is that the right number instead of six or four? Ms. Ziesenhenne: Those numbers of people are actually many more bodies. There's four full-time and then the rest end up being about six other part- time people. It depends. It depends on what are you going to do in the library during that time. If you have story time, you've got a Librarian or a Library Associate doing the story time. You need to have other people there to operate the library. It depends on the size of the building. For security, for availability to the public, we operate everywhere from about 2 1/2 people in a particular branch. Like at College Terrace, you would never want fewer than two for security. You certainly need at least a half more to handle the return volume, the displays, other work. Mitchell Park can have up to 20 or 30 people there at a time depending on the needs. The span of control for the branch manager as it currently exists is 27 people at Mitchell Park. That's not recommended by most HR professionals to be able to do that. You need a smaller span of control to ensure that everyone is doing their Page 5 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES work, getting it done successfully, especially when you're working with the customers, the public. Some of the reference questions take a long time, because they're bringing you a tablet and saying, "I can't download an e- book. Can you help me?" We will sit there with you as long as it takes until you've successfully done it. The quality of service is quite good. Council Member Filseth: That was what I was wondering. Of that 2.5 to 27 people, are there specifications that we need at least two of this kind of person and one of that kind of person and three of that kind of person? Is there anything like that? Ms. Ziesenhenne: No, no. The State Library, for example, specifically doesn't make recommendations in terms of any kind of standard, because the ability for libraries around the state varies so much in terms of what they can offer. There's not really a recommendation that you have a Librarian, a Clerk, an Associate. We tend to look at what is the work that needs to be accomplished in that time, who are the best fits for that work in terms of the job classification. We think about it a lot. Council Member Filseth: I had one other question I wanted to ask. Sorry for the wonky question here. It looks like you're going to convert 4 1/2 Library Assistants to Library Specialists. Are there different roles or skills? What's the color on that? Ms. Ziesenhenne: That was actually a request we made last year, and it got left out. Following a study of all the library classifications, for Library Assistant and Library Specialist, there's basically one sentence difference in the job descriptions. We want to move them up to the higher level. The change in pay is not crazy. It allows us to use their skills more flexibly, and allows them to be able to participate in higher-level work. We get a bigger bang for the buck. Council Member Filseth: You anticipate they're going to be doing different things than they're doing today? Ms. Ziesenhenne: Yes, some a little bit different in terms of what they're doing. They can always work down. This probably matches what a number of them were already doing better anyway. Council Member Filseth: I noticed that the pay difference was basically zero. Although, is the pay range for those categories different? Ms. Ziesenhenne: Yes. Yes, it is. Council Member Filseth: Is it significantly different? Page 6 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Ms. Ziesenhenne: Not significantly, no. There's usually a 5 percent difference. I'd have to look it up on the PSO site to know. Council Member Filseth: If you change categories, somebody will go from this point in their range to a different point, basically a lower point in the other range? Ms. Ziesenhenne: Yes. Yeah, yeah. They'll ... Council Member Filseth: You think it's 5 percent lower in the range or something like that? Ms. Ziesenhenne: Usually it's a 5 percent difference, but I would have to ask my Budget folks to help me. They're going to look it up right now. Council Member Filseth: Obviously it makes a difference (crosstalk). Ms. Ziesenhenne: Talk slowly and by the end ... Council Member Filseth: It obviously makes a difference for things like step increases and stuff like that. Ms. Ziesenhenne: Right. Most of the folks who are in the Assistant category have been with the library a long time, so they're probably already at the top step. They'll move to the next step, and they'll probably be at the end. Council Member Scharff: Can I just interrupt? Council Member Filseth: Yeah. Council Member Scharff: That's a really good question. When you reclassify someone—I never understood this, what we're doing right here. You're giving them a new job title. There's five steps, right? Ms. Ziesenhenne: Yes. Council Member Scharff: Do you get brought in then at a second step, third step, fourth step, or do you start at the first step when you start a new job? Ms. Ziesenhenne: You don't start at the first step, because that first step might be lower than the money you're making right now. Council Member Scharff: Lalo, how does this work? Lalo Perez, Administrative Services Director and Chief Financial Officer: We tend to start them at the next closest step, if there is a change in duties. If Page 7 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES they were at Step 3 in the current classification and Step 3 is a little bit higher, then they would stay a Step 3. If the duties that they're doing is more, they could be a fourth. There's a judgment call to some extent there. It would not go from three to five. Council Member Filseth: It would be the other way. If they were in Step 5 in this category, then they would go to a Step 3 in the next category? Mr. Perez: That's correct. It could work that way. Council Member Filseth: (crosstalk) get to Step 7 or something like that. Ms. Ziesenhenne: We're getting more work. Council Member Scharff: What would be helpful in future Budgets is to have a sense of what this really costs us. It's misleading, and I know it's not done purposely. When you look at this, it looks like there's no real fiscal impact. That's what I take out of it. I forget the exact number, but it looks like there's no fiscal impact. It's what, $2,000? Council Member Filseth: $2,000 I think. Council Member Scharff: It's $2,000 and I say it's nothing. It really might be something or it might not be something. What's the four-year cost as you go through those new steps, as you ramp people up? We don't know what you're doing. Once they're there, we never see it, because step increases don't come to us. We never really understand the full cost of that. I don't know how to capture that in future Budgets. I don't know how to get that sense. It's clearly not saying what's really going on. Mr. Perez: That's a good observation. We can make that in the notations. What we're trying to do is budget at the projected salary that the individual is going to be at. Your point is what is the classification cost and what is going to be the cost eventually in three years or whatever. We can make footnotes saying that this is the current fiscal year costs and the classification increases could be up to X amount based on the current table. Council Member Scharff: That would make me feel a lot more comfortable. Also following up on the need for the classification change. You said something which surprised me a little bit. You said that you need the classification so that these people can do different work. Are you basically indicating to me that given the current union contract, people may not do certain work because it's a slightly different job? Ms. Ziesenhenne: Yes. Page 8 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: That's the issue, right? You said it's a one sentence difference. I'm like, "Really?" Ms. Ziesenhenne: These are older job descriptions. The survey of the job descriptions started before I arrived here four years ago. This has been an ongoing process. There were very slight differences in terms of cleaning up the number of different jobs. It made more sense to us to be able to accomplish a broader range of work with the Specialists given what the analysis showed in terms of the cost. Was that work getting done? Yes, by other Specialists because we have two or three of those in the classifications already. However, other Assistants would not be assigned to similar duties. With a greater number of people, we have a broader range of flexibility in terms of making assignments to get the work done. Council Member Filseth: I understand. Greg's trying to ask something that's very hard to quantify. Right? Ms. Ziesenhenne: Right. Council Member Filseth: One of the unintended consequences of this mechanism is, for example, a certain number of people might get a 10 percent raise over two years, or something like that. How do we say, "Yes, and this is what the residents of Palo Alto are getting out of this"? The library's longer hours, we got it. That's easy. Some of the other things in terms of different work and so forth, how do we explain that? We did this and, therefore, we got this. Ms. Ziesenhenne: There may be more technology work that they're expected to do. For example, we have a Specialist who does work a lot with the Technology Assistants. The Assistants would not be necessarily assigned to do that; that would not fall into their job description. Different things like that. For us it's more about the flexibility and having people there. Does anybody say to a customer who comes in, "No, I can't help you"? They wouldn't say it that way. They might take them to see somebody who could help them, rather than helping them at the point of contact. Again, as busy as we've been, there's people waiting, there's people who would like to be helped right away. We want to make that a better experience. Council Member Filseth: By doing that, we're going to be able to provide more services to more people? Ms. Ziesenhenne: Yeah. That's what's I mean by flexibility, the ability to have them assigned to different areas of the library more easily. Council Member Filseth: Thanks very much. Page 9 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Walter Rossmann, Office of Management and Budget Director: IF I may jump in, Council Member Filseth. From a top step to top step comparison, it's a 9 percent increase. If you look at Step 5 to Step 5. Council Member Filseth: If you did two steps in two years, that would be an extra 4 1/2 percent per year? Mr. Rossmann: That is correct, yes. Basically what Lalo was saying too is what we do from an HR perspective. We look at the duties of the job and we align it with the closest classification. That's what HR did with the study. Number 2, when we move them up incrementally, we go to the next closest step of the new classification per union contract. Ms. Ziesenhenne: The Library Assistant classification is retired. We won't have that anymore. Chair Schmid: Council Member Scharff. Council Member Filseth: If the lower pay scale classification is retired, a new person coming in wouldn't go in as an Assistant. They'd come in as a Specialist. Ms. Ziesenhenne: We recruit for those jobs specifically and separately. You could start as a Specialist now. It requires more experience, and it requires more training already done. Chair Schmid: Council Member Scharff. Council Member Scharff: Thank you. Thank you for the presentation. It was actually really well done. Ms. Ziesenhenne: You're welcome. Council Member Scharff: I think I will reflect just briefly over when I first started on Council and where the libraries were and where they are not. I'd say we've made tremendous progress. Monique, I think you're doing a really good job. Ms. Ziesenhenne: Thank you. Council Member Scharff: I actually don't think I've said that to any of the Directors that have come. It may be true. I think you're doing a really great job. The libraries seem to be humming along. Ms. Ziesenhenne: Thank you. Page 10 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: Wanting to think a little bit about the e-book stuff. One of the things you have in here is to spend $100,000 on—I don't know how you phrased it—e-services or ... Ms. Ziesenhenne: Digital resources. Council Member Scharff: Digital research services. Is that e-books or what is that? Ms. Ziesenhenne: It includes e-books. It's also all of our online databases, things that students use for school, things we use for language learning. It includes the streaming movies, music, all of those kinds of services that are available in a digital format online. Council Member Scharff: Can you just briefly summarize what those are? Ms. Ziesenhenne: All of them? Council Member Scharff: Are there a hundred or is it ten? Ms. Ziesenhenne: No, no. There's more than ten for sure. It's things like Zinio; that's online magazines. Council Member Scharff: Stop a minute just so I understand it. Are there 30, 40, 50 magazines available? Ms. Ziesenhenne: Yeah, like 80 I think through Zinio. Council Member Scharff: It's like 80 through Zinio. Is there a limit to the number of magazines that someone could look at? Ms. Ziesenhenne: No. Council Member Scharff: Anyone who's in the library can always look at any of the magazines on Zinio? Ms. Ziesenhenne: We could bring it up right now, right here. We could look at any one of those magazines. You can check it out on your tablet, and it lives there. In that case, it's not like you have to return it. Some things you get to keep. Council Member Scharff: This is my question. You said I could download Zinio on here then and check it out right online. Ms. Ziesenhenne: Yes. Page 11 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: I need to do this. No question I need to do this. Ms. Ziesenhenne: We will set up an appointment. We take appointments, and we'll work with you on it. Council Member Scharff: This is going to be a broader question. This is what I’m thinking about. You set up an appointment with me; you set up an appointment with 500 people. We all really love The New Yorker, for instance. Is there a point when you run out in a certain month of "No, everyone's checked that out," or is it unlimited? Ms. Ziesenhenne: It depends. I love sounding like the attorney. It depends. If it's an e-book, some are one title one user. You check that e- book out. When you return it, then the next person's available. You go on the waiting list just like you would for a hardback book. However, other formats allow you to do other things. The magazine, no, there's no limit. The music, no, no limit. Depending on the vendor, one e-book per user. Others allow multiple users per e-book. It's really down to the vendor. Council Member Scharff: When you say I don't have to return it, does it just disappear off my phone? Ms. Ziesenhenne: Yes, the e-books do. Some of the items just remain there until you're done reading it. Council Member Scharff: Music, do I listen to it once or I have it for a month or do I have it forever? Ms. Ziesenhenne: You download from Freegal and you have it forever. You can store it in your iTunes; you can keep it. Council Member Scharff: It's just like free music? Ms. Ziesenhenne: It is free music. We pay for the subscription. You can only download three to five songs per week, depending on what it is. We do control it that way, so you can't go really crazy. Council Member Scharff: How do we pay? Do we pay on a volumetric basis or on a flat fee basis? Ms. Ziesenhenne: We pay flat fee. I'm looking at Diane; Diane's nodding. We pay flat fee; although, some of them do actually offer a pay as you go. Our purchasing doesn't allow for that, so we pay a flat fee. Council Member Scharff: I would agree with that. What I'm really trying to get straight in my head is on the digital services. I'll give you my example. Page 12 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES I'll take e-books for example. If I downloaded an e-book from the library, and I could buy that book on the Kindle for $9.97 say and you paid $9.97 for it, that would be a silly model. If you got one book and I returned that book and then someone else has it available, that's the same model as the library. I understood it was different on e-books, that it was a certain number of downloads that the library purchased every time they purchased an e-book. Ms. Ziesenhenne: Again, it depends on the vendor, and it depends on the e- book publisher. We should do a Study Session on e–books, because this is a fascinating subject. We've done it with the Library Commission. First of all, we're not paying $9.97 for a book. We're paying closer to $60. Council Member Scharff: $6 a book? Ms. Ziesenhenne: $60. Council Member Scharff: $60? Ms. Ziesenhenne: $60. Some of the publishers limit the library to how many downloads they can have, then you have to renew it. We belong to a purchasing consortium as part of the regional libraries, so that we have access to a greater number of titles. We pay for additional copies or extra copies for Palo Alto residents, so that we have a broader range of e-books which are available. That said, those don't have the same limits because they're not purchasing from the publishers who have those limits. You're right. Whatever we pay for, technically we don't own it; we lease it from that publisher. It's a business model that is constantly evolving. We just try and stay on top of it as much as possible. Council Member Scharff: All I really want is assurances that we don't buy those books in which it's much more expensive than the equivalent of buying a book in a library. Given the number of people that check out a book typically—I don't know what that would be, but I assume there's metrics. You buy a best seller; 50 or 1,000 people check it out over the lifetime of the book. The book costs X dollars. Is it fairly similar to that or is it much more expensive as an e-book? Ms. Ziesenhenne: It is more expensive. We'll have to do a study to realize what is the cost per checkout for the e-books versus the hardback books. That's not super complicated. It goes on all the time in libraries. I can't give you a guarantee. Especially as part of a purchasing consortium, we try to maximize our dollars in every way possible. Again, we're looking at what is the community really using. Many people come in, and that is their primary interest. What do you have available online? What do you have available that I can use no matter where I am? What do you have that I can Page 13 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES download and keep? They're very interested. This being where we are, it feeds into that as well. Council Member Scharff: My concern obviously is that on the extreme level, why would we pay to basically give people a book? It would be equivalent if you bought people the book and handed it out to them rather than putting it in the library. Obviously if that book costs you the equivalent of what it used to cost you to buy a book, it's fine. In many ways unlike the traditional library model, it is a direct subsidy not based on income. If somebody walks in the door and you say, "We're spending $5 or $4 on this book, here you go. Just for coming in the library, take it." That's $4 the community spent to subsidize some random person in the community. Depending on how the economics work, that's either a good thing to do or not a good thing to do. I haven't seen the metrics on the economics to understand if it's a good thing or not a good thing. That's getting a little far afield from the Budget. Since you had $100,000 in here for e-books, I'm not going to challenge it or anything, I would like to understand how we do that and think about it a little bit. Does this make sense? Ms. Ziesenhenne: From the digital literacy standpoint, it does make sense. There are many people who, once they discover how to do this—we've had tutors working with seniors. Not only do they learn to download an e-book where they can adjust the type, where they can have it read to them. English-language learners who can look at a book and follow along and hear it, it's different from having the hardback book in your hand. Those seniors who are experimenting with that are also learning to use Skype at the same time. They're learning about the technology, feeling more comfortable with it. It enlarges their life. They talk to family around the world. There are additional values to becoming comfortable with those technologies that aren't just part of the cost. We do that. We train people. We go to Avenidas. We work with those folks, so there's a lot that we make available. We'll work on the economics piece, but we'll also look at the social piece that goes into that. Council Member Scharff: I agree. I keep forgetting you're not really a library anymore. You're a social network and community center. Ms. Ziesenhenne: Thank you. I'll take that. I think we're a learning center. Council Member Scharff: A learning center, I like that. Chair Schmid: Just a few broad, general questions. First on the changes that have taken place in the last year. Everyone I run into says immediately to me it was worth the wait. The opening of the new libraries has really been a success. You gave a couple of numbers that seem to indicate there's Page 14 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES a base question of what is a library. It seems as though attendance, the number of people coming to our buildings, has gone up quite dramatically from five, ten years ago. Yet the items in circulation have not. You are pushing a remote library as almost a substitute. People are using these buildings. How do you characterize the new library, the new buildings? What is it they come to? Ms. Ziesenhenne: I think they come for a space where they can use technology, where they can interact with people even if they're not interacting. They're around other people; that idea of the third space. Home, work and a third space where people can be a part of the community as well as use the resources. Many, many people are bringing their own devices, using the Wi-Fi. I was at Rinconada Library between 4:30 and 5:00 on Sunday. I walked along the perimeter and saw people working on coding, people working on their own projects, things like that. As a place, as a destination, we are seeing more people coming in to use the facilities and perhaps not taking something home but finding something to use while they're there. Families who use it as a destination for entertainment for the kids or interaction with other parents, special programs. Chair Schmid: There's a new competition in town. Hannah House is charging $3 an hour to sit with your ... Ms. Ziesenhenne: I went and checked them out. It was interesting to think about that. What does that mean for libraries? How do those coworking spaces change what we do? We also have meeting rooms. We also have small group rooms. Chair Schmid: As you think of the future of the library and the people on staff and what they're doing, you're thinking of that social component of what is it you do to create that atmosphere. To get to the current Budget, in the creation of this new library, you're asking for 5.3 new Staff members. You're asking to extend hours substantially. Your salary and benefits are going up 14.7 percent. There's a fairly big ask there. Part of it is you have so much more square footage. Are we getting the right people? Do you need the people? There is so much technology, not just on the online library, but even in the library itself. I know checking out and getting books back on the shelves is more tech-based than it used to be. What you're doing is you're adding hours during the times where right now you'll probably expect many fewer visitors per hour at those times. Talk a little bit about how you're building a future for it. Ms. Ziesenhenne: The increase in Staff is about 14.8 percent. The increase in hours is 14 percent. We're looking at the needs of multiple buildings Page 15 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES rather than one or maybe two as most of the libraries in this area also have. Let's go back to the technology. Yes, we have technology to check the items in. We still need a human to get it from the cart onto the shelf. Until I can get the drones to work in the library and shelve the books, I'm stuck with people. We're still backed up on that aspect. These positions address just that higher volume overall. Even though we talked about people are using it as a space, again, the interactions are taking longer with the technology. Many people that we're seeing haven't necessarily been in a library in a while. They've come to see this new building, maybe this new building that they've paid for. They're drawn in and their expectation of what a library is is a little more like a library rather than learning. There's orientation that goes on. There's a higher degree of customer service that's necessary in the most positive sense of the word. What we've added is really to add these additional hours. If you go from a 12:00 to 8:00 shift on Thursday to a 10:00 to 9:00, then you're talking about two overlapping shifts of people who need to come to work. You're looking at things like those branches that only have 2 1/2 people. We had to close temporary Main because those people all had the flu and everybody else was sick and we didn't have anybody to cover last winter. We're looking at a slim amount. Chair Schmid: Just a suggestion, we had a couple of years of sitting here waiting for it to happen. We were nervous and upset about it. It would be good if you could generate some quarterly data for us as we go on through the experiment of people, circulation, e-books, and so on. Just so we can see what's happening and how the extended hours have an impact on those base formulas. Ms. Ziesenhenne: Right. We plan to do that for ourselves internally. We'll be happy to make that data available. Chair Schmid: Council Member Kniss, do you have any questions? Council Member Kniss: I apologize. I was at a meeting in San Jose, so I'll catch up with the questions later since I haven't heard what's been asked. Thank you anyway. Ms. Ziesenhenne: You're welcome. Chair Schmid: A motion? MOTION: Council Member Scharff moved, seconded by Council Member Filseth to recommend tentatively the City Council approve the Library Department Budget. Chair Schmid: Do you want to say anything? Page 16 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Filseth: I do actually. Obviously we see the value. It's a really exciting time to be a library. On some of these classification changes, you guys need to be really careful. Between the top-end change, because of the classification which is 9 percent, and the steps and the cost of living adjustment, it looks to me like those four people are going to get like a 14 percent raise over two years. We've been doing this for the last week. I've been looking at this going, "Cost of living is like 2.5, 2.6 percent in the Bay area. How is it that our Staff costs seem to be going up so much higher than cost of living?" Some of this kind of stuff ends up doing some of that. You just need to be really careful about this kind of stuff. Council Member Scharff: I'll add to that too. I have similar type concerns, that Council Member Filseth just raised. I don't think now is the time to draw a line in the sand on library classifications. Over the next few years, we'll be looking at this issue a lot closer. It would be good to give us the information and make the case of what we're getting. You did that successfully, Monique. You said you'll get more work out of these positions. That's a good thing. I'd like to understand a little bit at some point, I'm sure I'll find out the information. How do we do our salary surveys in terms of how we come up with what those ranges are for this position as opposed to the previous position you have? Do other people have those limitations or is this really something we need to deal with in the union contracts in terms of flexibility of positions? That's completely unclear to me. The notion that there's one line in the job description and, therefore, you have to change the job description, maybe I misunderstood you but that struck me as a little archaic. Ms. Ziesenhenne: We just wanted to eliminate the position and combine them. I hope I can clarify that. James Keene, City Manager: Mr. Chairman? Obviously this systemic question about staffing, pay, fully loaded costs, all of that has been coming up recurrently. I might suggest that it's something we should also, in Finance sometime later this year outside of the Budget, have a much more in-depth discussion about. What the objectives are, how do we measure productivity, do we pay for productivity or do we just exact it. There's a lot of complicated issues there that we ought to think through. Obviously I do agree with you that this isn't a line of questioning that's going to be answered this year and not be back next year. I'm not asking not to continue this line of questioning when we get into some of the other Budgets, but obviously it's a comprehensive conversation Finance probably could have. Chair Schmid: If there's no further questions. Page 17 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES MOTION PASSED: 4-0 2. IT Department a) Operating Budget pp. 266-279 b) Capital Budget pp. 619-660 Walter Rossmann, Office of Management and Budget Director: Jonathan Reichental is our Chief Information Officer, and he will make a brief presentation about this department. Jonathan Reichental, Chief Information Officer: Thank you, Walter. Jonathan Reichental, Chief Information Officer. I'm joined this evening by Lisa Bolger, our IT Chief of Staff, who's going to do the bulk of the presentation. I did want to start off with a few opening comments. The last time I presented to you a few months ago, you said we didn't brag enough, so we're going to do a little bit of that. We didn't talk enough about our successes was the language. We've made significant progress over the last three years towards building a high performance team. I'll cite some of the data around that. Just between the years 2013 and 2014, we were able to deliver 50 percent more IT projects on behalf of the departments to the City. Overall we've delivered now 77 large IT projects over the last three years. Those are the kinds of numbers we were doing over periods of ten years prior. Now we're doing those very high numbers on a yearly basis. They are projects for every department, including our back office work, the stuff necessary to run the IT Department and the IT services for the City. We have increased year over year our speed to respond to issues by 25 percent. We get close to 10,000 requests per year. We have a very focused and serious amount of attention on information security, which we never had before. We have a Staff member on that. We've installed some technologies around that, and we'll continue to fight this number one priority for cities and states and governments around the country. In 2013, as you know, we were awarded the Number 1 Digital City in America. In 2014, we were pushed down to Number 2, but we're still among the top three in the country. Council Member Scharff: Who did we lose to? James Keene, City Manager: I'll tell you offline. It's kind of embarrassing. Mr. Reichental: We have an award winning website. We continue to win awards. This year I wanted to share that I'm particularly proud on behalf of the City Manager and the City to have launched the Civic Technology Center here at City Hall. For the very first time we have an innovation technology Page 18 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES center in the heart of Silicon Valley. It was opened by Mayor Holman on April 20th. It was a big deal for me, my team and the City. I want to finally say two more points. The percentage of our City Staff satisfaction, those who rated us as excellent in the City is 94 percent currently, which I would think you would agree is fairly high. I'll just end with this point on my opening comments. I have not asked for any head count in the entire time I've been here. We've done all this in fact by having reduced head count or by not asking to fill some roles despite all these improvements in performance. I'll pass you over to Lisa now for the main presentation. Lisa Bolger, Information Technology Chief of Staff: Thank you. Lisa Bolger, IT Chief of Staff. I'm going to go ahead and get us started. Our mission statement. The Information Technology Department's mission is to provide innovative technology solutions that support City departments in delivering quality services to our community. Our purpose. We really have four key areas that we concentrate on. The first is to champion and inspire a forward leaning vision for Citywide technology. We then have provide high quality technology solutions for employees, departments, Council Members and our community. We also have support and improve essential technology infrastructure throughout the City and to create and maintain an exciting workplace for the team, inspiring high performance and growth in career opportunities. We're comprised of five divisions. Our first is office of the CIO, which is predominantly responsible for strategy and vision. We have project services that really takes all new initiatives or requests through the project life cycle, from governance all the way to actual execution and implementation. We have an operations team that's responsible for essentially keeping the lights on with all of the existing services. We also have our enterprise services team which is supporting our SAP and GIS systems. Then we have our security division of one who is responsible for ensuring the security of all of our data. Some recent accomplishments; Jonathan has mentioned a few already. Just to note, this is just a small sample of the list of accomplishments that we have. Our Office of Management and Budget is very good at keeping us pretty succinct here. I wanted to make sure we fell within the parameters. Jonathan had mentioned that we were named the second Top Digital City for population under 75,000. We also last year, you may remember, did our evaluation for the enterprise resource planning. That's our SAP environment, our HR payroll, a lot of our core systems within the City. We did an assessment for enterprise asset management system. We also in conjunction with the Police Department, Fire Department as well as two other cities helped to support the implementation of our tri-city CAD system for Public Safety. We performed an upgrade for our virtual private network and also did an upgrade for our fire scheduling system. Again, just a small list of accomplishments that we've had over the last year. Some initiatives for Page 19 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES 2016 that are coming up. Again, just a small sample. We currently have over 32 in-flight projects which will likely span over the next year. While we did our assessment for our ERP last year, the expectation for Fiscal Year '16 is that we'll be performing our requirement gathering as well as soliciting RFPs for a new ERP system or systems. We have a fire station phone and Police Department network upgrade. That's an overhaul of all of the infrastructure in supporting telecommunications and networking for the fire station and Police Department. We have our cloud-based communication and productivity suite implementation. This will be our Office 365 implementation and also our enterprise mobility management. This is securing our mobile devices throughout the entire City. Last to mention is our enterprise asset management system. Again we did our assessment last year. The expectation is that we would actually go through implementation in Fiscal Year '16. Some significant Budget proposals that you'll see for Fiscal Year '16. We have our Council Chambers recording equipment. Where we're at today, we're basically running on an analog system. It's fairly antiquated, and we'll be looking at replacing that system. We have our enterprise resource planning system selection, as we mentioned previously, and again assisting with the requirement gathering and the RFP process for that. We have our information technology service management system. This would be implementing a world-class work order management system for IT following a lot of the industry best practices such as ITIL, the Information Technology Infrastructure Library, which is a best practice known for many IT organizations. Our last listed is our electronic signature application which is the operationalization of our docu-sign implementation and making that available to other departments. With that, I'd like to open it up for any questions that you might have. Chair Schmid: Thank you very much. Council Member Kniss wants to kickoff. Council Member Kniss: I'm not sure where to fit this in. We have talked a number of times about a presentation that I saw in Austin last December, where any number of apps that were credited to the City Palo Alto were shown. Many of which we don't use. Some of which we do. Are you going to talk about that at all in your presentation? I thought that was not only interesting but very applicable. Mr. Reichental: I wasn't planning to talk about it today. We do have over 50 applications and apps for City use. Since you mentioned it at the Council meeting where I presented the update, we have that update lined up for later in the year as a specific item. That and the open data work, you wanted us to give you an update on that. Page 20 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Kniss: If I wanted to find out about those, where would I go? Mr. Reichental: There's one link on the homepage of the City website, called eServices. Click on that and everything is listed in one list. Council Member Kniss: Who might be using them and so forth? Mr. Reichental: Many of the applications are specific to departments. For example, we have a lot of apps related to the library as Monique talked about. I would often ask her, if necessary, how many people use this application, how many have downloaded it. I would defer to the specific departments on usage of specific apps. Council Member Kniss: I don't want you to go into it now, but an awareness of what you're doing and how many other cities have adopted that and are currently using it and how highly you were spoken of in Austin. We were not surprised, but we were pleased. Chair Schmid: City Manager. Mr. Keene: I know it's sometimes hard for Council Members to travel because the local media or the community sometimes raises their eyebrows about it. It's good to get out of town, because you get to see clearly our City. The old saying, no one's a prophet in their hometown. If you get out of town, you find out an amazing array of things that are being done just in the whole emergent smart city movement around the world, which is again about how to use more technology and embed sensors and all sorts of things in delivering services. We are regarded as a leading city in this regard by cities like Barcelona, Spain. I would just say a couple of things about this. One, we have a philosophy and orientation that says that we ought to do our best as a city government and an organization to reflect the innovative culture that we have here, to be relevant. Because of that openness, we have a lot of folks who have been willing to partner with us. We've been able to prototype a lot of these things like the Open Gov application that's now being used all around the country. They were collecting statewide data trying to have some impact on things. We met them and we said, "Why are you wasting your time at the state level? It's so high level, it's not going to be that useful. It's not the sort of thing that people are going to be able to use and influence their government. You need to work with cities. As a matter of fact, we're right here. Why don't we do it?" We've been able to free source a lot of different applications. Now we have a reputation as a place for doing that sort of thing. It's a tribute to the culture and our receptivity. I'll mention this at the Council meeting. After the apps challenge we did last year, Jonathan came to me and said, "I'd like to self- Page 21 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES publish a little book on how to do an apps challenge." We'll give it to the Council. It's available to the world. My understanding is Mountain View has just launched their own apps challenge drawing upon the book and the work that we did. Council Member Scharff: Did we license it? Will it make some fees? Mr. Keene: I know. Chair Schmid: Any further Council Members? Council Member Filseth: I have a couple of questions I'd like to ask of the esteemed team here. Chair Schmid: Yes. Council Member Filseth: Looking at the staffing chart, I noticed that it looks like we're going to go down what looks like three Management Analysts. There's a Management Analyst, a Principal Management Analyst, and we're going to drop one Senior Management Analyst. Did I read that right? That's three people? I'm on page 275. What happens to those people? Are they still there? Are they going someplace else? Are they retired? Ms. Bolger: That's a great question. You'll see there's a number of ins and outs actually. Some are being reclassified. I don't know if maybe Lalo wants to point out some of these as well. Some of them are actually in Administrative Services and being reclassified. They're landing in IT; however, where you see a Senior Management Analyst, you'll see an offset that is a Principal ... Council Member Filseth: Looks like Business Analyst. Ms. Bolger: Right. Council Member Filseth: Given the last conversation, I've got to ask that. What's the comparison between the pay range for a Management Analyst versus a Business Analyst? Mr. Rossmann: Before we do this, I do want to mention that these changes were approved by the Council as part of the Management Compensation Plan. There were some reclassifications in there, and that's how they're reflected in the Budget. You understand the mechanism of how it was brought in here, and we can tell you the difference in a second. Council Member Filseth: Actually these aren't SEIU, right? They're management positions, so the dynamics are different. I understand. What I Page 22 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES really want to do is ask my second question. You understand where I'm going on that, right? What I want to do is ask my second question. The Capital Improvement Program, looks like there's an increase of about $4 2/3 million or something like that. Can you give a little color on what that is? I know some of it looked like it was from the county radio system and there was some other stuff. What is that? Mr. Rossmann: Let me first speak to you about the mechanism. When we had the kickoff with the Finance Committee last week, I talked about the change in the reappropriation process. That had a huge impact for some funds, especially for IT. That's the major reason why the IT Budget on the capital side went up this much. It's really old funds we haven't expended, and we're now showing them in the Budget. For details of those projects, you have to turn to Lisa. Council Member Filseth: The top three things that that's for. Ms. Bolger: One thing to keep in mind is that because we are an internal service fund, we do have departments' capital projects that are technology- related residing within. One of the big ones you'll see is the radio infrastructure, roughly $2 million. Council Member Filseth: It looked like about $2 million this year. Is that right? Ms. Bolger: That's right, that's right. The other is we have our telephone improvement and infrastructure upgrade, another one of the big ones. I would say the top third one is our disaster recovery and business continuity. Those are the three top CIPs we have. Again, they've been in the Budget for years. Council Member Filseth: That probably accounts for out of the $4.6 million, there's probably 3, 3 1/4, something like that. Ms. Bolger: That's right. Especially considering the radio is over $2 million. Council Member Filseth: Thanks very much. Mr. Rossmann: If you're interested in more detail, if you'll look at the Capital Budget document, we have on page 624 a summary of all the dollars in the projects. If you're interested. Chair Schmid: Council Member Kniss, do you have questions? Council Member Kniss: Let me try one that's quite different. We were just talking about Mountain View and they're going to do an apps challenge and Page 23 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES so forth. If we look at other cities that are similar, I think of Mountain View as pretty similar, maybe even Sunnyvale even though it's much bigger but a similar kind of operation. I realize we're front and center, so we'll say of course we're Number 1. As we look at what they're spending on their IT, on the different areas that they offer, how do we differ? Are we pretty competitive? One of the other things I know you must be concerned about is we live in a valley where people are poaching IT people all the time. You must be looking at that as well. When I run into some of your guys, they're frequently ones that I worked with at (inaudible). It's interesting that here they are again. Just tell us how you deal with this. It's different than asking you a dollars and cents question. It really is saying this is about management. How do we manage in a valley that is so connected to begin with and such a technology-based area to live in? Mr. Reichental: A couple of thoughts come to mind as I think about that question. One is we're the only city that has full utilities, as you well know. That accounts for a huge part of what we do, both the funds that are available to us to do the IT work and then the complexity of the systems that Utilities works with. None of our peer cities in the neighborhood have anything close to that. That impacts everything. The other part is ... Council Member Kniss: Including Santa Clara? Mr. Reichental: Yeah. I'm out there; I network considerably both with my private sector colleagues and my public sector colleagues. I don't see IT teams in local government of our size comparable to ours in terms of our ambition, the volume of work, the performance we have. The fact that we have now a close to fully certified project management team, this is world- class certification, doing projects not just back office which is stuff you never see, but working with Public Safety and Utilities and ASD and others. We're very hands on across the board. When I think of my peer group cities, that isn't the case. Their departments, many of them are still below the Administrative Services group. We now report directly to the City Manager. That makes a difference. Many of the departments are not visible in terms of producing anything that's visible to the community. I find myself, and I have great respect for my peers, an outlier in terms of what we do and how we're doing it. In many ways that was a responsibility that we had when I came in as the CIO to the City of Palo Alto and our place as the birthplace and heart of Silicon Valley. I don't think I would have done this work anywhere else, and I did it because of that. When Jim and I started to talk about what we were going to do, we wanted to realize that potential. It does leave a lot of our comparable cities behind us. They're not doing anywhere near the volume and quality and outreach that we're doing and Page 24 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES having the impact we're having. I can get into more specifics, but that's how I would summarize the response. Council Member Kniss: I really appreciate that. I'm not sure that we totally understand what you're doing and how recognized it is and admired it is. I was there when you did get the award for the Number 1 city. it makes a big difference in our City as to how we are seen out there by other cities. Perhaps, sometimes we're too attractive as a place to come and start your business or continue your business or whatever that may be. I know what you've done here, and it's been rather remarkable. Sometimes it's hard for you to say out loud what we can say in a less modest way. Mr. Reichental: If it's not too much, I did want to add, because I get the point of what you're asking. When I look at other cities and I look at other IT teams, they come to work and they do good work. They come to manage servers and applications. When I address my team and talk to my team, I ask, "How are we going to change the world? We have this platform of the heart of Silicon Valley. How can we reinvent how we deliver government?" I think the mission here is much bigger, and it's a choice we make. We ask that question. I don't like the idea of just coming to work and doing a job. This has to be something much bigger than the tasks we do. It's the real big global impact we can have. Council Member Kniss: What you've done has reflected that. Mr. Reichental: Thank you. Chair Schmid: Let me ask a question as just a practical economist. We're up here going through the Budget. The Budget is asking for a net gain of 13 new positions. We've been told that each permanent position, when they make a contribution to the benefit package, 69 percent goes to retirees, people who aren't even here. A new hire has long-term impacts on us. Tonight we have four departments coming, looking at their Budgets. One of them had a salary and benefit increase of 11.6 percent. Another has 16.2 percent. Another has 14.7 percent. Another has 12.4 percent increase in salaries and benefits. Just this year, not a long-term tail on it. We know our long-term revenue growth is between 3 1/2 and 4 percent per year in our ten-year financial forecast. IT Department, one of the anticipations we have for the IT Department is a focus on productivity. We're going to enhance the productivity of workers throughout the City. I know in the private sector, IT has a big impact on support services, on