HomeMy WebLinkAboutStaff Report 2511-5559CITY OF PALO ALTO
CITY COUNCIL
Special Meeting
Tuesday, January 20, 2026
Council Chambers & Hybrid
5:30 PM
Agenda Item
11.Policy and Services Committee Recommendation to Adopt the 2026 State and Federal
State Legislative Guidelines and 2026 Utility Policy Guidelines, and Receive an Update on
State and Federal Legislative Advocacy; CEQA Status – Not a Project Presentation
City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: City Clerk
Meeting Date: January 20, 2026
Report #:2511-5559
TITLE
Policy and Services Committee Recommendation to Adopt the 2026 State and Federal State
Legislative Guidelines and 2026 Utility Policy Guidelines, and Receive an Update on State and
Federal Legislative Advocacy; CEQA Status – Not a Project
RECOMMENDATION
The Policy and Services Committee recommends the City Council adopt the 2026 State and
Federal Legislative Guidelines and 2026 Utility Policy Guidelines and receive an update on State
and Federal Legislative Advocacy.
BACKGROUND
As part of the City’s legislative advocacy program, staff and City legislative advocates at
Townsend Public Affairs (TPA), work to identify and analyze potentially impactful legislation and
communicate the City’s interests to legislators. The program is guided by the Advocacy Process
Manual1 and a set of City Council-approved Citywide Legislative Guidelines. These guidelines
provide direction to staff and TPA on emerging legislative issues and other issues important to
the City Council. In consultation with the Mayor and the Policy and Services Committee Chair,
staff use the citywide legislative guidelines to respond to legislative affairs throughout the year.
These guidelines allow for flexible and prompt responses to emerging issues in the fast-paced
legislative environment without returning to the City Council each time an issue arises. The City
Council reviews and updates the citywide guidelines each January and reviews the utilities
guidelines as necessary.
Due to the highly regulated nature of utilities, Utilities Legislative Guidelines have been used to
enable effective staff advocacy in line with the Advocacy Process Manual. The broad and
technical scope of the dozens of bills introduced annually requires frequent communication with
utility associations and often direct staff advocacy to advance and protect the City of Palo Alto
1 Advocacy Process Manual: https://www.paloalto.gov/files/assets/public/v/2/intergovernmental-
affairs/advocacy-process-manual-2025.pdf
Utilities (CPAU) and customers‘ interests. The Utilities Legislative Guidelines were created to
guide these activities. These guidelines originated in 20093 and the review process, which
requires annual staff review and City Council approval of proposed changes (only when there are
changes to review), was formally adopted in 2017.4 The current guidelines format was
established in 2018.5
This year, staff is bringing both the State and Federal Legislative Guidelines and the Utilities
Legislative Policy Guidelines to City Council to show the entire portfolio of the City’s legislative
advocacy programs.
Both sets of guidelines were reviewed by the Policy and Services Committee on November 19,
2025. The Utilities Guidelines were also reviewed by the Utilities Advisory Commission (UAC) on
November 5, 2025.
ANALYSIS
Federal and State Legislative Guidelines
The draft 2026 Federal and State Legislative Guidelines are included as Attachment A. Changes
reflect topics the City Council has expressed interest in, updates from City staff, and issues
expected to be prominent in the upcoming legislative cycle. The Policy & Services Committee
revised the draft guidelines at its November 19, 2025 meeting and recommended the City Council
adopt the guidelines. In addition to changes made during the meeting, the Committee also
requested that staff study possible guidelines relating to homelessness and CEQA reform for
public infrastructure and bring language to the City Council for consideration. Staff incorporated
language on homelessness. Staff did further research with applicable departments on this topic
after the Policy & Services Committee and do not recommend further advocacy regarding
broader CEQA exemptions. Instead, if the City Council would like to pursue this topic, staff
recommends advocating only for narrow CEQA exemptions specific to the type of infrastructure
project of interest. Without further information on the specific types of projects of interest, staff
does not have recommended language at this time to add to the guidelines.
Also, the Finance Committee at its October 21, 2025 meeting recommended that the City Council
add support for any legislation that may arise related to tort reform to the legislative guidelines.
