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Home My WebLink About2026-04-07 Finance Committee Agenda PacketFINANCE COMMITTEE Regular Meeting Tuesday, April 07, 2026 Community Meeting Room & Hybrid 4:00 PM Finance Committee meetings will be held as “hybrid” meetings with the option to attend by teleconference/video conference 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/99227307235) Meeting ID: 992 2730 7235 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 determind 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 determind 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 types 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. 1 April 07, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. CALL TO ORDER PUBLIC COMMENT 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. ACTION ITEMS 1.Recommend City Council Adoption of a Resolution Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage) Reflecting a 3.0% Consumer Price Index Rate Increase to $18.14 Per Month Per Equivalent Residential Unit for Fiscal Year 2027; CEQA Status - Not a Project 2.Discussion of Electrification State Caps and Additional Discretionary Subsidies and Potential Recommendation to City Council FUTURE MEETINGS AND AGENDAS Members of the public may not speak to the item(s) ADJOURNMENT 2 April 07, 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: 992-2730-7235 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. 3 April 07, 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. 4 April 07, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. Finance Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Public Works Meeting Date: April 7, 2026 Report #:2602-5981 TITLE Recommend City Council Adoption of a Resolution Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage) Reflecting a 3.0% Consumer Price Index Rate Increase to $18.14 Per Month Per Equivalent Residential Unit for Fiscal Year 2027; CEQA Status - Not a Project RECOMMENDATION Staff recommends that the Finance Committee recommend that the City Council adopt the attached resolution amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage), to implement a 3.0% rate increase consistent with the applicable Consumer Price Index, increasing the monthly charge per Equivalent Residential Unit (ERU) by $0.53, from $17.61 to $18.14 for Fiscal Year 2027. BACKGROUND On April 11, 20171, a majority of Palo Alto property owners approved a ballot measure authorizing a monthly Stormwater Management Fee to fund storm drain capital improvements projects, enhanced maintenance of the storm drain system, stormwater quality protection programs, and more. City Council certified the results of the ballot proceeding on April 17, 2017. The approved ballot measure contains an annual fee escalator clause that permits the Council to raise the Stormwater Management Fee each year to account for inflationary cost increases. Specifically, the ballot measure stated that: “In order to offset the effects of inflation on labor and material costs, the maximum rate for the Storm Water Management Fee (and each component of the Storm Water Management Fee) will be increased annually each July 1 (beginning July 1, 2018), by the lesser of (i) the percentage change in the Consumer Price Index (CPI) for the San Francisco-Oakland-San Jose CSMA (Consolidated Statistical Metropolitan Area), published by the United States Department of Labor, Bureau of Labor Statistics during the prior calendar year or (ii) 6%. The City Council would have the authority to set the rate for the Storm Water Management Fee (and each 1 City Council, April 17, 2017; Agenda Item#3; SR #7937 Item 1 Item 1 Staff Report Item 1: Staff Report Pg. 1 Packet Pg. 5 of 19 component of the Storm Water Management Fee) at any rate that is less than or equal to the inflation adjusted maximum rate.” 3. ANALYSIS 4 . The new rate for the Stormwater Management Fee will be $18.14 per month per ERU. Single family residential properties are billed a monthly amount based on parcel size, in accordance with Table 1. Table 1: Residential Rates (Single-Family Residential Properties) Parcel Size ERU < 6,000 sq. ft 0.8 ERU 6,000 – 11,000 sq. ft.1.0 ERU > 11,000 sq. ft.1.4 ERU 3 City Council, June 16, 2025; Agenda Item #22; SR #2411-3776, 4 Utility Rate Schedule D-1; Effective July 1, 2025; Item 1 Item 1 Staff Report Item 1: Staff Report Pg. 2 Packet Pg. 6 of 19 anticipated to be completed at the end of 2026 as