networking, on consultant contracts, on things like this. I notice in your description of goals, targets and initiatives, you don't mention efficiencies, productivities. One of the things you should be taking credit for is "We saved five positions Page 25 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES here or three positions here." Is that part of your role? Do you see that as part of the role of the IT Department? Mr. Keene: It's safe to say that it wouldn't explicitly devolve to Jonathan. I would hope that what we're working towards is certainly the culture of the leadership team, but as far as we can expand that across the organization, that everybody sees that as what the goal is and part of our job. Sometimes it gets a little more complicated than that, because in some ways it's almost easier to measure how do you contain costs or how do you reduce positions or something like that and is there a degradation of the service that we're doing. In the environment we're in today, though, it's more that we are heightening responsiveness or expanding what it is we do. As with so many productivity improvements, suddenly the ceiling becomes the floor again as it relates to expectations. A perfect example is using the Palo Alto 311 app for identifying and reporting problems around the City. I'm a fairly prolific user of it. It's a pretty simple way for me to send in graffiti reports and all the sort of stuff. It takes about 30 seconds to get the picture, do the things, and bam, bam, bam, I get the responses all along the way until it's ultimately done. I can tell you it's been done in three days or whatever it was. It wasn't that long ago that two things would happen. Somebody would say, "Forget it. I'm not even going to report it. It's too much of a hassle," because of how you do it or the process you have to use to do it is cumbersome and takes a whole lot of time. We're an organization that's mostly focused on being responsive. We don't have a lot of time to sit and organize really well and report the improvements we're making . That's something that we're having some conversations about, how we push this. It's a perfect example. Now the idea that somebody can get a graffiti thing fixed in a faster turnaround than ever, that's the new norm. What's the value of that? How do we calculate the fact that we're bringing improvements? We look at the cost side of things, but also the output or the outcome side. We're trying to work on ways to be able to express the value proposition better to the Council and the community. Chair Schmid: I'm thinking of a series of things over the course of a year where we strategically need an answer to a problem, a traffic issue, a parking issue, a building issue or something like that. We end up saying, "We'll get a consultant to come in and count the traffic, look at the traffic volumes and that'll take six months." The issue is postponed while we go out and gather data. The question is are there things we could be doing at home where some essential data patterns can be identified and helped through the IT Department. Mr. Reichental: It's notable when we go out and get a consultant, but we don't note when we do it internally. We're doing a lot internally now. We're Page 26 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES just doing this systematically. I think about the Business Registry program that just went live, largely done internal, a really net partnership between IT, Development Services, the City Manager's Office and others, really drove it in a very quick way and a high quality solution. Now we're gathering the data, and we'll have all that useful data to make decisions. That was hard to do before, really hard to do before. We might have gotten an external firm to help us with that and design it and even design the RFP. Now we do that more often internally than we do it externally. This is the point you've told me before: we don't talk enough about that. Perhaps we need a way to capture that. Chair Schmid: On the practical side, when you come up with practical solutions to those things, answering strategic questions. That's very important. Those are the types of things that you would do well to tout. Chair Reichental: Thank you. Yes. Chair Schmid: Council Member Scharff. Council Member Scharff: When we had the Fire and Police Department come in, they wanted to add—what do you call it? You probably know. What did they want to add? Mr. Rossmann: A Senior Technologist. Council Member Scharff: A Senior Technologist. One of the questions that came up is should the Senior Technologist be in your shop or in their shop. What's your thoughts? Mr. Reichental: I don't know that I've thought about it deeply enough. If you ask me for a response now, I would talk about some of the advantages and disadvantages. If you're an IT professional and you work in the IT Department today, we have a real deep focus on training. We have career progression. We have lots of goals that we set and people have to meet. We have data collection expectations. You are an IT professional who can absolutely put your head up high outside of the conference and say, "I work for a world-class IT organization in local government." That's what I've built and what I support. If this individual was to work in IT and deliver exclusively to Public Safety, I would ensure that they had all the tools and training to do the best job as an IT professional. Council Member Scharff: We're going to wrap-up the Budget process fairly quickly. We put it in the parking lot at the suggestion of the City Manager at the last meeting. Maybe you could talk with both Chiefs, look at their concerns, and maybe be prepared to address them and give us some Page 27 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES thoughts as to where we should go on this. Right now I'm right on the fence of where that goes, what we think about it. I'd like some real input and some discussion when we come back, especially when we do the wrap-up on this. I just wanted to have that sense. I could see it, and both Chiefs had some specific concerns. I didn't think they were insurmountable, but I wanted your take on it frankly. What I've noticed is that—and I think we're doing it in this Budget. It was a little unclear how many people you're actually adding. I think you're adding 2 FTEs, right? No. Mr. Reichental: It's not adding anything. Council Member Scharff: You're getting 2 FTEs in your Budget, right? No? Mr. Reichental: Yes. Council Member Scharff: That's what it says under Budget Summary Change, 2 F ... Ms. Bolger: I can speak to that. One thing that we tried to address this year was putting people into the Budget and reconciling where positions were landing. From a head count perspective, we are not changing at all. These positions were previously budgeted in different departments. For example, we had a Business Analyst that was actually budgeted in Utilities, because that was the work that they were doing. That work has transitioned and transformed into something Citywide. Therefore, we've brought that into our Budget, and we're trying to do a good job of reconciling what our actual FTEs and Budget is for salaries and positions. No head count has been added. We're maintaining services (crosstalk). Council Member Scharff: I heard you say that earlier, but that's not what these documents said. That's a really great clarification. That's what I'm seeing. It seemed to me they were pulling all the IT functions into your department out of everywhere else. I don't know. That's how it feels. Is that not true? Mr. Reichental: The payment for them. The humans aren't changing anywhere. Council Member Scharff: Who do they report to? They report to you? Mr. Reichental: They're reporting to my organization today. Where they're paid for is somewhere else. Page 28 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: I got it. Do we have IT functions who don't report to you? Do we have IT people in the organization at this point who don't report to you? Mr. Reichental: We do, yes. You'll hear me say this very often in public, in conferences and things. Everybody's a technologist today. Everybody's in technology at some level, because of the nature of the work everyone does. We do have the Technologist and the Senior Technologist role in departments. Notably, I think Utilities would be an area, because of the nature it's high tech, high touch. There is a number of technology people in Public Safety today. They have that set of responsibilities. Council Member Scharff: The other thing I wanted to understand was your survey. In 2014 94 percent of the people were happy in the City with the IT. When it went to 90 and before it was 87, now it's basically 90. How's the survey done? I'm going to test this. One day I'm going to walk around City Hall, and I'm going to ask 20 people, "Are you happy?" I'll see if it matches this. I'm a little curious as to how the survey is done and what it looks like. Mr. Reichental: We use industry standard. Every time you engage with the IT Department for a service event, whether it's you can't print or your computer doesn't boot up or something, we create a work order for that. When we close that work order, on a randomized basis you get surveyed. We don't do it every time, because it would drive people crazy, and it does. I don't know what the percentage is, but some small percentage of the 10,000 tickets we do per year, people get a survey. In every organization, they're slightly biased towards positive, because you have to work with these people every day. You can understand that. I will say this though, this is a field that I've played in for about 25 years. Where the IT organization is not performing, the numbers are low. It doesn't really lie. We do have people who didn't like our service for one reason or another and wouldn't complete the survey. It's just another type of behavior. We have to factor that in. Surveys are complex. Council Member Scharff: I know that. That's why I'm asking. Mr. Reichental: I think we're smart about it. Obviously, you don't get the opportunity to elaborate on 90 or 94 percent. Anything at that level is very positive. Council Member Scharff: I thought it was so positive I was having trouble believing it. That was really the issue. Most people complain about something. Having 90 or 94 percent is fantastic. I was a little like, "Okay, how'd you do your survey?" Page 29 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Mr. Reichental: Can I add two extra points to this, because it's a good observation, an important one. One is when people are upset, they often come directly to Lisa or myself. We have those conversations and try to fix things. They never get captured. One interesting thing about the data, as there's any shift in the team, new leadership, we created a new department in 2011, 2012 that number actually did drop because we had a lot of chaos. We were creating something from nothing and a lot of change. Even though it didn't drop radically, it was points enough that we took notice. When the major changes were finished, we stabilized. The numbers went up again. It is quite sensitive. Council Member Scharff: Let's see if there's anything else I wanted to ask you guys. Chair Schmid: Any further questions? Council Member Scharff: Yeah, just briefly. On the capital improvements, these seem to me to be ones coming up from other departments, not from you guys. I assume that's correct. Ms. Bolger: That's correct. We have about four that are IT-centric. Council Member Scharff: What are those? Ms. Bolger: That's the telephone system replacement, IT disaster recovery plan, interactive voice response is a combo between us and Utilities. That is about it. Council Member Scharff: When we came in, Jonathan, you showed me this room filled with our servers. It looked like there hadn't been much IT work in Palo Alto in terms of moving us into the 21st century. Along the continuum of your vision, where are we? 50 percent complete, 30 percent complete? Where are we in this trajectory? If we gave you more money, would it be quicker? Where are we on your vision and what can we do to help? Mr. Reichental: Thanks for the opportunity to answer some of these important questions. Maybe Walter would answer this. Some of the IT costs have been hidden, because they are showing up in operations. Where we're installing, for example, state of the art security systems, some of those rack units we're spending out of a different place that you don't see here. That was a change that was made not so long ago. In my updates on a periodic basis, I just need to tell you about those, because they don't show up here as a callout as a capital item. In fact, as we approach June of 2015, we're at the end of the three-year IT strategy that I proposed to the City. We do, as Page 30 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES you'll recall from the Council update I gave, have our percentages of completion and where we are with each of those. In most areas, we're on target to finish. In many areas we exceeded. There's just one or two areas where we have a little more work to do. I would maybe defer to the City Manager to appraise it, but I'm very pleased. It's quite remarkable what we've done as a City and a small City. The other part of the question is if you gave me more people or more Staff, could we do more. There actually is a finite amount of stuff you can do, because we're so interdependent with each other. If my colleagues who I need to work with are 100 percent fully utilized on something else, it doesn't matter how fast my team works. We have to wait for them. There have been times in the last year where our performance is going along at a nice clip, and we actually have to wait for our colleagues because of their other important priorities. There's only so much you can squeeze out of this thing to get additional velocity. There are a few things we're going to do that'll go live at the beginning of FY '16 which are game changers. One of them is our cloud-based office productivity. Lisa talked about Office 365. That really changes the set of tools and capabilities available to all City Staff and Council Members around email, instant messaging, a collaboration platform. We're upgrading SharePoint which will be part of that. There's a whole set of things that are cloud-based. You'll see our data center is getting smaller; we're getting rid of hardware and power consumption. We finally are in a great place to deliver, because we've been playing some catch-up for the last few years. That's what I'd like to say. Council Member Kniss: You'll be totally cloud-based, not quite? Mr. Reichental: We won't be. There are definitely systems, particularly in the Public Safety area, that we will keep onsite. It'll be a high percentage, and we have some pretty ambitious goals around it. There still continues to be a business case for certain items to be here in this building. Small. Mr. Keene: I just wanted to call out one little project. The City Council Chambers recording system, just so we're clear, if you were to look beneath the covers of the system that we have here, this old analog system, it's actually such a rat's nest of old wires and technology, it has a nickname around here called Jurassic Park. There's a lot of reliability issues, interconnectivity issues with the other technology we're deploying, and the fact that we have really poor quality media. All of this is designed to move it to digital, ultimately high definition, formats to improve the experience for people in the community who are not able to come to the meetings. Chair Schmid: Thank you. Is there a motion? Page 31 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Kniss: Do you have questions, Eric? Council Member Filseth: I have a rumination that is going to be really short, because it is just a rumination. We're talking about staffing levels and so forth. We're saying, "This appears to be going up, but it's not really going up because it really was over there and it's coming down from over there." I'm having trouble trying to figure it out. We look at the other one and we say, "Those guys are losing people." Actually they're not. It'll take me a little while to grok all that together. We try to understand this stuff. The same may be true for capital projects as well. We've got a capital project here, but it's really over there. That's a challenge. MOTION: Council Member Kniss moved, seconded by Chair Schmid to recommend tentatively the City Council approve the IT Department Budget. Chair Schmid: Do you want to comment? Council Member Kniss: No. I've made lots of comments. As I've always said, I'm always so proud of our operation here when I go somewhere else. Chair Schmid: If there are no other comments? Lalo Perez, Administrative Services Department and Chief Financial Officer: Reflecting back on a comment that Council Member Filseth made, we will provide a table with all the changes, so you'll have a summary by the next meeting. MOTION PASSED: 4-0 3. Development Services, Operating Budget pp. 230-246. Walter Rossmann, Office of Management and Budget Director: I'd like to introduce Peter Pirnejad, he's our Development Services Director. He's going to make the next short presentation. James Keene, City Manager: May I say something just before Peter speaks? Especially for the newer Council Members, you might have certainly read about this or heard from citizens ... Council Member Kniss: I'm sorry I missed what you were saying. I'm trying to find my page. Mr. Keene: I was just saying that before 2012 or so, if we go back about four years ago, the Development Services Department was probably the poster child for the City as far as bureaucratic, inwardly focused ... Page 32 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Kniss: (inaudible). Mr. Keene: Yes. Between folks saying you don't want to do business there because it takes forever. Literally homeowners were reported crying at the Development Center counter. We literally called a press conference and said we were going to turn this around. I'll let Peter talk about the progress since then. Thanks. Peter Pirnejad, Development Services Director: Thanks, Jim. We're happy to be here. Good evening. I'd also like to welcome our Senior Management Analyst in Development Services, Jessie Deschamps, who will be joining me and doing the presentation as a backup. We have so much good news to share with you tonight; we don't know where to start. Development Services, as you know, is a combination, a collaboration among departments. You can see it as a combination of full-time employees that serve directly under my leadership. You have FTEs assigned to us from other departments. Then you have contract Staff which we have employed to act as resiliency in the event there's any policy changes or market changes that would give us the ability to quickly adjust and adapt to the environment. Meanwhile, we continue to set tight controls. Over this last year, if you remember, we've branched off to become our own department. In this year, we've been developing tight budgetary controls, contract oversight ensuring that our Budget is consistent with our revenues and expenditures. We've been instituting a lot of checks and balances to make sure that we have the right combination of FTEs and contract Staff and that we're able to basically institute an entrepreneurial form of government that is cost recoverable, which is harder than running a business because we can't run a profit. We have to be right on the bull's eye all the time, and that's what we intend to do and that's what we've brought before you today. We've made some minor tweaks to the Budget that we brought before you last year. In light with what Jonathan mentioned, it's really a shifting of positions which we'll get into. We are continuing to set the bar in a variety of ways. If I can take us to the accomplishment page. I won't spend too much time getting into every one of the awards, but let me just highlight some of them. The first is something that we're very proud of. That's the ISO Class 1 Building Code Classification that we recently got that we presented to the Council some weeks ago. That is a benchmark among 18,000 other cities, jurisdictions throughout the nation, which puts us in the top .04 percent of the nation. That's a measure of our ability to enforce the Building Codes. This award speaks to two things. First, it speaks to the assurance that your Development Services Department is running a top- notch department with qualified Staff that are given the right number of inspections to do per day. They're all trained and held to a very high caliber. We institute training models and outreach models that are consistent with Page 33 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES how the ISO, the Insurance Service Organization, determines to be the industry standard in terms of measuring the ability of a building department to do good, quality work. The second part of that is this has a direct effect on insurance rates that people in Palo Alto pay; that's residential, commercial, mixed use, office buildings. They use this rating to set their actuarial tables. As a result, they receive a benefit; they receive a savings in their insurance premiums. Secondly, we're also setting the bar in the vein of leading digital city. We were recently approached by Governing Institute to do a whitepaper on the work that we've done over these last few years. We've instituted, as you may know, a lot of technology advancements. We're highlighted as a model city in the area of online permitting, digital plan review. We partner regularly with startups that can progress and move forward our agenda to provide quality service to our applicants in a timely way. As a result, we were recently published, and there was a great deal of mention of Palo Alto and the work that we've done in Development Services. The title of the whitepaper is Making Your Community Thrive: How Innovative Ideas and Technologies Drive Dynamic Cities and Counties. This highlighted some of the work that we've done here. It was a great celebration that wasn't driven by us. We were approached by the Governing Institute Magazine. Finally, we continue to press hard, thanks to the Council direction, on our green building and energy efficiency initiatives. We recently brought to the Council and were awarded a 9-0 vote of approval for our Green Building and Energy Efficiency Ordinance. That will take effect 30 days after the second reading. We're already getting attention from San Francisco, Oakland, Berkeley. They're calling us, asking us what we're doing and how we're doing it. Our business model is getting a lot of attention. I recently presented to the League of California Cities and have been invited back to their Mayor and Council Members Forum, which I'm sure you might attend in Monterey. You'll be hearing me speak about our collaborative model and how we drive performance through metrics. That has driven a lot of attention and achieved a lot of attention from other cities throughout California, asking us how we established the department and what our best management practices are. The work is getting recognized throughout the state. We're happy to represent Palo Alto in that way. The fiscal Year 2016 initiatives. If I may just highlight some of the things that we're focused on this year. They have everything to do with Council Priorities and this new ISO award. With great award comes great responsibility. With an ISO Class 1 rating, we have to maintain that status of a leading building department. The first is an inventory of the building draft policy to expedite the seismic retrofit. If you remember, we were asked to do a soft-story study identifying our seismic vulnerability. We are in the process of doing that. That is one of our 2016 priorities. We're also integrating our use and occupancy permit process in line with the BRC. As you know, we worked collaboratively with a firm that created a very lean, sleek, online, easy-to- Page 34 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES use Business Registry Certification process. We're continuing to fine tune that as we find errors. The next step in 2016 is Phase 2 which is to try to create a partnership between that and our use and occupancy permit. Another one that I'll highlight is tohe create a checklist for business, commercial plan reviews in compliance with the ISO rating. We developed standards that we can make sure that there is a level of continuity and consistency and predictability when you come to the Development Services Department for a plan review, a permit and inspection. That's a big part of what we've been focusing on this year, and what I'll be presenting before you tonight. Develop and implement electronic plan reviews is another area. This is in compliance with AB 2188. The PV industry has been very adamant and getting a lot of state attention on streamlining the PV permit process. Some of you may remember two years ago, that was one of my first initiatives. We took the average wait time to get a PV permit from 120 days to over-the-counter. That required a lot of technology and process improvements and lean government strategies. We were able to make some significant improvements in that area as well as in the electric vehicle charging permitting process. We're very proud of those accomplishments, but we're taking it a step further. We're automating the entire process from the plan check submittal, the plan review and the inspection. We're setting the model in that area. We were approached by the state leaders that were forwarding this bill to see if we would partner with them to reach out to other cities to educate them. We've created a model ordinance that's online and available for download. The creation of the expired permit notification process is something that came from the Council's direction. We're hard at work in trying to deliver that over the next year as well. The significant Budget proposals. Going from top to bottom, we're asking for some two positions. There's a back story to these positions. The first is the FTE for the Assistant Chief Building Official. The Assistant Chief Building Official fills two key functions for us. ISO mandates that we have a PE, a professional engineer, on Staff, and that PE maintains a certain level of quality control and assurance to make sure that all of our reviews are held to a high standard. It also requires that we have a certain level of continuity in our plan check unit. Right now that entire unit is contracted, so we have the ultimate flexibility to scale it at a whim. What we're losing and where we're vulnerable is that level of continuity. If we really scale down our plan check unit, we need one person to maintain continuity and some institutional knowledge from market ebb and flow so we can work through the economic and political ups and downs. Next is the Planning Manager position. The net impact that we're asking for is a $37,000 increase to our Operating Budget. We share positions with various departments. This one position, a Planning Manager position, was accounted for. We paid for 80 percent of this position in Development Services. We've recently given that position back to Planning, and now we're asking for a full-time position. Really the next Page 35 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES impact is that 20 percent or $37,787. The Green Building Planning Coordinator, the second bullet point, is a compromise. We took a full-time position and we eliminated it and created a half-time contractor, because we could get so much more from a half-time contractor because of the networks and the knowledge and the experience that person had. We couldn't get that level of service from a full-time employee. We made a judgment call there, and we've been able to deliver quality green building ordinances and energy codes because of that person. The Development Services space rental modifications at $123,000. We have some workers' comp issues that we're working through. A lot of it has to do with some of our Staff on the second floor being confined to very tight working areas. We're trying to give them a little bit more space so they can do plan reviews and other things when they need to spread out. It's really a response to that. The next is the training and certification for community outreach. That line item again is to respond to ISO has a certain percentage of your Budget that they would like to see you spend on community outreach, training, education of your Staff, of the community. We have a lot programs that are in-flight today that we want to continue. The green building cost effectiveness study. In the last couple of weeks, we brought an Energy Efficiency Ordinance. That was made possible because of the cost effectiveness study. Our new Code cycle is coming online in June, a year from this June. We need to basically enter into a contract and pay for another cost effectiveness study to raise our Energy Code yet again in response to the new state standards. The final one is a fee study. In light of trying to move into an enterprise fund and make sure that our fees and expenditures are matched, we're doing a comprehensive fee study that we hope to embark on this next fiscal year. Just to highlight in the next slide the staffing adjustments. As I mentioned, we have contract Staff; we have Staff that reports directly to me; and then we have Staff that's shared. Over the last year as we prepare to move into an enterprise fund or something similar to that, we've been shifting the pieces around to make sure that we are accounting for the full cost of Development Services. In doing that, we basically shifted bodies back into other departments. The net increase or decrease in this case is .27 positions. We're actually seeing a decrease in our department staffing model by .27. Now because of the Staff addition of the Assistant Chief Building Official, the net increase in Staff costs is $30,000. Basically for $30,000 we're adding the Planning Manager and Assistant Chief Building Official; two new bodies to the department because of some of these changes. Again, the purpose of this effort is to make sure that we have the right combination of full-time employees to contract Staff. We've been studying this vigorously over the last two years, and we want to make sure we have the minimum number of full-time employees to minimize the long- term financial impacts through retirement and pension and healthcare costs to the City, but make sure that we also have enough to maintain that Page 36 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES continuity and institutional knowledge as we shift from contractors to new contractors. The next slide gives you a sense of that. In the light green is our contract Staff in our inspection unit. That's our largest unit. The dark green is our full-time employees. Even if we were to see a 50 percent reduction in the number of permits that end up in inspections, we would still be able to absorb that through the shedding of contractors and not have an impact to the City's workforce. This speaks to trying to make sure that we have the minimum number of employees to maintain that continuity. I feel a question coming on. Chair Schmid: Yeah. Council Member Kniss: Peter, does this mean—in fact it was one of my questions. I wondered how many permits we actually gave out. These are inspections? Mr. Pirnejad: Correct. Council Member Kniss: How does inspection contract with permits? Mr. Pirnejad: That's a great question. Council Member Kniss: When you have something done, somebody is going to come in and inspect any number of times while it's underway. You have a very high one in 2013 in October of 3,100. About how many permits do you give out and then how does that, as I said, relate to your inspection count? Mr. Pirnejad: That's a great question and that's a real testament to the model that we've instituted. We issue about 4,500 permits. Now every permit is created different. They require a different number of inspections. Some permits require one inspection. Council Member Kniss: How many? Mr. Pirnejad: 4,500 permits per year approximately. Council Member Kniss: Thank you. My light wasn't on. 4,500 seems like a lot. Mr. Pirnejad: Yeah. The difference between us and other cities, if we were to benchmark, is about comparable. We're a little bit higher than most cities because there's so much development activity. The complexity of the development that we realize in Palo Alto is in orders of magnitude more complex. Case in point is the tentative improvement that we saw on University and again at Stanford. The tentative improvements cost $6 million. You don't see glass buildings being built all over Mountain View or Page 37 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Menlo Park. The level of inspections necessary to make sure that they comply with the highest standard of seismic and other requirements requires more inspections. We've seen an increase year-over-year of about 6 percent on the amount of inspections necessary. Also, to make sure that we're providing as much assistance to the community as possible, we provide partial inspections. People won't be ready for a full inspection. They'll call our inspectors out. We'll happily go out and do a partial inspection so we can make sure that they're meeting their standards of progress. Council Member Kniss: You have contractors versus full-time which might make you ask, "Isn't it better to have full-time who are fully familiar with our rules and so forth versus contract?" You hire them when you need them, I presume. Right? Mr. Pirnejad: It's a little bit more planned out than ... Council Member Kniss: Is it more complicated than that? Mr. Pirnejad: It's not more complicated. You hit a great point. A lot of cities have all full-time employees. The problem is they have long-term costs. You're paying for pensions that are going to continue until they stop drawing from that. Also healthcare costs. There's a lot of overhead that you have to account for in a full-time employee. With contractors, the benefit is you can hire the most qualified, competent, skilled, trained, experienced contractor to work for us; use them for the job that you need at the time you need it; and then shed them when you don't need them. Council Member Kniss: Which seems totally desirable except I'm surprised that they're waiting to be hired and haven't gone elsewhere for a full-time job. Mr. Pirnejad: We have six contracts in place with various firms that we are able to ask at any time, "Do you have a qualified contractor that meets these specifications?" By and large we're able to get the need met, because we've established great working relationships with all these contractors. We literally draw the best to Palo Alto because of the level of complexity. We have inspectors flying in from Utah to work here just to put it on their resumes and to get the kind of experience that you can only get here in Palo Alto. It's not hard to find ... Council Member Kniss: It's impressive. Mr. Pirnejad: ... qualified Staff. Our building department has also spent a lot of time developing books, guidelines, website downloads and other Page 38 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES information that we provide to all of our contractors to make sure that they know what the minimum level of service and quality that we look for. That was part of the reason why we received the ISO 1 rating; we spent a lot of time building that infrastructure. Council Member Kniss: Do you receive most of the applications that you get on paper or do they come in on CAD? Mr. Pirnejad: Most of the applications we get are on paper. We're making the shift to CAD. As part of the initiative you'll see, in 2016 we're going to create an online plan check for the PV and for the electric vehicle charging. We're starting small, and then we want more departments to partner with us as we grow that. We've also launched 8 out of the 20 permits. Over the last two years, we've turned them into online permits. Roofers no longer come to the Development Center; they get their permit online; they schedule their inspections online. They love it. We're trying to expand that. Of the 8, we are trying to move to maybe 10 permits this year that we can offer online. Council Member Kniss: Good. Thank you. Mr. Pirnejad: You're very welcome. Chair Schmid: Council Member Scharff. Council Member Scharff: (inaudible). Mr. Pirnejad. No. That pretty much covers it. I'm happy to answer more questions. Council Member Scharff: Since I ran for Council, we've seen incredible improvements in the Development Center. Good job. It seems to be going well. I like the idea of more permits online. That's great. The one thing I hear in the community; I think it's just an informational issue. If you look on page 236, it's the number of days between permit issuance and temporary occupancy or final inspection. There's a lot of small businesses that are just not necessarily educated enough in the process. They lease their space, and they think they're going to be up and running in 60 days or less. Literally, six months later, they still don't have their final inspection. They're tearing their hair out and that kind of stuff. This is the average, I assume, 135 days is the proposed? Mr. Pirnejad: Correct. Page 39 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: Do we tell people when they first come in and say, "This project you have is going to take 135 days"? Do we get that for people or not? Mr. Pirnejad: In the various stages of the development review, you start with the plan check. In that process, we tell people we guarantee that we'll get you your first submittal, your comments back in 30 days, if they submit a plan. A lot of the tenant improvements that come to the Development Center, over 50 percent now as compared to single digits just three, four years ago can get a permit over the counter when in the past they had to submit. We've tightened that timeframe down to one day. If they do have to submit a set of plans, because we can't get all the different departments to buy off and approve those plans for permit issuance, we guarantee 30 days. 80 percent of the time currently we're on time. We're striving for 90 percent this year. That's an average of all the different departments, Public Works, Utilities, Fire, Building, Planning getting their comments to us on time. We're working to improve that. After you get the permit, the next stage of the process is the inspection process. That's a real reliance that the contractor is organized, is moving efficiently. What we've done to streamline that process is over this last we've never postponed an inspection more than a day. If they call by 3:00, we haven't turned anybody down this year yet on a next-day inspection. Two years ago during the peak period of the year, we sometimes had a three to six-day wait, because we had so many inspection requests. We've done everything we can to try to meet them halfway and get them the inspectors or the plan check comments as we can. We've also implemented a lot of technology enhancements that shorten that exchange of information. The second that the plan checker plan reviews, those comments are electronically emailed to the architect so they can start working on their revision. As soon as the inspector inspects his job, an email is transferred, because they do it on their mobile device. It gets emailed to whoever registered to be notified. What we're trying to do is improve where we can, where we have control. The areas that we don't have control is how quickly are they ready for that next inspection or how quickly do they respond to our comments. Chair Schmid: Council Member Filseth. Council Member Filseth: Just two questions. Of the work you folks do, what's the split between residential and commercial? Is it 50/50 or 10/90? What do you think? Mr. Pirnejad: Over 50 percent of our work is residential. Page 40 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Filseth: On PV, because it's topical this month, if I come and say, "I've got this parking garage, and I want to put PV on it," how long does it take from the time I show up to the time I get a permit? What's the difference between an application that goes really fast and one that drags out and out and out? Mr. Pirnejad: Take the easy one, a residential homeowner that wants to put a 3, 5 kilowatt system on their roof. We can have that issued the same day. We'll have everybody that needs to review that plan and that permit at the front counter ready to provide their corrections and approve the plan and issue the permit. If it's a complicated, large program, then we start with a partnership. We have two examples, one on HP and one on the Jewish Community Center. As soon as they approached us, it was Cobalt and Solar City who said, "We're going to put in a 1 Megawatt and we need your partnership." We developed a Gantt chart with them, identified their pre- plan check process, started going through the process before they even submitted to make sure that we could help them meet their milestones. They were both in and out faster than they thought they would be. We were able to process those applications quicker. They were more complicated. They had structural implications. They had electric utility implications. Those took longer, but we started the process and the conversation early to make sure that we were able to meet their timelines. Council Member Filseth: Is that two weeks or six months or .. Mr. Pirnejad: A project that complicated takes months. It takes that long to install the system. Council Member Filseth: Five years from now, is it going to be the same? What's your gut? Mr. Pirnejad: My gut tells me it's going to be even faster. Technology is improving. The parts of a solar system right now are many. They're consolidating them into one piece, so you basically put it on your roof and plug it into your system. In our last Energy Code update, we are now going forward mandating that all houses are solar ready. Now all the conduit is in place, the panels are ready. Everything's ready to just plug them in. Council Member Filseth: You think the big impact is going to be the ripple effects of Building Codes moving through the system for the stuff you're talking about and changes in technology as opposed to we're going to get a lot better after we do the next five of these things? Mr. Pirnejad: I think we've improved more than 90 percent of what we can improve. The last 10 percent is what I'm proposing this year, which is Page 41 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES completely automating the plan check process. It used to be, three years ago, that the permitting process was the hurdle. We had people that would leave the City. Solar City said they would stop working in the City. Cobalt said they would stop working with the City. We had a large stakeholder meeting. We invited all the solar contractors in. We said, "Why do you think it's taking so long?" We streamlined the process, created technology enhancements, so that's no longer an issue. It hasn't been for years. Council Member Filseth: That's very helpful. Thanks very much. Mr. Pirnejad: You're welcome. Mr. Keene: Could I just do a quick follow-up to Council Member Filseth's question? Twelve months or 18 months ago, whatever the right timeframe is, how long was it taking for a residential customer to get a solar permit from us? Mr. Pirnejad: It was about 120 days. Now it's over the counter. Mr. Keene: We had the worst reputation in the Bay area. They fixed that. Chair Schmid: Yes, it is a noticeable change. You hear stories about people delighted with the current process. I just have one question on the staffing. There's a lot of changes, little percentages of people moving in and out and up and down. That entails some movement between full-time Staff and part-time. It's striking when you look at the net change. It's actually a decline in Full-Time Equivalents, 0.27. Salary and benefits go up by 11.4 percent. That seems to indicate that you have moved maybe some part- timers, replaced them with full-time Staff. Is that what's going on? Why that huge change? Mr. Pirnejad: I can address that. It's a great question. We were just speaking about that earlier today. It's three parts. The first part, if you'll notice the third item down is called overtime. When we created the department ... Chair Schmid: What page are you on? Mr. Pirnejad: I'm on page 239 of the budget summary. You'll notice there's a $47,500 charge. That's a clerical clean-up item. That was a housekeeping item. It was left in Planning. It was transferred over to us to pay for overtime that we charge applicants. We recover that charge, but we need to budget for it. The second part is salaries and benefits going up. This year we had a 3.6 percent increase. We're accommodating for that, and that's a good part of this that we have no control over. The last part is Page 42 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES approximately the $30,000 that I made reference to which is the net increase in the dollars we're asking for in staffing. Chair Schmid: One of the things that is very different in your Budget than others is the increase in benefits is almost the same size as the increase in salaries. Do you know what's accounting for that? Mr. Pirnejad: That's a great question. I'd probably want to defer to our OMB Staff. Mr. Rossmann: Chair Schmid, I'm looking at page 239. The pension increase is 4.9 percent, salaries 8.6 percent, and retiree medical is 12 percent. Retiree medical, what happens here is as a newly developed department, we didn't really know the first year—no, it's the second year of Development Services—how to allocate that out. The majority of costs for retiree medical is former employees. We had to work with our actuary and figure out how to properly allocate that out. We have a large increase there. Salary and pension, there's definitely temporary staffing levels in there as well, I would think. I don't see it being the same, so I'm not sure what you're referring to. Chair Schmid: Other benefits doubled. Second line. Mr. Rossmann: That is also refined. When we created the department in 2015, again we didn't fully yet figure out how to allocate those costs. The second time around, we figured overtime wasn't properly in Development Services. Also the cost to the general benefits fund, which is other benefits, is not properly allocated. It's mainly a refinement or a more accurate allocation method among all departments. Chair Schmid: It's because it's a new department. Mr. Rossmann: That's correct. Chair Schmid: The reason I raised the issue, though, is this relationship between your full-time employees and your contracted out or part-time. If there is a recession, you want to be flexible, because you are paying for yourself and you could see a sharp decline at any time. How would you deal with that if you have a buildup of full-time employees? Mr. Pirnejad: We'd have to—I hate to even say the word. We'd have to lay those people off. We would want to avoid having to do that if they were full-time employees versus contractors. Plus we'd see a huge increase in the amount of pension, retiree medical and other benefits. We're trying to avoid Page 43 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES that cost. Plus there's a cost to recruitment and others that we don't bear now with the contractors. Chair Schmid: What's your relationship between full-time employees and your part-time or contractors? Mr. Pirnejad: It's excellent. We have a great working relationship. Chair Schmid: No, I mean what's the ratio. Mr. Pirnejad: The ratio depends on the unit. Our plan check unit is entirely contracted out, which is why I'm coming before you for one Assistant CBO position that would provide that continuity. The inspectors fluctuate quite a lot. Over any month of the year, we ebb and flow on number of contract inspectors. We have four Building Inspectors full-time and somewhere between 8 and 11 are contractors at any one time. Chair Schmid: Thank you. That's helpful. Are we ready for a motion? MOTION: Council Member Scharff moved, seconded by Council Member Filseth to recommend tentatively the City Council approve the Development Services Budget. Chair Schmid: Any further comments? MOTION PASSED: 4-0 4. Planning and Community Environment, Operating Budget pp. 292-307. Walter Rossmann, Office of Management and Budget Director: The next Budget up, Chair Schmid, we have Planning and Community Environment, and our Director Hillary Gitelman will be taking the presentation forward. The pages for the Planning and Community Environment Department is 292 to 307. Chair Schmid: Welcome. Hillary Gitelman, Planning and Community Environment Director: Thank you. Vice Mayor Schmid, Council Members, Hillary Gitelman, the Planning Director. I'm joined by Sherry, our fantastic administrative person in the Planning Department. We're happy to be here this evening to explain our Proposed Budget for the coming year. You all know on the next slide what we do for a living. We work with you on land use and transportation issues, trying to make a difference in Palo Alto and respond to the needs and desires of our constituents. In terms of our accomplishments in the last year, I'm going to whiz through this so that we can get to your comments. Page 44 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES As you know, we certified the Housing Element in compliance with state law. We've gotten the Residential Permit Parking program adopted, and it's in the implementation phase. We've initiated formation of a Transportation Management Agency and taken a number of other steps to build what we're thinking of as a coordinated and comprehensive approach to parking and transportation issues. We've completed the first phase of our Downtown CAP Study and initiated a $2 million upgrade to our traffic signal program. We've done all of this while we've had significant Staff vacancies in the course of this year. We currently have five