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HomeMy WebLinkAbout2026-06-08 City Council Agenda PacketCITY COUNCIL Regular Meeting Monday, June 08, 2026 Council Chambers & Hybrid 5:30 PM Time Estimates Updated   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 76, 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 June 08, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. CALL TO ORDER   SPECIAL ORDERS OF THE DAY (5:30 - 5:40 PM)   1.Proclamation Expressing Appreciation to Daniel Bergen Upon Retirement 2.Proclamation Expressing Appreciation to Julie Weiss Upon Retirement AGENDA CHANGES, ADDITIONS AND DELETIONS   PUBLIC COMMENT (5:40 - 6:10 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 (6:10 - 6:20 PM) Members of the public may not speak to the item(s).   CONSENT CALENDAR (6:20 - 6:25 PM) Items will be voted in one motion unless removed from the calendar by three Council Members.   3.Adoption of a Resolution Calling for a General Municipal Election to be held on November 3, 2026; CEQA Status – Not a Project 4.Recommendation from the Council Appointed Officers Committee to City Council to approve the FY26 Council Appointed Officers annual evaluation process timeline, the modified CAO self-evaluation questions and Council interview questions for the annual evaluation process - CEQA: Not a Project 5.Accept the City of Palo Alto Utility Reserves Advisory Report and Public Safety Staffing and Overtime Audit as recommended by the Policy & Services Committee. CEQA Status: Not a Project. 6.Approval of the City of Palo Alto's Permanent Water Use Ordinance. CEQA Status: Exempt under CEQA Guidelines Sections 15307 and 15308.  2 June 08, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. 7.Approval of Purchase Order C27197380 with Optiv Security, Utilizing a State of California Department of General Services Software Licensing Program (SLP) SLP-24-70-0184Z Contract, to Procure Varonis Systems for a Three-Year Term with an Annual Amount of $154,043 for a Total Not-To-Exceed Amount of $462,129. CEQA Status - exempt under CEQA regulation § 15061(b)(3). 8.Approval of Construction Contract C26197221 with Valentine Corporation in an Amount Not-to-Exceed $503,990 and Authorization for the City Manager or Their Designee to Negotiate and Execute Change Orders for Related Additional but Unforeseen Work that May Develop During the Project up to a Not-to-Exceed Amount of $50,399, for the Guardrail Repair Project, Capital Improvement Program Project PE-86070; CEQA Status – Exempt under Section 15301(c) and 15301(d) 9.Approval of Professional Services Contract Number C27196575 with Presidio Systems, Inc. in the Amount Not-to-Exceed $938,452 for Closed-Circuit Television (CCTV) Sanitary Sewer Pipeline Inspection for a Period of Three Years; CEQA Status – Not a Project Under CEQA Guidelines Section 15378. 10.Approval of Amendment No. 1 with Eight Professional Services Contracts for IT On-Call Services: Contract C26193247A INSPYR Solutions, C26193247B with AgreeYa Solutions, C26193247C with TechLink Systems, C26193247D with Compunnel Software Group, C26193247E with Progile Tech Inc, C26193247F with Omm IT Solutions, C26193247G with Infojini Inc, and C26193247H with California Creative Solutions Inc., to Increase the Not-to-Exceed Amount by $1.5 Million and Extend the Term through June 30, 2027; CEQA Status – Not a Project 11.QUASI-JUDICIAL. 405 Kipling Street [25PLN-00322] Approval of a Record of Land Use Action to Upgrade the Property Located at 405 Kipling Street From a Category 4 Resource on the Local Historic Inventory to a Category 2 Resource. CEQA Status: Not a Project Pursuant to Public Resources Code Section 21065. 12.QUASI-JUDICIAL. 3980 El Camino Real (Buena Vista) [26PLN-00090]: Request for a Final Map to Subdivide a Single, 4.52-Acre Parcel into Two Parcels. The Subdivision would Facilitate Renovation of the Buena Vista Mobile Home Park as well as Future Construction of a 100% Affordable Apartment Building on the Resulting Parcels (24PLN- 00041). A Tentative Map was Previously Approved on August 12, 2024. CEQA Status: Not a Project.  3 June 08, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. CITY MANAGER COMMENTS (6:25 - 6:35 PM)   ACTION ITEMS (Item 13: 6:35 - 7:35 PM; Item 14: 7:50 - 8:35 PM; Item 15: 8:35 - 10:05 PM) Include: Report of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Report of Officials, Unfinished Business and Council Matters.   13.PUBLIC HEARING: Adopt a Resolution Adopting the 2025 Urban Water Management Plan and a Resolution Adopting the 2025 Water Shortage Contingency Plan. CEQA Status: Exempt under Water Code Sec. 10652. BREAK (15 MINUTES) 14.Adopt an Ordinance and Resolution Calling an Election and Placing a ½ Cent (0.5%) Transactions and Use Tax Measure on the November 3, 2026 Ballot; and a Resolution Adopting Advisory Spending Guidelines for the Use of the Proceeds if the Measure Passes to Support Improving the Cubberley Community Center; CEQA Status - Not a Project. Late Packet Report Added 15.San Antonio Road Area Plan Core Scenario and Transportation Analysis Work Plan. CEQA Status: Exempt under CEQA Guidelines Section 15262. CLOSED SESSION (10:05 - 10:50 PM)   16.CONFERENCE WITH CITY ATTORNEY-POTENTIAL LITIGATION Subject: Potential exposure to litigation Authority: Government Code Section 54956.9(d)(2) Number of potential cases: 1, as Defendant.   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.439 Lincoln Avenue [26BLD-00812]: Notice of Demolition Application for a Significant Building within the Professorville Historic District B.Monthly Investment Report - April 2026 (Unaudited)  4 June 08, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. C.Status Report from the Oversized Vehicles (OSV) Ad Hoc Committee; CEQA Status - Not a Project. OTHER INFORMATION Standing Committee Meetings this week Policy & Services Committee June 9, 2026 Climate Action & Sustainability Committee June 12, 2026 Public Comment Letters Schedule of Meetings   SUPPLEMENTAL AGENDA ITEMS   14.Adopt an Ordinance and Resolution Calling an Election and Placing a ½ Cent (0.5%) Transactions and Use Tax Measure on the November 3, 2026 Ballot; and a Resolution Adopting Advisory Spending Guidelines for the Use of the Proceeds if the Measure Passes to Support Improving the Cubberley Community Center; CEQA Status - Not a Project. Late Packet Report Added      5 June 08, 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.  6 June 08, 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.  7 June 08, 2026 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. City Council Staff Report From: City Manager Report Type: SPECIAL ORDERS OF THE DAY Lead Department: Library Meeting Date: June 8, 2026 Report #:2604-6265 TITLE Proclamation Expressing Appreciation to Daniel Bergen Upon Retirement ATTACHMENTS Attachment A: Retirement Proclamation of Appreciation for Daniel (Dan) Bergen APPROVED BY: Gayathri Kanth, Library Director Item 1 Item 1 Staff Report        Item 1: Staff Report Pg. 1  Packet Pg. 8 of 320  EXPRESSING APPRECIATION TO DANIEL (DAN) BERGEN UPON HIS RETIREMENT WHEREAS, Dan Bergen joined the City of Palo Alto in 2002 and has dedicated 24 years to serving the community through his career in the Library Services Department; and WHEREAS, Dan skillfully managed the Mitchell Park Library staff work schedule, balancing library tasks and ensuring that staff provided a variety of services, and was an active participant on the Library’s Branch Leadership Team; and WHEREAS, Dan has tirelessly committed himself to circulating library materials, contributing to a team that moves more than one million materials annually between Library branches and directly into customers’ hands; and WHEREAS, Dan wrote and hosted lively, engaging trivia competitions as the resident Quizmaster for the Library’s annual Volunteer Appreciation Luncheon over the past several years; and WHEREAS, Dan created and presented a number of history-related library programs, sharing his passion with the public and building rapport with loyal library users who appreciated his positive, engaging, and good-natured approach to community service; and WHEREAS, through every challenge of the last 24 years, Dan has contributed his invaluable insight and considerable expertise to help create a stronger Library Department. NOW, THEREFORE, I, Vicki Veenker, Mayor of the City of Palo Alto on behalf of the entire City Council do hereby recognize Dan Bergen for his dedication and excellent service rendered to the City. Presented: June 8, 2026 APPROVED: ______________________ Mayor Vicki Veenker ______________________ ______________________ Vice Mayor Greer Stone Councilmember Pat Burt ______________________ ______________________ Councilmember Ed Lauing Councilmember George Lu ______________________ ______________________ Councilmember Julie Lythcott-Haims Councilmember Keith Reckdahl ATTEST: ______________________ City Clerk APPROVED AS TO FORM: ______________________ ______________________ City Manager City Attorney Proclamation Item 1 Attachment A - Retirement Proclamation of Appreciation for Daniel (Dan) Bergen        Item 1: Staff Report Pg. 2  Packet Pg. 9 of 320  City Council Staff Report From: City Manager Report Type: SPECIAL ORDERS OF THE DAY Lead Department: Public Works Meeting Date: June 8, 2026 Report #:2605-6326 TITLE Proclamation Expressing Appreciation to Julie Weiss Upon Retirement ATTACHMENTS Attachment A: Retirement Proclamation of Appreciation for Julie Weiss APPROVED BY: Brad Eggleston, Director Public Works/City Engineer Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 1  Packet Pg. 10 of 320  EXPRESSING APPRECIATION TO JULIE WEISS UPON HER RETIREMENT WHEREAS, Julie Weiss joined the City of Palo in 1993 as an employee in the Zero Waste team, was promoted in 2000 as an Environmental Specialist in the City of Palo Alto’s Public Works Watershed Protection Program, to Policy and Public Education Manager in 2016, and ultimately to Watershed Protection Manager in 2021; and WHEREAS, Julie developed the City’s Integrated Pest Management Policy, coordinated the City’s Integrated Pest Management, or IPM Program, and collaborated across City departments to reduce pesticide use and promote less-toxic alternatives which resulted in the California Department of Pesticide Regulation twice acknowledging the City of Palo Alto as an IPM Innovator; and WHEREAS, Julie developed the City’s Green Purchasing Policy and efforts that aligned the City’s environmental policies and goals with its purchasing practices; and WHEREAS, Julie expanded plastic reduction ordinances in 2013 and 2015 to eliminate single-use plastics bags, and plastic foam foodware at all retailers and food service establishments, elements of which were among the first in the nation; and WHEREAS, Julie managed the 2013 landscaping redesign at the Regional Water Quality Control Plant which improved the screening of the wastewater treatment plant, enhanced public access with improved paths and interpretive signs, and improved habitat and native plants; and WHEREAS, Julie developed the City’s Sea Level Rise Adaptation Policy, led the subsequent development of the Sea Level Rise Vulnerability Assessment, and initiated early sea level rise adaptation planning efforts in collaboration with several City departments; and WHEREAS, Julie actively participated in the Bay Area Clean Water Agencies Bay Area Pollution Prevention Group and was instrumental in spearheading outreach to veterinarians and the community to reduce pesticides entering wastewater from flea and tick products; and WHEREAS, Julie co-led and subsequently updated the City’s 2020 Tobacco Retail Permit Ordinance that aligned the City with Santa Clara County’s effort to prohibit the sale and distribution of all electronic cigarettes and flavored tobacco products to decrease tobacco-related litter, the number of people exposed to second-hand smoke, and the ability of youths to access tobacco products within the City; and WHEREAS, Julie Weiss completed 32 years of dedicated service to the City of Palo Alto’s Environmental Services Division. NOW, THEREFORE, I, Vicki Veenker, Mayor of the City of Palo Alto, on behalf of the entire City Council do hereby recognize Julie Weiss for her years of dedicated service. PRESENTED: June 8, 2026 APPROVED: ______________________ Mayor Vicki Veenker ______________________ ______________________ Vice Mayor Greer Stone Councilmember Pat Burt ______________________ ______________________ Councilmember George Lu Councilmember Julie Lythcott-Haims ______________________ ______________________ Councilmember Keith Reckdahl Councilmember Ed Lauing ATTEST: ______________________ City Clerk APPROVED AS TO FORM: ______________________ ______________________ City Manager City Attorney Proclamation Item 2 Attachment A - Retirement Proclamation of Appreciation for Julie Weiss        Item 2: Staff Report Pg. 2  Packet Pg. 11 of 320  City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: City Clerk Meeting Date: June 8, 2026 Report #:2604-6299 TITLE Adoption of a Resolution Calling for a General Municipal Election to be held on November 3, 2026; CEQA Status – Not a Project RECOMMENDATION Staff recommends that the City Council: 1. Adopt the attached Resolution calling for a General Municipal Election for three City Councilmember seats for November 3, 2026, authorizing consolidation of the election, and contracting for election services with Santa Clara County Registrar of Voters (ROV), and 2. Direct the City Clerk to use the Secretary of State’s randomized alphabet drawing to determine the order of candidates’ names on the ballot. BACKGROUND Attached is a Resolution calling for a General Municipal Election for three City Councilmember seats on November 3, 2026, requesting the services of Santa Clara County Registrar of Voters (ROV), and requesting consolidation of the General Municipal Election with any other election called for this jurisdiction for this date. The terms of the following Councilmembers expire on December 31, 2026 and will be on the November ballot: Ed Lauing, Julie Lythcott-Haims, and Vicki Veenker. All three Councilmembers have each served one full term and are eligible to seek re-election on the November 3, 2026 ballot. The Palo Alto Charter requires that the order of candidates’ names on the ballot be determined by lot1. The City Clerk recommends that the City Council continue prior practice and direct that the Charter requirement be implemented by using the randomized alphabet drawing conducted 1 Palo Alto Charter, Article VII, Section 3: https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0- 0-59473 Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 1  Packet Pg. 12 of 320  by the California Secretary of State to determine the order in which candidates appear on the ballot. FISCAL/RESOURCE IMPACT Table 1: Summary of Election Costs (from ROV) Ballot Item Estimated Cost ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 2  Packet Pg. 13 of 320  1 Resolution No. ____ Resolution of the Council of the City of Palo Alto Calling a General Municipal Election of Three Council Member Seats, Requesting the Services of the Registrar of Voters, and Requesting the Consolidation of the General Municipal Election with the Statewide General Election to Be Held in Santa Clara County on November 3, 2026 R E C I T A L S A. Article III, Section 3, of the Palo Alto City Charter requires that a general municipal for election of council members be held on the first Tuesday after the first Monday in November of each even-numbered year, that is, November 3, 2026; and B. Pursuant to Section 1001 of the Elections Code of the State of California, a statewide general election is scheduled to be held on Tuesday, November 3, 2026; elections in other cities, certain school districts and special districts in Santa Clara County are also scheduled to be held on that date; and C. Under Part 3 of Division 10 of the Elections Code, beginning at Section 10400, and Education Code Section 5342, elections called by various governing bodies may be partially or completely consolidated and held on the same day as a statewide election, upon order of the City Council. NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows: SECTION 1. Call of Election. A statewide general election is called for the City of Palo Alto to be held on Tuesday, November 3, 2026, for the purpose of electing three (3) council members for full terms (four years), each of whom shall be an elector and shall have been a resident of the City of Palo Alto for at least thirty days next preceding the final filing date for nomination papers for such office. Title of Office Length of Term Number of Seats Type of Seats Council Member 4-year full-term 3 At-Large SECTION 2. Request to Consolidate. Pursuant to Section 10403 of the Elections Code of the State of California, the Council of the City of Palo Alto requests the governing body of the state and any other political subdivision, or any officers otherwise authorized by law, to partially or completely consolidate such elections and the City Council consents to such consolidation. The Council acknowledges that the election will be held and conducted according to procedures in the Elections Code, including Section 10418. SECTION 3. Request for County Services. Under Section 10002 of the California Elections Code, the Council of the City of Palo Alto requests the Board of Supervisors of Santa Clara County to permit the Registrar of Voters to render services to the City of Palo Alto relating to the Item 3 Attachment A - Resolution Calling for a General Municipal Election on November 3, 2026        Item 3: Staff Report Pg. 3  Packet Pg. 14 of 320  2 conduct of Palo Alto’s general municipal election which is called to be held on Tuesday, November 3, 2026, and shall reimburse the county for the costs incurred by the County of Santa Clara Registrar of Voters in conducting the general municipal election for the City of Palo Alto. The City requests the County of Santa Clara Board of Supervisors permit the County of Santa Clara Registrar of Voters to prepare the City’s election materials. The election services to be performed shall include the preparation, printing and mailing of official ballots and county voter information guides; the establishment of precincts, election ballots, return mail envelopes, ballot drop boxes, vote centers, election officers, and producing such publications as are required by law in connection therewith; the furnishing of ballots, envelopes, and other necessary supplies and materials for voting places; the canvassing of the returns of the election; the furnishing of the results of such canvassing to the City Clerk; and, the performance of other election services as may be requested by the City Clerk. SECTION 4. Consolidation of Measures. The Council of the City of Palo Alto requests the Board of Supervisors of Santa Clara County to include on the ballots and sample ballots all qualified measures submitted by the City Council to be ratified by the qualified electors of the City of Palo Alto. SECTION 5. Manner of Election. That the City Council of the City of Palo Alto requests the Board of Supervisors of the County of Santa Clara to hold and conduct the consolidated general election in the manner prescribed in Section 10418 of the Elections Code of the State of California, and to further provide that the Registrar of Voters canvass the returns of the municipal election. The County of Santa Clara is hereby authorized to certify the returns of the municipal election. SECTION 6. Candidate Statement of Qualifications. Pursuant to Section 13307 of the Elections Code of the State of California, each candidate for elective office may prepare a candidate’s statement. The candidates' statements of qualifications may include the name, age and occupation of the candidate and a brief description of no more than 200 words of the candidate’s education and qualifications expressed by the candidate. The cost of printing, translating and distributing said statements shall be borne by the City of Palo Alto. SECTION 7. Tie Votes. Pursuant to Section 15651 of the Elections Code of the State of California, in the event two or more persons receive an equal and the highest number of votes for any office, the City Council shall summon the candidates who received the tie votes, whether upon the canvass of returns or upon recount, to appear before it and shall determine the tie by lot. SECTION 8. Duties of City Clerk. Except as otherwise provided herein, the Palo Alto City Clerk shall do all things required by law to effectuate the November 3, 2026, general municipal election, including but not limited to causing the posting, publication and printing of all notices or other election materials under the requirements of the Charter of the City of Palo Alto and the California Elections and Government Codes. SECTION 9. Contract Authority. Subject to approval of the Board of Supervisors of Santa Clara County, the City Clerk may engage the services of the Registrar of Voters of the County of Santa Clara to aid in the conduct of the November 3, 2026, election including canvassing the returns of that election. The Palo Alto Director of Administrative Services shall pay the cost of Item 3 Attachment A - Resolution Calling for a General Municipal Election on November 3, 2026        Item 3: Staff Report Pg. 4  Packet Pg. 15 of 320  3 contracted services provided that no payment shall be made for services which the Registrar of Voters is otherwise required by law to perform. SECTION 10. Transmittal of Resolution. The City Clerk shall submit a certified copy of this resolution to the Board of Supervisors of the County of Santa Clara. SECTION 11. CEQA. The Council finds that this resolution does not constitute a project subject to the California Environmental Quality Act under Public Resources Code section 21065 or CEQA Guidelines section 15378. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: APPROVED: _____________________________ ____________________________City Clerk Mayor APPROVED AS TO FORM: _____________________________ ____________________________Assistant City Attorney City Manager ____________________________Director of Administrative Services Item 3 Attachment A - Resolution Calling for a General Municipal Election on November 3, 2026        Item 3: Staff Report Pg. 5  Packet Pg. 16 of 320  City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Human Resources Meeting Date: June 8, 2026 Report #:2605-6421 TITLE Recommendation from the Council Appointed Officers Committee to City Council to approve the FY26 Council Appointed Officers annual evaluation process timeline, the modified CAO self- evaluation questions and Council interview questions for the annual evaluation process - CEQA: Not a Project RECOMMENDATION The Council Appointed Officers (CAO) Committee recommends approval of the FY 2026 CAO annual evaluation process timeline, the modified CAO self-evaluation questions and Council interview questions for the annual evaluation process. BACKGROUND The City Manager, City Attorney, City Auditor and City Clerk are appointed directly by the City Council and, as such, are reviewed by the City Council on an annual basis in accordance with their individual employment agreements. The City Auditor is also appointed directly by the City Council however the City contracts for internal auditing services with Baker Tilly under the terms of the contract. Such review is necessary for Council members to ensure the efficiency of the appointed offices, to provide general feedback on their performance, to set goals for the coming year, and to identify areas of improvement. It is also necessary to review compensation to ensure that the positions are paid appropriately in comparison to the market and their performances. Given that a need exists for objectivity and facilitation as well as the time commitment in meeting with seven City Council members, the four CAO’s, and the CAO Committee, the use of an outside consultant increases efficiency. Following the FY25 CAO evaluation process, the CAO Committee debriefed on December 10, 2025 with MRG consultant with Dan Rich and issues such as the following were raised: Is there agreement that the timeline to complete the evaluation process should be compressed so appointees can integrate into their workplans? Item 4 Item 4 Staff Report        Item 4: Staff Report Pg. 1  Packet Pg. 17 of 320  Are any changes to the CAO self-evaluation prompts or Council interview questions appropriate? Should the structure of the closed session evaluation with each appointee be altered? Should the timing and process be altered for the City Auditor? How can the Council calendar year priorities be better aligned with the appointee fiscal year goals? The CAO Committee discussed these changes and asked the consultant to propose modification based on the discussion. No action was taken. The CAO Committee launched the FY26 CAO evaluation process with a meeting on May 13, 2026. The CAO Committee reviewed the proposed process timeline, the updated CAO self- prompts and Council interview questions. ANALYSIS Attached is the proposed timeline for the FY26 CAO evaluation process which was discussed with the CAO Committee including confirmation that a key goal will be to compress the process so that appointees can integrate Council feedback into their workplans more timely than in past two years. It was also suggested to schedule closed session evaluations in September on non- Council meeting nights in order to expedite the evaluation reviews. No changes to the FY26 proposed timeline were recommended. Next, the CAO Committee reviewed the proposed changes to the CAO self-evaluation prompts and Council interview questions and discussed the modifications presented by Dan Rich. It was pointed out that the City Auditor evaluation could be skipped for the FY26 evaluation process as the City Auditor’s workplan is in progress and already has been reviewed by Council and the feedback provided in last year’s evaluation would be incorporated into her FY 26-27 workplan. Key feedback was provided by the CAO Committee and some Council questions were fine-tuned, including changes to the City Attorney Council interview questions given his recent appointment as City Attorney in March 2026. Attached are the revisions to the Appointee Self-Prompts as well as each Appointee Council interview questions. In addition, there was a brief discussion regarding KPI’s and the Committee decided it was best to have the Appointees in their Self-Evaluation Prompts, self-identify potential KPI’s that would be appropriate for their roles and suggested goals, in light of Council’s priorities for the calendar year. This approach will be discussed during the Appointee Evaluations for Council’s consideration. The CAO Committee voted unanimously to recommend to the City Council approval of the proposed FY26 CAO evaluation process timeline, the amended Appointee Self-Evaluation Prompts and Appointee Council Interview Questions as modified by the CAO Committee. Item 4 Item 4 Staff Report        Item 4: Staff Report Pg. 2  Packet Pg. 18 of 320  FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 4 Item 4 Staff Report        Item 4: Staff Report Pg. 3  Packet Pg. 19 of 320  P. O. Box 561, Wilton, CA 95693 916-261-7547 www.Solutions-MRG.com PALO ALTO 25-26 CAO EVALUATIONS – TIMELINE Date Action May 14 CAO’s and Council to respond to) Late May MRG consultant send CAO’s brief update on the tentative 2026 Evaluation process Early June (8) Consent Item to full Council on process/timeline Early June Process, timeline and self-evaluation prompts distributed to CAOs; Sandra sends to Council July 10 CAO’s self-evaluations due July 16 advance of individual meetings July 21 – August 13 MRG to conduct with Council to gather their input and experiences with the appointees (zoom or in person) Sept. 3 MRG distributes draft performance evaluations, goals, salary info to Council September Closed Sessions Review of draft evaluations – week of Sept 7 City Manager – week of Sept 21 City Attorney, City Clerk and compensation for all – week of Sept 28 Mid Sept. Final evaluations distributed to Council and CAO’s (after first closed session) Early Oct. Following approval, MRG routes final docs via DocuSign for signature Mid Oct. Schedule debrief conversations with CAO’s Council approval of amended Employment Agreements for CAOs Early Nov CAO Committee to meet and debrief on the process Item 4 Attachment A - FY26 CAO evaluation timeline        Item 4: Staff Report Pg. 4  Packet Pg. 20 of 320  5/20/26 QUESTIONS TO DRIVE THE PALO ALTO CAO EVALUATION PROCESS – Council would like the appointed officials to respond to some specific questions in the self- evaluation, which will help focus the Council interviews and final evaluation: a. What do you consider your key achievements in the last fiscal year, including as called out in Council-identified priorities and the specific goals identified in your most recent performance evaluation (performance against goals, including KPI’s as appropriate)? b. What do you see as areas of concern or vulnerability (to include organization- wide and/or department-specific comments, but not personnel-specific). c. How are your direct reports performing? (for example: productivity, morale, collaboration, communication, recruitment, etc.). d. What are the trends you see from your vantage point and expertise that the City needs to be thinking about (regional, state, national, etc. issues that impact the City)? e. What is your characterization of the effectiveness and quality of Appointed Official/Elected Official relationships (availability, responsiveness, communication, open mindedness, etc.). What could both sides do to improve the relationship? f. What are your suggested priorities for the coming year, and how would you measure their success (draft KPIs)? g. What do you need from the Council in the next fiscal year and beyond to be successful? h. What else would you like to share with the Council? i. Please provide an update on the “Areas of Development” from last year. j. What are your observations on the organization’s fiscal health (strengths and risks). For CM only k. For the City Attorney: Please modify as appropriate given your short tenure and no formal goals established. And add: What are your observations and ideas so far on the organization, your department – it’s staffing and structure, and the significant legal issues currently or potentially facing the City. Item 4 Attachment B - CAO Self- eval prompts        Item 4: Staff Report Pg. 5  Packet Pg. 21 of 320  CITY OF PALO ALTO CITY MANAGER 2026 EVALUATION – COUNCIL INTERVIEW QUESTIONS 1. Based on your observations and his self-evaluation, what do you see as the top 2-3 personal strengths and organizational achievements of City Manager from the past year? 2. How did the City Manager do on achieving Council’s priority goals and his Council adopted priorities for FY 25-26? Please be as specific as possible. 3. Does the City Manager have areas for development that should be addressed to help him grow in this role? 4. Does the organization face vulnerabilities or challenges that you can see and would like the City Manager to be aware of? 5. How does the City Manager and his staff provide the elected officials with the support needed to govern effectively (availability, responsiveness, communication, etc.)? 6. Please share your perception of the City Manager’s leadership and how it effectively meets the needs of the organization and community (such as: vision, leading others, partnering, decisiveness/consensus decision making, developing a team, managing conflict, leveraging resources, etc.). Provide specific examples as possible. 7. Is there any feedback (positive or constructive) you would like to provide about the operation of departments? 8. How well does the City Manager anticipate issues and think strategically to address trends and long-term issues? 9. Are there any additional comments or suggestions that you would like to add concerning the City Manager’s performance over the past year? 10. What do you think the top 2-3 issues the CM should specifically focus on as priorities for FY 26-27 and beyond? Item 4 Attachment C - Council interview questions        Item 4: Staff Report Pg. 6  Packet Pg. 22 of 320  CITY OF PALO ALTO CITY ATTORNEY 2026 EVALUATION – COUNCIL INTERVIEW QUESTIONS 1. How satisfied are you with the verbal and written analysis, as well as advice, provided by the City Attorney regarding topic such as active litigation, settlements and pending risk issues? a. Are you satisfied with the work of outside Counsel retained by the City Attorney? 2. What are the top 2-3 strengths and/or achievements of the City Attorney since he started that should be highlighted? 3. How did the City Attorney do on supporting achievement of Council’s priority goals for FY 25-26? Please be as specific as possible. 4. Does the City Attorney have any areas for development that you think he should work? 5. Does the organization face legal vulnerabilities or challenges that you can see? How well has the City Attorney done so far in spotting or bringing forward those or other challenges? 6. How well does the City Attorney spot and anticipate issues; does he think strategically to address trends and long-term issues? 7. Is there any feedback (positive or constructive) you would like to provide about the operation of the CA department? 8. Are there any additional comments or suggestions that you would like to add concerning the City Attorney’s performance since he began? 9. What do you think are the top 2-3 issues the City Attorney should focus on as priorities for FY 26-27 and beyond? Item 4 Attachment C - Council interview questions        Item 4: Staff Report Pg. 7  Packet Pg. 23 of 320  CITY OF PALO ALTO CITY CLERK 2026 EVALUATION – COUNCIL INTERVIEW QUESTIONS 1. What do you see as the top 2-3 personal strengths and professional achievements of the City Clerk from the past year? 2. How did the City Clerk do in furthering Council priority goals as related to her position and her individual goals for FY25-26 (from last year’s evaluation)? 3. How does the City Clerk provide the elected officials with the support needed to govern effectively (availability, responsiveness, communication, meeting management, etc.)? 4. Please share your perception of the City Clerk’s leadership and how it effectively meets the needs of the Council and her team. Provide specific examples as possible. 5. What is your perception of the Clerk’s interaction with, and responsiveness to, the public? 6. Does the City Clerk have areas for development that should be addressed to help her in this role? 7. How well does the City Clerk anticipate issues and think strategically to address trends and long- term issues? Are there innovations you are looking for in the Clerk’s office? 8. Is there any feedback (positive or constructive) you would like to provide about the operation of the Clerk’s department? 9. Are there any additional comments or suggestions that you would like to add concerning the City Clerk’s performance over the past year? 10. What do you think are the top 2-3 issues the City Clerk should specifically focus on as priorities for FY 26-27 and beyond? 5/20/26 Item 4 Attachment C - Council interview questions        Item 4: Staff Report Pg. 8  Packet Pg. 24 of 320  9 9 7 4 City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: City Auditor Meeting Date: June 8, 2026 Report #:2605-6353 TITLE Accept the City of Palo Alto Utility Reserves Advisory Report and Public Safety Staffing and Overtime Audit as recommended by the Policy & Services Committee. CEQA Status: Not a Project. RECOMMENDATION The Policy & Services Committee (P&S) and the Office of the City Auditor recommend City Council accept the results of one advisory project and one audit: 1. City of Palo Alto Utility Reserves Advisory Project (Attachment A, P&S recommended accepting results on April 14, 2026), and 2. Public Safety Staffing and Overtime Audit (Attachment B, P&S recommended accepting results on May 12, 2026) BACKGROUND Baker Tilly Advisory, in its capacity serving as the Office of the City Auditor (OCA), performs a citywide risk assessment each year that evaluates a wide range of risk areas, including strategic, financial, operational, compliance, technological, and reputational risks. The purpose of these assessments is to identify and prioritize risks to develop each year’s annual audit plan. During the FY2024 risk assessment, the OCA identified public safety (Police and Fire Departments) staffing and overtime as potential areas of risk and this audit topic was included in the FY2025 Annual Audit Plan approved by Council. OCA identified the City’s utility reserves as a potential area of risk during the FY2025 risk assessment and included this topic as an advisory project in the FY2026 Annual Audit Plan approved by Council. In accordance with our agreement with the City, Baker Tilly Advisory is required to execute the Annual Audit Plan each year which consists of specific, approved task orders. Task Orders approved by the Council are executed by the P& S Committee Chair as the Project Manager for the Baker Tilly Contract as stipulated in the contract terms. Item 5 Item 5 Staff Report        Item 5: Staff Report Pg. 1  Packet Pg. 25 of 320  9 9 7 4 ANALYSIS Item 5 Item 5 Staff Report        Item 5: Staff Report Pg. 2  Packet Pg. 26 of 320  9 9 7 4 Please see Attachment A for a more detailed discussion of our observations and recommendations and management response. Public Safety Staffing and Overtime Audit FISCAL/RESOURCE IMPACT Item 5 Item 5 Staff Report        Item 5: Staff Report Pg. 3  Packet Pg. 27 of 320  9 9 7 4 report (Attachment B). Implementation to change reserve levels would have rate impacts and staff recommend spending the coming year in advance of FY2028 rate setting to evaluate policy changes based on this research. Public Safety Staffing and Overtime Audit: The timeline and resource needs for implementation of management’s corrective action plans are identified by management within the attached report. STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 5 Item 5 Staff Report        Item 5: Staff Report Pg. 4  Packet Pg. 28 of 320  City of Palo Alto Office of the City Auditor City of Palo Alto Utility Reserves Advisory Report March 27, 2026 Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 5  Packet Pg. 29 of 320  Contents network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. EXECUTIVE SUMMARY .................................................................................................. 