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HomeMy WebLinkAbout2026-05-04 City Council Summary MinutesCITY COUNCIL SUMMARY MINUTES Page 1 of 16 Regular Meeting May 4, 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: None Absent: None Special Orders of the Day 1. Proclamation of May 2026 as Affordable Housing Month. CEQA Status: Not a project. Mayor Veenker announced recognition of May as Affordable Housing Month. Councilmember Lythcott-Haims read the proclamation, Affordable Housing Month. Chief Operating Officer Sheryl Klein of Alta Housing accepted the proclamation on behalf of the organizations partnering with the City to expand affordable housing opportunities. Appreciation was expressed for the City's leadership and ongoing efforts to create affordable housing and support economically diverse and vulnerable community members. COO Klein invited the Council and community to a tree-planting event scheduled for the following day at Colorado Park Apartments in partnership with Canopy and noted that a Cinco de Mayo celebration would follow. Mayor Veenker invited COO Klein to the dais for a photo with Council. NO ACTION Agenda Changes, Additions and Deletions City Manager Ed Shikada reviewed agenda modifications, including correction of the time estimate for the budget study session, elimination of City Manager comments, and reversal of the order of Items 14 and 15. Mayor Veenker noted that the budget study session had been extended from 30 to 60 minutes and advised that subsequent agenda item start times would be adjusted accordingly. SUMMARY MINUTES Page 2 of 16 City Council Meeting Summary Minutes: 05/04/2026 Closed Session 2. 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 3. CONFERENCE WITH REAL PROPERTY NEGOTIATORS Authority: Government Code Section 54956.8. Property: 4000 Middlefield Road, Palo Alto (Informally known as the Cubberley Site) Negotiating Party: Palo Alto Unified School District City Negotiators: (Ed Shikada, Kiely Nose, Kristen O'Kane, Lauren Lai) Subject of Negotiations: Purchase, Exchange, and/or Lease, Price and Terms of Payment Public Comment: Herb B. questioned the adequacy of the notice and property description associated with Item 2 and raised concerns regarding the identification of negotiators and the listed address. Regarding Item 3, Herb B. discussed the Cubberley site in relation to rail corridor safety concerns and suggested evaluating alternative uses or locations for educational facilities. Council went into Closed Session at 5:45 p.m. and returned from Closed Session at 7:45 p.m. No reportable action. MOTION: Councilmember Lythcott-Haims moved, seconded by Councilmember Reckdahl, to go into Closed Session. MOTION PASSED: 7-0 Public Comment 1. Tim M., representing the Silicon Valley Democratic Socialists of America, urged the City to terminate its contract with Flock Safety, remove automated license plate reader cameras, and consider legal action related to reported data access violations. Concerns were voiced regarding compliance with City policies, contractual obligations, and state law. The commenter stated that the reported breaches demonstrated reliability and accountability issues and suggested that affected jurisdictions explore a coordinated legal response. 2. Barbara H., a Professorville resident, spoke in opposition to the proposed closure of the Churchill Avenue rail crossing. The potential impact of traffic being diverted to Oregon Expressway and Embarcadero Road was discussed, including safety risks SUMMARY MINUTES Page 3 of 16 City Council Meeting Summary Minutes: 05/04/2026 to motorists, bicyclists, pedestrians, and schoolchildren. The commenter cited reported concerns from police and fire personnel regarding emergency response times and contended that the closure could create foreseeable safety and liability issues. Alternative suicide prevention measures were preferred, including 24-hour rail crossing security, and reference was made to public opposition to the proposed closure. 3. Roger S., a longtime Palo Alto resident, highlighted a Fire Department program that provides transportation assistance for medical emergencies for a monthly fee and encouraged broader public awareness of the service. The commenter requested that the Churchill Avenue rail crossing item scheduled for the next City Council meeting be heard earlier in the agenda to improve accessibility for residents wishing to participate. Public Comment on Item 15 Mayor Veenker opened the public hearing on Item 15 for the limited purpose of receiving comments from recognized labor organizations and advised that the remaining public hearing would be continued until later in the meeting. Mayor Veenker noted that speakers could defer their comments until after the staff presentation if desired. 1. Rob M. D., representing building inspectors through SEIU, discussed employee retention and staffing improvements within the Building Inspection Division, noting that the department had progressed from significant vacancies to full staffing following recent labor negotiations. Improvements in workload distribution, work quality, and employee quality of life were highlighted. Similar staffing investments were encouraged in other departments experiencing recruitment and retention challenges. The commenter compared employee healthcare costs with those of neighboring jurisdictions and contended that Palo Alto employees face higher costs across multiple coverage categories. 2. Ricardo V., a laboratory technician at the Water Quality Control Plant, addressed employee retention and encouraged the City to pursue additional incentives to retain staff. Recent initiatives, including access to PAUSD and the BayPass program, were identified as positive examples. The commenter suggested exploring measures to reduce commuting burdens, such as expanded remote work opportunities and employee housing options, and recommended conducting targeted market studies for positions experiencing high vacancy and turnover rates. 