vacancies in the department, three of which are management positions. We're talking about in this next year, with your help, resourcing this department and this function to the level that we think it deserves. Our 2016 initiatives, again, you are aware of these. The first and foremost, thank you to the Council for making this one of your own Priorities for the year, is the update to the Comprehensive Plan. We're working on that as a team in the department, again short-staffed on that team but trying to keep the ball moving. We're looking forward to the Summit on the 30th of May. We're also at the Council's request undertaking some concurrent zoning revisions, and these are not small matters. As you know, we're tackling retail preservation Citywide. We're tackling the pace of office development and job growth. In addition, we have a whole suite of transportation initiatives that are underway. We are, as I mentioned, in the implementation phase of the RPP. We're designing parking guidance systems and revenue and access controls for our Downtown parking garages and parking lots. That's in addition to a wayfinding program and a number of other parking and transportation initiatives. We're also just taking care of some good business practices. In the coming year, we will be completing the nexus study for our Housing Impact Fees and initiating a nexus study for Transportation Impact Fees. We're also talking about undertaking a peer review of our Individual Review process. It may surprise you to know that we do about 70 IR applications, that's two-story homes, in the course of a year. That number has been pretty steady over the last few years. A lot of those go through our system without comment, but every year there's a handful of those IR applications that become extremely controversial. Our thought was to bring in an outside expert, an architect who works in other communities on similar residential projects, and have them review our program and see if we need to make changes. The guidelines that we currently use have been in place for ten years, so we thought it was a good opportunity. Council Member Kniss: You said 70, right? Ms. Gitelman: 7=-0, correct. We are also hoping, with the help of the Finance Committee, to be looking at updates to our fee schedule in the coming year. We'll have that to you sometime, certainly before the next Page 45 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Budget process. We've been undertaking a fee study and are close to having significant data and results to bring to you with recommendations about our user fees as part of the next Budget cycle. In terms of our significant Budget proposals, first and foremost, as I said, we're trying to resource the planning and transportation function to the level that is needed to accomplish what the Council has identified as its priorities and what we think the community has identified as its principle needs. We're talking about three new positions. Even with the in and out of the positions identified in other departments, you just talked about that as you saw the other departments. There's some reallocation between departments. Even taking all that into account, we're talking about three new FTE. The new positions are a Traffic Operations position. This is someone with expertise in traffic signal operations and other transportation engineering functions. We're talking about a Parking Operations person. We're building this huge parking program, and we do it with our Transportation Planning Manager and one part-time extra help person. We're trying to institutionalize this function and resources in a way that it deserves. Finally, Code Enforcement. The Council's aware we have currently two Code Enforcement folks on Staff. We're talking about adding a third. Code Enforcement is one of those things that is resource constrained. If you have one Code Enforcement person, that's how much Code Enforcement you do. If you have three, you'll do that much. If you have ten, you'll do that much. We want to add to our current resources for Code Enforcement. None of these three positions are management positions. The Code Enforcement position is a lead in the sense that it would help us and the other two Staff people organize the work and assign duties and make sure the program as a whole was well managed and proceeding appropriately. In addition to the additional staffing resources, we're talking about undertaking a study of paid parking. You know we've been doing a lot of work on parking, the RPP, the Downtown garages and systems to make parking fees in the garages more efficient and effective. The piece that's been missing is looking holistically at parking charges. We want to bring in professionals who are used to working on these issues in other communities to advise us on how we can think about this issue and make some recommendations to the Council. We'll be working with some of the same stakeholders who have been at the table for the other Downtown-related parking changes, bringing them on board as we discuss the scope of this study and as the study gets underway. We think it's a valuable next step in our program. We're also including in our Budget requests $100,000 for a study of seismically vulnerable buildings. This is actually a project that's going to be managed in Peter's shop, in Development Services. It's a General Fund-supported item, and so we're carrying it in our Budget. We're going to work with them because, after we inventory seismically vulnerable buildings which Peter's shop will take the lead on, we will be working with the community and the Council to develop a Page 46 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES new system of priorities. Currently, the system we have goes back a couple of decades and doesn't account for some building types that weren't recognized as vulnerable at the time. We also at that time, I think it was in the '80s, came up with our own system of prioritizing. We're thinking of following much more in sync with how the rest of the region is doing this. I mentioned the traffic impact fee study that's needed to update our fees. That's what we have in terms of highlights. Sherry and I are here to answer your questions. Chair Schmid: Thank you. I'm sure there are questions. Council Member Kniss: I would make an observation, if I might. Jim might comment on this as well. Probably 80 percent of what we do in public is land use; therefore, it is what you do, what Planning does. It's what you're listing here, traffic, parking, Code, the whole thing. Not to discount Police or Fire, but Planning becomes the heart of your operation, because you are constantly working on that and constantly making decisions about that as a Council. When you're short-staffed, we know about it and are sympathetic with it. Even the public is, who often says, "They need more help in the Planning Department." The public so often interacts with you. The question inherent in that comment is being able to hire, Hillary. What is it that will enable us to find those Planners that clearly you need? We're aware of the need. It's not that you've come to present it to us, and we're saying, "We don't know about that." We're saying, "That's absolutely the case." What will it take for us to be fully staffed in that department, especially as we head into doing the Comp Plan, getting through the Summit, doing the Comp Plan, and so forth? Ms. Gitelman: Thank you for that question, Council Member Kniss. It is a tight job market right now for Planners. During the recession a lot of Planners were underemployed. Since the recession, we're all working crazy hard all over the place. It's a tight market. We are holding interviews this week for a vacant position. I'll be able to give you a better update within a few weeks. It's true that land use and transportation are the issues du jour. Maybe they are always, but now particularly. This is a really hard place to work. To the extent that the Council works in partnership with the department and the Staff and you can express your support and gratitude for the professionalism that our team brings to these issues, that will help. That's something that would help on an ongoing basis. Council Member Kniss: Message heard. Ms. Gitelman: With recruitment and retention. Thank you for that question. Chair Schmid: Council Member Scharff. Page 47 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: Welcome, Director Gitelman. Don't take this the wrong way. I'll preface it that way. Every time we have a Council meeting, we talk about planning. We add two things to your things to-do; that might be being generous on our part. Sometimes I think it's more than that. It seems to me that the workload is expanding exponentially of things we want you to get done. We don't expect it to be done 18 months from now. We expect you to come back to us in six to nine months, maybe three months. I'm a little shocked at your choices for adding staffing. Really, a Code Enforcement person when you have all this planning work that we're piling on that you say you can't do? I want to get some sense of why you think a Code Enforcement person is the priority when, as far as I can tell, you don't have the Staff to do the work that we keep asking you to do. Ms. Gitelman: Thank you for that question too. Our calculation was that it's hard to ask for additional Planners when you have five vacant positions. Seriously, those vacancies are in current and long-range planning. If we have those positions filled with the kind of professionals that we think we need and deserve, we're going to be well resourced on the planning side. Where we are not well resourced is on the transportation side and in that Code Enforcement function, given what I know to be the Council and the community's expectations about Code enforcement. Council Member Scharff: Council Member Kniss is right; it's just an issue of being unable to hire or fill those positions. How long have they been vacant? Ms. Gitelman: Some of those positions have been vacant for quite some time. You'll recall Stephen Turner left, it's got to be nine months ago. We've been trying to fill that position for quite some time. Now we have some good candidates that we're interviewing this week. It's been very, very challenging. Council Member Scharff: What makes it challenging? Is it the culture, the environment, our City's reputation, lack of pay? What's going on? Ms. Gitelman: A lot of those things contribute. I also think it's simply just a really tight job market for Planners. People who are looking to move to more challenging roles, like myself and my Assistant Director, did that in the last year and a half. They're not out there looking for additional jobs, new jobs. It's a cycle we're in. I'm hoping we're turning the corner with the interviews that we're doing this week. I'll be able to let you know if we're successful within a few weeks, I hope. Council Member Scharff: What you're telling me is that if you can fill these five positions, if we give you the Traffic Operations person and the Parking Page 48 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Operations person, we'll come back to the Code Enforcement, you'll be able to do the work. You have a sense of the volume of work and where we are, you feel like you'll have enough resources to get done what the Council is likely to ask you to do. Ms. Gitelman: I think we will have a very strong department, and we will be able to accomplish a lot of the work on our plate. It is true that to the extent that the Council keeps adding to the top of the pile, the stuff on the bottom of this pile falls away. We all have to be careful and develop systems to be aware of that and make a conscious decision, when we're adding, what we are going to subtract or combine with other initiatives to be more efficient with the resources that we have. Adding Staff, doubling the size of the department because we double the workload every year, I don't think that's a sustainable response either. Council Member Scharff: On the traffic person, one of my frustrations and the community's frustration is we still don't have the Embarcadero, Town and Country, the lights there don't seem to have proper timing and all that. Are we going to get that issue resolved? I know I must have asked Jaime 50 times, and I always heard "in about three months, we'll get it done." It's been four years on Council now that I've complained about it. Ms. Gitelman: Thank you. The Embarcadero Road project is really divided into two phases. The first is to solve that immediate frustration at the Town and Country/Paly intersection. A contract has been funded to do the design and construction on that. They're waiting for the school year to end. It's being managed out of Public Works. The last time I talked to the Public Works Director, they were trying to work with the contractor on an expedited schedule, so it would be done in the summer months before school was back in session. We're making good progress on that. The second phase of the Embarcadero project has to do with the rest of that section of roadway between Caltrain and El Camino, which is a state facility. That's more complicated. It's going to involve right-of-way and consultation with Caltrans. It's also going to require consultation with the school district and with Stanford once we get into that intersection at El Camino. That's a longer term prospect. Council Member Scharff: Have we started this process or is it just ... Ms. Gitelman: We have an RFP that we've tried to push out the door for the design work on that for some time. Truthfully I talked about it with Staff a week ago, and it was imminent. I don't know whether it's gone out in the week since then or not. It's moving forward, not as quickly as the Phase 1 Page 49 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES improvements which will address the most immediate and very frustrating situation. Council Member Scharff: When we talk about Code enforcement, I was thinking a little bit about we have two Code Enforcement people now. How do we know we need another Code Enforcement person? Are we having 400 complaints about Code enforcement violations and we're only getting through 200 of them? What metrics do you have? We've had two Code Enforcement people for as long as I can remember. Why do we need a third? Ms. Gitelman: Thank you for that question. Code enforcement, again, it's hard to measure, but we do have figures in the SEA tables that show that over the last few years there's been a steady increase, not dramatic, in the number of new cases and number of inspections we do. We're keeping up with them. We're resolving cases pretty rapidly. Council Member Scharff: That was my impression. Ms. Gitelman: The issue is you can only do so much with two people working full-time. One of them goes on leave, you're down to one. We're behind and having difficulty responding to complaints on a regular basis. We could do more with more resources. This is a policy decision. I'll be honest with you. I asked for this last year, and the Council thought this wasn't a priority. Again, it's completely up to the Council. This has to do with the amount of Code enforcement you would like us to do. Council Member Scharff: This is what I'm taking out of this. It's a policy decision. If we had more, we could always do more. You are currently getting through and closing the cases that we have. Ms. Gitelman: That's correct. Council Member Scharff: The seismically vulnerable building study. I'm always stunned how much these studies cost, I must say. I remember you came to Policy and Services or Finance or whatever. There was actually a list of seismically vulnerable buildings. One of the questions that came up was why have these not been done, why have they not been upgraded. Is that the genesis of doing this study or how did this come about? Ms. Gitelman: Yes, this grew out of that Policy and Services discussion which, if I recall, happened right after the earthquake in ... Council Member Scharff: I think it was the Napa earthquake. Page 50 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Ms. Gitelman: You're right. We looked at the list of seismically vulnerable buildings that we've had now for 20 years. It doesn't address soft-story buildings, certain building types that now we all recognize. The Building Codes have seismic deficiencies and should be addressed. A new inventory to address those additional building types. We're going to be looking at the prior program and why it was effective, where it was effective, and where it wasn't effective what we should be doing differently, and how we should prioritize the vulnerabilities or the risks that we identify. It's not a quick study. This is going to take some dedicated work on Peter's Staff. The consultant team, I think we have a contractor on board. We've been in the RFP process; we have five proposals. Council Member Scharff: I'm glad you don't have the contractor on board. That would be a problem. Ms. Gitelman: I saw it on the agenda for August for a contracting decision. It's a pretty significant work effort. Council Member Scharff: You think this is definitely worth doing? Ms. Gitelman: I think it's a very good idea to identify and mitigate risk. Council Member Scharff: That's all I have. Council Member Kniss: Could I add onto something before we go to Eric? I don't know exactly how to define Code enforcement, but I do know that it's probably the thing I hear the most complaints about. I cannot tell you how often somebody has said, "Why doesn't somebody do something about that building," or "Do you know how long that's been underway." There was a big flub-up in my neighborhood about a building that had been left for a year, and there were rodents in the backyard. It created such bad will. As much as anything, Code is about can you enforce something. Do we still have the houses that have been underway for two or three years? What Code can do about that is what I don't actually know, Hillary. I realize that Code cannot always force something to happen, but at least it reassures the public that we're actually out and looking at it. With that one in our neighborhood, it actually did result in something going on there. It appears that there ... Ms. Gitelman: Thank you. Sherry's pointed out too that in these metrics that we include in the Budget document on 298, we've actually shown a pretty steady performance at 60 percent satisfaction in Code enforcement. There is room for improvement here with additional resources. Page 51 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Kniss: That's one of those things we don't talk about a lot, but people complain about it a lot. Chair Schmid: Council Member Filseth. Council Member Filseth: Let's make sure I understand this. If I read the chart right, there's 39 positions full-time and 2.05 hourly, and it breaks down to 12 in current planning, 6 in advanced planning, 9 in transportation, 4 in planning and development service, and so forth. That includes five vacancies. Am I reading that right? Ms. Gitelman: I didn't hear your last statement there. Council Member Filseth: I'm on page 293, which is the Org Chart. There's 39 full-time positions and 2.05 hourly ones. It breaks down to 12 in current planning, 9 in transportation, 6 in advanced planning, and so forth. Ms. Gitelman: I'd have to do the math, but I assume you're correct. Council Member Filseth: You said there's five vacancies as well. What it means is there's 39 positions on the Org Chart, but there's really only 32 at the moment. Do I understand that right? Some of these are vacancies or ... Ms. Gitelman: That does include the vacant positions. We're not at full strength. Council Member Filseth: Let me ask about transportation first. There's nine people in transportation. Are some of the vacancies in there? Jaime's not there anymore. Ms. Gitelman: The Chief Transportation Official is one of our key vacancies, and also this chart is showing the request of positions. It's showing the Traffic Operations and the Parking Operations person. Council Member Filseth: That includes the Traffic Operations Lead, okay. Ms. Gitelman: Yes. We're talking about filling that position halfway through the year. In parts of the Budget, it shows as a full position, but we're in this year's Budget going to spend half of that. Council Member Filseth: Structurally, beyond that it's full-time. Ms. Gitelman: Correct. Council Member Filseth: What are we going to get from the Transportation Lead that we're not getting with the other, I want to say eight but it's really Page 52 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES seven because we don't have the transportation. We've got seven people on there now. What does the eighth give us? Ms. Gitelman: The need for the Traffic Operations position has been identified since we initiated the traffic signal upgrade. We're enabling all this fancy technology with the new systems, and we really don't have the expertise to benefit as much as we could from that new technology in-house right now. We did identify this when we brought the traffic signal contract to the Council for consideration as something that we might want to do in the future, which is bring someone on board who could make it go. That's partly why we're proposing to add it halfway through the year as well, because the signals are just now being installed and it'll take that long to get them operational. Adding a person who can help us do that; they're also going to supplement our team on other traffic engineering activities. Council Member Filseth: It's more of an expertise skill set thing than a bandwidth thing, for example. If I understood what you just said. Ms. Gitelman: It's both. It gives us expertise we don't currently have on the team, and it's going to deepen our bench on regular traffic engineering problems and questions that come up in the course of our work. Council Member Filseth: Let me ask about the planning. The difference between current planning and advanced planning is current planning is project related. People bring you a project and say, "I want to build a second story on my house," or something like that. That would go into current planning. Whereas, advanced planning, I assume that's those poor people working on the Comp Plan that we flog you guys with all the time. Ms. Gitelman: That's generally right. There's a little bit of overlap. The current planning division includes our historic preservation program which is ongoing. Mostly current planning is application processing, and advanced planning is long-range planning. Council Member Filseth: How much of the current planning load is residential versus commercial? Ms. Gitelman: I would have to do some analysis. In fact, I'll be able to answer that question quite specifically when we bring forward our fee study. We've been looking at the amount of resources we're putting into the various application types. As I said, we do like 70 two-story homes. We do fewer than that of major ARBs, big commercial projects. Council Member Filseth: They're more complicated. Page 53 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Ms. Gitelman: Those take more time. That's right. I'll be able to answer that more specifically. Council Member Filseth: Do you have a gut, is it 50/50, 80/20? Ms. Gitelman: I don't want to hazard a guess. Council Member Filseth: Looks like administration is 6 out of the 39, if you look on the chart. It's 15 percent. Ms. Gitelman: It is six positions. Council Member Filseth: Is that the right number? Ms. Gitelman: I think it is the right number. Council Member Filseth: That's 15 percent of the department. Ms. Gitelman: We do a lot of noticing, a lot of public meetings that Staff supports, the HRB, the ARB and the PTC, all the packets for all of those bodies and for Council packets. We're doing a lot of work in the department, and actually we have a super admin team. Council Member Filseth: Finally, I wanted to ask a question about contractors. The contract services number has bumped around. It's a million higher in '16 than '15, but then it was a couple million lower in '15 than it was in '14. It's bumped around. In the previous session with Peter, he's got a lot of people that are basically contractors doing a job that could be done either by a contractor or an FTE. He talked about inspectors, here's how many contract inspectors. They're doing the same thing but it's different. There's that kind of contractor, and there's folks like the Dyett and Bhatia study that go out and do the Downtown CAP study. Within Planning, PCE, is there a split between people doing stuff that could be done by either a contractor or an FTE and other things that are very clearly a consulting engagement? Is there a mix of both of those things? Ms. Gitelman: Thank you. Really great question. There is a mix of both of those things. You actually don't see the on-call contracts in the Budget document, because they're in our base Budget. It's not apparent here. Council Member Filseth: That doesn't show up in contract services? Ms. Gitelman: It's not showing up in the delta. It's in the base Budget. We currently have on-call contracts almost $0.5 million, and it's mostly for our Individual Review program and assistance with environmental documents Page 54 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES and some planning applications if we get really full and we don't have Staff to assign new projects to. Council Member Filseth: Got it. Super. That was actually going to be my next question. Some of the things that we're critically loaded in, like current planning, is some of that stuff you can do on-call? Ms. Gitelman: That's right. We have these on-call contracts. We only use them when we're really filled up or when we need that expertise. We have been using them quite a bit. When we can, we charge those back to the applicant. Council Member Filseth: How about some of the transportation work, can that be done on-call? Ms. Gitelman: We do have one on-call contract in transportation for assistance with traffic analysis and responding to customer requests and complaints. Council Member Filseth: The skill set between transportation and current planning, is it fungible at all? Somebody could do one and do the other when there was a peak load and valley and that kind of stuff? Ms. Gitelman: They're really very different functions and professional areas of expertise. They support each other. Clearly we have transportation Staff that supports the current planning function. They're pretty different. Council Member Filseth: I suppose Code enforcement is completely different. Ms. Gitelman: Code enforcement requires that special mindset of Code enforcement. There are people who love it and people who can't do it. Council Member Filseth: I suppose that's not contractible, because you really need to know our Codes. Ms. Gitelman: That'd be a difficult function. It takes some political smarts, some sensitivity, and you really have to enjoy Code enforcement. It's a specialized activity. Council Member Filseth: Thanks. Chair Schmid: Thank you. I'd just like to add to the comments about the workload the department has. One of the reasons for the workload is you have stepped forward and said, "We need to do long-term planning," and have agreed with every time the Council says what about this and that to Page 55 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES say, "We'll do that." You should be praised for adding to the workload, but including that strategic component in it. I just want to ask one Budget question. My question is really for the City Manager or the Budget Staff. The ask has something dealing with traffic, parking, paid parking study, traffic impact fees. These are things that have been on the Council agenda for the last 12 months and have been identified as being generated by a particular set of problems, very rapid growth in office and business in town. The base question is why is this in the General Fund and not targeted to the cause of the problem, which is growth in office and business? I would make the point, the other day when we were talking about municipal fees, we put out a gold standard that said if a beneficiary of a project, if a single person or group, gets the benefits of a project, they should pay for it. James Keene, City Manager: Let me take a first stab at this. First of all, I think the question isn't exactly about why is it in the General Fund versus somewhere else. For example, we still fund the Development Services Department out of the General Fund. We are moving towards actually creating a separate enterprise fund to sequester all of the expense and all of the revenues in a completely separate fund. Chair Schmid: But it's a fee-based operation. Mr. Keene: The issue is are there, in a sense, non-taxes or special fees associated with the expenditures, and do we have a way of directly linking those. The answer is yes and no. We do allocate some of the charges for some things where we have opportunities. There are charges against the parking permit fund, some other small fund areas. Some of the issues related to if we wanted to use Development Impact Fees as a revenue source, that raises some other challenges. As you know, just the Planning Department right now is looking at reviewing some of the planning impact fees and the nexus study and all of those things we have to do over time to look at are there opportunities to increase and associate those things. We've charged to some of the garages and some of those things some of the charges that we can have. Your larger question is why isn't elasticity of demand that is being driven by development linked to a particular revenue stream that can rise and fall with those demands. Chair Schmid: Yeah. I would point to the Ordinance that established the Downtown Parking District. It stated very clearly that the parking deficit should not exceed the amount it was in 1998. As that gets exceeded, it seems to me there is a fund set up to deal with that. The Ordinance points at the Downtown parking fund. There does seem to be in the history an identification of a group who might bear the responsibility. Page 56 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Mr. Keene: There's two issues. There's the issue of the Parking Assessment District, which actually has a whole methodology and everything set up and in one sense legacy payees and contributors to that. That's basically dealing with financing the debt. Then there's the parking permit fund and how do we charge for parking and what do we use that funding for. We do charge things against the parking permit fund. The fact is there's not enough money ... Chair Schmid: That's (crosstalk). Mr. Keene: ... in there with the parking permit structure that we have right now to be addressing the issue that you're talking about. Chair Schmid: It seems—go ahead. Lalo Perez, Administrative Services Director and Chief Financial Officer: I was just going to add to City Manager Keene's comment. The Assessment District is also not the whole Downtown. It's a great portion, but not all of it. Chair Schmid: That's right. Mr. Keene: I did want to get off on a bunch of planning discussions too, and that's probably a slippery slope that I’m going to be treading on here. The question of who pays and who benefits as it relates to development and parking is a complicated one. In other words, what are the drivers themselves? If I have five cars in my family, would we look at a household as somehow using more than their share of the road network and, therefore, needing to pay more? We don't do that. I'm not saying that there aren't legitimate issues on the office or other side of things. Again, the public streets are public streets. How we start to figure out how you price things to manage the impacts of demands is just a complicated series of stuff that there's no way we could do quickly. Chair Schmid: Yeah. I'd just throw out a couple of things we do know. We have a ratio of three jobs in town for every employed resident, which is the highest in the Bay area. The generation of traffic and parking problems, you can identify a source which is different. It makes nexus problems hard, because consultants come in and say, "Let's assume you're like every other city." We are not. The other aspect of the problem is we know each year the share of the General Fund taxes being paid by businesses is declining. You put those together and it does show up in the Budget and it's an important part of the Budget. There's no other place to address the issue that's more relevant. At some point, maybe with the Comp Plan discussion, there should be a discussion of who benefits, who pays. Page 57 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Mr. Keene: That's another workload item we could put on the Planning Department. That's what it is. Chair Schmid: She can seriously turn to her right and say, "Need some help from the Finance Staff." Mr. Keene: No, no, no. Not to say that. Chair Schmid: Those are my questions. Mr. Keene: Just before you leave, just for a little bit of fun I wanted to respond to Council Member Scharff's question earlier about what were the reasons for the recruitment challenges. Some of it is the environment we're in. Some folks are up for it and other folks aren't. It might be fun if we tried a different recruitment strategy. I went back and looked at the famous story of Shackleton's trip to Antarctica and the ads that he put out. In this case it said men, but we say "People wanted for hazardous journey. Low wages, bitter cold, long hours of complete darkness, safe return doubtful. Honor and recognition in event of success." He had unbelievable response. MOTION: Council Member Kniss moved, seconded by Council Member ??? to recommend tentatively the City Council approve the Planning and Community Environment Department Budget. Council Member Scharff: I'm not seconding it. I would do that with an amendment that we put the Code Enforcement person in the parking lot. Council Member Kniss: Okay, but I think that's in error. Council Member Scharff: You're good with that for now? Council Member Kniss: I think it'll be overridden, so I'm perfectly comfortable. Chair Schmid: It's a motion to put ... Council Member Filseth: I have a lot of things going through my mind on this. One is the intersection of we've got all these open positions that we haven't filled yet. Another is that clearly part of this is to change the profile skill set. We're going to try to bring in some skills that we don't have. Some of it's things that are available on-call and not on-call and so forth. My top choice wouldn't be adding a whole person to bring in a skill set that we don't have, if there isn't also a 100 percent full-time demand for that skill set. If that makes any sense. FTEs are expensive in this town. We've got the numbers here, but it's at least 2X once you count all the other stuff. Particularly since we've got these open positions, so we say we need X Page 58 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Planners plus this skill set, but we're going to bring this skill set and we've already got eight people doing that in that area. It's not clear to me exactly how to do this. I don't know. My inclination is maybe the traffic person goes in the parking lot as well. If we need that skill set, do we also need that many current planning people as well? Are we that short? Should we use one of those to get the Traffic Specialist with the special knowledge? The parking person I can see. Is that an ongoing thing? Are we going to get this done and then the load of parking work is going to decline after we get the technology in place? I don't know. My sense is it's probably an ongoing thing. I'd almost wonder if we don't put the traffic person in the parking lot as well pending some level setting on contractors versus general planning people. Chair Schmid: Is that an amendment you're proposing? Council Member Filseth: More up for discussion than an amendment. Council Member Scharff: Let's have this discussion. What I'm understanding you to say, Eric, is that we have five open positions. How many are you going to fill this year? Are you close to filling five or are you close to filling four? That's the first question. Ms. Gitelman: One of the five is the Chief Transportation Official, and four are Planners. We want to fill all of them. Council Member Scharff: This year? Ms. Gitelman: This month. Council Member Scharff: This month. Are we close to filling them this month, all four? Ms. Gitelman: We're interviewing this week for all five positions. Council Member Scharff: Your point was if you could add the skill set of the traffic and the Planner together, is that it? Council Member Filseth: Yeah. Council Member Scharff: Why don't you address whether or not that's a possibility, of putting traffic and planning together or if they're different people, a different skill set? Council Member Kniss: Do you mean they've got the same skills, Eric? Page 59 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Filseth: I don't know. I don't understand well enough. We're relying on you folks for this. If I've got all these planning positions open, and what I really need is half a traffic person but I need the skill set. Is there some way I can optimize there without adding another FTE and the whole pension and all that kind of stuff? Ms. Gitelman: In our analysis we feel like we need a full Traffic Engineer. We won't need them until halfway through the year. This is a skill set that we're lacking. it's an area of our work that's not going to diminish. If anything, it's going to grow. Council Member Filseth: Let me ask the hard question then. Of the eight traffic people you've got so far including the Director, have you got any skill sets there that you don't need anymore? Ms. Gitelman: I really don't think so. Again, we're talking about resourcing this function that is in the eye of the storm right now. We have fewer people in this department than you have in your IT Department. We are trying to do, as Council Member Kniss said, about 80 percent of the items that are coming to the Council. We're also trying to respond to an enormous amount of citizen input and citizen complaints on traffic and transportation. Any resources we can add there would be helpful. Council Member Kniss: Eric, if I might jump in. The area where I hear the most from the public is about traffic. Maybe your question actually is what does this Traffic Operations person do? Council Member Scharff: Wait a minute. I thought you heard most from Code enforcement. You can't hear most from both. Was it parking, traffic, or Code enforcement? Council Member Kniss: I do a lot of listening. Right after Code enforcement, I hear more about traffic and the problems with traffic than almost anything else. If you do a survey, that's what someone's going to say. Your question, Eric, is does this person here, that 1.0, does that relieve the traffic in some way. Is it helping to solve our problems in some way? Are the problems going to persist whether you've got that person or not? Is that the question? Council Member Filseth: I believe the skill set will help with the traffic. My question is will adding more people to the transportation department help with the traffic. Council Member Kniss: I think it will from what I have heard. When I am out there, especially talking in your area of town, in north Palo Alto, that's Page 60 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES where I hear the most about how desperately you need someone else that is working on the traffic problem. Not that I don't hear it in other parts of town, but I particularly hear it from north Palo Alto. In fact I think I have en email right now I could pull up that talks about this. Council Member Filseth: What I'd really like to do, which I understand can't be done, in a perfect world you'd say we're going to bring in the new traffic person. We're going to take one of the people from the existing transportation and use them to fill one of the slots in the planning space. Council Member Kniss: It's that perfect world problem. Council Member Filseth: There you go. Chair Schmid: I thought that's what I heard being said, that the Planning Department is looking for five people, and the five people would fit in with special skills that are absolutely needed like traffic and parking, and would free up some key people that are now spending part of their time out of their expertise to get into the longer-term planning issues. Council Member Kniss: Since I made the motion, at this point where I'm comfortable is putting the Code enforcement inside even though I'm not sure that that would be my first choice. Traffic though, having heard so much about it, that's one of the areas I'd like to keep in there. If two of you want to park it, then it gets parked. Council Member Filseth: If nobody else wants to park it, I'll give in. Chair Schmid: All you need is one other member to agree. Is there anyone who agrees? Okay. Council Member Filseth: Then I gracefully accede and I'll support the motion. Chair Schmid: Is there a second to Council Member Kniss? Yes. We have a motion and second. Further discussion? MOTION PASSED: 4-0 Mr. Rossmann: Chair Schmid, do you mind clarifying whether you parked the Code Enforcement Lead? No, you didn't. Thank you. Chair Schmid: That's included. Page 61 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES 5. Special Revenue Funds, Operating Budget pp. 114-125 a) Parking District, Operating Budget pp. 122-123 b) Stanford Development Agreement Fund, Operating Budget pp. 124-125 c) Other Special Revenue Funds, Operating Budget pp. 119-120 Walter Rossmann, Office of Management and Budget Director: The last part of your agenda tonight is Special Revenue Funds. They start on page 114 with descriptions. I do have a PowerPoint presentation I can share with you, it's three slides, or we can open it up for discussion. However the Committee would like to proceed. Chair Schmid: It might be helpful just to have that context. Mr. Rossmann: The Special Revenue Funds is a selection of many funds. It's the Public Art Fund, Community Development Fund, the Gas Tax Fund, the federal and state revenue funds are in here, housing funds, parking funds. Just an overview. It's a grouping of funds. We use those funds for special purposes. They're restricted in their revenues and their usages. With that said, let me dive right into it. What we do here in the PowerPoint presentation is give you the most important ones, which I think we need to bring to your attention, especially changes to the Budget which we are proposing. First is the University Avenue Parking Permit Fund. We looked at this fund during the recessionary times. We shifted costs into this fund. Now that we're doing better, we are shifting about $140,000 out of this fund on this item, the Downtown Streets Team, twinkle lights, and also part of a police patrol. We are adding continuation of the valet attendant services expansion. Started in Fiscal Year 2014, we are adding valet services to certain parking lots. This allows us to compact parking a little bit more, increase the sale of permits. It does not fully pay for itself, but it's a short- term strategy to increase more parking in Downtown. We're proposing to continue that. There's lot resurfacing for Lots N and T. At City Hall, we are proposing a capital project to replace the lighting and use LEDs. The savings of that project will benefit the parking fund. It's basically electricity savings. There are no changes to the California Avenue Parking Fund. The Residential Parking Permit Fund, that is a renamed fund. Before we had the College Terrace Parking Permit Fund. We've expanded that with the start of the RPP program which the Council approved. This assumes, by the way, that parking enforcement will be outsourced. We are still working with SEIU to work through those issues. We are sitting at the table with them as part of meeting and conferring. There will be a Budget Amendment Ordinance coming forth to you to initially seed the money for parking enforcement. We Page 62 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES do hope once the program is up and running that the permits will pay for the costs. This is the set up for the parking permit fund, that initially we have some revenue starting it halfway through the fiscal year with some costs. Council Member Scharff: Can I ask a question there? Mr. Rossmann: Yeah, sure. Council Member Scharff: It's confusing to me. We already have the College Terrace one going on, and we heavily subsidize the College Terrace Fund if I remember (crosstalk). Mr. Rossmann: No, we have not. Council Member Scharff: We don't? Mr. Rossmann: No, I don't think so. There was initial one-time funds in there which you're still using. Council Member Kniss: Do you mean for the permits, Greg? Council Member Scharff: I thought for the enforcement (crosstalk). Mr. Rossmann: I will listen to Lalo, who has been here longer than I have. Lalo Perez, Administrative Services Director and Chief Financial Officer: We subsidize it. We don't cost recover (inaudible). Chair Schmid: Stanford gave a grant to start the fund. Council Member Scharff: Correct. I understand that. On a going forward basis, I thought that. Do we have the same rules on the new parking districts? Downtown north, University south, wherever we're doing it. Are we making one fund out of all this and are the rules the same now for all three? Do we cause any problems by having one fund as opposed to a College Terrace Fund and then what we're doing in the rest? That's really my question. Mr. Rossmann: We're tracking the costs of revenues and expenses in the same fund but different cost centers. It's definitely separated. We're not mixing it. Council Member Scharff: That's what I wanted to make sure. Mr. Rossmann: That's a good question. I appreciate that. Just as an update for the Stanford University Medical Center Fund, as you know we got Page 63 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES a lot of Development Impact Fees from Stanford Medical Center. The majority of those are reserved for the Infrastructure Plan forthcoming, but there are certain areas which we continue to spend funds on. That's Track Watch and then the Project Safety Net staffing model. Rob de Geus mentioned to you in his presentation last week that we're changing the model from having full-time temporary Staff to a contract model. There's an RFP out on the street for that. Lastly, we have CIP transfers for the Bike and Pedestrian Plan. These are planned also as part of the total Infrastructure Plan package, which the Council approved. We're already starting to spend some design funds for the Public Safety Building. You'll hear more about the Infrastructure Plan as well as the total cost package on Thursday when we talk about the General Fund Capital Program. Lastly, Housing In-Lieu Funds. We looked at these funds, and this is expected revenue coming in from the impact fees regarding housing. We looked at expenditures for legal services and planning service. We're just aligning the funding by reducing it to historical levels, because you realize we over- budgeted in previous years. Council Member Scharff: Is the Housing In-Lieu Funds part of the $8 million the City Manager suggested for Buena Vista? Mr. Rossmann: That is correct. Basically the Housing-In Lieu is the Commercial In-Lieu and the Residential In-Lieu funds. Those were the potential funding source. We have Traffic Mitigation and Parking In-Lieu Funds. Again, we're starting—what's the $0.9 million for, Mike? It might be in my notes. It is for that. Basically it ties into the Infrastructure Plan as well. That's for the design of the Downtown parking garage. Gas Tax Fund, that's actually an interesting story we would definitely want the Council to understand. We are projecting, and so does the state, that gas tax revenues are declining. This has to do with consumption of energy, of gasoline. Regardless of the price of gasoline fluctuating as you all experience at the pump, it really has to do with the consumption level. We are adjusting for this in the Capital Improvement Program over the next five years. You'll see this in the Budget as well. CDBG, the Committee looked at in April, and it's scheduled for Council approval on the coming Monday. That's when it's up for Council. That's it on the Special Revenue Funds. Any questions, I'll be happy to answer them. Chair Schmid: Any questions on Special Revenue? Council Member Scharff. Council Member Scharff: I'd like to go to the University Parking Fund. Mr. Rossmann: We also have a page on that. It is page 122. Council Member Scharff: Yep, 122, 121-122. Page 64 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Mr. Rossmann: 121-122, that's correct. Council Member Scharff: This is my understanding just as being a Council Member for the last five years. When we had the great recession, we actually had this fund fund a lot of City services. Now that we no longer have that, we should take things out of this fund that really should be in the General Fund. I congratulate the City Manager on moving in that direction. I noticed he moved $100,000 out of it. I would say that I don't think the police patrol should be in here. It's not that much money anyway. It's another $100,000. We provide police patrol everywhere in the City. The fact that the police go down and patrol the parking garages, I don't think should be in here. I'm open to a reason, but my sense is we had that in here to save costs. I really don't think it should be in there. I wanted to ask about the Streets Team peer counseling. It was a little unclear to me why that's in here. Maybe there's a good reason. It's $20,000, not a big number. Those were the two things that jumped out at me. I was going to ask if there were other things in here that probably should be in the General Fund but are not, and Staff's thoughts about this. James Keene, City Manager: Let me speak to that. I think I can best speak to it. I asked the Staff to do an analysis of the funding. We came up with a recommendation