1 PURPOSE OF THE ASSESSMENT ........................................................................................................ 1 REPORT HIGHLIGHTS ............................................................................................................................... 1 INTRODUCTION ............................................................................................................... 7 OBJECTIVE ................................................................................................................................................... 7 OVERVIEW .................................................................................................................................................... 7 SCOPE AND PROCEDURES ................................................................................................................... 7 DETAILED ANALYSIS ..................................................................................................... 8 Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 6  Packet Pg. 30 of 320  Executive Summary Purpose of the Assessment Baker Tilly Advisory Group, LP (Baker Tilly), in its capacity serving as the Office of the City Auditor (OCA) for the City of Palo Alto (the City or Palo Alto), conducted a City of Palo Alto Utilities (CPAU) Advisory Project based on approved Task Order 4.38 as part of the City’s Fiscal Year (FY) 2026 Audit Plan. The purpose of this project was to assess CPAU's Reserve policies and benchmark them against peer agencies. Report Highlights Overview of Current Reserves: (Page 9) Consistency w/ Regulatory Reserve Margin Requirements: (Page 16) Utility reserve funds provide a safety net for municipal utilities and can help agencies stabilize rates, respond to emergencies and plan for capital improvements, while ensuring the utility remains credit worthy and financially healthy. • Current reserve policies contain multiple prescribed transfer rules that require the tracking of reserve funds to minimum, target, and maximum levels resulting in significant administrative burden. • Reserve funds and policies for the Wastewater Treatment Utility, Refuse Utility, and Stormwater Utility date back to the early 1990s and are no longer aligned with other utilities reserve policies which were updated in June 16, 2025. The Electric Special Projects Reserve appears to serve similar purposes with the CIP Reserves. As such, additional clarity on the intended use of these funds may be necessary. Consistency with Regulatory Reserve Margin Requirements Policies The City’s bond covenants contain specific reserve requirements for the outstanding Water Revenue Bonds, 2009 Series A (2009 Bonds) and the Utility Revenue Refunding Bonds, 2011 Series A (2011 Bonds)(collectively, Utility Bonds). Relevant cash reserve credit rating targets from S&P and Moody’s are also discussed in this section of the report. • Both the Rate Covenant and Available Reserves Covenants are monitored and tracked by the Administrative Services Department. Current utility reserve policies do not specifically address the Rate Covenants or Available Reserve Covenants made by the City in the official statements and legal documents for the outstanding 2009 and 2011 bonds. According to the latest Ratings Affirmation from S&P on the outstanding 2011 and 2009 bonds, Palo Alto is in compliance with the Rate and Available Reserves Covenants. The City could consider referencing these documents in its reserve policies. Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 7  Packet Pg. 31 of 320  EXECUTIVE SUMMARY Operational / Industry Best Practices: (Page 20) • When determining credit ratings, rating agencies ultimately rate a utility based on a holistic financial profile. Rating agencies outline cash reserve targets as a guideline and is one of the many differing levels of creditworthiness. While the current reserve policies do not include cash reserve targets that correspond to the amounts laid out in credit agency rating guidelines, an important factor to consider is maintaining sufficient cash reserves to maintain credit ratings for the City’s utilities. • The outstanding 2009 and 2011 Bonds contain an overly burdensome reserve requirement covenant that is not a market standard, particularly for high-grade utility credits. The reserve requirement for the 2009 and 2011 Bonds require that the Electric Fund, the Gas Fund, and the Water Fund be combined for an Available Reserves Test. With future issuances, City Utilities can remove this Available Reserves Test form its covenants. The 2011 Bonds mature in June 2026. Refunding the 2009 Bonds is being evaluated by the City. Once both Utility Bonds are defeased, City Utilities will no longer have to consider compliance to the Available Reserves Test separate from its reserve policies. Operational / Industry Best Practices This section of the report includes information on common best practices for operational reserves and capital improvement reserves from the Government Finance Officers Association (GFOA) and best practices that Baker Tilly employs when working with Utility clients. • Current operations reserve fund policies are in alignment with the GFOA’s recommendations for operating reserves, however, the Wastewater Treatment Utility, Refuse Utility and Stormwater Utility do not currently have operations reserve funds. Wastewater Treatment Utility is currently working with a consultant to review their reserves. • Current reserve policies for the City’s CIP reserve funds specify a maximum reserve guideline level that is equivalent to one-year of average capital improvements. In Baker Tilly’s experience, one-year of average capital improvements is the amount most frequently used as a target level of reserves in a CIP reserve fund. We consider this a best practice as setting aside one-year worth of capital improvement expenditures allows for the ongoing replacement of necessary infrastructure. It should be noted that when determining the one-year average capital improvement amount, Baker Tilly recommends that reappropriations and commitments (and the funds set aside for them) should not be considered. • While Baker Tilly considers one-year of average capital improvements a best practice CIP reserve level, GFOA recommends that capital reserve level development should be designed to best serve the particular needs Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 8  Packet Pg. 32 of 320  EXECUTIVE SUMMARY Benchmarked Comparables: (Page 22) recommendation could be considered. Alternatively, another approach to determining a CIP reserve fund guideline level could be to maintain one- year or a percentage of one-year of depreciation expense in reserve balances. • The current CIP reserve fund policy does not make a distinction between budgeted CIP expenses to be funded by cash or CIP expenses to be funded by Bonds or other funding sources. The best practice for this reserve policy would be to separate those two types of CIP expenses, and craft reserve guideline levels based on CIP expenses to be funded by cash. This ensures that reserve fund amounts in a given year are not artificially inflated due to large projects that will be funded through other funding sources. Local Economy Specific Reserves Through Benchmarking Comparables This assessment benchmarked reserve policies from the Roseville, Santa Clara, Healdsburg and Pasadena cities, as well as, San Jose Energy CCA (collectively, the “benchmarked communities”) and compares their policies to CPAU’s reserve policies. • Rate stabilization reserve funds for the City’s Electric, Water, and Wastewater Collection Utilities do not contain formally established guideline reserve levels while most benchmarked communities specify varying target levels. • Operation and maintenance reserve funds for the City’s Electric, Water, and Wastewater Collection Utilities have more prescriptive guidelines reserve levels through the establishment of minimum, target, and maximum guideline levels compared to the benchmarked communities. The benchmark communities, with just one exception used only minimum guideline levels for the operation and maintenance reserve funds. The minimum guideline levels were most typically based on a specified amount of days operating expenses. • Note that when analyzing operating reserves vs. rate stabilization reserves, Baker Tilly specifically compared Palo Alto’s rate stabilization reserve fund policies to only rate stabilization reserve fund policies for the Benchmark Communities, and Palo Alto’s operation reserve fund policies to operation reserve fund policies for the Benchmark Communities. • The Benchmark Communities typically have some or all of the three commonly established reserve funds that Palo Alto Utilities with updated reserve policies have, which are the rate stabilization reserve, the operations and maintenance reserve, and the CIP reserve. • The City’s Electric, Water, and Wastewater Collection Utilities have set minimum and maximum guideline levels for the capital replacement and improvement reserve funds, while all other benchmark communities with Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 9  Packet Pg. 33 of 320  EXECUTIVE SUMMARY Reserve Tracking: (Page 35) capital replacement and improvement reserve funds only had target guideline levels. • In general, the reserve policies for CPAU are more detailed and cumbersome than the policies of the benchmarked communities. CPAU has more funds established to hold cash reserves and its policies are more detailed in terms of guideline levels and sources and uses of those reserve funds when compared to others. Reserve Tracking – Key Observations This section of the report examines the current requirements and processes for tracking reserves. • Utility Management tracks reserves on an annual basis in conjunction with the development of each individual Utility’s Financial Plan. A reserve tracking policy with guidance included to report instances when reserve fund balances do not meet guideline levels to Council may provide more assurance that reserve targets are being met throughout the year and equip the Council with better information to make financial decisions than the current reporting process. Key Recommendations 1. Update Dated Policies - the Wastewater Treatment, Refuse, and Stormwater Utilities’ operations, rate stabilization, and CIP reserve funds policies should be updated to align with similar reserve policy guidelines in other CPAU utilities. When updating, management should consider the need for the existing reserve funds in these Utilities that are not common across other CPAU utilities, including the Emergency Plant Replacement Reserve Fund, the Notes and Loans Reserve Fund for the Wastewater Treatment Utility, and the Landfill Corrective Action and Geng Road Reserve funds for the Refuse Utility. If no longer necessary, these funds should be closed out and the money transferred to other funds in place. 2. Do not eliminate any of the current reserve funds in place – With the exception of the utilities with dated policies mentioned above, all City Utilities have in common three reserve funds: operations, rate stabilization, and CIP reserve funds. Baker Tilly views maintaining each of these reserve funds as a best practice. Additionally, as shown in the Benchmarking Comparables section of the report, many of the Benchmark Communities share these same common reserve funds in their utilities. Specifically, the City of Roseville Water and wastewater utilities, the City of Santa Clara electric utility, and the San Jose clean energy electric utility all have both rate stabilization and operation Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 10  Packet Pg. 34 of 320  EXECUTIVE SUMMARY wastewater utilities have operation and maintenance, rate stabilization, and capital improvement reserve funds. What’s more, all Benchmark communities utilities that were reviewed had at least one of the three of these reserve funds. Palo Alto Utilities reserve funds separate from the three commonly shared reserve funds are in place for specifically defined and valid purposes and should remain in place until those purposes are accomplished or are no longer applicable. 3. Clarify CIP Reserve Fund Language – the Electric Special Project Reserve within the Electric Utility is distinct from the CIP Reserve Fund. While both of these funds are purposed for capital projects clarity on intended use of funds is recommended. 4. Consider adjustment to CIP Reserve Fund Guideline Levels – Consider adjustment to CIP Reserve guideline levels to align with Baker Tilly’s recommendation to maintain in the CIP reserve fund 20% of 60 months of budgeted CIP expenses or alternatively, one-year of depreciation expense in the CIP reserve fund. CIP expenses should only include those intended to be funded by Utility cash and not those projects intended to be funded by bonds or other outside sources of funding. 5. Adjust Rate Stabilization Reserve Policy to align with Bond Covenants and Benchmark Communities – Consider establishing: • Minimum guideline levels in the Rate Stabilization Reserve Funds for the Electric, Gas, and Water Utilities to ensure reserve balances meet or exceed the current Available Reserves Bond Covenants. Note: Staff is evaluating refunding of the 2009 Bonds and a normal payoff of the 2011 Bonds in June 2026, which would eliminate the need to make a change to these minimum guideline levels due to this Bond Covenant. • Target guideline levels for these funds for the Electric, Gas and Water Utilities should be at the higher of the minimum guideline level required by the Available Reserve Bond Covenants or a specified percentage of the total operating revenues or operating expenses in the current fiscal year so that the Rate Stabilization Reserve could hold funds in excess of the amount dictated by bond covenants to be used for its defined purposes. • The rate stabilization fund for Utilities without the Available Reserve Bond Covenants in place (Wastewater Collection, Wastewater Treatment, Refuse, and Stormwater) should have a target guideline level based on a specified percentage of total operating revenues or operating expenses in Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 11  Packet Pg. 35 of 320  EXECUTIVE SUMMARY • varied between 10 to 65% of either revenues or expenses. The larger the percentage selected, the more reserve funds would be available to stabilize future rate increases. The percentage of operating revenues or expenses to be used as a target guideline level should be determined by Utility Management based on the amount desired to be held in the fund to help stabilize future rate increases. • Revising wording in the policy from “If there are funds in the Rate Stabilization Reserve at the end of any fiscal year, any subsequent Utility Financial Plan must result in withdrawal of all funds from this Reserve by the end of the Financial Planning Period.” to “If a Utility Financial Plan proposes a rate increase, the funds in the Rate Stabilization Reserve Fund in excess of the target amounts must be drawn down to offset the proposed rate increase.” 6. Formalize Reserve Tracking – Develop a reserve tracking policy with reporting requirements to City Council on a regular basis. The policy could include a schedule prepared for each Utility showing the current reserve fund balances compared to the amount that should be held in those funds based on established guideline levels, as well as an explanation of how those guideline levels are calculated and the reserve funds are used based on the Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 12  Packet Pg. 36 of 320  Introduction The purpose of this assessment was to assess and benchmark the City’s current Utilities Reserves Policies. Overview and Reserve Policies, Compliance with Regulatory Reserve Margin Requirements, Operational/Industry Best Practices, Local Economy Specific Reserves Through Benchmarking Comparables, and Reserve Tracking. These sections include the information obtained through our research and outline our thought process in developing the proposed recommendations for adjustments to the City's current Utility Reserve Policies. Scope and Procedures The OCA performed the following procedures: • Gathered all relevant information on the Utility Reserve Policies currently in place; • Interviewed Utility personnel to gain a comprehensive understanding of these policies; • Researched applicable information on Utility reserve policies, operational & industry best practices; • Researched reserve policies for comparable communities to provide benchmarking information regarding the reserve funds; • Analyzed and outlined observations regarding the current Utility Reserve Policies against best practices, and • Developed recommendations for decision makers to consider for updating the current Utility Reserve Policies. The OCA greatly appreciates the support of the CPAU and Administrative Services Department in conducting this assessment. Thank you! Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 13  Packet Pg. 37 of 320  DETAILED ANALYSIS Detailed Analysis Overview of Current Reserve Funds and Reserve Policies Utility reserve funds provide a safety net for municipal utilities and can help an agency stabilize rates, respond to emergencies and plan for capital improvements, while ensuring the utility remains credit worthy and financially healthy. This section of the report to provides a detailed overview of the current reserve funds and reserve policies for each of the City’s Utilities. Below is a chart that provides a listing of all the reserve funds in place and whether those reserve funds are in place in the individual utility listed at the top of each column. Utilities not listed in this chart were not analyzed as a part of this engagement. The remainder of this section provides the details of these reserve funds and their associated policies categorized by the reserve funds that are common across all utilities and the reserve funds that are unique to specific utilities. Current Reserve Funds in Place for the Utility? Electric Gas Water Stormwater Operations No No No Rate Stabilization CIP Reserves No No No Electric Special Projects No No No No No No Underground Loan No No No No No No Hydroelectric Stabilization No No No No No No Electrification Reserve No No No No No No Public Benefits No No No No No No Low Carbon Fuel Standard No No No No No No Cap and Trade Program No No No No No Emergency Plant Replacement No No No No No No Landfill Corrective Action Reserve No No No No No No Geng Road Reserve No No No No No No Notes and Loans No No No No No No Reserve Funds included in all Utilities Unless otherwise noted, guideline levels for reserve funds are based on the reserves management practices document for each utility. Rate Stabilization The purpose of the Rate Stabilization Reserve Fund is to manage the trajectory of future year rate increases. Withdrawal of funds from Rate Stabilization Reserves requires action by the City Council. If there are funds at the end of any fiscal year, any subsequent Financial Plan must result in the withdrawal of all funds from the Reserves by the end of the Financial Planning Period. The Council may approve exceptions to this requirement, when proposed by staff to provide greater rate stabilization to customers. City of Palo Alto ACFR FYE June 30, 2025 (Page 112) Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 14  Packet Pg. 38 of 320  DETAILED ANALYSIS Rate Stabilization Reserves for Wastewater Treatment and Refuse have set Minimum, Target, and Maximum Levels, which are defined as a % of sales revenue. There is only a Target Level for Stormwater. Guideline Levels Wastewater Treatment (1) Refuse (1) Stormwater (2) Rate Stabilization Reserves for Electric, Gas, Wastewater Collection and Water do not have set Minimum, Target and Maximum Levels. Reserve Funds unique to specific utilities Operations The purpose of the Operations Reserve Fund is to manage normal variations in costs and as a reserve for contingencies. The Operations Reserve Fund is found within the Electric Utility, Gas Utility, Wastewater Collection Utility, and Water Utility. The Minimum, Target, and Maximum level of reserves for the Electric, Gas, Wastewater Collection, and Water Utilities are defined by the number of days of expenses that should be covered. Based on the current reserve policies, these guideline levels are as follows: Guideline Levels Electric Supply (1) Electric Distribution (2) Gas (3) Wastewater Collection (4) Water (5) Electric Utility Reserves Management Practices, Gas Utility Reserves Management Practices, Wastewater Collection Utility Reserves Management Practices, Water Utility Reserves Management Practices, City Council CMR:320:0, City Council CMR:263:3 Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 15  Packet Pg. 39 of 320  DETAILED ANALYSIS Based upon policy, it should be noted that if, at the end of any fiscal year, the funds remaining in the Operations Reserves are lower than the minimum level set forth above, staff shall present a plan to the City Council to replenish the reserve. The plan shall be delivered within six months of the end of the fiscal year, and shall, at a minimum, result in the reserve reaching its minimum level by the end of the following fiscal year. In addition, staff may present an alternative plan that takes longer than one year to replenish the reserve. The policy also states that if, at the end of any fiscal year, either Operations Reserve is higher or lower than the target level, any Financial Plan for a Utility shall be designed to return Operations Reserves to their target levels by the end of the forecast period considered in the Financial Plan. Also, based upon policy, if at any time the Operations Reserve reaches its maximum level, no funds may be added to this Reserve. Any further increase in that fund's Fund Balance shall be automatically included in the Unassigned Reserves. CIP Reserves The purpose of the CIP Reserve Fund is to manage cash flow for capital projects and to act as a reserve for capital contingencies such as overage amounts for a project. The CIP Reserve Fund is found within the Electric Utility, Gas Utility, Wastewater Collection Utility, and Water Utility. The Minimum and Maximum Level guidelines are the same for Electric, Gas, Wastewater Collection, and Water for the CIP Reserves Fund. Guideline Levels These guideline levels are calculated for each fiscal year of the Financial Planning Period and approved by Council resolution. Based upon policy, it should be noted that if, at the end of any fiscal year, the minimum guideline is not met, staff shall present a plan to the City Council to replenish the reserve. The plan shall be delivered by the end of the following fiscal year, and shall, at a minimum result in the reserve reaching its minimum level by the end of the next fiscal year. Electric Utility Reserves Management Practices, Gas Utility Reserves Management Practices, Wastewater Collection Utility Reserves Management Practices, Water Utility Reserves Management Practices, City Council CMR:320:0, City Council CMR:263:3 Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 16  Packet Pg. 40 of 320  DETAILED ANALYSIS Also, based upon policy, it should be noted that if, at any time, the CIP Reserve reaches its maximum level, no funds may be added to this reserve. If there are funds in this reserve in excess of the maximum level staff must propose to transfer these funds to another reserve or return them to ratepayers in the next Financial Plan. Staff may also seek Council approval to hold funds in this reserve in excess of the maximum level, if they are held for a specific future purpose related to the CIP. Electric Special Projects The purpose of the Electric Special Projects (ESP) Reserve Fund is to fund projects that benefit electric rate payers. The Electric Special Projects Reserve Fund is found within the Electric Utility. The Electric Special Projects Reserve Fund will be managed in accordance with the policies set forth in Resolution 9206 (Resolution of the Council of the City of Palo Alto Approving Renaming the Calaveras Reserve to the Electric Special Project Reserve and Adoption of Electric Special Project Reserve Guidelines) which was passed in 2011. Below are the Electric Special Projects (ESP) Reserve Fund guidelines set forth in Resolution 9206: • The purpose of the ESP Reserve is to fund projects that benefit electric ratepayers. • The ESP Reserve Funds must be used for projects of significant impact. • Projects proposed for funding must demonstrate a need and value to electric ratepayers. The projects must have verifiable value and must not be speculative, or high-risk in nature. • Projects proposed for funding must be substantial in size, requiring funding of at least $1 million. • Set a goal to commit funds by the end of FY 2025. • Any uncommitted funds remaining at the end of FY 2030 will be transferred to the Electric Supply Operations Reserve and the ESP Reserve will be closed. Underground Loan The purpose of the Underground Loan Reserve Fund is to fund a reserve for principal payments of outstanding Underground Loan(s). The Underground Loan Reserve Fund is found within the Electric Utility. Based upon policy, it should be noted that, at the end of each fiscal year, the Underground Loan Reserve will be adjusted by the principal payments made against outstanding underground loans. There are no set Minimum, Target and Maximum Levels. Electric Utility Reserves Management Practices Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 17  Packet Pg. 41 of 320  DETAILED ANALYSIS Hydroelectric Stabilization Reserve The purpose of the Hydroelectric Stabilization Reserve Fund is to manage the supply cost impacts with variations in generation from hydroelectric resources. The Hydroelectric Stabilization Reserve Fund is found within the Electric Utility. Based upon policy, it should be noted that, near the end of each fiscal year, staff will determine the actual and expected hydro output for that fiscal year, compare that to the long-term average annual output level, and multiply the difference by the average of the monthly round-the-clock forward market prices for each month of the current fiscal year for the projected hydro output. Staff is authorized to transfer the amount calculated for the projected hydro output (described above) from the Operations Reserve to the Hydroelectric Stabilization Reserve for hydro output deviations above long-term average levels, or transfer this amount from the Hydroelectric Stabilization Reserve to the Operations Reserve for hydro output deviations below long-term average levels. The level of the Hydroelectric Stabilization Reserve after the transfers described above shall be the basis for staff's determination, with Council approval, of whether to implement the Hydro Rate Adjuster (Electric Rate E-HRA) for the following fiscal year. For the Hydroelectric Stabilization Reserve Fund there are set Minimum, Target and Maximum Levels. Guideline Levels Electrification Reserve The purpose of the Electrification Reserve Fund is to track funding of City buildings, appliance and vehicle electrification projects and programs, including development and implementation costs and associated financial incentives, loans and rebates for participating customers. The Electrification Reserve Fund is found within the Electric Utility. Electric Utility Reserves Management Practices Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 18  Packet Pg. 42 of 320  DETAILED ANALYSIS Based upon policy, the Electrification Reserve may be funded by any lawful source of funds available for such programs, including new or ongoing utility revenues derived from customer participation. The Electrification Reserve balance shall be annually adjusted based on the net of revenues and expenses associated with the City's building appliance and vehicle electrification projects and programs using this reserve. Public Benefits The purpose of the Public Benefits Reserve Fund is to track unspent Public Benefits Revenues. The Public Benefits Reserve Fund is found within the Electric Utility. Based upon policy, the Public Benefits Reserve Fund will be increased by the amount of unspent Public Benefits Revenues remaining at the end of each fiscal year. Expenditure of these funds requires actions by the City Council. Low Carbon Fuel Standard The purpose of the Low Carbon Fuel Standard (LCFS) Reserve Fund is to track the revenues earned via the sale of Low Carbon Fuel Credits allocated by the California Air Resources Board to the City, as well as expenses incurred, in accordance with California's Low Carbon Fuel Standard Program. The Low Carbon Fuel Standard Reserve Fund is found within the Electric Utility. Based upon policy, at the end of each fiscal year, the Low Carbon Fuel Standard Reserve will be adjusted by the net of revenues and expenses associated with California's Low Carbon Fuel Standard program Cap and Trade Program The purpose of the Cap-and-Trade Program Reserve Fund is to track unspent or unallocated revenues from the sale of carbon allowances freely allocated by the California Air Resources Board to the Electric Utility and Gas Utility, under the State's Cap and Trade Program. The Cap-and-Trade Program Reserve Fund is found within the Electric Utility and Gas Utility. Based upon policy, funds in this reserve are managed in accordance with the City's Policy on the Use of Freely Allocated Allowances under the State's Cap and Trade Program, adopted by Council Resolution 9487 in January 2015. At the end of each fiscal year, the Cap-and-Trade Program Reserve will be adjusted by the net of revenues and expenses associated with the Cap-and-Trade program. Electric Utility Reserves Management Practices, Gas Utility Reserves Management Practices Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 19  Packet Pg. 43 of 320  DETAILED ANALYSIS Emergency Plant Replacement The purpose of the Emergency Plant Replacement Reserve Fund is to manage cash flow for replacement or emergency repairs of damaged equipment. Reserves in this fund are to be used on the most expensive pieces of equipment which, if lost, would interrupt Wastewater Treatment activity. The Emergency Plant Replacement Reserve Fund is found within the Wastewater Treatment Utility. Based upon policy, uses of funds in this reserve require special appropriation by the Council. For the Emergency Plant Replacement Reserve Fund there are set Minimum and Maximum Levels. Guideline Levels (1) Notes and Loans The purpose of the Notes and Loans Reserve Fund is to manage cash flow reserves for any outstanding Notes and Loans. The Notes and Loans Reserve Fund is found within the Wastewater Treatment Utility. There are no set Minimum, Target, and Maximum Levels explicitly stated in the policies as required amounts are established in the respective loan agreements. Landfill Corrective Action Reserve The purpose of the Landfill Corrective Action Reserve Fund is to manage cash flow reserves for any costs of closure/post closure maintenance and corrective action for the respective facilities to protect the environment. The Landfill Corrective Action Reserve is found within the Refuse Utility. There are no set Minimum, Target, and Maximum Levels. Geng Road Reserve The purpose of the Geng Road Reserve is to manage cash flow reserves for any costs associated with Geng Road. The Geng Road Reserve is found within the Refuse Utility. There are no set Minimum, Target, and Maximum Levels. City Council CMR:320:0, City Council CMR:263:3 Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 20  Packet Pg. 44 of 320  DETAILED ANALYSIS Overview of Current Reserve Funds and Reserve Policies Observations Observation #1 Based on the information discussed within the Reserve Funds included in all Utilities category, and the Reserve Funds that are unique to specific Utilities category, current reserve policies result in significant administrative burden through multiple prescribed transfer rules and the necessary tracking of reserve funds to minimum, target, and maximum levels. The policies for many reserve funds dictate that reserve funds money must be transferred into the fund if below the minimum level or out of the fund if above the maximum level. For example, this is a requirement for the Operations and Maintenance Reserve, CIP Reserve, and Hydroelectric Stabilization Reserve for the Electric Utility. This requirement necessitates tracking reserve funds to the specific minimum and maximum amounts and transferring funds accordingly. Observation #2 The current reserve funds and policies for the Wastewater Treatment Utility, Refuse Utility, and Stormwater Utility are from May 24, 1990 and May 6, 1993 and are not up to date compared to the other Utilities. Reserve policies for the other utilities were updated June 16, 2025. Observation #3 The purpose of the Electric Special Projects Reserve appears to be similar to the CIP Reserves, and the combination of the two reserves into just one, could assist in relieving the administrative burden of having two reserve funds within the Electric Utility that are for similar purposes. Consistency With Regulatory Reserve Margin Requirements Outstanding Bond Requirements There are two series of publicly-sold utility bonds outstanding: • $35,015,000 City of Palo Alto Water Revenue Bonds, 2009 Series A (Taxable Direct Payment Build America Bonds), which mature on June 1, 2035 • $17,225,000 City of Palo Alto Utility Revenue Refunding Bonds 2011 Series A, which mature on June 1, 2026 The 2009 Bonds are payable only from Net Revenues of the Water System. Proceeds of the 2009 Bonds funded a debt service reserve fund for the 2009 Bonds in the amount of $2,567,280. The City is required to maintain the debt service reserve fund while the 2009 Bonds remain outstanding. Water Revenue Bonds, 2009 Series A, OS, Utility Revenue Refunding Bonds, 2011 Series A, OS Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 21  Packet Pg. 45 of 320  DETAILED ANALYSIS The 2011 Bonds were separated into sub-series, with 45% ($7,751,250) allocated to the Water System and 55% ($9,473,750) allocated to the Gas System. The Water System’s 2011 sub-series is payable only from Net Revenues of the Water System on a parity basis with the 2009 Bonds. The Gas System 2011 sub-series is payable only from Net Revenues of the Gas System. Proceeds of the 2011 Bonds funded a debt service reserve fund for the 2009 Bonds in the amount of $1,462,600. The City is required to maintain the debt service reserve fund the 2011 Bonds remain outstanding. Rate Covenant 2009 Bonds. In the Indenture for the 2009 Bonds, the City covenanted to fix, prescribe, revise and collect Charges for the Water System during each Fiscal Year which (together with other funds transferred from stabilization reserve funds for the Water System, and which are lawfully available to the City for payment of any of the following amounts during such Fiscal Year) are at least sufficient, after making allowances for contingencies and error in the estimates, to pay the following amounts in the following order: • All Maintenance and Operation Costs of the Water System estimated by the City to become due and payable in such Fiscal Year; • the Debt Service; • All other payments required for compliance with the Indenture and the instruments pursuant to which any Parity Bonds relating to the Water System shall have been issued; and • All payments required to meet any other obligations of the City which are charges, liens, encumbrances upon or payable from the Gross Revenues of the Water System or the Net Revenues of the Water System. In addition, the City covenanted to fix, prescribe, revise and collect Charges for the Water System during each Fiscal Year which, when added to the balance then on hand in Available Reserves for the Water System, are sufficient to yield Net Revenues of the Water System at least equal to one hundred twenty-five percent (125%) of the amounts payable under the preceding clause (a)(2) in such Fiscal Year for Bonds which have a lien on such Net Revenues. 2011 Bonds. In the Indenture for the 2011 Bonds, the City covenanted, separately for each of the Water System and the Gas System, to fix, prescribe, revise, and collect Charges for each System during each Fiscal Year which (together with other funds transferred from stabilization reserve funds for such System, and which are lawfully available to the City for payment of any of the following amounts during such Fiscal Year) are at least sufficient, after making allowances for contingencies and error in the estimates, to pay the following amounts in the following order: • All Maintenance and Operation Costs of Such System estimated by the City to become due and payable in such Fiscal Year; • The Debt Service on the Sub-Series of the 2011 Bonds issued for such System; Water Revenue Bonds, 2009 Series A, OS, Utility Revenue Refunding Bonds, 2011 Series A, OS Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 22  Packet Pg. 46 of 320  DETAILED ANALYSIS • All other payments required for compliance with this Indenture and the instruments pursuant to which any Parity Bonds relating to such System shall have been issued; and • All payments required to meet any other obligations of the City which are charges, liens, encumbrances upon or payable from the Gross Revenues of such System or the Net Revenues of such System. In addition, the City covenanted for each of the Water System and the Gas System to fix, prescribe, revise, and collect Charges for such System during each Fiscal Year which, when added to the balance then on hand in Available Reserves for such System, are sufficient to yield Net Revenues of such System at least equal to one hundred twenty-five percent (125%) of Debt Service that is payable from Net Revenues of the such System. Available Reserves 2009 Bonds. In the Indenture for the 2009 Bonds, the City covenanted to maintain the funds on hand in Available Reserves in an aggregate amount at least equal to five (5.0) times maximum annual debt service on all outstanding bonded indebtedness secured by Net Revenues of the Water, Gas or Electric Systems. In addition, the City covenanted to transfer from Available Reserves, to the Water Revenue Fund, as needed, amounts sufficient to enable the City to pay all maintenance and operation costs of the Water System, and all debt service on the Bonds, when and as the same become due and payable. The 2009 Indenture defines “Available Reserves” to mean funds held in the City’s: (i) Rate Stabilization Reserve for the Water System, (ii) Distribution Rate Stabilization Reserve for the Electric System, (iii) Distribution Rate Stabilization Reserve for the Gas System, (iv) Supply Rate Stabilization Reserve for the Electric System, (v) Supply Rate Stabilization Reserve for the Gas System, and (vi) the Electric System’s Calaveras-Stranded Costs Reserve. 