Cities throughout the state are facing rising insurance premiums due in part to increased jury
3 Utilities Advisory Commission, November 4, 2009: https://www.paloalto.gov/files/assets/public/v/1/agendas-
minutes-reports/agendas-minutes/utilities-advisory-commission/archived-agenda-and-minutes/agendas-and-
minutes-2009/11-04-2009-meeting/item-4_-util-legislative-policy-guidelines-2010.pdf
4 City Council, February 13, 2017, Resolution 9668: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=53971
5 City Council, January 22, 2018, SR 8750: https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes-
reports/reports/city-manager-reports-cmrs/year-archive/2018/final-staff-report-id-8750_2018-city-and-utilities-
legislative-guidelines.pdf
verdicts in claims against public entities. Balanced tort reform would preserve funding for City
services and help stabilize annual insurance premiums, long-range financial planning and future
liability exposures. This topic is included in the draft Citywide Legislative Guidelines as approved
by the Committee.
Utilities Legislative Policy Guidelines
The Draft 2026 Utility Legislative Policy Guidelines are included as Attachment B. These
guidelines are intended to be evergreen and subject to annual staff review. When there are
recommended changes, the guidelines are brought to the UAC for review and recommendation
to the City Council for approval of any changes. The most recent guidelines were approved by
the City Council on April 3, 2023.9 Updates in 2024 and 2025 did not occur since the guidelines
are evergreen and staff did not seek any updates. On November 5, 2025, staff presented the
proposed guidelines to the UAC with only minor grammatical adjustments for discussion and
recommendation to the Policy & Services Committee.10 The 2023 guidelines were almost entirely
unchanged going back to the version approved in 2018,11 as City Council direction has been
consistent on issues pertaining to Utilities.
The UAC unanimously approved a slightly revised version of the guidelines and the adjustments
are reflected in redline in Attachment B. The discussion expressed the UAC’s interest in legislative
advocacy, impacts to the City of the Federal shutdown, and a greater understanding of how the
guidelines empower staff to advocate on behalf of the City. The UAC approved an amendment
to add the language to Utilities guideline #8, “while maintaining flexibility to support rate designs
and policies that advance beneficial electrification and decarbonization in the public interest” to
reflect their recommendation to enable staff to advocate for legislative revisions to cost
allocation principles currently governed by Proposition 26 and Proposition 218 related to rate-
making publicly owned utilities. On November 19, 2025, staff presented the UAC-amended
guidelines to the Policy & Services Committee. The Policy & Services Committee unanimously
approved the guidelines with the suggestion that, where appropriate, language be added that
incorporates a “just decarbonization transition and equitable access.” The redlines in
Attachment B show the changes made as suggested by Policy & Services Committee as well as
the UAC.
Legislative Update
At the City Council meeting, Townsend Public Affairs will provide an advocacy update and
preview issues expected to arise in the upcoming legislative cycle. An overview memo is included
9 City Council, April 3, 2023, SR 2301-0895: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82266
10 Utilities Advisory Commission Meeting, November 5, 2025, Item #3:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=17466
11 City Council, January 22, 2018, SR 8750: https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes-
reports/reports/city-manager-reports-cmrs/year-archive/2018/final-staff-report-id-8750_2018-city-and-utilities-
legislative-guidelines.pdf
as Attachment C. In addition to the topics that will likely arise next session, and subsequent to
the Policy & Services Committee discussion, staff became aware of several topics on which the
City may be interested in supporting or sponsoring legislation. The topics relate to existing City
services or programs that would benefit or require legislative amendments to advance the City‘s
goals; they include:
-Raising the cap for local sales tax increments
-Preserving publicly owned utilities’ investment in flexible hydropower
-Regulating the use of e-bikes and e-motos
-Streamlining the process for developing affordable housing on City-owned land
-Preserving local permitting and zoning requirements for telecommunications
infrastructure
FISCAL/RESOURCE IMPACT
STAKEHOLDER ENGAGEMENT
ENVIRONMENTAL REVIEW
ATTACHMENTS
Attachment C: Townsend Public Affairs Overview Memo
APPROVED BY:
The City of Palo Alto’s 20256 Federal and State Legislative Guidelines
Page 1 of 5 Adopted January 20, 2026 January 13, 2025
These Guidelines reflect and activate the City Council’s priorities; they do not supplant them.