3. Marcelo A., a Water Quality employee, referenced employee turnover and succession planning concerns within the department. Concerns were expressed regarding the loss of experienced staff through retirements and departures to SUMMARY MINUTES Page 4 of 16 City Council Meeting Summary Minutes: 05/04/2026 other agencies, as well as the challenges associated with training replacements for specialized positions. The commenter encouraged the City to pursue retention strategies, including home financing programs with below-market interest rates and enhanced healthcare benefits, to support workforce stability. Council Member Questions, Comments and Announcements Councilmember Lauing commented on participation in the May Fete Parade and described it as a valued community event. Support was expressed for extending the parade route in future years and for including gift bags for children. Positive feedback from parade participants was reported. Councilmember Lythcott-Haims echoed appreciation for the May Fete Parade and voiced interest in restoring elements of the event from prior years, including a longer parade route and additional floats. Councilmember Lythcott-Haims announced the City's first Pride event, scheduled for June 7 at King Plaza, and recognized the efforts of staff, community partners, volunteers, and Palo Alto youth in organizing the event. Planned activities will include performances, speeches, informational booths, and music. It was noted that the Palo Alto Police Department would wear Pride-themed badges during June. Councilmember Burt reported on the opening of Caminar, an outpatient treatment center for young adults, on Cambridge Avenue and described the facility as a significant addition to services available to residents. Appreciation was expressed for the organization's decision to locate the facility in Palo Alto. Mayor Veenker voiced support for the community events and initiatives discussed by Councilmembers and highlighted the City's participation in the Mayor's Monarch Pledge. Mayor Veenker noted that the pledge supports efforts to protect monarch butterflies through habitat restoration, public engagement, and native plantings, and stated that the initiative aligns with the City's sustainability goals. Engagement with community gardens and nature centers to encourage planting of native milkweed and nectar-producing plants was identified as part of the effort. Mayor Veenker reported on recent activities with the Northern California Power Agency (NCPA), including a tour of Shasta Dam and participation in an NCPA Commission meeting. It was noted that the Commission voted to accept the application of Lassen Municipal Utility District for NCPA membership, with further analysis and discussion to follow. Participation in a League of California Cities meeting and meetings with state legislators regarding municipal issues was reported, along with attendance at a federal policy conference in Washington, D.C., focused on public power issues. Mayor Veenker further highlighted the Sustainable Data Centers Conference held at Stanford University and recognized the contributions of City staff, Stanford partners, NCPA, the Bay Area Air District, and other organizations. The conference focused on developing sustainable approaches to data center SUMMARY MINUTES Page 5 of 16 City Council Meeting Summary Minutes: 05/04/2026 development and operations, including strategies to protect water, air quality, and electric power resources. Councilmember Reckdahl reported on a tour of the Living Levee and commended staff for their work on the initiative. The project was described as a potential tool for addressing sea level rise while providing habitat benefits and interest from other Bay Area jurisdictions was noted. Councilmember Reckdahl commented positively on the May Fete Parade and expressed support for restoring features from prior years, including floats and a route that would pass Channing House, where residents enjoy watching the parade. Study Session 4. City Manager Transmittal of the Fiscal Year 2027 Proposed Operating and Capital Budgets City Manager Ed Shikada introduced the item and noted that the budget had been released the previous week in accordance with the City Charter. The budget was described as addressing fiscal challenges associated with tax revenue adjustments and economic uncertainty while maintaining core services, advancing Council priorities, and supporting infrastructure investments. Ongoing cost-containment efforts, including vacancy management and other operational measures, were identified as contributing to the proposed budget. City Manager Shikada further highlighted several City initiatives and projects moving forward despite fiscal constraints, including the Mitchell Park Place affordable housing development, discussions regarding the Churchill Avenue rail crossing and oversized vehicle (OSV) policies, the Homekey program, construction of the Newell Road Bridge, and the opening of the Bryant Street Community Center. City Manager Shikada emphasized that the proposed budget reflects tradeoffs and cost-control measures while continuing to advance key City priorities. Chief Financial Officer Lauren Lai introduced the FY 2027 proposed operating and capital budgets and thanked staff and stakeholders involved in the budget development process. CFO Lai described the proposal as a balanced budget that incorporates multiyear strategies to address financial challenges while preserving core City services and supporting major infrastructure