that you referenced, moving the twinkle lights out even though folks had wanted it. We moved out the share of the police funding that was for general patrol in the Downtown except for the portions allocated to the garage. Same thing with the Downtown Streets Team. This stuff would just relate to the garages. One could make the argument, and some have, that even the special garage patrol ought to just be absorbed by the General Fund. We've argued differently. It's a little bit more along these lines of saying that is a special level of service we provide due to the fact that we have some particular problems in the garages due to homeless and other behavior and the need to clean up the garage. We thought it was a legitimate expense. It wasn't like you were saying, "Let's take this parking garage-related stuff and buy twinkle lights or buy police patrol out at Lytton Plaza." That's where we've ended up. I know that there are some folks in the Downtown business sector who disagree with that. They'd like to see us move all of it out. It's ultimately a policy call for the Council. In my conversations with them I said, "If we're going to move anything out, it clearly needs to be directly devoted, in my view, to providing or supplementing parking related to those things." That being said, it's not that much money that it's really going to add that much value to the parking component of it. We have a good rationale for it, but the Council, if you wanted to, could make a different determination. Page 65 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: I appreciate that. I'm glad that you said it's just the portion that actually patrols the garage. As you said, it's not a huge enough number. It depends on if there were other things that they wanted to do in the parking garage that were very important towards making the parking garages function. As you said about the five cars on the street, I really do think that police patrol is a Citywide function we provide, and we don't charge people for police patrol. I don't have this hugely strong feeling about it. We obviously do subsidize lots of things. We subsidize Children's Theatre to a really large extent. We give people free e-books. There's lots of things we subsidize. Council Member Filseth: Could I interject to make sure I understood what he said? Council Member Scharff: Sure. Council Member Filseth: Did you say that this $132,692 is the cost of police patrolling the garages specifically? Mr. Rossmann: Which page are you looking at? Council Member Filseth: 122. Mr. Perez: A quick background. We used to have a private patrol service. Council Member Filseth: That is that number? If it's more complicated than yes or no, I want to give the floor back to Greg. Mr. Keene: It might have a little bit of the Downtown Streets Team. What are Staff really tried to do is be sure that we were allocating what we thought the real costs were directly to the garages, and have nothing extraneous related to Downtown. Council Member Filseth: Got it. Thanks. Council Member Scharff: That's what I was looking for. That statement from you. I know that wasn't in the past. I just wanted to make sure. Just briefly, the Streets Team peer counseling, how does that relate to the garages? Mr. Rossmann: The Streets Team clean the garages, they pick up the trash, and they support the cleanliness overall. Council Member Scharff: Right, but that's under the Downtown Streets Team, the $61,000 I see there, right? Page 66 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Mr. Keene: The peer counseling piece is this idea of some of the problem behavior that you might have from some peers of the folks who are on the Streets Team. They actually engage in talking with them in the garages and all this sort of stuff. Council Member Scharff: I had no idea what you were talking about. I get it now. What you're really saying is that people who are on the Downtown Streets Team go out and talk to the homeless who are camping in the garage and try and get them to not mess the garages up. Mr. Keene: Right, exactly. Chair Schmid: Any other questions or comments? Council Member Scharff: Not on parking. I have ones on other funds. Do you want me to go on to other funds? Chair Schmid: Yeah, let's do it. Council Member Filseth: Can I ask one on parking before you ... Council Member Scharff: I'd rather we just do one fund at a time. It's easier if there's questions on it. Council Member Filseth: Can I ask a question on parking? I will have another meeting like this tomorrow morning actually. I go with the Downtown Business Improvement District and frequently they mention this number of $400,000 that they've paid to the City that they think the City ought to pay for instead of them. Where does their contribution show up in this or does it show up some place else or is it part of this $1.949 million? Mr. Perez: You're referring to the Business Improvement District on that? Council Member Filseth: Yes. Mr. Perez: It is not part of this. It's a separate collection. The Business Improvement District collection, we're a pass-through for them. We collect it and then pass it back to them. It's their budget and we don't keep any of that. We don't charge them an administrative overhead either. Council Member Filseth: Is some of that related to parking and does that cover the police patrol? Mr. Perez: No. They have challenges in collecting from all the businesses, as you may have heard. It basically covers administration and some other maintenance efforts. It's not a lot of money that they collect. Page 67 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Filseth: For the moment, this police patrol, the $132,692, the City's paying for that, not the Business Improvement District? Mr. Perez: It's the revenues from the parking permits that is paying for that. It's the $485 that a person pays annually for the permit. Mr. Keene: The peer counseling for the Streets Team and the police patrol portions allocated to the garages, we're taking that out. About an equal amount was the amount that we shifted back into the General Fund this year for non-garage related things. Just in case it's misunderstood, Council Member Scharff was accurate in describing that many of these charges were actually asked for by the folks in the Downtown Business District when times were tough. It's not that the City unilaterally just said, "Let's charge the funds." Chair Schmid: I'll make a comment on the parking district. While you're looking at taking funds out, you ought to then look at bringing in the cost of the Embarcadero shuttle parking lot into the Downtown as a ... Council Member Scharff: Into the Downtown Parking Fund, why? Chair Schmid: You're shuttling people from the Baylands to the Downtown. You park them in the Baylands, shuttle them Downtown. Council Member Scharff: We sell permits for the garage for the (inaudible) set up as an enterprise fund roughly. That doesn't really make sense. I can see your concern about somebody should pay for it from the business thing. Until we create that mechanism, which is a different issue ... Chair Schmid: It's a substitute for building a new garage, and it's cheaper. Council Member Scharff: The Parking Permit Fund does not deal with building a new garage. It simply deals with maintaining the garages that are currently built. Chair Schmid: Unless you add permits to the Embarcadero Baylands. Council Member Kniss: Do you mean if we sell permits to park there? Chair Schmid: Yeah. If it's for the Downtown business. Council Member Scharff: We're selling RPP permits, and we have a separate fund for that, which is what I was asking the questions of. We're going to sell some of those permits to business frankly. If you were going to sell Embarcadero permits, I actually believe that would go into that fund, but I could be wrong. I defer to Lalo. Page 68 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Chair Schmid: It's just something to discuss when you're looking at permits. That's my comment. Council Member Scharff: Briefly on the Stanford Development Agreement Funds. My concerns on this was all Project Safety Net. One of the things that really concerns me is that Rob de Geus came before us and said he's having a hard time doing his job because he's spending a lot of time on Project Safety Net. That's one of the reasons he needs to hire a Superintendant of Recreation. Obviously Project Safety Net has taken on added importance in the community; people are obviously very concerned about it. You just told me something which I didn't realize; we're actually going out for an RFP and having an outside consultant person doing this. Maybe you could explain where we are with the Project Safety Net fund which is in this fund? How this is working and what we're doing with Project Safety Net and how we're spending it. Mr. Rossmann: I have Minka van der Zwaag who is here to explain this for us. Thank you. Minka van der Zwaag, Human Services Manager: Good evening, Council Members. Minka van der Zwaag, Office of Human Services. We are not at this point going out for an RFP for Project Safety Net Director. What we are at this point is at the cusp of bringing to the Policy and Services Committee a report back from the assignment they gave us back in October to look at some staffing and structure models for ongoing sustainability of the Project Safety Net community collaborative. We're going back to them on June 9th. At that point we'll be reporting back on the work that the collaborative has been doing, looking into some sustainable models for going forward with the collaborative. One of the things that we've noticed since we've gone to them in October, and we are in the midst of a suicide cluster, is the need to have a full-time, and we're going to be recommending contracted, Project Safety Net Program Director, someone who is working on Project Safety Net on a day-to-day basis. We have not gone out for an RFP or done anything at this point yet. Council Member Scharff: We are planning on having a contracted one. That would be through an RFP or we'd just go out and hire an individual contractor? How does that work? Ms. van der Zwaag: I'd leave that to Lalo and the purchasing department to tell us what kind of process we'd have to go through for that. Mr. Perez: Anything over $25,000 we have to competitively bid. Page 69 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: This is really my concern. I've been struggling a little bit with Rob's ask. One of the things I heard him say was that he spends a lot of time on Project Safety Net. When he comes back, I was going to ask him a little bit more about that. One of the questions I had is where are we on that, are we hiring a director. I couldn't remember; I was on that committee. It's coming back to me now. When are we going to have it stabilized, which is the question, where Rob does not have to spend time on it? Obviously in his new role and obviously there's a suicide cluster, so we obviously have to keep his focus on it right now. What is the timing of this and the transition and all of that? That's really my question. Ms. van der Zwaag: My hope at this point is that if Policy and Services is supportive of the approach that Staff is going to be recommending, hopefully very early in the next fiscal year we can go out and hire a Project Safety Net Director. As this year goes forward ... Council Member Scharff: You just said we were going to contract out. Ms. van der Zwaag: I'm sorry I misspoke. Get the contractor of the Project Safety Net position. It's really our hope that by late summer we'll have someone in place. We already have a part-time administrative assistant, and that's through the SUMC funds. It's our hope that by early fall, his time definitely and my time as well will be significantly tapering away from the day-to-day management of the collaborative. Council Member Scharff: How much time do you spend on the collaborative? Ms. van der Zwaag: At this point I spend at least 50 percent or more of time on it. Council Member Scharff: Really? Ms. van der Zwaag: It's significant as well. I've been doing a lot of the day- to-day management of it. We've been without a director for over a year now, so I've been doing a lot of the day-to-day management of pulling the collaborative together, the leadership teams, agenda planning, obviously higher-level policy decisions. Rob is part of it especially since this last process of looking at a sustainable model. He's been integral to helping the leadership team and myself and the lead staff from the school district work on this model in making sure that it is a sustainable model for the collaborative to move forward with. Council Member Scharff: Thank you. That was very helpful. Page 70 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Mr. Perez: It's probably late in the evening, but it's something to keep in mind as we progress forward in the future. It might be a sustainable model, but there's only so much in the bank from the University Development Impact Agreement. I see it as temporary, because it's not fully funded going forward until the policy decision is made. That's just something to keep in mind. Ms. van der Zwaag: I would add to that in the model that we will be bringing forward, we are definitely looking at the collaborative, looking to our key partners in the community to help us with this effort and help this effort be sustainable over the years without solely being a City-funded venture. Chair Schmid: Follow-up by Council Member Kniss. Council Member Kniss: Let me jump into this. I knew it had been that long. The issue with the Project Safety Net Director has been complicated. Would we agree with that? Ms. van der Zwaag: In retaining a director? Is that your question, Council Member? Council Member Kniss: The question is answered. If it's been more than a year, we've got a problem. Ms. van der Zwaag: I would qualify that a little bit. We had a director from March 2012 to August 2013, so about 17 months. Then we had a gap from that August until June, and we had a director stay for four months and left during personal issues. We have had two directors in the last two years, but there has been gaps between both of them and a gap since last September as well. Council Member Kniss: Here's my point. In a time when we've had more crises going on, when the papers are filled with what's going on with our teens, I am puzzled that we're talking about at this point a contract person, therefore somebody who is not as committed as somebody who is hired, to come in and run Project Safety Net. Of all the things tonight, this puzzles me the most. This is sounding awfully sketchy at this point. Rob is saying, "I'm spending most of my time on this, so I need somebody." You're saying you're spending more than 50 percent of your time on this. This doesn't seem to be well coordinated. Not to be quite so frank, but I'm not hearing how this is coming together. Page 71 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Mr. Perez: It's different points in time that we have. What I'm hearing from Minka is that when the director position was filled, it wasn't quite the same impact to her time, so it wasn't 50 percent. Council Member Kniss: Rather than going through that, Lalo, not to interrupt you. For me, I would really like to know where we're going with this. I would be happier if we were heading toward hiring somebody and not a contractor, but somebody that underscores for us the importance of us working with this particular issue in our community. Project Safety Net came about because of suicides that had begun. We were alarmed about them, and we've become even more alarmed about other kinds of things that go on with teens in our community. It's absolutely evident. I don't know where the rest of you might be, but I am uncomfortable with this floating idea of hearing that a couple of people are working on it, but we don't have any plan in mind to hire a full-time Project Safety Net Director. Mr. Perez: You're hitting the nail on the head. That's part of the challenge and the policy decision. I'll give you my finance view, not the program view. Council Member Kniss: You just want us to make the decision to leave the 104 in there. You want Policy and Services to come up with how we're going to do it. Am I correct? Mr. Perez: From a finance perspective, to answer your question, yes. Here's the issue. If you're going to try to work out a contract even with a nonprofit or if we're going to recruit for a contract person, if they know that there's only so much money designated, why would you want to make a move? It's a challenging task. The first director left because they didn't have a full benefits package. That's what she said when she left. That's why I'm saying we may have some solution in the short term, but ultimately need to make a bigger policy decision as to what do we want, what do we ambition in the long term. Then maybe the challenges are different. Council Member Kniss: Let's wait to hear what comes out of Policy. At least I'm on record as saying I don't like the direction that this seems to be going in. Council Member Scharff: I'd just like to follow-up with Council Member Kniss. Actually their Budget, if you look at it, is actually removing the $104,000. They're eliminating the position of Project Safety Net Director by approving this Budget. Ms. van der Zwaag: We're moving it from temporary salaries to contract salaries. Page 72 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Scharff: You're eliminating the position. Then what you're doing is you're coming up with a Community Health and Safety Project Net contracts and you're adding $358,000 to that for the Budget. What that looks to me like is we're taking away a $104,000 position and then adding $254,000 into the Budget for contracts. I want to know what all those contracts are. Lam Do, Management Analyst: Good evening, Council Member Scharff. Lam Do, Senior Administrator for the Community Services Department. The position that we previously hired to oversee Project Safety Net was an hourly or temporary salaried position. What we're doing is we're moving the funding for that out of temporary salaries and into contracts in anticipation that possibly we may need to contract out the manager position. The rest of the money that you see making up the $354,000, $240,000 of that is actually for Track Watch for six months. If you see the overall difference between Fiscal Year '15 and the Proposed Fiscal Year '16, you're seeing a $258,000 difference. $240,000 of that difference is actually Track Watch. Council Member Scharff: In 2015 we didn't have Track Watch? Mr. Do: We had Track Watch at a much lower level of security, where we had fewer locations and fewer hours. We went, I think, from four to six locations and we ... Ms. van der Zwaag: Two to four. Mr. Do: I'm sorry. Two to four locations and we went for more hours. Council Member Kniss: $250,000 is Track Watch? Mr. Do: Yes. Council Member Kniss: The rest is the coordinator? Ms. van der Zwaag: No. If you look at all the contract services, $315,000 of that is for Track Watch. $240,000 of that is to fund Track Watch at its current elevated level for six months. There's an additional $75,000 which is the normal amount that has been in the Track Watch Budget since Fiscal Year '12. That would fund the two guards only at night time at the two locations. The rest is for the contracted Project Safety Net Director. Council Member Kniss: At least this would be my request. Could you bring us something that spells this out, so that we can understand without having to quiz you like this? Mr. Rossmann: We'd be happy to do this, Council Member Kniss. Page 73 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Kniss: I hear what you're saying. You want the policy decision about this to come from Policy and Services. This just doesn't make much sense as I’m seeing it in front of me. Mr. Rossmann: We'll be happy to do so. MOTION: Council Member Scharff moved, seconded by Council Member Kniss to recommend tentatively the City Council approve the Parking District, Stanford Development Agreement Fund and Other Special Revenue Funds Budgets, with any amounts designated for Project Safety Net being placed in the parking lot. Council Member Kniss: Which one are you tentatively approving? Council Member Scharff: All of them. I'm open to doing anything. The approval is tentative. Council Member Kniss: Until I see how these funds will be—this is a fair amount. I am not sure what it's adding up to totally. I don't know what the total amount is. Chair Schmid: I think the suggestion was to put it in the parking lot, and Walter will come back. Council Member Kniss: Let's do that. Let's put this piece of it in the parking lot, that deals with Project Safety Net. Chair Schmid: I support that. Council Member Kniss: We take a look at that after you put something in writing for us so that we can see where it's going. Mr. Perez: We will do so. Chair Schmid: Did you have a comment? I just wanted to make a comment on the housing in-lieu funds. Housing in-lieu funds, you're stating that the City has reserved $8 million, $6.8 million from residential and $1.2 million from commercial. That raises a basic question of the housing in-lieu funds where already in the Housing Element we've identified the issue that new residences pay more than new businesses; although, businesses have been growing three to four times as fast. It seems there's a basic inequity in our in-lieu housing funds. Through ABAG, we know clearly that the pressure is on the City to build new housing, because of the rapid growth in office space in town, because we have three jobs for every employed resident. Yet, our in-lieu housing fees put the burden of building affordable housing on new housing. You penalize new housing by having them pay more for affordable Page 74 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES housing. It seems very inequitable. That was pointed out in the Housing Element already. Base question, what can we do about that? Council Member Scharff: Council Member Schmid, what was the question? You said about what? Chair Schmid: The housing in-lieu fund is setting aside money for Buena Vista. Three-quarters of that money comes from residences; one-quarter comes from commercial. Yet, commercial properties have been growing faster over the last five or six years than new residences. The pressure to build affordable housing comes from the rapid growth in the commercial side of our community. Council Member Scharff: I don't think that's true, but I'll let you finish. Chair Schmid: I think there should be a look at whether the housing in-lieu fee is inequitable. Mr. Rossmann: I think Hillary Gitelman talked about this in April as part of the Cost of Services Study Session. I think she mentioned tonight that she's going out for the housing nexus study, which the Council will have to approve. We can refer your question back to her. As we go through this process, see how this could be addressed. Mr. Perez: To you point, that's where we get into what assumptions are being made, what are the drivers of those assumptions that make up the fee (crosstalk). Chair Schmid: The only problem is that study has been promised now for a long time, and we keep making decisions such as approving a Budget that has three-quarters of the funds coming from housing. Mr. Perez: The problem is that you can't change your fees until you have a nexus study done. I understand your frustration that it hasn't been done. It is a legal process that you must go through. As you may recall when we did the Public Safety Impact Fee study, we had the nexus. You asked us to make some revisions. We made the revisions and then we came back to you with that. Chair Schmid: The last nexus study was based on a ratio of 1:1, and they say they use that because that's what they use for all cities. Our ratio is 3:1, and so I don't have much confidence in an outside consultant nexus. Why isn't there a discussion? Maybe you could identify that as an issue to look at. Page 75 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Mr. Perez: We will pass that on to Hillary about that specific issue. It's important that all of the variables and all the assumptions are called out. Chair Schmid: The problem is we went through this with the Housing Element. They said, "We'll do this nexus study." Here we are six months later with a Budget, same thing, they're going to come with that later. We keep making these fundamental decisions. Mr. Rossmann: I do want to add one thing, Vice Mayor Schmid. The majority of dollars in the housing in-lieu funds have been collected from the last few years. It's a fund balance of $8 million in one and $6.8 million in the other. They are based on the previous nexus study and existing housing impact fees. The nexus study will actually impact future collections. In the future collections, we assumed for 2016 about $1.3 million. It's a smaller portion. We understand your point. Chair Schmid: I'm just asking for that discussion to come before we face another decision like that. Mr. Rossmann: Point taken. Council Member Scharff: I just want to follow-up on that. First of all, we do actually collect housing in-lieu fees from office development that's built. I know we do. The more office development we build, the more housing in- lieu fees. Council Member Kniss: The more money we get. Council Member Scharff: More housing fees on the ratio of commercial to development. If we build more office, we'll have more housing in-lieu fees from office. If we build more residential, we'll get more housing in-lieu fees from residential. Chair Schmid: No. The way it's set up is per square foot of residence you pay more than you do for new office space, even though 1,000 feet of office space generates four jobs. A new house generates 1.6 workers. You're generating more potential residents, but you're paying the same amount, same share. Council Member Scharff: I'm not sure you're generating the residents. I don't think there's necessarily a connection between creating jobs and residents especially in Palo Alto. It depends on where they are. If they're along the Caltrain commute ... Chair Schmid: ABAG thinks differently. Page 76 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Kniss: Is this part of the motion? Council Member Scharff: No, it doesn't. No wait, Greg. You're wrong about ABAG. First of all, ABAG does not put any pressure on us to build. They've given us a housing allocation. Frankly the number of jobs played a very small role in that, very small. Chair Schmid: You and I might have a discussion separate. We don't need to keep everybody here. Council Member Scharff: (crosstalk) Council Member Kniss: Could we pass the motion and move on? Council Member Scharff: You always says this, every time. It's just simply not true. Chair Schmid: Let's look at the data. Council Member Scharff: It's not a data issue with ABAG. It's how their methodology works. It's just simply not true. In terms of the amount of jobs that we create ... Chair Schmid: We can talk about that. Council Member Scharff: You always say this. You go on and on about it, every time and say the same thing. Chair Schmid: It's comes from state law to the HCD. ABAG allocates it, (inaudible) they use a different formula for allocation than the total number. I'm talking about the total number of housing units. Council Member Scharff: When you say they put pressure on us, what they do is they allocate us a number which we put in the Housing Element. Right? Chair Schmid: Mm-hmm. Council Member Scharff: That's different than ABAG putting pressure on us. We can talk about it later. Council Member Kniss: I'm ready to vote. Chair Schmid: We have a motion. Council Member Kniss, did you make the motion? Page 77 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Council Member Kniss: I'm sure I did. Chair Schmid: Did we have a second? Council Member Kniss: Absolutely. Council Member Scharff: I thought I made the motion and you seconded it, but I'm happy to secede that privilege to you. Chair Schmid: We have a motion. MOTION PASSED: 4-0 Mr. Perez: We are putting in the parking lot the Project Safety Net funding. Council Member Kniss: (inaudible) I want to see spelled out as far as what the allocation (inaudible). Mr. Rossmann: We'll have this ready for you at the next at-places for Thursday. I know you will not be here next week on Tuesday. Future Meetings and Agendas Council Member Kniss: Will you go over the rest of our ... Chair Schmid: Yes. It'd be helpful. Council Member Kniss: I've got two different times for Thursday. Lalo Perez, Administrative Services Director and Chief Financial Officer: For our next meeting, it is Thursday. We have the meeting starting at 4:00. My notes say that Council Member Scharff will not be here. Is that correct? Council Member Kniss: I heard that. Mr. Perez: If the other three of you are here, then we have a quorum. We will be discussing the Municipal Fee Schedule ... Council Member Kniss: Do we know why we're starting at 4:00? Was that ... Council Member Scharff: Because you wanted to. Council Member Kniss: Because you wanted to? Council Member Scharff: No, because you wanted to. I've raised this like four times now. Page 78 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Chair Schmid: We did have a discussion, and you said 4:00 made sense for you. Council Member Kniss: Did I agree? Chair Schmid: Yes. Mr. Perez: We've published that already. Chair Schmid: Does it fit with your calendar, Liz? Council Member Kniss: 5:00 would be much better. If you've already agreed on that, I'll do it. Mr. Perez: We'll discuss the Municipal Fee Schedule changes. We're only going to bring to ... Council Member Kniss: I don't know why I agreed on 4:00. Council Member Filseth: My recollection is that the Staff's availability was one of the arguments. Council Member Kniss: You know what? If I agree to it, I'll be here. Maybe we'll get done by 7:00. Council Member Scharff: Without me here, you should be done by 6:00. Chair Schmid: Lalo. Mr. Perez: We'll have the Muni Fee Schedule and the Public Works Department and my department, Administrative Services. We'll also recap for you where you're at in terms of changes and what we noted in the parking lot to ensure that we captured everything prior to the 19th meeting, which is then the meeting starting at 2:00 on the 19th. Chair Schmid: That's the date you can't be here. Council Member Kniss: That's when I can't be here, and you're going to start at 2:00. Chair Schmid: Greg and Eric, 2:00 is confirmed? Council Member Filseth: Yes. Council Member Scharff: (inaudible) Page 79 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Mr. Perez: We'll have the General Fund Capital, infrastructure will be the focus. We'll bring you back the Animal Services item as well as everything else in the parking lot and wrap-up any outstanding issues that come up from this coming Thursday as well. That's all we have in terms of the Budget hearings. Chair Schmid: I thought we did agree on a backup date. It was Tuesday, May 26th. Mr. Perez: At 1:00. Chair Schmid: At 1:00. Mr. Perez: That's only if it's necessary. Chair Schmid: Only if necessary. That seems agreeable. Council Member Kniss: For Tuesday, you will simply decide that after the meeting on the 21st, right? Mr. Perez: On the 19th. Council Member Kniss: On the 19th, right. So there is no meeting right now on the 21st, correct? Mr. Perez: That is correct. We could not meet that night. Chair Schmid: It was cancelled. Council Member Kniss: That's when Jim is gone. Mr. Perez: Correct. Council Member Kniss: That one's just off the docket, right? Mr. Perez: Yes. Council Member Kniss: That Thursday, the 21st. Mr. Perez: Yes, you can erase that. Council Member Kniss: The wrap-up is May 26th. Mr. Perez: At 1:00. Chair Schmid: That's only tentative now. Page 80 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 DRAFT MINUTES Mr. Perez: Thank you. Chair Schmid: That completes the agenda. Council Member Kniss: That means you will have on the 19th taken everything out of the parking lot, right? Chair Schmid: We will discuss the parking lot, yeah. Council Member Kniss: If that's your last day, you've got to send it on, which means you've got to get it out of the parking lot. Maybe between now and Thursday, you can tell us what's in the parking lot, so I can lobby if necessary. Mr. Perez: Yes. We will do that. We will send out our spreadsheet and then we'll go over it first thing on Thursday. You'll have an opportunity to see it before. Adjournment: Meeting adjourned at 9:01 P.M. Page 81 of 81 Finance Committee Special Meeting Draft Minutes 5/12/2015 APPENDIX 4 FINANCE COMMITTEE DRAFT MINUTES Special Meeting Tuesday, May 14, 2015 Chairperson Chair Schmid called the meeting to order at 4:08 P.M. in the Council Chambers, 250 Hamilton Avenue, Palo Alto, California. Present: Filseth, Kniss, Schmid (Chair) Absent: Scharff Oral Communications None Chair Schmid: At-places memo, do you want to introduce the material we have? Walter Rossmann, Office of Management and Budget Director: Yes, Chair Schmid, Walter Rossmann, Budget Director. Just a quick overview of the agenda for today. We'll first have a conversation about the Municipal Fee Schedule and the changes we are proposing to that schedule. Then the major focus of this afternoon is the Public Works Department, General Fund as well as all Enterprise Funds. Lastly, we will conclude with the Administrative Services Department. We did provide you with an at-places memo today. The first part is revised pages regarding performance measures for the Administrative Services Department. Secondly, we promised the Committee on Tuesday regarding an attachment which shows the position allocations between funds. Attachment B does show that. If we move a position, we just increase or decrease the position count from the General Fund to Enterprise Funds or from Enterprise Funds to other funds. You'll see this in Attachment B. Finally, when I gave my overview presentation two weeks, I believe, or last week, Tuesday, I talked about the overall salary and benefits increases for all funds going up by $8.5 million. What we did here on the second page, we provided you more detail of that number. We broke it down for you between what we call the Base Budget versus a Proposed Budget. The Base Budget is the same service level as in 2015, but with the higher costs, higher pension costs, potential salary increase, etc. You'll see that change. If I quickly summarize that, the Base Budget change in all salaries and benefits is $6.5 million, and $2 million is Page 1 of 75 APPENDIX 4 DRAFT MINUTES the Proposed Budget change, and that's the cost for the 13.3 positions in total. That's on page 2 of the at-places memo. Lastly, the San Francisquito Creek Joint Power Authority gets supported by the City of Palo Alto. Their Board has voted to increase the contribution from its member agencies, which has an impact of $27,000 for the City. We are recommending to revise the Public Works Department General Fund Budget by $27,000 to pay for this additional contribution. That's on the second page at the bottom, second paragraph up. Last thing, part of the ballot measure which we have for the storm drain program, there's the Storm Dram Oversight Committee. That Committee has done its review as required and has confirmed that we are continuously in compliance with the ballot measure. That's Attachment C of the at-places memo. With that, if the Committee's ready, unless there are questions, we can move to (crosstalk). Chair Schmid: Let me ask a question. Some of the material you just presented is very interesting. When is an appropriate place to address questions to that? Should we do that at the end where we are talking about the next meeting and the wrap-up? Mr. Rossmann: It is the desire of the Committee; however you would like to proceed. Chair Schmid: Maybe that would be the best place to deal with it. It's very helpful, very good. Thank you for the memos, but a little time to absorb it would be good. Mr. Rossmann: I appreciate that. Sure. Chair Schmid: When we get to talking about the next meeting schedule, we can talk about whether some of this is relevant for that. Mr. Rossmann: We sure can do that. Agenda Items 1. Finance Committee Recommendation Regarding Amendments to the Municipal Fee Schedule for Fiscal Year 2016. Walter Rossmann, Office of Management and Budget Director: I quickly want to kick this off. As you know, annually the Council approves the Municipal Fee Schedule. A recommendation is now in front of you today. We submitted a City Manager's Report which outlines changes to that. Michael Bruckner, he's on the left side of me, is our Senior Management Analyst who handles that schedule on behalf of the office. He's working with Page 2 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES all City departments involved, he'll have a short presentation for you to summarize the City Manager's Report for you. Michael Bruckner, Senior Management Analyst: Good afternoon, Chairman Schmid and Members of the Palo Alto Finance Committee. As part of the annual Budget process, Staff submits changes to the Municipal Fee Schedule for Finance Committee review, approval, and recommendation to the City Council for adoption. The City's Municipal Fee Schedule includes over 1,000 fees for various services such as facility rentals for meeting rooms and studios, planning and development related fees for architectural review and building permits, and Animal Services fees. As recommended by this body in November 2013, we presented the User Fee Cost Recovery Level Policy for Council review on April 6, 2015, and for formal adoption on May 18, 2015. In anticipation of Council's approval of the User Fee Cost Recovery Level Policy, OMB Staff has began working with City Departments to align some fees to the appropriate cost recovery levels as outlined in the policy. We will discuss this in further detail later on in this presentation. As presented on Tuesday, included in the FY 2015 Budget was funding for a Cost of Services Study for planning fees. Staff is currently working with the consultant to finalize the study, and we expect to bring forward any recommended changes to planning fees to the Finance Committee in early FY 2016. The FY 2016 Proposed Budget for Development Services that was tentatively approved by the Finance Committee on Tuesday also includes funding for a consultant study to review Development Services-related fees. As mentioned during the April 6, 2015 Study Session, the vast majority of fees are recommended to be increased by 3.6 percent, an amount equivalent to the general salary and benefit increase over Fiscal Year 2015. This will ensure that the City continues to recuperate its cost for services. Based on our analysis, some fees were adjusted downward in order to not to exceed a 100-percent cost recovery level. It is also important to note that Development Impact Fees, which are based on discrete formulas as outlined in the Palo Alto Municipal Code, were increased by 2.5 percent, a factor equivalent with the construction price index increase for March 2014 to March 2015. Included in the report before you, we are recommending to add 11 new fees, delete 11 fees, and approve changes to 88 fees as outlined in Attachment A. For FY 2016, Staff is recommending to add fees for Community Services Department facility rentals at the Cubberley Community Center and Art Center, an off-hour inspection fee in the Public Works Department, and a consolidated business location change fee in the Police Department. We are recommending that duplicate fees, like Community Services Department facility rentals for birthday parties or parking lot attendant fees, a fee for service that is no longer offered, be deleted. We are recommending that 88 fees be changed as part of the FY 2016 Proposed Fee Schedule. A changed fee is categorized as a fee adjustment to align the Page 3 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES fee to market demand, increasing a fee to reach cost recovery, or a technical adjustment to a fee. As mentioned previously, some fees are also being lowered to generate demand or to ensure cost recovery does not exceed 100 percent. Examples of changed fees to align with market demand include a 10 percent or $12 increase in auditorium rentals from $119 to $131 per hour for residents and $179 to $191 per hour for nonresidents. To reach cost recovery, fees like Public Works Department encroachment permits for dumpsters is recommend to increase by 10 percent or $15, from $153 to $168 per permit. This 10 percent increase is recommended for the next two years until cost recovery is expected to be at 100 percent. Other fees like Art Center facility rentals for Studios A and B are recommended to be reduced by 25 percent or $13, from $50 to $37 per hour for residents, and a reduction of $19, from $75 to $56 per hour for nonresidents in order to generate demand for this space. Finally, other change fees include technical adjustment to tiered fees like the building permit fee or grading and excavation fee to account for minor adjustments to the base level amount charged at certain tiers. Other technical adjustments include changes to fees due to regulatory requirements like the strong motion instrument program fees for residential and commercial buildings where changes in State law require adjustments to the fee. This concludes my presentation. We're pleased to answer any questions you may have. Chair Schmid: Council Members, questions or comments? Council Member Kniss: Eric can start. Chair Schmid: You don't have any? Eric has none. Council Member Kniss. Council Member Kniss: Apologies for the cough. Why don't you say a bit about the philosophy of total cost recovery and relate it where necessary to Prop 218. Why don't you go into some of the overarching issues. In some cases, we're going to hear people who are pleased that the fees have gone down. Talk about that and how you looked at it. It's a major move when you do something like this, and you're getting total cost recovery. I would not be surprised if people said, "Really? That doesn't seem right to us. It seems like that's gone up too much." We will hear that, certainly. Mr. Rossmann: First, as you correctly stated Council Member, the voters did approve Prop 218 in the late '90s. That requires us to allocate costs related to an activity for which we can pay for fees. What we do for that is we actually work with departments to do a detailed analysis on the fee-based level. That tells us how much of a fraction for Staff time is allocated towards the activity on the average. That's how we calculate that. That's one part of it. We check annually whether we exceed the 100 percent cost recovery Page 4 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES level based on budgeted expenditures or we do not. The second piece is the Council provided comments on the User Cost Recovery Level Policy on April 6 at a Study Session. Overall, we felt that the Council was very supportive of that approach. Where some fees were really out of kilter in the cost recovery levels, we're proposing to start increasing those slightly faster, but this will take years. There's a set of fees in here, if we do the same 15 percent increase over the next five years, we probably will reach a 100 percent cost recovery level. The last piece is when do we try to reach that level and when do we not. That ties back to the policy. For instance if we have a building inspection related to that where the benefit primarily goes to the homeowner or the business, that's where the Council was agreeable to achieving a 100 percent cost recovery level. However, there are fees, whether it's in arts class or a recreation class or whether it's another—jump in if you have another example. I can't think of one right now—where the Council was satisfied with subsidizing the activity with a General Fund subsidy. It will take us at least three, four years, to align the oldest 1,000 fees towards the policy. Annually the Committee and the Council has a chance to weigh in whether we're doing the right approach. Council Member Kniss: Depending on how you look at this, though, you could say, "I thought my taxes already paid for those people to do that job. Now, you're telling me you need to get cost recovery." Correct? Mr. Rossmann: Sure. Council Member Kniss: Somebody will say that to me or Eric or Greg. They will, absolutely. They'll say, "Isn't that why our taxes go to pay that huge City Budget?" Mr. Rossmann: If you look at the General Fund of about $185 million, about 56 percent or so is actually paid for with taxes. That's your property tax. The residents pay the sales tax. Visitors may pay sales tax and Transient Occupancy Tax. Those are our three major tax sources. Yes, indeed, this will provide police services, fire services, park services. In order to supplement it and have a more diverse revenue portfolio, what cities have done including Palo Alto, we're trying to find different revenue sources to pay for all the services where taxes alone will not be sufficient. That's where the fee levels come in. They provide about $40 million between the licenses, permits, and fees. It's about 10 percent of our Budget. Lalo Perez, Chief Financial Officer and Administrative Services Director: Council Member Kniss, one other point, because we get that question as Staff as well. I think it's important for the community to recognize too. Not Page 5 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES everybody know that for every $1 paid for property tax, the City of Palo Alto receives about $0.09. Council Member Kniss: I'm glad you mentioned that, Lalo. It's always been one of my favorite statistics. Let's hope that goes on the record, because most people have no idea how that tax dollar is divided up. That's about it on that occasional year when we get 10 percent rather than the 9 percent. One year, I swear, I think we got all the way up to 11 percent. That would be unusual. I'll give somebody else a chance for a minute. Chair Schmid: A couple of questions. I'm sorry I did not bring my Municipal Fee Schedule. I notice it's not on the changes. I'm interested in the fee for playing fields. As I recall, in the Municipal Fee Schedule it's one of the few that has a very wide range. I think it goes from $3 an hour to $70 an hour. I've had a number of questions. I think what it does is ... Mr. Rossmann: We'll look it up quickly. Representatives from the Community Services Department are here as well. Chair Schmid: Playing fields. Mr. Bruckner: There is a fee for special events for playing fields. Are you talking about just reservations for activities? Chair Schmid: It's regular uses of teams. Mr. Rossmann: Lam Do is our Senior Management Analyst for Community Services and will respond to the question. Lam Do, Senior Management Analyst: Good evening, Vice Mayor Schmid. Can you clarify the question? The inquiry of ... Chair Schmid: As I recall, I don't have it in front of me, there is a wide range given in the fee schedule for playing fields. Is that right? Mr. Do: Yes. The range also depends on the field type. We have synthetic turf fields. We have grass fields. We have different fee structures. We have fee structures that are established for youth groups, where we charge different types either based on head count or per group. Chair Schmid: Could you read what the fee schedule says? Mr. Do: For grass fields for example, the fee ranges between $46 and $81 an hour. For Palo Alto youth-based sports organizations, however, the fee drops to between $3 and $27 an hour. Page 6 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Chair Schmid: The range in there, I've had some comments coming to me that year-to-year they see substantial increases. I say, "We didn't vote any." Is there a lot of discretion in there for changing the fees from year to year? Mr. Do: It's not discretion. Let me speak with a colleague to make sure that I have my information correct also. Our fees for fields, there are two factors that play into the fees. It depends on the quality of the field. Some fields are rated a higher quality, because of, for example, the playing surface. Those tend to be higher. What you're asking, though, is another factor impacting fees. Fees for youth organizations which were quite low before, we've been trying to increase the fees several times in the past couple of years. We've gone from about $2.50 per head count to, I think we're now about $7 per head count. Yes, that is an increase. In looking at the overall increase, it's a minor increase. The fee was quite low before. As we try to recoup our costs, we are increasing the fees incrementally. Chair Schmid: You're trying to get them in better balance. It would be helpful if you could give a description of what has taken place over the last few years, your goal on that. Is there a number you're trying to get to over a number of years? Council Member Kniss: On the playing fields, Greg? Chair Schmid: Yes. So that people running team sports can have an idea from year-to year-what is going on. When they come to me, I say, "We haven't changed that." As you say, it's tripled over time. Mr. Do: It has been expressed before, but we will make it more clear. We do also meet with the groups occasionally. We will reiterate one of our goals is to recoup more costs. Most all the groups know this is a subsidized program, which we are trying to increase the fees to lessen the burden on the City. Chair Schmid: It would be very helpful if you could give me a one-page summary of how you're dealing with the piece there. Mr. Do: Yes, we can come back to the Finance Committee with that. Chair Schmid: Thank you. Council Member Kniss: Before he sits down. Could you just give us, as Greg mentioned, a range? What's a rough cost? Chair Schmid: He gave an example of $3 to $27. Page 7 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Council Member Kniss: I heard that, and I also heard $81. I don't know ... Mr. Do: There are two fees. There are organizations, and we charge