2011 Bonds. In the Indenture for the 2011 Bonds, the City covenanted to maintain the funds on hand in Available Reserves (as defined above) in an aggregate amount at least equal to five (5.0) times maximum annual debt service on all outstanding bonded indebtedness secured by Net Revenues of the Water System and the Gas System. Water Revenue Bonds, 2009 Series A, OS, Utility Revenue Refunding Bonds, 2011 Series A, OS Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 23  Packet Pg. 47 of 320  DETAILED ANALYSIS In addition, the City covenanted to transfer from Available Reserves, to the Revenue Fund, as needed, amounts sufficient to enable the City to pay all Maintenance and Operation Costs of the applicable Water System or Gas System, and all Debt Service, when and as the same become due and payable. The City covenanted in the 2011 Indenture that any depletion of the Available Reserves which causes the balance therein to fall below the required level shall be restored from Net Revenues of the System which caused such depletion to take place. Application of the Available Reserves Requirement As described above, the City covenanted in the Indentures for the 2009 Bonds and the 2011 Bonds to maintain in the Available Reserves an aggregate amount at least equal to five (5.0) times maximum annual debt service on all outstanding bonded indebtedness secured by Net Revenues of the Water, Gas or Electric Systems. The Maximum Annual Debt Service on the 2009 and 2011 Bonds is $4,025,221.26. There is no outstanding bonded indebtedness payable from the Electric System. Five times the Maximum Annual Debt Service is $20,126,106.30. Consequently, the City is obligated to maintain $20,126,106.30 in the Available Reserves as long as the 2009 Bonds and the 2011 Bonds are outstanding. The 2011 Bonds mature in 2026. The City intends to refinance the 2009 Bonds, if market conditions permit. Water Revenue Bonds, 2009 Series A, OS, Utility Revenue Refunding Bonds, 2011 Series A, OS Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 24  Packet Pg. 48 of 320  DETAILED ANALYSIS Credit Rating Reserve Targets Standard & Poor's Standard & Poor’s (S&P) has a methodology known as “S&P Criteria for U.S. Municipal Water Sewer, and Solid Waste Utilities” that S&P applies for rating any water, sewer or solid waste utility nationally. S&P also has a methodology known as “S&P Criteria for U.S. Municipal Retail Electric and Gas Utilities” that S&P applies for rating any electric or gas utility nationally. More information about the S&P methodologies are provided below. Standard & Poor's (S&P) issued a Global Ratings Affirmation for the outstanding Utility Revenue Refunding Bonds, 2011 Series A and Water Revenue Bonds, 2009 Series A, and affirmed its 'AAA' rating on the outstanding bonds and determined that the outlook is stable. The outstanding bonds fall under the S&P Criteria for U.S. Municipal Water, Sewer, and Solid Waste Utilities, since they are backed by multiple Utility revenues. For the S&P Criteria for U.S. Municipal Water, Sewer, and Solid Waste Utilities, Liquidity and Reserves have a 40% weighting when it comes to a rating. Due to the significant weight of liquidity and the reserves on the overall rating criteria, An important factor in maintaining the City’s 'AAA' Rating is ensuring that their Water, Sewer, and Solid Waste Liquidity and Reserves meet the reserve balance category of Extremely Strong. Below is a table that lists the Liquidity and Reserves S&P criteria for U.S. Municipal Water, Sewer, and Solid Waste Utilities. Days' Cash Available Reserves Water Revenue Bonds, 2009 Series A, OS, Utility Revenue Refunding Bonds, 2011 Series A, OS, S&P Ratings Report from April 7, 2025, S&P Criteria | Governments | U.S. Public Finance: U.S. Municipal Water, Sewer, And Solid Waste Utilities: Methodology And Assumptions Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 25  Packet Pg. 49 of 320  DETAILED ANALYSIS For the S&P Criteria for U.S. Municipal Retail Electric and Gas Utilities, Liquidity and Reserves have a 25% weighting when it comes to a rating. The City does not currently have outstanding debt that is rated using this criteria. Below is a table that lists the Liquidity and Reserves S&P Criteria for U.S. Municipal Retail Electric and Gas Utilities. The following table measures liquidity through a Days' Liquidity metric, which measures how many days the Utility can continue to operate and pay for its expenses using only its currently available cash on hand. If the City intends to issue rated electric or gas utility debt in the future, the available reserves for those utilities would be considered against the amounts listed in the table below to help determine the liquidity and reserves scoring component for a bond rating. Total Days' Extremely Strong =>270 =>$250 Very Strong 150-270 $100-$250 Strong 90-150 $50-$100 Adequate 45-90 $10-$50 Vulnerable 15-45 $2-$10 Highly Vulnerable <=15 <=$2 Moody's Moody's issued a credit opinion on December 16, 2024 for the City of Palo Alto, the water system, and water and gas as a combined utility. The City's rating of 'Aaa' was determined to be stable, the water system's rating of 'Aa1' was determined to be stable, and the water and gas combined utility's rating of 'Aa2' was determined to stable. The criteria Moody's utilizes for their ratings from the credit opinion is their rating methodology over US Municipal Utility Revenue Debt. For Moody's US Municipal Utility Revenue Debt, Financial Strength has a 40% weighting when it comes to a rating. Of the 40% weighting, Annual Debt Service Coverage is 15%, Days Cash on Hand is 15%, and Debt to Operating Revenues is 10%. Below is a table that lists the Financial Strengths Moody's criteria for US Municipal Utility Revenue Debt. S&P Criteria | Governments | U.S. Public Finance: U.S. Municipal Retail Electric And Gas Utilities: Methodology And Assumptions, Moody's Rating Methodology: US Municipal Utility Revenue Debt Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 26  Packet Pg. 50 of 320  DETAILED ANALYSIS Annual Debt Service Coverage Days Cash on Hand Debt to Operating Revenues Aaa >2.00x >250 days <2.00x Aa A Baa 35 > n > 15 7.00x < n < 8.00x Ba 15 > n > 7 8.00x < n < 9.00x B and Below <0.70x <7 days >9.00x Compliance With Regulatory Reserve Margin Requirements Observations Observation #1 Current reserve policies do not specifically address the Rate Covenants or Available Reserve Covenants listed above as Outstanding Bond Requirements. These covenants were made by the City in the official statements and legal documents for the outstanding 2009 and 2011 bonds. The City could consider referencing these documents in its reserve policies. • It is important to note that aaccording to the latest Ratings Affirmation from S&P on the outstanding 2011 and 2009 bonds, Palo Alto is in compliance with the Rate and Available Reserves Covenants Observation #2 Current reserve policies do not specifically address relevant credit rating reserve targets. By formulating reserve policies that specify guideline levels for reserve funds with these credit rating reserve targets in mind, the City can better position itself to maintain its strong bond ratings. Moody's Rating Methodology: US Municipal Utility Revenue Debt Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 27  Packet Pg. 51 of 320  DETAILED ANALYSIS Operational/Industry Best Practices Government Finance Officers Association (GFOA) Operating Reserves GFOA recommends, at a minimum, regardless of a governments size, to maintain operating reserves at no less than two months of regular operating revenues or regular operating expenditures. The choice of revenues or expenditures as a basis of comparison may be dictated by what is more predictable for the government's particular circumstances. GFOA also states that a government's particular situation often may require a level of operating reserves to be significantly in excess of the recommended minimum level of no less than two months of regular operating revenues or regular operating expenditures. An example of a particular situation could be a government that knows it is exposed to certain economical or climate risks with complex potential effects of them in the future. GFOA also recommends that if the reserve balance falls below the government's policy level, there should be a solid plan to replenish it, and governments should seek to replenish the reserve balance within one to three years. Capital Improvement Program Reserves GFOA states that Capital Improvement Program Reserves may be used to proactively manage capital assets, for instance by annually setting aside 20% of a five-year asset's replacement costs so that funding is available when replacement is necessary. Furthermore, the GFOA provides two examples of annual funding allocations/levels for a Capital Improvement Program Reserves, which are listed below. • Maintain an ending balance equal to a dollar amount or a percentage of the five-year average of the entity's annual capital budget. (The actual dollar amount or percentage should be set based on the particular entity's capital needs and financial capabilities.) • Baker Tilly considers maintaining 20%, which is the equivalent of one- year of average capital improvements, of the total capital anticipated to be funded with cash on hand in the five-year capital budget in CIP reserves as a best practice. GFOA Fund Balance Guidelines for the General Fund, GFOA Strategies for Establishing Capital Asset Renewal and Replacement Reserve Policies Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 28  Packet Pg. 52 of 320  DETAILED ANALYSIS • Annually contribute an amount based on a percentage of the annual depreciation of the entity's assets. Funding sources will vary and may includes transfers from the Operations Fund or one-time revenues. An entity may wish to consider initial funding levels for the first one to five years with a plan for increasing funding thereafter until the target funding level is achieved. In addition, organizations should consider the pros and cons of the level of reliance on one-time versus recurring revenues based upon the financial conditions of the jurisdiction and the goals of the reserve. Additional Industry Best Practices Capital Improvement Program Reserves An additional best practice for the Capital Improvement Program Reserves it to have at least one year worth of depreciation expense in a fund for capital improvements. Note that a reserve target for a CIP fund would typically be based on either a percentage of average annual capital spending based on a CIP plan or based on depreciation expense amounts. Operational/Industry Best Practices Observations Observation #1 The City of Palo Alto's current reserve policies for its operations reserve funds are in alignment with the GFOA's recommendations for operating reserves. However, the Wastewater Treatment Utility, Refuse Utility, and Stormwater Utility do not currently have operations reserve funds. Observation #2 The City of Palo Alto's current reserve policy for its CIP reserve funds outlines a maximum reserve guideline level that aligns with Baker Tilly’s recommendation for a target ending balance for a CIP reserve fund (approximately one-year of average capital improvement spending held in reserve). Current reserve policy outlines a minimum reserve guideline level that is 20% of this amount. While Baker Tilly considers one-year of average capital improvements a best practice CIP reserve level, GFOA recommends that capital reserve level development should be designed to best serve the particular needs of a given organization. As such, an amount less than our recommendation could be considered. Alternatively, another approach to determining a CIP reserve fund guideline level could be to maintain one-year or a percentage of one-year of depreciation expense in reserve balances. Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 29  Packet Pg. 53 of 320  DETAILED ANALYSIS Local Economy Specific Reserves Through Benchmarking Comparables The purpose of this section is to provide an overview of the local economy specific reserves by benchmarking the reserve funds and reserve policies of communities comparable to the City of Palo Alto ("benchmark communities"). The benchmark communities that we researched are City of Roseville, City of Santa Clara, City of Healdsburg, City of Pasadena, and San Jose Clean Energy. Within this section, we list the reserve funds and the guideline cash reserve levels for the reserve funds from the benchmark communities and compare them to the City of Palo Alto's Utility reserve funds and reserve policies guidelines. This information is broken down into two sections; Reserve Funds Palo Alto Utilities Have and Reserve Funds Palo Alto Utilities Do Not Have. The chart below indicates for each comparable community what reserve funds they have (indicated by “Yes”) and do not have (indicated by “No”) for each of their utilities. Benchmarking Comparables City of Roseville City of Santa Clara City of Healdsburg City of Pasadena Jose Clean Electric Water Electric Water Electric Water Electric Electric Rate Stabilization Yes Yes Yes No Yes No No Yes Yes No Yes Operations No Yes Yes Yes Yes No Yes Yes Yes Yes Yes Capital Replacement & Improvement No No No No No Yes Yes Yes Yes Yes No No Yes Yes No No No No No No No No Yes No No No No No No No No Yes No Reserve Funds Palo Alto Utilities Do Not Have: Debt Service Yes No No No No No No No No No No Yes No No No No No No No No No No Fixed Cost Coverage Yes No No No No No No No No No No No No No No No No No No No Yes No No No No No No No No No No Yes No No No No No No No No No No Yes No Contingency Reserve No No No No No No No No No Yes No Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 30  Packet Pg. 54 of 320  DETAILED ANALYSIS Reserve Funds Palo Alto Utilities Have Rate Stabilization As noted in the overview of current reserve funds and reserve policies section, the City of Palo Alto has a rate stabilization reserve fund for each of its utilities. The current City reserve policies outline the guideline levels for rate stabilization reserves as follows: Table 1 - Palo Alto Rate Stabilization Fund Minimum 15% 10% N/A Target 22.5% 15% $500,000 Maximum 30% 20% N/A (1) % of sales revenue. Levels found in City Council CMR:263:3 from May 6, 1993 (2) Target Level found in City Council CMR:320:0 from May 24, 1990 Rate Stabilization Reserves for Electric, Gas, Wastewater Collection and Water do not have set Minimum, Target and Maximum Levels. Similar to Palo Alto, many of the benchmark communities researched had rate stabilization reserve funds for their utilities. The guideline levels of reserves outlined in the benchmark communities reserve policies for the rate stabilization reserve funds were as follows: City of Roseville Electric Table 2 - Roseville Electric Rate Stabilization Fund Minimum 40% of operating expenses Target 65% of operating expenses Maximum 90% of operating expenses City of Roseville Water and Wastewater Table 3 - Roseville Water and Wastewater Rate Stabilization Fund City of Roseville Financial Policies (Pages 106-108 and 118-120) 50% of operating expenses or roughly 180 Days' Cash Target Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 31  Packet Pg. 55 of 320  DETAILED ANALYSIS City of Santa Clara Electric Based upon research, it is determined that the City of Santa Clara Electric Utility has an Electric Rate Stabilization Reserve Fund with a balance as of May 31, 2025 of $70,000,000; however, we were unable to track down guideline levels for their Electric Rate Stabilization Reserve Fund. When calculating $70,000,000 divided by the City of Santa Clara's Electric Utility Fiscal Year 2024-2025 adopted budget for Electric Utility Operating Expenses of $649,513,582, the reserve balance comes out to approximately 10.78% of budgeted Electric Utility Operating Expenses. City of Healdsburg Water and Wastewater Table 4 - Healdsburg Water and Wastewater Rate Stabilization Fund San Jose Clean Energy Table 5 - San Jose Clean Energy Rate Stabilization Fund Comparison to City of Palo Alto Electric Table 6 - Electric Rate Stabilization Fund Guideline Reserve Levels Comparison Palo Alto City of Electric Santa San Jose Clean Energy Minimum N/A N/A N/A Target N/A 65% of expenses operating non-operating revenues Maximum N/A N/A N/A There are no set Minimum, Target and Maximum Levels for City of Palo Alto Electric. City of Santa Clara Financial Status Report as of May 31, 2025 (Pages 23-24), City of Healdsburg Ordinance No. 1240, San Jose Clean Energy Financial Reserves Policy Guideline Level Guideline Level Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 32  Packet Pg. 56 of 320  DETAILED ANALYSIS Comparison to City of Palo Alto Water Table 7 - Water Rate Stabilization Fund Guideline Reserve Levels Comparison Guideline Levels City of Palo Alto Water City of Roseville Water Minimum N/A N/A N/A Target N/A 50% of operating expenses or roughly 180 Days' Cash $1,000,000 There are no set Minimum, Target and Maximum Levels for City of Palo Alto Water. Comparison to City of Palo Alto Wastewater Table 8 - Wastewater Rate Stabilization Fund Guideline Reserve Levels Comparison Palo Alto Wastewater Collection Palo Alto Wastewater Treatment (1) City of Roseville Wastewater City of Healdsburg Wastewater Minimum N/A 15% N/A N/A Target N/A 22.5% 50% of operating expenses or roughly 180 Days' Cash There are no set Minimum, Target and Maximum Levels for City of Palo Alto Wastewater Collection. Also, it should be noted that the Gas, Refuse and Stormwater Systems for the City of Palo Alto all had rate stabilization reserve funds as well, but as none of the benchmark communities had rate stabilization reserve funds for these utilities, no charts are shown for them. Rate Stabilization Observations Observation #1 The City of Palo Alto Electric Utility does not have a set minimum, target, or maximum guideline level. For the benchmark communities, the City of Roseville Electric has a minimum, target, or maximum guideline level found in Table 2, our calculation for City of Santa Clara Electric of 10.78% of operating expenses is assumed to be the target guideline level, and San Jose Clean Energy only has a target guideline level found in Table 5. Table 6 shows these benchmark communities reserve guideline levels compared to the City of Palo Alto's Electric Utility. Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 33  Packet Pg. 57 of 320  DETAILED ANALYSIS Observation #2 The City of Palo Alto Water Utility does not have a set minimum, target, or maximum guideline level, while the City of Roseville Water and City of Healdsburg Water both have target guideline levels found in Table 3 and Table 4. Table 7 shows these benchmark communities reserve guideline levels compared to the City of Palo Alto's Water Utility. Observation #3 The City of Palo Alto Wastewater Collection Utility does not have a set minimum, target, or maximum guideline level, while the City of Palo Alto Wastewater Treatment Utility does as shown in Table 1. The City of Roseville Wastewater and City of Healdsburg Wastewater both have target guideline levels found in Table 3 and Table 4. Table 8 shows these benchmark communities reserve guideline levels compared to the City of Palo Alto's Wastewater Collection Utility. Operations and Maintenance As noted in the overview of current reserve funds and reserve policies section, the City of Palo Alto has an operations reserve fund for its Electric Utility, Gas Utility, Wastewater Collection Utility, and Water Utility. The current City reserve policies outline the guideline levels for operations reserves are found in the below table. Table 9 - Palo Alto Operations and Maintenance Fund Supply (1) Distribution (2) Gas (3) Collection (4) Water Minimum 60 60 60 60 60 Target 90 90 90 105 90 Maximum 120 120 120 150 120 (1) Days of Electric Supply Fund O&M and Commodity Expense (2) Days of Electric Distribution Fund O&M Expense (3) Days of Gas O&M and Commodity Expense (4) Days of Wastewater Collection O&M and Commodity Expense (5) Days of Water O&M and Commodity Expense City of Roseville Water Table 10 - Roseville Water Operations and Maintenance Fund City of Roseville Financial Policies (Pages 118-120) Minimum 90 days' cash worth of operating expenses. Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 34  Packet Pg. 58 of 320  DETAILED ANALYSIS City of Roseville Wastewater Table 11 - Roseville Wastewater Operations and Maintenance Fund City of Roseville Solid Waste Table12 - Roseville Solid Waste Operations and Maintenance Fund City of Santa Clara Electric Based upon research, it is determined that the City of Santa Clara Electric Utility has an Operations and Maintenance Reserve Fund with a balance as of May 31, 2025 of $257,000,000; however, we were unable to track down guideline levels for their Electric Operations and Maintenance Reserve Fund. When calculating $257,000,000 divided by the City of Santa Clara's Electric Utility Fiscal Year 2024-2025 adopted budget for Electric Utility Operating Expenses of $649,513,582, the reserve balance comes out to approximately 39.57% of budgeted Electric Utility Operating Expenses, or 145 days of operating expenses. City of Healdsburg Electric Table 13 - Healdsburg Electric Operations and Maintenance Fund City of Healdsburg Water Table 14 - Healdsburg Water Operations and Maintenance Fund City of Healdsburg Wastewater Table 15 - Healdsburg Wastewater Operations and Maintenance Fund City of Roseville Financial Policies (Pages 118-120), City of Santa Clara Financial Status Report as of May 31, 2025 (Pages 23-24), City of Healdsburg Ordinance No. 1240, City of Healdsburg Biennial Budget (Page 70) Minimum 90 days' cash worth of operating expenses. Minimum 90 days' cash worth of operating expenses. 183 days of operating expenses Minimum 92 days of operating expenses Minimu 92 days of operating expenses Minimum Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 35  Packet Pg. 59 of 320  DETAILED ANALYSIS City of Pasadena Electric Table 16 - Pasadena Electric Operations and Maintenance Fund Minimum 60 days of operating expenses Target 90 days of operating expenses San Jose Clean Energy Table 17 - San Jose Clean Energy Operations and Maintenance Fund Comparison to City of Palo Alto Water Table 18 - Water Operations and Maintenance Fund Guideline Reserve Levels Comparison Minimum 60 days of operating expenses. of operating expenses. City of Pasadena Code of Ordinances 13.04.175, San Jose Clean Energy Financial Reserves Policy 180 days liquidity on hand Minimum Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 36  Packet Pg. 60 of 320  DETAILED ANALYSIS Comparison to City of Palo Alto Wastewater Collection Table 19 - Wastewater Operations and Maintenance Fund Guideline Reserve Levels Comparison Wastewater Collection Wastewater Wastewater Minimum 60 days of operating expenses. of operating expenses. Comparison to City of Palo Alto Electric Table 20 - Electric Operations and Maintenance Fund Guideline Reserve Levels Comparison Guideline Levels City of Palo Alto Electric Supply (1) City of Palo Alto Electric Distribution (2) City of Santa Clara Electric City of Healdsburg Electric City of Pasadena Electric San Jose Clean Energy Minimum 60 days of operating expenses 60 days of operating expenses. N/A 183 days of operating expenses 60 days of operating expenses days liquidity on Target operating operating operating N/A operating N/A Maximum 120 days of operating expenses 120 days of operating expenses N/A N/A N/A N/A (1) Defined in the reserve policy as Electric Supply Fund O&M and Commodity Expense (2) Defined in the reserve policy as Electric Distribution Fund O&M Expense Also, it should be noted that the Gas System for the City of Palo Alto had operations and maintenance reserve fund as well, but as none of the benchmark communities had operations and maintenance reserve funds for Gas, no charts are shown for it. Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 37  Packet Pg. 61 of 320  DETAILED ANALYSIS Operations and Maintenance Observations Observation #1 As shown in Tables 18 and 19, the City of Palo Alto Water Utility and Wastewater Collection Utility both have a set minimum, target, and maximum guideline levels, while the City of Roseville and City of Healdsburg Water and Wastewater Utilities only have minimum guideline levels. While the City of Palo Alto's minimum guideline levels for both utilities are lower than the City of Roseville or the City of Healdsburg Water and Wastewater Utilities, Palo Alto's maximum guideline levels are higher than the minimum guideline levels for the City of Roseville and City of Healdsburg Water and Wastewater Utilities. Observation #2 As shown in Table 20, the City of Palo Alto Electric Utility has set minimum, target, and maximum guideline levels for Electric Supply and Electric Distribution, while City of Healdsburg Electric and San Jose Clean Energy only have a minimum guideline level, City of Pasadena Electric has both a minimum and target guideline levels, and while the City of Santa Clara Electric does not have specified guideline levels, we have listed their current balance expressed as days operating expenses as their target guideline level. Based on these guideline levels of reserves, the City of Palo Alto Electric Utility minimum and target guideline levels are the same as the City of Pasadena Electric, but the minimum and target guideline levels are lower than any minimum or target guideline levels for City of Santa Clara Electric, City of Healdsburg Electric, and San Jose Clean Energy. The City of Palo Alto Electric Utility maximum guideline level is lower than City of Healdsburg Electric and San Jose Clean Energy minimum guideline levels, and the Santa Clara Electric target guideline level. See Table 20. Capital Replacement & Improvement As noted in the overview of current reserve funds and reserve policies section, the City of Palo Alto has a CIP reserve fund for its Electric Utility, Gas Utility, Wastewater Collection Utility, and Water Utility. The current City reserve policies outline the guideline levels for CIP reserves as follows: Table 21 - Palo Alto Capital Replacement & Improvement Fund Minimum 20% of the maximum CIP Reserve guideline level Maximum Average annual (12 month) CIP budget, for 48 months of budgeted CIP expenses City of Santa Clara Water Based upon research, it is determined that the City of Santa Clara Water has a Capital Replacement & Improvement Reserve Fund with a balance as of May 31, 2025 of $303,090; however, we were unable to track down guideline levels for their Water Capital Replacement & Improvement Reserve Fund. Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 38  Packet Pg. 62 of 320  DETAILED ANALYSIS City of Healdsburg Electric Table 22 - Healdsburg Electric Capital Replacement & Improvement Fund City of Healdsburg Water Table 23 - Healdsburg Water Capital Replacement & Improvement Fund City of Healdsburg Wastewater Table 24 - Healdsburg Wastewater Capital Replacement & Improvement Fund City of Pasadena Electric Table 25 - Pasadena Electric Capital Replacement & Improvement Fund Comparison to City of Palo Alto Electric Table 26 - Electric Capital Replacement & Improvement Fund Guideline Reserve Levels Comparison Palo Alto Healdsburg Pasadena Minimum 20% of the maximum CIP Reserve guideline level N/A N/A Target N/A $4,000,000 capital expenditures budget, for 48 months of City of Santa Clara Financial Status Report as of May 31, 2025 (Pages 23-24), City of Healdsburg Ordinance No. 1240, City of Healdsburg Biennial Budget (Pages 66 and 69-70) One year of budgeted capital expenditures Target $1,000,000 Target $1,000,000 Target $4,000,000 Target Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 39  Packet Pg. 63 of 320  DETAILED ANALYSIS Comparison to City of Palo Alto Water Table 27 - Water Capital Replacement & Improvement Fund Guideline Reserve Levels Comparison Palo Alto Healdsburg Minimum 20% of the maximum CIP Reserve guideline level N/A Target N/A $1,000,000 Maximum Average annual (12 month) CIP budget, for 48 months of budgeted CIP expenses N/A Table 28 - Wastewater Capital Replacement & Improvement Fund Guideline Reserve Levels Comparison Palo Alto Healdsburg Minimum 20% of the maximum CIP Reserve guideline level N/A Target N/A $1,000,000 Maximum Average annual (12 month) CIP budget, for 48 months of budgeted CIP expenses N/A Also, it should be noted that the Gas System for the City of Palo Alto had capital replacement & improvement reserve fund as well, but as none of the benchmark communities had capital replacement & improvement reserve funds for Gas, no charts are shown for it. Capital Replacement & Improvement Observations Observation #1 The City of Palo Alto Electric, Water, and Wastewater Collection Utilities have set minimum and maximum guideline levels for the capital replacement & improvement reserve funds, while all other benchmark communities that had utilities with capital replacement & improvement reserve funds only had target guideline levels. See Tables 26 - 28 for the comparisons between Palo Alto and the benchmark communities for each of these Utilities. System Critical Failure As noted in the overview of current reserve funds and reserve policies section, the City of Palo Alto has an Emergency Plant Replacement reserve fund for its Wastewater Treatment Utility. The current City reserve policies outline the guideline levels for Emergency Plant Replacement reserves as follows: Table 29 - Palo Alto Wastewater Treatment System Critical Failure Fund Minimum 5% of annual increase in the net book value of fixed assets Maximum 5% of total net book value of fixed assets (1) Levels are found in City Council CMR:320:0 Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 40  Packet Pg. 64 of 320  DETAILED ANALYSIS City of Roseville Water Table 30 - Roseville Water System Critical Failure Fund City of Roseville Wastewater Table 31 - Roseville Wastewater System Critical Failure Fund System Critical Failure Observations Observation #1 The City of Palo Alto Wastewater Treatment Utility has set minimum and maximum guideline levels for the emergency plant replacement reserve, while the City of Roseville Water and Wastewater Utilities only had minimum guideline levels. See Table 29, Table 30, Table 31. Debt Service Reserve City of Roseville Electric Table 35 - Roseville Electric Debt Service Reserve Fund City of Pasadena Electric Table 36 - Pasadena Electric Debt Service Reserve Fund Reserve Funds Palo Alto Utilities Do Not Have Debt Service Coverage City of Roseville Electric Table 32 - Roseville Electric Debt Service Coverage Ratio City of Roseville Financial Policies (Page 118-120), City of Pasadena Code of Ordinances 13.04.175 Minimum 1% - 2% of the Capital Assets belonging to the Water Utility Minimum 1% - 2% of the Capital Assets belonging to the Wastewater Utility Minimum 2.0x annual debt service payments Minimum Maintain a fully funded debt service reserve as required by bond covenants. Minimum Maintain a reserve equivalent to one year of debt service payments for outstanding bond or credit obligations. Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 41  Packet Pg. 65 of 320  DETAILED ANALYSIS Days Cash on Hand City of Roseville Electric Table 33 - Roseville Electric Days Cash on Hand Fund City of Roseville Electric Table 34 - Roseville Electric Fixed Cost Coverage General Fund Transfer City of Pasadena Electric Table 37 - Pasadena Electric General Fund Transfer Energy Services Charge City of Pasadena Electric Table 38 - Pasadena Electric Energy Services Charge Minimum 60 days of projected power supply costs Target 90 days of projected power supply costs Transmission Services Charge City of Pasadena Electric Table 39 - Pasadena Electric Transmission Services Charge Minimum 60 days of transmission services cost Target 90 days of transmission services cost City of Roseville Financial Policies (Page 106-108), City of Pasadena Code of Ordinances 13.04.175 Minimum 1.5x of annual fixed costs Guideline Level One year of the budgeted General Fund Transfer Target Guideline Level Minimum >250 days Guideline Level Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 42  Packet Pg. 66 of 320  DETAILED ANALYSIS Contingency Reserve City of Pasadena Electric Table 40 - Pasadena Electric Contingency Reserve Fund Minimum Sum of 60 days of operating expenses and 60 days of capital expenditures Target Sum of 90 days of operating expenses and 90 days of capital expenditures Local Economy Specific Reserves Through Benchmarking Comparables Observations Observation #1 The Benchmark Communities typically have some or all of the three commonly established reserve funds that Palo Alto Utilities with updated reserve policies have, which are the rate stabilization reserve, the operations and maintenance reserve, and the CIP reserve. Observation #2 Based upon the research of the City of Roseville, City of Santa Clara, City of Healdsburg, City of Pasadena, and San Jose Clean Energy Reserve Policies, it is determined that the City of Palo Alto's Reserve Policies are more cumbersome than the comparables identified. The City of Palo Alto Utilities Operations and Maintenance Reserve Funds include a minimum, target and maximum guideline level while the other benchmark communities only include a minimum and/or a target. The City of Palo Alto Utilities Capital Replacement and Improvement Reserve Funds also include a minimum, target, and maximum, while the other benchmark communities only include a target. Overall, the City of Palo Alto Utilities have not only more funds established to hold cash reserves, but their policies are more detailed in terms of guideline levels and sources and uses of those reserve funds compared to the other benchmark communities reserve policies. Observation #3 While there are reserve funds that benchmark communities have in place that Palo Alto Utilities does not have in place, none of these reserve funds are vital or in line with industry best practices. In many cases, these reserve funds serve the same or a similar purpose as other reserve funds the benchmark communities and Palo Alto Utilities have in place. For example, the City of Roseville Electric days cash on hand reserve and fixed cost coverage reserve, and the City of Pasadena electric energy services charge and transmission services charge reserve funds serve a similar purpose to the operation and maintenance fund reserve for these Utilities. The City of Pasadena Contingency Reserve serves the same purpose as both the operation and maintenance reserve fund and the capital replacement and improvement reserve fund. City of Pasadena Code of Ordinances 13.04.175 Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 43  Packet Pg. 67 of 320  DETAILED ANALYSIS Reserve Tracking Reserve Tracking Requirements and Processes Current Requirements for Tracking Palo Alto's Reserves The Reserve Management Practices (policies) all state that they should be used when developing each individual Utility's Financial Plan. Guideline levels included in the reserve policies that are not a fixed dollar amount are calculated for each fiscal year of the financial planning period for each individual Utility's Financial Plan. Current Processes Being Performed for Tracking Palo Alto's Reserves Reserve targets are recalibrated annually to calculate the dollar amount planned to be held in reserve. The dollar amount for each reserve target calculated annually does not always represent the target outlined in the policy statement when the policy statement guideline levels are not fixed (for example, a guideline level based on number of days may not have a reserve target in a Financial Plan that matches this metric). During the update of a Utility's Financial Plan, reserve policies are reviewed to determine if they need to be updated. Reserve Tracking Observations Observation #1 Reserve tracking appears to be done on an annual basis in conjunction with the development of each individual Utility's Financial Plan for Palo Alto. A reserve tracking policy with guidance included to report instances when reserve fund balances do not meet guideline levels to Council would provide more assurance that reserve targets are being met throughout the year and equip the Council with better information to make financial decisions than the current process being performed for reserve tracking. Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 44  Packet Pg. 68 of 320  Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 45  Packet Pg. 69 of 320  Item 5 Attachment A - Utility Reserves Advisory Report        Item 5: Staff Report Pg. 46  Packet Pg. 70 of 320  A April 30, 2026 City of Palo Alto Office of the City Auditor Public Safety Staffing and Overtime Audit Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 47  Packet Pg. 71 of 320  Contents Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, operate under an alternative practice structure and are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. Executive Summary ............................................................................................................................ 