well. Center Drive Capacity Upgrades (SD- 26001) design will be done in-house by staff and is anticipated to start in early 2027. FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 1 Item 1 Staff Report Item 1: Staff Report Pg. 3 Packet Pg. 7 of 19 ***NOT YET APPROVED*** 1 0014_20260319_mv30 Resolution No. ______ Resolution of the Council of the City of Palo Alto Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage) to Increase Storm Water Management Fee Rates by 3.0% Per Month Per Equivalent Residential Unit for Fiscal Year 2027 R E C I T A L S A. In April 2017, a majority of property owners approved a ballot measure adopting a monthly Storm Water Management Fee to fund storm drain capital improvements projects, enhanced maintenance of the storm drain system, storm water quality protection programs, and related activities. B. The ballot measure allowed for annual increases to the fee based on lesser of the local rate of inflation (based on changes to the Consumer Price Index for the San Francisco- Oakland-San Jose region as published by the Bureau of Labor Statistics) or 6%. C. According to the Bureau of Labor Statistics, the Consumer Price Index for the San Francisco-Oakland-San Jose region increased by 3.0% between December 2024 and December 2025. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALO ALTO RESOLVES AS FOLLOWS: SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule D-1 (Storm and Surface Water Drainage) is hereby amended to read in accordance with sheet D-1-1, attached hereto and incorporated herein. The foregoing Utility Rate Schedule, as amended, shall become effective July 1, 2026. SECTION 2. The Council finds that this rate increase is being imposed to offset the effects of inflation on labor and material costs pursuant to the annual inflationary fee escalator provision of the Storm Water Management Fee ballot measure, which was approved by a majority of Palo Alto property owners on April 11, 2017. SECTION 3. The Council finds that the revenue derived from the authorized adoption enumerated herein shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. // // // // Item 1 Attachment A - Draft Resolution Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage) Item 1: Staff Report Pg. 4 Packet Pg. 8 of 19 ***NOT YET APPROVED*** 2 0014_20260319_mv30 SECTION 4. The Council finds that the adoption of this resolution changing the Storm Water Management Fee to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15378(b)(4). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED: Assistant City Attorney City Manager Director of Public Works Director of Administrative Services Item 1 Attachment A - Draft Resolution Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage) Item 1: Staff Report Pg. 5 Packet Pg. 9 of 19 GENERAL STORM AND SURFACE WATER DRAINAGE UTILITY RATE SCHEDULE D-1 A. APPLICABILITY: This schedule applies to all Storm and Surface Water Drainage Service, excepting only those users and to the extent that they are constitutionally exempt under the Constitution of the State of California or who are determined to be exempt pursuant to Rule and Regulation 25. B. TERRITORY: Inside the incorporated limits of the city of Palo Alto and land owned or leased by the City. C. RATES: Per Month: Storm Water Management Fee per Equivalent Residential Unit (ERU) .......................... $18.14 D. SPECIAL NOTES: 1. An Equivalent Residential Unit (ERU) is the basic unit for computation of storm drainage fees for residential and non-residential Customers. All single-family residential properties shall be billed the number of ERUs specified in the following table, based on an analysis of the relationship between impervious area and lot size for Palo Alto properties. RESIDENTIAL RATES (Single-Family Residential Properties PARCEL SIZE (sq.ft.) ERU <6,000 sq.ft. 0.8 ERU 6,000 - 11,000 sq.ft. 1.0 ERU >11,000 sq.ft. 1.4 ERU All other properties will have ERUs computed to the nearest 1/10 ERU using the following formula: No. of ERU = Impervious Area (Sq. Ft.) 2,500 Sq. Ft. 2. For more details on the Storm Water Management Fee, refer to Utilities Rule and Regulation 25. {End} CITY OF PALO ALTO UTILITIES Issued by the City Council Item 1 Attachment A - Draft Resolution Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage) Item 1: Staff Report Pg. 6 Packet Pg. 10 of 19 GENERAL STORM AND SURFACE WATER DRAINAGE UTILITY RATE SCHEDULE D-1 Effective 7-1-2026 Supersedes Sheet No.D-1-1 