They work to guide staff and the City’s legislative advocates on issues that are important to the
City Council, and likely to become a legislative issue. These Guidelines are not rank-ordered and
are meant to allow for a flexible and quick response by staff and advocates, without the need to
return to the City Council to seek guidance. The Guidelines work in conjunction with the City
Council-approved Advocacy Process Manual and the City Council action to do “Strategic
Weighing in on Issues of Interest”1. The City Council’s annual priorities are also guidance for the
City’s legislative platform.
The below Foundational Principles represent the ideals that form the core of the City’s policy
agenda. The Legislative Guidelines all rise from and strengthen four foundational principles:
1.Promote Local Fiscal Sustainability:
Support measures that promote fiscal stability, predictability, financial independence, and
preserve the City’s revenue base and maximum control over local government budgeting.
Also protect local revenue sources and prevent unfunded mandates.
2.Support Funding Opportunities:
Protect, seek, and increase funding for programs, projects, and services. Seek opportunities
that allow the City to compete for regional, state and federal funding. Support funding for
programs including, but not limited to, climate action, economic development,
infrastructure investment, housing, transportation projects (such as road improvements,
rail grade separations, bicycle and pedestrian safety, multi-modal transportation systems
and transit-oriented development), air quality, water quality and local water reliability,
parks and recreation, historic preservation, natural resources, hazard mitigation, public
safety and public health.
3.Preserve Local Control:
Preserve and protect the City’s powers, duties, and discretion to enact and engage in local
processes and policy making concerning local affairs and oppose efforts and legislation
from state and regional bodies that preempt local authority and do not align with City
priorities. Advocate for longer lead times for implementation of new legislation that
adversely impacts Palo Alto. Oppose items that preempt or reduce the authority or ability
of local government to determine how to effectively operate local programs, services,
activities, and governance.
4.Protect the health and safety of the community:
Support policies and funding that enrich the quality of life for the Palo Alto community with
services that provide for a safe, fulfilling, and vibrant life. Support policies that promote
equity.
1 City Council, June 22, 2021; Agenda Item # 7; Staff Report # 12344
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=81546
The City of Palo Alto’s 20256 Federal and State Legislative Guidelines
Page 2 of 5 Adopted January 20, 2026 January 13, 2025
The Legislative Guidelines create the framework for organizing the City’s policy interests, while
guiding staff and contracted legislative advocates in their advocacy efforts on behalf of the City.
The items below provide direction for the City’s efforts when addressing reasonable
government actions.
Transportation
The City supports government action that:
• Deters single occupancy drivers and alleviates local traffic congestion and promotes active
transportation safety infrastructure
• Reduces the likelihood of crashes, removes barriers to use of proven safety
countermeasures, and discontinues efforts that perpetuate safety risks
• Supports local and regional public transportation
• Regulates technology that diverts traffic into residential neighborhoods
• Provides funding for rail grade separations, rail efficiency improvements, and other means
of reducing the local impacts of regional transportation systems
• Streamlines funding between the state, federal, and local governments that help reduce
the amount of time and resources it takes to fund and complete transportation projects.
