Loading...
HomeMy WebLinkAboutTest packetCITY COUNCIL Special Meeting Monday, February 23, 2026 Council Chambers & Hybrid 5:30 PM   Palo Alto City Council meetings will be held as “hybrid” meetings with the option to attend by teleconference or in person. Information on how the public may observe and participate in the meeting is located at the end of the agenda. The meeting will be broadcast on Cable TV Channel 26, live on YouTube https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen Media Center https://midpenmedia.org. VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/362027238) Meeting ID: 362 027 238 Phone:1(669)900-6833   PUBLIC COMMENTS General Public Comment for items not on the agenda will be accepted in person for up to three minutes or an amount of time determined by the Chair. General public comment will be heard for 30 minutes. Additional public comments, if any, will be heard at the end of the agenda. Public comments for agendized items will be accepted both in person and via Zoom for up to three minutes or an amount of time determined by the Chair. Requests to speak will be taken until 5 minutes after the staff’s presentation or as determined by the Chair. Written public comments can be submitted in advance to city.council@PaloAlto.gov and will be provided to the Council and available for inspection on the City’s website. Please clearly indicate which agenda item you are referencing in your subject line. Multiple individuals who wish to speak on the same item may designate a spokesperson. Spokespersons must be representing five or more verified individuals who are present either in person or via zoom. Spokespeople will be allowed up to 10 minutes, at the discretion of the presiding officer. Speaking time may be reduced if the presiding officer reduces the speaking time for individual speakers. PowerPoints, videos, or other media to be presented during public comment are accepted only by email to city.clerk@PaloAlto.gov at least 24 hours prior to the meeting. Once received, the Clerk will have them shared at public comment for the specified item. To uphold strong cybersecurity management practices, USB’s or other physical electronic storage devices are not accepted. Signs and symbolic materials less than 2 feet by 3 feet are permitted provided that: (1) sticks, posts, poles or similar/other type of handle objects are strictly prohibited; (2) the items do not create a facility, fire, or safety hazard; and (3) persons with such items remain seated when displaying them and must not raise the items above shoulder level, obstruct the view or passage of other attendees, or otherwise disturb the business of the meeting. TIME ESTIMATES 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.  1 February 23, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. CALL TO ORDER   CLOSED SESSION (5:35 - 6:35 PM)   1.CONFERENCE WITH CITY ATTORNEY-POTENTIAL LITIGATION Subject: Potential litigation regarding 156 North California Avenue, as set forth in letter(s) from Holland & Knight LLP dated September 3, 2025 Authority: Government Code Section 54956.9(d)(2) Number of potential cases: 1, as Defendant   AGENDA CHANGES, ADDITIONS AND DELETIONS   PUBLIC COMMENT (6:35 - 7:05 PM) Members of the public may speak in-person ONLY to any item NOT on the agenda. 1-3 minutes depending on number of speakers. Public Comment is limited to 30 minutes. Additional public comments, if any, will be heard at the end of the agenda. COUNCIL MEMBER QUESTIONS, COMMENTS, ANNOUNCEMENTS (7:05 - 7:20 PM) Members of the public may not speak to the item(s).   STUDY SESSION (7:20 - 8:20 PM)   2.Status Report from the Oversized Vehicles (OSV) Ad Hoc Committee   CONSENT CALENDAR (8:20 - 8:25 PM) Items will be voted in one motion unless removed from the calendar by three Council Members.   3.Approval of Minutes from January 31, February 1, February 2, and February 9, 2026 Meeting 4.Approval of a Purchase Order with ABB Inc. for a Not-to-Exceed Amount of $389,862 to Procure Equipment and Services to Retrofit Ten (10) Existing VHK, Circuit Breakers for the Maybell Electric Substation. CEQA Status: Exempt Under CEQA Guideline 15302(c), Reconstruction of Existing Utility Facilities. 5.Approval of Professional Services Contract Number C26194078 with M.E. Simpson Co., Inc. in the Amount Not-to-Exceed $642,609 Water System Leak Detection Survey Services for a Period of Three Years. CEQA Status – Exempt under CEQA Guidelines Sections 15061(b)(2) and (b)(3).  2 February 23, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. 6.Approval of Amendment No. 2 to Contract No. C25193187 with Universal Security Company for Fire Watch Services at City Hall in the Amount of $80,915 for a New Total Not-to-Exceed Amount of $301,667, and Approval of a Fiscal Year 2026 Operating Budget Amendment in the General Fund; CEQA status - Categorically Exempt under Sections 15301 and 15302 7.Approval of a Contract to Patrol Four Railroad Grade Crossings (vendor, term, and cost TBD); Approval Cost Sharing Agreement with Palo Alto Unified School District; and Approve Related Budget Amendments; CEQA status – Not a project CITY MANAGER COMMENTS (8:25 - 8:40 PM)   BREAK (15 MINUTES) ACTION ITEMS (Item 8: 8:55 - 9:55 PM, Item 9: 9:55 - 10:55 PM) Include: Report of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Report of Officials, Unfinished Business and Council Matters.   8.FY 2026 Mid-Year Budget Review and Approve 1) Budget Amendments in Various Funds, and 2) a $10.0 Million Additional Discretionary Payment (ADP) from the PARS Pension Trust 9.Approval of City Council Values (as Recommended by Policy & Services Committee), 2026 Objectives, Ad Hoc Purpose Statements, and Committee Workplans ADJOURNMENT INFORMATION REPORTS Information reports are provided for informational purposes only to the Council and the public but are not listed for action or discussion during this meeting’s agenda.   A.Monthly Investment Report - January 2026 (Unaudited) B.Investment Activity Report for the Second Quarter (October - December), Fiscal Year 2026. CEQA Status – Not a Project OTHER INFORMATION  3 February 23, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. Standing Committee Meetings this week Public Comment Letters Schedule of Meetings      4 February 23, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. PUBLIC COMMENT INSTRUCTIONS Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone. 1.Written public comments may be submitted by email to city.council@PaloAlto.gov. 2.For in person public comments please complete a speaker request card located on the table at the entrance to the Council Chambers and deliver it to the Clerk prior to discussion of the item. 3.Spoken public comments for agendized items using a computer or smart phone will be accepted through the teleconference meeting. To address the Council, click on the link below to access a Zoom-based meeting. Please read the following instructions carefully. ◦You may download the Zoom client or connect to the meeting in- browser. If using your browser, make sure you are using a current, up-to-date browser: Chrome 30 , Firefox 27 , Microsoft Edge 12 , Safari 7 . Certain functionality may be disabled in older browsers including Internet Explorer. Or download the Zoom application onto your smart phone from the Apple App Store or Google Play Store and enter in the Meeting ID below. ◦You may be asked to enter an email address and name. We request that you identify yourself by name as this will be visible online and will be used to notify you that it is your turn to speak. ◦When you wish to speak on an Agenda Item, click on “raise hand.” The Clerk will activate and unmute speakers in turn. Speakers will be notified shortly before they are called to speak. ◦When called, please limit your remarks to the time limit allotted. A timer will be shown on the computer to help keep track of your comments. 4.Spoken public comments for agendized items using a phone use the telephone number listed below. When you wish to speak on an agenda item hit *9 on your phone so we know that you wish to speak. You will be asked to provide your first and last name before addressing the Council. You will be advised how long you have to speak. When called please limit your remarks to the agenda item and time limit allotted. CLICK HERE TO JOIN Meeting ID: 362-027-238 Phone: 1-669-900-6833 Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329-2550 (voice) or by emailing ada@PaloAlto.gov. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service.  5 February 23, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. California Government Code §84308, commonly referred to as the "Levine Act," prohibits an elected official of a local government agency from participating in a proceeding involving a license, permit, or other entitlement for use if the official received a campaign contribution exceeding $500 from a party or participant, including their agents, to the proceeding within the last 12 months. A “license, permit, or other entitlement for use” includes most land use and planning approvals and the approval of contracts that are not subject to lowest responsible bid procedures and have a value over $50,000. A “party” is a person who files an application for, or is the subject of, a proceeding involving a license, permit, or other entitlement for use. A “participant” is a person who actively supports or opposes a particular decision in a proceeding involving a license, permit, or other entitlement for use, and has a financial interest in the decision. The Levine Act incorporates the definition of “financial interest” in the Political Reform Act, which encompasses interests in business entities, real property, sources of income, sources of gifts, and personal finances that may be affected by the Council’s actions. If you qualify as a “party” or “participant” to a proceeding, and you have made a campaign contribution to a Council Member exceeding $500 made within the last 12 months, you must disclose the campaign contribution before making your comments.  6 February 23, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. City Council Staff Report Report Type: STUDY SESSION Lead Department: City Manager Meeting Date: February 23, 2026 Report #:2602-5960 TITLE Status Report from the Oversized Vehicles (OSV) Ad Hoc Committee This will be a late packet report published on February 19, 2026. Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 1  Packet Pg. 7 of 155  City Council Staff Report Report Type: ACTION ITEMS Lead Department: City Clerk Meeting Date: February 23, 2026 Report #:2602-5897 TITLE Approval of Minutes from January 31, February 1, February 2, and February 9, 2026 Meeting RECOMMENDATION Staff recommends that the City Council review and approve the minutes. ATTACHMENTS Attachment A: January 31, 2026 Draft Action Minutes Attachment B: February 1, 2026 Draft Action Minutes Attachment C: February 2, 2026 Draft Action Minutes Attachment D: February 9, 2026 Draft Action Minutes APPROVED BY: Mahealani Ah Yun, City Clerk Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 1  Packet Pg. 8 of 155  CITY COUNCIL DRAFT ACTION MINUTES Page 1 of 2 Special Meeting January 31, 2026 The City Council of the City of Palo Alto met on this date in the Community Meeting Room and by virtual teleconference at 12:35 P.M. Present In Person: Burt, Lauing, Lu, Reckdahl, Stone, Veenker Veenker arrived at 12:39 P.M. Present Remotely: Absent: Lythcott-Haims Call to Order Closed Session 1. Public Employee Appointment Title: City Attorney Authority: Gov. Code Section 54957(b) 2. Conference with Labor Negotiators Authority: Gov. Code section 54957.6; Agency representative: Sandra Blanch and Nicholas Raisch, Teri Black, Teri Black & Co. Unrepresented Employee: City Attorney MOTION: Councilmember Reckdahl moved, seconded by Councilmember Lu to go into Closed Session. MOTION PASSED: 6-0-1, Lythcott-Haims absent Council went into Closed Session at 12:45 P.M. Council returned from Closed Session at 6:18 P.M. Mayor Veenker announced no reportable action. Item 3 Attachment A - January 31, 2026 Draft Action Minutes        Item 3: Staff Report Pg. 2  Packet Pg. 9 of 155  DRAFT ACTION MINUTES Page 2 of 2 Sp. City Council Meeting Draft Action Minutes: 01/31/2026 Agenda Changes, Additions and Deletions Adjournment: The meeting was adjourned at 6:19 P.M. ATTEST: APPROVED: ____________________ ____________________ City Clerk Mayor NOTE: Action minutes are prepared in accordance with Palo Alto Municipal Code (PAMC) 2.04.160(a) and (b). Summary minutes (sense) are prepared in accordance with PAMC Section 2.04.160(c). Beginning in January 2018, in accordance with Ordinance No. 5423, the City Council found action minutes and the video/audio recordings of Council proceedings to be the official records of both Council and committee proceedings. These recordings are available on the City’s website. Item 3 Attachment A - January 31, 2026 Draft Action Minutes        Item 3: Staff Report Pg. 3  Packet Pg. 10 of 155  CITY COUNCIL DRAFT ACTION MINUTES Page 1 of 2 Special Meeting February 1, 2026 The City Council of the City of Palo Alto met on this date in the Community Meeting Room and by virtual teleconference at 12:31 P.M. Present In Person: Burt, Lauing, Lu, Lythcott-Haims, Reckdahl, Stone, Veenker Present Remotely: Absent: Call to Order Closed Session 1. Public Employee Appointment Title: City Attorney Authority: Gov. Code Section 54957(b) 2. Conference with Labor Negotiators Authority: Gov. Code section 54957.6; Agency representative: Sandra Blanch and Nicholas Raisch, Teri Black, Teri Black & Co. Unrepresented Employee: City Attorney MOTION: Councilmember Reckdahl moved, seconded by Councilmember Lythcott-Haims to go into Closed Session. MOTION PASSED: 7-0 Council went into Closed Session at 12:33 P.M. Council returned from Closed Session at 6:24 P.M. Mayor Veenker announced no reportable action. Agenda Changes, Additions and Deletions Item 3 Attachment B - February 1, 2026 Draft Action Minutes        Item 3: Staff Report Pg. 4  Packet Pg. 11 of 155  DRAFT ACTION MINUTES Page 2 of 2 Sp. City Council Meeting Draft Action Minutes: 02/01/2026 Adjournment: The meeting was adjourned at 6:25 P.M. ATTEST: APPROVED: ____________________ ____________________ City Clerk Mayor NOTE: Action minutes are prepared in accordance with Palo Alto Municipal Code (PAMC) 2.04.160(a) and (b). Summary minutes (sense) are prepared in accordance with PAMC Section 2.04.160(c). Beginning in January 2018, in accordance with Ordinance No. 5423, the City Council found action minutes and the video/audio recordings of Council proceedings to be the official records of both Council and committee proceedings. These recordings are available on the City’s website. Item 3 Attachment B - February 1, 2026 Draft Action Minutes        Item 3: Staff Report Pg. 5  Packet Pg. 12 of 155  CITY COUNCIL DRAFT ACTION MINUTES Page 1 of 4 Regular Meeting February 2, 2026 The City Council of the City of Palo Alto met on this date in the Council Chambers and by virtual teleconference at 5:30 P.M. Present In Person: Burt, Lauing, Lu, Lythcott-Haims, Reckdahl, Stone, Veenker Present Remotely: Absent: Special Orders of the Day 1. Proclamation Honoring Christopher Fujimoto for 25 Years of Service to the City of Palo Alto NO ACTION Closed Session 2. CONFERENCE WITH LEGAL COUNSEL—EXISTING LITIGATION Subject: Sami Gerges vs Yolanda Franco Clausen, City of Palo Alto, Santa Clara County Superior Court Case No. 25CV473428 Authority: Government Code Section 54956.9(d)(1) MOTION: Councilmember Lu moved, seconded by Councilmember Lauing to go into Closed Session. MOTION PASSED: 7-0 Council went into Closed Session at 5:39 P.M. Council returned from Closed Session at 6:05 P.M. Mayor Veenker announced no reportable action. Item 3 Attachment C - February 2, 2026 Draft Action Minutes        Item 3: Staff Report Pg. 6  Packet Pg. 13 of 155  DRAFT ACTION MINUTES Page 2 of 4 Sp. City Council Meeting Draft Action Minutes: 02/02/2026 Agenda Changes, Additions and Deletions Public Comment Council Member Questions, Comments and Announcements Study Session 3. 44 and 88 Encina Avenue [25PLN-00308]. Request for Council Prescreening to Rezone the Subject Properties from Community Commercial (CC) to Planned Community/Planned Home Zoning (PC/PHZ) and to Allow Construction of 158 Units and 315 Parking Spaces in Two Seven-Story Structures. The Formal Application Will be Subject to California Environmental Quality Act (CEQA) Review. Zoning District: CC (Community Commercial). NO ACTION Consent Calendar MOTION: Vice Mayor Stone moved, seconded by Councilmember Reckdahl to approve Agenda Item Numbers 4-6. MOTION PASSED: 7-0 4. Approval of Minutes from January 12, January 15, and January 20, 2026 Meetings 5. Approve and Authorize the City Manager to Execute an MOU Between the City of Palo Alto and the County of Santa Clara to Support the City's Psychiatric Emergency Response Team (PERT) Program for a Term of Five Years and a Not-To-Exceed Amount of $1.4 Million and Approval of a Budget Amendment in the General Fund and Stanford University Medical Center Fund; CEQA status - not a project. 6. SECOND READING: Ordinance of the Council of the City of Palo Alto Amending Chapter 4.54 (“Massage Establishments”) and Chapter 4.56 (Hot Tub/Sauna Establishments) of Title 4 (Business Licenses and Regulations) (FIRST READING: January 12, 2025, PASSED 7- 0) Item 3 Attachment C - February 2, 2026 Draft Action Minutes        Item 3: Staff Report Pg. 7  Packet Pg. 14 of 155  DRAFT ACTION MINUTES Page 3 of 4 Sp. City Council Meeting Draft Action Minutes: 02/02/2026 City Manager Comments Ed Shikada, City Manager Action Items 7. Approval of FY 2026 Architectural Review Board, Historic Resources Board, Planning and Transportation Commission, and Utilities Advisory Commission Work Plans; CEQA status– not a project MOTION: Councilmember Burt moved, seconded by Councilmember Reckdahl to approve the Architectural Review Board, Historic Resources Board, Planning and Transportation Commission, and Utilities Advisory Commission Fiscal Year 2026 Work Plans with the following amendments: Planning and Transportation Commission: • Add a reference to SB79 as a project. Utilities Advisory Commission: • Add project to propose specific goals for reliability. Architectural Review Board: • Add a reference to SB79 as a project. • Endorse recommendation to expand the objective standards of residential to townhomes. • Endorse efforts to coordinate and streamline work between the Historic Resources Board and Architectural Review Board, and Planning and Transportation Commission. MOTION PASSED: 7-0 8. Review the 2024 Greenhouse Gas Inventory and S/CAP Key Performance Indicators Annual Progress Report, and Approve the 2026-2027 S/CAP Work Plan and Receive Six S/CAP Studies Recommended by the Climate Action and Sustainability Committee; CEQA Status: Review GHG Inventory and Key Performance Indicators: Not a Project; Potential Environmental Impacts of the S/CAP Work Plan were Studied in the June 5, 2023 S/CAP Item 3 Attachment C - February 2, 2026 Draft Action Minutes        Item 3: Staff Report Pg. 8  Packet Pg. 15 of 155  DRAFT ACTION MINUTES Page 4 of 4 Sp. City Council Meeting Draft Action Minutes: 02/02/2026 Addendum to the 2017-2031 Comprehensive Plan EIR; this Project is also Exempt Pursuant to CEQA Guidelines Section 15183 Agenda Item Number 8 not heard and deferred to a future City Council Meeting date. Adjournment: The meeting was adjourned at 8:41 P.M. ATTEST: APPROVED: ____________________ ____________________ City Clerk Mayor NOTE: Action minutes are prepared in accordance with Palo Alto Municipal Code (PAMC) 2.04.160(a) and (b). Summary minutes (sense) are prepared in accordance with PAMC Section 2.04.160(c). Beginning in January 2018, in accordance with Ordinance No. 5423, the City Council found action minutes and the video/audio recordings of Council proceedings to be the official records of both Council and committee proceedings. These recordings are available on the City’s website. Item 3 Attachment C - February 2, 2026 Draft Action Minutes        Item 3: Staff Report Pg. 9  Packet Pg. 16 of 155  CITY COUNCIL DRAFT ACTION MINUTES Page 1 of 7 Regular Meeting February 9, 2026 The City Council of the City of Palo Alto met on this date in the Council Chambers and by virtual teleconference at 5:30 P.M. Present In Person: Burt, Lauing, Lu, Lythcott-Haims, Reckdahl, Stone, Veenker Present Remotely: Absent: Call to Order Agenda Changes, Additions and Deletions Council Member Questions, Comments and Announcements Public Comment Consent Calendar MOTION: Councilmember Reckdahl moved, seconded by Councilmember Lu, to approve Agenda Item Numbers 1 – 8. MOTION PASSED: 7-0 1. Approval of Minutes from January 20 and January 24, 2026 Meeting 2. Adoption of a Resolution Amending the El Camino Real Retail Node Map for Purposes of Palo Alto Municipal Code Section 18.40.180: Retail Preservation. CEQA Status: Item 3 Attachment D - February 9, 2026 Draft Action Minutes        Item 3: Staff Report Pg. 10  Packet Pg. 17 of 155  DRAFT ACTION MINUTES Page 2 of 7 City Council Meeting Draft Action Minutes: 02/09/2026 Addendum to the Comprehensive Plan Environmental Impact Report (EIR), adopted November 17, 2023 (SCH #2014052101) 3. Adoption of Revisions to the Investment Policy as Recommended by the Finance Committee. CEQA Status – Not a Project 4. Adoption of a Resolution Authorizing the City Manager to Negotiate and Execute Purchase Orders with To-Be-Determined Vendor(s) to Procure Nine Vehicle/Equipment Purchases for a Total Not-to-Exceed Amount of $1,430,000; Approval of a Fourth Amended and Restated Purchase Order Number 4521000199 with Altec Industries, Inc., to Increase the Purchase Order Amount by $94,911 to a New Not-to Exceed Amount of $1,167,986 for Two Vehicle/Equipment Purchases; and Amend the FY 2026 Budget in the Vehicle Replacement and Maintenance Fund and Electric Funds; CEQA Status – Not a Project 5. Approval of an Increase of Construction Contingency for Contract No. C24189237 with SAK Construction, LLC in the Amount of $800,000 and Amend the FY 2026 Budget in the Wastewater Treatment Fund for the Joint Intercepting Sewer Rehabilitation (Phase 1) Project (WQ-24000); CEQA Status - Exempt under CEQA Guidelines Section 15301 (Repairs to Existing Facilities) 6. Approval of Amendment No. 1. of the Future Talent of Silicon Valley dba First Tee - Silicon Valley (Contract S25192927) Facility Use Agreement to Extend the Term for Three Years to February 2029; CEQA status – not a project. 7. Approval of Amendment No. 3 to Contract No. S23187281 with Urban Planning Partners, Inc. in the Amount of $52,409, Increasing the Not-to-Exceed Amount to $137,409 and Extending the Contract Term Through December 31, 2027 to Create Standalone Pre-Approved Parklet Plans as Part of the California Avenue Streetscape Update PL-23000; CEQA Status – Categorically Exempt under CEQA Guidelines Section 15301 and 15304(e) 8. Approval of Four Professional Services Contracts C26194180A-D, with Interwest Consulting Group, Inc, TRB and Associates, Inc., Atlas Environmental and West Coast Code Consultants, Inc. in the Aggregate Total Not-to-Exceed amount of $1,438,800 for On-Call Fire Code, and Hazardous Material Related Services, Inspection, Plan Review and Environmental Consultation over a three-year term; CEQA status: not a project. City Manager Comments Ed Shikada, City Manager Item 3 Attachment D - February 9, 2026 Draft Action Minutes        Item 3: Staff Report Pg. 11  Packet Pg. 18 of 155  DRAFT ACTION MINUTES Page 3 of 7 City Council Meeting Draft Action Minutes: 02/09/2026 Action Items 9. Approve a resolution for an exception to the CalPERS 180-day waiting period to appoint retired annuitant Aaron Miller; CEQA Status - Not a Project MOTION: Councilmember Reckdahl moved, seconded by Councilmember Stone to adopt a resolution, pursuant to Government Code sections 7522.56 and 21224, approving an exception to the 180-day waiting period, set forth by the California Public Employee Retirement System (CalPERS), to allow the appointment of retired annuitant Aaron Miller to a temporary, part-time assignment to perform special-project work of limited duration at the Regional Water Quality Control Plant, following completion of the required 60-day bona fide separation from service. MOTION PASSED: 7-0 10. PUBLIC HEARING: Objections to Weed Abatement at Affected Properties and Approval of Affected Property List for Commencing Weed Abatement in 2026; CEQA Status - exempt MOTION: Councilmember Stone moved, seconded by Councilmember Reckdahl to a. Adopt a determination that weed abatement activities in 2026, as described in Resolution 10268 (Attachment A) adopted by Council on December 8, 2025, are exempt under Class 8 (CEQA Guidelines section 15308); b. Hold a Public Hearing to hear and consider any objections to the proposed destruction and removal of weeds in 2026 at the properties listed in Attachment B; and c. Approve the final list of affected properties for weed abatement in 2026 (Attachment B) excluding sites at 3460 Hillview Rd, 1072 Arastradero Rd, 3495 Deer Creek Rd, Deer Creek, and direct weed abatement activities to commence at those properties in accordance with Resolution 10268. MOTION PASSED: 7-0 11. Cubberley Project: Receive update on Third Round Polling Results, Approve a Letter of Intent with TheatreWorks Silicon Valley, and Direct Staff on Next Steps MOTION: Mayor Veenker moved, seconded by Councilmember Lythcott-Haims to 1. Approve a Letter of Intent (LOI) with TheatreWorks Silicon Valley for collaboration on a long-term public-private partnership for theatre space at the Cubberley site. Item 3 Attachment D - February 9, 2026 Draft Action Minutes        Item 3: Staff Report Pg. 12  Packet Pg. 19 of 155  DRAFT ACTION MINUTES Page 4 of 7 City Council Meeting Draft Action Minutes: 02/09/2026 2. Direct the City Manager to talk to the Superintendent about contingency plans and alternative terms for acquisition of 7 acres owned by the School District. 3. Direct staff to evaluate and return to Council with options to acquire the 7 acres other than via a ballot measure. MOTION PASSED: 7-0 12. Review and Approval of Suggested Changes to the City Council Procedures and Protocols Handbook as Recommended by the Policy and Services Committee. CEQA Status – Not a project. MOTION: Councilmember Stone moved, seconded by Councilmember Lu to approve changes to the City Council Procedures and Protocols Handbook as recommended by the Policy & Services Committee with the following additions: 1. In Section 2.3(b)5E: Decrease the limit on remote participation for Finance Committee from 5 meetings to 3 meetings. 