investments. An overview of the presentation agenda was provided, including the budget review schedule, Council priorities, economic outlook, Citywide funds, the General Fund, the 5-year Capital Improvement Program (CIP), General Fund reductions, utility operations, and upcoming budget deliberation milestones. A slide outlining the FY 2027 budget schedule was presented. CFO Lai reviewed upcoming budget workshops and hearings, including Finance Committee workshops, a City Council budget recap, Finance Committee wrap-up discussions, and final budget adoption scheduled for June 15. Slides summarizing the City's vision, 2026 Council priorities, and key FY 2027 budget metrics were shown. CFO Lai reported that the proposed Citywide budget totals approximately $1.05B, representing a 1.9 percent increase from the prior year. The General Fund budget was reported at approximately $311M, SUMMARY MINUTES Page 6 of 16 City Council Meeting Summary Minutes: 05/04/2026 a 1.1 percent decrease, while the FY 2027 CIP totals approximately $313.6M and the 5-year CIP totals approximately $1.2B. CFO Lai stated that the proposed budget addresses a projected $17.1M General Fund deficit through a multiyear balancing strategy and continuation of previously approved expenditure reductions. The Budget Stabilization Reserve (BSR) was projected to remain between 17 and 18 percent. A slide summarizing strategies to address the projected General Fund deficit was presented. CFO Lai reviewed approximately $6.8M in expenditure reductions, including administrative streamlining, system modernization, contract savings, vacancy management, and a net reduction of 22.25 FTEs. Proposed revenue enhancements totaling approximately $1.7M were described, including fee and rate adjustments, investment management changes, and economic development efforts. It was reported that approximately $2.6M in one-time funding sources would be used to support ongoing services and identified Measure B, SUMC, and the Hamilton Avenue Benefit Fund as funding sources. Reductions in General Fund transfers to the CIP were reviewed, while noting that the FY 2027 transfer of approximately $34.5M would continue to support infrastructure investments. CFO Lai further described approximately $4.5M in pension and liability savings associated with management of Section 115 Trust assets and CalPERS- related obligations. A slide identifying key fiscal challenges was presented. CFO Lai highlighted revenue-related risks affecting the City's financial outlook, including reduced sales tax allocations from the State, moderated property tax growth projections, and uncertainty surrounding the Document Transfer Tax (DTT). CFO Lai explained that proponents of the proposed Save Proposition 13 Act of 2026 contend that certain local transfer taxes adopted without two-thirds voter approval could no longer be collected after December 2028. Palo Alto was identified as one of the jurisdictions potentially affected, creating an estimated General Fund revenue risk of approximately $8M annually. CFO Lai emphasized that the proposed FY 2027 budget assumes continued receipt of DTT revenues. Pie charts summarizing Citywide revenues and expenditures were presented. CFO Lai reviewed the composition of the approximately $1.05B budget, highlighting major revenue sources, including utility revenues and taxes, and major expenditure categories, including personnel costs, utility purchases, and capital investments. A chart comparing historical staffing levels was shown. CFO Lai reported that the proposed FY 2027 budget includes 1,088 positions citywide, including 591 positions within the General Fund, reflecting a net reduction of 22.25 positions. Pie charts illustrating General Fund revenues and expenditures were presented. CFO Lai reviewed the primary revenue sources, including taxes and charges for services, and noted that personnel costs comprise a significant share of General Fund expenditures. CFO Lai reiterated that the proposed FY 2027 General Fund budget reflects a reduction in expenditures compared with the prior year. A multiyear General Fund forecast and BSR projection was presented. CFO Lai reviewed projected revenues, expenditures, and reserve levels over a 3- to 5-year period and reported that the FY 2027 budget is balanced, with modest deficits projected in FY 2028 and FY 2029. It was stated that maintaining fiscal stability will require continued expenditure discipline and ongoing use of Section 115 Trust resources for pension-related obligations. Council was advised to carefully consider future priorities and funding commitments in light of the forecast. A line chart showing trends in major General Fund tax revenues from 2019 SUMMARY MINUTES Page 7 of 16 City Council Meeting Summary Minutes: 05/04/2026 through 2027 was presented. CFO Lai highlighted recent declines in sales tax revenues, volatility in Transient Occupancy Tax (TOT) revenues, moderated property tax growth projections, and ongoing uncertainty surrounding DTT revenues. Slides summarizing investments and reductions across the City's 5 city service areas (CSAs) were presented. CFO Lai reviewed proposed investments within the Internal Support and Administration, Community and Library Services, Planning and Transportation, Infrastructure and Environment, and Public Safety CSAs. Investments included housing and community services, Cubberley planning, library operations, transportation programs, infrastructure maintenance, electrification, sustainability initiatives, and public safety facilities and services. Proposed reductions included staffing decreases, vacancy management, administrative efficiencies, replacement of Palo Alto Link with a voucher program, and adjustments to public safety operations and equipment procurement. Several