1 Introduction ........................................................................................................................................ 7 Best Practices Overview ................................................................................................................... 11 Audit Results ..................................................................................................................................... 14 Palo Alto Police Department ............................................................................................................ 14 Palo Alto Fire Department ................................................................................................................ 30 Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 48  Packet Pg. 72 of 320  Executive Summary Purpose of the Audit Baker Tilly Advisory Group, LP (Baker Tilly), in its capacity serving as the Office of the City Auditor (OCA) for the City of Palo Alto (the City), conducted a Public Safety Staffing and Overtime (OT) Audit based on approved Task Order 4.33 as part of the City’s FY25 Audit Plan. The objective of this audit was to: • Determine if sworn personnel at the Palo Alto Police Department (Police) and Palo Alto Fire Department (Fire) are effectively and efficiently staffed including use of OT. Please note that OT used by public safety dispatchers was assessed separately in 2025 and their use of OT was not considered as part of this audit. Report Highlights Palo Alto Police Department (Page 12) operational demands. Although the Police Department generally maintains minimum patrol staffing levels, overall staffing has not returned to pre-pandemic levels and, at times, a portion of the sworn workforce is unavailable for deployment due to injury leave or training assignments. As a result, the number of officers available for field operations may be lower than authorized staffing levels, placing additional strain on operations and limiting resources available for functions such as investigations. OCA also found that Police’s minimum staffing standards have not been formally reassessed in more than two decades, despite changes in service demand and crime trends. While PAPD has generally maintained stable response times, the absence of a recent staffing analysis makes it difficult to determine whether current staffing levels and deployment strategies remain appropriate. Key Observations: 1. The Police Department has not returned to pre-pandemic staffing levels. Average actual staffing declined by approximately 10 staff from FY2015– FY2019 to 139 FTEs in FY2024. 2. During FY25 and the beginning of FY26 approximately 20 employees were not deployable. During FY2025 and early FY2026, approximately 20 employees were unavailable for field deployment due to injury leave or training assignments. 3. Investigations have gone without resolution due to staffing constraints. Staffing constraints have resulted in personnel being reassigned from investigations to patrol, leaving some cases uninvestigated. 4. Minimum staffing standards have not been evaluated in over two decades. While Police generally meets minimum staffing levels, the Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 49  Packet Pg. 73 of 320  EXECUTIVE SUMMARY 5. Police has not met response time goals but response times have slightly improved despite being understaffed. While Police has not met the performance measure of answering 90% of emergency calls within 6 minutes and 90% of urgent calls within 10 minutes, response times have been trending positively since FY2021. Key Recommendations: • Consider over-hiring for positions affected by long-term leave to maintain adequate deployable staffing levels and leverage normal attrition for balancing staffing levels if needed. • Expand recruitment and retention efforts to address ongoing staffing shortages and strengthen the hiring pipeline. • Conduct a comprehensive staffing analysis using data on workload, calls for service, response times, crime trends, and deployable personnel. • Reassess minimum patrol staffing standards to ensure they reflect current service demands and operational needs. Finding 2: (Page 17) Police relies heavily on OT to maintain minimum staffing levels. Police sustained OT usage has largely been driven by staffing shortages and high vacancy levels. OT expenditures have consistently exceeded the City’s budget since 2015 and in recent years have been more than double the budgeted amount. Analysis indicates a strong correlation between increased vacancy days and higher OT expenditures, demonstrating that OT is primarily being used to maintain minimum staffing levels rather than address temporary operational needs. While this approach enables the department to maintain service levels in the short term, heavy reliance on OT may create long-term operational and workforce risks, including employee fatigue, reduced morale, and potential impacts on safety and performance. A more strategic approach to budgeting, staffing, and workload distribution may help the City better manage OT and support sustainable police operations. Key Observations: • Vacancies are a primary driver of OT usage. Analysis of FY2015–FY2024 data shows a clear relationship between vacancy days and OT expenditures; as vacancies increase, OT usage rises to compensate for staffing gaps. • Overtime use in CY2024 was largely driven by meeting minimum staffing levels. In 2024, approximately 81% of patrol OT was attributed to minimum staffing needs such as backfilling vacancies, early call-ins, and hold-over shifts. • OT concentration suggests potential workload imbalances and burnout. While 82% of employees recorded OT hours, the top 10 employees accounted for more than 25% of total OT, suggesting potential workload imbalances. Survey results show public safety employees report lower morale Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 50  Packet Pg. 74 of 320  EXECUTIVE SUMMARY rate morale as good or excellent), and staff indicated that OT levels are often higher than desired. • OT is not assessed as part of reviewing Workers’ Compensation cases, vehicle crashes or use-of-force incidents. Although a direct causal relationship cannot be confirmed, increased OT and staff absences may contribute to a cycle where remaining employees work additional OT to maintain staffing levels. The department and Independent Police Auditor review use-of-force incidents but do not assess whether officers involved were working OT, limiting opportunities to identify potential risk factors. Studies from oversight bodies in other cities indicate extended OT can increase the likelihood of complaints, workplace injuries, and use- of-force incidents. Key Recommendations: • Align OT budgets with operational needs. The City should reassess the PAPD’s OT budget to better reflect actual operational demands and historical spending trends, improving transparency and financial planning. • Evaluate the balance between staffing levels and OT use. PAPD, in coordination with the City’s budget and human resources offices, should periodically analyze vacancy rates, workload demands, and service expectations to determine whether adjustments to staffing levels or OT practices are needed. • Explore opportunities for civilianization. The department should evaluate whether certain administrative, technical, or support functions currently performed by sworn officers could be reassigned to civilian staff to reduce workload pressures and limit reliance on OT. Finding 3: (Page 23) The Police Department does not consistently collect or analyze key workforce data that could help evaluate recruitment effectiveness, staffing sustainability, and potential operational risks associated with OT. In particular, the department does not formally track police academy success rates or probationary outcomes, limiting its ability to assess recruitment and training effectiveness or accurately forecast staffing needs. Additionally, OT hours are not currently considered when reviewing safety- related incidents such as workers’ compensation claims, police vehicle crashes, or use-of-force events. Strengthening workforce data collection and incorporating OT analysis into operational reviews would support more data-driven decision-making and help the department better manage staffing, performance, and officer well-being. Key Observations: • Police academy success rates are not currently tracked. PAPD does not maintain comprehensive data needed to evaluate recruitment outcomes, training success rates, or long-term staffing sustainability. • Effects of OT are not considered in safety related incidents. The Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 51  Packet Pg. 75 of 320  EXECUTIVE SUMMARY workers’ compensation claims, employee injuries, mental health concerns, vehicle crashes, or use-of-force incidents. Key Recommendations: • Formally track police academy outcomes. PAPD should establish a process to monitor recruitment levels, academy completion rates, probationary success rates, and reasons for separation to better evaluate recruitment and training effectiveness and improve workforce planning. • Analyze OT in safety incident reviews. PAPD should include OT hours as a factor when reviewing workers’ compensation claims, vehicle crashes, and use-of-force incidents to identify potential fatigue-related risks. (Page 32) decisions based on inaccurate data. The City’s internal processes for tracking, analyzing, and reporting OT within the Police department relies heavily on manual data entry and fragmented systems, which increases the risk of data inaccuracies and limits the City’s ability to effectively monitor OT usage. Inconsistent reporting methods, lack of automation, and discrepancies between internal reports reduce confidence in the data used to inform staffing and budgetary decisions. Additionally, limitations within the City’s timekeeping system and the absence of standardized OT categorization hinder the City’s ability to analyze the root causes of OT. Strengthening automation, improving data integration, and enhancing reporting practices would improve transparency, support better workforce planning, and help the City more effectively manage OT costs. Key Observations: • Timekeeping Systems Are Incompatible. Police’s scheduling systems cannot interface directly with the City's central timekeeping system. Data exports from departmental scheduling platforms do not share common identifiers or structures with City timecard records, making cross-system indexing unreliable and labor-intensive. • Departmental Data Access Is Insufficient for Effective Overtime Management. Police receives limited payroll data from the City's central payroll function which is not easily reconciled against departmental overtime tracking efforts. The structural gap between what departments can see and what central systems produce limits the reliability and comparability of internal management reporting. • The OMB Quarterly Public Safety OT Analysis Is Not Actionable at the Department Level. The Quarterly Public Safety OT Analysis produced by OMB presents overtime data in aggregated form and is effective at reporting broadly to the public but lacks the employee-level detail departments need to identify patterns, investigate anomalies, or intervene in overtime spending. Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 52  Packet Pg. 76 of 320  EXECUTIVE SUMMARY • Previous audit findings remain unaddressed. Issues identified in the 2017 Continuous Monitoring Audit of OT 1—including limited SAP data capture, non-standardized timecard notes, and inconsistent departmental tracking— continue to affect OT monitoring. Key Recommendations: • Revisit and assess prior audit recommendations from the 2017 OT audit, including developing a continuous monitoring system to analyze service demand, absences, vacancies, and policy requirements, have not been fully implemented to support management of OT costs. • Improve OT data collection, system integration, and reporting, as well as exploring extending use of Telestaff, the OT tracking and monitoring system in use by the Fire department, to Police. Finding 5: (Page 25) concern. While Fire has recently increased deployed resources and restored some services across fire stations, challenges remain due to lengthy hiring and training timelines, vacancy-driven OT, and the need to ensure staffing and deployment align with increases in service demand. Continued workforce planning and improved monitoring of OT will be important to support sustainable operations and maintain service levels. Key Observations: • In recent years, the City has added Fire resources. In FY2025, 3.0 FTE were added to restore Fire Engine 62 from a two-person squad. In FY2026, 3.0 FTE Fire Captains were added to cross-staff Medic 64 with Fire Engine 64. In FY2026, 7.0 FTE were added to create a new Single Role Ambulance response division, by adding a 12-HR Peak Ambulance to the deployed resources. • While Fire was meeting some KPIs, staffing challenges may have impacted other response times and violation follow-up. Fire has not consistently achieved its eight-minute fire response target. Staffing constraints may have affected timely follow-up on fire code violations. • Most OT is used to meet minimum staffing requirements. Most OT is used to backfill vacancies, leave, and training absences. In addition, actual OT expenditures frequently exceed budgeted amounts suggesting OT has been used to compensate for staffing vacancies rather than as intended to manage schedules when firefighters are out for various types of leave. • Fire implemented structural changes to reduce forced mandatory OT Adjustments to OT scheduling 1 https://www.paloalto.gov/files/assets/public/v/1/city-auditor/z-old-reports/continuous-monitoring-audit-overtime.pdf Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 53  Packet Pg. 77 of 320  EXECUTIVE SUMMARY implemented in FY2023 have improved fairness and reduced forced OT hours. Key Recommendations: • Strengthen workforce planning and hiring pipeline management to account for attrition and long training timelines. • Periodically evaluate staffing levels and deployment against service demand to ensure resources align with service demand. • Improve OT monitoring and workforce sustainability to better manage fatigue and staffing risks. • Improve budget transparency and operational efficiency by aligning budgets with historical trends and continuing process improvements. Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 54  Packet Pg. 78 of 320  Introduction 2 https://pmc.ncbi.nlm.nih.gov/articles/PMC6617405/ Safety Departments (Fire and Police) are effectively and efficiently staffed including use of OT. Alto Police Department (Police) and Palo Alto Fire Department (Fire) are managing staffing and OT in an efficient, effective, and sustainable manner. The audit includes examining: the adequacy of current staffing levels relative to service demands; scheduling practices and how workloads are distributed; the policies and controls in place for authorizing and monitoring OT; and the impacts of OT on budget, employee well-being, and service delivery. OT expenditures in Palo Alto have regularly exceeded budgeted amounts. By analyzing OT drivers in Police and Fire, the City can find ways to control personnel costs. Additionally, ensuring proper staffing has safety implications: excessive OT can lead to fatigued first responders, which may affect their safety and performance on the job 2. To assess OT management, the audit also evaluated the systems and processes used by Police and Fire to record, approve, and report staff time and OT. Fire utilizes a program called Telestaff to manage scheduling and time reporting, while Police records staff time and overtime through the City’s Systems, Application, and Data (SAP) enterprise software and another scheduling system called PlanIt. The Police Department’s stated mission is to “proudly serve and protect the public with respect and integrity”. The department is a full-service law enforcement agency with approximately 87sworn officers (78 who are members of Palo Alto Police Officer Association [PAPOA]) serving a resident population around 67,000 (not counting a large daytime workforce and visitors) as reported in the FY2026 adopted budget. The department provides 24/7 emergency response, criminal investigations, traffic safety, and community policing services. The Fire Department operates 6 fire stations serving Palo Alto and Stanford University, staffed by 89 firefighters and paramedics in FY2026 who handle fire suppression, rescue, and emergency medical services. Dedicated to “safeguarding and enriching the lives of anyone, anytime, anywhere with compassion and pride”, the department also serves communities beyond Palo Alto through mutual aid agreements and when called upon by the State or Federal government for such services as combating large wildfires or providing medical response in emergencies. Both departments have high operational demands and at times rely on OT to meet staffing requirements and ensure public safety coverage. This round-the- clock staffing requirement, combined with challenges in keeping up with turnover, recruiting and retaining public safety personnel, has led to significant Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 55  Packet Pg. 79 of 320  INTRODUCTION 3 https://www.paloalto.gov/files/assets/public/v/1/administrative-services/city-budgets/fy-2026-city- budget/proposed/fy-2026-proposed-operating-budget.pdf 4 https://www.paloalto.gov/Departments/Fire/Frequently-Asked-Questions have grown further. In FY2024, the City paid $7.5 million in OT to Police and Fire employees 3. While OT is an expected tool to meet staffing needs for emergencies or special events, such figures may suggest that OT is being used to backfill routine staffing shortages. According to management, minimum staffing backfill challenges underlie much of this OT. Police has struggled with vacant FTEs and long-term benefited leave such as sick leave, retirement, and workers’ compensation. For instance, in 2018 it had a 17% vacancy rate (14 of 83 sworn positions unfilled) despite offering pay raises and hiring bonuses to attract officers. Competition from neighboring jurisdictions and a difficult recruiting climate have made it hard to reach full staffing, forcing remaining officers to work extra shifts. As of March 2026, PAPD’s authorized sworn staffing levels remain below pre-pandemic levels. Fire has experienced chronic challenges with minimum staffing backfill. The deployed resources require a continuous schedule of employees on Fire Department units. When the department holds vacant FTEs, overtime is the only mechanism available to provide coverage for these positions. According to management, Police and Firefighters have some of the longest hiring-to-full- productivity timelines in the public sector. For example, it can be 10-12 months from a firefighter application posting to the day a new recruit is able to work on a unit. That entire time, current employees are providing coverage for that spot on a unit to maintain the deployed resources. Fire deployment resource levels were impacted by the pandemic. In FY2021, budget cuts led the City Council to temporarily reduce fire staffing and temporarily close fire station 2 on nights and weekends 4. Although those cuts were partially reversed in FY2022 with funding to staff all six stations again, Fire reported using OT to fill gaps from vacancies, sick leave, and training absences in order to keep all engine and ambulance companies in service. Within the last two years, Fire has restored some deployed resources and is similar to pre- pandemic levels. Finally, OCA noted from the City of Palo Alto’s 2024 Community Survey that 81% of respondents rated the quality of Police Services positively. Fire Services received 92% positive ratings for emergency response services and 80% positive ratings for prevention and education services. In response to the question, "As a resident of Palo Alto, what one change could the City make that would make you happier?" many residents expressed a desire for better funding and staffing of the fire and police departments. Specific concerns included the lack of fire trucks and staff at Mitchell Park, the need for more police services to enhance safety, and increased policing in neighborhoods. Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 56  Packet Pg. 80 of 320  INTRODUCTION 5 Government auditing standards require an external peer review at least once every three (3) years. The last peer review of the Palo Alto Office of the City Auditor was conducted in 2017. The Palo Alto City Council approved a contract with Baker Tilly U.S, LLP for internal audit services for October 2020 through June 2022 with an extension through June 2025. City Council appointed Kate Murdock, Audit Manager in Baker Tilly’s Risk Advisory practice, as City Auditor in May 2024. As a result of transitions in the Audit Office and peer review delays due to the COVID pandemic, an external peer review is targeted for 2026. It should be noted that Baker Tilly’s most recent firmwide peer review was completed in November 2024 with a rating of “Pass”. The scope of that peer review includes projects completed under government auditing standards. A report on the next firmwide peer review should be available later in 2024. police and fire services but also underscore a desire for increased funding, staffing, and resources to further improve public safety and community design and implementation of time-tracking and OT reporting processes, including the internal controls in place to ensure accuracy, authorization, and • Interviewed the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to staffing and OT. • Analyzed policies and procedures as well as regulatory requirements to identify the criteria to be used for evaluation of control design and effectiveness. • Analyzed the complete list of Police and Fire employees and pay periods with higher OT utilization to assess the processes for time tracking, overtime recording, and supervisory review and approval. • OCA sampled employee time records from each department and the three highest-overtime months in 2024 and two highest-OT months in 2025. OCA conducted detailed testing for the selected employees and periods to assess compliance with applicable OT policies, labor agreements, and regulatory requirements. • Completed audit report of findings, conclusions, and recommendations based on the supporting evidence gathered. Statement This audit activity was conducted from January 2025 to March 2026 in accordance with generally accepted government auditing standards, except for the requirement of an external peer review 5. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings, observations, and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings, observations, and conclusions based on our audit objectives. Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 57  Packet Pg. 81 of 320  INTRODUCTION Organizational Strengths During this audit activity, we noted the professionalism and responsiveness of the PAPD and PAFD. We appreciated the participation of both departments in interviews, providing documentation for selected samples, and responding to follow-up requests. The OCA appreciates the support of the departments involved in conducting this audit activity. Thank you! Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 58  Packet Pg. 82 of 320  Best Practices Overview 6 305747_Analysis of Police Department Staffing _ McCabe.pdf 7 NFPA 1710 Summary 8 GFOA_Rethinking-Police-Budgeting_7.14.25.pdf 9 Home | The Institute of Internal Auditors | The IIA Public Safety Staffing and OT Criteria Addressing staffing and OT challenges in public safety requires a clear understanding of what effective management looks like in practice. The following best practice principles draw from leading industry standards and professional organizations and reflect widely accepted approaches to managing police and fire department staffing in a manner that controls OT costs while sustaining effective public safety service delivery. Professional organizations researched include the Institute of Internal Auditors (IIA), Government Finance Officers Association (GFOA), International City/County Management Association (ICMA), International Association of Chiefs of Police (IACP), U.S. Department of Justice (DOJ), and National Fire Protection Association (NFPA) Data-Driven Staffing and Workforce Planning Best practice indicates that staffing levels should be aligned with actual workload, service demand, and performance objectives. The ICMA Center for Public Safety Management recommends workload-based staffing models that evaluate calls for service, officer availability, and discretionary time rather than relying solely on historical minimum staffing levels6. For fire services, NFPA 1710 (Standard for the Organization and Deployment of Fire Suppression Operations, Emergency Medical Operations, and Special Operations to the Public by Career Fire Departments) provides nationally recognized benchmarks for crew size and response times 7. However Palo Alto Fire follows California Occupational Safety and Health Administration (CalOSHA), Title 8 standards requiring staffing be sufficient to perform fire response safely as well as a written procedure to implement firefighter safety. In addition, workforce planning literature from GFOA emphasizes incorporating long- term leave, retirement projections, and attrition rates into staffing forecasts to avoid structural reliance on OT. Persistent OT used to meet routine minimum coverage is widely recognized as an indicator that staffing models should be reassessed 8. OT Monitoring and Internal Controls The IIA identifies payroll and OT as high-risk expenditure areas requiring strong internal controls, routine monitoring, and data validation. The IIA’s Global Internal Audit Standards 9 emphasize continuous monitoring and use of analytics to identify anomalies and control weaknesses. The DOJ found that police OT can be effectively controlled through strong management practices, including systematic recordkeeping, analysis of OT trends, and supervisory oversight. The report emphasizes that while some OT is unavoidable Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 59  Packet Pg. 83 of 320  BEST PRACTICES OVERVIEW 10 https://www.ojp.gov/pdffiles/167572.pdf 11 Officer Safety and Wellness 12 21OIGNYPD.OT.Rpt.Release.05.03.2023.pdf 13 kcao-overtime-2017.ashx staffing and policy decisions 10. Best practice includes automated data capture, reconciliation across systems, supervisory approval thresholds, and analysis of OT drivers (e.g., minimum staffing, vacancy backfill, special events). Fatigue Management and Risk Mitigation Public safety research indicates that excessive OT can impair performance and increase safety risks. The IACP advise departments to establish reasonable limits on consecutive hours worked, enforce rest periods, and monitor cumulative OT 11. Oversight bodies such as the New York City Police Department Office of Inspector General 12 and the King County Auditor’s Office 13 have found statistically significant relationships between extended OT and increased complaints, use-of-force incidents, and workers’ compensation claims. The International Association of Fire Chiefs (IAFC), published The Effect of Sleep Deprivation on Fire Fighters and EMS Responders. The report identifies sleep disruption and fatigue as inherent risks in fire and EMS operations, documenting that insufficient or interrupted sleep impairs alertness, decision-making, reaction time, and overall responder performance. Critically, the IAFC notes that these impairments are not limited to extended wakefulness, even moderate disruption of nighttime sleep, such as that caused by repeated emergency calls between 10pm and 6am, can produce measurable cognitive degradation by the end of a shift. The IAFC additionally highlights that firefighters are at elevated risk for chronic, undiagnosed sleep disorders that further erode their capacity to perform safely under operational demands. The National Fire Protection Association (NFPA 1710) further establishes that safe and effective emergency response depends on maintaining adequate staffing and deployment levels rather than relying on extended work hours. Together, these authorities indicate that sustained reliance on overtime as a primary staffing mechanism can contribute to fatigue-related performance degradation, increased safety risk, and diminished workforce health, ultimately undermining the consistency and safety of emergency service delivery. Best practices therefore include enforcing daily and weekly hour limits, monitoring individual cumulative OT, and integrating OT data into early intervention systems. Fair and Transparent OT Distribution Public safety agencies should track OT usage at the individual employee level and periodically review workload distribution to ensure OT assignments are equitable. Monitoring OT allocation can help identify situations where a small number of employees are consistently working a disproportionate share of OT hours, which may increase fatigue risks and indicate underlying staffing or scheduling inefficiencies. Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 60  Packet Pg. 84 of 320  BEST PRACTICES OVERVIEW 14 WorkforceCrisis.pdf 15 A Performance-Based Approach to Police Staffing and Allocation 16 NFPA Standard 1710 17 305747_Analysis of Police Department Staffing _ McCabe.pdf 18 Workforce Planning and Development | icma.org agencies should analyze workload and staffing distribution data to ensure resources are deployed effectively and personnel demands are balanced across staff. Transparent and consistent OT assignment procedures can help improve morale, reduce perceptions of favoritism, and distribute workload more sustainably across the workforce. Financial Oversight and Budget Integration Public safety agencies should regularly analyze OT expenditures alongside staffing levels to determine whether OT is being used for short-term operational needs or to compensate for persistent staffing gaps. Guidance from the DOJ Office of Community Oriented Policing Services (COPS Office)15 notes that agencies should evaluate whether sustained OT usage indicates the need to adjust staffing levels, deployment models, or recruitment strategies. By analyzing OT trends in relation to vacancies, service demand, and staffing availability, agencies can better determine whether continued reliance on OT is operationally sustainable or whether additional staffing or alternative staffing models may be necessary. Performance Alignment and National Benchmarking Staffing models should support established performance goals. NFPA 1710 16 provides benchmarks for fire department deployment and response configuration. The ICMA 17 emphasizes periodic reassessment of staffing standards to ensure they align with evolving service demands, crime trends, and community expectations. Failure to reassess minimum staffing levels for extended periods is inconsistent with data-driven governance practices. Recruitment Pipeline and Training Metrics Effective workforce planning requires tracking academy enrollment, completion rates, attrition, probationary success, and time-to-deployment. Workforce analytics and public administration literature emphasize that hiring pipeline metrics are critical inputs into staffing projections and vacancy forecasting 18. Without structured tracking of academy outcomes, departments may underestimate attrition-driven staffing gaps. Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 61  Packet Pg. 85 of 320  AUDIT RESULTS Audit Results Palo Alto Police Department 19 https://www.paloalto.gov/Departments/Administrative-Services/City-Budget/Archived-Budget-Documents 20 City of Palo Alto Operating Budget.book Police may not have sufficient sworn staffing to meet operational demands. The department has not returned to pre-pandemic sworn staffing levels, at any given moment several employees are not deployable due to injury or enrollment in the training academy or in the field training program, and minimum staffing standards have not been reassessed in more than two decades. PAPD has not returned to pre-pandemic staffing levels. Our review of City budget documents 19 shows that PAPD has not returned to pre- pandemic staffing levels. From FY 2015 - FY 2019, actual full-time equivalents (FTEs) averaged 155. In FY2020, the department eliminating six positions shifting service delivery for animal services to an external vendor 20. Between Fy2021 and FY2022, FTEs dropped from 149 to 125. In recent years, staffing has increased to 139 FTES. While actual FTE counts are not available for FY25 and FY26 in the City’s budget documents, budgeted FTEs for these years were 141, still 8 FTE’s short of pre- pandemic levels. Exhibit 1: Number of Police Actual Full-Time Equivalents 2015 through 2024 *OCA analysis September 2025 155 155 155 155 155 149 149 125 134 140 0 40 80 120 160 200 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 62  Packet Pg. 86 of 320  PALO ALTO POLICE DEPARTMENT During FY2025 and the beginning of FY2026 approximately 20 employees were not deployable. Although the PAPD appeared fully staffed based on its budgeted 141 FTEs, discussions with department personnel and review of staffing data indicate that in the fall of 2025, approximately 20 employees were not deployable. Of these, 10 employees were on leave due to injury or workers’ compensation claims and 10 employees were assigned to the police academy for training. As a result, the number of officers available for field deployment was lower than authorized staffing levels, which placed additional strain on operational capacity. Investigations have gone without resolution due to staffing constraints. Interviews with key PAPD personnel revealed that budgeted staffing in the investigations division has led to an increase in cases going uninvestigated, compared to the period pre-pandemic. While quantitative data is limited, qualitative feedback indicates that cases are often left unresolved due to insufficient detective staffing. Due to the department’s minimum Patrol staff requirements, staff are often pulled from other functions such as investigations to ensure the safety of officers in the field and compliance with requirements. This gap in investigative capacity results in some cases involving misdemeanors and non-violent crimes are often left unresolved. Minimum staffing standards have not been re-evaluated in over two decades. The PAPD Policy Manual and the PAPOA Memorandum of Understanding outline minimum staffing requirements for the Patrol Division across three time blocks: • 0700–2400 hours: 1 Watch Commander, 1 Supervisor, and 6 Officers/Agents • 0001–0300 hours: 1 Watch Commander, 1 Supervisor, and 5 Officers/Agents • 0300–0700 hours: 1 Supervisor and 5 Officers/Agents PAPD consistently meets minimum staffing levels with only rare instances when the department falls below minimum staffing. PAPD did not experience any fully unstaffed shifts in FY 2023 or FY 2024. Our review of staffing data confirmed only minor gaps totaling 266 open hours in FY 2023 and 218 open hours in FY 2024, representing just 0.40% and 0.33% of total shift hours, respectively. This indicates that PAPD has been effective in maintaining minimum staffing coverage, with only minimal disruptions. Exhibit 2: Percentage of Open or Understaffed Shifts PAPD Openings FY 2023 FY 2024 *OCA analysis September 2025 Despite consistent coverage, staff were unable to confirm when the last formal study was conducted to determine appropriate minimum staffing levels. Current standards, which are also a component of the collective bargaining agreement with the police officers’ associations, have remained unchanged for at least 20 years, raising concerns Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 63  Packet Pg. 87 of 320  PALO ALTO POLICE DEPARTMENT 21 https://icma.org/sites/default/files/305747_Analysis%20of%20Police%20Department%20Staffing%20_%20McCabe.pdf Police staffing models typically fall into five categories: 1. Crime Trends 2. Per-Capita Ratios (e.g., officers per 1,000 residents) 3. Authorized/Budgeted Levels 4. Minimum Manning Levels 5. Workload-Based Models (e.g., calls for service, response times, discretionary time) According to the ICMA Center for Public Safety Management, departments should use data-driven benchmarks to evaluate staffing needs. These include: • Number of officers assigned to patrol • Workload levels of patrol officers • Time spent handling calls for service 21 While the City tracks this data, it has not conducted a formal analysis to assess whether current staffing levels are adequate. PAPD has not met response time goals but response times also have not worsened despite being understaffed. The OCA reviewed PAPD’s performance metrics as outlined in the City’s annual budget documents. PAPD tracks response times to emergency and urgent calls for service, with a goal of responding to: • Emergency calls within 6 minutes, 90% of the time • Urgent calls within 10 minutes, 90% of the time. Emergency and urgent calls require the most timely police response because they are generally life-threatening or represent higher danger crimes in progress. While PAPD has not met the 90% budgeted goal during the years reviewed of FY 2015 - FY2024 as shown in the Exhibit below, response times have trended somewhat positive despite staffing being reduced. Factors that influence response times include, but are not limited to, time of day, number of officers available to take a call or staffing levels, location of officers relative to the service call, existing demand for services, and the ability of officers to get through traffic - which can be impacted by commute time and weather, among other factors. Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 64  Packet Pg. 88 of 320  PALO ALTO POLICE DEPARTMENT Exhibit 4: PAPD Performance Compared to KPI Goal *OCA analysis February 2025 Recommend the City: 1. Over-Hiring for Long-Term Leave Positions and/or Improve Workforce Availability Management To strengthen PAPD’s hiring pipeline and ensure operational efficiency, we recommend that the City consider over-hiring for roles where staff are on long- term disability leave or workers’ compensation. This approach would help maintain adequate staffing levels and reduce reliance on OT to cover long-term absences. Additionally, increasing the number of new hires could help alleviate ongoing staffing shortages. However, given the City’s current and projected budget deficits, Police, with support from the City’s Human Resources and Administrative Services Departments, should evaluate policies and practices related to long-term leave, light-duty assignments, and training scheduling to identify opportunities to improve workforce availability. Proactively managing these factors could help minimize staffing gaps and reduce operational strain without increasing staffing levels. 2. Expand Recruitment and Retention Efforts Increasing the number of Public Safety new hires can help address persistent staffing shortages and support long-term workforce sustainability. Enhanced recruitment strategies may include targeted outreach, accelerated onboarding, and partnerships with local academies. The City can also consider further investment in retention incentives such as career development programs, wellness initiatives, and competitive compensation packages. 3. Conduct Staffing Analysis PAPD should conduct a comprehensive staffing analysis to assess whether current staffing levels are sufficient to meet operational demands and service 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Percent of emergency calls responded to within 6 minutes Percent of urgent calls responded to within 10 minutes KPI Goal Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 65  Packet Pg. 89 of 320  PALO ALTO POLICE DEPARTMENT operational priorities. This analysis should incorporate factors such as calls for service, officer workload, response time goals, crime trends and the number of deployable personnel. The results will help the department evaluate whether existing staffing levels and deployment strategies remain appropriate and to inform future staffing, hiring, and budgeting decisions. Leveraging existing data tracked by the City (e.g., number of patrol officers, call volumes, response times, and time spent per call) can aid in staffing assessments. PAPD should review current staffing deployment across units to ensure personnel resources are aligned with operational priorities. This review should consider whether staffing assigned to specialized units, administrative roles, or other assignments could be adjusted to better support patrol and investigative functions when staffing shortages occur. 4. Reassess Minimum Staffing Standards PAPD should initiate a formal review of minimum staffing standards, which have remained unchanged for over two decades. This study should incorporate workload-based analysis, crime trends, and officer availability to determine whether current minimums are appropriate and sustainable. Management Response Responsible Department(s): Concurrence: Partial Agreement Target Date: Varies Action Plan: 1. Partially agree. Although City Council has previously authorized over-hire positions, this approach was deprioritized due to persistent recruitment challenges and budget constraints. PAPD will reassess the feasibility of over- hire positions if recruitment conditions improve sufficiently as part of future staffing strategies, as feasible. 2. Agree. PAPD has taken a number of steps to expand recruiting, including assigning dedicated recruitment staff, updating recruiting materials on the City website, hosting local testing events at PAPD facilities, while also maintaining high hiring standards. PAPD has worked with the Palo Alto Police Foundation to implement several initiatives aimed at communicating to prospective and current employees that they are valued. The Department will continue to prioritize recruitment and retention efforts build a more consistent pipeline. 3. & 4. Partially agree. Completion of such analysis will take time and resources from PAPD, Human Resources and Administrative Services that are not currently allocated – staff will assess the scope and resource requirements to inform resource restraints and feasibility. An updated staffing analysis and assessment of minimum staffing standards should be based on a clearly defined expected level of service. Any proposed changes to service delivery should include structured public engagement. Unlike many peer agencies, PAPD continues to respond to a broad range of calls, including alarms, non-injury traffic collisions, and quality-of-life issues. These service commitments have staffing implications that may not be fully Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 66  Packet Pg. 90 of 320  PALO ALTO POLICE DEPARTMENT 22 https://www.paloalto.gov/Departments/Administrative-Services/City-Budget/Archived-Budget-Documents Police relies heavily on OT to maintain minimum staffing levels Due to staffing shortages and vacancy levels, Police relies heavily on overtime to maintain patrol minimum staffing levels. Overtime expenditures have exceeded the budget for several years and more recently actual expenditures have been more than twice of what was budgeted. Overtime expenditures are primarily used to backfill vacancies. Vacancies are driving most of overtime use. The City’s Office of Management & Budget (OMB) produces a Quarterly OT Report that shows budgeted vs. actual OT expense incurred by public safety departments. This report also tracks the department’s number of vacancy days or the cumulative number of days positions are vacant each year. A trend analysis of the Quarterly OT Reports from FY2015 – FY 2024 shows a peak in the number of vacancy days in FY2019 and a significant dip in FY2021. Vacancy days steadily began climbing again over the next several years. These vacancies have created staffing gaps in patrol staffing, leading to a growing reliance on OT to maintain service levels. Based on the City’s budget documents 22 and as shown in the graph below, as the number of vacancy days increases, so does the use of OT. We also see the opposite, that when vacancy days decrease, so does the use of OT suggesting these metrics are related. As noted in the Best Practices section of this report, DOJ guidance is for police departments to evaluate whether sustained OT usage indicates the need to adjust staffing levels. Exhibit 5: Police Vacancy Days vs. OT Expenses *OCA analysis September 2025 In addition, while PAPD’s OT expenses have exceeded the budget since 2015, in recent years actual expenses have far exceeded the budget as shown in the Exhibit 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 $- $500,000.00 $1,000,000.00 $1,500,000.00 $2,000,000.00 $2,500,000.00 $3,000,000.00 $3,500,000.00 $4,000,000.00 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 Nu m b e r o f V a c a n c y D a y s Ov e r t i m e E x p e n s e s Axis Title Overtime Expenses Vacancy Days Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 67  Packet Pg. 91 of 320  PALO ALTO POLICE DEPARTMENT Exhibit 6: Police OT Budgeted vs. Actual Expenditures *OCA analysis September 2025 The correlation between rising vacancies and increased OT expenditures suggests the department is compensating for reduced headcount by extending the workload of existing staff. For example, in the chart above you can see that OT expenses reduced by $1,135,871 from FY2020 to FY2021 which coincides with the Police Department’s significant drop in vacancy days in FY2021.This approach, while necessary in the short term, may not be sustainable and could contribute to employee fatigue, reduced morale, and operational inefficiencies. The following sections take a closer look at staffing challenges. Overtime use in 2024 was largely driven by meeting minimum staffing levels. The Police Department uses informal reporting of monthly OT at the employee/position level by way of matching hours worked from the enterprise accounting system to published pay rates on the city website. Using this reporting method, our analysis shows that in CY2024, 81% of Police Patrol OT costs were attributed to the “minimums/back-fill/early-in/hold-over” category. This indicates that maintaining minimum staffing for Patrol was a primary driver of OT for PAPD. Police management stated that meeting minimum staffing requirements remains a significant portion of OT use as of the writing of this report. $- $500,000.00 $1,000,000.00 $1,500,000.00 $2,000,000.00 $2,500,000.00 $3,000,000.00 $3,500,000.00 $4,000,000.00 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Budgeted Overtime Expense Actual Overtime Expense Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 68  Packet Pg. 92 of 320  PALO ALTO POLICE DEPARTMENT 23 palo-alto-employee-survey-report-2024.pdf Exhibit 7: PAPD Patrol – Largest Categories of OT Use in CY2024 *OCA analysis September 2025 OT concentration suggests potential workload imbalances and burnout. Police policy, collective bargaining agreements, and the Fair Labor Standards Act limit the amount of consecutive hours certain employees can work to 16 hours. Then, the employee must take an 8-hour break before beginning another shift or working OT. Analysis of sworn employee overtime use based on the FY2024 Police internal OT Report shows that 69 out of 93 sworn employees (74%) logged OT hours. The highest individual OT recorded was 1,019 hours. Notably, the top 10 sworn employees working OT accounted for over 35% of the department’s total sworn OT hours. This concentration of OT among a small group of employees suggests potential workload imbalances and may be indicative of broader staffing challenges. While OT is often seen as a way to increase salaries, especially in an area of the country where living expenses are high, employees at all levels of the PAPD stated that some employees are working more OT than desired. Police management stated they have only mandated sworn OT a handful of times in the past several years. Sustained high OT levels can contribute to employee fatigue, reduced morale, and increased risk of burnout. While not necessarily attributable to OT, in the most recent City of Palo Alto Employee Survey, 202423 employees in the Police and Fire departments were “less likely than their counterparts to have positive ratings for overall staff morale in the work group” with only 54% of Police and 57% of Fire employees rating overall staff morale as “excellent” or “good”. PAPD and PAFD employees were also less likely than employees 6% 81% 1%12% PAPD Patrol Largest Categories of Overtime in 2024 Patrol FSD - Follow-up/Case work/Court or Court prep/Warrant Service/Evidence Processing/Etc Patrol FSD - Patrol incl minimums/back-fill/early-in/hold-over Patrol FTO - Trainee Patrol FTO- Training Officer Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 69  Packet Pg. 93 of 320  PALO ALTO POLICE DEPARTMENT OT is not assessed as part of reviewing Workers’ Compensation cases, police vehicle crashes, or use-of-force incidents. OCA was unable to obtain employee files to evaluate contributing factors in police workers’ compensation cases and vehicle accidents. Based on our review of the Independent Police Auditors Reports, it does not appear that OT is formally considered as a factor in use-of-force incidents either. It appears that workers’ compensation cases have been trending upwards since 2020. Such cases often mean that staff are out on leave requiring other staff to fill in to meet minimum staffing requirements. It is unclear if increased OT is contributing to workers’ compensation claims. For example, management observed that since the pandemic they have seen an increase in workers’ compensation cases for mental health issues compared to other medical conditions. Alternatively, increased OT may merely be a result of more individuals being on workers’ compensation leave requiring remaining staff to cover their shifts. Determining whether excessive OT is contributing to an increase in workers’ compensation cases may not be possible given the complexity and numerous variables in such cases. However, considering OT as a factor when reviewing workers’ compensation cases may help the City determine if there is a relationship and if it something they will need to better manage in the future. While staff reported that it is less expensive to fill hours with OT than the cost of budgeting an additional FTE given the benefits and pension costs of adding an FTE, there may be other less easily measured costs associated with increasing OT. As noted in the background section of this report, some studies have found increasing OT can lead to overly fatiguing officers which can increase the risks of vehicle crashes or use of force incidents occurring. These added risks may outweigh the cost of adding more FTEs. Exhibit 8: Workers’ Compensation Cases from FY2015 – FY2024 *OCA analysis September 2025 OCA also analyzed vehicle crashes and use of force Incidents from FY2020 through FY2024. It is unclear if there is a relationship between increased OT and increased 0 5 10 15 20 25 30 35 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 Police Workers' Compensation Cases Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 70  Packet Pg. 94 of 320  PALO ALTO POLICE DEPARTMENT 24 https://www.paloalto.gov/Departments/Police/Accountability/Independent-Police-Auditor 25 https://www.nyc.gov/assets/doi/press-releases/2023/May/21OIGNYPD.OT.Rpt.Release.05.03.2023.pdf 26 https://www.kingcounty.gov/~/media/depts/auditor/new-web-docs/2017/kcao-overtime-2017/kcao-overtime-2017.ashx?la=en areas of concern when considering the balance of FTEs and OT use. Exhibit 9: Police Vehicle Crashes and Use-of-Force Incidents CY2020 – CY2024 *OCA analysis October 2025 The City has an Independent Police Auditor (IPA)24 which reviews all use of force cases including those involving specific weapons or injuries. While most incidents are found to be within policy, the IPA has identified areas for improvement in documentation, communication, and tactical decision-making. Based on OCA’s review of the IPA’s report, it does not appear that IPA analyzes whether officers involved in use-of-force incidents were working OT and it does not appear this analysis is performed by the City. Analyzing potential links between officer OT and use of force could provide an opportunity for deeper data-driven oversight. OCA’s review of recent OT audits conducted by other larger cities found that extended work hours and fatigue impair officer alertness and decision-making. In a report of the New York City Police Department Inspector General 25 they found that for an officer who works the average amount of OT—four hours and twelve minutes consecutively—the odds that they will be the subject of a substantiated NYC Civilian Complaint Review Board complaint the next day increased by 36.8%, the odds they will be named in a lawsuit for an incident occurring the next day increased by 36.5%, the odds that they will be involved in an incident the next day resulting in a Threat, Resistance, or Injury Interaction Report increase by 20.5%, and the odds that they would suffer a workplace injury the next day increased by 18.8%. The King County Auditor 26 found that every additional OT hour raised the likelihood of force by 2.7 percent. It also found that workers’ compensation claims are significantly correlated with OT. If an individual worked one additional hour of OT in the prior week, the odds of a workers’ 8 8 6 8 5 10 11 5 4 11 0 2 4 6 8 10 12 CY2020 CY2021 CY2022 CY2023 CY2024 Vehicle Crashes Use of Force Incidents Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 71  Packet Pg. 95 of 320  PALO ALTO POLICE DEPARTMENT these findings suggest that OT can contribute to fatigue, which in turn raises the risk of officer errors, use-of-force incidents, and an increase in workers compensation claims. Per discussions with Police staff, the department maintains a relatively low number of use-of-force incidents annually (around eight) and uses software to track instances of recommend the City: The City should evaluate PAPD’s budget to ensure it more accurately reflects operational staffing needs. OT expenditures have exceeded the budget in recent years, largely due to staffing shortages and the need to maintain minimum staffing levels. Establishing a more realistic OT budget based on historical trends and operational requirements would improve financial planning and provide greater transparency regarding the resources required to sustain current service levels. 2. Evaluate staffing versus OT balance PAPD, in coordination with the City’s budget and human resources offices, should periodically evaluate the balance between authorized staffing levels and OT usage. This analysis should consider factors such as vacancy rates, non- deployable personnel, workload demands, and response time goals. A comprehensive review would help determine whether current staffing levels are sufficient or whether adjustments to hiring levels, staffing allocations, or OT practices are needed to support sustainable operations. 3. Explore civilianization opportunities PAPD should assess whether certain administrative, technical, or support functions currently performed by sworn personnel could be reassigned to civilian staff where appropriate. Expanding the use of civilian positions, such as community service officers or other support roles, may help reduce the workload on sworn officers and allow them to focus on core law enforcement duties. Civilianization may also provide a more cost-effective staffing model in some cases and reduce reliance on OT to meet operational needs. Management Response Responsible Department(s): Concurrence: Partially Agree Target Date: FY 2028 Budget Action Plan: 1. Agree. The overtime budget has not kept pace with operating demands and the variance however, the gap between budgeted and actual overtime is not a failure of cost control. PAPD will work with the Office of Management and Budget to develop a historically informed overtime budget baseline while continuing the current practice of using vacancy savings as an offset. It is worth noting that the City's existing practice of reallocating vacancy savings to offset OT expenditure effectively acknowledges this structural relationship and Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 72  Packet Pg. 96 of 320  PALO ALTO POLICE DEPARTMENT 2. Agree. Regularly evaluating the balance between authorized staffing and overtime usage is a sound management practice. Overtime has become a routinized staffing tool, creating financial and workforce sustainability risks. PAPD will seek to establish a regular review process using existing data to help inform budget development and staffing allocations – likely this work would align with the Finding 1 staffing assessment and would align with time and resources for that. In the meantime, the department will use existing records to conduct baseline assessments. 3. Partially Agree. The Police Department will review current sworn assignments to identify functions where civilian classifications may be feasible, cost-effective, and operationally appropriate. This is routinely part of the budget development over decades and part of the management of workload and costs. Any reclassification must account for operational requirements and existing labor agreements, with Human Resources and labor relations staff engaged early in the process. Finding 3: Police does not fully use workforce data to monitor staff sustainability and risk The Police Department does not consistently collect or analyze workforce data needed to evaluate staffing sustainability, recruitment effectiveness, and potential operational risks associated with overtime. Police academy success rates are not currently tracked. Upon review of success rates for the Police and Fire academy the OCA found that rates are not tracked for the police academy. The City does not run its own police academy but rather recruits attend academies in neighboring cities and counties. Management said they could obtain records if needed but do not formally track how many recruits are successful and graduate from the academy each year or how many graduates make it through the field training program and subsequent probation period to become non- probationary sworn officers. Tracking and analyzing police academy performance metrics—such as recruitment levels, completion rates, attrition rates, and reasons for separation—could benefit the department in several ways. First, this data could help inform recruitment and selection practices by identifying factors that contribute to recruit attrition or unsuccessful completion of the academy or probationary period. Second, analyzing outcomes across different academy cohorts, training programs, or probationary supervision practices may help the department identify approaches that are more effective in preparing and retaining recruits. Finally, understanding typical completion and retention rates would allow the department to more accurately plan hiring targets and budget for anticipated staffing levels. For example, if historical data show that only a certain percentage of recruits successfully complete the academy and probationary period, the department could adjust recruitment levels accordingly to ensure that desired staffing levels are achieved. Management noted that one of the more recent cohorts hired had a higher than anticipated attrition rate. As a result, a full analysis of the cohort is being conducted and the results will be used in future recruitments. PAPD should continue to work to improve the collection, analysis and use of workforce-related data to guide staffing, scheduling and risk management decisions in order to more proactively manage resources. Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 73  Packet Pg. 97 of 320  PALO ALTO POLICE DEPARTMENT Effects of OT not considered in safety-related incidents. As noted in Finding 2, overtime is not currently analyzed as a contributing factor in safety-related incidents. Management indicated that there is no formal review process to evaluate whether OT hours may be associated with employee injuries, mental health concerns, or other workers’ compensation claims. Similarly, OT is not considered when reviewing officer-involved vehicle crashes or use-of-force incidents. Given the sometimes substantial amount of OT worked by employees, analyzing whether extended work hours may affect officers’ performance, decision-making, or overall well- being could provide valuable insight for protecting officer health and promoting public safety. recommend the City: 1. Formally track Police Academy Field Training Program and probationary period outcomes PAPD should implement a formal process to track and monitor police academy outcomes, including recruitment levels, completion rates, probationary success rates, and reasons for separation. Regular analysis of these metrics would help the department evaluate the effectiveness of its recruitment and training processes, identify factors contributing to recruit attrition, and make data- informed adjustments to hiring strategies and training practices. 2. Analyze OT in safety incidents PAPD should incorporate OT hours into its review of safety-related incidents, including worker’s compensation claims, vehicle crashes, and use-of-force incidents. Evaluating whether extended work hours may be associated with these events could help the department better understand potential fatigue- related risks and inform policies or scheduling practices designed to protect officer health and public safety. Response Responsible Department(s): Concurrence: Partially Agree Target Date: Q1 CY 2027 Action Plan: 1. Agree. PAPD agrees with the recommendation to implement formal tracking of academy and probationary outcomes and has already prompted a review of the recent cohort that reinforced the value of consistent data collection in identifying trends and refining hiring projections. PAPD will establish a formal tracking process to capture key metrics. HR can provide a report including Police Trainee date of hire, promotion date to Police Officer (upon Academy graduation) probationary end date and separation date and reason. This data will be reviewed regularly to inform recruitment trends and strategy, hiring targets, and budget planning. 2. Partially Agree. Permissible officer work hours are governed by the Fair Labor Standards Act and applicable labor agreements. PAPD adheres to these standards. With that, PAPD acknowledges that extended work hours can result in fatigue, which may impact officer performance. PAPD staff are unaware of Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 74  Packet Pg. 98 of 320  PALO ALTO POLICE DEPARTMENT fatigue, and it will nonetheless formally incorporate an assessment of fatigue into its administrative investigations and tracked in the supervisor injury report with goal to prevent injuries. PAPD leadership is committed to balancing the regional shortage of qualified officer candidates against the sustained operational expectations of our community — while remaining one of the most transparent departments in the region. Finding 4: Inconsistent and manual overtime tracking may cause the City to make staffing decisions based on inaccurate data. The City’s internal processes for tracking and reporting OT are inconsistent and largely manual, which may result in inaccurate data being used to inform staffing and budgetary decisions. Police management and administrative teams meet monthly to review OT usage and identify trends. However, the Police’s monthly OT reporting process relies heavily on manual data entry, with values hardcoded into spreadsheets and not linked to formulas. Descriptions of OT hours worked are not consistently documented, and categorization is performed manually by staff. This lack of automation and standardization increases the risk of data entry errors and incomplete reporting, potentially undermining the accuracy of OT analysis. During testing of Police OT data, OCA found that two systems are used for time tracking: SAP, the primary City-wide timekeeping system, which records total hours worked but not specific hours of the day; and PlanIt, which tracks the exact hours officers work. OCA found instances where total shift hours exceeded the allowable 16- hour limit. Management explained that these exceptions sometimes occurred in connection with high-profile incidents and are permitted with authorization. However, in some cases, management was unable to provide details regarding why hours were coded in a particular manner without first consulting the officer involved. Discrepancies exist between some internal reports. The Quarterly Public Safety OT Analysis, produced by OMB, reports OT costs for both Police and Fire. However, our review found that the figures in this report do not reconcile with the Police informal monthly analysis. This discrepancy exists in part because the Police monthly report is built through a highly manual process, pulling timecard data from SAP, merging it with hourly pay information, and manually categorizing OT usage, which means pieces of information can be missed on the back end due to disconnected systems. The Police Budget Analyst expressed concerns about the accuracy of the monthly internal report. Additionally, the quarterly report does not include OT hours or specific drivers of overtime (e.g., minimum staffing requirements, vacancy coverage) beyond backfilling open shifts. Staff indicated that including OT hours worked and the underlying drivers of OT would improve the report's usefulness and transparency and would reduce the burden of re-explaining the same budget dynamics each reporting cycle. OCA noted in its review of Fire’s OT tracking system, Telestaff, that it was designed for all public safety departments including police and dispatch. The City may be able to Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 75  Packet Pg. 99 of 320  PALO ALTO POLICE DEPARTMENT Previous audit findings remain unaddressed. An audit was conducted by the OCA in 2017, entitled Continuous Monitoring Audit: OT, which recommended implementing automated tracking through the planned procurement of a new Enterprise Resource Planning (ERP) system to improve resource allocation and utilization. The audit identified issues such as limited data capture in SAP, non-standardized notes, and inconsistent departmental tracking methods, many of which still persist today. Because SAP does not capture work start and end times, the specific reasons for OT in meaningful categories, and because employee timecard notes are not standardized, analysts cannot systematically extract or analyze the root causes of OT. This forces departments to maintain separate manual workarounds, such as the PAPD Budget Analyst's Microsoft Access-based process, which are highly dependent on individual employees and more prone to errors or omissions when staff turns over. These same underlying data limitations may also contribute to the reconciliation gap between the monthly and quarterly reports noted above. We Recommend the City: 1. Revisit and assess audit recommendations According to the 2017 OT Audit, it was recommended that the City explore the potential of developing a continuous monitoring process to provide more detailed information on OT usage so that management can better manage and control OT costs. A continuous monitoring system could include data analytics to extract data on service demands, absences and vacancies, and elements of city policies and contractual requirement that could be useful in identifying opportunities to reduce OT costs. The City should consider the benefits of automating data collection and having drill- down reporting capabilities for more accurate data capture and reporting. 2. Enhance internal data collection, system integration and reporting of OT The City should explore the current contract and Telestaff services in use by the Fire Department for expanded use with the Police Department. In the interim, Police should ensure alignment across reports and regularly validate data to support better staffing and budget decisions. Reconciling internal reports will ensure consistency across reporting periods and improve confidence in the data used. Additionally, the OMB should consider revising the Quarterly Public Safety OT Analysis to include not only OT costs but also OT hours and drivers of OT. This will provide a more complete picture of OT usage and support better decision-making. Response Responsible Department(s): Technology Concurrence: Agree Target Date: FY 2028 Action Plan: Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 76  Packet Pg. 100 of 320  1. & 2. Police will consult with Fire Department staff regarding it’s success with their scheduling platform with the goal of reducing manual entry, improve system integration, and improve reliability of information. The Department will also consult with the SAP functional team and Administrative Services to see if enhancements can be achieved in the system to include moving information between systems rather than manually. The City’s Enterprise Resource Planning system is undergoing an upgrade and as part of the Phase 2, which is estimated to begin in FY 2028, this will be added to consider if any new functionality is cost effective and efficient to support this effort. Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 77  Packet Pg. 101 of 320  PALO ALTO FIRE DEPARTMENT Palo Alto Fire Department Finding 5: Fire has made progress in restoring deployed resources but hiring process constraints result in continued overuse of OT to fill operational gaps. Deployed Resources and Minimum Staffing Backfill The Palo Alto Fire Department has experienced chronic minimum staffing backfill shortages. From FY2015 to FY2025 the Department held an average of 9.6 FTE positions vacant, with some years as high as 14 FTE. Fire personnel indicated that the department has rarely operated at full staffing levels in recent years. In addition to these vacant FTEs, a significant number of staff are consistently out due to injury or disability leave, reducing the number of deployable firefighters. In the last year, the City has made significant investments in increasing deployed resources. Over the last one to two years, the department has made significant efforts to increase deployed resources and restore services to all six fire stations. In FY2025, 3.0 FTE were added to restore Fire Engine 62 from a two-person squad. In FY2026, 3.0 FTE Fire Captains were added to cross-staff Medic 64 with Fire Engine 64. In FY2026, 7.0 FTE were added to create a new Single Role Ambulance response division, by adding a 12-HR Peak Ambulance to the deployed resources. Although deployed resources resemble similar pre-pandemic levels, service demands have increased. In CY2025 the Department responded to over 10,000 calls for service for the first time in its history. This is part of why the Department still struggles to meet key performance measures, particularly with response times, despite adding resources over the last two years. Management and staff both reported that the department has focused efforts on recruitment and retention. One recruitment and hiring challenge Fire experiences, similar to Police, is the significant time it takes from hire to deployment. According to management, firefighters have some of the longest hiring-to-full-productivity timelines in the public sector Once hired, a recruit goes through a lengthy, but necessary training academy. Upon completion of the academy, the recruit is assigned to a unit while still under a probationary period. This entire process takes between 18 to 24 months. In addition, there are instances where the new recruits do not successfully complete training or probation. OCA’s analysis of Fire records of academy recruitment groups from 2020 to 2025 showed that on average, 7.8 individuals were recruited per group. Of these individuals, the average separation during the academy was 1.2 or 15% with another 1.2 or 15% separating during probation. The average retention rate for these 5 years was 64%. While one recruitment class had no separations, another had 5 of the 11 recruits separate during the academy and probation period. When this happens, the department is forced to begin the process again to fill these now vacant positions. Tracking academy performance has provided the department with valuable information and helped in approaching staffing challenges. According to management, an effort was made in FY2023 to establish hire-ahead Firefighter Trainee positions to support long-term staffing stability; however, implementation was not realized due to internal concerns and administrative complexity. Key challenges included uncertainty around managing potential short-term staffing surpluses, as well as labor considerations related to establishing a lower initial Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 78  Packet Pg. 102 of 320  PALO ALTO FIRE DEPARTMENT vacancy-driven overtime pressures have continued under the current staffing model. Those positions have recently been included in budget reduction strategies. Currently, Fire management has been able to gain internal approval to use city-wide “over-strength” positions to hire ahead. However, the Department has still struggled to achieve full staffing. As a general rule, the City does not encourage over-strength hiring and departments need to get special approval before proceeding. Exhibit 10, below, shows Fire operational deployment positions from FY2015 to FY2019, showing that Fire has been understaffed for much of the past 7 years. Exhibit 10: Number of Operational Deployment Positions for Fire FY2015 through FY2024 *OCA analysis October 2025 In October 2023, the Local Agency Formation Commission (LAFCO) municipal service review found that Fire deployed resources are below the county average relative to peer jurisdictions. LAFCO also reported that Fire was not consistently meeting its eight- minute response-time standard and identified the need for additional resources. Despite comparatively strong staffing ratios, response performance has been constrained by deployment configuration and a high volume of medical calls. In response, the FY 2025 Adopted Budget includes funding to up-staff Fire Station 2’s Engine 62 to a full three- person crew and implement deployment adjustments, including a new Station 4 apparatus plan. Overall, the LAFCO review confirms that while Palo Alto’s public safety services are regarded as high quality and deployed resource levels are generally competitive, fire operations have faced challenges in achieving performance targets under existing 96 95 95 95 84 84 84 78 83 83 0 20 40 60 80 100 120 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 79  Packet Pg. 103 of 320  PALO ALTO FIRE DEPARTMENT 27 https://www.iaff.org/wp-content/uploads/English_Version_-_NFPA_1710_standards_DFSR_Summary_2022_new.pdf OCA also noted that while Fire does not have required minimum staffing levels, the National Fire Protection Association (NFPA) Standard 1710 provides widely accepted benchmarks for fire and emergency medical services staffing. Specifically: • Engine companies should be staffed with four firefighters. • Advanced Life Support (ALS) units should include two paramedics and two EMTs, all arriving on scene within the prescribed travel time standards.27 Currently, Palo Alto falls short of the recommended crew size as they staff three firefighters per engine. Fire management stated that NFPA’s standard is a recommendation that provides enough people to immediately begin the step towards fighting a fire. Fire sends two units to every call in order to meet the number of required people at the scene to complete those steps. This follows CalOSHA Title 8 standards requiring staffing be sufficient to perform fire response safely. Fire has a written procedure to ensure firefighter safety and effective fire operations. This has been a sufficient practice given Palo Alto’s size and resource mix. However, when engines leave the City to provide mutual aid or respond to State or Federal emergency response calls, they do send four firefighters per engine. The City’s recent Fire investments, staffing augmentations, and strategic deployment adjustments are intended to address these gaps and improve alignment between resource levels and service demand. Current “floating” positions may not provide adequate coverage The Fire Department operates nine units to provide service coverage to the City 24 hours per day, seven days per week. This coverage is broken into three shifts per day. According to management, 25 positions are required to staff each shift and with three shifts each day, the City requires 75 positions. Currently, Fire has 86 budgeted positions for these shifts leaving 11 “floaters” to cover for sick leave, vacation, training, etc. Floater positions are a standard staffing practice in fire service operations, consisting of personnel who are not assigned to a specific apparatus or shift but are deployed to fill daily staffing gaps caused by vacancies, leave usage, training, and other absences, reducing the need for overtime backfill. According to Fire management, maintaining an adequate number of floaters allows Fire to preserve minimum staffing levels, limit fatigue associated with excessive overtime, and support consistent emergency response performance. However, as of the writing of this report, the City currently only has two functional floaters due to having thee employees on “light duty” (meaning they are assigned to less strenuous tasks) and six employees on workers compensation leave. The department’s policy allows for up to four employees per shift to take vacation and employees can take other types of leave (sick, bereavement, parental, etc.) as needed. With a lack of adequate floaters to cover for these various absences, the department is forced to use more overtime. Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 80  Packet Pg. 104 of 320  PALO ALTO FIRE DEPARTMENT While Fire was meeting some KPIs, deployed resource levels may have impacted other response times and violation follow-up. According to the City’s annual budget documents, Fire has established Key Performance Measures (KPMs) for emergency response: • Fire and EMS response within 8 minutes, 90% of the time. • Advanced Life Support Ambulance (ALS) response within 12 minutes, 90% of the time. Fire met its goals for EMS and ALS response times in most years from FY 2019 - FY 2024. However, the department consistently fell short of its goal for fire emergency responses within 8 minutes during the same period as shown below. Exhibit 11: Fire Performance Compared to KPI Goals FY2015 – FY2024 *OCA analysis October 2025 Beginning in FY 2026, the department plans to revise its KPMs to reflect: • Emergency response within 8 minutes, and • Ambulance arrival within 12 minutes, 90% of the time.  Violations have gone without resolution due to deployed resource and financial constraints. Discussions with the Fire Marshal revealed that the department has faced challenges in conducting timely follow-up after issuing fire code violations. These delays are attributed to staffing constraints and may impact enforcement effectiveness and public safety. 0% 20% 40% 60% 80% 100% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Percent of responses to EMS calls within 8 minutes Percent of responses to fire emergencies within 8 minutesPercent of responses to paramedic calls within 12 minutesKPI Goal for EMS Calls & Fire Emergencies Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 81  Packet Pg. 105 of 320  PALO ALTO FIRE DEPARTMENT Most OT is used to meet minimum staffing requirements. Fire relies on overtime to meet minimum staffing requirements when they have experienced vacant FTEs. Management and union representatives reported that most OT is driven by backfilling vacancies, sick leave, vacation, workers’ compensation, training, and seasonal staffing needs. As shown in the graph below the number of vacancy days and the amount of OT expenses seems to generally trend together. Years with the highest number of vacancy days also have the highest OT expenditures. As mentioned in the Police section of this report, compensating for reduced headcount by extending workload of existing staff may be necessary in the short term but is not a sustainable model and can contribute to employee fatigue, reduced morale and operational inefficiencies. Guidance from the National Fire Protection Association and the International Association of Fire Chiefs identifies heavy reliance on overtime as a structural driver of firefighter fatigue that directly impacts EMS patient outcomes. Extended shifts and insufficient recovery time degrade cognitive performance, increase medical error rates, and reduce effectiveness in critical interventions such as CPR and airway management. In time-sensitive emergencies—including cardiac arrest, stroke, and respiratory failure—this fatigue-driven decline in performance can delay care, reduce survival rates, and increase the likelihood of adverse patient outcomes. Exhibit 12: Fire Vacancy Days vs. Overtime Expenses *OCA analysis October 2025 Fire has routinely spent significantly more on OT than it has budgeted with actual OT expenses exceeding budgeted by more than 100% in some years. The budget has remained relatively flat during a 10-year period, assuming the Department will be fully staffed. As discussed in the section on PAFD staffing, the department has made significant efforts to keep up with turnover and is currently nearly fully staffed after hiring for a Spring Academy. 0 1,000 2,000 3,000 4,000 5,000 6,000 $- $500,000.00 $1,000,000.00 $1,500,000.00 $2,000,000.00 $2,500,000.00 $3,000,000.00 $3,500,000.00 $4,000,000.00 $4,500,000.00 $5,000,000.00 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 Nu m b e r o f V a c a n c y D a y s Ov e r t i m e E x p e n s e s Axis Title OvertimeExpenses Vacancy Days Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 82  Packet Pg. 106 of 320  PALO ALTO FIRE DEPARTMENT Exhibit 13: Fire OT Budgeted vs. Actual Expenditures *OCA analysis October 2025 OT and Workers’ Compensation Cases In comparing Exhibit 13 of OT Expenditures with Exhibit 14, Fire Workers’ Compensation Cases, there appears to be similar trends with workers’ compensation cases seeming to rise when there is greater use of OT. Determining whether the amount of OT worked is a factor in workers’ compensation cases is important for the City to understand the full cost of using OT as a means for supporting systemic staffing issues. Exhibit 14 : Fire Workers’ Compensation Cases *OCA analysis October 2025 $- $500,000.00 $1,000,000.00 $1,500,000.00 $2,000,000.00 $2,500,000.00 $3,000,000.00 $3,500,000.00 $4,000,000.00 $4,500,000.00 $5,000,000.00 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Budgeted Overtime Expense Actual Overtime Expense 0 5 10 15 20 25 30 35 40 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 83  Packet Pg. 107 of 320  PALO ALTO FIRE DEPARTMENT Fire implemented structural changes to reduce forced or mandatory OT with positive feedback from staff. In order to maintain minimum staffing levels, PAFD has relied on “Force In” or mandatory OT. Analysis of OT data over the past 10 fiscal years provided from Telestaff software records in the PAFD shows that: • 62% of OT hours were voluntary • 34% were due to Force In/Mandatory OT • 4% were related to State Strike Team Deployment (reimbursed by OES) Exhibit 15: Fire Categories of OT FY2015 – FY2025 *OCA analysis October 2025 Mandatory OT is typically used when staffing levels are insufficient to cover shifts through voluntary means and firefighters are required to work OT shifts. The high proportion of “Force In/Mandatory OT” indicates persistent staffing challenges and can lead to staff dissatisfaction and burn-out. Fire implemented operational changes in 2023 to merge voluntary and mandatory OT lists. The department also adopted a system that prioritizes the last day worked for OT assignments. Staff feedback suggests these changes have improved fairness in shift distribution. The graph below shows that mandatory OT hours have decreased since FY 2022. 62% 34% 4% Regular Overtime Force In/Mandatory Overtime State Strike Team Deployment Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 84  Packet Pg. 108 of 320  PALO ALTO FIRE DEPARTMENT Exhibit 16: Fire “Force In/Mandatory” OT Hours FY2015-FY2024 *OCA analysis October 2025 We Recommend the City: 1. Strengthen workforce planning and hiring pipeline management Fire should continue to strengthen its workforce planning efforts by maintaining a consistent hiring pipeline that accounts for the department’s lengthy training and onboarding process incorporating attrition, academy separation rates, retirements, and long-term leave into its hiring projections. Developing a more proactive hiring plan will help ensure staffing levels remain stable and reduce the need for overtime to cover vacancies. The Department should consider reestablishing a structured hire-ahead Firefighter Trainee program to create a continuous staffing pipeline aligned with anticipated vacancies, reducing reliance on overtime to maintain minimum staffing. By proactively filling positions and maintaining adequate staffing levels, the Department can improve service reliability, control overtime costs, and mitigate fatigue-related performance risks identified 2. Consider best ratio of floater positions Fire should reassess the current ratio of floater positions to total suppression staffing and adjust it based on historical leave usage, vacancy rates, and workload demands to ensure sufficient baseline coverage without overreliance on overtime. 3. Periodically evaluate staffing levels and deployment against service demand The City should formally assess whether current staffing levels, deployment strategies, and apparatus configurations remain aligned with service demand and response time goals. This evaluation should consider factors such as call volume trends, response performance, staffing availability, and community growth. Conducting periodic reviews will help the City determine whether current resource levels and deployment models are sufficient to meet operational and public safety objectives. 4. Improve OT monitoring and workforce sustainability Fire should continue monitoring OT usage and analyzing the factors driving OT - 10,000.00 20,000.00 30,000.00 40,000.00 50,000.00 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 PAFD "Force In/Mandatory" Overtime Hours FY 2015 -FY2025 Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 85  Packet Pg. 109 of 320  PALO ALTO FIRE DEPARTMENT staffing needs. The department should also periodically evaluate whether extended OT hours are associated with employee fatigue, workers’ compensation claims, or other workforce health and safety indicators. Strengthening this analysis will help management identify opportunities to reduce reliance on mandatory OT while maintaining required staffing coverage. 5. Improve budget transparency and operational efficiency. The City should work with the Fire Department to ensure the budget more accurately reflects operational needs and historical spending trends. Aligning the OT budget with expected staffing realities will improve financial transparency and help both Fire and policymakers better understand the true cost of maintaining fire service levels. In addition, Fire should continue implementing operational improvements—such as inspection software and scheduling adjustments—to improve efficiency and ensure inspection and enforcement activities are completed in a timely manner. Response Fire, Human Resources, Administrative Services Concurrence: Agree Target Date: Q4, FY 2027 Action Plan: 1. Agree. The Department will continue refining workforce planning by incorporating known attrition factors, including retirements, academy and probationary separation rates, and long-term leave trends, into hiring projections and will share these projections annually to inform staffing and financial planning. Given the time required to recruit, train, and deploy firefighters, the Department will work with Human Resources and Administrative Services to review current hiring policies and explore process improvements that could support earlier recruitment while maintaining fiscal controls and oversight. These efforts are constrained by citywide hiring policies and balancing of fiscal impacts of over hiring practices. It should be noted that the Department recently worked to implement a structured hire-ahead Firefighter Trainee program which encountered identified operational, administrative, and labor-related complexities, including compensation structure and management of temporary over-strength conditions. In FY2027, the hire-ahead Firefighter Trainee position will be frozen and as such work on this will be paused while the City manages financial constraints and balances investment priorities. 2. Agree. The Department agrees that floater positions are a standard and effective strategy for managing daily staffing variability and reducing reliance on overtime and deploys. The Department will conduct a comprehensive analysis of leave usage, including sick leave, parental leave, workers’ compensation, vacation, and other extended absences. This will be used to analyze a recommended number of floater positions and bring forward resource adjustments as necessary or feasible as part of the FY 2028 budget process. 3. Agree. The Department agrees with the importance of aligning staffing levels and deployment models with service demands and community risks. Fire Department Command Staff continuously monitors system performance, including response times, unit availability, and call volume trends, and manages deployment within allocated resources. Performance metrics and operational outcomes are regularly Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 86  Packet Pg. 110 of 320  PALO ALTO FIRE DEPARTMENT To further support this work, the Department is planning an update to the Standards of Cover report as part of the Department’s recent five-year strategic plan that concludes in CY 2030. A Standards of Cover is a data-driven planning document used to evaluate risk, response performance, deployment strategies, and resource allocation, including community hazards, historical call demand, response times, and current staffing and deployment configurations. 4. Agree. The Department agrees with the importance of monitoring overtime usage and evaluating workforce sustainability. The Fire Department currently tracks key overtime-related metrics, including overtime hours, expenditures, vacancy days, and workers’ compensation cases. These metrics are reported through the City’s Quarterly Public Safety Overtime Report and presented to the Finance Committee. The Department will build on these practices by establishing a more formal internal data review process in collaboration with Human Resources and Payroll to analyze workforce trends. This process will include enhanced tracking and integration of hours per employee, leave trends, workers’ compensation data, overtime usage, and vacancy patterns to better understand workforce impacts. Supervisors may also formally incorporate fatigue assessments into injury reports and monitor trends to support injury prevention. 5. Concurs. The Department agrees with the importance of aligning budget assumptions with operational realities and maintaining transparency in overtime reporting. In the FY2027 budget development, the Department worked with Administrative Services to adjust assumptions for a realistic vacancy rate and increase the base overtime budget to better reflect align the budgeted cost of maintaining minimum staffing and deployed resources. The Department will continue to evaluate opportunities to improve system integration and efficiency Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 87  Packet Pg. 111 of 320  Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 88  Packet Pg. 112 of 320  Item 5 Attachment B - Public Safety Staffing and Overtime Audit Report        Item 5: Staff Report Pg. 89  Packet Pg. 113 of 320  9 9 8 2 City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Utilities Meeting Date: June 8, 2026 Report #:2605-6405 TITLE Approval of the City of Palo Alto's Permanent Water Use Ordinance. CEQA Status: Exempt under CEQA Guidelines Sections 15307 and 15308. RECOMMENDATION The Utilities Advisory Commission (UAC) and staff recommend that the City Council adopt an ordinance (Attachment A) amending Municipal Code section 12.32.010, Water Use Regulations. EXECUTIVE SUMMARY The proposed ordinance updates the City’s water use restrictions to strengthen permanent water conservation measures and align local requirements with State water-efficiency mandates. The ordinance would retain the City’s existing framework for preventing water waste while adding new restrictions on potable water (drinking water) use, particularly for landscape irrigation. Key updates include the following: 1. Following the State’s phased timeline: Prohibited use of potable water for irrigating nonfunctional turf (decorative grass) at government and commercial, industrial, and institutional (CII) properties, including homeowner associations (HOAs) common areas, statewide, as required by AB 1572; 2. Effective upon Ordinance adoption: Prohibited use of potable water on ornamental landscape or turf irrigation between 9:00 a.m. and 6:00 p.m., except via hand watering with a bucket or a hose with an operating shut-off valve; These updates are intended to reduce water waste and support the City’s compliance with evolving State water conservation laws. Item 6 Item 6 Staff Report        Item 6: Staff Report Pg. 1  Packet Pg. 114 of 320  9 9 8 2 BACKGROUND The City has long maintained water waste prevention requirements in Chapter 12.32 (Water Use Regulations) of the Palo Alto Municipal Code to support responsible management of limited water supplies. Existing permanent restrictions already prohibit wasteful actions, such as water use that results in runoff, and irrigation during daytime hours. Since those provisions were adopted, State law and regulations have continued to advance water use efficiency standards. Specifically, Assembly Bill 1572 requires local agencies to prohibit potable water irrigation of nonfunctional turf at government and CII properties, including HOA common areas, on a phased schedule beginning January 1, 2027. Staff recommends that the City adopt the proposed water ordinance updates concurrently with the 2025 Urban Water Management Plan (UWMP), which includes the Water Shortage Contingency Plan (WSCP), to ensure consistency. See Staff Report-2512-5656. The 2025 UWMP includes a description of the City’s water use restrictions ordinance, and the WSCP identifies response actions to be implemented during a water shortage. These actions include enforcement of the City’s permanent water use restrictions, along with increasingly stringent water-use prohibitions for each water shortage level. Enforcement of all water waste measures is carried out by staff with an education-first approach. Residents can report water waste through the PaloAlto3111 app or call (650) 496- 6968. ANALYSIS Staff proposes updating the City’s permanent water use restrictions to align with state- efficiency mandates and local requirements. These updates are: Prohibition on irrigation of turf or ornamental landscape between 9:00 a.m. and 6:00 p.m.: This update revises the existing prohibition on the use of potable water for turf or ornamental landscapes between 10:00 a.m. and 6:00 p.m. to be between 9:00 a.m. and 6:00 p.m. This is for consistency with Santa Clara Valley Water District regulations. The ordinance amendment is stated below: The irrigation of turf or ornamental landscapes, which serve purely decorative purposes, and are distinguished from trees, edible gardens or landscapes that provide more than a purely aesthetic function, with potable water shall not be allowed between 910:00 a.m. and 6:00 p.m., except via hand watering with a bucket or a hose with an operating shutoff valve. 1 Palo Alto 311 https://www.paloalto.gov/311 Item 6 Item 6 Staff Report        Item 6: Staff Report Pg. 2  Packet Pg. 115 of 320  9 9 8 2 Prohibition on the use of potable water for irrigating nonfunctional turf, as required by AB 1572: The proposed updates incorporate the commercial nonfunctional turf watering ban established under California Assembly Bill 1572 (2023) to ensure the City is compliant with state law. AB 1572 prohibits the use of potable water for irrigating nonfunctional turf at government and CII properties, including HOA common areas, statewide. AB 1572 features a phased implementation timeline and requires local governments to adopt or revise ordinances by January 1, 2027. Staff recommends following the phased timeline outlined in the state mandate. The ordinance amendment is stated below: FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT Item 6 Item 6 Staff Report        Item 6: Staff Report Pg. 3  Packet Pg. 116 of 320  9 9 8 2 On May 6, 2026 the UAC met and discussed this item and recommended that the City Council adopt the draft ordinance as proposed3. One commissioner asked whether AB 1572 requires local governments to update their ordinances to align with state law, and staff confirmed that it does. ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: 3 Additionally, in the same motion, the UAC also recommended a resolution adopting the 2025 UWMP, a resolution adopting the 2025 WSCP, and that the UAC submit to the Council as additional information a letter from Commissioner Gupta that he sent to the UAC on May 5, 2026 proposing seven in-context edits for inclusion in the City’s 2025 UWMP. Commissioner Gupta’s memo pertains to the Draft UWMP and does not include any suggested edits to the Water Use Restrictions Ordinance. Item 6 Item 6 Staff Report        Item 6: Staff Report Pg. 4  Packet Pg. 117 of 320  *NOT YET ADOPTED* 1 0290193_20260422_ms29 Ordinance No. Ordinance of the Council of the City of Palo Alto Amending Chapter 12.32 (Water Use Regulations) of the Palo Alto Municipal Code to Incorporate Additional Water Use Regulations The Council of the City of Palo Alto ORDAINS as follows: SECTION 1. Findings and Declarations. The City Council finds and declares as follows: A. Article 10, Section 2 of the California Constitution declares that waters of the State are to be put to beneficial use, that waste, unreasonable use, or unreasonable method of use of water be prevented, and that water be conserved for the public welfare. B. The State of California is prone to drought conditions, which result in water supply shortages. C. The City of Palo Alto recognizes the continuing need to manage water resources under its jurisdiction and control in a constitutionally compliant manner. D. Section 12.32.010 of the Palo Alto Municipal Code sets forth permanent water use restrictions applicable to all City water customers in order to responsibly manage the City’s water resources. E. City regulation of the time and manner of water use, rate design, the method of application of water for certain uses, and establishment of enforcement procedures in support of water use management is an effective and immediately available means of conserving water and is authorized by Palo Alto Municipal Code Section 12.20.010. F. California Assembly Bill (AB) 1572 (2023) prohibits the use of potable water to irrigate nonfunctional turf at most commercial, industrial, and institutional properties, including common areas managed by homeowner associations, and requires the City of Palo Alto to update its regulations to enforce the State-mandated prohibitions. G. In 2024, the State Water Resources Control Board adopted the “Making Conservation as a Way of Life” regulation (23 CCR § 965 et seq.), which establishes urban water use objectives and performance measures for retail water suppliers like the City. H. The Council wishes to make minor changes to existing water use restrictions and adopt additional permanent water use restrictions in order to responsibly manage the City’s water resources, meet its urban water use objectives, and comply with AB 1572. SECTION 2. Section 12.32.010 (Water Use Regulations) of Chapter 12.32 (Water Use Item 6 Attachment A - Ordinance Amending Municipal Code Sections 12.32.010, Water Use Regulations        Item 6: Staff Report Pg. 5  Packet Pg. 118 of 320  *NOT YET ADOPTED* 2 0290193_20260422_ms29 Regulations) of the Palo Alto Municipal Code is hereby amended as follows (additions underlined, deletions struck through): 12.32.010 Water use regulations. No purchaser of water from the city of Palo Alto, nor any customers of the water utility of the city of Palo Alto, shall use water or allow any other person to use water under the control of such customer or purchaser in the following ways: (a) Potable water shall not be allowed to flood or run off into gutters: driveways, sidewalks, streets or other unlandscaped areas. (b) By means of a hose to wash cars, boats, trailers, buses or other vehicles or to wash sidewalks, building structures, other hard-surfaced areas or parts thereof without an operating automatic shut-off valve. Use of a hose for such purposes should be avoided whenever possible. (c) Potable water for consolidation of backfill and other nondomestic uses in construction shall not be used if other water sources such as reclaimed water are available, as determined by the director of utilities or his or her designee. Applicants for hydrant permits from the city of Palo Alto shall be deemed to have consented to restrictions on water use which may be imposed by the director of utilities or his or her designee. (d) Any broken or defective plumbing, sprinklers, watering or irrigation systems which permit the escape or leakage of water shall be repaired or replaced as soon as possible, but no later than the date established by the director of utilities, or his or her designee, as reasonable after observation of the broken or defective system. (e) The irrigation of turf or ornamental landscapes, which serve purely decorative purposes, and are distinguished from trees, edible gardens or landscapes that provide more than a purely aesthetic function, with potable water shall not be allowed between 910:00 a.m. and 6:00 p.m., except via hand watering with a bucket or a hose with an operating shut- off valve. (f) The use of potable water in a fountain or other decorative water feature is prohibited, except where the water is part of a recirculating system. (g) The use of potable water for street sweepers and washers is prohibited if non-potable water is available, as determined by the Director of Utilities, or his or her designee. (h) Commercial car washes must use recycled water systems, if recycled water is available, as determined by the Director of Utilities, or his or her designee, and economically feasible. (i) The use of potable water for the irrigation of nonfunctional turf located on commercial, industrial, and institutional properties, other than a cemetery, and on properties of homeowners’ associations, common interest developments, and community service Item 6 Attachment A - Ordinance Amending Municipal Code Sections 12.32.010, Water Use Regulations        Item 6: Staff Report Pg. 6  Packet Pg. 119 of 320  *NOT YET ADOPTED* 3 0290193_20260422_ms29 organizations or similar entities is prohibited as of the following dates: (i) All properties owned by local governments, local or regional public agencies, and public water systems, beginning January 1, 2027. (ii) All other institutional properties and all commercial and industrial properties, beginning January 1, 2028. (iii) All common areas of properties of homeowners’ associations, common interest developments, and community service organizations or similar entities, beginning January 1, 2029. Notwithstanding the provisions of this subdivision (i), the use of potable water is not prohibited to the extent necessary to ensure the health of trees and other perennial nonturf plantings, or to the extent necessary to address an immediate health and safety need. For the purposes of this subdivision (i), relevant terms have the same meaning as in Section 10608.12 of the Water Code. SECTION 3. If any section, subsection, clause or phrase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portion or sections of the Ordinance. The Council hereby declares that it would have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid. SECTION 4. The Council finds that this ordinance is categorically exempt from review under the California Environmental Quality Act (CEQA) pursuant to Section 15307 and 15308 of the CEQA Guidelines (actions taken by regulatory agencies for the protection of natural resources and the environment). // // // // // // // // Item 6 Attachment A - Ordinance Amending Municipal Code Sections 12.32.010, Water Use Regulations        Item 6: Staff Report Pg. 7  Packet Pg. 120 of 320  *NOT YET ADOPTED* 4 0290193_20260422_ms29 SECTION 5. This ordinance shall be effective on the thirty-first day after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED AS TO CONTENT: City Attorney or Designee City Manager Director of Utilities Item 6 Attachment A - Ordinance Amending Municipal Code Sections 12.32.010, Water Use Regulations        Item 6: Staff Report Pg. 8  Packet Pg. 121 of 320  City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: IT Department Meeting Date: June 8, 2026 Report #:2603-6190 TITLE Approval of Purchase Order C27197380 with Optiv Security, Utilizing a State of California Department of General Services Software Licensing Program (SLP) SLP-24-70-0184Z Contract, to Procure Varonis Systems for a Three-Year Term with an Annual Amount of $154,043 for a Total Not-To-Exceed Amount of $462,129. CEQA Status - exempt under CEQA regulation § 15061(b)(3). RECOMMENDATION Staff recommends that City Council approve and authorize the City Manager or their designee to execute Purchase Order C27197380 with Optiv Security, utilizing the above-noted State of California Department of General Services Software Licensing Program SLP-24-70-0184Z1 contract to procure Varonis Systems over a three-year term (August 18, 2026 to August 17, 2029) with an annual amount of $154,043 and a total not-to-exceed amount of $462,129. BACKGROUND The City began using Varonis on August 18, 2023, under a three-year purchase order with annual payments of $146,000 and a total amount of $438,000. That purchase order also utilized a cooperative contract. Varonis is currently deployed across the City’s hybrid IT environment to provide centralized visibility and monitoring for Active Directory, the City’s file storage servers, and Microsoft 365, including email, SharePoint, and OneDrive. The City stores and processes critical and sensitive information, including personally identifiable information, financial records, human resources data, and public safety-related information. Because these systems span both on-premises and cloud environments, the City has an ongoing need for tools that provide centralized visibility and consistent security controls across platforms. 1 Software License Leveraged Procurement Agreement: https://caleprocure.ca.gov/PSRelay/ZZ_PO.ZZ_CTR_SUP_CMP.GBL?Page=ZZ_CTR_SUP_PG&Action=U&SETID=STAT E&CNTRCT_ID=SLP-24-70-0184Z Item 7 Item 7 Staff Report        Item 7: Staff Report Pg. 1  Packet Pg. 122 of 320  This renewal supports the City’s ongoing investment in secure and reliable technology infrastructure and is intended to maintain the City’s current cybersecurity capabilities without interruption. ANALYSIS Item 7 Item 7 Staff Report        Item 7: Staff Report Pg. 2  Packet Pg. 123 of 320  FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 7 Item 7 Staff Report        Item 7: Staff Report Pg. 3  Packet Pg. 124 of 320  Date: 3/30/2026 Expiration: 6/23/2026 To: City of Palo Alto Information Technology Services Darren Numoto CIO / Director of It 250 Hamilton Ave Fl 2 Palo Alto, CA 94301-2531 US 650-329-2211 darren.numoto@cityofpaloalto.org Varonis - 3YR Renewal - Annual Payments CA SLP contract / SLP-24-70-0184Z - In order to be accepted the PO must be fully funded for the entire 3YR term. Annual payments are as follows: - Year 1: $154,042.75 / Net30 Year 2: $154,042.76 / Net30 Year 3: $154,042.76 / Net30 Quote#: 4613705-2 Payment Terms: Net 30 Tax ID: 43-1806449 Internal Reference#: Q-2689233 From: Eli Hudson eli.hudson@optiv.com YEAR 1 Line # Product Description Product Code Term QTY Customer Price Customer Extended Price 1 Varonis Systems: Varonis for Active Directory SaaS subscription for 12 Months VAD-1001-1500SA 2026-08-18 to 2027-08-17 1,201 USD 11.72 USD 14,075.72 2 Varonis Systems: Varonis for Windows/NAS + M365 SaaS Subscription VTWO-1001- 1500SA 2026-08-18 to 2027-08-17 1,201 USD 92.31 USD 110,864.31 3 Varonis Systems: Collector License CL-1-5OS 2026-08-18 to 2027-08-17 1 USD 1,458.53 USD 1,458.53 Page 1 of 3 Item 7 Attachment A - Varonis Quote no. 4613705-2        Item 7: Staff Report Pg. 4  Packet Pg. 125 of 320  Line # Product Description Product Code Term QTY Customer Price Customer Extended Price 4 Varonis Systems: Varonis for Exchange Online is a SaaS subscription add-on that extends protection to cover Exchange Online DAEO-1001- 1500SA 2026-08-18 to 2027-08-17 1,201 USD 20.35 USD 24,440.35 5 Varonis Systems: Extended Event Retention for 7 Years SaaS Subscription 4M Daily Events VER7-4SA 2026-08-18 to 2027-08-17 4 USD 800.96 USD 3,203.84 6 Varonis Systems: Varonis SaaS FedRAMP Moderate Add-On SaaS Subscription VFED-1001- 1500SA 2026-08-18 to 2027-08-17 1,201 USD 0.00 USD 0.00 YEAR 1 TOTAL:USD 154,042.75 YEAR 2 Line # Product Description Product Code Term QTY Customer Price Customer Extended Price 7 Varonis Systems: Varonis for Active Directory SaaS subscription for 12 Months VAD-1001-1500SA 2027-08-18 to 2028-08-17 1,201 USD 11.72 USD 14,075.72 8 Varonis Systems: Varonis for Windows/NAS + M365 SaaS Subscription VTWO-1001- 1500SA 2027-08-18 to 2028-08-17 1,201 USD 92.31 USD 110,864.31 9 Varonis Systems: Collector License CL-1-5OS 2027-08-18 to 2028-08-17 1 USD 1,458.54 USD 1,458.54 10 Varonis Systems: Varonis for Exchange Online is a SaaS subscription add-on that extends protection to cover Exchange Online DAEO-1001- 1500SA 2027-08-18 to 2028-08-17 1,201 USD 20.35 USD 24,440.35 11 Varonis Systems: Extended Event Retention for 7 Years SaaS Subscription 4M Daily Events VER7-4SA 2027-08-18 to 2028-08-17 4 USD 800.96 USD 3,203.84 12 Varonis Systems: Varonis SaaS FedRAMP Moderate Add-On SaaS Subscription VFED-1001- 1500SA 2027-08-18 to 2028-08-17 1,201 USD 0.00 USD 0.00 YEAR 2 TOTAL:USD 154,042.76 YEAR 3 Line # Product Description Product Code Term QTY Customer Price Customer Extended Price 13 Varonis Systems: Varonis for Active Directory SaaS subscription for 12 Months VAD-1001-1500SA 2028-08-18 to 2029-08-17 1,201 USD 11.72 USD 14,075.72 14 Varonis Systems: Varonis for Windows/NAS + M365 SaaS Subscription VTWO-1001- 1500SA 2028-08-18 to 2029-08-17 1,201 USD 92.31 USD 110,864.31 Page 2 of 3 Item 7 Attachment A - Varonis Quote no. 4613705-2        Item 7: Staff Report Pg. 5  Packet Pg. 126 of 320  Line # Product Description Product Code Term QTY Customer Price Customer Extended Price 15 Varonis Systems: Collector License CL-1-5OS 2028-08-18 to 2029-08-17 1 USD 1,458.54 USD 1,458.54 16 Varonis Systems: Varonis for Exchange Online is a SaaS subscription add-on that extends protection to cover Exchange Online DAEO-1001- 1500SA 2028-08-18 to 2029-08-17 1,201 USD 20.35 USD 24,440.35 17 Varonis Systems: Extended Event Retention for 7 Years SaaS Subscription 4M Daily Events VER7-4SA 2028-08-18 to 2029-08-17 4 USD 800.96 USD 3,203.84 18 Varonis Systems: Varonis SaaS FedRAMP Moderate Add-On SaaS Subscription VFED-1001- 1500SA 2028-08-18 to 2029-08-17 1,201 USD 0.00 USD 0.00 YEAR 3 TOTAL:USD 154,042.76 Subtotal:USD 462,128.27 Estimated Tax:USD 0.00 Estimated Shipping:USD 0.00 Grand Total:USD 462,128.27 Sales Quote Terms and Conditions This Sales Quote and the Client’s purchase of the Products listed in this Sales Quote are subject to and shall be governed by (i) the Sales Quote Terms and Conditions and (ii) the Data Processing Terms and Conditions, both available at http://www.optiv.com/agreements Optiv Security Inc., 1144 15th Street, Suite 2900, Denver, CO 80202 United States By signing below, client agrees to purchase the items listed above. Signature: \s1\ Date: \d1\ ______/______/______ Name (Print): \n1\ Title: \t1\ Quote: 4613705-2 Grand Total: USD 462,128.27 Page 3 of 3 Item 7 Attachment A - Varonis Quote no. 4613705-2        Item 7: Staff Report Pg. 6  Packet Pg. 127 of 320  City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Public Works Meeting Date: June 8, 2026 Report #: 2512-5758 TITLE Approval of Construction Contract C26197221 with Valentine Corporation in an Amount Not-to- Exceed $503,990 and Authorization for the City Manager or Their Designee to Negotiate and Execute Change Orders for Related Additional but Unforeseen Work that May Develop During the Project up to a Not-to-Exceed Amount of $50,399, for the Guardrail Repair Project, Capital Improvement Program Project PE-86070; CEQA Status – Exempt under Section 15301(c) and 15301(d) RECOMMENDATION Staff recommends that the City Council: 1. Approve and authorize the City Manager or their designee to execute Contract No. C26197221 with Valentine Corporation in the not-to-exceed amount of $503,990, for the construction and installation of guardrails pursuant to the Guardrail Repair Project, Capital Improvement Program Project PE-86070; and 2. Authorize the City Manager or their designee to negotiate and execute one or more change orders to the construction contract with Valentine Corporation, for related, additional but unforeseen work that may develop during the project, the total value of which shall not exceed $50,399. BACKGROUND Three separate guardrails throughout the City of Palo Alto have been damaged and require repair. The three locations include the Alma Street and University Avenue interchange, the Alma Street and Oregon Expressway overpass, and the Park Boulevard and Oregon Expressway overpass (Attachment A). Two have been damaged by vehicle collisions, and