2. In Section 3.8: Add that Councilmembers be allowed to speak for 1 minute on why they are pulling an item. Councilmembers may speak to their no vote for a total of 3 minutes for all no votes combined. The City Manager has the prerogative to clarify factual errors. MOTION PASSED: 7-0 MOTION: Councilmember Burt moved, seconded by Councilmember XX to make the following revisions to the Procedures & Protocols Handbook: 1. In Section 3.7: Allow for Study Sessions be agendized as Action Items to allow for the possibility of clearer City Council direction than is provided by comments. MOTION WITHDRAWN BY MAKER MOTION: Councilmember Burt moved, seconded by Mayor Veenker to the direct staff to review and return to the City Council regarding: 1. Providing Boards with training for making motions. 2. Use of verbatim transcripts for PTC and UAC Board minutes using AI. Item 3 Attachment D - February 9, 2026 Draft Action Minutes        Item 3: Staff Report Pg. 13  Packet Pg. 20 of 155  DRAFT ACTION MINUTES Page 5 of 7 City Council Meeting Draft Action Minutes: 02/09/2026 3.Return with language clarifying that U.S. citizenship is not a requirement for service on a Board or Commission. MOTION PASSED: 7-0 MOTION: Councilmember Burt moved, seconded by Councilmember Lauing to make the following revisions to the Procedures & Protocols Handbook in Section 3.6: 1.Limit the amount of time to 5 minutes per Councilmember. 2.Provide guidance that comments should be limited to city government related matters. 3.Avoid personal or political comments. MOTION PASSED: 5-2, Lu, Stone no MOTION: Councilmember Burt moved, seconded by Councilmember Lu to make the following revisions to the Procedures & Protocols Handbook in Procedures Section 3: Items Considered After 10:00 p.m.: The Council makes every effort to end its meetings before 11 p.m. With that goal in mind, the Council generally does not start discussion of new matters after 10:00 p.m. Before 10 p.m. the Council will decide and announce whether it will begin consideration of any agenda items after 10:00 p.m. and, if so, which specific items will be taken up. MOTION PASSED: 6-1, Veenker no MOTION: C ouncilmember Burt moved, seconded by Council member Reckdahl to refer to staff and subsequently the Policy & Services Committee for a recommendation to the full City Council on the permissible and recommended practices relating to an item going to more than one standing committee when appropriate (Procedures Section 1.2(a)2). MOTION PASSED: 7-0 MOTION: Councilmember Burt moved, seconded by Councilmember Reckdahl to refer to staff to return with recommended language regarding if staff should provide briefings, respond to Councilmember questions, collaborate with C ouncilmembers to support City Council representatives on regional bodies. Item 3 Attachment D - February 9, 2026 Draft Action Minutes        Item 3: Staff Report Pg. 14  Packet Pg. 21 of 155  DRAFT ACTION MINUTES Page 6 of 7 City Council Meeting Draft Action Minutes: 02/09/2026 MOTION PASSED: 6-1, Veenker no MOTION: Councilmember Burt moved, seconded by Councilmember Reckdahl to refer to staff to clarify the role of the staff liaison to the committees to develop agendas in collaboration with chairs. MOTION WITHDRAWN BY MAKER Closed Session AA1. Conference with Labor Negotiators Authority: Gov. Code section 54957.6 Agency representative: Sandra Blanch and Nicholas Raisch, Teri Black, Teri Black & Co. Unrepresented Employee: City Attorney MOTION: Councilmember Stone moved, seconded by Councilmember Reckdahl to go into Closed Session. MOTION PASSED: 7-0 Council went into Closed Session at 10:14 P.M. Council returned from Closed Session at 10:56 P.M. Mayor Veenker announced no reportable action. Adjournment: The meeting was adjourned at 10:56 P.M. Item 3 Attachment D - February 9, 2026 Draft Action Minutes        Item 3: Staff Report Pg. 15  Packet Pg. 22 of 155  DRAFT ACTION MINUTES Page 7 of 7 City Council Meeting Draft Action Minutes: 02/09/2026 ATTEST: APPROVED: ____________________ ____________________ City Clerk Mayor NOTE: Action minutes are prepared in accordance with Palo Alto Municipal Code (PAMC) 2.04.160(a) and (b). Summary minutes (sense) are prepared in accordance with PAMC Section 2.04.160(c). Beginning in January 2018, in accordance with Ordinance No. 5423, the City Council found action minutes and the video/audio recordings of Council proceedings to be the official records of both Council and committee proceedings. These recordings are available on the City’s website. Item 3 Attachment D - February 9, 2026 Draft Action Minutes        Item 3: Staff Report Pg. 16  Packet Pg. 23 of 155  City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Utilities Meeting Date: February 23, 2026 Report #:2510-5315 TITLE Approval of a Purchase Order with ABB Inc. for a Not-to-Exceed Amount of $389,862 to Procure Equipment and Services to Retrofit Ten (10) Existing VHK, Circuit Breakers for the Maybell Electric Substation. CEQA Status: Exempt Under CEQA Guideline 15302(c), Reconstruction of Existing Utility Facilities. RECOMMENDATION Staff Recommends that Council approve and authorize the City Manager or their designee to execute a purchase order contract with ABB Inc. in the amount of $354,420 for the purchase and installation of ten (10) 12kV, 1200Amp magnetic-actuator type power circuit breakers for Maybell Substation with a 10% contingency of $35,442 for related but unforeseen work, for a total not-to-exceed amount of $389,862. BACKGROUND A circuit breaker is a device that interrupts high voltages and currents during switching or fault conditions to protect utility infrastructure. These devices require regular maintenance and routine testing to ensure proper operation. The high-voltage circuit breakers in Maybell Substation, originally installed in 1986, have exceeded their expected life of 30-35 years. Due to end of life, replacement parts are no longer readily available, and there have been instances where the breakers have failed to operate. Circuit breakers are an integral and critical part of an electric distribution system for maintaining safe and reliable electric service. Staff recommend that these selected breakers be replaced with modern circuit breakers equipped with magnetic actuators that can fit into the existing switchgear. Operational speed and response time of these replacement circuit breakers are faster due to their magnetic control of the mechanism. Magnetically-actuated circuit breakers with modern technology have fewer moving parts, longer in-service intervals between maintenance, and provide improved reliability over legacy spring- actuated breakers. Item 4 Item 4 Staff Report        Item 4: Staff Report Pg. 1  Packet Pg. 24 of 155  ANALYSIS The City’s Utilities staff evaluate the distribution system on an ongoing basis, including inspection and testing of existing facilities. Through routine inspection and testing of Maybell Substation’s 12kV circuit breakers, two breakers failed during testing. The failure of these breakers was attributed to their age and wear of existing in-service parts. Staff has determined that the only viable and cost-effective option for replacing the circuit breakers in Maybell Substation is to use retrofitted breakers manufactured by ABB Inc., which is the successor company to the original manufacturer. For this reason, Staff is recommending approval for the purchase of ten (10) circuit breakers directly from ABB via a sole source exemption 2.30.360(d) approved by the City Manager or their designee under the City’s standard procurement process. City staff requested a quotation from ABB on October 13, 2025, for compatible replacement breakers, and ABB quoted a price of $354,420 for ten breakers and installation support. ABB’s quote includes installation, training and commissioning by ABB approved installers consistent with the manufacturer’s warranty. The quoted onsite installation services include verification of fit within the City’s existing switchgear, confirmation of mechanical and electrical connections, and testing of functional operations. Staff is recommending ABB provide the installation of the replacement breakers to ensure proper fit and operation of the replacement breakers. Additionally, if ABB technicians install the replacement breakers, ABB will extend the manufacturer’s warranty an additional four years. Funding for the $354,420 to purchase the circuit breakers is available in the FY 2026 Electric CIP Budget under Capital Improvement Project EL-17002 (Substation Breaker Replacement). Outside of approval during a regularly scheduled Council meeting, no stakeholder engagement was sought for the procurement of new 12kV circuit breakers for City’s substation. This project is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines 15302(c), replacement or reconstruction of existing facilities. : Alan Kurotori, Director of Utilities Staff: Terry Crowley, Utilities Chief Operating Officer Staff: Mohammad Fattah, Electric Engineering Manager Item 4 Item 4 Staff Report        Item 4: Staff Report Pg. 2  Packet Pg. 25 of 155  City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Utilities Meeting Date: February 23, 2026 Report #:2504-4523 TITLE Approval of Professional Services Contract Number C26194078 with M.E. Simpson Co., Inc. in the Amount Not-to-Exceed $642,609 Water System Leak Detection Survey Services for a Period of Three Years. CEQA Status – Exempt under CEQA Guidelines Sections 15061(b)(2) and (b)(3). RECOMMENDATION Staff recommends that the City Council approve and authorize the City Manager, or designee, to execute Contract Number C26194078 (Attachment A) with M.E. Simpson Co., Inc. for water system leak detection survey services for a term of three (3) years and a total not-to-exceed amount of $642,609 including $584,190 for basic services and $58,419 for additional services. EXECUTIVE SUMMARY The City of Palo Alto’s Water Distribution System Improvements (WS-11003) projects provide annual water system leakage surveys to identify water leaks in public water distribution mains that would otherwise be too small to surface above ground. These small leaks can be detected with specialized sound-based equipment. This contract engages M.E. Simpson Co., Inc., a qualified leak detection service provider, to conduct annual leak detection work for three (3) consecutive years. The survey will cover the entire water distribution system, identify sub- surface leaks, and provide analysis regarding repairs and capital replacement to reduce water loss. BACKGROUND The City owns and maintains 231 miles of public water distribution mains and over 23,000 water service lines throughout the City’s water service area. Most of the water distribution mains were installed from the 1950s to the 1970s. As water pipes age, small leaks develop that may not be visible from the ground surface. Since the late 1980s, the City has implemented annual water main replacement projects to replace aging water pipes. Pipes with multiple reported leaks are often prioritized and replaced; however, small leaks may not be identified without the use of specialized leak detection equipment. Item 5 Item 5 Staff Report        Item 5: Staff Report Pg. 1  Packet Pg. 26 of 155  California Senate Bill (“SB”) 555 requires water suppliers in California to perform annual water loss audits and evaluate leak detection as a strategy for meeting water loss standards. The bill required the State Water Resources Control Board (“SWRCB”) to adopt a performance standard for a maximum allowable volume of water loss. While Palo Alto’s water loss from the public water distribution has been below the State standard, in 2023, Utilities Department staff completed an economic analysis of leak detection and concluded that a full water system network leak detection project would be cost effective, with a projected return on investment around 2.5 times the cost of survey. This proactive effort is anticipated to reduce non-revenue water and anticipates repairing leaks earlier and reducing expensive emergency work and enabling the utility to optimize capital investments ANALYSIS Table 1: Summary of Request for Proposal Project Bid Name/Number 3-Year Water System Leak Detection Services RFP194078 Proposed Length of Project 3-years Item 5 Item 5 Staff Report        Item 5: Staff Report Pg. 2  Packet Pg. 27 of 155  Number of Vendors Notified 3572 Number of Proposal Packages Downloaded by Vendors 44 Total Days to Respond to Request for Proposals 56 Calendar Days Pre-Proposal Meeting N/A Pre-Proposal Meeting Date N/A Number of Proposals Received 4 Proposal Price Range $478,092 - $15,788,355 Public Link to Solicitation https://procurement.opengov.com/portal/palo-alto- ca/projects/155480/ Utilities Engineering staff reviewed the four proposals and rated the consultants in accordance with factors defined in Palo Alto Municipal Code Section 2.30.410. M.E. Simpson Co., Inc. was selected as the top-ranked proposer based on its demonstrated expertise, methodology, and relevant project experience. Three proposals were near the expected price for the work, and the fourth proposal price was an outlier, with a much higher price that included unsolicited and unnecessary technology, services, and consulting. FISCAL/RESOURCE IMPACT Funding for the first year of this contract is available in the Fiscal Year 2026 Adopted Capital Improvement Program, Water Distribution System Improvements (WS-11003) project. Subsequent years are subject to City Council’s approval of the annual budget process and appropriation of funds. STAKEHOLDER ENGAGEMENT The key stakeholders for this project include the Utilities Department, Office of Transportation, Fire Department, and the Public Works Department. Engagement strategies include Utilities Department Division meetings, planning, coordination meetings, and work reviews with other departments. ENVIRONMENTAL REVIEW Council action on this item is exempt from California Environmental Quality Act (CEQA) review under sections 15061(b)(2) and (b)(3) because the proposed actions to assess conditions and prepare a leak report have no potential to result in physical impacts on environment and because any pipe repair work, which the proposed action may relate to, was previously evaluated under CEQA prior to approval and was found to be categorically exempt under CEQA Guidelines Section 15301 (repair, maintenance, or minor alteration of existing public facilities involving negligible or no expansion of existing or former use). Item 5 Item 5 Staff Report        Item 5: Staff Report Pg. 3  Packet Pg. 28 of 155  ATTACHMENTS APPROVED BY: Item 5 Item 5 Staff Report        Item 5: Staff Report Pg. 4  Packet Pg. 29 of 155  Professional Services Rev. Oct 16,2024 Page 1 of 22 CITY OF PALO ALTO CONTRACT NO. C26194078 AGREEMENT FOR PROFESSIONAL SERVICES BETWEEN THE CITY OF PALO ALTO AND M.E. SIMPSON COMPANY, INC. This Agreement for Professional Services (this “Agreement”) is entered into as of the 23rd day of February 2026 (the “Effective Date”), by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and M.E. SIMPSON COMPANY, INC., a corporation, located at 3406 Enterprise Ave., Valparaiso, IN 46383 (“CONSULTANT”). The following recitals are a substantive portion of this Agreement and are fully incorporated herein by this reference: RECITALS A. CITY intends to analyze unreported water leaks for the development of economic models and for regulatory compliance (the “Project”) and desires to engage a consultant to provide following professional water system leak detection and analysis services for the City of Palo Alto’s potable water distribution system, totaling approximately 231 miles of watermains in connection with the Project (the “Services”, as detailed more fully in Exhibit A). B. CONSULTANT represents that it, its employees and subconsultants, if any, possess the necessary professional expertise, qualifications, and capability, and all required licenses and/or certifications to provide the Services. C. CITY, in reliance on these representations, desires to engage CONSULTANT to provide the Services as more fully described in Exhibit A, entitled “SCOPE OF SERVICES”. NOW, THEREFORE, in consideration of the recitals, covenants, terms, and conditions, in this Agreement, the parties agree as follows: SECTION 1. SCOPE OF SERVICES. CONSULTANT shall perform the Services described in Exhibit A in accordance with the terms and conditions contained in this Agreement. The performance of all Services shall be to the reasonable satisfaction of CITY. Optional On-Call Provision (This provision only applies if checked and only applies to on-call agreements.) CITY may elect to, but is not required to, authorize on-call Services up to the maximum compensation amount set forth in Section 4 (Not to Exceed Compensation). CONSULTANT shall provide on-call Services only by advanced, written authorization from CITY as detailed in this Section. On-call Services, if any, shall be authorized by CITY, as needed, with a Task Order assigned and approved by CITY’s Project Manager, as identified in Section 13 (Project Management). Each Task Order shall be in substantially the same form as Exhibit A-1 entitled “PROFESSIONAL SERVICES TASK ORDER”. Each Task Order shall contain a specific scope of services, schedule of performance and maximum compensation amount, in accordance with the provisions of this Agreement. Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 5  Packet Pg. 30 of 155  Professional Services Rev. Oct 16,2024 Page 2 of 22 Compensation for on-call Services shall be specified by CITY in the Task Order, based on whichever is lowest: the compensation structure set forth in Exhibit C, the hourly rates set forth in Exhibit C-1, or a negotiated lump sum. To accept a Task Order, CONSULTANT shall sign the Task Order and return it to CITY’s Project Manager within the time specified by the Project Manager, and upon authorization by CITY (defined as counter-signature by the CITY Project Manager), the fully executed Task Order shall become part of this Agreement. The cumulative total compensation due to CONSULTANT for all Task Orders issued under this Agreement shall not exceed the amount of compensation set forth in Section 4. CONSULTANT shall only be compensated for on-call Services performed under an authorized Task Order and only up to the maximum compensation amount set forth in Section 4. Performance of and payment for any on-call Services are subject to all requirements and restrictions in this Agreement. SECTION 2. TERM. The term of this Agreement shall be from the effective date of this agreement through February 22, 2029, unless terminated earlier pursuant to Section 19 (Termination) of this Agreement. SECTION 3. SCHEDULE OF PERFORMANCE. Time is of the essence in the performance of Services under this Agreement. CONSULTANT shall complete the Services within the term of this Agreement and in accordance with the schedule set forth in Exhibit B, entitled “SCHEDULE OF PERFORMANCE”. Any Services for which times for performance are not specified in this Agreement shall be commenced and completed by CONSULTANT in a reasonably prompt and timely manner based upon the circumstances and direction communicated to the CONSULTANT. CITY’s agreement to extend the term or the schedule for performance shall not preclude recovery of damages for delay if the extension is required due to the fault of CONSULTANT. SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services shall be based on the compensation structure detailed in Exhibit C, entitled “COMPENSATION,” including any reimbursable expenses specified therein, and the maximum total compensation shall not exceed Five Hundred Eighty- Four Thousand One Hundred Ninety Dollars ($584,190.00). The hourly schedule of rates, if applicable, is set out in Exhibit C-1, entitled “SCHEDULE OF RATES.” Any work performed or expenses incurred for which payment would result in a total exceeding the maximum compensation set forth in this Section 4 shall be at no cost to the CITY. Optional Additional Services Provision (This provision applies only if checked and a not-to-exceed compensation amount for Additional Services is allocated below under this Section 4.) In addition to the not-to-exceed compensation specified above, CITY has set aside the not- to-exceed compensation amount of Fifty-Eight Thousand Four Hundred Nineteen Dollars ($58,419.00) for the performance of Additional Services (as defined below). The total compensation for performance of the Services, Additional Services and any reimbursable expenses specified in Exhibit C, shall not exceed Six Hundred Thirty-Eight Thousand Six Hundred Nine Dollars ($638,609.00), as detailed in Exhibit C. Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 6  Packet Pg. 31 of 155  Professional Services Rev. Oct 16,2024 Page 3 of 22 “Additional Services” means any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described at Exhibit A. CITY may elect to, but is not required to, authorize Additional Services up to the maximum amount of compensation set forth for Additional Services in this Section 4. CONSULTANT shall provide Additional Services only by advanced, written authorization from CITY as detailed in this Section. Additional Services, if any, shall be authorized by CITY with a Task Order assigned and authorized by CITY’s Project Manager, as identified in Section 13 (Project Management). Each Task Order shall be in substantially the same form as Exhibit A-1, entitled “PROFESSIONAL SERVICES TASK ORDER”. Each Task Order shall contain a specific scope of services, schedule of performance and maximum compensation amount, in accordance with the provisions of this Agreement. Compensation for Additional Services shall be specified by CITY in the Task Order, based on whichever is lowest: the compensation structure set forth in Exhibit C, the hourly rates set forth in Exhibit C-1, or a negotiated lump sum. To accept a Task Order, CONSULTANT shall sign the Task Order and return it to CITY’s Project Manager within the time specified by the Project Manager, and upon authorization by CITY (defined as counter-signature by the CITY Project Manager), the fully executed Task Order shall become part of this Agreement. The cumulative total compensation to CONSULTANT for all Task Orders authorized under this Agreement shall not exceed the amount of compensation set forth for Additional Services in this Section 4. CONSULTANT shall only be compensated for Additional Services performed under an authorized Task Order and only up to the maximum amount of compensation set forth for Additional Services in this Section 4. Performance of and payment for any Additional Services are subject to all requirements and restrictions in this Agreement. SECTION 5. INVOICES. In order to request payment, CONSULTANT shall submit monthly invoices to the CITY describing the Services performed and the applicable charges (including, if applicable, an identification of personnel who performed the Services, hours worked, hourly rates, and reimbursable expenses), based upon Exhibit C or, as applicable, CONSULTANT’s schedule of rates set forth in Exhibit C-1. If applicable, the invoice shall also describe the percentage of completion of each task. The information in CONSULTANT’s invoices shall be subject to verification by CITY. CONSULTANT shall send all invoices to CITY’s Project Manager at the address specified in Section 13 (Project Management) below. CITY will generally process and pay invoices within thirty (30) days of receipt of an acceptable invoice. SECTION 6. QUALIFICATIONS/STANDARD OF CARE. All Services shall be performed by CONSULTANT or under CONSULTANT’s supervision. CONSULTANT represents that it, its employees and subcontractors, if any, possess the professional and technical personnel necessary to perform the Services required by this Agreement and that the personnel have sufficient skill and experience to perform the Services assigned to them. CONSULTANT represents that it, its employees and subcontractors, if any, have and shall maintain during the term of this Agreement all licenses, permits, qualifications, insurance and approvals of whatever nature that are legally required to perform the Services. All Services to be furnished by CONSULTANT under this Agreement shall meet the professional standard and quality that prevail among professionals in the same discipline and of similar knowledge and skill engaged in related work throughout California under the same or similar circumstances. Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 7  Packet Pg. 32 of 155  Professional Services Rev. Oct 16,2024 Page 4 of 22 SECTION 7. COMPLIANCE WITH LAWS. CONSULTANT shall keep itself informed of and in compliance with all federal, state and local laws, ordinances, regulations, and orders that may affect in any manner the Project or the performance of the Services or those engaged to perform Services under this Agreement, as amended from time to time. CONSULTANT shall procure all permits and licenses, pay all charges and fees, and give all notices required by law in the performance of the Services. SECTION 8. ERRORS/OMISSIONS. CONSULTANT is solely responsible for costs, including, but not limited to, increases in the cost of Services, arising from or caused by CONSULTANT’s errors and omissions, including, but not limited to, the costs of corrections such errors and omissions, any change order markup costs, or costs arising from delay caused by the errors and omissions or unreasonable delay in correcting the errors and omissions. SECTION 9. COST ESTIMATES. If this Agreement pertains to the design of a public works project, CONSULTANT shall submit estimates of probable construction costs at each phase of design submittal. If the total estimated construction cost at any submittal exceeds the CITY’s stated construction budget by ten percent (10%) or more, CONSULTANT shall make recommendations to CITY for aligning the Project design with the budget, incorporate CITY approved recommendations, and revise the design to meet the Project budget, at no additional cost to CITY. SECTION 10. INDEPENDENT CONTRACTOR. CONSULTANT acknowledges and agrees that CONSULTANT and any agent or employee of CONSULTANT will act as and shall be deemed at all times to be an independent contractor and shall be wholly responsible for the manner in which CONSULTANT performs the Services requested by CITY under this Agreement. CONSULTANT and any agent or employee of CONSULTANT will not have employee status with CITY, nor be entitled to participate in any plans, arrangements, or distributions by CITY pertaining to or in connection with any retirement, health or other benefits that CITY may offer its employees. CONSULTANT will be responsible for all obligations and payments, whether imposed by federal, state or local law, including, but not limited to, FICA, income tax withholdings, workers’ compensation, unemployment compensation, insurance, and other similar responsibilities related to CONSULTANT’s performance of the Services, or any agent or employee of CONSULTANT providing same. Nothing in this Agreement shall be construed as creating an employment or agency relationship between CITY and CONSULTANT or any agent or employee of CONSULTANT. Any terms in this Agreement referring to direction from CITY shall be construed as providing for direction as to policy and the result of CONSULTANT’s provision of the Services only, and not as to the means by which such a result is obtained. SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of CONSULTANT are material considerations for this Agreement. CONSULTANT shall not assign or transfer any interest in this Agreement nor the performance of any of CONSULTANT’s obligations hereunder without the prior written approval of the City Manager. Any purported assignment made without the prior written approval of the City Manager will be void and without effect. Subject to the foregoing, the covenants, terms, conditions and provisions of this Agreement will apply to, and will bind, the heirs, successors, executors, administrators and assignees of the parties. SECTION 12. SUBCONTRACTING. Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 8  Packet Pg. 33 of 155  Professional Services Rev. Oct 16,2024 Page 5 of 22 Option A: No Subcontractor: CONSULTANT shall not subcontract any portion of the Services to be performed under this Agreement without the prior written authorization of the City Manager or designee. In the event CONSULTANT does subcontract any portion of the work to be performed under this Agreement, CONSULTANT shall be fully responsible for all acts and omissions of subcontractors. Option B: Subcontracts Authorized: Notwithstanding Section 11 (Assignment) above, CITY agrees that subcontractors may be used to complete the Services. The subcontractors authorized by CITY to perform work on this Project are: CONSULTANT shall be responsible for directing the work of any subcontractors and for any compensation due to subcontractors. CITY assumes no responsibility whatsoever concerning compensation of subcontractors. CONSULTANT shall be fully responsible to CITY for all acts and omissions of subcontractors. CONSULTANT shall change or add subcontractors only with the prior written approval of the City Manager or designee. SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Terrence Williams as the CONSULTANT’s Project Manager to have supervisory responsibility for the performance, progress, and execution of the Services and represent CONSULTANT during the day-to-day performance of the Services. If circumstances cause the substitution of the CONSULTANT’s Project Manager or any other of CONSULTANT’s key personnel for any reason, the appointment of a substitute Project Manager and the assignment of any key new or replacement personnel will be subject to the prior written approval of the CITY’s Project Manager. CONSULTANT, at CITY’s request, shall promptly remove CONSULTANT personnel who CITY finds do not perform the Services in an acceptable manner, are uncooperative, or present a threat to the adequate or timely completion of the Services or a threat to the safety of persons or property. CITY’s Project Manager is Patrick LaBruzzo, Utilities Department, WGW Division, 1007 Elwell Ct., Palo Alto, CA, 94303, Telephone: 650-566-4527, Email: Patrick.LaBruzzo@PaloAlto.gov. CITY’s Project Manager will be CONSULTANT’s point of contact with respect to performance, progress and execution of the Services. CITY may designate an alternate Project Manager from time to time. SECTION 14. OWNERSHIP OF MATERIALS. All work product, including without limitation, all writings, drawings, studies, sketches, photographs, plans, reports, specifications, computations, models, recordings, data, documents, and other materials and copyright interests developed under this Agreement, in any form or media, shall be and remain the exclusive property of CITY without restriction or limitation upon their use. CONSULTANT agrees that all copyrights which arise from creation of the work product pursuant to this Agreement are vested in CITY, and CONSULTANT hereby waives and relinquishes all claims to copyright or other intellectual property rights in favor of CITY. Neither CONSULTANT nor its subcontractors, if any, shall make any of such work product available to any individual or organization without the prior written approval of the City Manager or designee. CONSULTANT makes no representation of the suitability of the work product for use in or application to circumstances not contemplated by the Scope of Services. Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 9  Packet Pg. 34 of 155  Professional Services Rev. Oct 16,2024 Page 6 of 22 SECTION 15. AUDITS. CONSULTANT agrees to permit CITY and its authorized representatives to audit, at any reasonable time during the term of this Agreement and for four (4) years from the date of final payment, CONSULTANT’s records pertaining to matters covered by this Agreement, including without limitation records demonstrating compliance with the requirements of Section 10 (Independent Contractor). CONSULTANT further agrees to maintain and retain accurate books and records in accordance with generally accepted accounting principles for at least four (4) years after the expiration or earlier termination of this Agreement or the completion of any audit hereunder, whichever is later. SECTION 16. INDEMNITY. 16.1. To the fullest extent permitted by law, CONSULTANT shall indemnify, defend and hold harmless CITY, its Council members, officers, employees and agents (each an “Indemnified Party”) from and against any and all demands, claims, or liability of any nature, including death or injury to any person, property damage or any other loss, including all costs and expenses of whatever nature including attorney’s fees, experts fees, court costs and disbursements (“Claims”) resulting from, arising out of or in any manner related to performance or nonperformance by CONSULTANT, its officers, employees, agents or contractors under this Agreement, regardless of whether or not it is caused in part by an Indemnified Party. 16.2. Notwithstanding the above, nothing in this Section 16 shall be construed to require CONSULTANT to indemnify an Indemnified Party from a Claim arising from the active negligence or willful misconduct of an Indemnified Party that is not contributed to by any act of, or by any omission to perform a duty imposed by law or agreement by, CONSULTANT, its officers, employees, agents or contractors under this Agreement. 16.3. The acceptance of CONSULTANT’s Services and duties by CITY shall not operate as a waiver of the right of indemnification. The provisions of this Section 16 shall survive the expiration or early termination of this Agreement. SECTION 17. WAIVERS. No waiver of a condition or nonperformance of an obligation under this Agreement is effective unless it is in writing in accordance with Section 29.4 of this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute a waiver of that provision as to that or any other instance. Any waiver granted shall apply solely to the specific instance expressly stated. No single or partial exercise of any right or remedy will preclude any other or further exercise of any right or remedy. SECTION 18. INSURANCE. 18.1. CONSULTANT, at its sole cost and expense, shall obtain and maintain, in full force and effect during the term of this Agreement, the insurance coverage described in Exhibit D, entitled “INSURANCE REQUIREMENTS”. CONSULTANT and its contractors, if any, shall obtain a policy endorsement naming CITY as an additional insured under any general liability or automobile policy or policies. 18.2. All insurance coverage required hereunder shall be provided through carriers with AM Best’s Key Rating Guide ratings of A-:VII or higher which are licensed or authorized to transact insurance business in the State of California. Any and all contractors of Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 10  Packet Pg. 35 of 155  Professional Services Rev. Oct 16,2024 Page 7 of 22 CONSULTANT retained to perform Services under this Agreement will obtain and maintain, in full force and effect during the term of this Agreement, identical insurance coverage, naming CITY as an additional insured under such policies as required above. 18.3. Certificates evidencing such insurance shall be filed with CITY concurrently with the execution of this Agreement. The certificates will be subject to the approval of CITY’s Risk Manager and will contain an endorsement stating that the insurance is primary coverage and will not be canceled, or materially reduced in coverage or limits, by the insurer except after filing with the Purchasing Manager thirty (30) days’ prior written notice of the cancellation or modification. If the insurer cancels or modifies the insurance and provides less than thirty (30) days’ notice to CONSULTANT, CONSULTANT shall provide the Purchasing Manager written notice of the cancellation or modification within two (2) business days of the CONSULTANT’s receipt of such notice. CONSULTANT shall be responsible for ensuring that current certificates evidencing the insurance are provided to CITY’s Chief Procurement Officer during the entire term of this Agreement. 18.4. The procuring of such required policy or policies of insurance will not be construed to limit CONSULTANT’s liability hereunder nor to fulfill the indemnification provisions of this Agreement. Notwithstanding the policy or policies of insurance, CONSULTANT will be obligated for the full and total amount of any damage, injury, or loss caused by or directly arising as a result of the Services performed under this Agreement, including such damage, injury, or loss arising after the Agreement is terminated or the term has expired. SECTION 19. TERMINATION OR SUSPENSION OF AGREEMENT OR SERVICES. 19.1. The City Manager may suspend the performance of the Services, in whole or in part, or terminate this Agreement, with or without cause, by giving ten (10) days prior written notice thereof to CONSULTANT. If CONSULTANT fails to perform any of its material obligations under this Agreement, in addition to all other remedies provided under this Agreement or at law, the City Manager may terminate this Agreement sooner upon written notice of termination. Upon receipt of any notice of suspension or termination, CONSULTANT will discontinue its performance of the Services on the effective date in the notice of suspension or termination. 19.2. In event of suspension or termination, CONSULTANT will deliver to the City Manager on or before the effective date in the notice of suspension or termination, any and all work product, as detailed in Section 14 (Ownership of Materials), whether or not completed, prepared by CONSULTANT or its contractors, if any, in the performance of this Agreement. Such work product is the property of CITY, as detailed in Section 14 (Ownership of Materials). 19.3. In event of suspension or termination, CONSULTANT will be paid for the Services rendered and work products delivered to CITY in accordance with the Scope of Services up to the effective date in the notice of suspension or termination; provided, however, if this Agreement is suspended or terminated on account of a default by CONSULTANT, CITY will be obligated to compensate CONSULTANT only for that portion of CONSULTANT’s Services provided in material conformity with this Agreement as such determination is made by the City Manager acting in the reasonable exercise of his/her discretion. The following Sections will survive any expiration or termination of this Agreement: 14, 15, 16, 17, 19.2, 19.3, 19.4, 20, 25, Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 11  Packet Pg. 36 of 155  Professional Services Rev. Oct 16,2024 Page 8 of 22 27, 28, 29 and 30. 19.4. No payment, partial payment, acceptance, or partial acceptance by CITY will operate as a waiver on the part of CITY of any of its rights under this Agreement, unless made in accordance with Section 17 (Waivers). SECTION 20. NOTICES. All notices hereunder will be given in writing and mailed, postage prepaid, by certified mail, addressed as follows: To CITY: Office of the City Clerk City of Palo Alto Post Office Box 10250 Palo Alto, CA 94303 With a copy to the Purchasing Manager To CONSULTANT: Attention of the Project Manager at the address of CONSULTANT recited on the first page of this Agreement. CONSULTANT shall provide written notice to CITY of any change of address. SECTION 21. CONFLICT OF INTEREST. 21.1. In executing this Agreement, CONSULTANT covenants that it presently has no interest, and will not acquire any interest, direct or indirect, financial or otherwise, which would conflict in any manner or degree with the performance of the Services. 21.2. CONSULTANT further covenants that, in the performance of this Agreement, it will not employ subcontractors or other persons or parties having such an interest. CONSULTANT certifies that no person who has or will have any financial interest under this Agreement is an officer or employee of CITY; this provision will be interpreted in accordance with the applicable provisions of the Palo Alto Municipal Code and the Government Code of the State of California, as amended from time to time. CONSULTANT agrees to notify CITY if any conflict arises. 21.3. If the CONSULTANT meets the definition of a “Consultant” as defined by the Regulations of the Fair Political Practices Commission, CONSULTANT will file the appropriate financial disclosure documents required by the Palo Alto Municipal Code and the Political Reform Act of 1974, as amended from time to time. SECTION 22. NONDISCRIMINATION; COMPLIANCE WITH ADA. 22.1. As set forth in Palo Alto Municipal Code Section 2.30.510, as amended from time to time, CONSULTANT certifies that in the performance of this Agreement, it shall not discriminate in the employment of any person due to that person’s race, skin color, gender, gender identity, age, religion, disability, national origin, ancestry, sexual orientation, pregnancy, genetic Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 12  Packet Pg. 37 of 155  Professional Services Rev. Oct 16,2024 Page 9 of 22 information or condition, housing status, marital status, familial status, weight or height of such person. CONSULTANT acknowledges that it has read and understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and agrees to meet all requirements of Section 2.30.510 pertaining to nondiscrimination in employment. 22.2. CONSULTANT understands and agrees that pursuant to the Americans Disabilities Act (“ADA”), programs, services and other activities provided by a public entity to the public, whether directly or through a contractor or subcontractor, are required to be accessible to the disabled public. CONSULTANT will provide the Services specified in this Agreement in a manner that complies with the ADA and any other applicable federal, state and local disability rights laws and regulations, as amended from time to time. CONSULTANT will not discriminate against persons with disabilities in the provision of services, benefits or activities provided under this Agreement. SECTION 23. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO WASTE REQUIREMENTS. CONSULTANT shall comply with the CITY’s Environmentally Preferred Purchasing policies which are available at CITY’s Purchasing Department, hereby incorporated by reference and as amended from time to time. CONSULTANT shall comply with waste reduction, reuse, recycling and disposal requirements of CITY’s Zero Waste Program. Zero Waste best practices include, first, minimizing and reducing waste; second, reusing waste; and, third, recycling or composting waste. In particular, CONSULTANT shall comply with the following Zero Waste requirements: (a) All printed materials provided by CONSULTANT to CITY generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double-sided and printed on a minimum of 30% or greater post-consumer content paper, unless otherwise approved by CITY’s Project Manager. Any submitted materials printed by a professional printing company shall be a minimum of 30% or greater post-consumer material and printed with vegetable-based inks. (b) Goods purchased by CONSULTANT on behalf of CITY shall be purchased in accordance with CITY’s Environmental Purchasing Policy including but not limited to Extended Producer Responsibility requirements for products and packaging. A copy of this policy is on file at the Purchasing Department’s office. (c) Reusable/returnable pallets shall be taken back by CONSULTANT, at no additional cost to CITY, for reuse or recycling. CONSULTANT shall provide documentation from the facility accepting the pallets to verify that pallets are not being disposed. SECTION 24. COMPLIANCE WITH PALO ALTO MINIMUM WAGE ORDINANCE. CONSULTANT shall comply with all requirements of the Palo Alto Municipal Code Chapter 4.62 (Citywide Minimum Wage), as amended from time to time. In particular, for any employee otherwise entitled to the State minimum wage, who performs at least two (2) hours of work in a calendar week within the geographic boundaries of the City, CONSULTANT shall pay such employees no less than the minimum wage set forth in Palo Alto Municipal Code Section 4.62.030 for each hour worked within the geographic boundaries of the City of Palo Alto. In addition, CONSULTANT shall post notices regarding the Palo Alto Minimum Wage Ordinance in accordance with Palo Alto Municipal Code Section 4.62.060. SECTION 25. NON-APPROPRIATION. This Agreement is subject to the fiscal provisions of Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 13  Packet Pg. 38 of 155  Professional Services Rev. Oct 16,2024 Page 10 of 22 the Charter of the City of Palo Alto and the Palo Alto Municipal Code, as amended from time to time. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds for this Agreement are no longer available. This Section shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Agreement. SECTION 26. PREVAILING WAGES AND DIR REGISTRATION FOR PUBLIC WORKS CONTRACTS. 26.1. This Project is not subject to prevailing wages and related requirements. CONSULTANT is not required to pay prevailing wages and meet related requirements under the California Labor Code and California Code of Regulations in the performance and implementation of the Project if the contract: (1) is not a public works contract; (2) is for a public works construction project of $25,000 or less, per California Labor Code Sections 1782(d)(1), 1725.5(f) and 1773.3(j); or (3) is for a public works alteration, demolition, repair, or maintenance project of $15,000 or less, per California Labor Code Sections 1782(d)(1), 1725.5(f) and 1773.3(j). SECTION 27. CLAIMS PROCEDURE FOR “9204 PUBLIC WORKS PROJECTS”. For purposes of this Section 27, a “9204 Public Works Project” means the erection, construction, alteration, repair, or improvement of any public structure, building, road, or other public improvement of any kind. (Cal. Pub. Cont. Code § 9204.) Per California Public Contract Code Section 9204, for Public Works Projects, certain claims procedures shall apply, as set forth in Exhibit F, entitled “Claims for Public Contract Code Section 9204 Public Works Projects”. This Project is not a 9204 Public Works Project. SECTION 28. CONFIDENTIAL INFORMATION. 28.1. In the performance of this Agreement, CONSULTANT may have access to CITY’s Confidential Information (defined below). CONSULTANT will hold Confidential Information in strict confidence, not disclose it to any third party, and will use it only for the performance of its obligations to CITY under this Agreement and for no other purpose. CONSULTANT will maintain reasonable and appropriate administrative, technical and physical safeguards to ensure the security, confidentiality and integrity of the Confidential Information. Notwithstanding the foregoing, CONSULTANT may disclose Confidential Information to its employees, agents and subcontractors, if any, to the extent they have a need to know in order to perform CONSULTANT’s obligations to CITY under this Agreement and for no other purpose, provided that the CONSULTANT informs them of, and requires them to follow, the confidentiality and security obligations of this Agreement. 28.2. “Confidential Information” means all data, information (including without limitation “Personal Information” about a California resident as defined in Civil Code Section 1798 et seq., as amended from time to time) and materials, in any form or media, tangible or intangible, provided or otherwise made available to CONSULTANT by CITY, directly or Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 14  Packet Pg. 39 of 155  Professional Services Rev. Oct 16,2024 Page 11 of 22 indirectly, pursuant to this Agreement. Confidential Information excludes information that CONSULTANT can show by appropriate documentation: (i) was publicly known at the time it was provided or has subsequently become publicly known other than by a breach of this Agreement; (ii) was rightfully in CONSULTANT’s possession free of any obligation of confidence prior to receipt of Confidential Information; (iii) is rightfully obtained by CONSULTANT from a third party without breach of any confidentiality obligation; (iv) is independently developed by employees of CONSULTANT without any use of or access to the Confidential Information; or (v) CONSULTANT has written consent to disclose signed by an authorized representative of CITY. 28.3. Notwithstanding the foregoing, CONSULTANT may disclose Confidential Information to the extent required by order of a court of competent jurisdiction or governmental body, provided that CONSULTANT will notify CITY in writing of such order immediately upon receipt and prior to any such disclosure (unless CONSULTANT is prohibited by law from doing so), to give CITY an opportunity to oppose or otherwise respond to such order. 28.4. CONSULTANT will notify City promptly upon learning of any breach in the security of its systems or unauthorized disclosure of, or access to, Confidential Information in its possession or control, and if such Confidential Information consists of Personal Information, CONSULTANT will provide information to CITY sufficient to meet the notice requirements of Civil Code Section 1798 et seq., as applicable, as amended from time to time. 28.5. Prior to or upon termination or expiration of this Agreement, CONSULTANT will honor any request from the CITY to return or securely destroy all copies of Confidential Information. All Confidential Information is and will remain the property of the CITY and nothing contained in this Agreement grants or confers any rights to such Confidential Information on CONSULTANT. 28.6. If selected in Section 30 (Exhibits), this Agreement is also subject to the terms and conditions of the Information Privacy Policy and Cybersecurity Terms and Conditions. SECTION 29. MISCELLANEOUS PROVISIONS. 29.1. This Agreement will be governed by California law, without regard to its conflict of law provisions. 29.2. In the event that an action is brought, the parties agree that trial of such action will be vested exclusively in the state courts of California in the County of Santa Clara, State of California. 29.3. The prevailing party in any action brought to enforce the provisions of this Agreement may recover its reasonable costs and attorneys’ fees expended in connection with that action. The prevailing party shall be entitled to recover an amount equal to the fair market value of legal services provided by attorneys employed by it as well as any attorneys’ fees paid to third parties. 29.4. This Agreement, including all exhibits, constitutes the entire and integrated agreement between the parties with respect to the subject matter of this Agreement, and supersedes Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 15  Packet Pg. 40 of 155  Professional Services Rev. Oct 16,2024 Page 12 of 22 all prior agreements, negotiations, representations, statements and undertakings, either oral or written. This Agreement may be amended only by a written instrument, which is signed by the authorized representatives of the parties and approved as required under Palo Alto Municipal Code, as amended from time to time. 29.5. If a court of competent jurisdiction finds or rules that any provision of this Agreement is void or unenforceable, the unaffected provisions of this Agreement will remain in full force and effect. 29.6. In the event of a conflict between the terms of this Agreement and the exhibits hereto (per Section 30) or CONSULTANT’s proposal (if any), the Agreement shall control. In the event of a conflict between the exhibits hereto and CONSULTANT’s proposal (if any), the exhibits shall control. 29.7. The provisions of all checked boxes in this Agreement shall apply to this Agreement; the provisions of any unchecked boxes shall not apply to this Agreement. 29.8. All section headings contained in this Agreement are for convenience and reference only and are not intended to define or limit the scope of any provision of this Agreement. 29.9. This Agreement may be signed in multiple counterparts, which, when executed by the authorized representatives of the parties, shall together constitute a single binding agreement. SECTION 30. EXHIBITS. Each of the following exhibits, if the check box for such exhibit is selected below, is hereby attached and incorporated into this Agreement by reference as though fully set forth herein: EXHIBIT A: SCOPE OF SERVICES EXHIBIT A-1 PROFESSIONAL SERVICES TASK ORDER EXHIBIT B: SCHEDULE OF PERFORMANCE EXHIBIT C: COMPENSATION EXHIBIT C-1: SCHEDULE OF RATES EXHIBIT D: INSURANCE REQUIREMENTS THIS AGREEMENT IS NOT COMPLETE UNLESS ALL SELECTED EXHIBITS ARE ATTACHED. Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 16  Packet Pg. 41 of 155  Professional Services Rev. Oct 16,2024 Page 13 of 22 CONTRACT NO. C26194078 SIGNATURE PAGE IN WITNESS WHEREOF, the parties hereto have by their duly authorized representatives executed this Agreement as of the date first above written. CITY OF PALO ALTO ____________________________ City Manager APPROVED AS TO FORM: __________________________ City Attorney or designee M.E. SIMPSON COMPANY, INC. By: ________________________________ Name: ______________________________ Title: _______________________________ By: ________________________________ Name: ______________________________ Title: _______________________________ Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 MICHAEL D. SIMPSON CEO CFO Cara Lance-Emerick Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 17  Packet Pg. 42 of 155  Professional Services Rev. Oct 16,2024 Page 14 of 22 EXHIBIT A SCOPE OF SERVICES CONSULTANT shall provide the Services detailed in this Exhibit A, entitled “SCOPE OF SERVICES”. Notwithstanding any provision herein to the contrary, CONSULTANT’s duties and services described in this Scope of Services shall not include preparing or assisting CITY with any portion of CITY’s preparation of a request for proposals, request for qualifications, or any other solicitation regarding a subsequent or additional contract with CITY. CITY shall at all times retain responsibility for public contracting, including with respect to any subsequent phase of this project. CONSULTANT’s participation in the planning, discussions, or drawing of project plans or specifications shall be limited to conceptual, preliminary, or initial plans or specifications. CONSULTANT shall cooperate with CITY to ensure that all bidders for a subsequent contract on any subsequent phase of this project have access to the same information, including all conceptual, preliminary, or initial plans or specifications prepared by CONSULTANT pursuant to this Scope of Services. CONSULTANT shall provide following professional water system leak detection services for the City of Palo Alto’s potable water distribution system, totaling approximately 231 miles of watermains. The objective of this project is to analyze unreported water leaks for the development of economic models and for regulatory compliance. The work shall include project initiation, field acoustic survey, traffic control, reporting, geographic information system (“GIS”) deliverables, analysis, and quality assurance. Each Task shall be performed by CONSULTANT on an annual basis for a three (3) year duration, for a total of six (6) total tasks. Task 1: Project Initiation & Planning A) Conduct a kickoff meeting with CITY staff. B) Review CITY GIS maps, records, and system data. C) Establish safety, reporting, and communication protocols. Task 2: Field Leak Detection Survey and Reporting A) Conduct all leak detection services covering the CITY’s entire potable water distribution system in accordance with the industry manual of Practice American Water Works Association (“AWWA”) Manual 36 and shall be carried out by trained two-person teams to ensure accuracy and safety. a. Perform hydrant/valve listening at intervals of ≤500 ft metallic, ≤300 ft AC/Concrete, ≤150 ft PVC/HDPE. b. Provide all required traffic control. c. Use advanced leak detection equipment: Gutermann AquaScope, Echologics LeakFinder-ST, FCS Touch Pro d. Maintain a Suspected Leak Log; re-verify potential leaks after a minimum of 4 hours. e. Mark verified leaks with blue paint and record sub-meter GPS coordinates f. Address noise and mixed pipe conditions using nighttime survey methods and filtering g. All staff carrying out leak detection services shall be OSHA-certified, CPR/First Aid trained, and ATSSA traffic-control certified. Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 18  Packet Pg. 43 of 155  Professional Services Rev. Oct 16,2024 Page 15 of 22 h. Provide daily progress updates and weekly logs. i. Submit GIS shapefiles/ArcGIS deliverables with leak attributes each year. B) Submit Progress Report on a monthly basis, summarizing leaks identified. a. All reports shall be reviewed and approved by the Consultant’s QA/QC manager. C) Incorporate CITY feedback and submit Final Report within 30 working days, including leak summaries, estimated water loss, and economic analysis of potential costs of leak persistence. Deliverables: A) Daily progress updates. B) Weekly progress logs. C) GIS shapefiles of all verified leak locations with attributes. D) Draft Report summarizing methodology, leaks identified, and initial analysis. E) Final Report including leak summaries, estimated water loss, and economic analysis. Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 19  Packet Pg. 44 of 155  Professional Services Rev. Oct 16,2024 Page 16 of 22 EXHIBIT A-1 PROFESSIONAL SERVICES TASK ORDER CONSULTANT shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 are incorporated into this Task Order by this reference. CONSULTANT shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): 1B. TASK ORDER NO.: 2. CONSULTANT NAME: 3. PERIOD OF PERFORMANCE: START: COMPLETION: 4 TOTAL TASK ORDER PRICE: $__________________ BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT $_______________ 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:_____________________________________ 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE:  SERVICES AND DELIVERABLES TO BE PROVIDED  SCHEDULE OF PERFORMANCE  MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): _____________________________ I hereby authorize the performance of the work described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: ______________________ BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 20  Packet Pg. 45 of 155  Professional Services Rev. Oct 16,2024 Page 17 of 22 EXHIBIT B SCHEDULE OF PERFORMANCE CONSULTANT shall perform the Services so as to complete each milestone within the number of days/weeks specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the Project Managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed (“NTP”) from the CITY. Number of Days/Weeks (as Optional Schedule of Performance Provision for On-Call or Additional Services Agreements. (This provision only applies if checked and only applies to on-call agreements per Section 1 or agreements with Additional Services per Section 4.) The schedule of performance shall be as provided in the approved Task Order, as detailed in Section 1 (Scope of Services) in the case of on-call Services, or as detailed in Section 4 in the case of Additional Services, provided in all cases that the schedule of performance shall fall within the term as provided in Section 2 (Term) of this Agreement. Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 21  Packet Pg. 46 of 155  Professional Services Rev. Oct 16,2024 Page 18 of 22 EXHIBIT C COMPENSATION CITY agrees to compensate CONSULTANT for Services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the rate schedule attached as Exhibit C-1 up to the not to exceed budget amount for each task set forth below. CITY’s Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below, provided that the total compensation for the Services, including any specified reimbursable expenses, and the total compensation for Additional Services (if any, per Section 4 of the Agreement) do not exceed the amounts set forth in Section 4 of this Agreement. CONSULTANT agrees to complete all Services, any specified reimbursable expenses, and Additional Services (if any, per Section 4), within this/these amount(s). Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth in this Agreement shall be at no cost to the CITY. BUDGET SCHEDULE NOT TO EXCEED AMOUNT TASK NOT TO EXCEED AMOUNT Sub-total for Services $584,190.00 Total for Services and Reimbursable Expenses $584,190.00 Maximum Total Compensation $638,609.00 REIMBURSABLE EXPENSES CONSULTANT’S ordinary business expenses, such as administrative, overhead, administrative support time/overtime, information systems, software and hardware, photocopying, telecommunications (telephone, internet), in-house printing, insurance and other ordinary business expenses, are included within the scope of payment for Services and are not reimbursable expenses hereunder. Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 22  Packet Pg. 47 of 155  Professional Services Rev. Oct 16,2024 Page 19 of 22 Reimbursable expenses, if any are specified as reimbursable under this section, will be reimbursed at actual cost. The expenses (by type, e.g. travel) for which CONSULTANT will be reimbursed are: NONE up to the not-to-exceed amount of: $0.00. A. Travel outside the San Francisco Bay Area, including transportation and meals, if specified as reimbursable, will be reimbursed at actual cost subject to the City of Palo Alto’s policy for reimbursement of travel and meal expenses. B. Long distance telephone service charges, cellular phone service charges, facsimile transmission and postage charges, if specified as reimbursable, will be reimbursed at actual cost. All requests for reimbursement of expenses, if any are specified as reimbursable under this section, shall be accompanied by appropriate backup documentation and information. Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 23  Packet Pg. 48 of 155  Professional Services Rev. Oct 16,2024 Page 20 of 22 EXHIBIT C-1 SCHEDULE OF RATES CONSULTANT’s schedule of rates is as follows: Compensation for additional services to the contract using task orders shall be charged on a daily rate basis. Additional services will be performed on weekdays and will not extend over weekends. Additional services will be performed while mobilized. Additional services involving work near and around traffic shall be performed in pairs. Two Technicians……………………………………………………. $3,250.00 / DAY Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 24  Packet Pg. 49 of 155  Professional Services Rev. Oct 16,2024 Page 21 of 22 EXHIBIT D INSURANCE REQUIREMENTS CONSULTANTS TO THE CITY OF PALO ALTO (CITY), AT THEIR SOLE EXPENSE, SHALL FOR THE TERM OF THE CONTRACT OBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW, AFFORDED BY COMPANIES WITH AM BEST’S KEY RATING OF A-:VII, OR HIGHER, LICENSED OR AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE STATE OF CALIFORNIA. AWARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS AS SPECIFIED HEREIN. REQUIRED TYPE OF COVERAGE REQUIREMENT MINIMUM LIMITS EACH OCCURRENCE AGGREGATE YES YES WORKER’S COMPENSATION EMPLOYER’S LIABILITY STATUTORY STATUTORY STATUTORY STATUTORY YES GENERAL LIABILITY, INCLUDING PERSONAL INJURY, BROAD FORM PROPERTY DAMAGE BLANKET CONTRACTUAL, AND FIRE LEGAL LIABILITY BODILY INJURY PROPERTY DAMAGE BODILY INJURY & PROPERTY DAMAGE COMBINED. $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 YES AUTOMOBILE LIABILITY, INCLUDING ALL OWNED, HIRED, NON-OWNED BODILY INJURY - EACH PERSON - EACH OCCURRENCE PROPERTY DAMAGE BODILY INJURY AND PROPERTY DAMAGE, COMBINED $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 YES PROFESSIONAL LIABILITY, INCLUDING, ERRORS AND OMISSIONS, MALPRACTICE (WHEN APPLICABLE), AND NEGLIGENT PERFORMANCE ALL DAMAGES $1,000,000 YES THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: CONSULTANT, AT ITS SOLE COST AND EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT THE ENTIRE TERM OF ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY CONSULTANT COMPENSATION, EMPLOYER’S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSUREDS CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES. I. INSURANCE COVERAGE MUST INCLUDE: A. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CONSULTANT’S AGREEMENT TO INDEMNIFY CITY. II. THE CONSULTANT MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE AT THE FOLLOWING EMAIL: PURCHASINGSUPPORT@CITYOFPALOALTO.ORG III. ENDORSEMENT PROVISIONS WITH RESPECT TO THE INSURANCE AFFORDED TO ADDITIONAL INSUREDS: A. PRIMARY COVERAGE WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED, INSURANCE AS AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRIBUTING WITH ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSUREDS. Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 25  Packet Pg. 50 of 155  Professional Services Rev. Oct 16,2024 Page 22 of 22 B. CROSS LIABILITY THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS UNDER THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL LIABILITY OF THE COMPANY UNDER THIS POLICY. C. NOTICE OF CANCELLATION 1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE CONSULTANT SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. 2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT OF PREMIUM, THE CONSULTANT SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. EVIDENCE OF INSURANCE AND OTHER RELATED NOTICES ARE REQUIRED TO BE FILED WITH THE CITY OF PALO ALTO SENT TO THE FOLLOWING EMAIL: PURCHASINGSUPPORT@CITYOFPALOALTO.ORG Docusign Envelope ID: 8A2D500C-E8A9-435F-8B0B-F3B52EAABDA5 Item 5 Attachment A - M.E. Simpson Co., Inc. Contract #C26194078        Item 5: Staff Report Pg. 26  Packet Pg. 51 of 155  City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Public Works Meeting Date: February 23, 2026 Report #:2511-5432 TITLE Approval of Amendment No. 2 to Contract No. C25193187 with Universal Security Company for Fire Watch Services at City Hall in the Amount of $80,915 for a New Total Not-to-Exceed Amount of $301,667, and Approval of a Fiscal Year 2026 Operating Budget Amendment in the General Fund; CEQA status - Categorically Exempt under Sections 15301 and 15302 RECOMMENDATION Staff recommends that the City Council: 1. Approve and authorize the City Manager or their designee to execute Amendment No. 2 to Contract No. C25193187 with Universal Security Company to provide fire watch services at City Hall in the Amount of $80,915, for a new total not-to-exceed amount of $301,667; and 2. Amend the Fiscal Year 2026 Operating Budget Appropriation for the General Fund (requires a 2/3 vote) by: a. Increasing the Public Works Department Public Services Division contract expense appropriation by $80,915; and b. Decreasing the Budget Stabilization Reserve by $80,915. BACKGROUND On Monday, August 18, 2025, it was discovered that the drive shaft connecting a diesel engine to the City Hall fire pump was sheared in half, making the fire pump inoperable. The fire pump provides water pressure to the fire sprinkler system on the upper floors of City Hall. Section 15.5.2 of the National Fire Protection Association 25 mandates the provision of a fire watch whenever an automatic fire sprinkler system malfunctions for 10 hours in a 24-hour period. The 24 hours a day, 7 days per week fire watch service began on August 19, 2025, and ended on November 10, 2025, when the repair to the fire pump was completed. The fire watch services were performed by Universal Security Company. Item 6 Item 6 Staff Report        Item 6: Staff Report Pg. 1  Packet Pg. 52 of 155  Universal Security Company provides security services at the Municipal Service Center and the Regional Water Quality Control Plant under contract No. C251931871 and staff’s recommended action amends the contract scope and compensation for these additional services. ANALYSIS FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: 1 https://www.paloalto.gov/files/assets/public/v/1/public-works/public- services/contracts/contract-with-universal-security-company-c25193187.pdf Item 6 Item 6 Staff Report        Item 6: Staff Report Pg. 2  Packet Pg. 53 of 155  Vers.: Aug. 5, 2019 Page 1 of 5 AMENDMENT NO. 2 TO CONTRACT NO. C25193187 BETWEEN THE CITY OF PALO ALTO AND UNIVERSAL SEMICONDUCTOR, INC. dba UNIVERSAL SECURITY COMPANY This Amendment No. 2 (this “Amendment”) to Contract No. C25193187 (the “Contract” as defined below) is entered into as of December 16, 2025 by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and UNIVERSAL SEMICONDUCTOR, INC. dba UNIVERSAL SECURITY COMPANY, a California corporation, located at 1925 Zanker Road, San Jose, CA 95112, Telephone Number: 408-234-4797 (“CONTRACTOR”). CITY and CONTRACTOR are referred to collectively as the “Parties” in this Amendment. R E C I T A L S A. The Contract (as defined below) was entered into by and between the Parties hereto for the provision of security guard services, as detailed therein. B. The Parties now wish to amend the Contract in order to increase the total not-to-exceed amount of the Contract by Eighty Thousand Nine Hundred Fifteen Dollars $80,915.00) from Two Hundred Twenty Thousand Seven Hundred Fifty-Two Dollars ($220,752,000) to a new total not-to-exceed amount of Three Hundred One Thousand Six Hundred Sixty-Seven Dollars ($301,667.00) for city hall fire watch. NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the Parties agree: SECTION 1. Definitions. The following definitions shall apply to this Ame ndment: a.Contract. The term “Contract” shall mean Contract No. C25193187 between CONSULTANT and CITY, dated February 1, 2025, as amended by: Amendment No. 1, dated November 1, 2025 b.Other Terms. Capitalized terms used and not defined in this Amendment shall have the meanings assigned to such terms in the Contract. SECTION 2. Section 5 “COMPENSATION FOR ORIGINAL TERM” of the Contract is hereby amended to read as follows: “COMPENSATION FOR ORIGINAL TERM. CITY shall pay and CONTRACTOR agrees to accept as not-to-exceed compensation for the full performance of the Services and reimbursable expenses, if any: The total maximum lump sum compensation of dollars ($ ); #(&"") #$         Item 6 Attachment A - Amendment No. 2 City Hall Fire Watch Final; C25193187        Item 6: Staff Report Pg. 3  Packet Pg. 54 of 155  Vers.: Aug. 5, 2019 Page 2 of 5 OR The sum of dollars ($ ) per hour, not to exceed a total maximum compensation amount of dollars ($ ); OR A sum calculated in accordance with the fee schedule set forth at Exhibit C, not to exceed a total maximum compensation amount of Three Hundred One Thousand Six Hundred Sixty-Seven Dollars ($301,667.00). SECTION 3. The following exhibit(s) to the Contract is/are hereby amended or added, as indicated below, to read as set forth in the attachment(s) to this Amendment, which is/are hereby incorporated in full into this Amendment and into the Contract by this reference: a. Exhibit “A” entitled “SCOPE OF SERVICES”, ADDED, AMENDED. SECTION 4. Legal Effect. Except as modified by this Amendment, all other provisions of the Contract, including any exhibits thereto, shall remain in full force and effect. SECTION 5. Incorporation of Recitals. The recitals set forth above are terms of this Amendment and are fully incorporated herein by this reference. (SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.) #(&"") #$         Item 6 Attachment A - Amendment No. 2 City Hall Fire Watch Final; C25193187        Item 6: Staff Report Pg. 4  Packet Pg. 55 of 155  Vers.: Aug. 5, 2019 Page 3 of 5 SIGNATURES OF THE PARTIES IN WITNESS WHEREOF, the Parties have by their duly authorized representatives executed this Amendment effective as of the date first above written. CITY OF PALO ALTO _____________________________ City Manager APPROVED AS TO FORM: _____________________________ City Attorney or designee UNIVERSAL SEMICONDUCTOR, INC. dba UNIVERSAL SECURITY COMPANY By:______________________________ Name:___________________________ Title:____________________________ By:______________________________ Name:___________________________ Title:____________________________ Attachments: Exhibit “A” entitled “SCOPE OF SERVICES”, ADDED, AMENDED #(&"") #$         %&"' !#%&( #*&+ #%"  Item 6 Attachment A - Amendment No. 2 City Hall Fire Watch Final; C25193187        Item 6: Staff Report Pg. 5  Packet Pg. 56 of 155  Vers.: Aug. 5, 2019 Page 4 of 5 EXHIBIT A SCOPE OF SERVICES Scope of Work for City Hall CONTRACTOR shall supply all labor, materials, equipment and incidentals necessary to provide unarmed security guard services at City Hall for fire watch while the fire alarm is repaired. The general performance criteria shall include but not be limited to providing unarmed security guard services to: 1.CONTRACTOR shall provide a security sweep and inspection of City Hall. 2.Security sweeps and inspections shall be continuous Twenty-Four (24) hours a day, seven (7) days a week until the city’s fire department confirms the emergency is over. 3.Security sweeps will include but are not limited to: building exterior doors, internal doors, all floors, parking garage and both stairwells. 4.The 1st guard shall work from 6:00 am to 2:30 pm and will open front vehicle gate at 7am. 5.The 2nd guard shall work from 8:30 am to 5:00 pm and will close front vehicle gate at 4:30 pm. 6.Respond promptly and appropriately to all security-related emergencies. 7.Notify the appropriate law enforcement agency and Project Manager of any smoke or fire. Personnel Requirements: 1.Officer Uniforms a.All security officers must always wear a security uniform when performing services under this Contract. b.The uniform must have the word “Security” on the front and back of the uniform, in conformance with the State of California requirements. c.The name of the individual officer shall be on the front of the uniform. #(&"") #$         Item 6 Attachment A - Amendment No. 2 City Hall Fire Watch Final; C25193187        Item 6: Staff Report Pg. 6  Packet Pg. 57 of 155  Vers.: Aug. 5, 2019 Page 5 of 5 d.All uniforms (collar shirts and pants) shall be cleaned and pressed regularly. e.All collar shirts shall be tucked in neatly with dark color slacks and shoes. f.High visibility apparel and/or reflective vest is recommended due to the requirement of working in vehicle traffic situations. g.All uniforms shall be approved by the City’s Project Manager prior to wearing them onsite. 2.Officer Qualifications: a.Be able to communicate effectively in both written and oral English. b.Possess a valid California Driver’s License or Identification. c.Be a legal resident of the United States of America. d.Have successfully completed the educational requirements and successfully passed the examinations required by the State of California, Department of Consumer Affairs. e.Be capable of performing the assigned tasks. f.Passed background check and have no disqualifying criminal conviction record as determined by City. g.Must ensure that at least one person every day has a working knowledge of the City Hall. h.Possess a current security guard card from the state. 3.Equipment: a.Contractor shall furnish all equipment necessary to perform the work as described herein. b.All equipment shall be kept in good condition. Required equipment shall include but not be limited to: i.Flashlights and two-way radios/smart phones. ii.Appropriate winter and summer wear for staff meeting guidelines in the “Personnel” section above. Officer Wages 1.Contractor must follow the federal, state, and local minimum wage law each year of the Contract. #(&"") #$         Item 6 Attachment A - Amendment No. 2 City Hall Fire Watch Final; C25193187        Item 6: Staff Report Pg. 7  Packet Pg. 58 of 155  City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Police Meeting Date: February 23, 2026 Report #:2602-5961 TITLE Approval of a Contract to Patrol Four Railroad Grade Crossings (vendor, term, and cost TBD); Approval Cost Sharing Agreement with Palo Alto Unified School District; and Approve Related Budget Amendments; CEQA status – Not a project This will be a late packet report published on February 19, 2026. Item 7 Item 7 Staff Report        Item 7: Staff Report Pg. 1  Packet Pg. 59 of 155  City Council Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Administrative Services Meeting Date: February 23, 2026 Report #:2512-5662 TITLE FY 2026 Mid-Year Budget Review; and Approve 1) Budget Amendments in Various Funds, and 2) a $10.0 Million Additional Discretionary Payment (ADP) from the PARS Pension Trust RECOMMENDATION Staff recommends that the City Council receive the FY 2026 mid-year budget review and: 1. Approve amendments to the Fiscal Year 2026 Budget Appropriation for the funds and capital projects identified in Attachment A, Exhibits 1 and 2 (requires 2/3 approval); 2. Consolidate the remaining $6.0 million in the Uncertainty Reserve with the Budget Stabilization Reserve (BSR) to streamline reserve administration, closing the Uncertainty Reserve; and 3. Authorize the City Manager or their designee to transmit $10.0 million from the City’s PARS Pension Trust to CalPERS as an Additional Discretionary Payment (ADP) EXECUTIVE SUMMARY This report provides the financial status of major City funds as of December 31, 2025, and presents strategic actions to manage immediate revenue fluctuations while addressing long- term structural liabilities. Overall, the General Fund is tracking below adopted revenues and within expenditure levels. Significant revenue realignments are necessary to reflect a $9.0 million decline in sales tax and $1.3 million downward revision of property tax. Consistent with data reviewed by the Finance Committee in November 20252. Total General Fund revenue estimates are recommended for reduction by $10.3 million to align with updated county and market forecasts ($6.3 million ongoing, and $4 million one-time). While revenues for charges for services, permits & license, transient occupancy tax and document transfer tax revenue receipts through Q2 are stronger than prior year trends, these sources are less predictable and conservatively these FY 2026 budget estimates are not revised upwards at this time. This hopefully provides revenue opportunities in FY 2027 budget development and staff will closely monitor Q3 and Q4. Item 8 Item 8 Staff Report        Item 8: Staff Report Pg. 1  Packet Pg. 60 of 155  To streamline reserve administration and prepare for a General Fund projected $14.9 million structural deficit in FY 20271, staff and the Finance Committee recommends consolidating the Uncertainty Reserve ($6.0 million balance) with the Budget Stabilization Reserve via a technical adjustment. Combined, the BSR balance is projected to end FY 2026 at $54.7 million (17.8%), which is $2.1 million below the Council’s 18.5% target ($56.8 million). This conservatively assumes the consolidation of the reserves offset by the $10.3 million reduction in estimated tax revenues. If the reserve is offset by the ongoing $6.3 million reduction in estimated tax revenues, excluding the contingent one-time sales tax reduction (of $4 million), then the projected BSR would be $58.7 million or 19.1%. There is a lower probability of using $2.0 million BSR previously identified in LRFF for FY 2027 budget balancing with the current projection falling below target levels. 2, this proactive step implements the City Retiree Benefit Funding Policy (Policy) and is integral to the FY 2027 budget balancing strategy. BACKGROUND 3. These reports provide the technical baseline for the City’s current operations 1 City Council, January 13, 2026; Report #2511-5473, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=84151&dbid=0&repo=PaloAlto&searchid=87b8885 8-9fbd-4c06-82ac-9564f9076e1b 2 Finance Committee, November 18, 2025; #2511-5392, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83886&dbid=0&repo=PaloAlto&searchid=643b9fb0 -0e06-4d6d-9fee-6c01ce0f9094 3 City Council, January 20, 2026; #2512-5601: FY 2027-FY 2036 Long Range Financial Forecast, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=85271&dbid=0&repo=PaloAlto&searchid=a0926757 -5af0-466d-b59c-ae4de17e166d Item 8 Item 8 Staff Report        Item 8: Staff Report Pg. 2  Packet Pg. 61 of 155  and serve as the "starting point" for developing a structurally balanced budget for the upcoming fiscal years7. 8. 