staffing changes were associated with project completion, service realignments, and targeted investments in priority areas, including regional water quality and emergency medical services. Slides summarizing the 5-year CIP and utility rate proposals were presented. CFO Lai reported that the proposed 5-year CIP totals approximately $1.2B and includes 217 projects across multiple funding sources. Projects scheduled for completion in FY 2027 include the Mitchell Park Library Repair, Hamilton Avenue System Upgrades, and Newell Road Bridge Replacement projects. Major projects included in the 5-year plan include Quiet Zone Improvements, Elwell Court and Development Office improvements, natural grass fields, and the Water System Master Plan. A summary of adopted and proposed utility rates was presented. CFO Lai reviewed utility rate proposals previously considered by the UAC and Finance Committee and noted that the Finance Committee had recommended a 4.5 percent electric rate increase for the following year in place of the proposed 6 percent increase. It was further noted that the proposed 9 percent gas rate increase received a split recommendation from the Finance Committee. A slide was presented identifying upcoming budget deliberation dates. CFO Lai encouraged community participation in the budget process and directed the public to budget materials available online. CFO Lai concluded the presentation by requesting initial feedback from Council to assist the Finance Committee in its upcoming budget review and noted that the discussion would provide an opportunity to clarify the budget process, materials, and respective roles. Mayor Veenker thanked CFO Lai and staff for their work in developing the proposed budget and characterized the budget as a thoughtful response to challenging fiscal circumstances. Prior to opening public comment, Mayor Veenker invited remarks from the Chair of the Finance Committee. Councilmember Lauing, speaking as Chair of the Finance Committee, emphasized that this discussion was intended to provide the Finance Committee with broad policy direction from the full City Council rather than detailed budget recommendations. It was stated that early feedback from Council would help inform the Finance Committee's upcoming 2-day budget workshop. SUMMARY MINUTES Page 8 of 16 City Council Meeting Summary Minutes: 05/04/2026 Public Comment: 1. Marie-Jo F. stated that the City assumed control of the Palo Alto Airport in 2014 and provided the airport with a loan of approximately $3.1M. Reference was made to reported operating losses at the airport and planned airport CIP projects. Concerns were expressed regarding the airport's financial performance, potential reliance on City resources, and the need for fiscal accountability while the City faces broader budget challenges. The commenter requested additional public reporting regarding airport revenues, expenditures, usage, and noise impacts, including publication of historical profit-and-loss information in future airport annual reports. 2. Helene G. acknowledged recent City actions to improve student safety, including daylighting improvements near her child’s elementary school, but opposed the proposed elimination of 4 crossing guard positions and a Community Service Officer position. It was observed that the savings would be minimal relative to the overall budget and concern was expressed that the reductions would negatively affect student safety, particularly at the Meadow Drive and Alma Street intersection used by many Gunn High School students. The commenter noted that crossing guards were added following prior collisions involving students and urged the Council to retain the positions and prioritize student safety. 3. Shani K., a Palo Alto resident, Parks and Recreation Commissioner, and liaison to the Foothills Nature Preserve, clarified that the PRC had not reviewed the FY 2027 budget and that these comments reflected her personal views. Opposition was expressed to a proposed budget cut for reduction in irrigation at Foothills Nature Preserve. The commenter stated that the preserve is currently operating under Tier 1 drought conditions and contended that additional reductions could adversely affect Boronda Lake, wildlife habitat, environmental conditions, recreational programming, and visitor experiences. The Council was urged to remove the proposed reduction from the budget or conduct further environmental evaluation before implementation. 4. Lara A., current PTA Council Chair for Safe Routes to School and speaking in an individual capacity, opposed the proposed reduction in crossing guard services. The commenter stated that crossing guard locations had undergone a warranting process and were determined to be necessary for student safety. Concerns were voiced that reducing crossing guard coverage could encourage additional school- related vehicle trips and negatively affect traffic, environmental goals, public health, and student safety. The commenter urged Council to identify alternative budget reductions. 5. John M. expressed appreciation for the organization and accessibility of the proposed budget materials. Support was expressed for advancing funding and SUMMARY MINUTES Page 9 of 16 City Council Meeting Summary Minutes: 05/04/2026 implementation of quiet zone improvements, which the commenter stated would provide benefits to residents along the rail corridor and complement ongoing rail safety efforts. Suggestions were offered regarding potential use of rail crossing monitors for crossing guard duties. A request was made for additional information regarding Caltrain and City strategies to improve rail safety and the anticipated implementation timeline. 