them the higher range that I spoke of earlier, the range between $46 and $81 depending on the quality of the field. Council Member Kniss: That's the $81? Mr. Do: Yes. When we're working with youth-based sports organizations then, because it's a youth organization, we don't charge them the higher rate that I just discussed with you earlier. We charge them by a head count of participants in the organization. That's where it's by head count and the fee which Vice Mayor Schmid was asking about. Council Member Kniss: That's the $3 one? Chair Schmid: Yes. Council Member Kniss: Thank you. We'll look forward to seeing the whole report. Mr. Do: Yes, we'll get that back to you. Council Member Kniss: Playing fields are always one of those red flag issues Chair Schmid: Yes. People love it. That's why it's a red flag. Did you have another question? Should I go ahead? Council Member Kniss: Not yet, not yet, probably will. Chair Schmid: I have another general question about our fees. When we had that Study Session, part of the Study Session was to look for overall goals of our fees. I thought the principle put forward by Community Services was that the fees should reflect the benefits that a person or a group gets from it. I have a question about the last meeting of the Finance Committee. We went through, I think, the Planning Department. There were five items looking for Budget requests of a substantial sum on parking. Many of them dealt with the Downtown parking situation, which I know by Code says clearly from 1998 that the businesses, business district goal is to maintain the number of parking in the neighborhood at that time. We are now dealing with an excess of cars parked from the business district in the neighborhood. There are substantial sums of money going in there. Seems to me that the fee schedule is a more appropriate place to pay for that than is the General Fund. The question is why isn't that a user fee. Page 8 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Mr. Rossmann: Thank you, Council Member Schmid. You're referring to having a parking fee, in essence, as a user fee, correct? Having to pay for parking Downtown, is that what you're specifically referring to? Chair Schmid: It could be a parking fee. It could be an in-lieu fee for a parking garage. It could be a shuttle service. It could be offsite parking. It could be a TDM program. There's a variety of ways of dealing with it. My point is it is benefiting one single group, a group of employers Downtown who are increasing their head count and need places to park. Rather than the General Fund bearing the cost, it seems to me that there's one group that is benefiting from it and it qualifies as a Municipal Fee. Why don't we have a user fee to cover our parking needs? Mr. Rossmann: The Planning Department, which you tentatively approved this week, does include a parking fee study of $100,000, if I have it right in my mind. The intent of Staff is to study this issue and come back to the Council to bring recommendations or results of that study. We are aware of that issue, and we plan to look into this with the support of the Council funding this study, and then return back with the results. Chair Schmid: In the meantime, we are voting a Budget which takes us into the next year. That Budget and our past Budget already includes, as you say, $100,000 here, but it includes parking in the Baylands, shuttle buses, TDM programs and a variety of things. The numbers add up pretty quickly. We're trying to do an RPP program in the next six months which will be in 2016. When do we have a discussion of the cost? Mr. Bruckner: I believe Council, regarding RPP, already weighed in on fees for the Downtown districts. Included in the Municipal Fee Schedule are fees for like University Ave., Lot X, High Street. Those daily permits and monthly permits are included already in the fee schedule. Chair Schmid: Yes. Those fees that we have maintain existing parking places. I'm talking about the additional spaces that we're grappling with. There are not enough parking spaces for the people who seek parking. Mr. Perez: Vice Mayor Schmid, where you're heading is a bigger policy discussion than the Municipal Fee Schedule. There are some vehicles that were formulated to address some of the concerns or issues that you're referring to. Obviously they're not enough. The parking in-lieu fee, as you know, in the $60,000 range per space, is calculated through a methodology based on the construction cost of your last garage. If we haven't built a garage in quite some time, it's an old number and it's a stale number. The assessment district, even though it's not the whole Downtown, is set up to pay for some of the structures that are in place. What you have in front of Page 9 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES you tonight in terms of any of the existing fees we have and that we may not be changing, you're right; they're not addressing those concerns. It probably needs to be a discussion of its own in conjunction with any of the other programs that are coming up in terms of making policy decisions whether we want to instill paid parking on the street surfaces for example. Chair Schmid: I agree with you that the 2016 Budget we need to move ahead on specifically. We are in the midst of a Comp Plan Update, and I am still scratching my head trying to get the connection between our finances and our Comp Plan. We have a ten-year forecast on the financial side, but it does not necessarily coincide with what we're talking about in the Comp Plan. This is one of the few opportunities Council Members have to discuss longer-term Budget items. Maybe something in our parking lot should be a discussion of the revenue side of our Budget. Joe Saccio, Administrative Services Assistant Director: Your comment is timely in that I often get questions about the assessment district that we established in 2001, whereby a lot of the square footage that was being used at the time was part of the assessment calculation. Since then, there's a lot of space and mezzanines and basements that have been used. One way to do this, and my understanding from the Planning Department is that it's perfectly legitimate, is that as that space gets developed, it wasn't originally assessed, that the in-lieu should apply to those spaces to accommodate the additional parking that property owners and employers are providing. That is one way to tackle the problem. Chari Schmid: That's very helpful to go back to the origins of how we got to where we are. Part of the issue is we do year-by-year focus only on this Budget this year without asking the broader question of what kind of cumulative impacts are we dealing with and where does the responsibility lie. Maybe I'd like to suggest an item for the parking lot in which we can at least set an agenda for a discussion of longer-term Budget impacts. Mr. Perez: Just so I'm clear. You're referring to having that discussion at the Committee-level, correct? Chair Schmid: Yes. The Committee can make a recommendation not to deal with it with the 2016 Budget, but to agendize a discussion. Mr. Perez: Let me have a discussion with the City Manager and the Planning Director, because we would need to time it with what's agendized and coming to you already that may be addressing part of those concerns. As you're saying, you're looking at more of a comprehensive discussion on how we address this as a package going forward. Page 10 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Chair Schmid: Yes. Thank you. Council Member Kniss, do you have ... Council Member Kniss: Yes. Let me follow up with that and if we had the whole fee schedule with us. Remind me, we have a lot about Cubberley here, which is primarily going up. Tell me again, the rooms that are in L maybe, I've forgotten where they are, but the rooms that are used by the artists. James Keene, City Manager: In the new U section of Cubberley? Council Member Kniss: The artist section ... Mr. Keene: Pretty much in the U wing. Council Member Kniss: ... as I recall, is still heavily subsidized, right? Mr. Keene: Yes. Council Member Kniss: That's heavily subsidized. As I look at the rest of Cubberley, I presume that's talking about the performing area, correct? I think it must be. I don't see what else it could be talking about. Mr. Do: Good evening, Council Member Kniss. The Cubberley facility, because it's such a large campus, has a wide variety of types of rooms and uses, such as the ones in particular set aside for the Cubberley Artists Studio Program. In addition to that, there are classrooms that are rented out for nonprofits, for organizations, churches, and then there are also leaseholders on that campus. There are several different fee structures in place. I'm not exactly sure which ones you're referring to, but I believe you are referring to the ones that have to do with the Cubberley theater rental. If I may ask if that's what you're referring to? Council Member Kniss: I'm not questioning the theater rental, because that makes a lot of sense. I am questioning, because we've brought it up any number of times before, it's been a discussion for probably 20 years, is how we're subsidizing the artists or whomever is in the very low cost. What are we currently charging the artists who are at Cubberley? Mr. Do: I'll refer you to our Assistant Director. Council Member Kniss: We now have a new policy. You might help me out with that one. I know we have a new policy which states now that we will rotate the artists which is something we never used to do and we were criticized for that. Give me a reminder, because there's nothing in here that really talks about it. Page 11 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Rhyena Halpern, Community Services Assistant Director: Rhyena Halpern, Assistant Director for Community Services. The Cubberley Artists Studio Program, we charge a fee for Palo Alto artists of $0.82 a square foot, and for nonresidents of $0.91 a square foot. In our research, we approximate that the subsidy is $2-$3 a square foot. There's a lot of different ways you can look at the subsidy. Council Member Kniss: I realize that, and I don't want to look at a room full of artists who come down and say this is something we committed to a long time ago. I do want to point out that when we're looking at Cubberley and we are charging a very substantial amount to use the performing arts area, other parts of it are subsidized pretty substantially by the City. Our criteria is not always well spelled out as to who gets what. That's probably enough said and it's obvious, but I don't think we should go through the entire Finance Committee in looking at our Budget for this year without realizing that there are hidden subsidies in a whole number of things that we do, especially at Cubberley, especially in the old rooms that are certainly not in great shape to begin with. There will always be a lot of discussion about why and how we got in that situation. Ms. Halpern: If I could just say two things though. One thing that's in the Muni Fee Schedule that you see in front of you that relates to Cubberley ... Council Member Kniss: This isn't the full schedule. This is just the ... Ms. Halpern: These are just the changes only. Council Member Kniss: Just the changes. Ms. Halpern: Only the changes. There's only one item that relates to the Artists Studio Program. That's a new program to keep one studio for short- term rentals. That's what you see there. That is the only thing. It's not looking at the whole Artists Studio Program, just this one studio rental. That's a new thing. We're getting huge response to this. Council Member Kniss: For the short-term rentals? Ms. Halpern: Yes, a huge response. It's amazing. We've had to do almost no promotion on it. Artists really want short-term space. It's also a way that we can support emerging artists, so that when we open another round, they know about the program, etc. It's really, really a high need. Like you just said very well, it's a huge campus, and we have lots of different missions and programs within this very large campus space. One thing is we have revenue-generating areas, and then we have nonrevenue- Page 12 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES generating areas or lower on the priority for revenue generating areas. We try to balance all that. Council Member Kniss: I won't prolong it. I simply think it ought to be on the record that we do know that that is a very uneven rental return at that particular facility. Chair Schmid: A motion? Council Member Kniss: A motion? Chair Schmid: We need a motion. MOTION: Council Member Kniss moved, seconded by Chair Schmid to recommend to the City Council tentative approval of the Amendments to the Municipal Fee Schedule for Fiscal Year 2016. Chair Schmid: Any discussion? MOTION PASSED: 3-0, Scharff absent 2. Public Works Department a. General Fund, Operating Budget Walter Rossmann, Office of Management and Budget Director: Next we have the Public Works Department. We are starting with the General Fund portion first. Mike Sartor and his team, as they're getting ready for you, will first make a presentation rather quickly, and then respond to questions which you may have. Chair Schmid: I note that we have set aside more time for this than any other single item. Welcome, Director Sartor. We'll have to take a 2 minute break, since we only have three members. A 2-minute recess. The Committee took a break from 4:47 P.M. to 4:49 P.M. Mike Sartor, Director of Public Works: Good afternoon, Chair Schmid and Members of the Finance Committee. I'm Mike Sartor, Public Works Director. Seated to my left here is Sharon Macway, our Senior Analyst or what I call our department budget manager. In the audience I have all of our division heads and other Staff to answer questions as needed. Real quickly, the Public Works Department. As you saw on Monday night, we are an infrastructure department. We provide efficient, safe, cost-effective services to our citizens in regards to City assets and infrastructure. We are also environmental stewards in the Public Works Department. Purpose, we Page 13 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES manage infrastructure. We protect the urban forest. We do pollution prevention activities. We operate a treatment plant. We collect and dispose of garbage and do recycling. We operate an airport for the first time this year. We also have the Capital Improvement Fund in the General Fund. We have four divisions in the department: engineering services, environmental services, airport, and public services. Real quickly, just some key accomplishments over the last year. We are now out of the library construction business. We completed Rinconada and Mitchell, thank God. We took over operations of the Palo Alto Airport in August from the County. We've also developed a new refuse rate structure to incorporate collection of food scraps from residential customers as well as diverting compostable materials from our landfills. Lastly on this, we are continuing to improve the condition of City streets within Palo Alto. We are actually way ahead of most cities like us in that regard. General Fund. Our focus for Fiscal Year '16 is to differentiate between our maintenance activities and our capital activities following the direction from the City Council's Infrastructure Committee and priorities to do some major infrastructure projects as well as keep up with our current facilities so we don't have deferred maintenance into the future, at least we can start to minimize that. That's just a general overview of where we're going in the General Fund. As you saw on Monday night, we are in the process of becoming the first accredited department by the American Public Works Association in Silicon Valley. We are continuing with our implementation of the Council's Infrastructure Plan. A key part of that is to get our infrastructure management system up and running for both, as I said, our maintenance priorities as well as our capital project priorities. We are also in the Budget proposing to implement operational efficiencies that were identified in the facilities study that was undertaken this year. As you may recall, last year you funded a study of our facilities operations and we now have the results of that study, which is reflected in our Budget proposals this year. Significant proposals. Let me jump to the second bullet to follow up with the facilities study. As you may recall, well actually you probably don't. Back in 2010 as part of the department restructuring and Budget reductions, we eliminated the Facilities Manager position. We have been limping along since then and have identified through the study that we are probably the only city in the area that does not have a Facilities Manager that oversees the work of the facilities group. What that means directly, we have two managers of maintenance operations that basically focus on day- to-day maintenance requirements. We don't have the ability to look at the vision of overall facility needs and requirements and also a linkage to our engineering division to input data to the infrastructure management system. This position will be responsible for doing that as well as looking at ways to do contracting out and streamlining the overall activities in that group. We also have in the Budget some monies that we plan to replace the twinkle lights on University Avenue, replace the benches on University Avenue, Page 14 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES replace the trash receptacles on University Avenue. As you can see on this slide, that's about $360,000. The last thing on this slide is we are proposing to shift some of our full-time equivalent Staff from the General Fund to the capital fund to focus on the capital projects that we have planned in the General Fund. With that, that's the last slide I have on the General Fund. I'm open to any questions you might have. Chair Schmid: Questions on Public Works General Fund? Council Member Kniss: Let me start it off with one that seems a little odd, and perhaps it's an easy explanation. This is on 353 where it talks about street maintenance. It talks about percent of citizens rating the quality of street repairs good or excellent which is 62 percent. Then it says pavement condition score is 81. Is it because I'm not happy with my street and you happened to talk to me? James Keene, City Manager: It could be just the vagaries of polling. Council Member Kniss: It's been that way for five years. Mr. Keene: That's what I mean. We're getting better and better at the street conditions and not moving the needle very much. Is that saying something about our streets or is that saying something about who we're serving and how they see things? Council Member Kniss: I don't know. That's rather interesting that it's so out of whack. If someone had asked me how I think the condition of the streets are, I'm of course going to talk about the streets that I drive all the time. Several of those are not in very good shape, and I'm probably going to call that out right away. Any time you want to do Cowper is fine with me. Mr. Keene: Can I just add one other thing before Mike speaks. It may be that the target that we've set and the way we're measuring does combine a range of streets and their condition and gives us an average measure. There still might be outlier streets perhaps that are in poor condition that just stands out for folks. Of course, we're in a small enough town where people are on more than one street. If they have a bad experience on a street, it's just surprising to me since we've done some major thoroughfares like Alma and some other areas that were in terrible condition, that you would think would jump out more as folks seeing that the City's making progress. That being said, maybe we ought to do some follow-up survey that tries to drill a little more deeply on this. In other words, to what extent do you think the City is improving the conditions of streets as opposed to ... Page 15 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Council Member Kniss: I'm delighted that Alma is done, and equally delighted that Oregon is done, even though that was done by the County. Because you have a group of people that bike and walk and are very aware of the street beneath them, it's very easy to know when streets aren't in good shape. We pretty much know where those streets are. Whether that's the difference in perception of 20 points I don't know. It would seem like one of those must be in question, because this says PCI scores rate 80-plus as very good or excellent. Maybe they're the people who are driving Alma most of the time. Mr. Sartor: I was going to follow up with Jim. Hopefully next year when we have completed Middlefield Road, for example, and a big piece of Alma between Oregon and Downtown, where that water line trench is that's very bumpy, we may actually see some perceptions change there. Regardless, we are continuing to devote a significant amount, $5 million a year, on our street maintenance program and we're continuing to see the pavement conditions improve. Council Member Kniss: I would certainly be remiss if I didn't call out the number of constituents who tell me that just as soon as a street gets paved they dig it up again for either a new house or to repair whatever may be under the street. That's a very frequent comment as to why isn't there more coordination between all the different groups that are going to be digging up the street. You all know that; you hear that on a regular basis; you probably get calls about it, and so forth. Just to call out, we look the best when we're coordinated. We look the best when we have our streets in good shape. It's one of the most visible things we do for our public. Mr. Keene: Council Members, we made significant progress in the in-house coordination. Obviously this is Public Works who is lead on repaving the streets and Utilities who would be most likely to be digging up a street. We still have difficulties and a problem with the private homeowner or business which isn't part of our coordination efforts. It could easily within a year or 18 months of paving a street come in with an improvement that requires the street to be dug up in order to make the connections. Obviously folks naturally turn to the City and say, "Why didn't you guys know about that or schedule it better?" I did want to say something in response to your comment about how people do experience the road. I might just draw on Council Member Filseth's and my experience this morning when we were doing the bike to work ride. We were in the Cal Avenue area on Park Boulevard and then heading east of that, and I happened to mention to Bike Pedestrian Staff Sarah that, "This stretch we're going to be on up here is in terrible condition. It's really tough for bike riders. I ride it regularly." She was able to say, "That's on the list for being paved this year." On the other Page 16 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES hand, folks don't really know as much about our schedule prospectively about when a road would be paved. It might be interesting to see whether we can get that word out better, whether that has any impact when people also realize, "Here's a plan and here's when I know these streets will get paved." Council Member Kniss: That would make a big difference. Chair Schmid: Council Member Filseth. Council Member Filseth: This is a gear head question here. The realignment of some folks from the General Fund to the Capital Improvement Fund, the net of that looks like .31 person. Is that actually .31 person or is it this many going that way and that many coming this way? Mr. Sartor: Yes, that's the case. The number going from one piece of the General Fund to the other, and the others going the other way. Council Member Filseth: How many is that? Mr. Sartor: Let's see. I've got our sidewalk crew which is basically, I believe, four or five people that are moving from the capital fund to the General Fund. Then we have an engineer in Public Works that is now being funded by the General Fund that's going to the capital fund. We have a senior engineer that's going from the General Fund to the capital fund. We have .45 of Brad Eggleston, the Assistant Director's position, that's going from the General Fund to the capital fund. We have proposed one of our manager of maintenance operations in the facilities group going from the General Fund, .65 percent of the rest of his going to the capital fund. Council Member Filseth: Is that five or something like that? Mr. Sartor: Sharon, you might be able to add more detail on that. Sharon Macway, Senior Management Analyst: Good afternoon, Chair Schmid, Finance Committee Members. Yeah, there was probably a combination of 20 positions that went back and forth and back and forth in little tiny bits, .05, .25, .10. Council Member Filseth: Right. Some of your time is spent in this classification and some of your time is spent in that classification. Ms. Macway: That's correct. Council Member Filseth: There's probably 20 involved, but the net is .31. Page 17 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Ms. Macway: Correct. Council Member Filseth: I guess the salary and benefit difference for .31 people is $170,000? Am I reading that right? Mr. Rossmann: If I may jump in, Committee Member Filseth. What you're seeing there, the net number in FTEs of .31; however, you have higher paid positions versus lower paid positions getting moved around. The FTE number is not necessarily commensurate to the dollar amount. Mr. Sartor: That's a good point. Council Member Filseth: It's not one person that makes $500,000 (crosstalk). Mr. Rossmann: That is correct. Definitely not. Council Member Filseth: It's a net net. I understand that. Thank you. The other thing that I wanted to ask is if you look, again this is on page 358. There's a line salary and benefit adjustments which is $687,152. What is that? Is that market rate adjustments or what is that? Mr. Rossmann: This is the line item which we have when we move the same kind of people we have in the department towards the higher benefits costs which we may have, but it's pension and healthcare or salaries based on the agreements with our bargaining groups or the Management and Professional Compensation Plan which the Council has approved. That's a lump-sum for each department which we put in based on those reasons. Council Member Filseth: What goes into that? Does COLA go into that? Mr. Rossmann: I didn't catch the last thing. Council Member Filseth: Does merit raises go into that or COLA? Mr. Rossmann: That's correct. If approved by the Council, like the Management Compensation, that goes into that number. That is correct. Council Member Filseth: Why is that number different from the number on page 355, which is the net change in salary and benefits? Mr. Rossmann: What the net change in salaries does, it takes all the changes, whether it's the Base Budget piece which you're quoting from or you have changes in salary and benefits in the proposed section. It takes all salary and benefits from one fiscal year to the next, makes those changes. What the Base Budget reconciliation page does on 358, it details it for you Page 18 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES between the Base Budget change, just the cost of increases for same Staff. Then next you have all the changes due to either the shifting of Staff or additional Staff or reductions of Staff costs. I mean I haven't done the math, but if I were to add all these up, I should get to this $300,000 number. Council Member Filseth: You should get to which? Mr. Rossmann: I beg your pardon? Council Member Filseth: I'm sorry I didn't hear that last sentence you said. Mr. Rossmann: If I take the salary and benefits adjustments of $687,000, and then I have Facilities Management Staff of $164,000, I have the funding realignment of negative $170,000, and there are probably some other salary and benefits costs somewhere else in this line items. That gets me to the total change. Council Member Filseth: Which one is the base change? Mr. Rossmann: If you look at page 358, the top line says Prior Year Budget. Then you have one-time adjustments of $49,000 for facility maintenance operational study. That's reductions from last year's Budget. Then we have a category called Adjustments to Costs of Ongoing Activities. All that down to the 2016 Base Budget, those are all the base changes. Then we have Budget Proposals which is for Numbers 1-7, which show either Budget proposals where we're actually starting out changing the service level with the various shifts and changes we are recommending in this particular Budget. Council Member Filseth: If you look at the base changes, you've got a lot of stuff in here, if I read this right, Information Technology, allocated charges, liability insurance adjustment and stuff like that. If I just wanted to look at base changes in salary and benefits, where do I find that? Mr. Rossmann: That's not broken down. Council Member Filseth: You can't find it? Mr. Rossmann: You couldn't find it. That's another layer to go below that. Mr. Keene: I'm sorry. The base salary ... Mr. Rossmann: Base changes for salary and benefits. It's a $680,000 ... Mr. Keene: No, it's $687,000. Page 19 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Council Member Filseth: It is the $687,000. Mr. Keene: The simplest way again is to think of the Base Budget as our existing operation, Staff, etc., even though there are built-in cost increases there. Then everything else is new. Under the Facilities Management staffing, that is the combined salary and benefits for that position as a new addition, $164,424 at .9. 90 percent of that position is in the General Fund or it's here in this portion of the Public Works Budget. The simple way, again, is just to think about it on a going forward basis. If this Facilities Management staffing position were approved this year, next year that position would be part of the base, and any cost increase it had, marginal cost increase, would be on top of the other salary and base adjustments that are in the base. Presuming there's a 5 percent overall increase in that, then that's going to be another whatever it is, $7,000 or whatever. Council Member Filseth: Sorry, I think I've almost got it. If I look at the $687,152 on page 358, that's the base change. Mr. Keene: Yes. Council Member Filseth: That doesn't include anything such as the transfer in and out of .31 people and Staff additions and reductions, new positions and people leaving and stuff like that. All that stuff is reflected in this other number, total salary and benefits on page 355, the $671,577, which coincidentally happens to be pretty close. I know that's a coincidence. If I look at $687,152 divided by the base salary and benefits for 2015 Adopted Budget, that's a 9.1 percent change. Mr. Rossmann: Are you just dividing that by the 55.65 positions? Council Member Filseth: I'm dividing that by the total salary and benefits lines on page 355, which is the base. Lalo Perez, Chief Financial Officer and Administrative Services Director: The $7.5 million? Council Member Filseth: Yes, $7.5 million. That's a base change of 9.1 percent. Mr. Rossmann: Would you mind repeating that one more time please? It's tough to hear with the noise of the rain. Council Member Filseth: The $687,152 is the base change from '15 to '16. If you divide that by the base salary and benefits in '15, which is $7.5 Page 20 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES million, then that's a 9.1 percent change, if I did my arithmetic right. What do I learn from that number? Mr. Rossmann: There's another piece which may not be as apparent in this proposal, I just realized. If you look at page 358, University Avenue enhancements and funding realignments. Mr. Keene: Down at the bottom, Number 7. Council Member Filseth: I see it. Mr. Rossmann: My Staff is just correcting me. Chair Schmid: That's under contract services, isn't it? Mr. Rossmann: That's contract services, correct. Council Member Filseth: This is $415,201? Christine Paras, Principal Management Analyst: Hi, Christine Paras, Principal Management Analyst in the Office of Management and Budget. To address Council Member Filseth's question, just to repeat it to make sure I understand. We're saying that the base change in salaries and benefits in the Public Works General Fund Budget is $687,000, which represents a 9 percent increase compared to the 2015 Adopted salary and benefits Budget of $7.5 million. You'll notice that the change between the 2015 Adopted Budget and the 2016 Proposed Budget is $671,000, which is an 8.9 percent increase compared to 9 percent you're saying. If you look at that amount and flip back to page 358, you'll see Budget Proposals Number 1 and 2 cancel out along with Budget Proposal Number 3. Those are for the Facilities Management staffing of $164,424, the General Fund capital improvement of minus $170,000. There's also towards the middle of the page an adjustment of $43,063 for temporary salary adjustments. The total package of that cancelling each other out would equal the 8.9 percent increase. You'll also note on page 355, there is a pretty large increase of workers' comp ... Council Member Filseth: I did notice that. It goes up by 2. Ms. Paras: I know it looks glaring. It's 147 percent, but it is $82,000. That is also included in the Base Budget adjustment of $687,000 on page 358. Council Member Filseth: It is. That includes the ... Ms. Paras: That's in that package too. Does that clarify? Page 21 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Council Member Filseth: The workers' comp, that $82,000, sorry. Where's workers' comp? That $82,000 workers' comp increase is included in the salary and benefit adjustment on page 358? Ms. Paras: That's correct. In the $687,152. Council Member Filseth: That would take that to $680,000. Then the number is 9.0 percent; no, I must have done that wrong. Sorry. That takes the number down to 8 percent. If that's right, then the base there probably also includes the pension increase. There's a pension expenditure increase of $96,000. The pension also includes, what? 70 percent of that's for retirees and 30 percent for active employees? Ms. Paras: That's part of the retiree medical line on page 355. Council Member Filseth: The pension is? Ms. Paras: No. Yes, that's under the pension line, $95,900. Council Member Filseth: A chunk of that 9.1 percent increase is actually going to increased workers' comp claims and retiree pension benefits as well. Ms. Paras: Mm-hmm. Yes. Council Member Filseth: Of the $95,000 in pension benefits, I'm going to guess it's two-thirds of that which is going to be $60,000 or something like that. If you go from ... Mr. Rossmann: It's attributed to what, Council Member? I'm sorry. Council Member Kniss: What's working now versus retirees. Council Member Filseth: One third. Mr. Rossmann: Correct. It's normal costs versus the unfunded liability. That's correct. Council Member Filseth: You take that out, and now it's 7 percent. Council Member Kniss: We're getting it down. Council Member Filseth: We're getting it down. It looks to me like if you factor out that stuff, then the base increase—for this group anyway. Obviously the Citywide average is different. The base increase for this group looks like about 7 percent, not 9 percent, if you take out retiree medical, Page 22 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES retiree pension and increase in workers' compensation. Actually I didn't back out retiree medical either. Council Member Kniss: You've got that big other benefits in there. Council Member Filseth: We've got other benefits in there too. Now we're down to 6.4 percent. Thank you very much. I think I understand it now. Apologies for all the newbie, nitty-gritty questions. Council Member Kniss: No, it was very helpful to have you go over it. It was. It's a good reinforcement. Council Member Filseth: For this group, it looks to me like about 6, 6 1/4 percent is the year-to-year base increase. Maybe I'll type it up in an email and send it to you. Then you can say, "You did this wrong." Thank you. Actually I did have it in my notes. I wanted to ask about the workers' compensation. It did go up over 2X. What is that? Is that one particular case or something like that? Mr. Rossmann: In this case, I don't know anything in particular about this. In police, I happened to remember there was a large case. Just in general, how we allocate those costs is based on past experience. There must have been in 2014 a higher claim amount in the Public Works Department General Fund, and that resulted in higher costs being allocated out this year. Council Member Filseth: You don't remember if it was one person? Mr. Rossmann: I do not recall that now. Chair Schmid: Let me start with a couple of general comments of the infrastructure program in the City. It got funding last year, and Public Works Department has done a great job in utilizing that. Our road index has gone from well below average in the Bay area to above average in the Bay area. We're on target to be among the top five to ten in the whole Bay area. That's a great manifestation of utilizing resources effectively. Second thing, I have to say I find myself out at the new Byxbee Park each week enjoying the new trails. We have 27 new acres of parkland available. The sign said it opened as of April 18th. I haven't heard any announcement. I find myself up there all by myself. It's a wonderful addition to City parkland. Are we going to have an official opening, announcement? Where is that? Mr. Sartor: Chair Schmid, you're jumping ahead of me a little bit, because I'll be getting into this in a little more detail when we get to the Refuse Fund, which the landfill is part of. We have an additional 20 or so acres that we Page 23 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES are currently capping. Once that's done next year, we'll work with you on some sort of celebration. Chair Schmid: I get to celebrate each time I go over there. Downtown Streets Team on 361. There's a little note that the parking district transferred to the Public Works Department $451,000. I can understand how that was thought of originally as cleaning and protecting the parking structures, which is a small part of what they do. The list you have of what they will be doing, street lights, street maintenance, cleaning Downtown area, it seems to me the Business Improvement District ought to be stepping up and assuming some of the burden of that. Why is Public Works and the General Fund doing it rather than the BID? Mr. Rossmann: Vice Mayor Schmid, on Tuesday night we talked about the Special Revenue Fund section. One of those was the University Avenue Parking Fund. What we did as part of looking at the University Avenue Parking Permit Fund is we looked at all expenditures in that fund, and we realized when we did the study how much time was spent by the Streets Team in the garages and the lots versus on Downtown streets. We realized we had to shift some costs back into the General Fund. That total cost package, the Downtown Streets Team, a portion of the police patrol officer and twinkle light maintenance, is about $130,000. This proposal which you're referring to on page 361 includes other actions as well. It does include replacement of the trash receptacles and benches as well as restringing the Downtown twinkle lights. Chair Schmid: What does the BID do? Mr. Rossmann: I beg your pardon? Char Schmid: What's the role of the Business ... Mr. Keene: The Business Improvement District. I don't think Tom is here. Maybe we can do a follow-up with the Council on this. Pardon me? Monday night, a hearing on the BID on the Council's agenda. My sense of this, because I have asked this question, is that the BID has a bit of a challenge in Palo Alto. The amount of dues that the members have to pay is such that, there's been a sense that the BID wouldn't get a positive response in adding to its dues in order to fund these particular items. That's what I've been told. Chair Schmid: I would just note that each year the share of our property taxes and probably the total taxes that the City generates, the share coming from nonresidents goes down. To push maintenance of the Downtown Page 24 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES district into the General Fund, because businesses are resisting paying for it, is a funny outcome. Mr. Keene: That might be something the Council would bring up. I certainly understand there are business improvement districts that are much more potent in their funding than ours. At the same, these districts are voluntary associations in a lot of ways. I don't want to speak for the BID, but the real question is would BID members be willing to pay for these necessary improvements or would they prefer not to pay and not have the improvements. We could still be left with a decision about what we want University Avenue to look like. It's a point well taken. Chair Schmid: Urban forest, is that appropriate? We had a discussion the other night about the urban forest. I thought a very effective point was made that there's a substantial discrepancy between the northern part of town and the southern part of town. That discrepancy is growing dramatically over the last couple of days. I noted in the funding, they had 88 projects in the urban forest. One of them dealt with a north/south issue, Item Number 3. I think it had $7,000. I also note that in your workload measures on page 354, you have total number of trees maintained by the City not growing. I scratch my head and say, "Wasn't one of the outcomes of the canopy study to do something about that issue? Maybe plant a few trees in the south part of town to ease that discrepancy a little." There doesn't seem to be any money in the Budget or any forecast of new trees. Mr. Keene: The City does plant several hundred new trees every year. A number of those are replacement trees though, for trees that are diseased or damaged or reach the end of their useful life. I’m not familiar enough with the details in the Urban Forest Master Plan; maybe you've read it more than I have. That perhaps answers why there is a difference between the north and the south. Chair Schmid: There were two issues. One, maybe a study is necessary. They put aside $7,000 for a study. I guess you know what you can get for $7,000. It doesn't seem in the targets or goals of Public Works that there's a push to increase the net number of trees. Those two things strike me. Mr. Keene: I might say something. The Council a lot of times asks us a lot of details on these Budget things that really are routine issues that we deal with that are, to be honest with you, pretty well taken care of by the organization. It's more of familiarizing the Council with the details. Maybe this is a strategic or a policy issue where the Council is observing something and ought to explicitly look at making some directives to the Staff for us to look at a different approach than what we're doing. Page 25 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Council Member Kniss: Can I say something on that, Greg, before you go on? Chair Schmid: Yeah, a follow-up. Council Member Kniss: I've lived in north, south, and the middle. From living in south Palo Alto, what I would observe is the, not the landscaping. What is the word I want for streetscape and so forth? Hard pack. The pavement. The pavement is considerably, I think, more evident in the south part of town. I remember that very well, because you have rolled sidewalks and so forth. It's hard to plant trees anywhere until you get up on the grass, because that's where our trees were planted. There was no place to plant a tree between our grass and the grass of the neighbors across the street. There weren't any ... Chair Schmid: The City has the right to plant on the first 3 feet of your property. Council Member Kniss: They did. What I'm explaining, and perhaps not very well, is the difference. I don't know how to do it without drawing it. If you draw a lot of the north streets, they look like this. This is the street and here's the planter area and here's the sidewalk right in here. If I look at the street that I lived on, on Fern, my street looked like this. I lived on a cul de sac. There was a sidewalk, but there was no area, whatever that may be called technically, between the sidewalk and the street where you could plant trees. Chair Schmid: My only point is that the City plants trees there in the north. They have the right to plant trees there (crosstalk). Council Member Kniss: They did. Where I lived, they planted the trees. Chair Schmid: There's a sharp 20 percentage point difference between the number of trees. Council Member Kniss: My point would be that I think before we try to determine cost or whether or not the City spends more time on the north end than the south end, I think we've got to look at the possibility of where they get planted. I don't know how to do that without doing a study of the possibilities of planting. Council Member Schmid: Right. My point is the Budget says $7,000 over the next five years to do studies. That doesn't seem adequate. Page 26 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Council Member Kniss: Maybe we should do $7,000 and get the study done and over with, so that we can actually figure out why there is that difference. Just looking at the map the other night, I could see where the differences were. Mr. Keene: Just to correct it. In the Urban Forest Master Plan, the first year of the Plan says investigate reasons for less canopy in south Palo Alto and develop strategies to end the trend of decreasing canopy in the area that at least was partly identified due to the fact that a lot of the trees that were planted were not the appropriate kind of trees to be in that condition. We've got about $30,000 set aside to do that. $20,000 ... Chair Schmid: Is that Number 3? Okay. I was looking at Number 3 that had $7,000. Mr. Keene: There's $7,900 for personnel, $20,000 for the studies. Council Member Kniss: An additional fact that I hope you will take into consideration is that most of Palo Alto to the south of Oregon didn't go in until the '50s and '60s. The trees at the northern end of town are much more mature than they are at the southern end of town. Would you agree? Chair Schmid: Yes, but I was startled by the fact that between 1982 and 2010 the discrepancy has grown, not shrunk as those young trees in the south have grown. Why should it be increasing rather than decreasing? Council Member Kniss: That's why the study. Mr. Keene: The point of the study will get to what the root cause is, no pun intended. Chair Schmid: Just a last comment to follow up Council Member Filseth's point about salary and benefits. The Public Works Department has no net increase in personnel, and yet has an increase in salary and benefits of 8.9 percent. Last week we had four departments, their increase in salary and benefits was 11.6, 16.2, 14.7 and 12.4 percent. Our revenue that we're using as a base comes from the ten-year forecast. The long-term forecast says our underlying growth in revenue is about 4.3 percent per year. It seems to me at some point we should be answering the question are we meeting our long-term revenue targets. How can we be growing salary and benefits by 8 percent per year across a wide swath of departments when our underlying revenue is forecast to grow at 4.3 percent? Mr. Rossmann: There are several anomalies perhaps this year from '15 to '16. What we can do, as the City Manager suggested, is give you some Page 27 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES examples in writing by the wrap-up which explains to you how come the changes are so different from '15 Adopted to '16 Proposed. There's several factors in there, how labor union contracts were approved and how the Budget was established. For instance, last year the '15 Budget was established in early March, labor contracts were approved mid-March. There's just some timing issues we experienced which were unusual. We'll be happy to address those in writing. Chair Schmid: Good. That would be during the wrap-up you'll have something? Mr. Rossmann: We can do that, yes. Mr. Keene: What will be important for us is to identify the different factors in a number of examples and then, to your deeper question, about is this a pattern that we also see continuing into the future. Obviously if we were to have 8 percent, 9 percent, whatever and 4 or 5 percent revenues and if that's a systemic trend, clearly that's not sustainable, not in the least. Chair Schmid: Our friends at CalPERS and the medical arena are telling us higher trends will continue. That's very helpful. I look forward to the wrap- up discussion. Are there any other comments or ready for a motion? Council Member Kniss: Would you like a motion? Chair Schmid: Yeah. MOTION: Council Member Kniss moved, seconded by Chair Schmid to recommend to the City Council tentative approval of the Public Works General Fund Budget. MOTION PASSED: 3-0, Scharff absent b. Refuse Fund i. Operating Budget ii. Capital Budget Mr. Sartor: Next we have our Refuse Fund. In 2016, we'll be bringing forward the collection of residential food scraps in our collection and disposal service. As I mentioned earlier, Chair Schmid, we'll be completing the capping of the landfill. Just to editorialize that, that will not include the 10 acres of the Measure E site that was set aside. Then we also will be implementing a commercial recycling and composting Ordinance for our commercial customers. As far as rate adjustments, you've seen this Page 28 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES previously. We are proposing a 9 percent average increase for the first year of a three-year strategy to cover our cost of services and support our food scraps program. In the commercial sector, there'll be no adjustments proposed. That's my summary for the Refuse Fund. Chair Schmid: Questions, comments? Council Member Filseth. Council Member Filseth: I have another