9. ANALYSIS 7 City Council Staff Report, January 13, 2025; #2412-3846, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83197&dbid=0&repo=PaloAlto&searchid=d5f2eb36 -85a1-47b6-91e4-e6ebf0093346&cr=1 8 Finance Committee, November 18, 2025; #2511- 5392https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83886&dbid=0&repo=PaloAlto&searchid=5f89 f3e9-39ff-4f54-b84c-1bdb84a084ff 9 City Council, January 20, 2026; Report #2510-5352, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=85264&dbid=0&repo=PaloAlto&searchid=51ce8927 -a6eb-4f27-966a-aecc716263c4 Item 8 Item 8 Staff Report        Item 8: Staff Report Pg. 3  Packet Pg. 62 of 155  I. General Fund Mid-Year Budget Adjustments The Fiscal Year 2026 General Fund Mid-Year Budget Review aligns the City’s budget with updated financial information while preserving the long-term stability established in the January 2026 Long-Range Financial Forecast (LRFF). While General Fund expenditures are tracking within adopted levels, significant adjustments are required on the revenue side to account for a projected $10.3 million reduction in sales tax ($9.0 million reduction) and property tax ($1.3 million reduction). This sales tax realignment results from State (CDTFA) regulation changes impacting the leasing and auto sectors and updated property tax projections. The conservative $9.0 million reduction in sales tax reflects both an estimated ongoing loss of $5 million in annual receipts as well as a contingent one-time loss estimated at $4 million for prior year adjustments. Depending upon CDTFA determination, the prior year adjustment could range between $0 and $4 million. Consolidating the General Fund reserves is a technical adjustment yielding a projected combined BSR balance of $54.7 million or 17.8%, which excludes the full revenue reduction $10.3 million in FY 2026. If the $4 million prior year sales tax adjustment does not occur, then the revenue reduction may be $6.3 million in FY 2026, resulting in projected BSR of $58.7 million or 19.1%. The recommended adjustments for the General Fund include a combination of additional funding for operational needs and technical alignments to reflect actual fiscal activity. Additional funding is proposed for the Public Works Department (PWD) to address critical equipment needs for the Urban Forestry section. Realignment of the grant award to the Chamber of Commerce as the fiscal sponsor of the former 3rd Thursday event series to the Palo Alto Recreation Foundation which is now coordinating an event series on California Ave. Technical adjustments include the prior revenue adjustments mentioned for major taxes and the consolidation of the Uncertainty Reserve with the BSR. Additionally, the Utilities Department (UTL) requires a true-up of the Electric Equity Transfer, while the Fire Department (FIR) recognizes revenue related to strike team deployments and the annual funding reconciliation with Stanford University. These technical actions also include an expenditure realignment for Fire to offset strike team costs and a bank fee adjustment in the Planning and Development Services Department (PDS) to align with current volume. These items are summarized in the Table 1. Summary of General Fund Adjustments Net $ Impact (Cost)/Benefit Technical Adjustments: Sales Tax Projection Update - Revenue Reduction $(9.0) M Property Tax Projection Update - Revenue Reduction $(1.3) M Uncertainty Reserve Consolidation w/BSR $6.0 M UTL: Electric Equity Transfer (Technical adjustment)$0.2 M Item 8 Item 8 Staff Report        Item 8: Staff Report Pg. 4  Packet Pg. 63 of 155  FIR: Stanford University FY 2025 Reconciliation Revenue $0.1 M PDS: Gas Water Heater Subsidy - Revenue Reduction $(0.1) M Subtotal Technical Adjustments:$(4.1) M Use of Budget Stabilization Reserve $4.1 M* (BSR at 17.8% and $2.1 M below the 18.5% target level) Total Net Impact General Fund Mid-Year Adjustments $0.0 M II. Pension Liability Management As part of implementing the City Retiree Benefit Policy and managing pension liability, staff recommends authorizing a $10.0 million Additional Discretionary Payment (ADP) from the Section 115 Pension Trust to CalPERS. The remaining Section 115 Trust and planned future contributions and earnings are projected to achieve the Policy outcome of reaching 90% funded status within 15 years of the approved Policy. This proactive measure, reviewed and recommended by the Finance Committee on November 18, 2025, aligns with the Policy and is integral to the multi-year financial plan. The Section 115 Pension Trust was established to provide the City with a dedicated vehicle to manage pension volatility and reduce the Unfunded Accrued Liability (UAL). By transferring these funds to CalPERS as an ADP, the City effectively reduces the principal balance of its pension debt, leading to long-term interest savings and lower annual required contributions in future years. This action is particularly critical given the projected $14.9 million structural deficit beginning in FY 2027, as it helps flatten the trajectory of rising benefit costs. III. Enterprise and Other Fund Adjustments Beyond the General Fund, the Mid-Year Budget Review includes a series of technical and operational adjustments across the City’s Enterprise, Internal Service, Special Revenue, and Capital funds. These actions are required to align appropriations with updated revenue sources, ensure compliance with grant timelines, and accurately reflect Council-directed changes to capital projects. A summary are included in Table 2. Within the Enterprise Funds, the most significant financial adjustment occurs in the Fund 526 Wastewater Treatment Fund, where staff recommends recognizing $17.0 million in revenue from the City of Mountain View. This revenue reflects Mountain View’s proportional share of the Advanced Water Purification System (AWPS) capital project, based on a funding agreement executed following the adoption of the FY 2026 budget. Additionally, this fund requires an increase in operating appropriations to address higher-than-anticipated chemical costs for treatment and laboratory operations, driven by rising vendor prices. In the Fund 530 Airport Fund, a minor adjustment is proposed to resource the Unleaded Fuel Transition Plan, providing necessary consultant services to monitor aircraft lead emissions and track the transition to unleaded fuel in alignment with City Council priorities. Item 8 Item 8 Staff Report        Item 8: Staff Report Pg. 5  Packet Pg. 64 of 155  Internal Service Funds require adjustments to address rising fixed costs and technical carry- forward corrections. The Fund 689 General Liabilities Insurance Fund requires a $0.9 million increase in appropriation to cover a significant 30 percent rise in excess liability insurance premiums, a trend consistent with the broader municipal insurance market. In the Fund 682 Information Technology Fund, staff recommends a technical re-appropriation of $230,000 to complete public safety radio infrastructure upgrades. These funds were not correctly carried forward from the previous fiscal year, and this action ensures the department has the authority to satisfy active purchase orders for critical public safety communication equipment. Additionally, the Fund 687 General Benefits Fund includes a technical true-up to align PARS supplemental pension contributions with actual departmental allocations, resulting in a $83,000 reduction to the fund balance. Table 2: Enterprise and Other Fund Mid-Year Adjustments Fund Name Net $ Impact (Cost)/Benefit Enterprise Funds: Fund 513 Electric Supply Fund (Equity Transfer)$(157) K Fund 523 Electric Fund (Cap and Invest Transfer to CIP)$(258) K Fund 526 Wastewater Treatment Fund (AWPS Revenue & Chemical Costs)$16,843 K Fund 530 Airport Fund (Unleaded Fuel Transition Plan)$(20) K Internal Service Funds: Fund 681 Vehicle Replacement & Maintenance Fund (Bucket Truck Rental)$(72) K Fund 682 Information Technology Fund (Radio Infrastructure)$(230) K Fund 687 General Benefits Fund (115 Trust Transfer/PARS True-Up)$(83) K Fund 689 General Liabilities Insurance Fund (Excess Liability Costs)$(900) K Special Revenue & Capital Funds: Fund 231 Gas Tax Fund (Revenue/Transfer True-Up)$10 K Fund 232 Community Development Block Grant (Return to Fund Balance)$63 K Fund 233 Housing In Lieu / Residential (Housing Program)$(114) K Item 8 Item 8 Staff Report        Item 8: Staff Report Pg. 6  Packet Pg. 65 of 155  Fund 236 University Ave Parking Fund (Parking Services)$0 K Fund 248 Law Enforcement Services (ALPR Grant Cleanup)$(36) K Fund 253 Local Housing Allocation (Grant Re-appropriation)$(244) K Fund 471 General Fund Capital Improvement Fund (Project Savings & Transfers)$200 K Total Net Impact Enterprise and Other Funds $15,002 K IV. Future Outlook and Governmental Efficiency The FY 2026 Mid-Year Budget Review balances the General Fund, closing the projected revenue gap through the limited use of the reserves and technical realignments. During FY 2026, budget reductions were made by Council on September 8, 202513 to improve the structural deficit by reducing FY 2026 budget spending by approximately $6 million with $3.4 million on-going for 3 years (reduce $2.4 million General Fund and $1 million CIP) and $2.8 million one-time (reduce $0.6 million General Fund and $2.2 million CIP). This fiscal discipline and more solutions are required to balance the additional forecasted FY 2027 structural deficit of $14.9 million, which continues through FY 2032. Increased government efficiency will be a greater focus in FY 2027 budget development, transparency and management in alignment with the 2026 City Council priority. Staff are working to identify, develop, and implement governmental efficiencies including but not limited to: streamlining operations, reducing professional service costs and improving contract management, increasing revenues, and improving facility utilization. Priority initiatives will be reported in the Council Priorities and Objective updates, City Manager budget transmittal, and budget presentations. Staff will return to the Finance Committee and City Council in May 2026 with a balanced Proposed Budget with solutions ensuring that Palo Alto maintains its fiscal health while delivering high-quality services to the community. FISCAL/RESOURCE IMPACT Approval of the attached transactions is required to amend the FY 2026 budget appropriation. With the approval of these amendments, the projected ending balance of the General Fund Budget Stabilization Reserve (BSR) is $54.7M, or 17.8% of expenditures. While this is within the 15% to 20% policy range, it is $2.1 million below the City Council’s 18.5% target of $56.8M. Notably, if the $4M one-time sales tax adjustment does not occur, the ending BSR balance is projected to reach $58.7M, or 19.1%. 13 City Council, September 8, 2025; Agenda Item#18; 2506- 4818,https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83564&dbid=0&repo=PaloAlto&searchid=0cb 9ea95-968d-4d59-8d45-249d0c4401e3 Item 8 Item 8 Staff Report        Item 8: Staff Report Pg. 7  Packet Pg. 66 of 155  The projected changes to the fund balance for all other funds including Capital Funds, Enterprise Funds, Internal Services Funds, and Special Revenue Funds are outlined in Attachment A and accompanying exhibits and impacts to fund balances in these fund types are summarized in the table below. Table 3: Summary of Impacts to Fund Balances (Non-General Fund) Fund Type / Fund Name Net Impact to Fund Balance Enterprise Funds Fund 513 Electric Supply Fund $(0.16) M Fund 523 Electric Fund $(0.26) M Fund 526 Wastewater Treatment Fund $16.84 M Fund 530 Airport Fund $(0.02) M Enterprise Funds Subtotal $16.40 M Internal Service Funds Fund 681 Vehicle Replacement & Maintenance Fund $(0.07) M Fund 682 Information Technology Fund $(0.23) M Fund 687 General Benefits Fund $(0.83) M Fund 689 General Liabilities Insurance Fund $(0.90) M Internal Service Funds Subtotal $(1.20) M Special Revenue Funds Fund 231 Gas Tax Fund $(0.01) M Fund 232 Community Development Block Grant Fund $0.06 M Fund 233 Housing In Lieu / Residential $(0.11) M Fund 236 University Ave Parking Fund $(0.00) M Fund 248 Law Enforcement Services Fund $(0.04) M Fund 253 Local Housing Allocation Fund $(0.24) M Special Revenue Funds Subtotal $(0.34) M Capital Funds Fund 471 Capital Improvement Fund $0.20 M Capital Funds Subtotal $0.20 M Total Net Impact to All Other Funds $14.98 M STAKEHOLDER ENGAGEMENT Item 8 Item 8 Staff Report        Item 8: Staff Report Pg. 8  Packet Pg. 67 of 155  on the Long Range Financial Forecast. During those sessions, staff provided detailed updates on tax revenue trends and the long-term forecast, allowing for a collaborative review of the challenges we face and the maneuvers proposed to keep the City’s finances in balance. ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 8 Item 8 Staff Report        Item 8: Staff Report Pg. 9  Packet Pg. 68 of 155  Revenues Department FTE Adjustment Adjustment GENERAL FUND (102) Non-Departmental Technical Adjust: Projected Sales Tax Revenue Update This action reduces General Fund revenue by $9 million to align with updated sales tax forecast for $5 million ongoing reduction and $4 million contingent one-time prior year adjustment. Primarily due to leasing and auto sales sector. - (9,000,000)$ -$ Non-Departmental Technical Adjust: Projected Property Tax Revenue Update This action reduces General Fund revenue to align with updated county and market forecasts for property ($1.3 million reduction) taxes. Property tax growth is expected to be lower than the original 6.1% projection, and sales tax estimates have been adjusted down based on recent quarterly reports. - (1,300,000)$ -$ Non-Departmental Technical Adjust: Eliminate Uncertainty Reserve This action eliminates $6.0 million from the Uncertainty Reserve and returns these funds to the Budget Stabilization Reserve (BSR). This serves as a strategic bridge to mitigate projected revenue declines anticipated in Fiscal Years 2026 and 2027. - -$ (6,000,000)$ Non-Departmental Technical Adjust: California Ave. Event Series (formerly Third Thursday Series) This action formalizes the grant award of $40,000 in FY 2026 to the Palo Alto Recreation Foundation, previously awarded to the Chamber of Commerce as the fiscal sponsor of the former Third Thursday event series. As previously announced, the grant previously awarded through the Non-Profit Phase I grant process, is being evaluated for rebranding to better support the future vision of California Avenue activations with PARF. - -$ -$ Utilities Technical Adjust: FY 2025 Year-End Cleanup for the Electric Equity Transfer This action adjusts the electric transfer to the General Fund following the release of the FY 2025 ACFR. This update accounts for changes to PG&E’s return on equity rates effective January 1, 2026, ensuring accurate financial alignment. - 157,000$ -$ Fire Technical Adjust: Revenue from Stanford/Fire Response Services Agreement This action recognizes $109,665 in the estimate for Charges for Services revenue from the FY 2025 reconciliation process with Stanford University, which showed a 1.1% variance above the adopted budget. These funds have been billed per the terms of the agreement. - 109,665$ -$ Fire Technical Adjust: Salaries and Overtime Adjustment This net-neutral action reallocates $1.25 million in projected salary savings to the overtime budget. The department carried ten vacancies during the first half of the fiscal year, necessitating overtime to maintain minimum staffing levels. - -$ -$ Fire Technical Adjust: Revenue from Other Agencies/Overtime for Strike Teams This action recognizes $489,382 in reimbursement revenue for participation in eight strike teams. The request increases overtime and equipment budgets to align with state-reimbursed costs for personnel and essential tools. - 489,382$ 489,382$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2026 BUDGET Expenses ATTACHMENT A, EXHIBIT 1 Item 8 Attachment A - FY2026 Mid- Year Budget Amendments        Item 8: Staff Report Pg. 10  Packet Pg. 69 of 155  Revenues Department FTE Adjustment Adjustment GENERAL FUND (102) CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2026 BUDGET Expenses ATTACHMENT A, EXHIBIT 1 Fire Technical Adjust: Revenue from Other Agencies/Overtime for Fire Station 8 This action recognizes $229,660 in revenue under an agreement to staff Fire Station 8. An offsetting overtime expense is included to account for personnel costs associated with this service contract. - 229,660$ 229,660$ Library Technical Adjust: Grant Revenue/Library Programs This action recognizes $13,195 in grant revenue from the Pacific Library Partnership and the Howard Hughes Medical Institute. Funds support the Vintage Media Lab and participation in the Northern California Digital Library Consortium. - 13,195$ 13,195$ Planning & Dev. Services Technical Adjust: Development Services Bank Card Fees/Permits and Licenses This action increases the budget for bank card fees by $120,000 due to increased credit card usage by applicants. The expense is offset by revenue from plan check and permit fees. 120,000$ 120,000$ Planning & Dev. Services Technical Adjust: Permits and Licenses Revenue/Gas Water Heater Subsidy This action reflects a $50,000 reduction in anticipated revenue from Permits and Licenses to incorporate the gas water heater permit fee subsidy, authorized by Council resolution to support environmental goals. (50,000)$ Fund Balance Adjustment to Fund Balance This action adjusts the fund balance as a result of actions recommended in this report and decreases the Budget Stabilization Reserve (BSR) projected for June 30, 2026 to $54.7 million or 17.8%. **If the $4 million prior year sales tax adjustment does not occur, then the revenue reduction may be $6.3 million in FY 2026, resulting in projected BSR of $58.7 million or 19.1% at FY 2026 year-end. - -$ (4,083,335)$ GENERAL FUND (102) SUBTOTAL - (9,231,098)$ (9,231,098)$ Item 8 Attachment A - FY2026 Mid- Year Budget Amendments        Item 8: Staff Report Pg. 11  Packet Pg. 70 of 155  Attachment B B Attachment B – Page 1 of 7 Preliminary FY 2026 2nd Quarter Financial Status General Fund Overall, the General Fund is tracking below the adopted revenue estimates and within the adopted expenditure levels. Actual FY 2026 total revenues and expenditures increased by 9.0% and 2.9% respectively compared to the same period in FY 2025. General Fund revenues increased overall compared to the prior year, with growth observed in property tax, charges for services, transient occupancy tax, utility user tax, permits and licenses, documentary transfer tax, and business tax. Sales tax remained relatively flat. The adopted FY 2026 revenue budget expected even higher revenue trends, and so a budget amendment is recommended to adjust the budget estimates to a lower level. As previously discussed with Finance Committee and Council in the long range financial forecast (LRFF), this FY 2026 Mid-Year recommend adjustments that are measured and aligned with the City’s overall financial outlook. Revenues The FY 2026 Adjusted revenue budget, prior to changes recommended in the Mid-Year Review, totals $270.3 million (excluding Operating Transfers‐in), of which $107.0 million or 39.6% of the budget, has been collected as of the end of the 2nd quarter compared to 37.8% collected in prior year. Revenue receipt is seasonal with non-linear collection. Business Tax is included in totals and used for specific programs related to public safety, affordable housing and homeless services, and transportation and grade separation projects, per Council direction. A Reserve for Business Tax Revenue is used to ensure that business tax revenue is accounted separately from the Budget Stabilization Reserve (BSR) to be used in accordance with approved programs in the previously mentioned areas. Adjustments to align revenue estimates based on current experience through the first half of FY 2026 and forecasted through year-end are recommended in this Mid‐Year Budget Review, including adjustments to reduce revenues by $10.3 million for Sales Tax ($9.0 million decrease) and Property Tax ($1.3 million decrease). Table 1 below outlines General Fund revenue performance, as of the end of the 2nd quarter, December 31, 2025, compared to the adjusted budget. The adjusted budget does not assume staff’s recommended adjustments presented in this Mid‐Year report as these changes have not been approved by the City Council. Item 8 Attachment B - FY 2026 Second Quarter Financial Status Report        Item 8: Staff Report Pg. 12  Packet Pg. 71 of 155  Attachment B B Attachment B – Page 2 of 7 Table 1 Property Tax The FY 2026 Budget is $73.6 million, a $4.2 million or 6.1% increase from the FY 2025 actual receipts of $69.4 million. Property Tax revenues are collected and allocated by the County and are received by the City in two periods during the fiscal year, generally beginning in late November and again in the Spring. The County’s November forecast is consistent with assumptions included in the Long Range Financial Forecast, which was developed using County data available as of September. At this stage, the County has published the tax roll and Staff recommends aligning the City budget revenues accordingly thereby reducing FY 2026 Property Tax estimates by $1.3 million, from $73.6 million to $72.3 million. With this adjustment, Property Tax revenues are still projected to increase year over year, though at a more moderate level than the adopted budget. Educational Revenue Augmentation Fund (ERAF) - The City has set aside $7.1 million in reserves to address ongoing uncertainty related to the calculation of ERAF distributions. This includes pending litigation between Marin County and the California State Controller regarding the methodology used to calculate excess ERAF, which could have broader implications for counties statewide. A court hearing on this matter is expected to continue in March 2026. Staff will continue to monitor developments and update assumptions as additional information becomes available. Item 8 Attachment B - FY 2026 Second Quarter Financial Status Report        Item 8: Staff Report Pg. 13  Packet Pg. 72 of 155  Attachment B B Attachment B – Page 3 of 7 Sales Tax The FY 2026 Adopted Budget is $36.4 million, an increase of 3.29% compared to the actual Sales Tax receipts of $35.2 million in FY 2025. As of the 2nd quarter, actual receipts are 30.7% compared to 28.2% of budget; however, this Midyear report includes a decrease of $9.0 million in Sales Tax revenue, consistent with the assumptions previously presented to the Finance Committee on November 18, 20251, and incorporated into the FY 2027-36 Long Range Financial Forecast. The adjustment reflects updated sales tax projections indicating a decline of approximately $9.0 million in FY 2026, or more than 20%, driven by potential one-time adjustments and lower ongoing allocations to the City. Beginning in FY 2027, sales tax revenue is projected to remain approximately $5.0 million lower annually, or over 10%, compared to prior estimates. These changes are primarily due to revised regulations used by the California Department of Tax and Fee Administration (CDTFA) in apportioning sales tax revenue from the leasing and new auto sectors. Sales Tax performance continues to evolve based on consumer activity and state allocation methodology, and staff continues to coordinate with the State and business community to better understand these impacts. Transient Occupancy Tax (TOT) The FY 2026 Budget is $29.1 million in TOT revenue, consistent with FY 2025 actual receipts of $29.0 million and above pre‐pandemic collections of $25.7 million in FY 2019. TOT performance is primarily driven by hotel operating metrics, including average daily room rates and occupancy. December TOT revenue is not included in the Mid-Year report due to timing of collections. From July to November, the average occupancy rate is 85.5% (compared to 71.4% the prior fiscal year), and the average room rate is $274 (down from $290 the prior fiscal year). Year-to-date collections represent approximately 43% of the annual budget compared to prior year of 41%, given current trends TOT is projected to meet or exceed current FY 2026 budget estimate. This is an improvement from the current long-range financial forecast estimate. Utility User Tax (UUT) The FY 2026 Budget is $21.4 million, a $1.0 million or 5.11% increase compared to $20.4 million in FY 2025 actual receipts. UUT is calculated as a percentage of utility charges billed to customers for services and is primarily driven by customer usage and utility rates. As of the 2nd quarter, actual receipts are $10.0 million, which is $0.6 million or 6.2% higher than the same period of the prior year at $9.4 million. This increase reflects FY 2026 adopted utility rate increases, normal fluctuation in utility consumption and billing cycles. Based on current trends, staff does not recommend adjustments to the adopted budget and will continue to monitor collections throughout the remainder of the fiscal year. Documentary Transfer Tax (DTT) 1 Finance Committee, November 18, 2025, Item #2 https://portal.laserfiche.com/Portal/DocView.aspx?id=237463&repo=r-704298fc Item 8 Attachment B - FY 2026 Second Quarter Financial Status Report        Item 8: Staff Report Pg. 14  Packet Pg. 73 of 155  Attachment B B Attachment B – Page 4 of 7 The FY 2026 Budget totals $8.5 million, representing a $0.1 million, or 1.8%, increase over FY 2025 actual receipts of $8.4 million. Through the second quarter, cash receipts total $5.0 million, which is 58.8% of the FY 2026 adjusted budget and $1.0 millio n, or 24.2%, higher than receipts through the second quarter of FY 2025. DTT revenues are highly variable, as collections depend on both the number and value of property transactions. Staff continues to monitor these receipts closely due to significant fluctuations that can occur from changing market conditions. Based on receipts reported to date, staff recommends maintaining DTT revenue at the FY 2026 Adopted Budget level and continue to monitor collections throughout the remainder of the fiscal year. Return on Investments The FY 2026 Budget is $3.7 million, a $0.2 million or 0.56% increase from FY 2025 actual receipts which were also $3.7 million. As of the 2nd quarter, cash receipts total $1.98 million, or 53% of the FY 2026 budget. Beginning in August 2025, the City transitioned from managing investments in- house to Chandler Asset Management to provide active investment management2, cash flow forecasting, and investment advisory services. While this transition is expected to increase the City’s return on investments over time, the benefits will occur gradually as existing holdings mature, and the portfolio is repositioned to the new strategy. Investment revenues in the current year are tracking in line with the adopted budget, and no material change is expected in FY 2026. Higher investment earnings are anticipated beginning in FY 2027 and will be incorporated into the FY 2027 Proposed Budget. Staff will continue to monitor investment performance through quarterly reporting. Business Tax The FY 2026 Adopted Budget includes $6.7 million for Business Tax revenue. As of the 2nd quarter, collections total $1.8 million or 27.1% of the FY2026 budget. This is consistent with historical collection patterns and reflects the timing of quarterly Business Tax payments, which are received in arrears. Early fiscal year receipts are mostly attributable to prior-year activity, as taxes due June 30 are payable beginning July 1 with a 30-day grace period through July 30. Based on payments received to date and expected upcoming filings, staff anticipates revenues will align with adopted budget levels and will continue to monitor collection trends. Measure K (Business Tax) was approved by voters in November 2022 to provide additional funding for critical public safety needs; transportation