6. Melinda M. (Zoom) was concerned regarding the proposed timeline and funding strategy for quiet zone improvements. Questions were raised regarding the anticipated 2030 implementation date, the use of Measure K funding, the availability of other funding sources, and the proposed design costs. The commenter referenced prior quiet zone projects in neighboring jurisdictions and urged the City to accelerate implementation, particularly at the Churchill Avenue crossing, citing community health and quality-of-life impacts associated with train horn noise. 7. Tim H. (via Zoom) opposed the proposed reduction in crossing guard services. The commenter stated that crossing guard positions were added in response to prior student-involved traffic incidents and believed that reducing those services would weaken preventative safety measures. Support was expressed for maintaining crossing guard staffing and prioritizing proactive investments in student safety. 8. Brian C. (Zoom) opposed the proposed reduction in crossing guard services and characterized student safety as a core municipal responsibility. The commenter contended that budget decisions should reflect community values and questioned whether consultant and planning expenditures should take precedence over crossing guard staffing and student safety. Reference was made to the South Palo Alto Bike/Pedestrian Connectivity Project and the commenter suggested redirecting funding from that effort to maintain crossing guard positions. Mayor Veenker thanked members of the public for their comments and reminded the community that additional budget discussions would occur at upcoming Finance Committee and City Council meetings prior to budget adoption in June. Councilmembers were then invited to ask questions and provide feedback for consideration during the Finance Committee's budget deliberations. Vice Mayor Stone thanked staff for developing the proposed budget and acknowledged the challenges associated with addressing projected deficits while maintaining service levels. Vice Mayor Stone expressed concern regarding the proposed reduction in crossing guard services and asked whether discussions had occurred with PAUSD regarding cost sharing. City Manager Shikada confirmed that conversations had taken place and would continue with current district leadership. Vice Mayor Stone indicated support for maintaining crossing guard staffing while exploring partnership opportunities with the school district. SUMMARY MINUTES Page 10 of 16 City Council Meeting Summary Minutes: 05/04/2026 Vice Mayor Stone asked whether the proposed budget includes reductions to sworn police staffing. CFO Lai explained that the budget proposes a 1-year freeze of a Police Department special events sergeant position and creation of a civilian program assistant position to assume scheduling responsibilities, while other duties would be redistributed among existing sergeants. Vice Mayor Stone expressed concern regarding police staffing vacancies and associated overtime costs and suggested exploring budget strategies to improve recruitment and retention within the Palo Alto Police Department. Reference was made to a recent police and fire staffing audit and the potential operational impacts of continued vacancies. CFO Lai indicated that these comments would provide useful direction for the Finance Committee's budget review. Vice Mayor Stone asked about the potential impact of eliminating a Community Service Officer position on OSV enforcement activities. Police Chief James Reifschneider stated that reducing Community Service Officer staffing would likely affect enforcement capacity because responsibilities would need to be redistributed among fewer personnel. It was indicated that increased emphasis on OSV enforcement could result in reduced capacity for other parking enforcement activities. Vice Mayor Stone expressed concern that the proposed reduction could hinder progress toward Council priorities related to OSV enforcement. Councilmember Reckdahl expressed support for maintaining crossing guard services and encouraged continued discussions with PAUSD or finding other ways to fund the service. Concerns were raised regarding the proposed irrigation reductions at Foothills Nature Preserve, particularly potential impacts on Boronda Lake, wildlife, and vegetation. Councilmember Reckdahl supported a gradual and carefully planned approach and suggested that the matter be reviewed by the Parks and Recreation Commission (PRC). Regarding quiet zones, Councilmember Reckdahl stated that project timing appeared to be driven more by railroad- related constraints than by available funding. Support was expressed for maintaining funding for longstanding nonprofit partners that provide community services. Councilmember Reckdahl further discussed fire engine procurement and suggested exploring used diesel vehicles as a potential alternative. Councilmember Reckdahl asked about the availability of infrastructure reserve funding within the CIP. CFO Lai explained that reserve levels should be evaluated over the full 5-year CIP horizon and noted that projected fund balances decline significantly over that period. Councilmember Reckdahl emphasized the importance of maintaining flexibility for potential future capital needs, citing possible expenditures related to OSV programs, transportation improvements and bicycle safety projects related to new development by Barron Park, and facility repairs at the Palo Alto Museum. Councilmember Reckdahl expressed support for retaining reserves to address unforeseen infrastructure and community needs. Councilmember Reckdahl discussed the City's use of Section 115 Trust funds for ADP and ADC to CalPERS. The trust was described as having generated strong investment returns and ADP and a portion of ADC were identified as mechanisms for