one has deteriorated due to environmental exposure. The scope of this project is to demolish, remove, and replace the damaged portions of these guardrails using updated designs and materials. Guardrails are a vital safety measure to protect pedestrians and vehicular traffic on these roadways, and repairing these damaged sections is necessary to ensure the continued safety of the public. Item 8 Item 8 Staff Report        Item 8: Staff Report Pg. 1  Packet Pg. 128 of 320  On February 24, 2025, the City hired Hohbach-Lewin, Inc. (Hohbach-Lewin) to design and provide construction support in the reconstruction of the damaged guardrails and sections of concrete sidewalks, curb, and gutter. Hohbach-Lewin completed designs, including details and drawings, to repair the guardrails. Hohbach-Lewin will also provide on-site inspections during construction, construction administration, and as-built drawings after project completion. ANALYSIS 1 to carry out necessary repairs and rehabilitation work to return these guardrail systems to operational status. The scope of work includes the demolition of existing damaged guardrails and substructures, and installation of 250 square feet of new sidewalk, 100 linear feet of curb, and 70 linear feet of new guardrail. Table 1: Summary of Invitation for Bids Project Bid Name/Number Guardrail Repair Project IFB195842 Proposed Length of Project 60 calendar days # of Bid Packages Downloaded by Builder’s Exchanges 1 # of Bid Packages Downloaded by Contractors 45 Total Days to Respond to Bid 37 Mandatory Pre-Bid Meeting Yes # of Company Attendees at Non-Mandatory Pre-Bid Meeting 2 Number of Bids Received 5 1 Valentine Corporation Construction Contract for Guardrail Repair Project C26197221 https://www.paloalto.gov//files/assets/public/v/1/public-works/staff-reports-all/2026/c26197221-valentine- corporation-guardrail-repair-project-final.pdf Item 8 Item 8 Staff Report        Item 8: Staff Report Pg. 2  Packet Pg. 129 of 320  Table 1: Summary of Invitation for Bids Project Bid Name/Number Guardrail Repair Project IFB195842 Base Bid Price Range $334,369 - $450,000 Public Link to Solicitation https://procurement.opengov.com/port al/palo-alto-ca/projects/247830 The apparent low bidder was selected based upon the base bid. The bids ranged from $334,369 to $450,000 and from 15% to 37% below the engineer’s estimate of $530,682. Staff reviewed the submitted bids and recommends that Valentine Corporation be declared the lowest responsible bidder and the City accept the base bid submitted by Valentine Corporation in the amount of $334,369. Staff recommends awarding add alternate #1 in the amount of $169,621 in addition to the base bid to address environmental damage to the guardrail at the Park Boulevard and Oregon Expressway overpass. The total base bid plus the add alternates totals $503,990. The construction contingency amount of $50,399, which equals 10% of the contract value, is requested for related, additional, but unforeseen work which may develop during the project, implemented via City-approved Change Order. FISCAL/RESOURCE IMPACT Funding for the Guardrail Repair Project is available in the FY 2026 Adopted Capital Improvement Program Street Maintenance project (PE-86070). The Guardrail Repair project is appropriately categorized under street maintenance because the guardrail system is an existing component of the public roadway. STAKEHOLDER ENGAGEMENT The guardrail work has been coordinated with the City’s Public Works and Utilities departments to ensure no impact on other projects. Public outreach, in the form of mailer notifications and NextDoor postings, will be conducted before and during the construction to keep the community informed throughout the process. ENVIRONMENTAL REVIEW This project is categorically exempt from the California Environmental Quality Act (CEQA) under Sections 15301(c) and 15301(d) of the CEQA Guidelines. This work includes the repair, maintenance and/or minor alteration of the existing facilities as well as restoration or rehabilitation of deteriorated or damaged structures and facilities in the interest of public health and safety. Therefore, no further environmental review is necessary. ATTACHMENTS Attachment A: Project Location Map Attachment B: Bid Summary APPROVED BY: Brad Eggleston, Director Public Works/City Engineer Item 8 Item 8 Staff Report        Item 8: Staff Report Pg. 3  Packet Pg. 130 of 320  EMERSON STREET KINGSLEY AVENUE ALMA STREET ALMA STREET HIGH STREET RAMONA STREET LINCOLN AVENUE LINCOLN AVENUE RAMONA STREET EMERSON STREET HIGH STREET EMBARCADERO ROAD EMERSON STREET QUARRY ROAD QUARRY ROAD EMERSON STREET HOMER AVENUE EL CAMINO REAL PALO ALTO AVENUE EL CAMINO REAL PALO ALTO AVENUE HAWTHORNE AVENUE RAMONA STREET EMERSON STREET HAWTHORNE AVENUE HIGH STREET EVERETT AVENUE EVERETT AVENUE HIGH STREET ALMA STREET ALMA STREET ALMA STREET LYTTON AVENUE EL CAMINO REAL QUARRY ROAD ALMA STREET EMERSON STREET RAMONA STREETLYTTON AVENUE UNIVERSITY AVENUE RAMONA STREET BRYANT STREET HIGH STREET EMERSON STREET ALMA STREET EMERSON STREET HIGH STREET HIGH STREETHAMILTON AVENUE HAMILTON AVENUE EMERSON STREET HAMILTON AVENUE GILMAN STREET WAVERLEY STREET BRYANT STREET FOREST AVENUE FOREST AVENUE BRYANT STREET RAMONA STREET RAMONA STREET BRYANT STREET FLORENCE STREET RAMONA STREET BRYANT STREET LYTTON AVENUE UNIVERSITY AVENUE WAVERLEY STREET HAMILTON AVENUE MELVILLE AVENUE EMERSON STREET KELLOGG AVENUE EMERSON STREET KELLOGG AVENUE BRYANT STREET BRYANT STREET EMBARCADERO ROAD WAVERLEY STREET MELVILLE AVENUE EMBARCADERO ROAD EMERSON STREET KINGSLEY AVENUE BRYANT STREET BRYANT STREET SCOTT STREET ADDISON AVENUEBRYANT STREET BRYANT STREET ADDISON AVENUE LINCOLN AVENUE COWPER STREET FOREST AVENUE WAVERLEY STREET BRYANT STREET HOMER AVENUE WAVERLEY STREET CHANNING AVENUE RAMONA STREET RAMONA STREET WEBSTER STREET COWPER STREET HOMER AVENUE HOMER AVENUE COWPER STREET KIPLING STREET CHANNING AVENUE WAVERLEY STREET ADDISON AVENUE MELVILLE AVENUE WAVERLEY STREET KINGSLEY AVENUE KINGSLEY AVENUE WAVERLEY STREET LINCOLN AVENUE COWPER STREET LINCOLN AVENUE ADDISON AVENUE WEBSTER STREET MIDDLEFIELD ROAD ADDISON AVENUE COWPER STREET WEBSTER STREET HOMER AVENUE WEBSTER STREET CHANNING AVENUE CHANNING AVENUE KINGSLEY AVENUE WEBSTER STREET MIDDLEFIELD ROAD COWPER STREET U N I V E R S I T Y C I R C L E LANE 39 LANE B EAST LANE 7 EAST LANE 5 EAST LANE 6 EAST LANE 20 EAST LANE 20 WEST LANE 21 MITCHELL LANE PAULSEN LANE LANE 12 WEST LANE 11 WEST CENTENNIAL WALK LANE D EAST LANE D WEST LANE 59 EAST WHITMAN COURT PEAR LANE DOWNING LANE LANE 56 EL CAMINO REAL ALMA STREET PENINSULA CORRIDOR JOINT POWERS BOARD PENINSULA CORRIDOR JOINT POWERS BOARD PENINSULA CORRIDOR JOINT POWERS BOARD PALM DRIVE PALM DRIVE PALM DRIVE PALO ROAD ARBORETUM ROAD ARBORETUM ROAD ARBORETUM ROAD GALVEZ STREET EMERSON STREET EMERSON ST REET HIGH STREET HIGH STREET HIGH STREET ALMA STREET ALMA STREET ALMA STREET ALMA STREET ALMA STREET FOREST AVENUE CHANNING AVENUE HOMER AVENUE ADDISON A VENUE EL CAMINO REAL EL CAMINO REAL EL CAMINO REAL EL CAMINO REAL EL CAMINO REAL EL CAMINO REAL EMBARCADERO ROAD WELLS AVENUE URBAN LANE URBAN LANE ENCINA AVENUE ENCINA AVENUE M E D I C A L FOU N D ATION WAY LANE 7 WEST LANE 8 WEST LANE A WEST LANE B WEST CHANNING AVENUE This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. 0'400' FY 2 6 G u a r d r a i l R e p a i r P r o j e c t CITY OF PALO ALTO I N C O R P O R A T E D CALI FORNIA P a l o A l t o T h e C i t y o f A PR I L 1 6 1 89 4 The City of Palo Alto assumes no responsibility for any errors. ©1989 to 2016 City of Palo Alto ehochst, 2026-05-14 09:59:02 (\\cc-maps\Encompass\Admin\Meta\View.mdb) Alma Street and University Avenue Interchange Location Item 8Attachment A - Project Location Map       Item 8: Staff Report Pg. 4  Packet Pg. 131 of 320  MIDDLEFIELD ROAD MIDDLEFIELD ROAD WEBSTER STREET BRYSON AVENUE COLORADO AVENUE COLORADO AVENUE COWPER STREET ELDO RA DO AVENUE KIPLING STREET WAVERLEY STREET COLLEGE AVENUE YALE STREET CAMBRIDGE AVENUE CALIFORNIA AVENUE WILLIAMS STREET CALIFORNIA AVENUE GRANT AVENUE EL CAMINO REAL EL CAMINO REAL EL CAMINO REAL SHERMA N AVENUE SHERMA N AVENUE JACARANDA LANE ASH STREET NEW MAYFIELD LANE NEW MAYFIELD LANE EL CAMINO REAL EL CAMINO REAL CALIFORNIA AVENUE CALIFORNIA AVENUE PERAL LANE MIMOSA LANE SEDRO LANE CAMBRIDGE AVENUE COLLEGE AVENUE WELLESLEY STREET ASH STREET OXFORD AVENUE EL CAMINO REAL STANFORD AVENUE CASTILLEJA AVENUE PARK BOULEVARD STANFORD AVENUE BIRCH STREET OXFORD AVENUE BIRCH STREET STANFORD AVENUE ALMA STREET MARIPOSA AVENUE SEQUOIA AVENUE BIRCH STREET LELAND AVENUE LELAND AVENUE ASH STREET TENNYSON AVENUE ALMA STREET BIRCH STREET NEW MAYFIELD LANE CAMBRIDGE AVENUE BIRCH STREET BIRCH STREET COLLEGE AVENUE COLLEGE AVENUE PARK BOULEVARD CALIFORNIA AVENUE ALMA STREET PARK BOULEVARD SHERMAN AVENUE JACARANDA LANE PARK BOULEVARD ALMA STREETPARK BOULEVARD PARK BOULEVARD OXFORD AVENUE EMERSON STREET SEALE AVENUE SEALE AVENUE EMERSON STREET RINCONADA AVENUE ALMA STREET RINCONADA AVENUE EMERSON STREET SANTA RITA AVENUE SANTA RITA AVENUE ALMA STREET HIGH STREET HIGH STREET EMERSON STREET EMERSON STREET RAMONA STREET COLORADO AVENUE COLORADO AVENUE EMERSON STREET HIGH STREET ALMA STREET ALMA STREET OREGON EXPRESSWAY BRYANT STREET SOUTH COURT EL DORADO AVENUE OREGON AVENUE SANTA RITA AVENUE WASHINGTON AVENUE BRYANT STREET WAVERLEY OAKS (PVT) EMERSON STREET WASHINGTON AVENUE NORTH CALIFORNIA AVENUE NEVADA AVENUE OREGON AVENUE HIGH STREET NORTH CALIFORNIA AVENUE WAVERLEY STREET SOUTH COURT RAMONA STREET OREGON AVENUE BRYANT STREET RAMONA STREET WAVERLEY STREET OREGON EXPRESSWAY BRYANT STREET SOUTH COURT WAVERLEY STREET MARION AVENUE COLORADO AVENUE WAVERLEY STREET COWPER STREET KIPLING STREET COLORADO AVENUE WAVERLEY STREET OREGON EXPRESSWAY OREGON AVENUE ANTON COURT COWPER STREET NEVADA AVENUE OREGON AVENUE OREGON EXPRESSWAY GREEN MANOR COWPER STREET MAR ION AV ENU E MARION AVENUE MARION PLACE TASSO STREET YALE STREET GRANT AVENUE SHERMAN AVENUE SHERIDAN AVENUE SHERIDAN AVENUE ASH STREET BIRCH STREET BIRCH STREET GRANT AVENUE SOUTH COURT BRYANT STREET BRYANT STREET EL DORADO AVENUE EL DORADO AVENUE RAMONA STREET EMERSON STREET EL CARMELO AVENUE EL CARMELO AVENUE EL CARMELO AVENUE EMERSON STREET RAMONA STREET LAMBERT AVENUE PARK BOULEV A RD PARK BOULEV ARD ALMA STREET ALMA STREET PEPPER AVENUE ASH STREET NORTH CALIFORNIA AVENUE PAG E MIL L R OA D ALMA STREET STAUNTON COURT GASPAR COURT PAG E MIL L R OA D PAG E MIL L R OA D PAG E MIL L R OA D NOGAL LAN E JACAR AN DA L A NE PENINSULA CORRIDOR JOINT POWERS BOARD PENINSULA CORRIDOR JOINT POWERS BOARD PENINSULA CORRIDOR JOINT POWERS BOARD PENINSULA CORRIDOR JOINT POWERS BOARD PENINSULA CORRIDOR JOINT POWERS BOARD PENINSULA CORRIDOR JOINT POWERS BOARD OXFORD AVENUE EL CAMINO REAL EL CAMINO REAL EL CAMINO REAL EL CAMINO REAL This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. 0'400' FY 2 6 G u a r d r a i l R e p a i r P r o j e c t CITY OF PALO ALTO I N C O R P O R A T E D CALI FORNIA P a l o A l t o T h e C i t y o f A PR I L 1 6 1 89 4 The City of Palo Alto assumes no responsibility for any errors. ©1989 to 2016 City of Palo Alto ehochst, 2026-05-14 10:00:12 (\\cc-maps\Encompass\Admin\Meta\View.mdb) Alma Street and Oregon Expressway Overpass Location Park Boulevard and Oregon Expressway Overpass Location - Add Alternate 1 Item 8Attachment A - Project Location Map       Item 8: Staff Report Pg. 5  Packet Pg. 132 of 320  FY26 Guardrail Repair Project - Bid Summary BID ITEM UNIT QTY DESCRIPTION UNIT PRICE TOTAL PRICE UNIT PRICE TOTAL PRICE UNIT PRICE TOTAL PRICE UNIT PRICE TOTAL PRICE UNIT PRICE TOTAL PRICE UNIT PRICE TOTAL PRICE 1 LS 1 Complete installation of the guard rail system and concrete sidewalk, curb and gutter work as detailed in the project drawings and specifications for the Alma/Oregon Over Pass. This includes, but is not limited to, any demolition, site preparation, logistics planning and plan development, and/or material procurement. $ 151,900.00 $ 151,900.00 $ 145,000.00 $ 145,000.00 $ 140,000.00 $ 140,000.00 $ 166,110.78 $ 166,110.78 $ 159,112.00 $ 159,112.00 $ 163,369.00 $ 163,369.00 2 LS 1 Complete installation of the guard rail system and concrete sidewalk, curb and gutter work as detailed in the project drawings and specifications for University Avenue. This includes, but is not limited to, any demolition, site preparation, logistics planning and plan development, and/or material procurement. $ 247,350.00 $ 247,350.00 $ 135,000.00 $ 135,000.00 $ 62,500.00 $ 62,500.00 $ 109,430.17 $ 109,430.17 $ 109,556.00 $ 109,556.00 $ 100,000.00 $ 100,000.00 3 LS 1 Furnish and provide all labor, materials, and equipment for mobilization forces and resources to perform work at Alma/Oregon Overpass location. $ 10,000.00 $ 10,000.00 $ 20,000.00 $ 20,000.00 $ 42,765.00 $ 42,765.00 $ 7,130.02 $ 7,130.02 $ 21,000.00 $ 21,000.00 $ 12,000.00 $ 12,000.00 4 LS 1 Furnish and provide all labor, materials, and equipment required to implement and maintain traffic control for work at the Alma/Oregon Overpass. This includes submission and revisions for approval of site-specific traffic control plans. $ 58,000.00 $ 58,000.00 $ 30,000.00 $ 30,000.00 $ 46,000.00 $ 46,000.00 $ 51,914.00 $ 51,914.00 $ 34,000.00 $ 34,000.00 $ 28,000.00 $ 28,000.00 5 LS 1 Furnish and provide all labor, materials, and equipment for mobilization forces and resources to perform work at University Avenue location. $ 10,000.00 $ 10,000.00 $ 18,000.00 $ 18,000.00 $ 29,000.00 $ 29,000.00 $ 4,152.16 $ 4,152.16 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 6 LS 1 Furnish and provide all labor, materials, and equipment required to implement and maintain traffic control for work at the University Avenue location. This includes submission and revisions for approval of site-specific traffic control plans. $ 33,432.00 $ 33,432.00 $ 28,000.00 $ 28,000.00 $ 19,000.00 $ 19,000.00 $ 26,214.00 $ 26,214.00 $ 15,000.00 $ 15,000.00 $ 18,000.00 $ 18,000.00 7 LS 1 Notifications for all locations. $ 20,000.00 $ 20,000.00 $ 74,000.00 $ 74,000.00 $ 1,000.00 $ 1,000.00 $ 6,425.00 $ 6,425.00 $ 6,000.00 $ 6,000.00 $ 3,000.00 $ 3,000.00 BID ITEM UNIT QTY DESCRIPTION UNIT PRICE TOTAL PRICE UNIT PRICE TOTAL PRICE UNIT PRICE TOTAL PRICE UNIT PRICE TOTAL PRICE UNIT PRICE TOTAL PRICE UNIT PRICE TOTAL PRICE 8 LS 1 Complete installation of the guard rail system and concrete sidewalk, curb and gutter work as detailed in the project drawings and specifications for the Park Boulevard/Oregon Expressway Overpass. This includes, but is not limited to, any demolition, site preparation, and/or material procurement. $ 167,300.00 $ 167,300.00 $ 120,000.00 $ 120,000.00 $ 125,000.00 $ 125,000.00 $ 105,455.65 $ 105,455.65 $ 111,957.00 $ 111,957.00 $ 117,621.00 $ 117,621.00 9 LS 1 Furnish and provide all labor, materials, and equipment for mobilization forces and resources to perform work at Park/Oregon Overpass Location. $ 10,000.00 $ 10,000.00 $ 15,000.00 $ 15,000.00 $ 40,000.00 $ 40,000.00 $ 7,448.30 $ 7,448.30 $ 17,000.00 $ 17,000.00 $ 10,000.00 $ 10,000.00 10 LS 1 Furnish and provide all labor, materials, and equipment required to implement and maintain traffic control for work at the Park/Oregon Overpass Location. This includes submission and revisions for approval of site-specific traffic control plans. $ 33,432.00 $ 33,432.00 $ 25,000.00 $ 25,000.00 $ 62,500.00 $ 62,500.00 $ 38,152.00 $ 38,152.00 $ 44,000.00 $ 44,000.00 $ 42,000.00 $ 42,000.00 Under Over Under Under Under 172,957.00$ 169,621.00$ -24% 8% -28% -18% -20% ALT Bid 1 Total (Items 008 through 010) 210,732.00$ 160,000.00$ 227,500.00$ 151,055.95$ ADD ALT 1 BID SUMMARY ENGINEER BNO Builders Coral Construction MARC Builders T.P.A. Valentine Under Under Under Under Under T.P.A. 354,668.00$ Valentine 334,369.00$ -15% -36% -30% -33% -37% MARC Builders 371,376.13$ Base Bid Total (Items 001 through 007) 530,682.00$ 450,000.00$ Coral Construction 340,265.00$ BID SUMMARY ENGINEER BNO Builders Item 8 Attachment B - Bid Summary        Item 8: Staff Report Pg. 6  Packet Pg. 133 of 320  8 5 0 City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Utilities Meeting Date: June 8, 2026 Report #:2512-5653 TITLE Approval of Professional Services Contract Number C27196575 with Presidio Systems, Inc. in the Amount Not-to-Exceed $938,452 for Closed-Circuit Television (CCTV) Sanitary Sewer Pipeline Inspection for a Period of Three Years; CEQA Status – Not a Project Under CEQA Guidelines Section 15378. RECOMMENDATION Staff recommend that the City Council approve and authorize the City Manager or their designee to execute Contract Number C27196575 (Attachment A) with Presidio Systems, Inc. for CCTV inspection services for a term of three (3) years and a total, not-to-exceed amount of $938,452, including $853,139 for basic service and $85,313 for additional services. EXECUTIVE SUMMARY To ensure the long-term resilience of City’s wastewater collection system, it is recommended that the City of Palo Alto (City) initiate a comprehensive CCTV inspection project. This project includes CCTV inspection of approximately 230,000 linear feet (44 miles) of sewer mains to be inspected over the period of 3 years. The sewer mains proposed for the CCTV inspection are non-plastic and no slip lined pipes, and cover a diameter range from 6 to 18 inches. CCTV sewer main inspection shall follow industry standards such as National Association of Sewer Service Companies (NASSCO) Pipe Assessment and Certification Program (PACP) standards. The last CCTV inspection project was completed in 2006. This project will help the City maintain wastewater collection system compliance with environmental regulations. The CCTV inspection results inform proactive sewer main cleaning and repair activities and provide information about the sewer main’s structural condition to help prioritize the Capital Improvement Program (CIP) for the City’s wastewater collection system. BACKGROUND The City’s last CCTV inspection project was completed in 2006 and now requires a comprehensive update. A CCTV sewer inspection program uses specialized cameras to inspect Item 9 Item 9 Staff Report        Item 9: Staff Report Pg. 1  Packet Pg. 134 of 320  8 5 0 and diagnose the condition of sewer main lines. This process provides high-resolution videos of pipes to locate blockages, root intrusions, leaks and pipe breaks. This process helps with system compliance and overall maintenance, preventing costly repairs through early and accurate detection of compromised pipeline integrity. Table 1: Sewer Main CCTV Prioritization, By Year Year Total (miles)Sewer mains prioritization identified in the SMP 1 15 High-risk sewer mains 2 14 High-risk & medium-risk sewer mains 3 15 Medium-risk sewer mains ANALYSIS Table 2: Summary of Request for Proposal Project Bid Name/Number 3-Year CCTV Sanitary Sewer Main Inspection project, CIP WC-26001, RFP 196575 Proposed Length of Project 3 years at 105 working days per year, between the dry weather months of April and November. Number of Vendors Notified 3941 # of Proposal Packages Downloaded by Vendors 47 Total Days to Respond to Request for Proposals 27 Calendar Days Pre-Proposal Meeting Yes (Non-Mandatory) on March 24, 2026 at 10am Pre-Proposal Meeting Date no pre-qualification requirement Item 9 Item 9 Staff Report        Item 9: Staff Report Pg. 2  Packet Pg. 135 of 320  8 5 0 Table 2: Summary of Request for Proposal Project Bid Name/Number 3-Year CCTV Sanitary Sewer Main Inspection project, CIP WC-26001, RFP 196575 Number of Proposals Received 9 Proposal Price Range $576,445 to $2,269,960 Public Link to Solicitation https://procurement.opengov.com/governments/6 50/projects/247562/manage Presidio Systems, Inc. was selected as the top-ranked proposer based on their expertise, methodology, and relevant project experience. Proposal cost was independently evaluated by Purchasing administrator following the completion of the technical evaluation by Engineering staff. Presidio Systems, Inc. submitted the 3rd lowest bid, demonstrated the highest technical proficiency, and was identified as the best value proposer. Presidio Systems, Inc. listed previous experiences working with local agencies on large-scale projects. Additionally, they proposed utilization of additional crews to address heavy debris areas and software solutions that support future maintenance planning. Staff have evaluated the submitted proposals and recommend that the proposal of $853,139 submitted by Presidio Systems, Inc. be accepted and be deemed the most advantageous to the City. The selected vendor’s proposal is approximately 5.2 percent below the staff engineer’s estimate of $900,000. The two (2) lower priced bidders scored lower than the preferred vendor. Examples of areas these submittals feel below the recommended service provider include but are not limited to project references with projects that are currently in progress or scaled down with only 6,000 LF of CCTV inspected sewer mains, reference to projects out of the area, and lack of experience with high traffic on local arterials and severe regional bottlenecks. Timeline This CCTV project must be conducted during the City’s historical dry season (April through November) - an industry standard. Dry weather provides the ideal conditions for gathering accurate, actionable data, due to minimum Inflow and Infiltration (I&I) generated from stormwater or groundwater that enters sanitary system through damaged pipes, leaky joints, or improper connections. The low wastewater flow ensures maximum visibility of the pipe invert, reduces the risk of equipment loss, and provides a clear baseline of structural integrity and debris accumulation without the interference of storm-related inflow and infiltration. FISCAL/RESOURCE IMPACT Funding for the first year of the contract is included in the FY 2027 Wastewater Collection Capital Budget under WC-26001 (Closed Circuit Television Sewer Main Inspection), subject to City Council approval. Funding for subsequent years is contingent upon Council appropriation Item 9 Item 9 Staff Report        Item 9: Staff Report Pg. 3  Packet Pg. 136 of 320  8 5 0 and approval of funds through the annual budget process. The total project cost of $938,452 includes total basic services of $853,139 and $85,313 (10%) for optional additional services, if deemed necessary by the City, over three years. Breakdown of Three-Year Contract Costs for CCTV Inspection (WC-26001) Table 3: Three-Year Contract Costs for CCTV Inspection Fiscal Year (FY)CCTV Inspection (not to exceed) 2027 $292,037 2028 $273,449 2029 $287,653 Subtotal $853,139 Additional Services $85,313 Total $938,452 STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 9 Item 9 Staff Report        Item 9: Staff Report Pg. 4  Packet Pg. 137 of 320  Professional Services Rev. Oct 16,2024 Page 1 of 22 CITY OF PALO ALTO CONTRACT NO. C27196575 AGREEMENT FOR PROFESSIONAL SERVICES BETWEEN THE CITY OF PALO ALTO AND PRESIDIO SYSTEMS INC. This Agreement for Professional Services (this “Agreement”) is entered into as of the 1st day of July, 2026 (the “Effective Date”), by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and PRESIDIO SYSTEMS INC., a California corporation, located at 159 Wright Brothers Ave., Livermore, CA 94551 (“CONSULTANT”). The following recitals are a substantive portion of this Agreement and are fully incorporated herein by this reference: RECITALS A. CITY intends to inspect its sanitary sewer mains(the “Project”) and desires to engage a consultant to provide CCTV Sanitary Sewer Main inspections and condition assessment services 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. 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 Docusign Envelope ID: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 5  Packet Pg. 138 of 320  Professional Services Rev. Oct 16,2024 Page 2 of 22 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 June 30, 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 Eight Hundred Fifty- Three Thousand One Hundred Thirty-Eight Dollars and Sixty Cents ($853,138.60). 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 Eighty-Five Thousand Three Hundred Thirteen Dollars and Zero Cents ($85,313.00) 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 Nine Hundred Thirty-Eight Thousand Four Hundred Fifty-One Dollars and Sixty Cents ($938,451.60), as detailed in Exhibit C. Docusign Envelope ID: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 6  Packet Pg. 139 of 320  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: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 7  Packet Pg. 140 of 320  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: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 8  Packet Pg. 141 of 320  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 Mike Schratz 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 Darija Borkovic, Utilities Department, WGW Engineering Division, 1007 Elwell Court, Palo Alto, CA 94303, Telephone: 650-566-4507. 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. SECTION 15. AUDITS. CONSULTANT agrees to permit CITY and its authorized Docusign Envelope ID: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 9  Packet Pg. 142 of 320  Professional Services Rev. Oct 16,2024 Page 6 of 22 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 CONSULTANT retained to perform Services under this Agreement will obtain and maintain, in Docusign Envelope ID: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 10  Packet Pg. 143 of 320  Professional Services Rev. Oct 16,2024 Page 7 of 22 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, 27, 28, 29 and 30. Docusign Envelope ID: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 11  Packet Pg. 144 of 320  Professional Services Rev. Oct 16,2024 Page 8 of 22 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 information or condition, housing status, marital status, familial status, weight or height of such Docusign Envelope ID: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 12  Packet Pg. 145 of 320  Professional Services Rev. Oct 16,2024 Page 9 of 22 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 the Charter of the City of Palo Alto and the Palo Alto Municipal Code, as amended from time to Docusign Envelope ID: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 13  Packet Pg. 146 of 320  Professional Services Rev. Oct 16,2024 Page 10 of 22 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 indirectly, pursuant to this Agreement. Confidential Information excludes information that Docusign Envelope ID: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 14  Packet Pg. 147 of 320  Professional Services Rev. Oct 16,2024 Page 11 of 22 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 all prior agreements, negotiations, representations, statements and undertakings, either oral or Docusign Envelope ID: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 15  Packet Pg. 148 of 320  Professional Services Rev. Oct 16,2024 Page 12 of 22 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: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 16  Packet Pg. 149 of 320  Professional Services Rev. Oct 16,2024 Page 13 of 22 CONTRACT NO. C27196575 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 PRESIDIO SYSTEMS, INC. Officer 1 By: ________________________________ Name: ______________________________ Title: _______________________________ Officer 2 (Required for Corp. or LLC) By: ________________________________ Name: ______________________________ Title: _______________________________ Docusign Envelope ID: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Joe Schratz President Kris Schratz CEO Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 17  Packet Pg. 150 of 320  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. 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: Year 1 – Project Initiation, Planning, Closed-Circuit Television (CCTV) Inspection A) Conduct a kickoff meeting with CITY staff within 1 week after Notice to Proceed has been issued. B) Weekly progress meetings. C) Provide all required traffic control devices based on the latest version of the Manual Uniform Traffic Control Devices (MUTCD). D) Establish safety, reporting, and communication protocols. E) All staff carrying out CCTV inspection work must have currently active National Association of Sewer Service Companies (NASSCO) certification credentials. F) Clean sewer mains & perform CCTV inspection and provide Pipe Assessment and Certification Program (PACP) pipe rating report for each individual pipe segment, based on latest NASSCO standards. G) Clean and inspect a total of 78,929 linear feet (LF) total in Year 1, from the list of pipeline segments designated by CITY, broken down as follows: a. Size 6”-8” = 54,540 LF; b. Size 10”-12” = 12,793 LF, c. Size > 12” and <= 18” = 11,596 LF Task 2: Year 2 – Project Planning and CCTV Inspection A) Weekly progress meetings. B) Provide all required traffic control devices based on the latest version of the MUTCD. C) Establish safety, reporting, and communication protocols. D) All staff carrying out CCTV inspection work must have currently active NASSCO certification credentials. E) Clean sewer mains & perform CCTV inspection and provide PACP pipe rating report for each individual pipe segment, based on latest NASSCO standards. F) Clean and inspect a total of 73,905 LF total in Year 2, from the list of pipeline Docusign Envelope ID: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 18  Packet Pg. 151 of 320  Professional Services Rev. Oct 16,2024 Page 15 of 22 segments designated by CITY, broken down as follows: a. Size 6”-8” = 55,591 LF b. Size 10”-12” = 8,513 LF c. Size > 12” and <= 18” = 9,441 LF Task 3: Year 3 – Project Planning, Closed-Circuit Television (CCTV) Inspection A) Weekly progress meetings. B) Provide all required traffic control devices based on the latest version of the MUTCD. C) Establish safety, reporting, and communication protocols. D) All staff carrying out CCTV inspection work must have currently active NASSCO certification credentials. E) Cleaning sewer mains & CCTV inspection with overall Pipe Assessment and Certification Program (PACP) pipe rating reports, based on latest National Association of Sewer Service Companies (NASSCO) standards. F) Clean and inspect a total of 77,744 LF total in Year 3, from the list of pipeline segments designated by CITY, broken down as follows: a. Size 6”-8” = 45,858 LF b. Size 10”-12” = 12,887 LF c. Size > 12” and <= 18” = 18,999 LF Deliverables: A) Submittals B) Daily progress updates. C) Monthly completed CCTV video footage file for each inspected sewer main pipeline segment saved with approved naming convention, to be delivered via cloud services or thumb-drive. D) Complete pipeline inspection reports. E) Weekly Excel spreadsheet log of showing completed CCTV pipeline segments. F) Monthly progress payment invoices. G) Final report (annually) including overall pipe rating of each pipe segment per latest NASSCO standards. Docusign Envelope ID: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 19  Packet Pg. 152 of 320  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: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 20  Packet Pg. 153 of 320  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. Milestones Number of Days/Weeks (as specified below) 1. Year 1 (FY 2027)50 working days between September to November 2. Year 1 (FY 2027) Kick off meeting 5 working days after issuance of Notice to Proceed 3. Year 1 (FY 2027) Submittals 5 working days after issuance of Notice to Proceed 4. Year 2 (FY 2028)105 working days between April to November 5. Year 3 (FY 2029)105 working days between April to November 6. Year 3 (FY 2029) Final Report showcasing all 3 years of sewer main payment invoice 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: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 21  Packet Pg. 154 of 320  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 number of linear feet (LF) of pipelines cleaned and inspected shown on the Scope of Services attached as Exhibit A, multiplied by the cost per LF shown 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 TASK NOT TO EXCEED AMOUNT 853,138.60 0 Total for Services and Reimbursable Expenses $853,138.60 Maximum Total Compensation $938,451.60 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: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 22  Packet Pg. 155 of 320  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: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 23  Packet Pg. 156 of 320  Professional Services Rev. Oct 16,2024 Page 20 of 22 EXHIBIT C-1 SCHEDULE OF RATES CONSULTANT’s schedule of rates is as follows: Year 1 CCTV Inspection: Cleaning $2.00 per LF Inspection $1.70 per LF Year 2 CCTV Inspection: Cleaning $2.00 per LF Inspection $1.70 per LF Year 3 CCTV Inspection: Cleaning $2.00 per LF Inspection $1.70 per LF Docusign Envelope ID: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 24  Packet Pg. 157 of 320  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@PaloAlto.Gov 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. B. CROSS LIABILITY Docusign Envelope ID: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 25  Packet Pg. 158 of 320  Professional Services Rev. Oct 16,2024 Page 22 of 22 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@PaloAlto.Gov Docusign Envelope ID: CE5CFB09-C0CD-8D71-81FD-29F4BA479588 Item 9 Attachment A - Presidio Systems, Contract No. C27196575        Item 9: Staff Report Pg. 26  Packet Pg. 159 of 320  Bid Summary: 3 year CCTV Inspection project; WC-26001; RFP#26196575 Bid date: 4/14/2026 Year Current Budget Engineer's Estimate Selected Vendor's Total Base bid Bid / Budget difference AIMS Ceterra Pipe and Plant Summit Pipelines Murgreen Enviromental National Plant Presidio Systems Video Inspection Specialist Sewer Tech FY'27 $360,000.00 $300,000.00 $292,037.30 $67,962.70 $735,618.28 $690,628.75 $493,306.25 $464,102.52 $442,791.69 $348,076.89 $292,037.30 $207,583.27 $197,322.50 FY'28 $380,000.00 $300,000.00 $273,448.50 $106,551.50 $694,707.00 $646,668.75 $484,816.80 $434,561.40 $414,607.05 $328,138.20 $273,448.50 $194,370.15 $184,762.50 FY'29 $400,000.00 $300,000.00 $287,652.80 $112,347.20 $839,635.20 $880,260.00 $536,433.60 $592,714.38 $436,143.84 $445,609.48 $287,652.80 $204,466.72 $194,360.00 TOTAL $1,140,000.00 $900,000.00 $853,138.60 $286,861.40 $2,269,960.48 $2,217,557.50 $1,514,556.65 $1,491,378.30 $1,293,542.58 $1,121,824.57 $853,138.60 $606,420.14 $576,445.00 LIST OF VENDORS Item 9Attachment B - 3-year CCTVBid Summary       Item 9: Staff Report Pg. 27  Packet Pg. 160 of 320  City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: IT Department Meeting Date: June 8, 2026 Report #:2511-5465 TITLE Approval of Amendment No. 1 with Eight Professional Services Contracts for IT On-Call Services: Contract C26193247A INSPYR Solutions, C26193247B with AgreeYa Solutions, C26193247C with TechLink Systems, C26193247D with Compunnel Software Group, C26193247E with Progile Tech Inc, C26193247F with Omm IT Solutions, C26193247G with Infojini Inc, and C26193247H with California Creative Solutions Inc., to Increase the Not-to-Exceed Amount by $1.5 Million and Extend the Term through June 30, 2027; CEQA Status – Not a Project RECOMMENDATION Staff recommends that the City Council authorize the City Manager or their designee to execute Amendment No. 1 to eight on-call professional services contracts for IT on-call services with the vendors listed above, for a one-year term, in an amount Not-to-Exceed $1,500,000 annually. The revised total contract not-to-exceed amount of $3.0 million. BACKGROUND On June 17, 2025, the City Council approved eight on-call IT professional services contracts for an initial one-year term from July 1, 2025, through June 30, 2026, with four optional one-year extensions1. These four optional one-year extensions allow the City to regularly review service levels and resource needs. Year 1 is nearing completion and staff recommends approval of Amendment No. 1 to extend the contracts for a second-year from July 1, 2026, through June 30, 2027. In total, $0.8 million has been authorized via task orders in year 1; the table below represents some of the major accomplishments from FY26 utilizing these on-call contracts. 