dated 7-1-2025 Sheet No. D-1-1 Item 1 Attachment A - Draft Resolution Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage) Item 1: Staff Report Pg. 7 Packet Pg. 11 of 19 Finance Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Planning and Development Services Meeting Date: April 7, 2026 Report #:2511-5562 TITLE Discussion of Electrification State Caps and Additional Discretionary Subsidies and Potential Recommendation to City Council RECOMMENDATION Staff recommends that the Finance Committee recommend the City Council adopt an ordinance amending the Fiscal Year (FY) 2026 Municipal Fee Schedule to reflect subsidies for Electrification fees to further the City’s sustainability goals. EXECUTIVE SUMMARY Through the development of the FY 2026 Municipal Fee Schedule, the Finance Committee expressed interest in subsidizing fees related to electrification to further the City’s sustainability goals. When the FY 2026 Municipal Fee Schedule was adopted, these fees were inadvertently not subsidized. Although some fees related to electrification are subject to a State cap that limits what the City can charge for the fees without a written finding, other fees, such as those for new or replacement electric service, heating, ventilation, and air conditioning (HVAC) permits, or permits for electric vehicle charging stations (EVCS), can be full cost-recovery or can be subsidized through City Council’s policy decisions. Given the current financial forecast, staff seek feedback from the Finance Committee on the desired level of subsidy for these activities before returning to the City Council for adoption of new fees. BACKGROUND The City conducted a comprehensive review of Planning and Development Services’ fees for services as part of the development of the FY 2026 Operating Budget. This fee study was discussed with the Finance Committee on March 4, 2025, and the Finance Committee recommended adoption of the fees with a recommendation to City Council to subsidize certain fees to further advance the City’s goals with relation to sustainability and climate action. At the end of their March 4, 2025, discussion the Finance Committee unanimously voted to: Recommend the City Council amend the Planning and Development Services municipal fees as outlined in Attachment B as part of the FY26 budget and municipal fee schedule Item 2 Item 2 Staff Report Item 2: Staff Report Pg. 1 Packet Pg. 12 of 19 with additional recommendation for strong subsidy for electrified appliances and not for gas, except for consideration of compliance with seeking permit. As part of the adoption of the FY 2026 Operating Budget, the City Council voted to adopt the municipal fee schedule, which brought FY 2026 fees for services into alignment with the fee study presented to the Finance Committee through the March 4, 2025. However, certain fees were included at full-cost recovery levels – inadvertently contravening staff’s recommendation, subsequent endorsement from the Finance Committee, and the intent of discussions on subsidizing electrification. This has resulted in the FY 2026 adopted fees for activities related to electrification exceeding those of nearby jurisdictions, complaints from applicants pursuing electrification, and exceeding State limits on certain fees. ANALYSIS This report presents options for aligning electrification fees with previous conversations to further the City’s sustainability goals. As seen in the Finance Committee’s March 4, 2025, motion (above) there was interest from the committee in subsidizing electrification permits that were inadvertently not applied through the adoption of the FY 2026 Municipal Fee Schedule. There are three categories of electrification fees presented for discussion; those that are ‘capped’ (limited) by state law; those that apply to new/replacement electric service, including HVAC; and, EVCS. Staff’s recommendations for how to proceed for each of these three categories are discussed below. State Limits on Photovoltaic (Solar Energy) Systems per California Government Code 66015(a) and (b). The State of California sets ‘caps’ on fees for photovoltaic (solar energy) systems fees that the City cannot exceed without written findings documenting that actual costs exceed the state caps. The City has the ability and documentation necessary to make such findings through its recent fee study. Staff recommends aligning with state caps for clarity with applicants, parity with neighboring