safety improvements and grade separations; and affordable housing and unhoused services. The first Business Tax payment was due on January 1, 2024, for the calendar year of 2023, with quarterly payments thereafter. Measure K included a multi-year phase-in of the tax rate, with incremental increases applied annually. FY 2026 represents the full fiscal year in which the Business Tax is fully phased in at the voter-approved rate of $0.075 per square foot. 2 Finance Committee, October 21, 2025, Item #2: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16276 Item 8 Attachment B - FY 2026 Second Quarter Financial Status Report        Item 8: Staff Report Pg. 15  Packet Pg. 74 of 155  Attachment B B Attachment B – Page 5 of 7 Charges for Services The FY 2026 Budget assumes $44.2 million in Charges for Services, an increase of $5.0 million, or 12.8%, compared to FY 2025 actual receipts of $39.2 million. Current year-to-date receipt is 42% compared to 39% in the prior year. The primary drivers for higher year-over-year increase include zoning and plan check ($1.8 million), paramedic service fee ($1.4 million) reflecting new first responder fee and increased number of transports, and recreation programming and drop-in admissions ($0.6 million). Based on current receipt trends and due to unpredictable nature of some revenues (i.e. permit and medical transport), revenues are projected to meet the FY 2026 budget estimate. Permit & License The FY 2026 Budget assumes an estimate of $11.1 million in permit and license revenue, which aligns with the $10.6 million FY 2025 actual receipts. Permits and Licenses revenue totaled $5.65 million in Q2 FY 2026, an increase of $1.11 million (24%) compared to Q2 FY 2025. The increase is driven almost entirely by Building New Construction Permit revenue, which rose by $1.13 million due to the timing and scale of development activity. Several smaller permit categories declined year over year, partially offsetting gains. Overall, growth reflects concentrated new construction activity. Given current permits and license receipts and unpredictable nature of such revenues, it is projected to meet current FY 2026 budget estimate. Expenditures Overall General Fund expenditures are currently expected to remain within the FY 2026 Adjusted budget levels of $287.5 million (excluding transfers to infrastructure or other funds). General Fund expenditures (excluding operating transfers) for second quarter are 2.9% higher than the prior fiscal year and are tracking at 45.9% of the Adjusted Budget (excluding encumbrances). This trend exceeds prior fiscal year expenditure levels which were at 44.8% at the end of the 2nd quarter in FY 2025. This is still below the 50% par level that is expected halfway through the fiscal year, and staff will continue to monitor expense trends and inform Council regarding anticipated savings or overages compared to budgeted levels. Table 2 Salaries and Benefits Expenditures FY 2026 FY 2025 Inc/(Dec)% change FY 2026 %FY 2025 % Police 30,155$ 30,414$ (259)$ -0.9%59,899$ 50.3%56,388$ 53.9% Fire 30,000 28,688 1,312 4.6%59,504 50.4%55,441 51.7% Community Services 21,491 20,325 1,166 5.7%44,815 48.0%42,553 47.8% Public Works 12,818 11,541 1,277 11.1%28,813 44.5%27,805 41.5% Planning and Development Services 11,582 11,081 501 4.5%29,782 38.9%29,336 37.8% Library 6,613 6,496 117 1.8%13,085 50.5%12,840 50.6% Administrative Services 5,756 5,650 106 1.9%12,039 47.8%12,154 46.5% All Other Departments 13,462 13,973 (511)-3.7%39,541 34.0%49,605 28.2% Total Expenditures 131,877$ 128,168$ 3,709$ 2.9%287,478$ 45.9%286,122$ 44.8% General Fund Expenditures FY 2026 2nd Quarter YTD (000's) 2nd Quarter Actuals Adjusted Budget Item 8 Attachment B - FY 2026 Second Quarter Financial Status Report        Item 8: Staff Report Pg. 16  Packet Pg. 75 of 155  Attachment B B Attachment B – Page 6 of 7 As a service driven organization, the largest expenditure is salaries and benefits. Preliminary salaries and benefits expenditures through December 2025 are approximately $95.8 million, or 50.7% of the $189.0 million FY 2026 Budget, compared to $99.0 million or 54.4% in the same period in the prior fiscal year. As of February 2026, the citywide vacancy was 126 positions or 11.5% vacancy rate. See Table 3 below for more detailed information regarding citywide vacancies by department and bargaining unit as of the beginning of February. Given the fiscal condition of the City, all recruitments are subject to review and approval by the Hiring Review Committee and further consideration of governmental efficiencies. Table 3 Citywide Vacancies by Department Public Safety Overtime Table 4 Department General Fund Other Funds Grand Total Administrative Services Department 6.00 1.50 7.50 City Attorney's Office 1.00 1.00 City Clerk's Office 1.00 1.00 Community Services Department 5.75 5.75 Fire Department 9.00 9.00 Human Resources Department 0.00 1.00 1.00 Information Technology Department 2.00 2.00 Library Services Department 5.00 5.00 Office of Transportation 3.00 3.00 Planning and Development Services 6.00 1.00 7.00 Police Department 15.00 15.00 Public Works Department 5.00 18.50 23.50 Utilities Department 46.00 46.00 Grand Total 56.75 70.00 126.75 Vacancy %9.4%14.2%11.5% Vacancy % (w/o Public Safety)6.9% Police and Fire Salaries and Overtime Expense FY 2026 2nd Quarter YTD (000's) FY 2026 FY 2025 % change FY 2026 %FY 2025 % Inc (Dec) Police - Salaries 10,536$ 10,562$ -0.2%23,037$ 46%22,548$ 46.8% Police - Overtime 2,225 2,162 2.9%4,574 49%5,903 36.6% Total Police 12,761 12,724 0.3%27,611 46%28,451 44.7% Fire - Salaries 10,947 9,808 11.6%22,924 48%21,628 45.3% Fire - Overtime 2,310 3,010 -23.3%3,080 75%2,721 110.6% Total Fire 13,257 12,818 3.4%26,004 51%24,349 52.6% Total Public Safety Salaries & Overtime 26,018$ 25,542$ 1.9%53,615$ 48.5%52,800$ 48.4% 2nd Quarter YTD Actuals Adjusted Budget Item 8 Attachment B - FY 2026 Second Quarter Financial Status Report        Item 8: Staff Report Pg. 17  Packet Pg. 76 of 155  Attachment B B Attachment B – Page 7 of 7 Police Department overtime is 3% higher than prior fiscal year and represents 49% of the adjusted budget. As of first quarter of FY 2026, the Department had 15 vacancies, or 11% of 139 FTE positions (12 officers and 3 dispatchers). Overtime is used to cover vacancies, training, leave and major incidents, with most costs driven by police officer staffing. For example, in January 2026 only 57 of 84 authorized non-management officers (68%) were available for duty; the remainder were vacant, on long-term leave, in training, or at the academy. Additional information regarding public safety overtime tracking is included in Attachment C. Fire Department overtime is generated to backfill vacancies on shift. Each day, 25 positions are required to keep Fire Engines and Ambulances operational. Any vacancy must be filled to keep the unit in service. Vacancies result from open positions, injuries, employees in training, and approved leave. In the second quarter of FY 2026, 10 new firefighters entered the Fire Academy; overtime is required to cover their shifts until they graduate in February 2026. All Strike Team deployments are paid at overtime and reimbursed by the State. There have been six deployments in FY 2026 that are pending reimbursement. Additional information regarding public safety overtime tracking is included in Attachment C. Item 8 Attachment B - FY 2026 Second Quarter Financial Status Report        Item 8: Staff Report Pg. 18  Packet Pg. 77 of 155  Attachment C 2024 2025 2026 Q2 POLICE DEPARTMEN Overtime Expense Adopted Budget (A)$1,028,988 $1,098,939 $1,173,110 Modified Budget (B)1,028,988 1,098,939 1,173,110 Net Overtime Cost - see below 1,160,290 1,868,684 364,829 Variance to Budget (131,303) (769,745) 808,281 Overtime Net Cost Actual Expense $3,467,691 $3,181,061 $2,186,643 Less Reimbursements Other Program Reimbursements 259,747 - 671,270 California OES/FEMA (Strike Teams) - - - Stanford Communications 99,161 109,651 50,746 Utilities Communications Reimbursement 56,429 67,170 30,142 Local Agencies (C)6,574 6,813 5,291 Police Service Fees 117,433 138,141 48,080 Total Reimbursements 539,345 321,775 805,530 Less Department Vacancies (A)1,768,057 990,602 1,016,284 Net Overtime Cost $1,160,290 $1,868,684 $364,829 Department Vacancies (number of days)5,419 2,733 2,454 Workers' Compensation Cases 21 13 6 Department Disabilities (number of days)381 664 216 FIRE DEPARTMEN Overtime Expense Adopted Budget (D)$2,146,234 $2,721,066 $3,079,691 Modified Budget (E)2,146,234 5,216,682 4,939,387 Net Overtime Cost - see below 1,734,841 3,474,470 1,842,167 Variance to Budget 411,393 1,742,212 3,097,220 Overtime Net Cost Actual Expense $4,099,233 $5,288,738 $2,278,922 Less Reimbursements California OES/FEMA (Strike Teams) - 957,482 109,064 Fire Station 8 Fire Services 272,267 229,660 Total Reimbursements - 1,229,749 338,724 Less Department Vacancies (D)2,364,392 584,519 98,031 Net Overtime Cost $1,734,841 $3,474,470 $1,842,167 Department Vacancies (number of days)5,297 3,401 788 Workers' Compensation Cases 8 16 5 Department Disabilities (number of days)274 395 121 NOTES: (A)The FY 2026 Police Department budget did not include any new positions. (B)Police Department adopted budget has not been adjusted in FY 2026. (C)Includes Animal Control Services contract with Los Altos and Los Altos Hills. (D)The FY 2026 Fire Department budget was increased by 3.0 Fire Captains and 7.0 Single Role EMS Division positions. (E)As part of the FY 2026 Mid-Year Review, staff is recommending actions that will result in a Fire Department overtime budget of $4.9 million. Public Safety Department Overtime Analysis for Fiscal Years 2024 through 2026 Item 8 Attachment C - Public Safety Overtime Analysis Q2 2026        Item 8: Staff Report Pg. 19  Packet Pg. 78 of 155  City Council Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: City Manager Meeting Date: February 23, 2026 Report #:2602-5887 TITLE Approval of City Council Values (as Recommended by Policy & Services Committee), 2026 Objectives, Ad Hoc Purpose Statements, and Committee Workplans RECOMMENDATION Staff recommends that the City Council approve: (a) Revised Council Values, as recommended by the Policy & Services Committee, (b) 2026 City Council Group 1 Objectives, and (c) Ad Hoc Purpose Statements and Committee Workplans EXECUTIVE SUMMARY At its January 24, 2026 annual retreat, the City Council adopted a refined framework for establishing priorities and objectives that emphasizes clarity, focus, and implementation. Under this approach, City Council Values represent enduring policy commitments; Priorities identify a limited number of areas requiring heightened focus; and Objectives define specific, measurable actions to advance both values and priorities. This structure is intended to strengthen accountability, align resources with Council direction, and ensure meaningful progress within the year. This report presents: (a) recommended revised City Council Values as recommended by the Policy & Services Committee; (b) the proposed 2026 Group 1 Objectives aligned with the adopted Priorities; and (c) Ad Hoc Purpose Statements and Committee Workplans for City Council consideration and adoption. Objectives are organized into three categories: Group 1 (mission-critical and requiring City Council engagement), Group 2 (value-adding initiatives with flexible timing), and Staff Not Recommended. While all Group 1 and Group 2 objectives will be tracked for progress, quarterly reporting will focus on Group 1 objectives to align with City Council’s highest priorities. The Policy & Services Committee reviewed and consolidated proposed revisions to the City Council Values and unanimously recommends adoption of an updated set of values. Item 9 Item 9 Staff Report        Item 9: Staff Report Pg. 1  Packet Pg. 79 of 155  It should be noted that the objectives and timeframes described here were developed prior to the identification of potential near-term changes being considered at railroad grade crossings. The effort required to address this issue may impact timelines of other priority objectives. BACKGROUND 1. City Council distinguished between enduring Council Values, time-bound priorities, and actionable objectives, noting that values should reflect long-standing policy commitments, while priorities should represent a limited number of areas requiring heightened Council attention in the near term. Several policy areas previously treated as annual priorities were recognized as ongoing in nature and more appropriately reflected as values, allowing annual priorities to be more targeted and strategic. This refined approach remains consistent with the Council’s Policies and Protocols Handbook. Achieve Near-Term Priority Housing Milestones Cubberley Acquisition and Renovation Funding Enhance Business Vibrancy Government Efficiency The Palo Alto City Council has universally shared values that help guide our decision and the work we do. These values include: 1. We will make decisions that balance revenues and expenses, now and in the future. 2. We will make decisions that are environmentally sustainable, now and in the future. 3. We will integrate equity into our decisions, considering how decisions affect people differently based on their identity or circumstances. 4. We will make decisions that create a healthy, safe and welcoming community for all. 5. We will safeguard public trust through transparent practices and open communication. 1 January 24, 2026 City Council Retreat: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=18520 Item 9 Item 9 Staff Report        Item 9: Staff Report Pg. 2  Packet Pg. 80 of 155  6. We embrace innovation. This report outlines the reorganized proposed 2026 Objectives within the adopted Priorities and City Council Values, incorporating City Council feedback and the refined priority framework. It also includes ad hoc purpose statements and committee workplans for City Council consideration and adoption, as well as the recommended City Council Values refined by the Policy & Services Committee for City Council consideration. ANALYSIS City Council Values On February 10, 2026, the Policy & Services Committee discussed the City Council referral to refine the City Council Values and considered proposed revisions submitted by City Councilmembers Burt, Reckdahl, and Mayor Veenker.3 The Committee noted that the proposals were mostly aligned, with differences primarily related to wording, organization and level of specificity. The Committee emphasized readability, clarity, succinctness, and ensuring that the final values incorporated key themes raised in all the suggested drafts, including economic development, fiscal stewardship, equity, belonging, innovation, climate action and adaptation, transparency, and community well-being. Following revisions and consensus on language, the Committee agreed on a consolidated set of seven City Council Values and voted unanimously to recommend that the City Council adopt the updated values: 1.Vibrant Community. Cultivate a dynamic community by fostering retail vibrancy, economic development, engaging public spaces, and a high quality of life for all. 2.Fiscal Responsibility. Exercise disciplined financial management to ensure city revenues and expenses remain balanced and sustainable, and are fiscally strategic and responsible. 3.Accountable Governance. Earn public trust through transparent leadership, inclusive engagement, and open communication. 4.Strategic Innovation. As the birthplace of Silicon Valley, embrace innovation in the public and private sectors to optimize efficiency and outcomes. 5.Equity and Shared Prosperity. Center equity in every decision, and advance housing, workforce, and social policies that promote inclusion, socioeconomic diversity, and opportunity. 6.Climate Leadership and Environmental Stewardship. Lead with urgency on climate action and adaptation, sustainability, and environmental protection for current and future generations. 7.Community Well-Being & Belonging. Foster a safe, healthy, and welcoming community where everyone belongs and can thrive physically, mentally, and socially. 3 February 10, 2026 Policy & Services Meeting: https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=10899&meetingTemplateType=2&com piledMeetingDocumentId=18478 Item 9 Item 9 Staff Report        Item 9: Staff Report Pg. 3  Packet Pg. 81 of 155  Proposed 2026 Objectives Group 1 objectives are categorized as mission-critical, and must be achieved to meet legal, operational, safety, or strategic requirements. Objectives in this group will require City Council engagement. These are captured in Attachment A. Group 2 objectives are value-adding initiatives that are important, improve quality of life or advance longer-term goals, but flexible in timing and dependent on capacity or completion of Group 1 priorities. These do not create immediate risk if delayed. Many of the objectives captured in this category are already underway and will not require Council action to be completed. These are captured in Attachment B. Staff Not Recommended objectives include projects that are not recommended to be part of the 2026 list of objectives, for a variety of reasons including feasibility challenges, or work is already underway as part of a greater effort, such as the draft proposed Business Retention, Expansion, and Attraction (BRE/A) strategy in Attachment G. A narrative for each objective not being recommended is summarized in Attachment C. Priority Group 1 Group 2 Staff Not Recommended Total 42 24 14 Item 9 Item 9 Staff Report        Item 9: Staff Report Pg. 4  Packet Pg. 82 of 155  Ad Hoc Purpose Statements and Committee Workplans Rail Committee (Brown Act) Rail Safety/Youth Mental Health Ad Hoc Cubberley Ad Hoc Economic Development Ad Hoc (Brown Act) Climate Action & Sustainability Ad Hoc (Brown Act) Oversized Vehicles Impacts & Services Ad Hoc Downtown Housing Plan and SB79 Ad Hoc Valley Water Shoreline Funding Allocation Ad Hoc FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT Item 9 Item 9 Staff Report        Item 9: Staff Report Pg. 5  Packet Pg. 83 of 155  The City uses the International Association for Public Participation (IAP2) as a guide to structure community participation and align that participation with the type of input or feedback needed based on the project/issue. Workplan engagement typically fit within these general focus areas: Inform: Fact sheets, webpages, blog posts, information sessions, open houses, frequently asked questions, community briefings, and website feedback forms Consult & Involve: Surveys, focus groups, questions and answer sessions, office hours, public meetings like community meetings, town halls, panel discussions, workshops, and polling Collaborate & Empower: Working groups, ad hoc groups, feedback groups, boards, commissions and committee meetings, community advisory panels, advisory groups, digital engagement platforms, and voter ballot measures. ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 9 Item 9 Staff Report        Item 9: Staff Report Pg. 6  Packet Pg. 84 of 155  ATTACHMENT A 1 2 3 4 5 6 7 8 9 10 11 B C D E F G H I J K L M 2026 DRAFT CITY COUNCIL PRIORITIES AND OBJECTIVES AN P H M CA & R F EB V GE $'s Achieve Near‐Term Priority Housing Milestones (ANTPHM)‐ 15 Total x Adopt an updated Accessory Dwelling Unit (ADU) ordinance to comply with State law  and implement additional policy alternatives, including increased allowable square  footage and condominium conversions, consistent with City Council direction  (05.15.23). Milestone: Planning and Transportation Commission recommendation  and City Council consideration of draft ordinance.x 1 x Evaluate opportunities that make multi‐family housing an attractive alternative to  commercial office development, consistent with Housing Element Program 3.9A.  Milestones: Feedback from Policy & Services Committee in Q1 and advance  ordinance to Council in Q2.x 1 x Partner with Santa Clara County Housing Authority to achieve construction timeline  milestones for the Palo Alto Homekey project (which will provide transitional housing  and services for unhoused residents). Milestone: Formal opening of the Palo Alto  Homekey facility at 1237 San Antonio Rd.x 1 x Receive a Prohousing Designation from the California Department of Housing and  Community Development in order to enhance the City's competitive advantage for  qualifying grants. Milestone: Apply to HCD in Q1; receive approval in Q2.  x x Select a preferred alternative for the San Antonio Road Area Plan land use and  transportation alternatives based on community input and City Council direction.  Milestones : Stakeholder input for alternatives (PTC, community, and advisory  bodies') in Q1, Council selection of preferred alternative(s) in Q2, Environmental  Impact Review in Q3, and Council review of policy recommendations in Q4.x 1 x Develop and adopt Objective Development Standards for the South of Forest Area  Coordinated Area Plan (SOFA), and present plan amendment options to replace  subjective standards with objective standards for Planning and Transportation  Commission and City Council consideration, consistent with Housing Element  Program 3.7. Explore alignment opportunities with SB 79 work and Downtown  Housing Plan. Milestones: Planning and Transportation Commission recommendation  and City Council consideration of amended SOFA CAP and/or municipal code  amendments by end of 2026. x 1 x Codify the R1/SB 9 interim ordinance by establishing objective development  standards and increasing the maximum floor area for SB 9 units from 800 to 1,200  square feet, consistent with Housing Element Program 6.3A, and evaluate  implications for R1 and SB 9 projects within the City’s Individual Review Program.  Milestones: Planning and Transportation consideration of draft ordinance in Q3;  Council consideration in Q4.x 1 Priority CC  Va l u e    # OBJECTIVES (42 Total) Sorted by:  Council Priority, Group #, estimated completion date, and finally by additional resource needs.Q1 Q2 Q3 Q4 Gr o u p  # Attachment A - Page 1 of 6 Item 9 Attachment A - City Council 2026 Priorities & Objectives- Group 1        Item 9: Staff Report Pg. 7  Packet Pg. 85 of 155  ATTACHMENT A 1 2 3 B C D E F G H I J K L M 2026 DRAFT CITY COUNCIL PRIORITIES AND OBJECTIVES AN P H M CA & R F EB V GE $'s Priority CC  Va l u e    # OBJECTIVES (42 Total) Sorted by:  Council Priority, Group #, estimated completion date, and finally by additional resource needs.Q1 Q2 Q3 Q4 Gr o u p  # 12 13 14 15 16 17 x Conduct and complete a study of short‐term rentals and adopt housing and  neighborhood preservation regulations that prioritize long‐term occupancy,  consistent with Housing Element Programs 4.2D–E (anticipates ordinance adoption  by July, 2027). Milestones: report to City Council in Q3; prepare alternatives for  Council and Planning and Transportation Commission review in Q4, 2026 or Q1, 2027,  if requested.x 1 x Receive Council direction on optional SB 79 implementation strategies and, as  appropriate, present scenario Downtown Housing Plan scenarios to Council and  initiate environmental review. Milestones: Work with SB 79 and Downtown Housing  Plan City Council Ad‐Hoc Committee on next steps in Q1 and Q2 based on SB 79  implementation approach; advance Downtown Housing Plan based on direction  received from City Council through Q4.x 1 x Adopt zoning incentives and development standards that support innovative housing  typologies, including micro‐units, intergenerational housing, housing for aging adults,  students, and lower‐income households, consistent with Housing Element Program  6.5B. Milestones : Study session with Planning and Transportation Commission in Q1;  recommendations for Architectural Review Board consideration in Q2; Planning and  Transportation Commission recommendation and City Council consideration of draft  ordinance in Q4.x 1 x Update and adopt development impact fees for public safety, government facilities,  housing, transportation, parks, and community services, including completion of  nexus and feasibility studies and establishment of fee waivers for low‐income  inclusionary units. (Housing Element Programs 2.1B; 3.1B & C). Milestone: Present  development scenarios and growth assumptions to Council for feedback by Q2.  Adopt Parks, Library & Community Facility Fee Updates by Q3. Adopt additional fee  updates by Q1 2027.x 1 x Issue Requests for Information or Requests for Proposals (RFI/P) to develop  approximately 218 affordable or workforce housing units on City‐owned surface  parking lots. (Housing Element Program 1.4A). Milestone: Review draft RFI/P with  Policy & Services Committee by Q3 2026 to issue the solicitation process by year end.x 1 x Identify and designate additional Housing Element site capacity to maintain RHNA  compliance and buffer by evaluating new opportunity sites to address anticipated  capacity shortfalls in 2026, including impacts from development on faith‐based sites  and downtown parking lots. Milestones : Select consultant to provide technical  analysis in Q1; Planning and Transportation Commission recommendation and City  Council consideration of replacement Housing Element sites in Q3.x 1 $‐$$ Attachment A - Page 2 of 6 Item 9 Attachment A - City Council 2026 Priorities & Objectives- Group 1        Item 9: Staff Report Pg. 8  Packet Pg. 86 of 155  ATTACHMENT A 1 2 3 B C D E F G H I J K L M 2026 DRAFT CITY COUNCIL PRIORITIES AND OBJECTIVES AN P H M CA & R F EB V GE $'s Priority CC  Va l u e    # OBJECTIVES (42 Total) Sorted by:  Council Priority, Group #, estimated completion date, and finally by additional resource needs.Q1 Q2 Q3 Q4 Gr o u p  # 18 19 20 21 22 23 24 25 26 x Implement Oversized Vehicles (OSV) Phase 1 work, including options for RV buyback  and storage, new recruiting safe parking and enforcement/signage relating to  detached/inoperable vehicles prohibition. Milestones: In coordination with the OSV  Ad hoc, seek Council direction on preferred option(s) on RV buyback and storage in  Q2. Implement signage and enforce detached/inoperable vehicles prohibition in Q2.  