• Sustains local, regional, and state funding sources for the development and maintenance
of transportation and does not condition receipt of funds on non-transportation related
factors
• Supports expansion and operations of public transit options throughout Palo Alto,
especially funding for transit
• Supports state legislation that maximizes local control related to land use requirements
near transit (especially if it impacts the City’s approach to planning for complete
communities)
• Supports local, regional, state, and federal policies that would reduce aviation noise and
emissions impacts over communities, including passing noise ordinances and creating
incentives for reducing impacts
• Supports coordination among transportation agencies regionally
• Regulates electric bicycles and similar modes of transportation to promote safety
Climate and Environment
The City supports government action that:
• Reduces GHG emissions and sSupports an equitable and just transition toward GHG
reduction, and carbon neutrality goals, and electrification goals including by maintaining
or expanding funding resources for local government implementation strategies
• Maintains or expands funding resources for local governments to reduce GHG emissions
• Reduces airplane noise, health impacts, and/or airplane emissions
The City of Palo Alto’s 20256 Federal and State Legislative Guidelines
Page 3 of 5 Adopted January 20, 2026 January 13, 2025
• Promotes residential, commercial, and vehicle electrification programs
• Promotes workforce development to provide increased workforce needed for
electrification and grid modernization
• Promotes the use of renewable resources, water conservation, and the flexible use of
existing resources
• Continues support for a statewide ban on polystyrene containers and packaging
materials
• Provides opportunities for staff, in partnership with the San Francisquito Creek Joint
Powers Authority and other regional stakeholders, to advance efforts to improve the
creek’s watershed and floodplain (especially related to local bridges)
• Supports efforts to protect local communities from sea level rise and other impacts of
climate change
• Supports responsible processing of recyclables once removed from Palo Alto and other
communities, including promoting processing facilities and recyclables markets within
the United States
• Strengthens and modernizes the State and Local electric grids and grid capacity
• Supports the protection of our natural environment, including open space, trees/tree
canopy, and biodiversity
Financial
The City supports government action that:
• Supports the long-term stability of CalPERS and the ability of local governments to mitigate
and manage with flexibility its pension obligations
• Protects the funding sources for the sustainable delivery of City services
• Supports the continued deductibility of tax-exempt municipal bonds and the restoration of
Advance Refunding of Tax-Exempt Municipal Bonds
• Supports the continuance of tax credits available at the federal level to support low-
income individuals in achieving housing affordability and financial stability
• Supports the lowering or maintaining of voter thresholds for local revenue measures
• Supports maximum flexibility for local government in contracting and contract
negotiations
• Supports reforms to local revenue financing tools for the purpose of supporting the
development of affordable housing and public infrastructure
• Supports efforts to attract and retain resources for current and future smaller businesses
in Palo Alto
• Preserves local discretion in the assessment, collection, and usage of development fees
• Supports tort reform to limit the City’s financial risk and liability exposure
• Supports maintaining local discretion and authority over transfer taxes and other locally
approved revenue measures, opposing any state or federal efforts to preempt, delay, or
undermine their implementation.
• Preserves local fiscal autonomy necessary to fund essential community services,
infrastructure, and housing initiatives approved by their voters.
The City of Palo Alto’s 20256 Federal and State Legislative Guidelines
Page 4 of 5 Adopted January 20, 2026 January 13, 2025
Governance, Transparency, and Human Resources
The City supports government action that:
• Preserves local government’s ability to manage its own employment issues, including, but
not limited to hiring, evaluating, disciplining, and/or terminating and negotiating collective
bargaining agreements with employees’ representatives
• Supports reasonable regulatory efforts surrounding policies regarding cybersecurity,
drones, shared mobility services, returning to Obama-era net neutrality regulations, and
smart city initiatives
• Provides for the incremental and thoughtful integration of artificial intelligence
technologies
• Protects individual privacy and allows the City to safeguard customer information
• Maintain existing records collection and retention requirements
• Promote teleconferencing flexibilities under the Ralph M. Brown Act
• Allows the City to support the collaborative work of regional partners, trade associations,
other local governments and organizations, and Joint Powers Authorities
• Provides for the equal treatment of all individuals
• Protects funding for safety net services provided by the County
Housing
The City supports government action that:
• Supports reasonable housing policies that recognize local autonomy to maintain the local
public process and preserve local government’s ability to determine land use policies and
development standards
• Provides flexible, ongoing funding for (a) affordable housing, (b) homelessness, and (c)
infrastructure (such as parks, utilities, roads, and transit) required to support the
increased housing production and keep pace with local development goals
• Promotes the development and enhancement of safe and affordable housing and
accessible housing within the City for all economic segments of the population
• Promotes funding and tax incentives for the identification, acquisition, maintenance,
adaptive reuse, and restoration of historic sites and vacant structures
• Fosters reasonable ratios between jobs and housing
• Supports the development and implementation of efficient and environmentally
sustainable land use and building practices
• Supports the provision of greater lead times for Palo Alto to implement state legislation
when necessary to comply with new land use and housing requirements within the local
context
• Support property insurance availability and affordability initiatives
• Support RHNA reforms to promote fact-based standards that would further support goals of
social and economic housing balance
The City of Palo Alto’s 20256 Federal and State Legislative Guidelines
Page 5 of 5 Adopted January 20, 2026 January 13, 2025
• Supports evidence-based approaches to addressing homelessness
Public Safety
The City supports government action that:
• Supports efforts which seek to modify policing services, including but not limited to
alternative public safety models and funding to address community mental health
issues, expansion of requirements regarding police data and rules regarding prior
employment information transparency, and expansion of data and communications
including radio encryption
• Provides for greater public safety support resources especially related to organized retail
theft operations
• Reduces weapons-related violence via the enactment of common-sense firearm reforms
• Enhances fire and emergency training and response capabilities. Mitigate fire safety
risks. Advocate for funding and policy to mitigate wildfire risks and funding for fire
services in general as well as funding for emergency services.