weenie question. If I look at the head count on page 367, it drops about seven people. On 368, it looks like four of those were street sweeper operators. I assume that's because we outsourced street sweeping. The total was five people, those four and a little bit of a couple of other people. Mr. Sartor: I believe it was seven total. Council Member Filseth: Seven total? Mr. Sartor: Yeah. Council Member Filseth: How much salary and benefits did we save in 2016 by doing that? Do you know offhand? Mr. Rossmann: If you look on page 369, it's the fourth line down. It's annualization of street sweeping program service. It's $584,000. Council Member Filseth: $585,000. That's $585,000 that was in the 2015 Budget under this department, but is not in the 2016 Budget because it's been outsourced. What is the relationship of that $585,000 to the $150 million in Walter's document which is the 2015 base for this year? Mr. Rossmann: This $584,000 would be included in the base number. Council Member Filseth: It's included in the base number. Mr. Rossmann: Because it was the decision which the Council approved in October 2014, that's why it's a base issue. Council Member Filseth: Thank you very much for this. This is really helpful. If I look at this document at the bottom line, the FY 2016 base is $156,600,000, which is an increase of 4.33 percent over 2015. Mr. Rossmann: Repeat that one more time please. Council Member Filseth: If I look at the very bottom row on this, the FY 2016 base is $156,600,000, which is an increase of 4.33 percent over the FY 2015 base. However, if I'm really doing an apples-to-apples comparison of Page 29 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES what the increase is, then shouldn't I take that $585,000 and subtract it from the $150 million in 2015? Mr. Rossmann: Not really, because at the time when the Council adopted the Budget for Fiscal Year 2015, the decision for outsourcing street sweeping was not made yet. Council Member Filseth: I understand. That is from a procedural perspective. If I want to look at a chart and I want to understand how fast salaries and benefits are increasing in the City, then it seems to me that in order to have the correct ratio, the correct increase, I need to take that $585,000 and subtract it from this number, $150 million. Mr. Rossmann: I see where you're going. It's actually a portion of that, because we did fund those positions for the first three months of the year. Secondly, the $585,000 is only those funding sources which related to the Refuse Fund. As you've mentioned before, we did actually outsource seven FTEs, and those were funded in the Cal Avenue Parking Fund and the University Avenue Parking Fund. That $585,000 is only the Refuse Fund portion. We would have to increase the amount for the total funding sources, and then take three months of that and subtract it from the $150 million. Council Member Filseth: Just for this group? Mr. Rossmann: Just for that group. Council Member Filseth: You understand the number I'm going after? Mr. Rossmann: Mm-hmm. Council Member Filseth: It's clearly larger than 4.33 percent. It's going to be 4.5 percent or 4.6 percent or something like that. Mr. Rossmann: It'll be more. That's correct. Council Member Filseth: That's just for this department, just for outsourcing street sweeping. Mr. Rossmann: That's actually the only change we made midyear from a funding level perspective from Fiscal Year '15 Adopted to '16 Proposed. Council Member Filseth: I understand. Did we outsource anything else last year? Page 30 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Mr. Rossmann: No, we did not. We added the Principal Attorney position but without funding at midyear. Council Member Filseth: By the way that number, the total salary and benefits number, includes some fixed costs, retiree healthcare, the two- thirds of pension that's for retired folks as opposed to active folks and so forth. I assume that if I just looked at salary and maybe direct benefits for active people, not including the retiree stuff, the increase is probably even a little bit larger than 4.5 or 4.6 percent. It's probably 4.7 or 4.8 percent, which is a clearer measure of how fast our long-term wage and benefits are going to increase. Mr. Rossmann: You're correct; retiree healthcare is a fixed cost. From a pension perspective, the way we budget is on a rate. That means whether it goes towards retirees or actives, that really does not make a difference from a cost perspective. Council Member Filseth: From a cost perspective. I understand. What I'm really interested in is the growth, the growth rate of wages and benefits for active employees. It looks to me like 4.33 percent here understates it a little bit. Mr. Rossmann: It sure does for the outsourcing. That's correct. Council Member Filseth: Because we've outsourced some things. If we didn't outsource anything, then it would be bigger. Of course, there's only so much we're going to be able to outsource in the City. That's what I wanted to understand. It's back to the Vice Mayor's point, which is long- term growth of revenue in the City, 3.5, 4 percent; cost of living in the Bay area is 2.5, 2.6, 2.7 percent. That number is quite an important number over the long term. Mr. Keene: May I make a suggestion? As part of the wrap-up piece on this ... Council Member Filseth: I'm done. Mr. Keene: ... one of the reasons for the apples-to-apples comparison and question is that for the most part what we're reporting is a particular fund portion of a department's spending related to fund, a comparison from the fund from one year to the next. Obviously, if we outsource something or if we move funding from one to the next, it doesn't track and capture this picture of the personnel and the salaries. To what extent we might choose some examples, it really just tries to look overall at tracking the people themselves and what that aggregate cost is. We control for the ins and outs Page 31 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES from outsourcing, moving from one fund to the next, so you get that clear picture. Council Member Filseth: No, I understand. I appreciate that. I think you guys have done it right. You did the right thing by doing the street sweeping thing, and it's accounted for correctly. My question is less about refuse than overall and trying to understand the relation between the individual departments and the gestalt. Chair Schmid: Just a technical question. Hazardous waste, you have in your Budget a little increase on making that more effective. The question I get very often is medications. You go around town and no one accepts them. What do we do with medications? Ron Arp, Solid Waste Manager: Hi, Ron Arp, Solid Waste Manager. Medications, there's a couple of different ways residents can dispose of it. You could certainly take it to our household hazardous waste station every Saturday from 9:00 to 11:00. Chair Schmid: You do accept those? Mr. Arp: Yes, we do. There's also a large bin right now at the Water Quality Control Plant that they do accept medications as well as sharps packaged in rigid containers. They do take that five days a week, Monday through Friday. There's a couple of pharmacies; I don't remember which ones they are. There's a couple that do take back (crosstalk). Chair Schmid: That's very important. My understanding was that our hazardous waste group at one point was not accepting that. I've gone to several pharmacies, and they don't do it. You don't want to put it in any of the recycling bins. Mr. Arp: Right. We'll certainly take it every Saturday. Somebody else here has some more information. Karin North, Watershed Protection Manager: Hi, my name is Karin North. I'm the Watershed Protection Manager. We actually run and operate the pharmaceutical collection program throughout the City. We've been working with local pharmacies to accept it. Palo Alto Medical Foundation, we started a pilot program, so they accept it at Level A. They've now taken on the payment option, so they actually collect and pay for the disposal which is fantastic for us. Walgreens Downtown also accepts it, except they do not accept controlled substances which is something we're trying to work on fixing. I'm meeting with the Police Department in the next couple of weeks. Santa Clara County on Tuesday is trying to get the manufacturers to pay for Page 32 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES disposal of pharmaceutical waste. The Board of Supervisors is looking at an Ordinance on Tuesday morning. It just came out today, the announcement for that. Chari Schmid: Letting people know, just publicizing what the options are now and maybe what the alternatives may be would be very helpful. Ms. North: We have tear pads at every pharmacy throughout our service area since we're a regional Wastewater Treatment Plant. Every pharmacy in Palo Alto should have a tear pad including our veterinary clinics. Chair Schmid: Should have a what? Ms. North: A tear pad telling them where to dispose of medicines. We do direct mail as well through utility bill inserts. We do try and get the message out to residents. Chair Schmid: That's the only question I had. MOTION: Council Member Kniss moved, seconded by Council Member Filseth to recommend to the City Council tentative approval of the Public Works Refuse Fund Budget. Chair Schmid: Comments? Herb Borock: Chairman Schmid, I submitted a card. Chair Schmid: Oh, I'm sorry, yes. Speaker from the public. Herb Borock speaking on 2b. Mr. Borock: Thank you. My comments are on the Operating Budget for Refuse. The first comment is on page 363 under initiatives, where it refers in both the first and the last bullet point to the food scrap collection program and anaerobic digestion to produce compost and electricity. The first bullet point is something that's going on the future to implement it and says that it's going to be done in a local facility. The last bullet point talks about a negotiated contract with GreenWaste, so it's something that's happened already in that GreenWaste will do this at the Zero Waste Energy Development facility which, as you know, is not a local facility. In fact Staff made this recommendation to the Council as indicated on the previous page in the Budget, and the Council accepted that recommendation and adopted it. It appears to me that the first bullet point either is an old one and should be deleted entirely or at least, if you need the redundancy, replace the word "local" with some other word like "nearby." The second comment refers to something that Staff just said, and I'm not sure I heard it correctly. That Page 33 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES refers to the capping of the landfill and its relationship to the portion of the landfill that is in the 10-acre site that was removed from park dedication, most of which is in the landfill. There's a small portion that's not. It wasn't clear whether that was or wasn't going to be capped. We have an obligation to cap the entire landfill including any portion that's within the 10-acre site. Maybe I didn't hear that correctly. My final comments refer to the dollar amounts shown for GreenWaste and how they're accounted. First, on page 365, it refers to a payment to GreenWaste of about $15.8 million which is an increase of $1.6 million in the Budget summary by division. Then I was trying to match that with the next page, 366, with the dollars by category. The only contract services was $165,000, but there was also a Capital Improvement Program of $1.2 million. Finally on page 369, it refers to the GreenWaste annual contract increase of $282,000 and changes in capital costs of almost $1.3 million. I note that GreenWaste will be purchasing additional vehicles. It's unclear to me just what are our payments to GreenWaste. Is it the larger amount and does that mean we're paying for those vehicles outright rather than as part of an annual lease payment? I had a difficult time reconciling those different numbers and knowing what goes with what. Thank you. Chair Schmid: Thank you, and sorry I missed the card. Mike, do you want to make comments on the issues raised? Mr. Sartor: Sure. On the first point about the description of the residential food scrap collection and disposal, that will be taken to a facility, I believe, down in San Jose by GreenWaste. I think he's right; a nearby facility is probably more accurate. As far as the capping goes, I'll ask Ron Arp to verify, but I believe we will be capping the landfill portion of the Measure E site. Of course we won't be doing anything down on the flat area which was the subject of our discussion with you guys and the proposal for (inaudible). That was the 3.5 acres that's in the flat area of that Measure E site. The last part about the Budget reconciliation, I'll ask Ron Arp to respond to that. Mr. Arp: As Mike said, we will be capping all of the Measure E that overlies the landfill. There's the portion that's on a flat strip between the landfill and the Water Quality Control Plant. That portion of Measure E obviously won't be capped, but it'll all be capped. The GreenWaste portion, $15.8 million, it is on page 366 under utility purchase. It's not under contract services. That's more the Smart Station Kirby Canyon disposal site. The trucks are going to be depreciated out over the remainder of the new term, so it's not going to be just a one-time purchase. We will have additional costs of $1.36 which will be additional tipping fees for the compostable materials. There's a CPI of 2 1/2 percent also, which is another $300,000. That comes up to the $1.6 increase. Page 34 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Phil Bobel, Public Works Assistant Director: Could I just add to that? Phil Bobel, Public Works. The $1.3 increase ironically isn't the trucks. GreenWaste is purchasing the trucks. They are then going to amortize them over this period that Ron mentioned. We'll be billed essentially through that amortization. They're going to get a cost savings from having fewer drivers which actually exceeds the amortization of the trucks. The trucks are actually a savings to us. That cost of $1.3 is the cost of other things, mostly our food scrap program, both with respect to commercial and residential, various new things that we're doing. We could go in-depth on that if you like. The trucks aren't what's causing the $1.3 million increase. They're actually resulting in a savings that's subtracted off of that $1.3. Chair Schmid: Thank you very much. Appreciate that. I think we were ready for a motion. Council Member Kniss: I made it and we passed it. MOTION PASSED: 3-0 Scharff absent Mr. Rossmann: I just want to confirm that also includes the Capital Budget, pages 457-469. We have the Operating Budget to approve now as well as portions of the Capital Budget. Chair Schmid: Any questions or comments on the Capital Budget? I guess I included that in our discussion. Mr. Rossmann: Thanks for the clarification. Next we can go to the Storm Drain Fund, if Mike Sartor is ready. c. Storm Drain Fund i. Operating Budget ii. Capital Budget Mr. Sartor: Thank you, Walter and Christine. In 2016 in our Storm Drain Fund, we will complete working on the seven capital projects that were identified in the ballot measure back in 2005. That includes particularly this coming year the Matadero Pump Station Improvement Project. We will also be finishing up our Channing Avenue, Lincoln Avenue storm drain project. We have some replacement and repair projects in the pipeline under the capital program for the Storm Drain Fund. Another major initiative that we'll be doing this year and bringing back to you likely in the fall after your break is a discussion about where we want to go with the Storm Drain Fund into the future, recognizing that the fee increase that was passed by the voters Page 35 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES in 2005 will expire in 2017. To put it in perspective, the 2016 fee per month for residents is $12.63. The base fee that preceded the fee increase is $4.25. If the fee is not extended, we would go back to the base fee which essentially would not be enough to cover all of the storm drain maintenance expenses into the future. There would also be no capital improvements. We'll be looking at that particular issue and bringing that to you for discussion this fall. Thank you. Chair Schmid: Questions, comments? Council Member Kniss: While Eric is winding up over here, I'll ask one. The Storm Drain Fund seems like an anachronism at this point. We haven't had a storm in a very long time. Talk a little about that one, because granted we have to have the storm drain and the Storm Drain Fund. We did have a little bit of rain today just as a warm-up. Overall if we're looking at this, how does the situation that we're in with water alter our storm drains? I'm actually wondering is it better long-term for the infrastructure or is it worse. Is it better if they have water running through them on a regular basis? Mr. Sartor: Let me answer that. I know we've had a drought. We're in the middle of a drought obviously. Part of the challenge for the storm drain system here in Palo Alto is when we have the major storms roll through. Even though it doesn't provide enough snow pack and water to cover the drought, you recall back in December of last year we actually had to activate the Emergency Operation Center. We had lots of water ponding in the streets because of the inadequate storm drain system. That happened another time fairly recently back in December 2012. Council Member Kniss: That's a very good reminder. Mr. Sartor: We do have some deficiencies in our storm drainage system, and we do have these big storms come through. We have associated problems with our storm drainage. Council Member Kniss: Good reminder. I appreciate that. I've given Eric a chance to get into the nitty gritty. Council Member Filseth: Is it my turn? Council Member Kniss: It's your turn. Council Member Filseth: I have a question on page 375. If you look at dollars by division, about halfway down the page, there's a line storm drainage administration. It looks like from 2013 to 2016, it's gone from Page 36 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES $583,000 to $937,000. That's a 61 percent increase over three years. What exactly is storm drainage administration? Mr. Sartor: That, I believe, is our Staff, our storm drain program Staff that executes the projects and manages the program. Am I right on that? Ms. Macway: I think some of the Staff are in there, but also that's where all the allocated charges land. Can I confirm that with OMB? Mr. Rossmann: That is correct. You have the allocated charges which we charge the Storm Drain Fund. They usually charge the administration division, so it's not necessarily an increase in Staff costs, but an increase in allocated charges. If you look at the Budget reconciliation page, it probably will tell us that. If you look at page 378, the Technology Fund is about two- thirds down. The Technology Fund allocated charges adjustment of $42,000; liability insurance of $10,000, and then the Public Works administration allocated charges. What happens here in Public Works like in Utilities, we have the administration, Mike Sartor, Sharon Macway at the table here and others, who charge their costs out to the respective funds. We look at this annually based on activity. That was increased as well. The majority of increase in administration is really related to allocated charges. Council Member Filseth: I see. I understand. Chair Schmid: It probably includes the City Council as well. Mr. Rossmann: That is correct. Council Member Filseth: Yeah, it probably includes us as well. That makes some sense. It's $33,000 and $42,000 and so forth, but the increase this year is only 11.8 percent. I understand some of this is interdepartmental. From an aggregate perspective, it still seems like some of it went to the Technology Budget. Some of it went to, what was one of the other ones? The liability insurance allocated charges bucket and so forth. It still seems to me like the City is paying 61 percent more for storm drainage administration than we were 2 1/2 years ago, well three years ago. Mr. Keene: Let me jump in here. I don't know the details (crosstalk). Council Member Filseth: It's split out amongst various Budgets. Sorry, go ahead. Mr. Keene: The real switch was from 2014 to 2015, is where the jump was. Certainly we could have some overall increase in the pool of allocated charges. In other words, the cost goes up for those things; however, it Page 37 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES doesn't go up \61 percent. There had to be some methodology changes that we used in the allocated charges that increased significantly the charges to the Storm Drain Fund. I'm sure we had a policy reason for that. There is a concomitant reduction elsewhere within the allocated charges spread that offsets that. Mr. Rossmann: That is correct. The way we assess allocated charges for all funds is we look at actual activity in the prior year to see what happened. Based on that activity, we then allocate the costs out for the next year. If the purchasing activity changes, the storm drain may not be a good example. Let's say we put more bids out for a storm drain which we're building through seven projects, that will merely affect slightly the purchasing charges to this fund. That's one change. The other change we did make in 2015. When Eric came on board about two years ago, he reviewed the allocated charges methodology, and he realized that we could refine it and basically charge other funds more costs. In general we always recuperate in the backend. As part of closing out the Budget, we review the allocated charges and we true them up. Instead of doing it at the backend, we did it at the frontend as part of the Budget process. That's one of the reasons of the jump from '14 actuals to '15 adopted. Council Member Filseth: I thought this was an interesting case, because head count hasn't changed since then. It's closer to an apples-to-apples. The line directly below that is storm drain miscellaneous, which increases on basically the same dynamic, about 62 percent, and the jump is '14 to '15. I assume that similar dynamics apply to that one. Mr. Keene: The thought is when you looked at the allocated charges and it wasn't driven by what can we offload, but in many ways were we under- allocating to the Storm Drain Fund. Let me give you a really simple example. If we were looking at the City Council and we allocate some of the City Council's expenses across to different departmental areas, even though the size of the City Council doesn't change, the distribution could change. Five years ago, for example, if we were to allocate the charges of the City Council, we could be charging them a lot more, I'm being theoretical here, on Budget and finance and in that area. When you looked in their Budget, the allocated charge that was put to them would be a lot more. Whereas, today we would be charging you to planning and land use and that area a whole lot more, because you're spending a lot more of your time there. What happens is that even if the staffing in the Storm Drain Fund is one thing, the amount of Mike's salary for example, might be more charged to Storm Drain Fund in '15 and '16 than it was in prior years. As they looked at it, they said, "Actually you are spending more of your time on some of these projects, because we've got more projects coming on to bid." That's Page 38 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES the basic thought process. I'm sure, Eric, he had a much more detailed spreadsheet and everything that he did and how he did that. I do think it is interesting when you see a jump that's that high how we can think about being able to inform the Council about what the methodology change was that drives that. We could also show the reduction on the other side, what are the winners and what are the losers on the allocated charges thing. Council Member Filseth: Your point about the jump was a couple of years ago, the Council should have asked the question last year or the year before instead of this year. Mr. Bobel: Phil Bobel, Public Works. Could I just add one thing? Council Member Filseth: Yeah. Mr. Bobel: Brad and I were just talking about when this occurred. One thing that's happened with respect to the storm drain function is that we're relatively new to the regulatory world. We are being heavily regulated for our storm water discharge to our creeks and Bay. They're just about to issue us a new storm water permit. This whole regulatory scrutiny of our program started about five years ago. What we've had to do, and we think maybe it occurred in FY '14 versus '13 and it certainly occurred in prior years as well, is reallocate some of my Staff in the Watershed Protection Program. We haven't hired any new people, as I've pointed out to everybody, in a very long time. We have reallocated about half a person year over the last several years from the wastewater to the storm water, because we're getting more and more pressure. Frankly, some of our large industrial dischargers now have left town, and we're able to spend a little less time on the industrial wastewater program, but we've been forced to spend more time. I wanted to mention that, because actually in future years you're going to see more of that. We're going to get this new storm water permit in about a month. It's got all these new tasks from the Regional Board. I honestly don't know how we're going to do them. I don't think we can simply shift from my wastewater group to the storm water group anymore. We may have to actually get some new folks if we're going to stay in compliance with all this new stuff. Council Member Filseth: That actually is a real increase in storm drain administration courtesy of Sacramento. Chair Schmid: Eric, if I could interrupt. We have a card from Hal Mickelson, who's a member of the Storm Drain Committee. It might be appropriate to hear from him at this point. Page 39 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Hal Mickelson, Storm Drain Oversight Commission Vice Chair: Very briefly, an annual ritual. In 20015 when the voters were asked to approve an increase in the storm drain fee, the voters were promised that each year a citizen committee would review the capital projects made possible by the increase to confirm that the money was being spent in ways that were consistent with the ballot measure. I am here simply to report on a matter that you have in your packet as a memorandum from us that the Oversight Committee has reviewed in detail the Fiscal Year 2016 Budget with the City Staff. Based on information provided by the City Staff, we can duly verify that the planned storm drain expenditures are in keeping with the 2005 measure. We can check it off. Council Member Kniss: Thank you, Hal. Council Member Filseth: Thank you very much. Chair Schmid: Thanks very much for coming, and thanks for your work on oversight over the last six, seven years. Council Member Filseth: I did want to ask that briefly. Obviously there's a pretty large increase in capital investment. It looks like the majority of that is for the Matadero Creek Pump Station enhancements. Is that right? Thank you. Chair Schmid: I noticed that in the at-places memo we had a little history of expenditures from 2005. As a matter of fact, that's one the question I had identified as important, especially since next year we have to make a decision as to what to do, whether to renew this or not. Having this available somewhere in the Budget document would be good to alert Council Members to the whole program, the seven projects that have taken place over the years, just to build a sense first among the Council but among the public as well of how successful the program has been and it's culminating a long-term period. I'd encourage you to find a place somewhere in the Budget document where that might appear. The other issue, thinking about the future, is tidal flooding. It seems to me the main issue with storm drain access to the Bay is compounded by higher and higher tides, which make it more and more difficult for the draining system to work. Just encourage maybe looking at the levees as an aspect of the storm drain system. I note the next item we're going to look at has us spending $105 million on redoing the waste treatment plant, which is out in the tidal plains. I know our disposal site, the Smart Station, is in the tidal plains. I note that Mountain View is adding a million square feet of new buildings out in the tidal plain. There's a lot of partners out there who have a similar interest. I know the San Francisquito issue is connected to that. Just to think maybe about as Page 40 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES you look at where we're going after 2016, whether that might not be an issue that could or should be added. Those are my two comments. MOTION: Council Member Kniss moved, seconded by Council Member Filseth to recommend to the City Council tentative approval of the Public Works Storm Drain Fund Budget. MOTION PASSED: 3-0 Scharff absent Council Member Filseth: You didn't give us a chance to comment. Chair Schmid: Questions and comments come together. Council Member Filseth: I actually did have one. Sorry to drag everybody through the weeds so. You'll forgive us on this side of the table for looking through all of this stuff, and so much of it seems to be accounting changes and allocations and these people to that department and these people to this Budget and those folks back and forth. You'll forgive us for seeming like a black box sometimes in trying to dig into that. Thanks. d. Wastewater Treatment Fund Operating Budget Capital Budget Mr. Sartor: The Wastewater Treatment Fund in 2016, we will be completing the California Environmental Quality Act documentation for the new sludge dewatering and load-out facility. To remind you, this is a facility that we're moving forward to as part of our Biosolids Facility Plan which will lead the eventual decommissioning of the incinerators at the treatment plant for the sludge burning and disposal. We are also planning to expand our polystyrene Ordinance to include service and coolers and other items. To remind you, polystyrene is anathema to trash in the creeks and stuff. We're moving on that. We have a $15.2 million capital program proposed for 2016, which includes major efforts for the dewatering and load-out facility and first-year design efforts for our eventual anaerobic digester system which would be put in place to deal with the sludge generated from the treatment plant. That is my summary of the Wastewater Treatment Fund highlights. Council Member Kniss: We're coming to the end of the storm drain, wastewater and so forth. In the last few days, I know that it was a bit of a publicity stunt, but the Mayor and others in San Jose were shown drinking not quite wastewater, but I don't know what to call it. Page 41 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Council Member Filseth: Recycled toilet water. Council Member Kniss: Toilet water. My question is where in our discussions this year are we talking about gray water, recycled water, other kinds of water like that. Phil is smiling, and I bet Phil would love to come up and talk about the wastewater and where it can go. It fascinates people. It really does. People are always asking, "What about wastewater? What about gray water? Why can't we do this?" Given now back to the discussion about storm drains, which has something to do with the drought. Where are we on this? Looking at Jim, is this an appropriate time to ask this or is there a better time to bring up these alternate water treatment possibilities? If not now, I guess when? Mr. Keene: I'm not quite sure how to answer that. I don't know if, Mike, you and Phil want to speak to this. Council Member Kniss: I don't want to take us off on a meandering path. I want to make sure though that we are really thinking about this, that we really have this as a capital project at some point. I really do want to know about drinking water that, as Eric says, comes out of a porcelain bowl. The drought is frankly very frightening. One doesn't overreact, but we are in the fifth year of a drought. Mr. Keene: Why don't we do an installment piece on this? Obviously this will be an unfolding conversation as we go further and further into the future. I would say our situation is not as dire as some of the surrounding areas. The slope of change for us is not at the same slope at the moment as some of these other agencies. The basic issues and questions out there ultimately apply to everybody. Mr. Sartor: Let me try to do this relatively quickly. We already are generating or producing recycled water at our treatment plant. We have a pipeline that runs from the treatment plant down East Bayshore Road to our partner Mountain View, which uses a lot of it in their shoreline area. We also use it to water the golf course and Greer Park and other locations like that. We released an Environmental Impact Report a few weeks ago to look at possibly extending a pipeline system up through Palo Alto to the Stanford Research Park to generate additional reclaimed water. I've been told by Staff that our treatment plant, the way it's set up right now could generate or produce up to 6 million to 7 million gallons a day of recycled water for distribution throughout the City or to other customers. The last thing I'd like to mention, as a response to the drought we are now using reclaimed water for Downtown steam cleaning. For example, our contractor fills up at our reclaimed water filling station at the Municipal Service Center and at the Page 42 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES treatment plant. We're also using it blended with some potable water for watering street trees, irrigation systems, that kind of thing. The last thing I'd like to say is we will be working with the Santa Clara Valley Water District who was the one that did the ... Council Member Kniss: Just did the PR promotion. Mr. Sartor: What I found really amusing, and I was talking to Phil, is they were drinking out of laboratory beakers, which I thought was quite interesting. We are working with the Water District and their task force on expanding reclaimed water throughout Santa Clara Valley. Mr. Keene: Let me just get a few definitions clear from a ham-handed, excuse me Phil and everybody, City Manager point of view. We have reclaimed water which is not potable water. Our focus has been on improving the quality of our reclaimed water, particularly as it relates to the salinity levels of it so that it is more useable in landscaping. That has been where our focus has been. Of course, that method requires a way to deliver that water which essentially means a purple pipe or different delivery system. The Santa Clara Valley Water District has a much more dire situation as it relates to their water supply. They are actively looking at a higher standard of purification typically called purified water at a potable level beyond reclaimed water. They are looking at two things. One, a first- stage exploration of purifying water and then injecting that into the existing aquifers and then subsequently pumping it out. They've also talked about a second stage of potentially direct delivery of purified water, which obviously is a cheaper capital expense because they would be able to connect the delivery of purified water to the existing water system that they have. We're again right at this moment actively more focused on how to utilize more of our reclaimed water. What do we generate every day, you guys? Mr. Sartor: 22 million gallons. Mr. Keene: 22 million gallons a day right now, most of which is just being discharged without being reused. Council Member Kniss: That would beg the question then, how are we looking at this in such a way? We've started an EIR on it. We're producing how much a day? 22 million? James Allen, Water Quality Control Plant Manager: We're sending out to the Bay right now about 16 million gallons a day. Council Member Kniss: Which would be very handy for people's gardens, lawns and whatever. Page 43 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Mr. Allen: We could distribute up to 6 million. We could produce about 4 1/2 million gallons a day if we wanted to. We sent out last year about 200 million gallons to Mountain View and Palo Alto. Mountain View's 57 percent of it, Palo Alto's 43 percent mostly at the golf course and Greer Park, Animal Services. Mountain View uses it in North Bayshore in the golf course. They want to hook up more customers. They have 40 more that they're going to try to bring online soon as part of this drought. We want to see this growth. What Jim is talking about with the Water District is a whole other level. Council Member Kniss: This is an area that you really need to keep the Council informed on. I don't think there's anything I'm asked about any more than the drought or about putting in a new lawn. Somebody said this morning, "What happens if everything dies?" If we have the Niño next year, we will have, talk about trees, Greg, even a worse problem. Phil, thank you. I knew Phil would eventually say something. With the EIR in place and with us thinking of using this water more fully, we don't have anything in the Budget for it. Correct? Mr. Bobel: Phil Bobel. I was just going to say, your first part of that is why I hopped up, keeping Council informed. We are in the next several months going to be coming to Council with this final EIR. That'll be a good time to not only brief you on the EIR, but all the different non-potable uses, what we're doing, what we could do. This is a big step for us, completing this EIR that we're about to deliver to you guys. We had a real good meeting with Stanford today. You may recall that Stanford was resisting this whole thing, or at least certain parts of Stanford. We had a very good meeting today. When it comes to you in the final EIR, Stanford's going to be supporting it. I expect Gene to come and be supportive. We're making good progress there. As far as being in the Budget, there is something we may have to bring to you midyear, because it didn't quite materialize. That is to do a feasibility study on some kind of purification plant. As Jim pointed out, this is the new word that San Jose and others have invented for that next level of treatment. Recycled water is what we produce now. Purified water is after you go through reverse osmosis or an equivalent step. Mountain View has just indicated, and they had a discussion with their Council, an interest in seriously considering reverse osmosis or some similar treatment. It could be a very small plant, and just give us enough of this highly purified water to combine with our other water and produce a lower salinity water that would be even more acceptable to everybody for irrigation. I see us doing a feasibility study and getting started on that right away with respect to RO. That's something that's new, and we might be coming to you midyear for a funding change so that we can do it. Mountain View is going to come up with some of that funding themselves. We may well get grant money or, as Page 44 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Jim and Mike pointed out, Water District money. You're going to see a lot happening in the next 12 months. Council Member Kniss: Please keep us informed. I request also that, if Mountain View's doing it, we ought to be doing it. This is an area where we really have to pay attention and where we really need to be thinking about where are we going next with this. Two more years of a drought, and we will be in a really different situation. Any plans we make now are going to make a big difference then. Mr. Keene: If I just might add and maybe push us on towards the capital portion of the Wastewater Fund Budget and the big capital program we have. There's a very ambitious plan. We're talking about ultimate reuse of wastewater. We have also a preliminary stage which is how do we keep our wastewater treatment plant working for the long term. We've got this big capital project. Then we have another, I'm sorry I keep bringing this one up, non-capitalized project which we've got to deal with. That is the fact that the Regional Water Quality Control Plant is smack dab in the middle of the sea level rise area. We do not have a specific plan or capital plan for addressing that as of yet. There's lots of good metaphors that come up. Council Member Kniss: Thank you both for indulging me. It's something I've been concerned about for a long time, and really do think we need to let the public know, in whatever way we're going to, that we really have all this on our radar. We're really heading forth with it. We are not getting behind. Chair Schmid: Council Member Filseth. Council Member Filseth: I propose a tax on agricultural water to pay for it, but that's a different story. We have a water problem that big and a plumbing problem that big. I just had one question actually. On the capital side, there's a 5.1 million, it looks to me, this year allocated for the dewatering and load-out facility. Mr. Rossmann: Which page are you looking at, Council Member? Council Member Filseth: I'm looking at Capital Budget 533. It's in the text. Council Member Kniss: It's up on the screen right now. Council Member Filseth: Is that the facility that makes it possible for the digester to process food scraps? Mr. Sartor: Actually it's being built primarily to allow us to decommission the incinerators. Then the anaerobic digester would follow that and the Page 45 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES load-out facility would become a secondary fall-back. The sludge would go into the anaerobic digesters. Chair Schmid: I just wanted to make the same point that Council Member Kniss had made. That the recycling is an important issue. We'll look forward to the EIR on that. Capital Budget, I do notice on page 381 of the current Budget an $11.7 million increase in capital spending. That's on the expenditure side. Where does the revenue come from? Mr. Allen: The $11.7 million, we will be applying for State loans. We've actually submitted the loan to the State. They're reviewing it now. We'll get our partners to agree to repay, then we'll come back to you and get a Resolution agreeing to repay and set up the Reserves. Then they'll give us a funding agreement, which is a loan document. You guys will approve that, and then we will submit basically monthly requests for revenue. We will not have to repay the loan until after construction is completed. It's very favorable terms. It's one year after construction completion; they'll start the first of 30 years of debt repayment. That's the way the State works. They're funding your fixed asset through giving you the revenue on a monthly basis. The partners would then repay after construction is completed. We show this as $12 million, but it's going to be funded by the State through low interest rate loans. Chair Schmid: I recalled that during the discussion. The spot in the process that we're in is we have applied for the loan and expect it to come through soon. Mr. Allen: We have to have a CEQA and some other things completed. We'll be getting those documents together and come back to you for approval of the CEQA and the Resolutions that are needed, partner agreements. Chair Schmid: I know we have agreed on that. Have our partners agreed formally? Mr. Allen: They've been kept informed, but we will bring them a formal modification to the agreement between Palo Alto and each partner. Then they will approve it. The answer is no, they haven't approved that. Chair Schmid: They have to go through the City Councils and so on, which might take time if it's like Palo Alto. Mr. Allen: Two or three months I think. Council Member Kniss: Could I ask one more question? Page 46 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Chair Schmid: Yeah. Council Member Kniss: Double dipping I know. The water that goes to Mountain View, how does it get there? Mr. Allen: There's a purple pipe that goes down East Bayshore Road, in front of the MSC. It's 24-inch, 30-inch, 24-inch ductile iron pipe, and then it spreads out in that whole Google area. The water's under pressure. Council Member Kniss: It only goes by pipe? Mr. Allen: Correct. Council Member Kniss: Is any of this water going by truck anywhere? Mr. Allen: There is a commercial fill standpipe at the Wastewater Treatment Plant and one at MSC that was mentioned. Mountain View's going to be putting in a commercial fill station. Water trucks that do soil compaction and dust control, they can fill up a 2,000-3,000 water truck. Yeah, some of it, but not a whole lot. Most of it is delivered through the pipe and through sprinklers. Council Member Kniss: If somebody wanted to do that privately, could they do it though? Could somebody take our recycled water and ... Mr. Allen: We have two companies right now that have permits with us to deliver water to individual properties. We just permitted them. Council Member Kniss: I had heard that, which is why I'm asking it. I hadn't really believed it, but that is true, right? Mr. Allen: One is called Rain Dance and one's called Drought Savers. That's the names of the two companies. They're front-yard watering. We don't allow them to ... Council Member Kniss: Good advertising for them. They resale our water, right? No, no, no. They deliver our water. Mr. Allen: Yeah, we don't charge for it. Council Member Kniss: You don't charge, but I bet they charge the people who receive it. Am I correct? Mr. Allen: Correct. Council Member Kniss: Rain Dance and what's the other one? Page 47 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Mr. Allen: Drought Savers. They haven't begun deliveries, but I just signed their permit yesterday. Mr. Bobel: The charge that they're charging mostly is to cover their costs of renting these water trucks and their drivers and the time and their insurance and all those kinds of things. Council Member Kniss: A burgeoning industry. Mr. Allen: They deliver water to customers outside of Palo Alto as well, like Los Altos and Atherton, Menlo Park, Woodside. They're providing a service to many people. Council Member Kniss: To the city itself? Mr. Allen: No, to residents. Chair Schmid: If there's no further questions or comments? Council Member Kniss: I think we've carried on enough, don't you? MOTION: Chair Schmid moved, seconded by Council Member Kniss to recommend to the City Council tentative approval of the Public Works Department Wastewater Treatment Fund Budget. Council Member Kniss: Wait. Do you have a card from Herb? Chair Schmid: I thought this was .. Council Member Kniss: Do you have a card on this one, Herb? Chair Schmid: I thought it was the next one. Herb Borock: On wastewater. Chair Schmid: Right. Herb Borock. Mr. Borock: Thank you, Council Member. I have comments. The way I have it separated is on both the operating and the capital. The operating one refers to the recycled water that you've been discussing. I felt this is the most convenient place to talk about it. That is what this should be, who should pay for it, which customers. It should be the—Hal? Thank you. It's water, not wastewater. The water customers should be paying for it, including Rain Dance and Drought Savers customers. There was just a recent court case under Prop 218 dealing with water charges. I believe San Juan Capistrano and all customers essentially will be paying the same rate. Page 48 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES There wasn't a distinction between water that's currently recycled water that's not purified being used for landscaping and water that's drinking water. They benefit all customers to make the supply available. I don't know how these charges have been accounted for between funds up to now. It seems that it should ultimately be the Water Fund, whether it's in Palo Alto or Mountain View. Those customers should be paying for it. There's also the equity thing, which is that while residential customers in their wastewater bills pay the same whether they're in a studio apartment or in their house the size of Council Member Scharff's. Whereas, nonresidential customers pay based proportional to their water charge during the winter. The assumption being that when they're irrigating, that doesn't affect the wastewater. You're getting recycled water that's going to commercial use, and it's not being charged via the Water Fund between the Wastewater Fund. The beneficiaries aren't paying for it at all. On the capital program, page 532 refers to the anaerobic digester costs of $33.7 million in this five- year capital program budget and $75 million for the total cost. However, on page 553, it transposes those numbers and says that it's $57 million rather than $75 million. Those two numbers should be the same, and they should be the right number. On page 554, it shows the five-year cost, and there is a column for the amount beyond the five-year CIP. Instead of showing the amount, it shows zero. That appears to be consistent, not just for this Fund's tables for funding sources schedule and expenditure schedule, but it seems throughout the CIP. Since the narrative includes the amounts throughout the Capital Improvement Program Budget for the amounts beyond the five-year program, it seems to me all of those tables should include the amount in the column beyond the five-year CIP and should also show the total amount. That may just be a transcription problem, but I think the final CIP should show those. Chair Schmid: Checking on your number. You said on page 533? Mr. Borock: No, 532. Chair Schmid: There's a 33 and then on 533 you said it was transposed to 50 ... Mr. Borock: No, 553. 