Work with OSV Ad Hoc on recruiting new safe parking and bring any potential  projects to Council for consideration in Q3. (related to 2025 Objective 3.3.4). x 1 $$‐ $$$ x Initiate and advance Oversized Vehicles Phase 2 work, including oversized vehicle  permit pilot (e.g., collecting count data, designing permit process & terms, conducting  informal RFI/Q to operate pilot). Milestone : Develop OSV permit pilot, including  enhanced services and bring to Council for consideration. (related to 2025 Objective  3.3.4).x 1 $$‐ $$$ Cubberley Acquisition and Renovation Funding (CA&RF)‐ 2 Total Continue to advance the Cubberley Project focusing on anticipated purchase of 7  acres from PAUSD and community polling for potential placement of a measure on  the November 2026 ballot and other funding source(s). x 1 Continue to explore and develop partnership opportunities with community  nonprofit organizations to advance certain elements of the master concept plan  through a combination of city and private investments.x 1 Enhance Business Vibrancy (EBV)‐ 5 Total x Develop a formal business retention/expansion/attraction program focused on  supporting existing Palo Alto businesses seeking to diversify the local economy,  increase the tax base that pays for essential public services, job creation, support  placemaking and special events, and branding opportunities. Milestone: With the  Economic Development Ad Hoc Committee, review and solidify for Council approval a  Business Retention, Expansion, and Attraction (BRE/A) Strategy with various  implementation actions; an initial draft is attached to this staff report.x 1 x Adopt an ordinance expanding retail opportunities and strengthening retail resiliency,  including refining retail and retail‐like definitions and updating the retail preservation  ordinance. Milestone: PTC review and recommendation in Q2; City Council review  and action in Q3. Continued engagement with stakeholders prior to implementation. X 1 x Implement the California Avenue near‐term signage plan replacing the El Camino Real  (October 2026) and Oregon Expressway (August 2026) signs—by completing their  procurement and installation. x 1 Attachment A - Page 3 of 6 Item 9 Attachment A - City Council 2026 Priorities & Objectives- Group 1        Item 9: Staff Report Pg. 9  Packet Pg. 87 of 155  ATTACHMENT A 1 2 3 B C D E F G H I J K L M 2026 DRAFT CITY COUNCIL PRIORITIES AND OBJECTIVES AN P H M CA & R F EB V GE $'s Priority CC  Va l u e    # OBJECTIVES (42 Total) Sorted by:  Council Priority, Group #, estimated completion date, and finally by additional resource needs.Q1 Q2 Q3 Q4 Gr o u p  # 27 28 29 30 31 32 33 34 35 x Continue design work on new parking structure in Downtown core (Lot D).  Milestone: Complete entitlement process and design development phase by the end  of 2026.x 1 x Secure City Council approval for the California Avenue Outdoor Activation Guidelines.  These guidelines will be finalized through continued stakeholder engagement that  includes a representative mix of business owners and residents and a formal  Architectural Review Board (ARB) review.x 1 $ Government Efficiency (GE)‐ 8 Total x Develop and balance FY 2027 budget by June 30 prioritizing government efficiency,  ongoing solutions and balancing fiscal impacts of policies and practices including  consultant contracts, downtown parking and general fund subsidies, nonprofit  partnerships and revenue enhancements.x 1 x Implement a standardized Citywide Consultant Stewardship Framework—covering  the lifecycle from the decision to outsource and scope drafting to contract close‐ out—to develop and manage scope of services and enhanced reporting on use of  professional services.x 1 x Improve City processes by streamlining approval of revised procurement thresholds  and contract authority.x 1 x x Improve and streamline staff work on homelessness, housing and services for  vulnerable residents. Milestones: Centralize in City Manager's Office, Identify and  implement ways to improve processes and reporting (e.g., consolidating contracts,  standardizing reporting, HSRAP).x 1 x Leverage the Palo Alto 311 staff working group workplan, vendor support and City  Auditor benchmarking advice to improve clarity and timing of constituent response  and satisfaction, and enhance staff efficiencies by aligning report categories with  constituent expectations, and implementing vendor‐proposed 2026 system  upgrades—including integrating AI tools.x 1 x Modify the municipal code to remove the requirement for planning entitlement  approval (such as architectural review) or compliance with zoning regulations and  procedures for capital improvement or other city‐initiated projects on publicly owned  right of way and land. x 1 Attachment A - Page 4 of 6 Item 9 Attachment A - City Council 2026 Priorities & Objectives- Group 1        Item 9: Staff Report Pg. 10  Packet Pg. 88 of 155  ATTACHMENT A 1 2 3 B C D E F G H I J K L M 2026 DRAFT CITY COUNCIL PRIORITIES AND OBJECTIVES AN P H M CA & R F EB V GE $'s Priority CC  Va l u e    # OBJECTIVES (42 Total) Sorted by:  Council Priority, Group #, estimated completion date, and finally by additional resource needs.Q1 Q2 Q3 Q4 Gr o u p  # 36 37 38 39 40 41 42 43 44 45 x Explore options to streamline delivery of low‐cost, high‐value (aka quick build) traffic  safety improvements and update the City’s Traffic Calming Policy to align with Safety  Action Plan, Bicycle/Pedestrian Transportation Plan (BPTP) and Safe Routes to School.  Milestone: Council review of existing program, policy needs and approaches.x 1 x Relocate City operations in Utilities and the Development Center back to City Hall in  order to reduce rent expense to third party landlords, maximizing revenue to the  General Fund, and consolidating property and facility management within City owned  land.x 1 Council Values‐ 12 Total 3,4 Open 429 Bryant Street Community Center. Complete construction and any  necessary partnership agreements to begin La Comida Senior Lunch Program at the  facility by end of July, 2026; plan further work for general community center  operations concurrently. x 1 3,4 Execute MOU with Santa Clara County for assignment of clinician to PD Psychiatric  Emergency Response Team (PERT) in Jan 2026.x 1 2 Adopt ordinance updates establishing additional Green Building Standards and Energy  Reach Codes. Milestone: City Council consideration of ordinance for adoption by June  2026.x 1 2 Complete 2026 Bicycle and Pedestrian Transportation Plan (BPTP) with City Council  adoption of the plan. x 1 2 Advance recommendations for the Regional Water Quality Control Plant Biosolids  Facility Plan. Milestone: Conduct community engagement, refine and review  recommendations with Council Committee in 2026, and further develop  implementation strategies in preparation for Council acceptance of the Biosolids  Facility Plan in 2027.  x 1 2 Advance design of Grade Separation projects at Charleston Road, Meadow Drive and  Churchill Avenue. Milestone: Complete 15% design and select Locally Preferred  Alternative for 35% design at each crossing. x 1 4 Update the Safety Element and develop an Evacuation Plan pursuant to SB 99, AB  747, and AB 1409. Milestones: contract with consultant to develop evacuation plan,  present draft Safety Element amendments to Planning and Transportation  Commission and City Council consideration with final submittal to state for review in  Q3. x 1 Attachment A - Page 5 of 6 Item 9 Attachment A - City Council 2026 Priorities & Objectives- Group 1        Item 9: Staff Report Pg. 11  Packet Pg. 89 of 155  ATTACHMENT A 1 2 3 B C D E F G H I J K L M 2026 DRAFT CITY COUNCIL PRIORITIES AND OBJECTIVES AN P H M CA & R F EB V GE $'s Priority CC  Va l u e    # OBJECTIVES (42 Total) Sorted by:  Council Priority, Group #, estimated completion date, and finally by additional resource needs.Q1 Q2 Q3 Q4 Gr o u p  # 46 47 48 49 50 51 3,4 Support Community Mental Health through provision of support for all ages through  community partnerships, programs, and initiatives. Milestone: continue work with  the Jed Foundation engagement to support youth mental health and suicide  prevention efforts.x 1 2 Implement the strategies contained in the 2026‐2027 Sustainability and Climate  Action Plan Work Plan. Milestone: Complete progress on strategies implementation  in substantial alignment with the Target Completion Dates contained in the Work  Plan.x 1 4 Pursue a natural grass athletic field pilot project to determine the best management  practices to enhance playability and durability. Milestones : Q1 work with the Parks  and Recreation Commission (PRC) to develop a workplan for the Turf Pilot. Q2 seek  Council approval of work plan and funding. Q3 Conduct enhanced maintenance pilot  and feasibility study at two locations. Q4 Conduct stakeholder engagement on  conceptual designs and present to PRC. Funding and construction of high performing  grass fields to be completed in 2027‐28 pending Council review and approval.x 1 $$‐ $$$ 2 Develop and recommend for Council approval a multi‐year grid modernization capital  improvement plan focused on improving reliability and facilitating city‐wide customer  electrification by upgrading  sub‐transmission, substation, and distribution  infrastructure. Issue the first tranche of debt financing in 2026.x 1 $$$$ 4 Advance Quiet Zones at Palo Alto Avenue, Churchill Avenue, Meadow Drive, and  Charleston Road Rail Crossings. Milestone: Council approval of Notice of  Establishment and Quiet Zone implementation at Palo Alto Avenue; and identification  of funding and procurement of professional services for design of required  improvements to establish Quiet Zones at Churchill, Meadow and Charleston.x 1 $$$$ $ = up to 50K;    $$ = 51‐499K,     $$$ = 500K‐999k,      $$$$ = 1M + Attachment A - Page 6 of 6 Item 9 Attachment A - City Council 2026 Priorities & Objectives- Group 1        Item 9: Staff Report Pg. 12  Packet Pg. 90 of 155  ATTACHMENT B 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 B C D E F G H I J K L MG 2026 DRAFT CITY COUNCIL PRIORITIES AND OBJECTIVES AN P H CA & R F EB V GE $'s Achieve Near‐Term Priority Housing Milestones (ANPHM)‐ 6 Total x Present initial data from the first year rental registry program to Policy and Services  for discussion and an information report update to City Council. x 2 x Present to Policy and Services an analysis related to anti‐rent gouging and forward  Committee recommendations to the City Council. x 2 x Adopt a renter protection “fair chance” ordinance, including findings and  implementing regulations. (Housing Element Program 6.6I). Milestones: City Council  Policy and Services Committee consideration in Q2 of ordinance revised based on  City Council direction; City Council consideration upon P&S recommendation in Q3. x 2 x Release a Request for Proposals for development of the one‐acre site near  Matadero Creek dedicated to the City under the 2023 Sobrato/City Development  Agreement. Milestone: Issue RFP by end of 2026.x 2 x Expand and implement the Safe Parking Program in commercial areas by increasing  geographic coverage and service availability citywide. (Housing Element Program  6.4A and Council assigned 12.04.23). Milestones: Initiate draft of zoning text  amendment by end of 2026.x 2 x Organize an initial review of sources and methods to raise funding to support new  affordable housing production for future evaluation.x 2 Cubberley Acquisition and Renovation Funding (CA&RF)‐ 0 Total Enhance Business Vibrancy (EBV)‐ 7 Total x Complete stable car free street improvements on Ramona Street, e.g. bollards and  barriers, signage, and parking regulations. Milestone: Implementation of updated  parking signage and painted curbs, and installation of spherical bollards, vehicular  barriers, and updated signage.x 2 x Modernize Downtown parking policy to increase availability of premium parking,  reduce operating subsidies, encourage development and economic diversity and  vibrancy, and reduce fossil fuel dependency. Milestone: Council review of options to  modernize parking policy.x 2 Priority CC  Va l u e  # OBJECTIVES (24 Total) Sorted by:  Council Priority, Group #, estimated completion date, and finally by additional resource needs.Q1 Q2 Q3 Q4 Gr o u p  # Attachment B - Page 1 of 3 Item 9 Attachment B - City Council 2026 Priorities & Objectives- Group 2        Item 9: Staff Report Pg. 13  Packet Pg. 91 of 155  ATTACHMENT B 1 2 3 B C D E F G H I J K L MG AN P H CA & R F EB V GE $'s 2026 DRAFT CITY COUNCIL PRIORITIES AND OBJECTIVES Priority CC  Va l u e  # OBJECTIVES (24 Total) Sorted by:  Council Priority, Group #, estimated completion date, and finally by additional resource needs.Q1 Q2 Q3 Q4 Gr o u p  # 17 18 19 20 21 22 23 24 25 26 27 x Extend the existing interim ordinance or adopt a new ordinance that restores and  implements subjective wireless communication facility regulations. Milestones:  Present an ordinance to the City Council in Q4.x 2 x Begin feasibility analysis of Assessment District for University Avenue Streetscape.  Conduct analysis to determine practicality of an assessment district or similarly  funding strategy as a funding mechanism for capital enhancements to University  Avenue Streetscape. x 2 $$ x Design and provide funding appropriations to improve the car free portion of  California Ave for bike and pedestrian markings and calming and minor physical  environment adjustments to reduce friction with the outdoor dining guidelines (e.g.  movement of bike racks). x 2 $$$ x Engage stakeholders to develop design proposals for Car‐Free Ramona Street and  present to Council for necessary funding appropriations to implement initial  phase(s). Begin Historic Resource Board and Architectural Review Board  review of  activation guidelines in late 2026/early 2027. x 2 $$$ x Initiate process for Development of the Comprehensive Plan Update. Milestone :  Confirm a more limited scope for the upcoming 2030 Comprehensive Plan to inform  the release of an RFP by Q4 2026 to select a consultant to support the limited scope  refresh; consultant funding will be necessary. x 2 $$$ Government Efficiency (GE)‐ 0 Total N/A Council Values‐ 11 Total 2 Adopt Bird‐Friendly Design standards. Milestones: City Council consideration in  March/April 2026 of ordinance recommended by PTC in late 2025. x 2 2 Adopt an ordinance updating Stream and Creek Corridor Setback requirements.  Milestone: PTC consideration of revised draft ordinance in Q2, 2026; Council  consideration of draft ordinance in Q3, 2026. x 2 2,4 Update the City's Natural Environment Element Update to comply with recent state  law. Milestone: Prepare draft revisions for review by the Parks and Recreation  Commission, Planning and Transportation Commission, and City Council by Q3,  2026. Present Comp Plan amendments to PRC, PTC, and City Council by the Q4 of  2026. x 2 Attachment B - Page 2 of 3 Item 9 Attachment B - City Council 2026 Priorities & Objectives- Group 2        Item 9: Staff Report Pg. 14  Packet Pg. 92 of 155  ATTACHMENT B 1 2 3 B C D E F G H I J K L MG AN P H CA & R F EB V GE $'s 2026 DRAFT CITY COUNCIL PRIORITIES AND OBJECTIVES Priority CC  Va l u e  # OBJECTIVES (24 Total) Sorted by:  Council Priority, Group #, estimated completion date, and finally by additional resource needs.Q1 Q2 Q3 Q4 Gr o u p  # 28 29 30 31 32 33 34 35 36 2,4 Advance design on South Palo Alto Bikeway project to increase walking and biking  and enhance safety. Milestone: Initiate work on pilot bikeway project.x 2 2,4 Complete concept design for additional east‐west bicycle/pedestrian crossing of  railroad tracks in the southern part of the City. Milestone: Council review of draft  report on South Palo Alto Connectivity.x 2 2 Continue to implement 3‐phase plan presented to Council in September 2024 for  phasing out leaded fuel at Palo Alto Airport. Milestone: Initiate lead air monitoring  program in Q1, work with the new fuel provider and supplier to inform tenants and  encourage the use of unleaded fuel, and provide a progress update to City Council. x 2 4 Restart and make progress on the Palo Alto Airport master planning process.  Milestone: Develop updated alternatives informed by Council feedback from  September 2024, conduct public stakeholder meetings, and conduct a study session  with Council to review progress.x 2 4 Develop and adopt updates to the City’s seismic risk mitigation ordinance.  Milestone: Seek policy guidance from Policy and Services Committee, review draft  ordinance with Policy and Services Committee, and Council consideration of  ordinance updates by Q4 2026. x 2 2,3 Launch new Palo Alto education and rebate program for electric stoves and  cooktops, with a goal of 50 electric cooktop conversions from gas. Milestone:  Program is available to customers by the end of Q2 2026.x 2 2 Implement Quarry Road Extension in Partnership with Stanford University, Caltrans  and VTA. Milestone: Execute grant agreement with MTC and submit initial  engineering package to Caltrans to confirm process. x 2 6 Complete build‐out of fiber‐to‐the‐premises (FTTP) pilot Phase 1 and begin provision  of beta service for a municipal high speed fiber service. Establish internet service  provider operations and through iterative customer engagement, and provision  services to  residents in the initial pilot area.x 2 $ = up to 50K;    $$ = 51‐400K,     $$$ = 500K‐999k,      $$$$ = 1M + Attachment B - Page 3 of 3 Item 9 Attachment B - City Council 2026 Priorities & Objectives- Group 2        Item 9: Staff Report Pg. 15  Packet Pg. 93 of 155  ATTACHMENT C Staff Not Recommended Objectives For various reasons, including staff capacity to advance, feasibility challenges, or that work is already underway, some objectives from the 2025 Priority Objectives list, previous Council suggestions, or the Annual Retreat suggestions are not recommended to become priority objectives for 2026. Staff will be prepared to respond to any Councilmember’s questions. 12. Begin implementation of the City Facility Electrification Plan. Milestone: Council approval of design consultant contract and procurement of a contractor to construct projects at first two buildings. This objective will continue as a staff priority but is not recommended for inclusion as a standalone project, as it is already incorporated into the 2026–2027 Sustainability and Climate Action Plan Work Plan. Instead, staff has added a broader objective focused on implementing the Work Plan items overall, which encompasses this initiative. 15. Pilot electrification as a service, charging as a service, or creative financing programs to complement the City' s single-family, multi-family, and/or non-residential electrification programs, that can be scaled. Milestone: At least one new financing program is available to single-family, multi-family, and/or non- residential customers by the end of 2026. This objective will continue as a staff priority but is not recommended for inclusion as a standalone project, as it is already incorporated into the 2026–2027 Sustainability and Climate Action Plan Work Plan. Instead, staff has added a broader objective focused on implementing the Work Plan items overall, which encompasses this initiative. 16. Develop long-term Climate Action funding and financing strategies and scenarios for Council consideration. Milestone: Present strategies and scenarios to the Council Committee for consideration by December 2026. This objective will continue as a staff priority but is not recommended for inclusion as a standalone project, as it is already incorporated into the 2026–2027 Sustainability and Climate Action Plan Work Plan. Instead, staff has added a broader objective focused on implementing the Work Plan items overall, which encompasses this initiative. 54. Implement Senate Bill 79 by developing and presenting implementation options and advancing a recommended approach for City Council adoption. Seek direction from SB 79 and Downtown Housing Plan City Council Ad-Hoc Committee on next steps in Q1 and Q2; present recommendations for City Council consideration and next steps on SB 79 implementation before July 1, 2026; develop SB 79 alternative plan if directed by City Council. Objective has been combined and updated with Objective #50. 82. Implement a gas-powered leaf blower ban citywide, based on recommendation from Policy and Services Committee. Staff is not recommending this project at this time due to limited resources and the need to prioritize other Council-directed initiatives currently underway. Item 9 Attachment C - Staff Not Recommended Objectives        Item 9: Staff Report Pg. 16  Packet Pg. 94 of 155  ATTACHMENT C 83. Develop and implement strategies to activate vacant commercial storefronts, including establishing regulatory tools and streamlined permitting for temporary pop-up stores. Staff is not recommending this project at this time due to limited resources and the need to prioritize other Council-directed initiatives currently underway. Staff is not recommending this project at this time due to limited resources and the need to prioritize other Council-directed initiatives currently underway. Staff is not recommending this project at this time due to limited resources and the need to prioritize other Council-directed initiatives currently underway. Staff is not recommending this project at this time due to limited resources and the need to prioritize other Council-directed initiatives currently underway. Staff is not recommending this project at this time due to limited resources and the need to prioritize other Council-directed initiatives currently underway. Staff is not recommending this project at this time due to limited resources and the need to prioritize other Council-directed initiatives currently underway. Staff is not recommending this project at this time due to limited resources and the need to prioritize other Council-directed initiatives currently underway. Moreover, the interested parties can file a text amendment application to initiate this process. Item 9 Attachment C - Staff Not Recommended Objectives        Item 9: Staff Report Pg. 17  Packet Pg. 95 of 155  ATTACHMENT C 90. Council consideration of a design option for California Avenue. Continue engaging stakeholders to refine alternative street designs for California Avenue and present to Council for discussion and action, including funding appropriations to pursue a street design in late Q2/early Q3 2026. Staff is not recommending this project at this time due to limited human and financial resources. Suspending the project will allow staff to focus on completing the California Avenue Outdoor Activation Guidelines and supporting businesses in their requests and plans for improvements. To activate this project funding would be necessary both for staff and professional services ($$$). These efforts are being incorporated into the proposed Business Retention, Expansion, and Attraction (BRE/A) Strategy. Item 9 Attachment C - Staff Not Recommended Objectives        Item 9: Staff Report Pg. 18  Packet Pg. 96 of 155  ATTACHMENT D 2026 Ad Hoc Committee Purpose Statements And Tentative meeting schedules Rail Committee To meet every other month The Rail Committee reviews the projects and provides recommendations to the City Council based on the Rail Guiding principles adopted by the City Council (August 8, 2022). The projects include: the grade separations and safety improvements at existing crossings, additional east-west bicycle and pedestrian railroad crossings, and quiet zone improvements. Rail committee will review and advance projects for Council approval. Rail Safety/Youth Mental Health Meeting as needed The Rail Safety/Youth Mental Health Ad Hoc Committee will facilitate Council decision-making on near- term modifications to rail crossings in response to and for prevention of youth and other suicides. This Ad Hoc Committee will also support communication with other agencies such as Caltrain. City Council involvement and coordination with the JED Foundation’s ongoing postvention engagement is handled by the City/Schools Liaison Committee. Cubberley Ad Hoc Committee To meet monthly or as necessary to meet the project schedule The Cubberley Ad Hoc will facilitate City Council review and approval of the master plan process and serve as the Council ambassador for engagement with the community and building community support for development for a new community center at the Cubberley site. This includes making recommendations to the Council on the future operating model (e.g. services available, recommend to Finance Committee an approach to fees & charges, space allocation) and master plan that will successfully receive voter support in 2026. Coordination with PAUSD on Cubberley will occur through this committee rather than the City Schools Liaison Committee. Operations, funding, and ballot measure work (including polling) may be heard by the Finance Committee rather than the Cubberley Ad Hoc for recommendations to the full City Council. Economic Development Ad Hoc Committee To meet every other month The Economic Development Committee will provide a regular forum for business and community stakeholders to engage with Council members on implementation of the City’s economic development strategy. The Economic Development Committee will make recommendations to the City Council and provide ongoing engagement on approved economic development priorities to enhance business vibrancy efforts, including business retention, expansion, and attraction. Item 9 Attachment D - 2026 Ad Hoc Committee Purpose Statements        Item 9: Staff Report Pg. 19  Packet Pg. 97 of 155  ATTACHMENT D Climate Action & Sustainability Ad Hoc Committee To meet monthly The Climate Action & Sustainability Committee facilitates implementation of the Climate Action workplan items of the 2026/2027 Sustainability and Climate Action Plan (S/CAP) Workplan and the 2026 Council Priority Objectives which fall under the Council values on environmental sustainability. Oversized Vehicles Impacts & Services Ad Hoc Meeting as needed The Oversized Vehicles (OSV) Ad Hoc Committee was created at the October 20, 2025 Council Meeting. The Committee is tasked with 1) recommending details on increased enforcement; 2) sharing recommendations on other issues related to the implementation of the Oct. 20 Council motion on OSVs (including safe parking street cleaning, urgency ordinances for detached trailers and “vanlording,” and considering options for buyback or parking program); 3) evaluating Phase 2 activities; and 4) participating with staff in further engagement. To date, meeting frequency has been weekly, with few exceptions. Downtown Housing Plan and SB 79 Ad Hoc Meeting as needed Established late 2025, the purpose of the ad hoc is to explore options to implement SB 79, including no additional action, and support staff’s continued work on the Downtown Housing Plan through the balance of calendar year 2026. Meeting frequency will vary throughout the year with more meetings initially and fewer meetings toward the end of the year averaging out to approximately one meeting every two months. Valley Water Shoreline Funding Allocation Ad Hoc Meeting as needed The Valley Water Shoreline Funding Allocation Ad Hoc was announced at the February 24, 2025 City Council meeting, in response to a Valley Water proposal to shift funding for addressing sea level rise in the north County to a south County project. The committee was announced with an expectation of being active for approximately 60 days. Valley Water ultimately deferred taking the action in 2025, and proceeded with making process improvements to support better communications and consultation for future proposals affecting project funding. Item 9 Attachment D - 2026 Ad Hoc Committee Purpose Statements        Item 9: Staff Report Pg. 20  Packet Pg. 98 of 155  City of Palo Alto I 250 Hamilton Avenue, Palo Alto, CA I www.paloalto.gov – February 2026 POLICY & SERVICES TENTATIVE TOPICS CALENDAR 2026 Tentative as of February 10, 2026 January • Nonprofit Workplan item • Referral (2024): Establish a frequency for joint City Council meetings or Policy & Services meeting with Boards and Commissions, Youth Council, and meetings with Boards and Commissions Chairs; - Kept referral per P&S on Dec. 9, 2025 February • Council referral (from Jan 24, 2026 retreat): Update City Council Values and Consider Renaming them (linked to adopted values on November 7, 2022 – https://portal.laserfiche.com/Portal/DocView.aspx?id=31240&repo=r- 704298fc&searchid=0d712abe-b8ef-435e-9045-9198fc7001ae) • SB 707 Brown Act Updates • Seismic Ordinance Follow up discussion Note: All items listed for the following months are tentative in date at this time. Items will be moved around based on item readiness and agenda capacity in partnership with Committee Chair closer to the actual meeting date. March • Nonprofit Partnership Phase I Improvements • Consider Policy Tool Options to Encourage Multi-Family Development in Mixed-Use Districts (2023- 2031 Housing Element Program 3.9(A)). • Audit: Utilities Reserves April • Discussion of Local Residential Rental Market Data and Recommendation regarding whether to Pursue a Rent Stabilization Program • Present initial data from the first-year rental registry program to Policy and Services for discussion and an information report update to City Council. • Legislative Update • Fair Chance in Housing Ordinance • Incentives at Strategic Locations to Shift the Economic Benefit of Redevelopment from Commercial Toward Home Building (2023-2031 Housing Element Program 3.9(A)). • Auditor Report: Junior Museum and Zoo • Auditor Report: Annual Follow-up on Audit Recommendations Item 9 Attachment E - Policy & Services Committee Workplan        Item 9: Staff Report Pg. 21  Packet Pg. 99 of 155  City of Palo Alto I 250 Hamilton Avenue, Palo Alto, CA I www.paloalto.gov – February 2026 May •Referral Follow Up: Discussion and Recommendation to Council Regarding Potential New Procedure for Councilmembers to Make Referrals to Staff Besides Colleagues’ Memo •Auditor Task Orders •Auditor Report: Public Safety Overtime •Auditor Risk Assessment •Quarterly Audit Status Report June •Review of Proposed Amendments to Seismic Risk Mitigation Ordinance •Present to Policy and Services an analysis related to anti-rent gouging and forward Committee recommendations to the City Council. •(other items carried forward from April or May) July – No meeting; Council break August •Tentative: Auditor Report •Legislative Update (State and Federal) September •Tentative: Auditor Report •Review RFI/P solicitation related to Housing Element Program 1.4A October 29 •Tentative: Auditor Report November 19 •Legislative Agenda and Guidelines; and Brief Legislative update •Tentative: Nonprofit workplan •2027 City Council Priorities Discussion (focused on process, the retreat and submitted ideas) December 9 •Tentative: Auditor report •No Procedures & Protocols Handbook Discussion (every other year and this is an off year) •Informational: Report out on Status of Committee Referrals Items removed: •Referral (2024): Policy & Services to review and make recommendations for any initiatives to support and strengthen neighborhood programs (linked to discussions in 2021) Removed from referral list at Dec. 9, 2025 P&S Meeting 1 as the spirit of the referral has been accomplished 1 P&S Discussion, December 9, 2025, Item #5, Link: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16351 Item 9 Attachment E - Policy & Services Committee Workplan        Item 9: Staff Report Pg. 22  Packet Pg. 100 of 155  City of Palo Alto I 250 Hamilton Avenue, Palo Alto, CA I www.paloalto.gov – February 2026 Referrals from February 9, 2026: 1. Refer to staff and subsequently the Policy & Services Committee for a recommendation to the full City Council on the permissible and recommended practices relating to an item going to more than one standing committee when appropriate (Procedures Section 1.2(a)2). 