• Updates, implements, and refines processes, services, and programs affecting the City.
This includes, but is not limited to, public safety reform efforts and streamlining
reporting mandates
• Support legislation that would address ongoing safety concerns and help prevent acts of
violence motivated by hate, including improving data collection and reporting
• Support legislation for increased resources for crime victims including victim support
services and victim compensation processes
• Support measures that protect immigrants from unlawful or inhumane deportation
efforts
• Support measures that allow peace officers to enforce traffic safety violations by
autonomous vehicles, including failure to obey traffic lights and stop signs
• Support measures that allow for automated enforcement of speed violations
UTILITIES LEGISLATIVE POLICY GUIDELINES: 2026 UPDATE
1
M E M O R A N D U M
To: The Honorable Ed Lauing and Members of the Palo Alto City Council
CC:Ed Shikada, City Manager
Chantal Cotton Gaines, Deputy City Manager
Christine Prior, Assistant City Clerk
From: Townsend Public Affairs
Niccolo De Luca, Vice President
Alex Gibbs, Grants Director
Carlin Shelby, Deputy Director
Joseph Melo, Federal Advocacy Manager
Date: January 5, 2026
Subject: State and Federal Legislative Updates
Townsend Public Affairs, Inc. (TPA) has prepared this report for the City of Palo Alto to provide a
summary of State, Federal, and funding efforts and highlight the current status of the legislative
process.
STATE LEGISLATIVE UPDATES
Legislature Reconvenes 2025-26 Legislative Session
On January 5, the California State Assembly and Senate reconvened to begin the second year of
the 2025–26 two-year legislative session. With the bill introduction period largely complete, the
Legislature is now operating under compressed timelines focused on advancing measures that
were introduced during the first year of the session. Several hundred two-year bills that were
introduced in 2025 but held over remain eligible for consideration and must begin moving through
policy committees by the end of January to remain viable. As a result, early January committee
hearings are expected to focus heavily on these pending measures, alongside budget oversight
and implementation issues.
February 20 marks the final deadline for the introduction of new bill vehicles for the remainder of
the session. After that date, legislative activity will shift almost entirely to policy and fiscal
deliberations, budget negotiations, and amendments to existing measures rather than the
introduction of new proposals.
Key changes influencing the beginning of the new Legislative Session include new Senate
Leadership, with Monique Limón (D-Santa Barbara) assuming the role of Senate President pro
Tempore. Senator Limón has emphasized budget discipline, implementation of recently enacted
laws, and increased oversight of state programs, themes that are expected to shape both
committee agendas and floor priorities in 2026. Several committee chair assignments of particular
importance to local governments took effect immediately or will take effect by February 1.
2
The Senate Local Government Committee is chaired by Maria Elena Durazo, with jurisdiction over
Brown Act compliance, local government authority, municipal finance tools, and special district
governance. This committee will play a central role in any legislation affecting local operational
flexibility, governance structures, or liability exposure.
Advancing statewide electric bicycle safety reforms: Electric bicycle safety continues to
emerge as a significant transportation and public safety issue for cities, particularly given
the proliferation of overpowered and illegally modified devices that do not align with
California’s existing three-class e-bike framework. Prior to the start of the second year of
the legislative session, the City of Palo Alto signed onto a coalition letter requesting an
informational hearing on SB 381, which commissioned a statewide study examining
electric bicycle safety performance data, enforcement challenges, and policy options. The
letter was submitted to the Legislature before the new year and calls for a formal legislative
discussion of the study’s findings, including potential statutory reforms related to device
classification, manufacturing standards, and enforcement authority. TPA will continue
coordinating with coalition partners and legislative offices to support an informational
hearing and to position the City for engagement on any follow-on legislation informed by
the study’s recommendations.