jurisdictions, and to reflect the previous interest in subsidizing electrification activities. Table 2 below presents the solar fees that are limited by state caps. Item 2 Item 2 Staff Report Item 2: Staff Report Pg. 2 Packet Pg. 13 of 19 Table 1. State Caps on Photovoltaic Systems (PV) compared to current fees Fee Title FY 2025 Fee ($) FY 2026 Fee ($) FY 2024 Permits Issued State Cap / Proposed Fee ($) Difference ($) % Subsidy % Cost Recovery Potential annual $ Value of subsidy Multi-Family / Commercial System (10kW or less) 755 1,938 -1,000 (938) 48% 52% - Multi-Family / Commercial System (11kW-49kW) 1,013 2,613 - 1,000 (1,613) 62% 38% - Multi-Family Commercial System (50kW or greater) 755 3,471 2 1,0001 (2,471) 71% 29% (4,942)1 Single-Family Systems (10kW or less) 349 1,481 128 450 (1,031) 70% 30% (131,968) Single-Family Systems (greater than 10kW) 223 1,868 73 4502 (1,418) 76% 24%(103,514)2 Single-Family Systems (Reinstallation) 1,002 450 (557) 55% 45% - SolarAPP+PV and ESS - 1,331 - 450 (881) 66% 34% - SolarAPP+PV - 655 - 450 (205) 31% 69% - Solar Hot Water System - 665 - 450 (215) 32% 68% - Energy Storage System – Residential -1,859 -450 (1,409)76%24% Energy Storage System – Commercial -3,255 -1,000 (2,255)69%31% Note 1: $7 per kw>51k but less than 250k, $5 per kw>250k. As a result, the "difference" would reduce depending on true scale of proposed system. Note 2: Additional $15/kw > 15. As a result, the "difference" would reduce depending on true scale of proposed system. Item 2 Item 2 Staff Report Item 2: Staff Report Pg. 3 Packet Pg. 14 of 19 permits would cause lesser financial impacts on cost recovery levels. Through January 2026, approximately $113,000 in revenues have been impacted by these State caps. Given the growing interest in electrification, in both commercial and residential sectors, staff will continue to closely monitor these activity levels to determine precise impacts of this policy subsidy. 1 1 Future legislation could limit permit fees like photovoltaic permits. Senate Bill (SB) 222 is bill advancing through the state legislature. Item 2 Item 2 Staff Report Item 2: Staff Report Pg. 4 Packet Pg. 15 of 19 Table 2. Electric Service and HVAC Permits – Base Fee Subsidy Fee Title FY 2025 Fee* ($) FY 2026 Fee ($) Proposed $ Subsidized Cost (Less Base Fee) New Cost Recovery New Subsidy FY 2024 Activity Level Annual $ Value estimate of subsidy Electrical Service - New or Replacement: 400 amp and Greater 745 958 653 68%32%1 (305) Electrical Service - New or Replacement: Less than 400 amp 497 621 316 51%49%187 (57,035) HVAC Systems (i.e., Air Conditioners, Heat Pumps, Air Handling Unit): Multi-Family / Commercial (Groups of 5): Direct replacements 64 902 597 66%34%-- HVAC Systems (i.e., Air Conditioners, Heat Pumps, Air Handling Unit): Multi-Family / Commercial (Groups of 5): New - with curb 64 1,539 1,234 80%20%-- HVAC Systems (i.e., Air Conditioners, Heat Pumps, Air Handling Unit): Multi-Family / Commercial (Groups of 5): New - without curb 64 1,232 927 75%25%-- HVAC Systems (i.e., Air Conditioners, Heat Pumps, Air Handling Unit): Single-Family* 64 714 328 46%54%219 (84,534) *This aligns with the City’s fee for ’Residential Gas Water and Space Heating Equipment – Stand Alone’ set by Council in September 2025. The Annual estimated subsidy impact includes the estimated impacts associated with gas subsidy. Electric Vehicle Charging Stations (EVCS) The final discussion area for electrification subsidies relates to EVCS for both residential and commercial applicants. The department’s 2025 Fee Study calculated 100% cost-recovery for processing permits. These levels were applied through the Municipal Fee Schedule process, inadvertently contravening the recommendation from the Finance Committee to apply a policy subsidy. Since the fees were adopted, there have also been numerous complaints from EVCS applicants about the high cost of permits, especially as it relates to neighboring jurisdictions and the cost for the EVCS equipment. Item 2 Item 2 Staff Report Item 2: Staff Report Pg. 5 Packet Pg. 16 of 19 Given the costs associated with processing permits for EVCS through the fee study methodology, a base fee subsidy (as discussed above for Electric Service and HVAC units) would not bring the City into alignment with neighboring jurisdictions nor address the relative cost of the permit compared to the EVCS equipment. There is also concern that the relatively high price point of the