2. Refer to staff to return with recommended language regarding if staff should provide briefings, respond to Councilmember questions, collaborate with Councilmembers to support City Council representatives on regional bodies. (Not required to come to P&S, but could if needed) 3. Refer to staff and return to Council on the use of verbatim transcripts for PTC and UAC Board minutes using AI. (Not required to come to P&S, but could if needed) Further Work Requested Related to these Referrals: 1. Discussion of the Creation of the Advisory Committee regarding Council Compensation (Previous Committee action completed. P&S Committee requested on Dec. 9, 2025 to keep this item on the list to bring back) 2. Initial Discussion Regarding Potential New Procedure for Councilmembers Referrals to Staff Item 9 Attachment E - Policy & Services Committee Workplan        Item 9: Staff Report Pg. 23  Packet Pg. 101 of 155  City of Palo Alto I 250 Hamilton Avenue, Palo Alto, CA. I www.cityofpaloalto.org      ATTACHMENT F      FINANCE COMMITTEE TENTATIVE TOPICS CALENDAR 2026  As of January 30, 2026     The Municipal Code states that the role of the Council Finance Committee is to consider and  make recommendations on matters referred to it by the Council relating to finance, budget,  financial audits, capital planning and debt. (§2.04.210).    See the end of the document for information on the completed 2025 referrals as well as the  outstanding and on hold referrals to date.     January (6th) (Special Meeting)   Update and Adoption of the Investment Policy (to be done by June 30 per code)   Mayor appoints Committee and designates Chair; usually no FC meeting      February  (3rd & 17th)    Feb 3 ‐‐ No Meeting, City Council meetings schedules for January impacts    March (3rd & 17th)  Utilities Advisory Commission Rate Forecasts and Five‐Year Financial Plans: Water,  Wastewater Collection    Storm Water Management Fee   April (7th & 21st)   Utilities Advisory Commission Rate Forecasts and Five‐Year Financial Plans: Gas, Electric.   Planning & Development Services ‐ Electrification State caps & fee subsidies   City Fee Updates (various)   Grid Mod Financing (Tentative)    May (5th, 6th, & 19th)   Annual Budget Review: Operating and Five‐year Capital Improvement Plan   Alternative meeting times (9:00am – 5:00pm) May 5 and May 6   Including Nonprofit Partnership Workplan Phase I funding    June (2nd & 16th)   Third Quarter Fiscal Year 2025 Financial Report      July  No meeting; Council Break    Item 9 Attachment F - Finance Committee Workplan        Item 9: Staff Report Pg. 24  Packet Pg. 102 of 155    Finance Committee Tentative Topics, Calendar 2026  As of January 2026   August    Grid modernization financing     September   Accept California Public Employees’ Retirement System (CalPERS) Pension Annual  Valuation. Reports as of June 30, 2024.     Retiree Benefit Policy – review and update, if necessary.       October     November    Informational: Report out on Status of Committee Referrals    Discussion and Recommendation to the City Council to Accept the Macias Gini &  O'Connell's Audit of the City of Palo Alto's Financial Statements as of June 30, 2026 and  Management Letter   Discussion and Recommendation to Approve the Fiscal Year (FY) 2026 Annual  Comprehensive Financial Report (ACFR) and Approve Budget Amendments in Various  Funds  December   Review and Forward the FY 2028 ‐ FY 2037 Long Range Financial Forecast   First Quarter Fiscal Year 2026 Financial Report   Preliminary Utility Rate Forecast Review    Referred Topics:  A full report on the status of Finance Committee referrals and the status can be found on Item  2 on the November 18, 2025 agenda1.    Completed Referrals  1) Planning and Development Services Fee Study and Update   2) Parking Permits Pricing and Parking Permit Funds Financial Status. [scheduled for Council  consideration Spring 2026]  3) Ability Path financial support [addressed in FY 2025 Mid‐Year Report]  4) Fire Emergency Medical Response Fee Analysis and Update.  5) Fire Emergency Medical Reponses; Supplemental Resources – Approved 12‐Hour Peak  Ambulance with Single Role Staff (Implementation in 2026)  6) Active Recruitment Digital Marketing Services (Contract Services) – Staff discontinued  request due to financial situation, available workforce due to layoffs (federal level and local  tech) and limitations on digital marketing into the hard to recruit industries.    1 https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16320    Item 9 Attachment F - Finance Committee Workplan        Item 9: Staff Report Pg. 25  Packet Pg. 103 of 155    Finance Committee Tentative Topics, Calendar 2026  As of January 2026   7) Establish Organizational Development & Safety Division – Without adding headcount, Staff  created a merged division of organizational development and HRIS to support.   8) Explore financial, outreach, and policy processes for adding East Palo Alto to resident rates  for the golf course – East Palo Alto added to resident rates for golf course, effective July 1,  2025.      In Progress/Pending Referrals:  9) Review Parks Restroom Prioritization; Specifically, Pardee Park – Incorporated into FY22026  CIP that was approved by Council on June 16, 2025, CIP PG‐19000 anticipated to begin mid‐ 2026.  10) Increasing Revenue‐ Generating CSD Programming to Meet Demand\Cost recovery policy  100% ‐‐ Further analysis and review in Spring 2026  11) Cost Recovery Policy – Update to include new 100% Category ‐ Spring 2026  12) Update Fee Cost Recovery Category for current fee cost categories – update fee categories  and fees as a part of budget development – Spring 2026  13) Risk Mgt, General Liability and Insurance – Update Council on risk management, safety  policies and risk transfer and claim analysis and mitigation strategies – going to Council  February 2026     Item 9 Attachment F - Finance Committee Workplan        Item 9: Staff Report Pg. 26  Packet Pg. 104 of 155  City of Palo Alto - 2026 City Council Priorities At the January 24, 2026 meeting, the Palo Alto City Council reached consensus on adopting a 2026 Economic Development priority titled, “Enhance Business Vibrancy.” The City Council acknowledges the importance of Economic Development and the intersection between a healthy local economy and the City’s long-term fiscal sustainability. The City of Palo Alto continues to build from the current Economic Development Strategy to achieve the City Council’s goals and priorities. Economic Development is taking a proactive approach to advocating for Palo Alto’s business and entrepreneurial ecosystem that is reflective of the population it serves. Economic Development is a concerted effort by the City of Palo Alto’s City Council to ensure that the business climate is healthy. As such, the Economic Development team recommends that the Economic Development Ad Hoc Committee (formerly Retail Ad Hoc Committee) and City Council proceed with a formal Business Retention, Expansion, and Attraction (BRE/A) Strategy. A Business Retention, Expansion, and Attraction (BRE/A) Strategy will formalize Economic Development’s Work Plan for calendar year 2026. A BRE/A Strategy consists of identifying key industries for retention, expansion, and attraction, proactive business engagement to build strategic partnerships, determining areas where the City of Palo Alto can gain a competitive advantage, and providing support for a favorable business environment that can lead to increased employment opportunities and overall economic prosperity. The BRE/A Strategy will result in preserving and enhancing the local business climate to ensure the City is fiscally stable to provide essential services that the Palo Alto community deserves. The BRE/A Strategy includes two tactical categories: Enhance Business Vibrancy and Engagement and Promotions. While two 2026 City Council priority objectives are included in the BRE/A such as #29 to develop a formal business retention, expansion, and attraction program and #34 focused on activation activities and events, other key components include strengthening the tax base, developing a competitive advantage, real estate assets, business and community engagement, and promotions and marketing. Performance Metrics are specific, measurable, achievable, relevant, and timely. Item 9 Attachment G - Draft BREA Strategy        Item 9: Staff Report Pg. 27  Packet Pg. 105 of 155  Business Retention, Expansion and Attraction (BRE/A) Strategy – Enhancing Business Vibrancy is a 2026 City Council priority and includes priorities #29 and #34. Strengthening the Tax Base o Sales tax, property tax, and transient occupancy tax revenue bases - Establish a formal Corporate Visitation Program. Review quarterly data for sales/transient occupancy tax revenues and bi-annually for property tax revenues to identify and respond to changing trends. Performance Metric: Convene up to five of the top twenty-five sales tax generators by the end of 2026 with the goal of retaining businesses that enhance the City’s long-term fiscal sustainability on a quarterly basis. o New Investment Opportunities - Encourage new investments that create economic impact, multiplier effects and sales tax revenue. Performance Metric: Staff will explore financial and non-financial incentives and develop a list to support, retain, and grow business opportunities to drive economic vitality by Quarter 3 2026, and present to the Economic Development Ad Hoc Committee for review and feedback. Competitive Advantage o Venture Capital, Incubators, and Accelerators - IDA Ireland, Japan Innovation Campus (JIC), Consulate General and Innovation Centre Denmark, Nordic Innovation House, Flanders Investment and Trade (FIT), The Hive, Archimedes Labs, StartX, Venture Dock, etc. Performance Metric: Meet with at least four Venture Capital investment firms, incubators, and accelerators to develop foreign direct investment (FDI) opportunities and continue to cultivate the innovation and entrepreneurial ecosystem by the end of calendar year 2026. o Business Technical Assistance - Performance Metric: Partner with the Silicon Valley Small Business Development Center (SV SBDC), Small Business Administration (SBA), SCORE, Chamber of Commerce, etc. to host two small business (live and virtual) training workshops in 2026. Real Estate Assets o Real Estate Network - Property Owners, Real Estate Brokerage, Property Managers, and Development Community Network to foment relationships to fill vacant spaces and attract a mix of retail, office, and industrial businesses to enhance diversity of businesses for a broader customer base. Performance Metric: Economic Development will host a Real Estate Broker roundtable by Quarter 4 2026 to learn about new opportunities, market trends, new uses, permit processes, and align development efforts with market needs. Item 9 Attachment G - Draft BREA Strategy        Item 9: Staff Report Pg. 28  Packet Pg. 106 of 155  o City Real Estate Assets – Leverage City’s real estate assets for revenue generation. Performance Metric: Economic Development will execute a lease with Nobu for the use of 20 valet services parking spaces in Parking Lot Q by April 2026 to generate new revenues for the City. Engagement and Promotions Business and Community Engagement o Public-Private Partnerships - Engagement fosters trust and collaboration, allowing for effective partnerships that leverage resources for community projects - Performance Metric: Economic Development will promote the Retail Vibrancy Ordinance reflecting flexibility in land use/zoning to the real estate network starting in Quarter 2, and establish two office hour events on California Avenue and Downtown for additional business and community engagement opportunities by Quarter 3 2026. o Open Container Resolution and Entertainment Zone - Performance Metric: Economic Development will present to the Economic Development Ad Hoc Committee to obtain a recommendation for the City Council’s consideration of a California Avenue Entertainment Zone Ordinance in April/May 2026. Promotions and Marketing o 2026 Activities and Events - Performance Metric: Economic Development will partner with businesses, Palo Alto Recreation Foundation, and Chamber on at least 3 California Avenue activities (3rdThursday/FIFA World Cup) and promote the hospitality sector (digital/print) during the 2026 sporting events (March Madness Tournament/FIFA World Cup) from March through July 2026. The BRE/A Strategy is bounded by two strategic categories: Enhance Business Vibrancy and Engagement and Promotions. The two categories are supported by nine new Economic Development focused implementation actions for calendar year 2026. Economic Development staff will continue to lead, co-lead, and/or monitor 2025 City Council priority projects currently underway including: #30 Retail Vibrancy Ordinance, #31 California Avenue Signage, and #33 California Avenue Outdoor Activation Guidelines. Economic Development staff recommends suspending #35 Car-free street improvements on Ramona Street. And, obtain City Council feedback on whether to proceed with #39 California Avenue Design and Funding given that lack of financial resources and to directly focus on the aforementioned 2025 on-going projects and the new BRE/A Strategy. Item 9 Attachment G - Draft BREA Strategy        Item 9: Staff Report Pg. 29  Packet Pg. 107 of 155  The BRE/A Strategy lays a foundation for creating a vibrant, resilient, inclusive, and diversified economic future. Notwithstanding, the BRE/A Strategy highlights the need for a future Economic Development Strategy that serves as a policy document that will guide the City of Palo Alto’s economic development activities for a designated period. Should the City Council consider a new Economic Development Strategy, it would align with the City’s Comprehensive Plan and the Economic Development Element, Sustainability and Climate Action Plan (S/CAP), and other City policy documents. A new Economic Development Strategy will serve as Palo Alto’s road map to grow and diversify the local economy, support businesses and workers, and improve the quality of life for Palo Altans. Item 9 Attachment G - Draft BREA Strategy        Item 9: Staff Report Pg. 30  Packet Pg. 108 of 155  City Council Staff Report Report Type: INFORMATION REPORTS Lead Department: Administrative Services Meeting Date: February 23, 2026 Report #:2601-5819 TITLE Monthly Investment Report - January 2026 (Unaudited) RECOMMENDATION This is an Information Report. No Council action is required. ANALYSIS The City’s Investment Policy (Policy)1 and California Government Code Section 53607 requires that a report of transactions (investments, reinvestment, sold, and exchanged securities) be made available to the Council on a monthly basis. This reporting requirement is separate and distinct from the quarterly investment report submitted under California Government Code Section 53646 that includes portfolio composition, a detailed list of all securities, performance compared to the Policy, overall compliance with the Policy, and the City’s ability to meet expenditure requirements over the next six months. ATTACHMENTS Attachment A: Investment Portfolio Transaction Ledger – January 2025 APPROVED BY: Lauren Lai, Administrative Services Director 1 Investment Policy Fiscal Year 2025-2026 (Adopted February 9, 2026): https://www.paloalto.gov/files/assets/public/v/2/administrative-services/investment-policies/investment- policyfy-2025-2026.pdf Item A Item A Staff Report        Item A: Staff Report Pg. 1  Packet Pg. 109 of 155  Buy Call Redemption Maturity Summary CUSIP Security Description Security Type Transaction Type Settlement Date Quantity Price Acq/Disp Yield Amount Purchased/Sold Interest Total Amount 91282CPT2 UNITED STATES TREASURY 3.5 01/15/2029 US GOV Buy 01/28/2026 5,000,000.00 99.609 3.640 -4,980,468.75 6,284.53 -4,986,753.28 64952WFR9 NEW YORK LIFE GLOBAL FUNDING 4.25 01/09/2031 CORP Buy 01/28/2026 2,500,000.00 99.676 4.323 -2,491,900.00 5,607.64 -2,497,507.64 ---------Buy 01/28/2026 7,500,000.00 ---3.868 -7,472,368.75 11,892.17 -7,484,260.92 CUSIP Security Description Security Type Transaction Type Settlement Date Quantity Price Acq/Disp Yield Amount Purchased/Sold Interest Total Amount 671082CN3 Oak Bank 4.8 01/19/2027 CD Call Redemption 01/19/2026 -249,000.00 100.000 4.804 249,000.00 0.00 249,000.00 19648GSA1 COLORADO HOUSING AND FINANCE AUTHORITY 5.031 05/01/2034 MUNI Call Redemption 01/01/2026 -100,000.00 100.000 4.834 100,000.00 0.00 100,000.00 ---------Call Redemption 01/14/2026 -349,000.00 100.000 4.813 349,000.00 0.00 349,000.00 CUSIP Security Description Security Type Transaction Type Settlement Date Quantity Price Acq/Disp Yield Amount Purchased/Sold Interest Total Amount 530520AC9 Liberty First Credit Union 4.5 01/27/2026 CD Maturity 01/27/2026 -249,000.00 100.000 4.504 249,000.00 0.00 249,000.00 45950VPJ9 INTERNATIONAL FINANCE CORP 0.58 01/15/2026 SOVEREIGN GOV Maturity 01/15/2026 -3,000,000.00 100.000 0.519 3,000,000.00 0.00 3,000,000.00 31422B6K1 FEDERAL AGRICULTURAL MORTGAGE CORP 0.48 01/15/2026 AGCY BOND Maturity 01/15/2026 -1,500,000.00 100.000 0.500 1,500,000.00 0.00 1,500,000.00 30960QAK3 Farmers Insurance Federal Credit Union 0.5 01/27/2026 CD Maturity 01/27/2026 -249,000.00 100.000 0.551 249,000.00 0.00 249,000.00 066519QC6 BANKUNITED NA 0.55 01/22/2026 CD Maturity 01/22/2026 -249,000.00 100.000 0.601 249,000.00 0.00 249,000.00 ---------Maturity 01/16/2026 -5,247,000.00 100.000 0.708 5,247,000.00 0.00 5,247,000.00 CUSIP Security Description Security Type Transaction Type Settlement Date Quantity Price Acq/Disp Yield Amount Purchased/Sold Interest Total Amount ------------01/23/2026 1,904,000.00 ---2.624 -1,876,368.75 11,892.17 -1,888,260.92 Palo Alto Monthly Transactions 01/01/2026 - 01/31/2026 1 ATTACHMENT A Item AAttachment A - InvestmentPortfolio TransactionLedger - January 2025       Item A: Staff Report Pg. 2  Packet Pg. 110 of 155  City Council Staff Report From: City Manager Report Type: INFORMATION REPORTS Lead Department: Administrative Services Meeting Date: February 23, 2026 Report #:2512-5667 TITLE Investment Activity Report for the Second Quarter (October - December), Fiscal Year 2026. CEQA Status – Not a Project RECOMMENDATION This is an informational report and no City Council action is required. EXECUTIVE SUMMARY This report is presented in accordance with California Government Code Section 53646 and the City’s Investment Policy. As of December 31, 2025, the consolidated portfolio totaled $658.9 million (par value), including $537.5 million in investments and $121.4 million in liquid accounts. The investment portfolio was in full compliance with the City’s Investment Policy, and staff projects adequate liquidity to meet expenditure requirements for the next six months. Attachments in this report provide detailed cash and investment information, including portfolio holdings, performance metrics, and related financial summaries. BACKGROUND The City’s Investment Policy is reviewed and approved annually by Council and establishes the framework for managing public funds in accordance with the Prudent Investor Standard under state law. The policy outlines authorized investment types, maturity and credit quality limits, diversification requirements, and reporting standards to ensure the objectives of safety, liquidity, and yield. The policy also requires the Administrative Services Department to provide the City Council with monthly and quarterly investment reports, consistent with California Government Code 53646. Monthly reports provide details on investment activity during the period, such as Item B Item B Staff Report        Item B: Staff Report Pg. 1  Packet Pg. 111 of 155  purchases, calls, redemptions, and maturities. This quarterly report summarizes the City’s investment holdings, portfolio performance, and compliance with the City’s Investment Policy and California Government Code. 1, and this report is presented in accordance with the policy in effect prior to those changes. Future quarterly investment reports will reflect the updated policy. Attachment A. The Investment Quarterly Report as of December 31, 2025 is included in Attachment B. A complete list of current and historical holdings, as well as the City’s Investment Policy, are available on the City’s website: www.paloalto.gov/investmentreporting. ANALYSIS Portfolio Overview As of December 31, 2025, the City’s consolidated portfolio totaled $658.9 million (par value), including $537.5 million in investments and $121.4 million in liquid accounts. The investment portfolio had an average duration of 2.56 years and an average credit quality of AA+. The duration is closely aligned to Chandler’s recommended positioning of 2.5 years within a one-to- five-year maturity range. Graph 1 below illustrates the City’s portfolio by security type, reflecting how funds are allocated across permitted investment categories. 1 City Council, February 09, 2026: Agenda Item #3: SR #2512-5767 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=85314&dbid=0&repo=PaloAlto Item B Item B Staff Report        Item B: Staff Report Pg. 2  Packet Pg. 112 of 155  Table 1 summarizes the portfolio’s maturity structure, which supports the City’s liquidity objectives and duration strategy. Investment Performance and Activity For the quarter ended December 31, 2025, the City’s portfolio average market yield was 3.87% compared to 3.55% for the ICE BofA 1-5 Year U.S. Treasury & Agency Index benchmark. The portfolio's total return for the quarter was 1.56%, exceeding the benchmark return of 1.35%. These results reflect the shorter performance period beginning in August 2025, when portfolio management transitioned to Chandler. Future reports will include longer-term performance measures as the investment strategy continues to be implemented. During the quarter, $52.5 million in securities were purchased, $5.5 million were called or redeemed, and $33.4 million matured. Item B Item B Staff Report        Item B: Staff Report Pg. 3  Packet Pg. 113 of 155  Table 2 summarizes key portfolio characteristics including maturity, duration, yield, and credit quality. As of December 31st, the yield for LAIF and the two-year US Treasury were 3.98% and 3.48%, respectively. While these are not direct performance benchmarks, they provide useful context for evaluating the portfolio’s positioning relative to short-term liquidity returns and broader market conditions. Table 2: Portfolio Characteristics Benchmark* Portfolio as of Dec 31 Portfolio as of Sept 30 *Benchmark: ICE BofA 105 Unsubordinated US Treasury & Agency Index **The credit quality is a weighted average calculation of the highest S&P, Moody’s and Finch Compliance and Credit Standards The City’s Investment Policy establishes minimum credit rating requirements at the time of purchase and requires that any securities whose credit ratings fall below the minimum thresholds be reported to the City Council. Item B Item B Staff Report        Item B: Staff Report Pg. 4  Packet Pg. 114 of 155