Sales tax cap exemption authority: TPA is working with Senator Arreguín to incorporate
the City of Palo Alto into SB 762, which authorizes specified cities to exceed the statewide
sales and use tax rate cap under defined circumstances. Inclusion in SB 762 would allow
Palo Alto to pursue up to a one-half cent sales tax adjustment, subject to local voter
approval, providing the City with additional fiscal capacity to address structural budget
pressures, maintain core services, and invest in long-term priorities.
Housing and land use implementation reforms: Housing and land use policy will continue
to dominate the second year of the legislative session, with growing legislative interest in
3
refining how existing housing laws are implemented at the local level. TPA will engage on
streamlining processes for development of affordable housing on City-owned land,
proposals addressing challenges related to the use of housing overlays, enforcement of
RHNA compliance, and the application of the Builder’s Remedy. Particular emphasis will
be placed on remedying unintended consequences that have arisen for jurisdictions with
certified housing elements, including reduced planning certainty and constraints on locally
tailored zoning strategies. Advocacy will focus on restoring balance between state housing
production goals and local implementation feasibility.
Statewide housing bond: Legislative actions are underway regarding a potential $10 billion
statewide housing bond that could be placed before voters in a future statewide election.
TPA will monitor the development of this proposal and engage to ensure that bond
allocations meaningfully support local governments through funding for affordable housing
production, preservation, infrastructure, and site preparation. Particular emphasis will be
placed on structuring bond programs to complement and leverage local housing finance
trusts and other locally controlled funding sources, allowing eligible jurisdictions to align
state bond proceeds with existing local investments. For jurisdictions like Palo Alto that
have adopted certified housing elements and are actively advancing housing projects,
advocacy will focus on ensuring equitable access to bond resources, eligibility criteria that
recognize local readiness, and sufficient flexibility to braid state bond funds with local trust
funds, impact fees, and other financing tools.
Liability reforms affecting local governments: TPA will engage on legislative efforts to
address the growing public liability crisis facing cities and other public agencies following
changes enacted under AB 218 (Gonzalez, 2019). While intended to expand access to
the courts, AB 218 and related litigation trends have significantly increased public entity
exposure, destabilized the liability insurance market, and driven sharp growth in high-cost
claims and verdicts against local governments. TPA will work with legislative offices and
local government coalitions to pursue targeted statutory reforms that restore balance to
public liability standards, improve predictability for public agencies acting in good faith,
and reduce pressure on local budgets while maintaining access to the judicial system.
State Budget Update
With the Legislature’s return from winter recess on January 5, budget activity for the 2026–27
fiscal year will begin to accelerate. According to the Legislative Analyst’s Office (LAO), the state
is facing an estimated $18 billion budget shortfall driven by a combination of continued revenue
volatility, slower-than-anticipated recovery in personal income tax receipts, and elevated baseline
expenditure commitments adopted in prior budget cycles. The LAO has emphasized that the
state’s heavy reliance on high-income earners for General Fund revenues has amplified year-
over-year fluctuations, while recent declines in capital gains and stock-related income have
reduced revenue growth projections.
At the same time, the LAO has noted that the state has limited remaining one-time resources
available to address ongoing obligations. While reserves remain historically strong, including the
Budget Stabilization Account, the LAO has cautioned against overreliance on reserves to backfill
structural gaps, warning that doing so would weaken the state’s ability to respond to future
economic downturns. As a result, early budget discussions are expected to focus on a mix of
expenditure restraint, programmatic delays or reductions, fund shifts, and limited use of reserves,
rather than broad-based program expansions.
4
The Governor’s proposed budget is expected to be released before January 10 and will provide
the first comprehensive snapshot of the Administration’s assessment of the state’s fiscal condition
heading into 2026–27. The proposal will outline the administration’s approach to addressing the
projected deficit, including assumptions related to revenue growth, caseload adjustments, and
discretionary spending. The LAO has indicated that differences between administration revenue
assumptions and independent forecasts are likely to be a focal point of legislative scrutiny,
particularly given recent volatility in income tax collections.
FEDERAL UPDATES
Congressionally Directed Spending Submittal
5
At the federal level, Congress is continuing to operate under short-term funding measures while
advancing full-year FY 2026 appropriations bills through a series of bipartisan “minibus”
packages. The House has begun releasing and voting on these minibus packages, which bundle
several appropriations bills together to facilitate floor action and bicameral negotiations. The
Senate is expected to take up corresponding packages on a parallel timeline as leaders work
toward avoiding further continuing resolutions and finalizing full-year funding levels.