reducing pension-related liabilities. Although initially concerned that ADC payments could be viewed as funding ongoing costs with reserves, Councilmember Reckdahl stated that his review indicated the payments remain SUMMARY MINUTES Page 11 of 16 City Council Meeting Summary Minutes: 05/04/2026 directed toward reducing existing pension obligations. That approach was characterized as reasonable. Councilmember Reckdahl noted that CalPERS has been requiring more aggressive pension debt repayment, which he believed would strengthen the City's long-term financial position. Councilmember Lythcott-Haims thanked staff and the Finance Committee for their work on the proposed budget and expressed appreciation for the proposed funding for allcove. Support was expressed for maintaining crossing guard services, particularly at locations involving Alma Street, and for continuing discussions with PAUSD regarding potential cost sharing. Councilmember Lythcott-Haims further expressed concern that funding for rail crossing monitors is proposed only through February 2027 and stated that the limited duration of the program should be clearly communicated as part of upcoming discussions regarding a potential temporary closure of the Churchill Avenue rail crossing. It was noted that some community members may assume the monitor program will remain in place for a longer period based on the City's reliance on the program as a rail safety measure. Councilmember Lythcott-Haims requested additional information regarding the proposed quiet zone funding and implementation schedule, noting community interest in accelerating the project. Chief Transportation Official Ria Lo explained that the FY 2027 funding would support design work required before construction can begin and stated that staff has been coordinating with Caltrain and Public Works to expedite the process. It was reported that the design phase could potentially be completed in approximately 10 to 11 months rather than the more typical 18-month timeframe, although portions of the process require coordination with the California Public Utilities Commission and Caltrain. Chief Transportation Official Lo further noted that accelerating construction beyond the current schedule would require advancing funding to an earlier year. Councilmember Lythcott-Haims voiced appreciation for staff's efforts to expedite the project. Councilmember Lythcott-Haims agreed with Councilmember Reckdahl regarding the importance of addressing water leaks at the Palo Alto Museum. Councilmember Lythcott-Haims suggested continued consideration of whether the current number of library facilities represents an essential service level given the City's population size. Mayor Veenker thanked Councilmembers and the Finance Committee for their work on the proposed budget. Support was expressed for the proposed library reductions, with Mayor Veenker noting that the discussion relates more to service levels than the number of library locations. Mayor Veenker was supportive of accelerating quiet zone implementation and stated that project timing appears to be driven primarily by process requirements rather than funding availability. Support was further voiced for maintaining crossing guard services. Mayor Veenker requested additional evaluation of the proposal to procure diesel fire engines and suggested exploring alternatives, including the potential use of used diesel vehicles. Concerns were raised regarding police staffing levels and overtime costs. In response to a question regarding the proposed sergeant position freeze, City Manager Shikada stated that the position is expected to become vacant during the budget period. Mayor Veenker further indicated interest in SUMMARY MINUTES Page 12 of 16 City Council Meeting Summary Minutes: 05/04/2026 identifying funding options for water intrusion remediation at the Palo Alto Museum and asked whether the project was included in the proposed budget. City Manager Shikada stated that the project is not currently included. Mayor Veenker requested additional review of potential funding options and indicated support for helping the museum meet its planned opening schedule. Mayor Veenker asked about the financial condition of the Palo Alto Airport in light of public comments regarding operating losses. CFO Lai reported that staff has developed a comprehensive fee update intended to improve the airport's long-term financial sustainability and stated that the airport enterprise fund is projected to be near break-even in FY 2027. It was noted that the proposed fee structure includes adjustments for multiple categories of airport users and will return to the Finance Committee and City Council for consideration. Mayor Veenker noted that continued airport subsidies would raise additional questions given the City's fiscal constraints. CFO Lai credited staff for developing a revised fee structure designed to support future financial stability. Director of Public Works Brad Eggleston clarified that the airport operates as an enterprise fund and that operating losses would affect airport reserves rather than require General Fund support. Director Eggleston confirmed that repayment of the original General Fund loan contributes to the airport's financial obligations. Mayor Veenker asked about the decline in sales tax revenues reflected in the budget forecast. CFO Lai explained that the reduction in FY 2026 results from a combination of one-time adjustments and ongoing reductions to the City's sales tax base. It was noted that revenues are projected to partially recover in FY 2027 but remain below prior trend levels and that sales tax revenues are projected to decline approximately 8 percent from the prior year. Mayor Veenker expressed interest in having the Finance Committee