permit could dissuade applicants from obtaining a permit. This issue of permit avoidance is one that is contrary to the City’s interests; the City needs to understand which households are installing electric vehicle charging stations not only from a safety perspective but also from a utilities load management perspective. Table 3. Electric Vehicle Charging Stations Refined Review Process Fee Fee Title FY 2025 Fee* ($) FY 2026 Fee ($) Refined Review Process Fee ($) Difference ($) FY 2024 Activity Level Annual $ Value impact EVCS: Single-Family (Level 1 and 2) 209 1,327 307 1,020 121 (123,420) EVCS: Single-Family (Level 3) 317 1,527 489 1,038 0 EVCS: Multi-Family / Commercial (Level 1 and 2): 1-6 Stations 483 4,326 3,338 988 12 (11,856) EVCS: Multi-Family / Commercial (Level 1 and 2): Each add’l 6 stations 91 1,134 1,036 98 167 (16,366) EVCS: Multi-Family / Commercial (Level 3 and 4): 1-6 Stations 577 5,238 3,806 1,432 1 (1,432) EVCS: Multi-Family / Commercial (Level 3 and 4): Each add’l 6 stations 113 1,134 1,036 98 1 (98) Item 2 Item 2 Staff Report Item 2: Staff Report Pg. 6 Packet Pg. 17 of 19 FISCAL/RESOURCE IMPACT The recommended changes in this report will negatively impact cost recovery levels for the Planning and Development Services Department, and thereby for the General Fund, by reducing revenues collected through subsidized fees. This approach reflects previous conversation and feedback from the Finance Committee to subsidize these fees from the General Fund in furtherance of electrification as a policy goal. These subsidies will prevent Development Services from achieving full cost-recovery. State caps on photovoltaic (solar) systems will reduce revenues by approximately $240,000 each year if activity levels remain constant with FY 2024 activity levels. The activity level will determine the exact impact of these state caps. Alternatively, the City could pursue a written finding to achieve full cost-recovery, though this would contravene prior discussions about subsidizing electrification activities. For policy subsidies related to other electrification permits, the precise fiscal impacts will be determined by the number of permit applications in each category since the volume varies year to year. Given the timing of this discussion with the Finance Committee, impacts from additional policy subsidies beyond state caps on FY 2026 will be minimal. Impacts from a policy subsidy in future years will be more significant and requires careful consideration of the trade- offs between the City‘s goals and fiscal sustainability. Potential strategies to address a decrease in revenue associated will involve the permit streamlining approach to EVCS above, working with the City’s Utilities Department and Climate Action Team to explore alternative revenue sources, such as subsidies from climate- and energy-related revenue sources such as Public Benefits, Cap and Trade, and Low Carbon Fuel Standard revenues to address solar, electrification, and EVCS permit fees, and discussions of any tradeoffs between policy priorities for various options, if any arise. Staff will continue to monitor activity levels and return to City Council with corresponding budget adjustments as part of the development of the FY 2027 Budget Development Process. STAKEHOLDER ENGAGEMENT Extensive stakeholder engagement was conducted as part of the March 4, 2025, conversation with the Finance Committee about the Planning and Development Services Fee Study as referenced in CMR 2501-4019.2 There were a number of meetings with internal stakeholders, including the Utilities Department and Planning and Development Services to align on approaches for incorporating Finance Committee’s Spring 2025 feedback. No additional external stakeholder engagement was conducted for this report since it aligns FY 2026 Municipal Fees with previous feedback and intent from Finance Committee. ENVIRONMENTAL REVIEW Council action on this item is not a project as defined by the California Environmental Quality Act (CEQA) because the proposed amendment to the 2026 Municipal Fee Schedule is a government funding mechanism which does not involve any commitment to any specific Item 2 Item 2 Staff Report Item 2: Staff Report Pg. 7 Packet Pg. 18 of 19 project which may result in a potentially significant physical impact on the environment. CEQA Guidelines section 15378(b)(4). APPROVED BY: Item 2 Item 2 Staff Report Item 2: Staff Report Pg. 8 Packet Pg. 19 of 19