GRANT FUNDING UPDATES
Program Request
Amount
Status Description
Federal Emergency
Management Agency –
Assistance to Firefighters
Grant (AFG)
$139,688 Not
Awarded
Replacement of chest compression
equipment to support emergency
medical response capabilities.
Metropolitan Transportation
Commission – Transit Oriented
Communities Implementation
Grant
$2,885,000 Awarded Palo Alto EV Charging
Infrastructure Project to expand
publicly accessible electric vehicle
charging stations near transit and
activity centers.
Federal Emergency
Management Agency – Staffing
for Adequate Fire and
Emergency Response (SAFER)
$4,011,929 Pending Personnel funding to support fire
and emergency response staffing
levels and service capacity.
CalFire – Wildfire Prevention
Grant Program
$850,000 Not
Awarded
Fuels management and ecosystem
protection activities to reduce
6
wildfire risk and improve
community resilience.
6
Board of State and
Community Corrections –
Organized Retail Theft Grant
$5,176,812 Awarded Funding to strengthen regional
coordination and public safety
strategies to combat organized retail
theft.
January 20, 2026
Legislative Guidelines & Advocacy Updates
PaloAlto.gov
Christine Prior, Assistant City Clerk
Chantal Cotton Gaines, Deputy City Manager
Lisa Bilir, Utilities Assistant Director of Resource Management
Lena Perkins, PhD, Utilities Acting Deputy Director of Legislative & Regulatory
Riley Yaylian, Utilities Legislative & Regulatory Analyst
Carlin Shelby, Deputy Director, Townsend Public Affairs
1
Staff recommends that the City Council:
•Adopt the 2026 State and Federal Legislative Guidelines and 2026 Utility
Legislative Policy Guidelines
•Receive an update and provide feedback on recent and upcoming federal and
state legislative and regulatory activities
Recommendation
2
•Framework used by staff and the City's legislative advocates, in consultation with
the Mayor and Policy & Services Chair, to respond to legislative issues
•Allow for flexible and quick responses to emerging issues
•Annual review and update conducted by the Policy & Services in the fall and City
Council in January
•Attachment A (packet pages 450-454) – State and Federal Legislative Guidelines
recommended updates
•Attachment B (packet page 455) – Utilities Legislative and Policy Guidelines
Background
3
Additional issues identified by staff after Policy & Services Committee’s review:
•Raising the cap for local sales tax increments
•Preserving publicly owned utilities’ investments in hydropower beyond 2030
•Regulating the use of e-bikes and e-motos
•Streamlining the process for developing affordable housing on City-owned land
•Preserving local permitting and zoning requirements for telecommunications
infrastructure
Additional Legislative Topics
Legislative and Funding Updates
January 20, 2026 4
PRESENTATION OVERVIEW
Slide 5
Overview of Grant Funding Efforts
Key State Legislative Items for 2026
State Budget Update
Federal Appropriations Update
KEY STATE LEGISLATIVE ITEMS FOR 2026
Slide 6
E-bike Safety Reforms Affordable Housing Delivery Sales Tax Cap Exemption
SB 79 (Wiener, 2025) Clean Up Statewide Bond Proposals New Leadership and Administration Changes
STATE BUDGET UPDATE
Slide 7
Governor’s Budget Expects $2.9B Deficit (Smaller than $18B Projected by LAO
No New Funding for Housing/Homelessness (Anticipated in January Processes)
Proposition 4 Climate Bond Roll Out
Local Exposure to Federal Cost Shifts
Early Action Budget Items Anticipated – Including Bay Area Transit Operations Loan
Negotiations and Budget Committees to Follow – Next Milestone during May Revision
FEDERAL APPROPRIATIONS UPDATE
Slide 8
Congress is finalizing FY 2026 funding through bipartisan “minibus” packages
to avoid a government shutdown
Most remaining discretionary funding and earmarks are in the Transportation
and Housing and Labor and Health bills
Transportation and Housing is expected to receive floor consideration due to its
size and funding volume
Palo Alto’s Fire Station No. 4 Replacement Project is included in the House
Transportation and Housing bill at $850,000 and is awaiting final House and
Senate approval
GRANT FUNDING UPDATE
Slide 9
Program Request Status Description
Federal Emergency
Management Agency –
Assistance to Firefighters
Grant (AFG)
$139,688 Not Awarded Replacement of chest compression
equipment to support emergency
medical response capabilities.