further review the proposed irrigation reductions at Foothills Nature Preserve. It was noted that the proposal contemplates implementation through drought measures and consideration of historical water use and a desire was conveyed to ensure that any reductions are implemented in a sustainable manner that addresses concerns raised during public comment. Councilmember Burt echoed comments regarding crossing guard services and ongoing funding for rail crossing monitors and emphasized the importance of continued discussions with PAUSD regarding cost sharing. Councilmember Burt noted that rail crossing monitor needs would remain at other crossings regardless of any future decision regarding the Churchill Avenue crossing and referenced an upcoming Rail Committee update on quiet zone implementation and timing. Councilmember Burt further stated that the City's budget challenges create opportunities to improve organizational efficiency and effectiveness. Support was expressed for developing a more strategic approach to consultant utilization and for exploring how technology and AI can improve City operations. Councilmember Burt indicated an interest in discussing these topics further during the Finance Committee's budget workshops. SUMMARY MINUTES Page 13 of 16 City Council Meeting Summary Minutes: 05/04/2026 Councilmember Lauing asked whether there are significant anticipated expenditures not currently reflected in the proposed budget and cited potential future costs associated with OSV programs. CFO Lai identified continuation of the rail crossing monitor contract and additional funding for nonprofit partnerships as examples of items discussed during this meeting that could require future funding consideration. Councilmember Lauing further questioned whether staff had identified strategic investment opportunities in addition to expenditure reductions and emphasized the importance of continuing to invest in priority areas, including the Police Department. CFO Lai responded that staff had spent several months balancing reductions and investments and stated that any additional opportunities identified during the upcoming budget workshops would be brought forward for consideration. NO ACTION Consent Calendar Public Comment: 1. Shani K., speaking in an individual capacity and on behalf of the Santa Clara Valley Bird Alliance, commented on Item 9. The commenter stated that mitigation and monitoring measures associated with the 2014 golf course reconfiguration project had not been fully implemented and referenced prior concerns regarding wetland protection, tree loss, and invasive species. Support was expressed for the proposed contract for wetland mitigation monitoring and the commenter urged continued enforcement of mitigation measures to protect wetlands and prevent encroachment and invasive species impacts. 2. Herb B. commented on Items 10 and 11 and requested that these items be removed from the Consent Calendar. Regarding Item 10, the commenter expressed concerns about the use of an outside auditing firm and suggested that auditing functions be performed by a City employee. Regarding Item 11, the commenter disputed statements concerning the property's status as dedicated parkland, raised questions regarding the public benefits provided through the lease arrangement, and expressed concerns about Community Skating's reporting and compliance obligations. The commenter stated that these concerns do not support extending the lease agreement. Mayor Veenker thanked the public commenters and asked whether any Councilmembers wished to pull items, register no votes, or recuse themselves. MOTION: Councilmember Reckdahl moved, seconded by Councilmember Lythcott-Haims, to approve Agenda Item Numbers 5-13. MOTION PASSED: 7-0 SUMMARY MINUTES Page 14 of 16 City Council Meeting Summary Minutes: 05/04/2026 5. Approval of Minutes from April 13, April 15, and April 20, 2026 Meetings 6. Adopt a Resolution Making Required Findings in Support of the City’s Application for FY 2026/27 Transportation Development Act (TDA) Article 3 Funds in the Amount of $326,590 for the South Palo Alto Bikeways Demonstration Project and Authorize Staff to Submit the Application; CEQA status - not a project. 7. Approval of Contract Amendment Number 1 to Contract Number S23187797 with Stephen Galloway Studio, LLC to Extend the Contract Term Through April 1, 2029, for Concept Design Development, Fabrication and Delivery to the Site and Placement of Artwork; CEQA Status – categorically exempt. 8. Approve Supplement No. 2 to Master Funding Agreement with the Metropolitan Transportation Commission for the City to receive an Amount Not to Exceed $1 Million for the Palo Alto Transit Center Quarry Road Connection; CEQA status - statutorily exempt. 9. Approval of Professional Services Contract Number C26196239 with Triple HS, INC (dba H. T. Harvey & Associates), in an Amount Not to Exceed of $399,239 Over a 5-year Term for Annual Wetland Mitigation Monitoring, Reporting, and Improvements, and Approval of a Budget Amendment in the Capital Improvement Fund; CEQA Status - This project is part of the Mitigation Monitoring and Reporting Program approved on February 3, 2014 as part of the Golf Course Reconfiguration EIR. 10. Approval of Contract Amendment No. 3 to Contract Number C21179340 with Baker Tilly US, LLP to Extend Term to June 30, 2028 with no increase to the not to exceed amount based on CAO Committee Recommendation; CEQA Status – Not a Project. 