32 and 53. Council Member Kniss: Those are the actual numbers I think. Chair Schmid: Let me ask Staff then two questions. Those two numbers, 33 and 57. Page 49 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Mr. Allen: I can answer that. He's correct. Page 532 is right. The numbers on page 553 and 554 will need to be fixed. That was a mistake. Apologize for that. Chair Schmid: Any other comments on what Mr. Borock brought up? Mr. Bobel: Phil Bobel, Public Works. I'd like to address his first comment about whether we should be charging people for this water. Chair Schmid: There's the legal issue of Prop 218 and is that applicable. Mr. Bobel: Our water folks from Utilities aren't here tonight. They might have comments. Let me just address it from a Wastewater Treatment Plant standpoint which is you could think of it as the wholesale of this water. Our Water Utility would ultimately be the retailer of this water. From the sewage treatment's perspective, there isn't much incremental cost of producing recycled water versus just producing our treated water. They're almost exactly the same thing. We'd be splitting hairs, and it'd be within the noise to say there's an incremental cost of us treating the water. We've actually talked about that, and Jaime's prepared to analyze that relatively small incremental difference. If we started charging for the water, we'd actually be making money on it. That doesn't seem quite fair either, because we charge the partners enough to treat it. Like I say, this very small incremental difference, we just didn't think it was worth running a big program to address this small incremental difference between the water we discharge to the Bay and the water we deliver. It's almost the same thing. From the wholesaler's perspective, that's what we've been doing. Our Utility Department has not yet established a water utility for recycled water. Why? Because there's only three users in Palo Alto. Yes, we have a lot of users in Mountain View. The treatment plant's position is Mountain View's paying for the treatment of that water. They're already doing that. It's their water, and they've also paid their fair share of the pipeline system to get it to Mountain View. We've tried to make sure that Mountain View is paying for their full share of treating the water and then Mountain View's full share of the pipeline system to get it to Mountain View. Then it's up to them as a retailer to charge and they are charging their customers for that water. Why we haven't gotten to that in Palo Alto yet is our three users are all the City of Palo Alto. We don't actually have any commercial users in Palo Alto yet. It would just be an interdepartmental transfer, and it wouldn't be a great amount of money and it just hasn't seemed frankly worth it quite yet. Whenever our Utilities Department decides to establish a formal Enterprise Fund for recycled water, then I’m sure they will begin a system of charging even if it's just the other departments. Page 50 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Chair Schmid: It is worth having at least an informal conversation as you go down the road. Any other comments? If not, we do have a motion. MOTION PASSED: 3-0 Scharff absent e. Airport Fund i. Operating Budget ii. Capital Budget Mr. Sartor: For the first time at the Finance Committee, we are bringing to you our Airport Fund. As you recall, we took over control of the airport last August from the County of Santa Clara. Our plans this coming fiscal year are to, Number 1, focus on design of the aprons and taxiways out there. A lot of the asphalt that is in place is very deteriorated. We have a great need to do some maintenance or actually repaving work. The FAA is aware of this, and we're working with them on that. We are also going to be looking at the leasing models and options in preparation for the expiration of the fixed-space operator leases which will occur in April and June of 2017. Those are what we'll be working on. Significant Budget. We've reduced our General Fund loan to the airport this coming fiscal year by $260,000. Last year we had a $560,000 loan, and this year we're proposing $300,000. We're projecting 2017 to be the last year we will need a General Fund loan, and expect by 2018 we'll be balanced in the Airport Fund. That's quite remarkable in the short amount of time that we've had to take over and get the airport under control. We are proposing an addition of a Manager of Maintenance Operations at the airport to assist our Airport Manager with managing the airport. That position would be primarily to oversee the work of the hourly employees we're using to staff the airport basically to match the tower. There's a control tower out there. They operate, I believe, from 7:00 in the morning until 9:00 at night. We have people out there at the same time the FAA has a tower open. We did look at the plan last year to contract out this function. We issued an RFP this year and received only one proposal. It turned out to be significantly more expensive than bringing in hourly employees and managing them ourselves. Again, the cost of the airport staffing would be $79,000. In the 2016 Capital Budget for the airport, we're proposing $500,000, $300,000 of that would be to start the design of the airport apron to get us in compliance with FAA requirements so we can get an FAA grant to cover the design cost and the future construction costs of that work. That's it for the summary of the Airport Fund. I'm open to any questions you might have. We also have in the audience here Andy Swanson, our Airport Manager, that can give you more detail. Thank you. Chair Schmid: Questions, comments? Page 51 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Council Member Kniss: Let me start this from the standpoint of I've always thought it was a terrible idea to have an airport, as you well know. If you honestly think that by 2018 it's going to be in the black, which is what you're telling us, I will be really fascinated. I'm not a believer yet, but I'll be watching it with great interest. Mr. Keene: I argued against taking over the airport. Mr. Sartor: I hid under the table every time the topic came up. Council Member Kniss: We've got it now, and I hear what you're saying. You're saying it's best if we operate it ourselves. You think that's the way it's going to run in the black, not with leasing it out to someone else. It's a very valuable asset for the community. There is no question. Whether you're flying in and out in your own small plane or whether or not you're getting important medical supplies and so forth that may be coming in that way, it has great value to us as a region. I'm always very aware of that. It would be an interesting case study for the business school at some point as to whether or not this will actually make some money. I don’t have any big, audacious questions about it. I'll eat some crow by 2018 if it actually ends up being in the black. Chair Schmid: Council Member Filseth. Council Member Filseth: Break even for Fiscal Year 2018. I want to believe. Good luck. Chair Schmid: I remember when we discussed it. The critical assumption made was the future of lease payments at the airport. We had fairly optimistic assumptions. What you're saying is to date the market seems to be confirming that those assumptions were correct. Council Member Kniss: A good economy doesn't hurt. Chair Schmid: The other critical assumption is that the FAA and the Federal Government would stand in for the capital infrastructure needs that we had, and our contracts with them are clear and are working. They have accepted us. The only question I would have outstanding is the FAA seems to have said they will only grant those loans if they have control over, is it the control tower? Which means they have the right to allow commercial flights into the airport. Is that right? Andy Swanson, Airport Manager: Andy Swanson, Airport Manager, Chairman and Members of the Finance Committee. That is correct. We're under the grant assurances that we're obligated to when we transferred the Page 52 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES airport back. There's been some talk every time we take a grant, but it does also obligate us. The obligation was when we transferred it back, and we're operating an airport. We're obligated to the grant assurances of the FAA. Chair Schmid: What's the outlook if say the City of Atherton rises up and forces commercial flights out of San Carlos, and they look at Palo Alto? What control do we have over Palo Alto becoming the third commercial airport in the Bay area? Mr. Swanson: It's a 24-hour, 7-day-a-week open operation, part of the national transportation system. I can't give you a legal opinion on that, but we're obligated just like San Carlos or any of the airports. We're a reliever, and we're the third busiest airport in the region right now, tenth in the State of California. That includes SFO. It's SFO, Oakland, Palo Alto, right in this region. Chair Schmid: We're ahead of San Jose, huh? Mr. Swanson: We are. Chair Schmid: What's your informal forecast about the likelihood of something like that happening? Mr. Swanson: It could happen. I think you're referring to Surf Air which operates out of there. Surf Air did look at Palo Alto originally. Their original business model for this area was Palo Alto. It could happen. I don't know the likelihood of that. I haven't heard any talk of that. The good news on that is the actual impact in the way they'd operate would not be any different than to the same aircraft that is operating out there, being used for business use, today. Chair Schmid: It wouldn't change dramatically either the number of flights or the size of the planes? Ms. Swanson: No. Chair Schmid: Would it have an impact on the ground leases? Would they need to take over half the sites in the airport? Ms. Swanson: Our 50-year old terminal building may have quite an impact on that, yes. Chair Schmid: It might be good to have an aging airport building. There has been no preliminary discussions or talks along those lines? Ms. Swanson: No. I have not been approached. Page 53 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Chair Schmid: Mike, did you have a comment? Mr. Sartor: No. Chair Schmid: If there are no other questions. MOTION: Council Member Kniss moved, seconded by Chair Schmid to recommend to the City Council tentative approval of the Public Works Department Airport Fund Budget. MOTION PASSED: 3-0 Scharff absent f. Vehicle Replacement Fund i. Operating Budget ii. Capital Budget Mr. Sartor: Now we're into the home stretch. This is the sixth fund that the Public Works Department is involved in. It's the Vehicle Replacement and Maintenance Fund. Our initiatives this year will be to replace older vehicles with newer, more efficient equipment. What I mean by that is we are actually focusing on expanding our fleet, not expanding the numbers, but getting more electric vehicles and alternative fuel vehicles. We've actually put together a policy and a checklist. When vehicles come up for replacement, we are prioritizing alternative fuels including electric. That's particularly for our transport vehicles; pickup trucks, vans, passenger cars, that kind of thing. We also are going to be focusing on coming up with a more sustainable funding model. With the retirement of our former Fleet Manager and the fact that we did not have a Fleet Manager for about two years, we now have one, Raul Juarez who's in the audience here with us, we will be focusing on taking a look at our operating and maintenance costs and making sure that we allocate those charges back to the departments in a more sustainable fashion as well as making sure we have enough funding for replacement of vehicles as we bring new vehicles into the fleet. That'll be a major initiative that we'll be working on this year, to get us more in line with the fund and to start strengthening our reserves in the vehicle fund. We do have some capital funding proposed for 2016. That's basically to purchase replacement vehicles. To be honest, and you'll see in the document, this includes monies that were approved as far as back as Fiscal Year 2013. We're still catching up with replacing vehicles that we identified in '13, '14, and '15. That's what you'll see in the Capital Budget on this to get us back up and in operation in terms of replacing older vehicles. That's the end of my summary on the vehicle fund. Page 54 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Chair Schmid: Council Members, questions? Council Member Filseth. Council Member Filseth: It looks to me like we've got an estimated 553 vehicles in 2015, and 2016 proposed is also 553 vehicles. How do we know what the right number of vehicles is? How do we know that 553 is right as opposed to 560 or 550 or 600 or 400? Mr. Sartor: That's a good question. We started on that back in 2012 by looking at what was determined by our auditors as underutilized vehicles. We actually removed from the fleet about 25 vehicles that were deemed to be underutilized. We also in 2010 started removing assigned vehicles from the departments and putting them into pools, so that people don't have an assigned vehicle. That's one of the measures that we've been taking to try to right-size our fleet. Now that we have Raul on board, we'll be looking at other opportunities to reduce and bring our fleet down to more reasonable numbers. I can't tell you myself what the right size is, but we definitely are looking into that. It's a topic of discussion for us. Council Member Filseth: You folks looked at utilization and if vehicles aren't utilized. That makes sense. You said you don't do this anymore, but what's an assigned vehicle? What was an assigned vehicle? Mr. Sartor: An example of that would be a maintenance supervisor in Parks or Public Works or Utilities that actually had a vehicle that was assigned to them on a daily basis. Oftentimes, they actually in the old days would take those vehicles home and use them as their commute vehicle too. We've eliminated that. Council Member Filseth: I see. It seems like a tree trimming vehicle is good for trimming trees but not for watering plants or something like that. Mr. Sartor: Right, right. Typically they were for managers, assigned vehicles were assigned to managers, supervisors, that kind of position. Council Member Filseth: If I look at the number of vehicles we've got, it looks like a total of 69 of them are sedans and SUVs that are not police cars and trucks and dump trucks and boom trucks and stuff like that. Is that right? Mr. Sartor: Yes. Council Member Filseth: What are those used for, the 69 SUVs and sedans? Mr. Sartor: There are various uses. Many of them are assigned to field crews in all of the departments. We have pickup trucks, for example, that Page 55 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Parks Maintenance folks will use. For example, our survey crew has a van that they carry their survey equipment around in. There's many of those. I can't tell you what all 69 of them are, but we do take a close look at those and see whether they're absolutely needed or not. Mr. Keene: There are vehicles in Fire and in Police that are not patrol vehicles that are used by them. Mr. Sartor: That's true too. Mr. Keene: When I was out today with Jon Hospitalier, the Staff in charge of fleet field crew stuff, we were driving in his little whatever it was, Ford Focus or whatever sedan. A lot of the supervisory Staff who may not need a truck or something on the job, but who are out in the field, are driving these sedans. Council Member Filseth: Yeah, somewhere there's a picture of, I don't know what it looks like, Ford Focuses lined up or something like that. Sorry? Raul Juarez, Fleet Manager: Honda Civics. Council Member Filseth: Honda Civics, okay. I assume those are the ones that are targeted to be electric vehicles someday and so forth. You're not going to have dump trucks do that. Are there a lot of people in the City that have a car allowance? Mr. Keene: No. Mr. Perez: There's been a change. There's a few of us left that's mostly department heads. Mr. Keene: About three years, at least three or four years ago, the Council made a policy to abandon new car allowances. Any of the new folks we've hired, there's not a car allowance. Mr. Perez: It's $350 a month. Council Member Filseth: 69 sedans and SUVs by my reckoning is 12 percent of the fleet. A sizeable chunk. Mr. Rossmann: I think the other part of the City which uses sedans are building inspectors. They also have to go out into the field. That's another use of sedans. Chair Schmid: Council Member Kniss. Page 56 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Council Member Kniss: Almost for my own interest. For the most part the police insist on having a high-powered vehicle. They must have within that fleet, if they don't need those, some number of Priuses or something similar. Am I right? Mr. Keene: Not enough. Council Member Kniss: Do you know how they break that down? Do you know how many they actually have for patrol that need to be, it used to be the old Crown Vic. I don't think it is anymore. They changed it. Mr. Keene: Yeah, the Crown Vics aren't made anymore. We're buying whatever, the Chevy Caprice or Impala. They're a little bit smaller. Mr. Sartor: The Chevy (crosstalk). Council Member Kniss: Whatever that substitute is. Mr. Keene: We are trying to move to as much as possible not only smaller vehicles but electric vehicles. When I was talking with the fleet Staff today, there are now some electric motorcycles that are being made that are not only electric but extremely quiet. I think we were on the cusp of having the department look at moving to those. Mr. Sartor: They're pretty quick too. Mr. Keene: We sort of pulled away from it. We have a combination of the emergent technology and moving our attitudes about some of these vehicles. We do have a big orientation as to a hierarchy of pushing electric or hybrid vehicles as a first priority and Staff having to justify a reason why we would not go in that particular direction. Obviously that's much more in the sedan and that kind of area, not the big equipment. Council Member Kniss: I realize that those who are out on patrol are going to insist on something that you can catch the bad guys with. End of my comment. Chair Schmid: We had an audit report a couple of years ago on the vehicle fleet. I thought one of their suggestions and one of the reasons we pulled back on new vehicles for a while was they were exploring other options. One of the options would be outsourcing or a cooperative venture where maybe several cities would get together and say, "We don't all need a whole fleet of specialized vehicles, but could have a pool to share." I thought there was some talks going on about that. What was the outcome? Page 57 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Mr. Sartor: What I do recall was that there was a recommendation that we look at pool vehicles, not with other cities necessarily but within departments. We have done that. As I mentioned earlier, we went through the underutilized vehicles. We eliminated 26 of them. We moved another 10 into the pool. We're continuing to look at that. One of the auditor's recommendations, you might recall, was to establish a Fleet Review Committee whose responsibility was to take an impartial look at fleet usage and how we could right size. The Fleet Review Committee consists of the Assistant City Manager, our new Assistant City Manager Ed Shikada will be serving on that committee. Lalo Perez is also identified as a member of that committee, the Finance Director, and myself. We will be looking at that. We are looking at potential leasing of vehicles. We haven't put out an RFP on that yet, but that's something that Raul, our Fleet Manager, will be looking at for future fleet acquisitions. We are very cognizant of the auditor's recommendations. I think the last thing that the auditor recommended was to do an operational study, which has been completed. That led to a number of recommendations for reorganizing our fleet. One of the things we are about to do is to go with a dual shift, if you will, staggered shift so that we have two fleet operation crews. That would allow us to remain open in the fleet until 7:00, 8:00 at night. Currently we close down at 3:30, so that makes our customer service a little more difficult for the other departments. The last thing that we've implemented as a result of the audit was improving our software programs. We are using Asset Works Software Suite to manage our fleet. Chair Schmid: I assume the lease idea hasn't gone very far, because you have a five-year purchase recommendation in the Budget. We are moving to or back to a full purchase. Mr. Sartor: We also haven't had the bandwidth to put together an RFP until Raul came on board about eight, nine months ago. Now that's it's not quite as powerful a fire hose that he's drinking out of, he's starting to look at some opportunities that we might be able to put together a lease package for some of our replacement vehicles, particularly transport vehicles, pool vehicles, that kind of thing. Chair Schmid: In the current Budget, you're asking for 40 percent of the fleet to be new purchases in the next five years, and one-third of that comes in the first year. You're moving into a big period of purchasing new vehicles. Mr. Sartor: Yes, we are. Remember for '16 that large number includes purchases that haven't been yet done for prior years, back to '13. Page 58 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Chair Schmid: A second thing you mentioned, alternate vehicles. I look at the table in the Capital Budget on page 664 of our current status. We have two electric, no, I guess two scooters. We have a big investment in diesel and CNG. Are you saying that those will be gradually retired or what kind of alternative are they? Mr. Sartor: The way to put it is as we come upon new purchases, we will be looking at electric vehicles as a priority if it's a sedan, that kind of thing. Raul, can you help me? We have already put in orders for three more electric vehicles to replace former gasoline-powered vehicles. Is that right, Raul? Mr. Juarez: Raul Juarez, Fleet Manager. Yes, Vice Mayor Greg Schmid. Since I came on board, I've been tasked with different opportunities for the City. The electric vehicles are a feasible option. The downside of it is the higher costs, but there are some grants that can be exercised. Attached to those grants, some of them can only be had if the vehicles are leased. That's the reason for pursuing the lease option in lieu of an outright purchase. I take into account the size of the City, and there are recommendations that the State makes in order for fleets to be operational and cost effective. One of those factors is that a vehicle should be used or travel at least 2,500 miles per year. In a city the size of Palo Alto, that's a tall order to attain. At the same time, we're trying to reduce our carbon print. Even though some of the departments might drive not even close to 2,500 miles, they still need that vehicle to serve as the City's infrastructure. These are things that I would address with my boss, Jon, Hospitalier, and then Mike Sartor. Of course, the Fleet Review Committee would make the decision. My job is to every year in December perform an analysis using the Asset Works software and determine the utilization of each vehicle in the fleet. I think somebody questioned the scooters. They're labeled scooters, but they really are golf carts, if you will, which are used in the Parks Department. They are electric, 36 volt, 48 volt. The electrics that we have are small in capacity. Nissan Motors actually lends us a Leaf for about three weeks. I was the one managing that project, and I shared it with other departments in the City. The Utilities Director used it. Some of the challenges there is that those departments have to go to Sacramento once or twice a month. The electrics only allow you to travel between 60 and 80 miles before you have to recharge it. It creates a challenge for somebody in the department that currently has a Toyota Camry CNG, and I'm trying to fit him into a electric and the electric just won't do the job. Technology is changing rapidly. Toyota has introduced a hydrogen-fueled vehicle I think they were demoing here in the City. Hydrogen fuel is another option in lieu of electrics. The goal is to reduce the carbon footprint, but also be sustainable. As a manager, it would be foolish of me to recommend Page 59 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES something to another department that doesn't make sense, both cost-wise and for their daily use. Chair Schmid: The important thing is that you are out there in the market and trying, experimenting. It involves both leases and new types of vehicles and you're reaching out to the departments to see what's going to work. One issue that comes up is the infrastructure. We have invested something in a CNG infrastructure. If we stop buying them, that will gradually ... Mr. Juarez: I took delivery of 13 2015 GMC full-sized vans. Again, we had some hiccups. As I told our City Manager, because he was out at the facility today, General Motors makes the engine and then they subcontract the conversion to the CNG to another company in Indiana. They had a problem with the high pressure fuel regulator that was leaking. That part came from Canada, so it delayed the delivery of these vehicles for six months. Chair Schmid: Our CNG fleet should be maintained into the future? Mr. Juarez: Yes, it will. Chair Schmid: You raise one other interesting question. You say we must drive 2,500 miles a year. Some of them don't make that. Mr. Sartor: Let me address that. That was an auditor recommendation; actually was two auditors ago that made that recommendation. We as the Fleet Review Committee have taken that under advice, but that's not necessarily the only criteria that we use for eliminating vehicles. Chair Schmid: The question that comes up with me is that means keeping it a certain number of years if you have ... Mr. Sartor: That is another factor. Some of our vehicles that we are proposing for replacement may not have the 2,500 a year mileage, but they're 20 years old. There's other ... Chair Schmid: There might be some replacement vehicles that have a market. How do we market replacements? Mr. Sartor: We put them out for sale under our surplus program. When we replace a vehicle we essentially sell it on the secondary market. Chair Schmid: Is that a revenue source? Mr. Sartor: What's that? Chair Schmid: Is that a good revenue source? Page 60 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Mr. Sartor: It is a revenue source, yes. That money goes back into our replacement fund. Chair Schmid: Any other comments? Council Member Filseth: I wish there was some way we knew what the right number was. What strikes me is we've got 553 vehicles, and we've only got 1,000 employees in the whole City. That's one vehicle for every two of us. Mr. Sartor: That also includes equipment, like generators and mowers and that king of things. It's not just vehicles. Council Member Filseth: Okay, I understand. Of the Capital Budget, I'd really like to know how many of those are in the category of passenger vehicles, sedans and SUVs as opposed to the other stuff. Do we have that number handy anywhere? Chair Schmid: You see the table on 664. Council Member Filseth: 664, that's how many we've got now. I'm thinking of the Capital Budget for next year. Jon Hospitalier, Public Works Assistant Director: Good evening, Jon Hospitalier, Assistant Director of Public Works or Public Services. I do have some rough numbers on what we propose for Fiscal Year '16 as far as the types of vehicles. Council Member Filseth: By the way, thank you guys very much for putting this out through 2020. That's very good. Go ahead. Mr. Hospitalier: Basically for '16 we're looking at 5 sedans, 13 pickup trucks, 6 vans, 3 police vehicles, 1 Wildland pumper, 2 SUVs, 1 dump truck, and 8 miscellaneous pieces of equipment. The breakdown for dollar amount should be $1,469,000 for General Fund vehicles, and for Enterprise it would be $1,305,000. Mr. Rossmann: Council Member Filseth, you'll find this information ... Council Member Filseth: I was writing those fast, but I missed the police. Mr. Rossmann: If you look at page 683 of the Capital Budget document, under supplemental information, that's where the same information is recorded. Page 683, supplemental information. Council Member Filseth: That it is. That's 39 vehicles. Page 61 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Mr. Rossmann: If you go out for 2017, you have the same information. That's page 685. Then you have the replacement for 2018 schedule, etc. We have all the information recorded right here. Council Member Filseth: The sedans and SUVs, there's 69 of those now, and we're going to replace 7 next year, which is 10 percent. Seven sedans and SUVs, 30K each for a Honda Civic, that's $200,000, $210,000, $220,000. Is that right? Mr. Hospitalier: I think we'd get a better deal than that. Council Member Filseth: We'd get a better deal than that, okay, good. I want to shop with you guys. Mr. Hospitalier: There's an advantage to fleet sales. Chair Schmid: No other questions? Ready for a motion. MOTION: Council Member Kniss moved, seconded by Chair Schmid to recommend to the City Council tentative approval of the Public Works Department Vehicle Replacement Fund Budget. Chair Schmid: Any comment, questions? MOTION PASSED: 3-0 Scharff absent Mr. Rossmann: Vice Mayor Schmid, I would like to ask the Committee to turn to the at-places memo from today. On page 2, I forgot to ask you to adopt this change to the General Fund Public Works Budget when you approved that item just about 1 1/2 hours ago. Chair Schmid: What page? Mr. Rossmann: Page 2 of the at-places memo. This talks about additional funding for the San Francisquito Creek Joint Power Authority of $27,000 to align our Budget with the request from the JPA. We did not include this item in the Budget, since the JPA approved their budget April 23. By that time we were actually trying to print the Budget; therefore, this request comes late to you. Our recommendation is to fund this item to support the JPA, offset with additional surplus funds from Fiscal Year 2015. Chair Schmid: Has the JPA been given a go ahead by the State Water Board? Mr. Keene: Yes and No. The JPA received its certification from the Water Board, but with a series of conditions. One was quite significant and had not Page 62 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES been brought up or pushed by the Water Board before, and they're now talking about the need to relocate a PGE gas line, which is quite problematic as it relates to the project and costs. I know the JPA Board has taken under advisement about how they're going to respond. We have the certification. We expected that we would get that given what had been done, but that still means we're potentially a long way still from being able to proceed with the project. Chair Schmid: Is it appropriate to be adding extra Staff while they're in a period of waiting? Mr. Keene: We could get more information. They're not in a period of waiting; they're in a period of hyper responsiveness to all of the data requests that they're getting plus from the Federal agencies. Both the Corps and the U.S. Fish and Wildlife have yet to issue their permits. Chair Schmid: An additional Staff member means that there is growing intensity of activity. Staff is recommending approval. Council Members, 27K grant to the JPA. Mr. Keene: Let me just add to the fact, we're one of five or six agencies in the JPA. Our contribution is just a portion of, I think this is in response to a decision that the JPA has already made. Council Member Kniss: This is not a time when we say no. Would you like a motion? Chair Schmid: Yes. MOTION: Council Member Kniss moved, seconded by Chair Schmid to recommend to the City Council tentative approval to increase the annual San Francisquito Creek Joint Powers Authority contribution, which is funded in the Public Works Department’s General Fund Budget by $27,000 to cover the additional cost. The increased expense is recommended to be funded via increased Fiscal Year 2015 Budget Surplus Carry-Forward Funds. Chair Schmid: Council Member Filseth, where are you on this? PASSED: 3-0 Scharff absent Page 63 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES 3. ASD Department, Operating Budget a. Printing & Mailing Fund, Operating Budget Walter Rossmann, Office of Management and Budget Director: The next and final department for today is the Administrative Services Department. Our CFO, Lalo Perez, is right here with me. Lalo Perez, Chief Financial Officer and Administrative Services Director: Thank you. I'm going to skip over the department overview, unless you want me to come back to it. I'm going to start with the accomplishments. What I will do is I will focus on one. You can read the other ones yourself. One of the ones that I think is very important for us as an organization is maintaining our AAA rating. You may ask, "How does that translate to dollars?" I had Staff look over the last five years. We refinanced our debt. In refinancing our debt over the last five years, we saved in a net present value format $8.3 million from all funds, not just General Funds. That's one of the reasons why we continue to provide guidance that we have strong Reserves, that we continue to tighten our belts where we can, and continue to have the outlook of maintaining that AAA throughout our financial planning. In terms of initiatives, what I can surmise to you over the years as we reduced our staffing level, one of the key things that we've strived for is to bring in tools and innovate. The work doesn't go away. We need to continue to do that. Some of the initiatives that you're seeing in here are to do exactly that, to have e-procurement for example. There's a lot of requests now for contract information. People want to see the competitors. There's a big push for companies to find out who's doing business with the City and what kind of business that they're doing. We want to have that type of information out there. It's also good for us. A piece of that that will allow for people to see for themselves will be consultants. You probably get a lot of questions and comments about that. How many consultants do we have and why do we have them? This will allow us to have that information out in the public for anybody to see and look at the Requests for Proposal, see how many people responded, see what the responses were, and the ranking and so on. That's a good addition for us among the other areas that we're doing there. In terms of Budget changes that we're submitting, we have three of them. The first one is to reclass two positions. We're elevating the level of responsibility for these classifications. We're wanting to move a position to an Accountant and then another one elevated to a Manager of Debt and Investments. We have a clerical-type position classification, and we feel that it's more important to do better analysis and better recording to have them at the accounting level. Those adjustments cost about $20,000 going forward. The next item we're requesting is what Walter explained to you at the beginning of the process. One of the goals Page 64 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES for us is to have a priority-based budgeting system. This will influence our performance measures, the management of the program levels, and hopefully provide us a view of how we can have alternative service delivery options by having the priority-based budgeting implemented as that. For this we would request a $60,000 Budget for a consultant to help us achieve this goal. The last item that we have is a postage meter replacement. The City Manager asked me if we're still using postage. The answer is yes. We mail a lot of utility bills. The goal is still to try to reduce that. Until we do so, that is obviously a very important function for us. That's roughly about 40 percent of the activity, and the rest is general business activity that we do. That's a $53,000 expense. Those are the changes that we are requesting of you today. Chair Schmid: Questions, comments from Council Members? Council Member Kniss: While Eric warms up ... Council Member Filseth: Prop 218 allows us to charge the mailing cost to the customer, right? Mr. Perez: Yes. Prop 218, Prop 26, the challenges in the legal system. We do factor all of those costs and we allocate them appropriately to the funds. Council Member Filseth: I'll let Liz (inaudible). Council Member Kniss: I've just lost my page, the one that says what our return on investment is. It's page 199. Mr. Perez: Yes, it is one of our performance measures. It is on page 199. It's on the top. I can tell you that there's a survey done. I'm trying to pull it out of my files here. It is not done by us. It is done by the City of San Mateo on an annual basis. What they do is they survey ... Council Member Kniss: You're talking about our percentage on investments? Mr. Perez: Yes. We have a portfolio of about $550 million. Council Member Kniss: Yeah, I know. Mr. Perez: We measure ourselves against the surrounding communities. We tend to fare very well. I've got to have full disclosure ... Council Member Kniss: The 1.85 is really good? Page 65 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Mr. Perez: It is. I can tell you from this report that I have in front of me, as of June 30, 2014, it's a little dated but that's the last one. It's done annually. We were at 2.01, south San Francisco at .55, San Mateo .7 ... Council Member Kniss: Lalo, not to interrupt. It's nice that we're doing that, but why is it so low? James Keene, City Manager: We have an extremely conservative, low-risk investment strategy. Mr. Perez: The State of California has put restrictions on local governments. We can only invest in bonds basically. Council Member Kniss: That's a better answer. Under those restrictions, fine but otherwise this is ... Mr. Keene: We're not in equities. We're not in RITs. We're not in hedge fund investments, anything. Chair Schmid: It has to be secure and liquid. Council Member Filseth: Even CalPERS gets 9 percent, right? Mr. Keene: Repeating what the Chair said and Lalo said ... Council Member Kniss: You were saying there were very good reasons for this. Therefore, I will be done with my questions. Eric, attack it. Council Member Filseth: The priority-based budgeting consultant, I like the idea. What are we going to have when it's done? Mr. Rossmann: What are we going to have? I apologize. Council Member Filseth: What's the output going to be? Mr. Rossmann: The timing for this. What we'll have? Council Member Filseth: Yeah. Mr. Rossmann: What we'll have is a detailed review of each City department by programs. If you look at finance as an example, we have accounting in the Budget document. Within accounting, you have payroll, accounts payable, Enterprise accounting, General Fund accounting. There's different types of programs below the division level. We'll look at that. We'll know how many Staff are assigned to these programs. We'll know how much it costs, how many contractual dollars there are. That's really the first part. Page 66 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Then we're trying to figure out how do these programs align to major outcomes within the City and how can we provide those programs differently. Can we potentially outsource them? Can we partner? Can we combine programs across departments? It's really an analysis of the organization at a much deeper level. Council Member Filseth: How different is that from if you actually tried to do a zero-based Budget? Mr. Perez: Zero-based budgeting actually says everything is out the door and you have to re-justify everything. The challenge with zero-based budgeting is we still need the police force, we'll still need the Fire Department. What you're now doing with how it's different, the Police Department you would say of the 85 or so police officers we have, what are they really doing? They're doing patrol; we know that. They're doing investigations. How much is really allocated towards these programmatic elements. That's how it's different. It allows you to look at the department much deeper. Mr. Perez: You also get to make categories such as is it required legal, is it a local requirement, is it a Council priority. You start ranking it into those levels as well. Mr. Keene: If I just might add. We've said that it's going to take a significant amount of work. It's as much as anything imposing a decision framework on the organization so that the conversation we have is not so much on the increments of expenditures and revenues in a year, but really the relationship programmatically, as Walter said, to particular outcomes. That's a more complicated analytical process than looking at marginal cost increases from one year to the next. Chair Schmid: This is the last item on the Budget, last department. Come back to a general statement that there is basically no Staff increase. There's actually a slight decline. Yet, the salary and benefits is rising at 6.6 percent. We started the Budget process with the revenue that in the long run we're going to have between 4 and 4 1/2 percent growth in revenue. Here we have a department with the finest financial minds in the City, a model for other departments, and yet we have this base issue cropping up in every department on all circumstances. Our salary and benefit packages are just going beyond what seems to be our long-term revenue increase. On top of that, taking place in departments with no growth, we have a net increase of 13 Staff positions. We're building it into our future as well. Is there some notion that as we add needed Staff, and I think you made a very convincing case there's four or five positions we absolutely need, should there be Page 67 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES efficiency somewhere that could offset that? Come back to basics. Jim, did you have a comment you wanted to ... Mr. Keene: I do. I want to make sure that we're drawing the right conclusions this year. I definitely share the concern about the systemic challenge. Just very simply, one of the things that will be revealed when we come back that will mitigate a little bit of these increases this year was the point that Walter was making that the 2015 Budget doesn't really reflect the true cost of 2015. If we take SEIU as one example, over 500 employees in SEIU, half of our full-time employees were in a unit that got a 2 percent raise followed by a 2 1/2 percent raise that extended over the two fiscal years, yet they occurred after the 2015 Budget, so they're all showing up here. You've got a 4 1/2 percent raise right there plus a catch-up on the market adjustments that had not been made for a series of years, again all showing up in one year. This idea that we're going to see this pattern at this degree in 2017, etc., doesn't necessarily hold, because we've clustered a bit. That still doesn't change the fact that even if it isn't, it's still at least 4 or 4 1/2 percent which is right at where our very healthy revenue growth is. It, therefore, doesn't really allow for much flexibility in other spending decisions. I do think that we'll be able to show a little bit that there's a bit of an anomaly in this 2016 number. That being said, the other thing is that we don't have a good way for reducing demand. That's the other part of the equation. Let's leave the dollars out. Is our community asking less or asking more? Is the Council asking for less or more? I would say, no, the Council's asking for a lot more in response to the community and rightfully so. We can't quantify it, but I'm just saying intuitively. I just think back from when I first came here even as far as what the pace was. The expectations and the demands are increasing faster than our revenue stream is also. That's the challenge. We can't have it all ways, increase responsiveness, do more studies, take on more issues, be sure to expand the hours at the great new facilities we've opened up, and not be confronted with these costs. Then we've got as you know, and this is probably more for the wrap-up and everything, we have some real handcuffs placed on us by the State as far as our flexibility to look at things. We've talked about that when we were talking about can we cut our benefits and have different salaries. We're handcuffed by PERS and a number of things that are locking us into a bad situation. Chair Schmid: An additional issue of are we paying the full cost of the employees we currently have or are we pushing some of those costs off to the future. Right now we are paying substantial costs for the past. Instead of saying next year we'll be able to deal with this, CalPERS is going to tell us next year is when they're going to put higher costs on to pay for last year. Page 68 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Mr. Keene: I can tell you this though, we are and this Council is paying much more attention to this issue than our predecessors did. I'm certain that 15 years ago nobody was having this conversation at all about the future impact. Again, when you particularly look at this retiree medical distribution across, I've looked at them in a few areas. I said to these guys, "What is this?" These are employees going back 30 years who happen to still be alive, who we are carrying on the books. Council Member Kniss: In many ways the enemy is us. We've negotiated on all of this since I've been here, and I've only been here 2 1/2 years now. We've negotiated on it all. When I came, you had made enormous cuts. I can't remember how many employees, but some enormous number between '09 and '10-'11. Mr. Keene: Just in the General Fund we cut 12 percent or so of employees over a couple of years total. Council Member Kniss: I don't have those figures with me, but we're not back up to where we were. Mr. Keene: 70 positions. No, we're not. We showed at the very beginning, we're not ... Council Member Kniss: I can't find it. Mr. Keene: ... anywhere even close to where you were ten years ago. Our population has increased. I would say that the acceleration of social media and connectivity has sped up demand and the expectations for responsiveness. We all know this. Council Member Kniss: Those retirees are just living longer, aren't they? Chair Schmid: Could I ask a general question on the Table of Organization. There's a listing of all employees in the City that we track very closely. I understand there's a variance in how many of those positions are unfilled from year to year. Can you give an idea over the last four years of the percentage of these positions that are filled? Mr. Rossmann: I just happened to talk to one of my employees today. At this moment we have 40 unfilled or vacant positions right this pay period. We do a biweekly analysis of that, and they just told me the data today. Council Member Kniss: 7:45 pm on May 14th. Just approximate, right? Mr. Rossmann: This is for the pay period which is the one we just finished. Yeah, it's approximate. Page 69 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Mr. Perez: In the last three years, we've been around that number. I was trying to calculate a percentage for you. In terms of that number, it's been about that. When we've had some temporary issues such as in Public Safety or Fire, where we've had either people in the academies or waiting periods like that, it's gone up to 60. It ranges (crosstalk). Mr. Keene: That's at any one point in time. That measures one thing. Chair Schmid: You need some flexibility. My understanding is when we entered the recession, it was probably twice that. Instead of 4 percent, it was probably 8 percent. Mr. Perez: The City Manager wanted us to have that flexibility to be able to close the gap, and then strategically decide whether we needed to refill those positions and, if so, where. Chair Schmid: That certainly helped us when the recession came. Mr. Keene: Can I say something? We could get a more specific measure for this. The 40 positions is right now, at any point in time. Let's say that 4 percent as a number. The fact that the actual turnover number could be closer to 15 to 20 percent over the course of a year when we measure the cumulative amount. We're going to fill these positions, but we're going to have other positions. In other words, the change over within the whole organization will be more than it is at any point in time. Let's say we fill all of these 40, and in three months from now we're going to have a different 30 who are up at one point in time. That doesn't mean for a whole year; that's a different measure. A lot of times when you think about what's the turnover rate in an organization, the higher the percentage in a lot of ways, the more impact that has on productivity and ability to get stuff done. Council Member Kniss: The more expensive it is. Mr. Keene: If 20 percent of your workforce in a year turns over, there are a lot of gaps that occur and it's more than just the time they're out. Losing somebody, getting somebody in, getting them up to speed, catching them up to where they are, that can be pretty significant. Mr. Perez: That's right. It's a net number we're talking about. The situation that the City Manager is talking about is a bigger one. As you all know, retraining and going through the whole process takes some time. If you have time and you want to, since this is an important issue to you and a couple of you really like numbers, in the handout that we gave you that has the actuary report from Barthel and Associates, there's a lot of data that is very critical to your concerns going forward. I'm going off the top of my Page 70 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES head, so please don't hold me to this. There's one table about 220 employees are 50 years of age and have 20 years or more of service. That's the delta point that is going to tell us that pretty soon those are going to go into retirement, and we're going to have retiree medical. Depending on how many of those we replace, then we have a new expense. That helps paint the picture. The other side to that is that we are having 28 percent of our Miscellaneous Employees in