Metropolitan Transportation
Commission – Transit
Oriented Communities
Implementation Grant
$2,885,000 Awarded Palo Alto EV Charging
Infrastructure Project to expand
publicly accessible electric vehicle
charging stations near transit and
activity centers.
Federal Emergency
Management Agency –
Staffing for Adequate Fire and
Emergency Response
(SAFER)
$4,011,929 Pending Personnel funding to support fire
and emergency response staffing
levels and service capacity.
CalFire – Wildfire Prevention
Grant Program
$850,000 Not Awarded Fuels management and ecosystem
protection activities to reduce
wildfire risk and improve community
resilience.
Board of State and
Community Corrections –
Organized Retail Theft Grant
$5,176,812 Awarded Funding to strengthen regional
coordination and public safety
strategies to combat organized
retail theft.
QUESTIONS?
Slide 10
California Advocacy | Federal Advocacy | Grant Writing
www.TownsendPA.com | (949) 399-9050
Carlin Shelby,
Deputy Director
cshelby@townsendpa.com
Niccolo De Luca,
Vice President/
Chief Advocacy
Officer
Ndeluda@townsendpa.com
Alex Gibbs,
Grants Director
agibbs@townsendpa.com
Joseph Melo,
Federal Advocacy
Manager
jmelo@townsendpa.com
11
2026 Utilities Legislative and Regulatory Look Ahead
State
Legislative Regulatory
•Support AB 34 (Patterson)
Preserving value of
Publicly-owned
Hydropower 1/5/2026
•Coauthored by Sen.
Becker and Asm.
Berman
•Watching several bills
related to energy, water,
wildfire mitigation
•CEQA streamlining bill
expected
•Affordability focus
•California Air Resources
Board released draft Cap &
Invest Language 1/13/2026
•Preserves funds for local
decarbonization
•Electric vehicle rebates put
forth by Gov. budget
•Electric Transmission
Planning advocacy
•Updates to Model Water
Efficiency Ordinance
Federal
Legislative Regulatory
•Support the Low-Income
Home Energy Assistance
Program for Fiscal Year
2027
•Support Fix our Forests Act
(HR 471) to protect
affordable and reliable
water and power supplies
•Work to protect California
and local control for energy
and water issues
•Affordability focus
•Advocate to fill
operationally critical
Federal hydropower
roles protect reliability
•Intervene in Federal Energy
Regulatory Commission
(FERC) cases related to
transmission charges
alongside the CPUC Public
Advocates Office
•Watch large load
interconnection FERC
rulemaking (datacenters)
12
Utilities Staff Advocacy and Collaborating Agencies
Electric Advocacy
•Hydropower:staff and lawmakers at State and Federal level for Federal hydropower legislative and regulatory
also with US Bureau of Reclamation (USBR),Western Area Power Association (WAPA), Northern California
Power Agency (NCPA), Northwest Power Producers Association (NWPPA), American Public Power Association
(APPA),California Municipal Utilities Association (CMUA),California Independent System Operator (CAISO)
•Transmission:legislation and regulatory engagement with Bay Area Municipal Transmission Group (BAMx),
NCPA Transmission Rate Case group,CAISO, Transmission Agency of Northern California (TANC)
•Cap & Invest Program: advocacy with California Energy Commission (CEC), with California Air Resources Board
(CARB),CMUA, NCPA
Water Advocacy
•Engagement on legislation and regulations with supply, water quality, and conservation with CMUA, Bay Area
Water Supply & Conservation Agency (BAWSCA), State Water Resources Control Board (SWRCB), Valley Water
Natural Gas Advocacy
•CARB, CMUA, Bay Area Air District, California Gas Utilities Group, California Joint Utilities Group
13
Staff recommends that the City Council:
•Adopt the 2026 State and Federal Legislative Guidelines and 2026 Utility
Legislative Policy Guidelines
•Receive an update and provide feedback on recent and upcoming federal and
state legislative and regulatory activities
Recommendation