11. Approval of Second Amendment to the Lease Between the City of Palo Alto and Community Skating, Inc. for the Tennis Facility at 3005 Middlefield Road, Extending the Term to January 1, 2040; CEQA Status – Categorically Exempt 12. SECOND READING: Ordinance of the Council of the City of Palo Alto Amending Chapter 9.73 (City Policy Against Arbitrary Discrimination) of Title 9 (Public Peace, Morals and Safety) of the Palo Alto Municipal Code to Add Sections 9.73.050 (Local CEDAW Principles) and 9.73.060 (Private Right of Action) and Amend Associated Sections (FIRST READING: March 23, 2026, PASSED: 7-0) 13. SECOND READING: Ordinance of the Council of the City of Palo Alto Creating New PAMC Chapter 9.05 (Entertainment Zones) and Establishing an Entertainment Zone on a Portion of California Avenue (FIRST READING: April 20, 2026; PASSED: 7-0) City Manager Comments SUMMARY MINUTES Page 15 of 16 City Council Meeting Summary Minutes: 05/04/2026 City Manager Ed Shikada announced that City Manager Comments would be omitted due to time constraints. Informational slides had been distributed publicly to provide updates on ongoing City activities. Action Items Agenda Item Number 15 heard out of order. 15. PUBLIC HEARING: Report on City Vacancies and Recruitment Efforts, Pursuant to Assembly Bill 2561; CEQA Status – Not a Project. Human Resources Director Sandra Blanch introduced the annual public hearing on City vacancies and recruitment and retention efforts required by AB 2561. Director Blanch explained that the legislation requires a public hearing prior to budget adoption addressing current vacancies, recruitment and retention activities, and an opportunity for labor organizations to provide input. It was reported that the City has made significant progress in reducing vacancy rates and stabilizing employee turnover. Employee Relations Manager Tori Post presented current vacancy data by bargaining unit and reported that the City remains below the 20 percent vacancy threshold established by AB 2561, with a citywide vacancy rate of approximately 10 percent as of April 2026. Manager Post highlighted improvements in several bargaining units, including reductions in vacancy rates among UMPAPA and IAFF, while noting that vacancy rates for SEIU and PAPOA remained generally consistent with the prior year. Slides summarizing recruitment and retention initiatives were presented. Manager Post reported that the City has continued implementation of its recruitment strategic plan and has completed 2 of the 3 findings identified in the City Auditor's Recruitment and Succession Planning audit. Recruitment process improvements have reduced the average time from employment offer to start date from more than 60 days to approximately 23 days. Manager Post further highlighted expansion of the City's internship program, formalization of the Workforce Career Advancement and Continuity Planning program, and enhancements to supervisory leadership training and employee development efforts. Public Comment: 1. Chris C., a sergeant with the Palo Alto Police Department speaking on behalf of the Palo Alto Police Officers' Association (PAPOA), discussed police staffing levels, recruitment and retention challenges, and proposed budget adjustments affecting the department. Slides illustrating staffing and workforce availability were presented. The commenter stated that only about 68 percent of department personnel are currently available for full duty due to vacancies, injuries, and training assignments and noted staffing challenges within the traffic unit and detective bureau. The commenter reported a 44 percent failure rate among new officers participating in the field training program since January 2024 and stated SUMMARY MINUTES Page 16 of 16 City Council Meeting Summary Minutes: 05/04/2026 that the department has experienced retirements, departures to other agencies, and ongoing mental health-related attrition. Concerns were expressed regarding the proposed freeze of the Special Operations Sergeant position, which the commenter stated could increase workload demands and overtime costs. The commenter suggested evaluating supervisory staffing levels as an alternative cost- saving measure and expressed concern regarding a proposed reduction in police training funding. The commenter concluded by emphasizing the department's continued efforts to maintain service levels despite staffing challenges. 2. Joseph P. (Zoom), president of International Association of Fire Fighters Local 1319 and labor representative for the Palo Alto Fire Department, thanked staff for their work on the budget and discussed firefighter recruitment and retention. The commenter stated that vacancies are less of a concern than the nationwide shortage of licensed paramedics and noted that the department has increasingly hired EMTs due to the limited supply of qualified paramedic candidates. Concerns were expressed regarding maintaining the department's target percentage of paramedic staffing, particularly as promotions and attrition affect available personnel. The commenter encouraged continued collaboration on strategies to recruit, retain, and develop paramedics, including consideration of training programs that support employees in obtaining paramedic certification, and emphasized the importance of preventing burnout among existing paramedic staff. Mayor Veenker noted that the item was an information report and invited questions and comments from Councilmembers. Councilmember Burt requested that the slide presentation provided by the Palo Alto Police Officers' Association be distributed to Council. It was noted that vacancy issues across City departments would likely be discussed further during the Finance Committee's budget review. NO ACTION 14. Receive Update and Provide Direction to Staff on the Implementation of Senate Bill 79 (SB 79) and Work Related to the Downtown Housing Plan. CEQA Status: Exempt Under CEQA Guidelines Section 15262. Agenda Item Number 14 not heard and deferred to date uncertain. Adjournment: The meeting was adjourned at 10:17 p.m.