the second and third tier. We know at some point we're going to get some relief from that. There's a lot of useful information in those actuary reports about trending data like that. Chair Schmid: That's coming in September if we get a chance. Council Member Kniss: Even with the ACA, the medical costs are going up so dramatically. I got my bill today from the County, since I'm in their retiree health plan. I am just stunned by it. I just can't believe it. I thought, "This is what's happening everywhere." The cost of medicine goes up, and the cost to the employee goes up or to the retiree goes up. We sit here and wonder why the cost of running our airline has gone up so much. Would you like a motion on anything or (inaudible)? Chair Schmid: I think we are looking for a motion on the ASD Department including the Printing and Mailing Fund. MOTION: Council Member Kniss moved, seconded by Council Member Filseth to recommend to the City Council tentative approval of the Administrative Services Department Printing & Mailing Fund Budget. MOTION PASSED: 3-0 Scharff absent Mr. Perez: Thank you for that vote. I wanted to acknowledge Mary Figone who helps me with preparing the Budget. Thank you, Mary. Future Meetings and Agendas Lalo Perez, Chief Financial Officer and Administrative Services Director: What Walter is going to do is walk you through a summary of where we're at. Sorry. Christine Paras is going to walk us through the summary of where we're at, so we can prepare ourselves for the Budget wrap-up. For the Budget wrap-up itself, we will have the General Fund Capital Improvement Program. As a side note, the Infrastructure Master Plan that you approved or the Council approved I should say, because some of you were not on the Council yet, is embedded in this five-year plan. That's a major driver. Obviously anything that's left over in the parking lot and any additional information you have requested from tonight. Let me turn it over to Christine. Page 71 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Christine Paras, Principal Management Analyst: Good evening again. Christine Paras, Principal Management Analyst. We distributed this summary of our Budget process to you all yesterday afternoon. First of all, on the upper left we have a balance of the Council Contingency. So far the Finance Committee has not elected to tap that Contingency yet. As far as the parking lot items to date, we have $666,000 in the parking lot for the General Fund which is comprised of the Recreation Superintendant of $178,000, the Office of Sustainability consultant funding of $190,000, the Senior Technologist for Public Safety of $183,000, and the Code Enforcement Lead which is $115,000. We anticipate having discussion of the parking lot items during Budget wrap, and we'll provide any additional information you need during that time. For the Fiber Optic Fund, Staff has prepared follow-up items for that as well for Budget wrap. That is the Fiber Optic rebuild CIP which is $1.15 million. In the Stanford Development Agreement Fund, we placed into the parking lot the Project Safety Net cost for that program which is $178,000. Council Member Kniss: Wait, 178? Mr. Paras: 487. As far as motions to date for General Fund changes starting on line 19 of the summary, we have in total a net benefit to the General Fund via Budget Stabilization Reserve of $634,000, which is listed here. Other than the items in the parking lot that we just reviewed, we also have an increase for Council meals of $5,000 and the San Francisquito Creek JPA additional cost that was accepted by the Finance Committee this evening. In addition to that, we have General Fund FTE changes, and this is basically a list of the FTE changes that were placed into the parking lot. Those total 3: the Recreation Superintendant, the Senior Technologist for Public Safety, and the Code Enforcement Lead. Chair Schmid: The goal of the wrap-up session is to review this list and see what net balance we would like to do to the Proposed Budget. Also at that time since everything else is tentative, to see if there are adjustments that can be made with other funds. Is that correct? Council Member Filseth: There's still the General Fund capital. Walter Rossmann, Office of Management and Budget Director: That is correct. The other item for ... Chair Schmid: The next agenda we have is the General Fund capital and the wrap-up. Page 72 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Mr. Perez: We have allowed it from 1:00 to 4:00 on the 26th of May. It's a Tuesday. The reason we suggested a hard stop for you is you need a break before the Council meeting starts at 5:00 with the Buena Vista project. James Keene, City Manager: This is doable. You've been through this. An hour on the General Fund CIP. It's driven so much by the Infrastructure Plan and fairly limited funding other than that. Then 2 hours for working through this and other stuff. Council Member Filseth: If we don't wrap up in those two hours, what's the backup? Council Member Kniss: Wait. What was the timing that you gave us? Mr. Perez: Three hours, 1:00 to 4:00. Council Member Kniss: 1:00 to 4:00, okay. Greg wanted to know if we could start at noon. Mr. Keene: Which Greg? Council Member Filseth: Scharff. Council Member Kniss: The other Greg. Mr. Keene: We don't complain. We don't even need breaks. Whatever we need to do. You guys were talking about efficiency; honestly, we ought to be able to get this thing through at this stage with all the background in three or four hours. We're fine with starting at noon from our point of view, if that means we can get done by 4:00 on the 26th, because we have some real production issues for the Staff to be able to turn all this around into some stuff that the Council can get in advance. Chair Schmid: It is important that we achieve that March 26th deadline. Mr. Perez: Let me just make another comment. Council Member Filseth may not have gone through this before. It's not unheard of where we may have a 2-2 vote, where you just don't make a decision. We have those probably every year. What we do is we try to do a very good job of detailing those decisions out night-by-night, department-by-department, fund-by- fund. Any of those we point out. You may have a project where you just don't have enough information. We'll come back with the information on June 8th, so you'll have that. Even if you didn't make a decision as a Finance Committee, you can make it as a Council on the 8th. Page 73 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES Council Member Kniss: Is there anything else on the agenda that night? Please tell me there isn't. Council Member Filseth: Wait. It's coming June 8th? Mr. Perez: June 8th to the Council. Council Member Kniss: June 8th is just the Budget hearing, right? Mr. Keene: There are some other things, but it's the main action item. Mr. Perez: It's the first one. Council Member Filseth: I'm out of town on June 8th. Mr. Perez: Are you? June 15th then. Chair Schmid: I'd like to make one other point. We also discussed a number of surrounding issues that have made making Budget decisions difficult. A lot of them are associated with revenue, what is the revenue, what is a sustainable Budget, how do we assure that we get in there. You mentioned the actuary report. We're going to be voting on approving a payment which might be understated. There have been a number of issues that have been brought up that should be addressed in some way during the wrap-up rather than just, "We'll forget them all." Some of those might be future agenda items. I want to make sure that there is time on the wrap-up to identify these underlying strategic issues. Council Member Kniss: Could we start at noon and, luckily if we got done by 3:00, we'd have a couple of hours of break before the evening meeting? Mr. Keene: We're fine. We'll adjust our schedule to start at noon. That's fine. Council Member Kniss: What do you guys think? Council Member Filseth: I’m okay. Chair Schmid: Yeah, but we'll have to check with Greg. Mr. Keene: To the Chair's point, as it relates to these larger strategic system issues, you're not going to resolve them at this. If you want to identify and schedule them for subsequent Finance Committee work, that would be really important work which might also mean the Finance Committee would not get involved in some smaller-scale issues as you do from time to time to really focus on these big thematic issues. These are Page 74 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 DRAFT MINUTES the drivers that really affect the City and the organization that do need attention. I guarantee you, if you want me to really slash spending in this City, I can easily do that. The consequences, you're going to say, "We don't like this." There's important policy choices only the Council can make. That's not going to happen at that meeting, but you could certainly identify issues. Let's call it the post-Budget parking lot of the Finance Committee's agenda for this year. Chair Schmid: At the same time we're going through Comp Plan issues of trying to make statements for the next five to ten years. It seems to me the Budget is as significant and important and fits together with those. How do you create a sustainable City? It would be worthwhile to do that, to have ... Council Member Filseth: Thank you for that. Your characterization of this as a highly constrained problem is dead nuts on. That's fundamentally what we're trying to grapple through. ADJOURNMENT: Meeting adjourned at 7:59 P.M. Page 75 of 75 Finance Committee Special Meeting Draft Minutes 5/14/2015 APPENDIX 4 City of Palo Alto (ID # 5412) City Council Staff Report Report Type: Action Items Meeting Date: 6/8/2015 City of Palo Alto Page 1 Summary Title: Fry's Grant Scope of Work Title: Review of a Draft Scope of Work for the Fry's Master Plan and Adoption of a Resolution Regarding the Use of Regional Transportation Funding From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that Council review the Draft scope of work for the Fry’s Master Plan and adopt the resolution included as Attachment C regarding the use of regional transportation funds from the Metropolitan Transportation Commission (MTC). Executive Summary On April 21, 2014, the City Council met to review and comment on the draft California Avenue Concept Plan. As part of the Concept Plan discussion, the City Council authorized staff to submit an application for a Priority Development Area grant to the Santa Clara County Valley Transportation Authority (VTA) for the preparation of a master plan of the 15 acre Fry’s Electronics store site, located at 340 Portage Avenue The purpose of the master plan is to identify land use and transportation opportunities for a well-planned and designed mixed of uses for the site. In addition to authorizing the submittal of the application, the Council requested an opportunity to review and approve the scope of work prior to execution of any grant agreement or Memorandum of Understanding (MOU) for the VTA grant funds. The application was submitted on April 28, 2014 and in August 2014, the City was awarded a $265,000 grant to prepare the master plan. A local cash match of $35,000 is required as part of the grant. Both the grant and the matching funds are included in the proposed budget for Fiscal Year (FY) 2016. VTA proposed to fund the grant using federal highway funds from Caltrans, and took much longer than the City anticipated to make the funds available. Quite recently, in response to a request from City staff, the VTA determined that the funds could be provided directly to the City from the Metropolitan Transportation Commission (MTC), which will allow the City (rather than VTA) to contract for consultant services. The attached resolution is required for MTC to process the grant and make funding available. City of Palo Alto Page 2 The proposed scope of work envisions an 18 month community planning effort, resulting in a coordinated area plan, including development standards and design guidelines for the site. The property owner would be an important participant in the process, and was provided an opportunity to comment on the proposed scope of work. The property owner’s representative has also informed City staff their lease with Fry’s has been extended, such that Fry’s is expected to remain on site through 2019 and has expressed hesitation about initiating the planning process right now. Background In 2006, the City Council initiated the California Avenue Concept Plan (Concept Plan) study as part of the Comprehensive Plan update. The 115 acre California Avenue Plan Area includes the Fry’s site. The purpose of the California Avenue Concept Plan was to identify appropriate development intensities, the potential for additional housing and plan for retention and enhancement of retail/service opportunities and improved pedestrian and bicycle connections in the California Avenue area. The Draft Concept Plan provided to the Council in early 2014 lays out a proposed vision to guide future development and redevelopment and is subject to review and revision during the balance of the Comprehensive Plan Update process. The Draft Concept Plan focuses on three sub areas: 1) California Avenue, 2) Park Boulevard and 3) the Fry’s site. For the Fry’s subarea, the stated goal for the area is “Over the long term, foster the transformation of the Fry’s site subarea into a walkable, human scale mixed use neighborhood that includes ample amenities.” In the Draft Concept Plan, there are a number of proposed policies that focus on the Fry’s site, which is envisioned as a mixed use site with retail, office, and residential uses. There is a policy that encourages redevelopment of the site if the Fry’s store leaves, and policies that stress the importance of improving vehicular, bicycle and pedestrian connection. In the City’s updated Housing Element, adopted in late 2014 and certified by the State in January 2015, the site is identified as an important location for multifamily housing consistent with its current Multiple Family (RM-30) zoning. The Fry’s Master Plan grant application to the VTA described the intent of the master plan as providing a cohesive development program with more specific requirements and standards than the Draft Concept Plan. The 15 acre site is one of the City’s largest underdeveloped sites and provides a unique opportunity to plan for a variety of uses. The coordinated area plan would identify land use and transportation opportunities, include a site plan with a mix of uses, and seek to enhance the site’s transit oriented character by improving vehicular, pedestrian and transit opportunities. Components would include development standards (i.e. site specific zoning changes), a transportation demand management program, and design guidelines. (See the attached draft scope of work for more specifics.) For reference, the original VTA application is included as Attachment A. City of Palo Alto Page 3 In the Council’s review of the Planning grant, the Council had some questions about the requirements of the grant. Some of the questions included: Would any constraints be placed on the City if the grant was awarded? What commitments, if any, about uses or densities would be required under the terms of the grant? Staff explained that the application for the grant did not commit the City to any VTA requirements or constraints, and committed to review the scope of work and grant agreement (or MOU) with the Council prior to accepting grant funds. Staff having recently secured VTA’s concurrence that the City could directly administer the grant and consultant services solidifies the City’s ability to ensure that the work product reflects Palo Alto planning needs. A proposed Scope of Work is provided for the Council’s review in Attachment B and the proposed resolution contains the only commitments required as conditions of the grant, namely the need to provide local matching funds, the need to provide a single point of contact, and the need to staff the project appropriately. Timeline Following transmittal of the adopted resolution to MTC, it’s expected that funds for the planning effort will be available by the end of June or July 2015, at which time the City would issue a Request for Proposals and select a qualified planning consultant to execute the agreed- upon scope of work at the City’s direction. The attached scope of work anticipates an 18 month schedule from the consultant’s start date. Resource Impact In the grant application, a local cash match was required and the City pledged to provide $35,000, for a total project cost of $300,000. This amount is included in the Planning and Community Environment Department’s Fiscal Year 2016 budget request. The department has many competing priorities and alloctating staff to this planning effort may mean that other projects take longer than anticipated. Policy Implications Development of a Fry’s Master Plan would implement the California Avenue Area Concept Plan that is being developed as part of the Comprehensive Plan Update and the Master Plan would have to be consistent with the Comprehensive Plan. If the Master Plan did not accommodate the number of housing units (221-249 units) anticipated in the City’s Housing Element, an amendment to the Housing Element would be required to identify an additional or alternative housing site(s). Environmental Review The attached scope of work anticipates CEQA review as part of the Master Planning process. City of Palo Alto Page 4 Attachments: Attachment A: Palo Alto VTA Grant Application (DOC) Attachment B: Fry's Master Plan Draft Scope of Work (DOCX) Attachment C: Resolution PDA Planning Grant (PDF) ATTACHMENT A PDA PLANNING GRANT PROGRAM Applications due April 28, 2014 Submit to: Celeste.Fiore@VTA.org General Background Information Project Title Fry’s Master Plan Brief Project Description The Fry’s Master Plan project is proposed to develop a comprehensive and forward thinking planning document to guide development of a significant 15 acre site (340 Portage) located in Palo Alto’s designated California Avenue Planned Development Area, one of the few areas in Palo Alto intended for higher density development, proximity to multi-modal transportation. The purpose of the plan is identify land use and transportation opportunities for a well planned and designed mixed use area of residential, commercial, office and retail uses. It is also intended to enhance the site’s transit oriented character by improving vehicular, pedestrian and transit opportunities. As a site within walking distance of Caltrain, multiple bus lines, El Camino Real, and one of Palo Alto’s main bike boulevards (Park Boulevard), it represents a rare opportunity within this city for true transit oriented mixed-use. The master plan is designed to be a guide and strategy for future land use. It is intended for use by decision makers during the process of making choices between varied and often competing interests. It is intended to bridge between the goals and policies of the General Plan and individual development projects. The master plan will define a variety of land use opportunities of well planned and designed commercial, office, residential development, enhanced activity nodes, and safe and efficient circulation and access for all modes of transportation between activity centers that help focus and support activity in the centers. ATTACHMENT A Planning Activity (Check One Box) Advanced Planning Preliminary Planning Policy Planning Project Sponsor City of Palo Alto Project Contact Name: Elena Lee Title: Senior Planner Agency: City of Palo Alto Phone Number: (650) 617-3196 Email Address: Elena.Lee@CityofPaloAlto.org Other Project Partners Project Location Project Location/Target Population If applicable, please attach project area maps: Map #1: Location within agency jurisdiction Map #2: Project Area detail map Is the project in a Community of Concern or CARE Community? See Attachments D and E. ___ Yes _x_ No Does the project target low-income populations? _x_ Yes* ___ No *Via BMR units as part of the City’s RHNA allocation. s ATTACHMENT A Project Budget (Maximum Fund Request is $1,000,000) Total Project Cost $300,000 Grant Request (88.5% maximum) $265,000 Matching Funds $35,000 Project Timeline Submit E-76 Request to Caltrans (Projects > $500,000): Execute Funding Agreement with VTA (Projects < $500,000): Begin Reimbursable Work: August 11, 2014 Interim Project Milestones (please add where applicable): Milestone #1: City Council approval of scope Milestone #2: Community and stakeholder meetings Milestone #3: Preparation of master plan and review before the Architectural Review Board, Planning and Transportation, and the City Council for final review. Project Completion: December 19, 2015 City Council/Board of Supervisors Approval: December 15, 2015 Grant Close-out: December 19, 2015 All Projects are expected to have a Caltrans E-76 Approval by February 1, 2016 Project Questions 1. Describe how the project or its implementation will help achieve One Bay Area Grant program goals and objectives and facilitate PDA implementation in the following categories: ATTACHMENT A a. Increase housing supply, including affordable housing 1for low-income residents. b. Increase and jobs within PDAs. c. Increase land use intensities in PDAs. d. Boost transit ridership within PDAs. e. Increase walking, bicycling, carpooling and/or car‐sharing within PDAs. f. Manage parking and driving. g. Promote multimodal connections within the PDAs. h. Locate key services and retail businesses within PDAs. Please highlight plan benefits, including (but not limited to): enhanced walkability and bikeability safety and security; enhanced economic activity protection of environmental resources public transit access or amenities parking design, streetscape design gap closure of an essential pedestrian/ bicycle route or network access to services that meet daily needs The intent of the Fry’s Master Plan is to develop a comprehensive and coordinated plan to foster mixed-use, improve the relationship of the site with the adjacent neighborhoods, enhance connectivity and circulation for pedestrians, cyclists and drivers and provide context-sensitive, pedestrian-scaled development consistent with its surroundings. The master plan would connect the site better with the California Avenue Business District, the Stanford Research Park, the businesses along Park Boulevard and El Camino Real. Consistent with the larger California Avenue Concept Plan, the master plan would encourage higher density, where appropriate and where impacts can be managed to ensure quality of life. The site is currently developed with commercial uses and has not been updated for many years. This plan provides an opportunity to proactively develop a plan for a more efficient use of the land with a variety of mixed uses and higher density housing within a key area of the California Avenue PDA. With excellent access to transit and the availability of larger vacant or underutilized land, the California Avenue area has been a popular area for redevelopment. As a 15-acre site, the Fry’s property represents a uniquely sized parcel that provides an important opportunity to further influence and set the tone for land uses within the City’s Priority Development Area. The existing area already provides a mix of uses, commercial uses along California Avenue, office uses along the Park Boulevard corridor, and a regional commercial center in the subject Fry’s property. The area is occupied by several large employers, including the County Courthouse, AOL, and Microsoft. The plan will include a diverse mix of land uses designed to create an important business, retail and mixed use center. It will serve to support Palo Alto’s second largest commercial center, provide much needed housing, and help fulfill the City’s Regional Housing Needs Assessment allocation, The plan will build upon the area’s existing strengths and establish the 1 Affordable housing, for the purposes of this application is defined by the limits set by HUD for Santa Clara County, found at (website). ATTACHMENT A direction to create the place that is envisioned by the community. The project would help to focus growth in a location that can provide multi-modal opportunities for future residents, visitors and employees. The plan would also emphasize better connectivity through the site and safety for all modes of travel. Because the site was developed for primarily one set of buildings, it does not include a street network that would better connect the site to either Park Boulevard or El Camino Real. The project area is located within walking distance of existing and future transit facilities of regional significance including the existing Caltrain – California Avenue Station, the existing El Camino Real transit routes, future El Camino Real Bus Rapid Transit Station, and local Stanford University Marguerite and VTA routes. These existing public transit systems provide direct access to significant destinations and employers, including Stanford University Research Park, the County Courthouse, and the California Avenue Business District. In addition, the plan would help support the City’s Bike and Pedestrian Master Plan by encouraging development that would take advantage of one the City’s primary bicycle corridors on Park Boulevard. The City has also begun significant street improvements along the nearby California Avenue, including significant bicycle and pedestrian improvements. The City has also initiated parking related studies for the California Avenue area. Some options being considered are City wide transportation demand management programs and public-private partnerships to provide additional parking facilities. The City’s proposed Comprehensive Plan Amendment also includes language for the implementation of a design competition to encourage innovative concepts for the City’s public parking lots. 2. Describe how the jurisdiction in which the project is located has demonstrated a commitment to provide an increase in housing, employment, and transportation choices through its’ existing policies. These policies may include (but are not limited to)policies and regulations, such as innovative parking policies, TOD zoning, transportation demand management strategies, existing citywide affordable housing policies and approved projects, supportive general plan policies, sustainability policies, including green building policies and alternative energy policies. The project site has been the focus of number of recent planning initiatives and studies. The Fry’s site is located within the California Avenue Concept Plan area. The California Avenue Concept Plan (Cal. Ave. Concept Plan) is one of two studies, along with the East Meadow Circle Concept Plan, that the City Council has initiated as part of the Comprehensive Plan Update as two areas that have been the subject of some of the most change in the City. The intent of the plan is to address land use and circulation and to provide policy guidance. The Draft Concept Plan http://www.paloaltocompplan2020.org/files/file/Documents/Cal%20Ave%20Area%20Concept% 20Plan_Draft%20March%202014.pdf) specifies land uses and development intensities, including the potential for additional housing, the desire to retain and enhance retail/service opportunities, and the desire for improved pedestrian and bicycle connections. The 15 acre Fry’s site is one of the most important areas in the Concept Plan and has been identified as one where a land use change is being recommended. The Draft Concept Plan identifies this area as one that is suitable for growth and recommends that development happen at the higher end of the allowed density when appropriate, especially for housing. This area has been identified for mixed uses and increased development intensity because of ATTACHMENT A its Zoning and Comprehensive Plan land use designations. The California Avenue area, including the subject property, is within the Transit-Oriented Residential land use designation (TOR). This designation allows high density residential development in areas that are within 2,000 feet of a multi-modal transit station. The goal would be to generate densities that would support substantial use of public transportation. A significant portion of the larger California Avenue area has been zoned Pedestrian Transit Oriented Development (PTOD). The PTOD designation is intended to allow higher density residential uses on commercial, industrial and multi-family parcels within a walkable distance of the Caltrain station. This area is also an important component of the Palo Alto Bicycle and Pedestrian Transportation Plan. The plan guides public and private investment in non-motorized transportation facilities and related programs. The adjacent Park Boulevard is a critical bicycle boulevard that will provide an important access route to and through the site. The approved Rail Corridor Study also covers this portion of Palo Alto. The report establishes a community vision for land use, transportation and urban design opportunities along the Caltrain corridor. The Study identifies this area as an important one for strong pedestrian and transit-oriented uses, as well as one that can accommodate much of the City’s future development. As discussed above, the City has also started significant streetscape improvements along California Avenue to create a better pedestrian and bicycle friendly environment, while continuing to provide adequate parking facilities. 3. What are the outcomes of this plan that the jurisdiction hopes to achieve through this grant? A) Please list and describe desired outcomes. B) What implementation actions will this planning effort lead to? (For example, capital project lists, zoning change, implementation of parking management practice, change of City design standards, LOS standards, etc.) What is the proposed schedule for these actions? C) How does the jurisdiction propose to measure whether housing and/or employment with the PDAs increased as a result of implementing the PDA Planning Grant funded project? The City’s desired outcome of this project is to develop a comprehensive plan that will meet City’s policies regarding development in this area. The intent of the Fry’s Master Plan is to develop a comprehensive and coordinated plan to foster mixed-use, improve the relationship of the site with the adjacent neighborhoods, enhance connectivity and circulation for pedestrians, cyclists and drivers and provide context-sensitive, pedestrian-scaled development consistent with its surroundings. The plan would identify the land uses, intensity, and design guidelines that would encourage redevelopment and growth that would enhance the pedestrian, bicycle-friendly and transit oriented nature of the area through a robust public process. It would balance the needs of neighborhood residents as well as the daytime population of the area. The desired implementation actions would lead to potential zoning changes, implementation of an area-wide transportation demand management program, enhancement of parking ATTACHMENT A facilities within the area, and development of design guidelines. The intent would be to develop a development program that would receive public support and meet property owner’s needs that would circumvent the recent increase in requests for site specific Planned development proposals that have often been seen as controversial projects that do not adequately consider the larger context. These programs would be developed concurrently with this project and adopted within the year after the adoption of the master plan. This would also coincide with the completion of the City’s Comprehensive Plan Update. The success of the program in regards to increase in housing or employment would be measured through a variety of methods. The success would be measured in terms of the increased number of housing units (as well as variety of type), and non-residential square footage. The site currently has a legal nonconforming commercial use, but is zoned and has a land use designation for multi-family residential. Due to land prices and development regulations, properties with the same multi-family residential designation have typically been developed at the lower range of density. The goal would be to encourage developed at the higher range, while also ensuring that negative impacts would be avoided. The City is also in process of implementing a business registry. As one of the few jurisdictions without a business license requirement, it has been difficult to measure the number of actual jobs. The new registry would provide a vehicle to develop and maintain an accurate database. 4. Please describe the project’s community outreach component. Is it designed to involve the affected community, including existing residents and business owners, to ensure that community concerns are understood and reflected in the plan? The community outreach component is a very important aspect for Palo Alto. The City has already implemented significant outreach as part of the larger Concept Plan and Comprehensive Plan Update through resident and business stakeholder groups, property owners and business owners. This outreach has included four community meetings, multiple stakeholder meetings and seven public hearings. The concept of a master plan for this property has been discussed during the larger process with the public. As one of the larger parcels in the City and the site of a well-regarded retail business, there has been a lot of public concern regarding the future of this site. This project can take advantage of the robust program and contact list that has been already been established through the Cal Ave Concept Plan and Comprehensive Plan Update process. The City has engaged in regular communication with the property owners of the Fry’s property as well as the Fry’s Electronic business itself. This degree of public outreach will continue with this process. While multiple community workshops are envisioned, smaller groups would be established to develop a forum for the public to provide regular input and to engage in an ongoing discussion. The City would not only continue discussions with those that are immediately affected by any changes on the property itself, but also with stakeholder groups. An important aspect of the City’s outreach process is the City’s website. A webpage will be developed on this project to provide up to date information at any time for the public. An email list will be made available for people to sign up for regular updates. April 2015 DRAFT Scope of Work Subject to Modification Page 1 ATTACHMENT B DRAFT FRY’S SITE MASTER PLAN/COORDINATED AREA PLAN SCOPE OF WORK The Fry’s Site Master Plan project will develop a comprehensive and forward thinking planning document to guide development of a significant 15 acre site (340 Portage) located in Palo Alto’s designated California Avenue Planned Development Area, one of the few areas in Palo Alto intended for higher density development due to its proximity to multi-modal transportation. [Note: we may want to use another name for the site, since there are multiple tenants and uses.] The purpose of the plan is to specify desired land uses and densities, identify needed on- and off-site improvements to support redevelopment of the site, and provide standards and guidelines that will result in a well-designed mixed use area of residential, commercial, and public uses. The plan is also intended to enhance the site’s transit oriented character and will assess and identify ways to improve vehicular, pedestrian, bicycle, and transit access to and from the area. As a site within walking distance of Caltrain, multiple bus lines, El Camino Real, and one of Palo Alto’s main bike boulevards (Park Boulevard), the Fry’s area represents a rare opportunity within a built-out city for true transit-oriented mixed-use with a substantial component of multifamily housing, including a variety of housing types. The master plan is designed to be a coordinated area plan, similar to the SOFA Phase 1 and 2 Coordinated Area Plans, and the planning process and plan contents will comply with Section 19.10 of the Palo Alto Municipal Code. Significant community engagement and property-owner participation would be required early in the process and continue through implementation. Once adopted, the plan is intended to supplement the goals and policies of the Comprehensive Plan (General Plan), and provide development standards for the site. The Comprehensive Plan Update, which includes the California Avenue Concept Plan, will likely lead to other zoning code updates. The City is also concurrently working on an update to its Sustainability/Climate Action Plan. The master plan must be carefully coordinated with all of these efforts to ensure consistency, and the CEQA document prepared for the Master Plan will “tier” from the program-level Environmental Impact Report (EIR) prepared for the Comprehensive Plan Update. It is expected that the completed master plan will consist of the following chapters or components: 1. Planning Objectives and Site Context 2. Goals and Policies April 2015 DRAFT Scope of Work Subject to Modification Page 2 3. Site Plan, Desired Land Uses 4. Development Standards and Criteria 5. Architectural and Site Design Objectives & Standards 6. Capital Improvements and Implementation Measures 7. Monitoring and Adaptation Plan Task One: Community Engagement (Month 1-18) Formation of a citizens’ working group with regular meetings Comprised of interested stakeholders including property owners, neighborhood residents, local business representatives and others Review baseline data Develop goals and policies Serve as a conduit and resource for larger community input Development and implementation of a community engagement effort Plan and conduct a minimum of three community meetings. The meetings should educate the public about the issues for the study area and solicit the public’s desires for the master plan. Solicit regular feedback from key stakeholder groups o Property owners of subject site and adjacent properties o Area commercial tenants o Area residents Develop public outreach materials that can be used by neighborhood groups and other community organizations to solicit broad community involvement Create Fry’s Master Plan website Prepare electronic noticing list for public to receive Master Plan updates Tasks Two: Scoping, Data Collection & Analysis (Month 2-3) 1. Conduct meetings with the City’s Planning & Transportation Commission and the City Council to refine the scope of work as well as the plan goals, objectives, and schedule. 2. Data/background collection and analysis Compile existing Comprehensive Plan goals, policies and programs, proposals in the Draft California Avenue/Fry’s Area Concept Plan, and current zoning and development standards that apply to the site and its immediate vicinity. Compile data on existing uses and development patterns, including the unused development capacity of sites in the area. Gather information on existing traffic, parking, transit, bicycle, and pedestrian activities in the area, cultural and natural resources, natural and man-made hazards, and other relevant data. Task Three: Preparation and Review of Draft Plan (Month 4-6) 1. Develop plan policies and parameters to include: April 2015 DRAFT Scope of Work Subject to Modification Page 3 Specific land uses and densities Site plan and configuration of street network Pedestrian and transit oriented uses and connections Public spaces and amenities incl. public art component Economic analysis and project feasibility Development standard and criteria 2. Develop draft design objectives and standards 3. Present draft materials to Planning & Transportation Commission and City Council Task Four: Refinement of the Draft and Development of an Implementation/Monitoring Plan, Concurrent with CEQA Review (Month 6-12) Refine draft materials from Task Three Develop implementation plan to achieve identified goals Develop fiscal study to quantify (public and private) costs and benefits Draft project-specific CEQA document tiered from the Comp Plan EIR Draft monitoring & adaptation plan Task Five: Plan Adoption (Month 12-18) Circulate final draft for public review Review by the Architectural Review Board Review by the Planning and Transportation Commission Review and Adoption of Plan by City Council Resolution of Local Support Resolution No. _____ Authorizing the filing of an application for funding assigned to MTC and committing any necessary matching funds and stating assurance to complete the Fry’s Master Plan WHEREAS, CITY OF PALO ALTO (herein referred to as APPLICANT) is submitting an application to the Metropolitan Transportation Commission (MTC) for $265,000 in funding assigned to MTC for programming discretion, which includes federal funding administered by the Federal Highway Administration (FHWA) and federal or state funding administered by the California Transportation Commission (CTC) such as Surface Transportation Program (STP) funding, Congestion Mitigation and Air Quality Improvement (CMAQ) funding, Transportation Alternatives Program (TAP)/Active Transportation Program (ATP) funding, and Regional Transportation Improvement Program (RTIP) funding (herein collectively referred to as REGIONAL DISCRETIONARY FUNDING) for the FRY’S MASTER PLAN (herein referred to as PROJECT) for the PDA PLANNING GRANT PROGRAM (herein referred to as PROGRAM); and WHEREAS, the Moving Ahead for Progress in the 21st Century Act (Public Law 112-141, July 6, 2012) and any extensions or successor legislation for continued funding (collectively, MAP 21) authorize various federal funding programs including, but not limited to the Surface Transportation Program (STP) (23 U.S.C. § 133), the Congestion Mitigation and Air Quality Improvement Program (CMAQ) (23 U.S.C. § 149) and the Transportation Alternatives Program (TA) (23 U.S.C. § 213); and WHEREAS, state statutes, including California Streets and Highways Code §182.6, §182.7, and §2381(a)(1), and California Government Code §14527, provide various funding programs for the programming discretion of the Metropolitan Planning Organization (MPO) and the Regional Transportation Planning Agency (RTPA); and WHEREAS, pursuant to MAP-21, and any regulations promulgated thereunder, eligible project sponsors wishing to receive federal or state funds for a regionally-significant project shall submit an application first with the appropriate MPO, or RTPA, as applicable, for review and inclusion in the federal Transportation Improvement Program (TIP); and WHEREAS, MTC is the MPO and RTPA for the nine counties of the San Francisco Bay region; and WHEREAS, MTC has adopted a Regional Project Funding Delivery Policy (MTC Resolution No. 3606, revised) that sets out procedures governing the application and use of REGIONAL DISCRETIONARY FUNDING; and WHEREAS, APPLICANT is an eligible sponsor for REGIONAL DISCRETIONARY FUNDING; and WHEREAS, as part of the application for REGIONAL DISCRETIONARY FUNDING, MTC requires a resolution adopted by the responsible implementing agency stating the following: •the commitment of any required matching funds; and •that the sponsor understands that the REGIONAL DISCRETIONARY FUNDING is fixed at the programmed amount, and therefore any cost increase cannot be expected to be funded with additional REGIONAL DISCRETIONARY FUNDING; and •that the PROJECT will comply with the procedures, delivery milestones and funding deadlines specified in the Regional Project Funding Delivery Policy (MTC Resolution 15.02.06 Attachment C No. 3606, revised); and • the assurance of the sponsor to complete the PROJECT as described in the application, subject to environmental clearance, and if approved, as included in MTC's federal Transportation Improvement Program (TIP); and • that the PROJECT will have adequate staffing resources to deliver and complete the PROJECT within the schedule submitted with the project application; and • that the PROJECT will comply with all project-specific requirements as set forth in the PROGRAM; and • that APPLICANT has assigned, and will maintain a single point of contact for all FHWA- and CTC-funded transportation projects to coordinate within the agency and with the respective Congestion Management Agency (CMA), MTC, Caltrans. FHWA, and CTC on all communications, inquires or issues that may arise during the federal programming and delivery process for all FHWA- and CTC-funded transportation and transit projects implemented by APPLICANT; and • in the case of a transit project, the PROJECT will comply with MTC Resolution No. 3866, revised, which sets forth the requirements of MTC’s Transit Coordination Implementation Plan to more efficiently deliver transit projects in the region; and • in the case of a highway project, the PROJECT will comply with MTC Resolution No. 4104, which sets forth MTC’s Traffic Operations System (TOS) Policy to install and activate TOS elements on new major freeway projects; and • in the case of an RTIP project, state law requires PROJECT be included in a local congestion management plan, or be consistent with the capital improvement program adopted pursuant to MTC’s funding agreement with the countywide transportation agency; and WHEREAS, that APPLICANT is authorized to submit an application for REGIONAL DISCRETIONARY FUNDING for the PROJECT; and WHEREAS, there is no legal impediment to APPLICANT making applications for the funds; and WHEREAS, there is no pending or threatened litigation that might in any way adversely affect the proposed PROJECT, or the ability of APPLICANT to deliver such PROJECT; and WHEREAS, APPLICANT authorizes its Executive Director, General Manager, or designee to execute and file an application with MTC for REGIONAL DISCRETIONARY FUNDING for the PROJECT as referenced in this resolution; and WHEREAS, MTC requires that a copy of this resolution be transmitted to the MTC in conjunction with the filing of the application. NOW, THEREFORE, BE IT RESOLVED that the APPLICANT is authorized to execute and file an application for funding for the PROJECT for REGIONAL DISCRETIONARY FUNDING under MAP-21 or continued funding; and be it further RESOLVED that APPLICANT will provide any required matching funds; and be it further RESOLVED that APPLICANT understands that the REGIONAL DISCRETIONARY FUNDING for the project is fixed at the MTC approved programmed amount, and that any cost increases must be funded by the APPLICANT from other funds, and that APPLICANT does not expect any cost increases to be funded with additional REGIONAL DISCRETIONARY FUNDING; and be it further 15.02.06 RESOLVED that APPLICANT understands the funding deadlines associated with these funds and will comply with the provisions and requirements of the Regional Project Funding Delivery Policy (MTC Resolution No. 3606, revised) and APPLICANT has, and will retain the expertise, knowledge and resources necessary to deliver federally-funded transportation and transit projects, and has assigned, and will maintain a single point of contact for all FHWA- and CTC-funded transportation projects to coordinate within the agency and with the respective Congestion Management Agency (CMA), MTC, Caltrans. FHWA, and CTC on all communications, inquires or issues that may arise during the federal programming and delivery process for all FHWA- and CTC-funded transportation and transit projects implemented by APPLICANT; and be it further RESOLVED that PROJECT will be implemented as described in the complete application and in this resolution, subject to environmental clearance, and, if approved, for the amount approved by MTC and programmed in the federal TIP; and be it further RESOLVED that APPLICANT has reviewed the PROJECT and has adequate staffing resources to deliver and complete the PROJECT within the schedule submitted with the project application; and be it further RESOLVED that PROJECT will comply with the requirements as set forth in MTC programming guidelines and project selection procedures for the PROGRAM; and be it further RESOLVED that, in the case of a transit project, APPLICANT agrees to comply with the requirements of MTC’s Transit Coordination Implementation Plan as set forth in MTC Resolution No. 3866, revised; and be it further RESOLVED that, in the case of a highway project, APPLICANT agrees to comply with the requirements of MTC’s Traffic Operations System (TOS) Policy as set forth in MTC Resolution No. 4104; and be it further RESOLVED that, in the case of an RTIP project, PROJECT is included in a local congestion management plan, or is consistent with the capital improvement program adopted pursuant to MTC’s funding agreement with the countywide transportation agency; and be it further RESOLVED that APPLICANT is an eligible sponsor of REGIONAL DISCRETIONARY FUNDING funded projects; and be it further RESOLVED that APPLICANT is authorized to submit an application for REGIONAL DISCRETIONARY FUNDING for the PROJECT; and be it further RESOLVED that there is no legal impediment to APPLICANT making applications for the funds; and be it further RESOLVED that there is no pending or threatened litigation that might in any way adversely affect the proposed PROJECT, or the ability of APPLICANT to deliver such PROJECT; and be it further RESOLVED that APPLICANT authorizes its Executive Director, General Manager, City Manager, or designee to execute and file an application with MTC for REGIONAL DISCRETIONARY FUNDING for the PROJECT as referenced in this resolution; and be it further RESOLVED that a copy of this resolution will be transmitted to the MTC in conjunction with the filing of the application; and be it further 15.02.06 RESOLVED that the MTC is requested to support the application for the PROJECT described in the resolution, and if approved, to include the PROJECT in MTC's federal TIP upon submittal by the project sponsor for TIP programming. INTRODUCED and PASSED: AYES: NOES: ABSENT: ABSTENTIONS: NOT PARTICIPATING: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Senior Asst. City Attorney City Manager ____________________________ Director of Planning & Community Environment 15.02.06