1 June 17, 2025 City Council Staff Report: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=17567 Item 10 Item 10 Staff Report        Item 10: Staff Report Pg. 1  Packet Pg. 161 of 320  Table 1. FY26 IT On-Call Projects by Funding Source Funding Source / Department Amount Task Orders Utilities Department $374,436 Fiber to the Premises (FTTP) support and project delivery FTTP Phase 1 Pilot project management, systems and process workflows, fiber work orders, field investigations, and 3GIS support Fiber project coordination, including engineering, construction oversight, permitting, regulatory compliance, make-ready coordination, testing, acceptance, and asset documentation Information Technology Department (ITD) $343,000 Citywide IT operations and technology improvements Interactive dashboards and API/webservices integrations to support cross-functional business needs Technician support for City laptop replacement / upgrade project augmenting City staff as needed Coordination of cross-department technology initiatives and related reporting tools Planning & Development Services $20,000 Development of Power BI dashboards that provide interactive, performance-focused monitoring and reporting Recognizing the continuing and evolving need for specialized IT support across multiple departments, the Information Technology Department (ITD) issued a Request for Proposals (RFP) in early 2025 to establish a pool of qualified vendors capable of providing IT on-call services from July 1, 2025, through June 30, 20303. The on-call structure allows the City to access skilled IT resources on an as-needed, limited-term basis while maintaining flexibility to scale work up or down based on City needs and budget. The total combined spending across all 8 contracts shall not exceed $1,500,000 annually. No vendor is guaranteed a minimum amount of work. Services will be issued through task orders with defined scope, schedule, and price. ANALYSIS Continuation of on-call IT contracts are critical, as demand for support is increasing for enhanced capabilities such as infrastructure support, disaster recovery, application development, compliance, workflow automation, interactive dashboards, SharePoint and collaboration improvements, and stronger data management and governance. These on-call 3 2025 RFP: https://procurement.opengov.com/portal/palo-alto-ca/projects/141382/addenda Item 10 Item 10 Staff Report        Item 10: Staff Report Pg. 2  Packet Pg. 162 of 320  contracts are planned to support multiple initiatives underway or scheduled to begin in FY 2027. Estimated needs for FY 2027 include: Citywide IT operations and technology improvements (funded in the Information Technology fund; estimated cost is $400K for cybersecurity, power platform development, and deployment of device replacement cycle) Data analytics and dashboard development funded by the Information Technology fund as well as other city departmental funds as requested (utilities and development center; estimated cost is $200K for BI development) Fiber to the premises project customer onboarding, installation, and customer interface funded by the Fiber Fund (estimated cost is $500K for broadband and project coordinators) Contractors will be selected for each task order based on resource availability, relevant expertise, and alignment with project requirements. Staff will evaluate each task order’s scope of work, contractor experience, and billing rates to ensure they are appropriate and cost-effective. Department directors or their designees will approve all task orders, including contractor selection and budget adherence. City Manager or designee will approve any task order over $100,000. Project managers will manage deliverables and budgets, review work products, and approve invoices only after confirming that billed hours match work performed and that deliverables meet City standards. Item 10 Item 10 Staff Report        Item 10: Staff Report Pg. 3  Packet Pg. 163 of 320  FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW LINKS INSPYR Solutions, Contract Number C26193247A5 AgreeYa Solutions, Contract Number C26193247B6 TechLink Systems, Contract Number C26193247C7 Compunnel Software Group, Contract Number C26193247D8 Progile Tech, Contract Number C26193247E9 Omm IT Solutions, Contract Number C26193247F10 5 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/it-on- call/2026/c26193247a.pdf 6 AgreeYa Solutions, Contract Number C26193247B 7 TechLink Systems, Contract Number C26193247C 8 Compunnel Software Group, Contract Number C26193247D 9 Progile Tech, Contract Number C26193247E 10 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/it-on- call/2026/c26193247f.pdf Item 10 Item 10 Staff Report        Item 10: Staff Report Pg. 4  Packet Pg. 164 of 320  Infojini, Contract Number C26193247G17 California Creative Solutions, Contract Number C26193247H18 APPROVED BY: Darren Numoto, Chief Information Officer; Lisa Bolger, Assistant Director Information Technology/CTO 17 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/it-on- call/2026/c26193247g.pdf 18 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/it-on- call/2026/c26193247h.pdf Item 10 Item 10 Staff Report        Item 10: Staff Report Pg. 5  Packet Pg. 165 of 320  9 8 7 4 CITY COUNCIL Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Planning and Development Services Meeting Date: June 8, 2026 Report #: 2604-6292 TITLE QUASI-JUDICIAL. 405 Kipling Street [25PLN-00322] Approval of a Record of Land Use Action to Upgrade the Property Located at 405 Kipling Street From a Category 4 Resource on the Local Historic Inventory to a Category 2 Resource. CEQA Status: Not a Project Pursuant to Public Resources Code Section 21065. RECOMMENDATION Staff and the Historic Resources Board (HRB) recommend that City Council reclassify the building from a Category 4 resource to a Category 2 resource on the Palo Alto Historic Resources Inventory. BACKGROUND This report and Record of Land Use Action (Attachment B) provide background and support for the HRB’s April 9, 2026, recommendation to upgrade the two-story residential building, located at 405 Kipling Street, from Historic Inventory Category 4 to Category 2. The HRB staff report1 included the consultant’s assessment and inventory form. These documents are also available on the project webpage (Attachment C). The property at 405 Kipling Street is situated on a flat rectangular corner parcel that is 112 feet deep and 53 feet wide in the Downtown North Neighborhood. The two-story residential building was built by H.L. Upham in 1897 and exemplifies the early Palo Alto Two-Story Square Box building type with stylistic elements of Queen Anne. The property appears to have been minimally altered from its original style, form, and massing. The building at 405 Kipling Street, was first evaluated and added to the local historic inventory in 1985 as a Category 4 resource for its architecture. While originally constructed as a single- family residence, the property has undergone several changes in use. By 1901, rooms were rented to lodgers and Stanford University students. Around 1955, William P. Wreden converted 1 Link to April 9, 2026 HRB staff report with consultant assessment and inventory form: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=19597 Item 11 Item 11 Staff Report        Item 11: Staff Report Pg. 1  Packet Pg. 166 of 320  9 8 7 4 the property to commercial use for his antiquarian bookstore, though it is unclear whether the entire building was used or if any residential use remained. By 1970, Chimaera Books and Music occupied both floors. In 1999, Chimaera relocated to Redwood City. Since that time the building has been used for residential use. ANALYSIS FISCAL/RESOURCE IMPACT Item 11 Item 11 Staff Report        Item 11: Staff Report Pg. 2  Packet Pg. 167 of 320  9 8 7 4 the transfer of development rights to another site, reflected in reassessed property tax revenues; however, that value cannot be quantified at present. PUBLIC COMMENTS ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 11 Item 11 Staff Report        Item 11: Staff Report Pg. 3  Packet Pg. 168 of 320  7 7-11 93.0' 37.5' 105.5' 37.5' 105.5' 37.5' 105.5' 37.5' 105.5' 93.0' 105.5' 93.0' 105.5' 168.0' 112.5' 168.0' 112.5' 50.0' 57.0' 71.5' 43.0'50.0' 88.0' 125.0' 93.0' 30.0' 75.0'40.0' 112.5' 40.0' 112.5'50.0' 112.5' 50.0' 112.5' 50.0' 112.5' 50.0' 112.5' 36.0' 95.0' 36.0' 95.0' 39.0' 37.5' 18.0' 75.0' 57.0' 112.5' 107.0' 107.0' 50.0'107.0' 107.0' 25.0' 125.0' 37.5' 25.0' 112.5' 50.0' 112.5' 14.0'17.5'36.0' 130.0' 50.0' 218.0' 218.0' 45.0' 112.5' 45.0' 112.5' 45.0' 105.5' 110.0'100.0' 25.0' 37.5' 37.5' 112.5' 30.0' 75.0' 30.0' 75.0' 50.0' 112.5' 112.5'40.0' 112.5' 40.0' 112.5'60.0' 112.5' 60.0' 112.5' 60.0' 112.5' 60.0' 112.5' 60.0' 112.5' 60.0' 112.5' 50.0' 35.0' 62.5' 35.0' 62.5' 83.0' 62.5'83.0' 62.5' 118.0' 62.5' 118.0' 62.5' 118.0' 100.0'118.0' 100.0' 112.5' 100.0' 130.5' 93.0' 112.5' 93.0' 112.5' 100.0' 112.5' 100.0' 112.5'53.0' 112.5' 53.0' 112.5' 65.0' 112.5' 100.0' 112.5' 100.0' 112.5' 100.0' 112.5' 100.0' 112.5' 100.0' 112.5' 100.0' 130.5' 130.5' 130.5' 405 437 463 480 530 405 431 433 437 440 336 360 425 489- 499 411 411 421 340 344 348 325 327 333 335 337 425 419 405 401 450 407 423 443 451 463 440 430 431 444 351349 361 457 451 465 420 430 342 340 338 450 KIPLING STREET LYT T O N A V E N U E WAVERLEY STREET COWPER STREET KIPLING STREET UNIVERSITY AVENUE LAN E 3 0 Lot T This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend Project Site 0' 70' Attachment A Location Map 405 Kipling Street CITY OF PALO ALTO I NCO R P O R A TE D CALI FORNIA P a l o A l t o T h e C i t y o f APRI L 1 6 189 4 The City of Palo Alto assumes no responsibility for any errors ©1989 to 2016 City of Palo Alto sswitze, 2026-04-01 08:32:10 (\\cc-maps\Encompass\Admin\Personal\Planning.mdb) Item 11 Attachment A - Location Map        Item 11: Staff Report Pg. 4  Packet Pg. 169 of 320  1 APPROVAL NO. 2025- On June 8, 2026, the Council held a duly noticed public hearing and, after considering all of the evidence presented, approved the property owner’s request to reclassify the residential building at 405 Kipling Street currently a Local Category 4 Historic Resource. The Council approved the Historic Resources Board (HRB) recommendation to an upgraded level, Category 2 Historic Resource on the City of Palo Alto Historic Resources Inventory. In approving the application, the Council made the following findings, determination, and declarations: SECTION 1. Background. A. On December 2, 2025, the property owner contacted staff to request a reclassification of a two-story residential building at 405 Kipling Street, built by H.L. Upham in 1897 and exemplifies the early Palo Alto Two-Story Square Box building type with stylistic elements of Queen Anne, from a ‘Contributing Building’ Category 4 resource to a ‘Major Building’ Category 2 resource on the Palo Alto Historic Inventory. With the owner’s request and funding, staff obtained a historic resource evaluation from the City’s consultant, Page & Turnbull, including an integrity evaluation to understand building’s eligibility for a classification upgrade. The historic resource evaluation supports a classification upgrade to a Category 2 historic resource. The consultant describes the building’s eligibility in a report dated June 10, 2025, noting its eligibility under local criteria 2, 5, and 6: Criterion 2 (The structure or is particularly representative of an architectural style or way of life important to the city, state or nation) 405 Kipling Street is an early example of the Two-Story Square Box house type in Palo Alto’s Downtown North neighborhood. The Two-Story Square Box is a Palo Alto residential house type that mixed familiar forms and finishes of the Colonial Revival, Queen Anne Free Classic, and sometimes Craftsman styles in later examples. 405 Kipling Street does meet the requirements of Criterion 2. Criterion 5 (The architect or building was important) H.L. Upham was a builder of merit who made important contributions to the early built environment of Palo Alto. Upham designed and built numerous larger high- style residences in Palo Alto, including many TwoStory Box house types. The subject building is a minimally altered example of H.L. Upham’s contributions to the high-quality housing stock during Palo Alto’s early period of development. 405 Kipling Street does meet the requirements of Criterion 5. Criterion 6 (The structure or site contains elements demonstrating outstanding attention to architectural design, detail, materials or craftsmanship) Item 11 Attachment B - Draft Record of Land Use Action        Item 11: Staff Report Pg. 5  Packet Pg. 170 of 320  2 The building’s wood windows and shiplap siding are common in buildings constructed in the late 19th and early 20th centuries, elements such as the molded cornice and eave returns, decorative carved corbels, fish scale cladding, Tuscan columns, and multi-lite porch window are examples of attention to architectural design, detail, materials, and craftsmanship implemented by builder-of-merit H.L. Upham. 405 Kipling Street does meet the requirements of Criterion 6. B. On April 9, 2026, the HRB received a staff report (ID #2603-6180), conducted a public hearing, and concurred with the consultant’s evaluation regarding the building’s eligibility for category upgrade from the current local historic inventory Category 4 to Category 2. SECTION 2. Environmental Review. Pursuant to Section 21065 of the California Environmental Quality Act (CEQA) Guidelines, the maintenance or reclassification of a property’s historic designation does not constitute a project under CEQA. SECTION 3. Designation Findings. A. The following criteria, as specified in Municipal Code Section 16.49.040 (b), shall be used as criteria for designating historic structures/sites to the historic inventory: 1. The structure or site is identified with the lives of historic people or with important events in the city, state or nation; 2. The structure or site is particularly representative of an architectural style or way of life important to the city, state or nation; 3. The structure or site is an example of a type of building which was once common, but is now rare; 4. The structure or site is connected with a business or use which was once common, but is now rare; 5. The architect or building was important; 6. The structure or site contains elements demonstrating outstanding attention to architectural design, detail, materials or craftsmanship. The building at 405 Kipling Street met many of the above criteria when it was first listed on Palo Alto’s Historic Resource Inventory in 1985. With the historic assessment in 2025, the building’s status as a historic resource has remained per Page & Turnbull’s conclusion. B. The definition of Category 2 in Municipal Code Section 16.49.020 (b) must be met to allow the upgrade to the structure’s category designation: Category 2 Definition: "Major building" means any building or group of buildings of major regional importance, meritorious works of the best architects or an outstanding Item 11 Attachment B - Draft Record of Land Use Action        Item 11: Staff Report Pg. 6  Packet Pg. 171 of 320  3 example of an architectural style or the stylistic development of architecture in the state or region. A major building may have some exterior modifications, but the original character is retained. The applicant requested and the consultant found Category 2 appropriate for this building. Page & Turnbull historic consultant supported applicant’s request. The City’s consultant found the building at 405 Kipling Street meets the Palo Alto Inventory Category 2 Definition. The integrity evaluation found that the building at 405 Kipling Street retains all seven aspects of integrity (location, setting, design, materials, workmanship, feeling, and association). The minor exterior modifications cited in the consultant’s report have not caused the building to lose its original character. National Register of Historic Places and California Register of Historical Resources listing: 405 Kipling Street is currently listed in the City of Palo Alto Historic Inventory as a Category 4: “Contributing Building.” It was surveyed for the Historic Resources Inventory and added to the local register in 1985. SECTION 4. Category Upgrade Approved. The City Council approves the property owner’s request for re-classification of 405 Kipling Street to a Category 2 historic resource on the City’s Historic Resources Inventory. // // // // // // // // // // // Item 11 Attachment B - Draft Record of Land Use Action        Item 11: Staff Report Pg. 7  Packet Pg. 172 of 320  4 INTRODUCED AND PASSED: June 8, 2026 Item 11 Attachment B - Draft Record of Land Use Action        Item 11: Staff Report Pg. 8  Packet Pg. 173 of 320  ATTACHMENT C Project Plans In order to reduce paper consumption, a limited number of hard copy project plans are provided to Councilmembers for their review. The same plans are available to the public, at all hours of the day, via the following online resources. Directions to review Project plans online: 1. Go to: https://www.paloalto.gov/Departments/Planning-Development- Services/Development-Services/Palo-Alto-Permit-View 2. Scroll down to find “405 Kipling Street” and click the address link. 3. On this project specific webpage, you will find a link to the project plans and other important information. Project Website: https://www.paloalto.gov/Departments/Planning-Development-Services/Current- Planning/Projects/405-Kipling-Street Item 11 Attachment C - Project Plans        Item 11: Staff Report Pg. 9  Packet Pg. 174 of 320  CITY COUNCIL Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Planning and Development Services Meeting Date: June 8, 2026 Report #: 2604-6277 TITLE QUASI-JUDICIAL. 3980 El Camino Real (Buena Vista) [26PLN-00090]: Request for a Final Map to Subdivide a Single, 4.52-Acre Parcel into Two Parcels. The Subdivision would Facilitate Renovation of the Buena Vista Mobile Home Park as well as Future Construction of a 100% Affordable Apartment Building on the Resulting Parcels (24PLN-00041). A Tentative Map was Previously Approved on August 12, 2024. CEQA Status: Not a Project. RECOMMENDATION Staff recommends that the City Council approve the Final Map (Attachment B), which is in Substantial Compliance with the Vesting Tentative Map Approved on August 12, 2024, pursuant to Palo Alto Municipal Code (PAMC) Section 21.16 and the Subdivision Map Act. BACKGROUND On April 30, 2024, the Santa Clara County Housing Authority (SCCHA), filed a Vesting Tentative Map application (24PLN-00129) concurrently with a Streamlined Housing Development review application (24PLN-00041) in relation to the Buena Vista Mobile Home Park. In accordance with the PAMC Section 21.13 Vesting Tentative Map, the map application was deferred until all other entitlements were approved. The Planning and Transportation Commission reviewed and recommended approval of the Vesting Tentative Map on July 10, 2024, and City Council approved the Vesting Tentative Map on August 12, 2024, along with the associated entitlements for the proposed improvements. The Record of Land Use Action (RLUA 2024-13) is included in Attachment A. On April 21, 2026, SCCHA filed a Final Map application. The Final Map application is the second of a two-phased process to subdivide the existing 196,918-square-foot (4.52 acre) parcel into two resulting parcels. The Final Map is the official legal document recorded with Santa Clara County that establishes the property lines and easements within the subdivision. The Final Map must be prepared under the direction of a registered civil engineer or a licensed land surveyor and be based on a survey. Approval of a Final Map is ministerial if the Final Map is in substantive compliance with the approved Vesting Tentative Map and the subdivider has satisfied the conditions of approval attached to the Tentative Map. While many cities delegate Item 12 Item 12 Staff Report        Item 12: Staff Report Pg. 1  Packet Pg. 175 of 320  approval of the Final Map to the City Engineer, under PAMC Section 21.16.240, the City Council is responsible for the approval in Palo Alto. ANALYSIS FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT Item 12 Item 12 Staff Report        Item 12: Staff Report Pg. 2  Packet Pg. 176 of 320  ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 12 Item 12 Staff Report        Item 12: Staff Report Pg. 3  Packet Pg. 177 of 320  ACTION NO. 2024-13 RECORD OF THE COUNCIL OF THE CITY OF PALO ALTO LAND USE ACTION FOR 3980 El CAMINO REAL: STREAMLINED HOUSING DEVELOPMENT AND VESTING TENTATIVE MAP [24PLN-00041; 24PLN-00129] At its meeting on August 12, 2024, the City Council of the City of Palo Alto (“City Council”) approved the Streamlined Housing Development Review for a 61-unit residential rental development and Vesting Tentative Map for the development of a subdivision to create two lots, making the following findings, determinations and declarations: SECTION 1. Background. A. On February 15, 2024, Santa Clara County Housing Authority (SCCHA) applied for a Streamlined Housing Development Review application for a 61-unit residential rental development, including the following density bonus waivers and concessions in accordance with state density bonus law: • Density Bonus: 80% increase in density from 20 du/ac to 36 du/ac • Concession 1: Façade Breaks • Concession 2: Ground Floor Unit Direct Connection to Path or Common Open Space • Concession 3: Percentage of Frontage Dedicated to Utilities and Parking • Concession 4: Private Open Space (None where 50 sf per unit is required) • Waiver 1: Floor Area Ratio (1.01:1 where 0.5:1 is allowed) • Waiver 2: Height (37 feet where 30 feet is allowed) • Waiver 3: Site Open Space (24% where 35% is required) • Waiver 4: Tree Canopy Cover in Parking Lot (future coverage of 47% where 50% is required) • Waiver 5: Reduction in Street Trees (none provided along the mobile home project frontage [due to Valley Water easement restrictions] where one per every 30 feet is required. B. On April 30, 2024, SCCHA applied for a Vesting Tentative Map for the development to subdivide one (1) existing 4.5-acre lot into two parcels (1.69-acres and 2.81 acres). The 61-unit apartment complex would be developed on the resulting 1.69-acre parcel; the 2.81-acre parcel would be redeveloped with 44 mobile home units, which would be processed through the state (“The Project”). C. The project site is comprised of one existing lot (APN No. 127-11-103) of approximately 4.5 Acres (196,020 sf). The site contains a multi-family development with seventy-nine (79) residential units, seventy-five (75) of which are occupied. Single family Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 4  Packet Pg. 178 of 320  residential uses abut the site to the north. Multi-family residential units abut the site to the west, and across Los Robles Avenue to the South. Commercial uses abut the site to the east along El Camino Real. D. Following submittal of the application, Council held a study session on March 4, 2024 to provide early input on the proposed development and to provide an opportunity to hear comments from the public. E. Following staff review, the Architectural Review Board reviewed the project at a study session on May 2, 2024, to provide feedback on the design for the streamlined housing development review application. F. Following the Architectural Review Board hearing, the applicant resubmitted revised plans for the streamlined housing development review application on May 29, 2024. G. Following staff review of the Vesting Tentative Map, the Planning and Transportation Commission reviewed the project and recommended approval on July 10, 2024, subject to conditions of approval. H. On June 18, 2024 the City Council held a duly noticed public hearing, at which evidence was considered and all persons were afforded an opportunity to be heard in accordance with the City Council’s policies and procedures. I. On August 12, 2024 the City Council held a duly noticed public meeting at which evidence was considered and all persons were afforded an opportunity to be heard in accordance with the City Council’s policies and procedures SECTION 2. Environmental Review. The City, acting as the lead agency for the Project, has determined that the project is exempt from the California Environmental Quality Act (CEQA) in accordance with CEQA Guideline section 15332, which provides an exemption for infill development projects. Documentation to support the exemption is available as part of the public record on file with the Planning and Development Services Division. SECTION 3. Streamlined Housing Development Review. The design and architecture of the proposed improvements, as conditioned, complies with the Streamlined Housing Development Project Review Process Findings as required in Chapter 18.77.073 of the PAMC. Neither the Director, nor the City Council on appeal, shall approve an application unless it is found that: Finding #1: The application complies with all applicable and objective standards in the Comprehensive Plan, the Palo Alto Municipal Code, and other City plans or policies. The proposed project complies with all applicable and objective standards in the Comprehensive Plan and the Palo Alto Municipal Code as detailed in the Council staff report Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 5  Packet Pg. 179 of 320  (Staff report ID #2248-3347) except where waivers or concessions are requested pursuant to state density bonus law. In accordance with The Housing Accountability Act as set forth in California Government Code 65589.5(j)(3), the receipt of a density bonus, incentive, concession, waiver, or reduction of development standards pursuant to Se ction 65915 shall not constitute a valid basis on which to find a proposed housing development project is inconsistent, not in compliance, or not in conformity, with an applicable plan, program, policy, ordinance, standard, requirement, or other similar provision. Therefore, for the project is compliant with the objective standards. A summary of the project’s consistency with the Comprehensive Plan is provided in this table. The project is required to comply with the Comprehensive Plan to the extent that t he requirements are objective. Comp Plan Goals and Policies How project adheres or does not adhere to Comp Plan The Comprehensive Plan land use designation for the site is Multi-family Residential which allows for densities ranging from 8 to 40 units per acre The project adheres to the Comprehensive Plan by providing multi-family housing on a multi-family use site. The proposed density is 36 units per acre which is consistent with this comprehensive plan land use designation. Housing Element Policy 4.3 Implement development standards, objective design standards, and architectural and green building standards that encourage new high-quality rental and ownership housing. The project complies with the implemented standards except where requests for waivers or concessions in accordance with state density bonus law is provided. The project provides the necessary upgrades to deteriorating infrastructure on the site and updates to the units to provide new high- quality rental and ownership units while maintaining the affordability level. Land Use and Community Design Element Policy L-2.8: When considering infill development, work to minimize the displacement of existing residents The project is an infill project. A full relocation plan has been presented to all tenants and creates options for ownership or rental. The project replaces more units than it removes. Policy L-9.2 Encourage development that creatively integrates parking into the project, including by locating it behind buildings or underground wherever possible, or by providing for shared use of parking areas. Encourage other alternatives to surface parking lots that minimize the amount of While the project proposes surface parking, the parking is located at the side of the building and is not located between the building and the street. The frontage is still provides a sidewalk and bike lane and provides street trees and other greenery along the frontage. Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 6  Packet Pg. 180 of 320  land devoted to parking while still maintaining safe streets, street trees, a vibrant local economy and sufficient parking to meet demand. Policy L-9.4 Treat residential streets as both public ways and neighborhood amenities. Provide and maintain continuous sidewalks, healthy street trees, benches and other amenities that promote walking and “active” transportation. The project includes a new sidewalk and street trees as well as new bicycle parking within the project setback area that promotes active transportation. This improves the current design, which provides parking along the project frontage and does not include a sidewalk. Transportation Element Policy T-3.7 Encourage pedestrian-friendly design features such as sidewalks, street trees, on-street parking, gathering spaces, gardens, outdoor furniture, art and interesting architectural details. The project includes direct connections to the sidewalk that help to activate the frontage along Los Robles Avenue in addition to new street trees and plantings. Policy T-3.9 Support citywide sustainability efforts by preserving and enhancing the tree canopy where feasible within the public right-of-way, consistent with the Urban Forest Management Plan, as amended. The project meets the tree canopy replacement requirements through on site planting. The project includes removal of two trees and replaces with 24 new trees where 7 24-inch box trees are required in accordance with the canopy replacement requirements. Finding #2: Approving the application will not result in a specific, adv erse, impact upon the public health or safety, which cannot feasibly be mitigated or avoided in a satisfactory manner. As used in this Section, a "specific, adverse impact" means a significant, quantifiable, direct, and unavoidable impact, based on objective, identified written public health or safety standards, policies, or conditions as they existed on the date the application was deemed complete. The proposed project would not result in a specific, adverse, impact upon public health or safety. The project complies with all applicable safety requirements with respect to fire safety for the building itself (e.g. ladder access, sprinklers) as well as emergency vehicle access to the site. The project also does not introduce any new changes to streets (e.g. new curves in a roadway) or impacts to line-of-sight that would create a safety hazard. SECTION 4. Vesting Tentative Map Findings. A legislative body of a city shall deny approval of a Parcel Map, if it makes any of the following findings (California Government Code Section 66474). The City Council cannot make these findings for the following reasons: Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 7  Packet Pg. 181 of 320  1. That the proposed map is not consistent with applicable general and specific plans as specified in Section 65451: The site is consistent with the Comprehensive Plan as described below. 2. That the design or improvement of the proposed subdivision is not consistent with applicable general and specific plans: There is no adopted specific plan for this project site. The proposed vesting tentative map and related improvements is consistent with the Comprehensive Plan in that it facilitates housing development on a site designated for multi-family use within the urban services area, consistent with Goal 2 of the Housing Element and Goal L1.2 of the Land Use Element. The proposed density (36 DU/AC) is consistent with the allowable density (20 to 40 DU/AC) in the multi-family land use designation as outlined in the Land Use Element. The project replaces 79 existing residential ownership and rental units with 61-residential rental units and 44 residential ownership units. The project would be 100% affordable with 40% of units provided at a rate affordable to households earning 30% of Area Median Income (AMI), 40% of the units provided at a rate affordable to households earning 50% AMI and the remaining 20% provided at a rate affordable to households earning 80% AMI. The project improves the city’s jobs housing imbalance consistent with the Transportation Element’s goals and policies. 3. That the site is not physically suitable for the type of development: The Project site is suitable for multi-family residential development in that it’s located within the multi-family zone district on a site designated on the City’s Land Use Map for multi-family use. The proposed resulting parcels meet the minimum code requirements for the RM-20 zone district with respect to lot area, width and depth. The proposed number of condominium units for one of the two parcels complies with the applicable densities set forth in the land use element. 4. That the site is not physically suitable for the proposed density of development: The proposed development of both parcels would create a total of one-hundred and five (105) multi-family residential units which is 23 dwelling units (DU) per acre (total project site is 4.5 acres). This density complies with the minimum and maximum allowable residential density as calculated for the total site area under the comprehensive plan (20-40 DU/acre = 90-180 DU). The newly created parcel for the rental units would have a density that exceeds the maximum allowable density for the zoning (20 DU/AC) in accordance with state density bonus law (Assembly Bill 1763) which allows for increased density based on the percentage of BMR units (80% of the base project) and their affordability level. Building, Palo Alto Fire Department, Planning, Transportation, Zero Waste, and Public Works Engineering have reviewed the requested density bonus waiver to permit a minimum 28-foot street width to ensure that all necessary requirements for safety, including but not limited to, fire safety and traffic safety Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 8  Packet Pg. 182 of 320  (e.g. curb cut location, turning radius, etc.) have been met as well as to ensure that the street allows for proper function of the site (e.g. trash pickup). 5. That the design of the subdivision or the proposed improvements are likely to cause substantial environmental damage or substantially and avoidably injure fish or wildlife or their habitat: The project is located within the built environment that does not contain quality habitat for fish or other wildlife on the site or within the vicinity of the site. An easement along the project frontage contains Barron Creek within an existing underground culvert pipe. An encroachment permit from Valley Water is required as a condition of approval of the project to ensure that the proposed work does not impact the existing infrastructure. The adopted Palo Alto 2030 Comprehensive Plan includes Map N-1, which identified sensitive animal and plant species within the Palo Alto quadrangle, a large geographic area that includes the urban portions along the bay and within the foothills, based on information in the California natural Diversity Database (CNDDB). Based on this map, and the urban nature of the site, the subject property does not contain any habitat for endangered, rare, or threatened species and has not historically supported any of these species. 6. That the design of the subdivision or type of improvements is likely to cause serious public health problems: The subdivision of this parcel and associated improvements would not have the potential to result in serious health problems. The proposed multi-family use would not include use or storage of hazardous materials and the use is located within the urban environment adjacent to other residential uses. The site is not located on a hazardous waste site pursuant to government code 65962.5. 7. That the design of the subdivision or the type of improvements will conflict with easements, acquired by the public at large, for access through or use of, property within the proposed subdivision. In this connection, the governing body may approve a map if it finds that alternate easements, for access or for use, will be provided, and that these will be substantially equivalent to ones previously acquired by the public. This subsection shall apply only to easements of record or to easements established by judgment of a court of competent jurisdiction and no authority is hereby granted to a legislative body to determine that the public at large has acquired easements for access through or use of property within the proposed subdivision: There are no public access easements over the property currently. Therefore, the d esign of the subdivision will not conflict with any public easements for access through, or use of, the property. Existing public utility easements would be vacated and new public utility easements created as part of the mapping process to reflect modifications to the location of utility infrastructure. A new public access easement would be granted over a portion of the frontage for public access on the proposed new sidewalk. An existing Valley Water easement would be Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 9  Packet Pg. 183 of 320  maintained along the frontage and any temporary or permanent improvements within that area requires an encroachment permit from valley water prior to building permit issuance. SECTION 5. Vesting Tentative Map Approval Granted. Vesting Tentative Map Approval is filed and processed in accordance to PAMC Section 21.13.020 and granted by the City Council under PAMC Sections 21.12 and 21.20 and the California Government Code Section 66474, subject to the conditions of approval in Section 8 of this Record of Land Use Action. SECTION 6. Final Map. The Final Map submitted for review and approval by the City Council shall be in substantial conformance with the Vesting Tentative Map prepared by Sandis Engineering titled “Vesting Tentative Map For a Two Lot Subdivision,” consisting of three pages, stamped as received July 1, 2024, except as modified to incorporate the conditions of approval in Section 8. A copy of the Vesting Tentative Map is on file in the Department of Planning and Development Services, Current Planning Division. Prior to the expiration of the Vesting Tentative Map approval, the subdivider shall cause the subdivision or any part thereof to be surveyed, and a Final Map, as specified in Chapter 21.08, to be prepared in conformance with the Vesting Tentative Map as conditionally approved, and in compliance with the provisions of the Subdivision Map Act and PAMC Title 21 and submitted to the City Engineer (PAMC Section 21.16.010[a]). SECTION 7. Conditions of Approval Streamlined Housing Development Review. PLANNING DIVISION 1. CONFORMANCE WITH PLANS. Construction and development shall conform to the approved plans entitled, "Buena Vista Commons 3980 El Camino Real, Palo Alto, CA 94306” stamped as received by the City on July 19, 2024 on file with the Planning Department, 250 Hamilton Avenue, Palo Alto, California except as modified by these conditions of approval. 2. BUILDING PERMIT. Apply for a building permit and meet any and all conditions of the Planning, Fire, Public Works, and Building Departments. 3. BUILDING PERMIT PLAN SET. A copy of this cover letter and conditions of approval shall be printed on the second page of the plans submitted for building permit. 4. PROJECT MODIFICATIONS. All modifications to the approved project shall be submitted for review and approval prior to construction. If during the Building Permit review and construction phase, the project is modified by the applicant, it is the responsibility of the applicant to contact the Planning Division/project planner directly to obtain approval of the project modification. It is the applicant’s responsibility to highlight any proposed changes to the project and to bring it to the project planner’s attention. 5. LANDSCAPE PLAN. Plantings shall be installed in accordance with the approved plan set and shall be permanently maintained and replaced as necessary. Landscaping along the rear lot Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 10  Packet Pg. 184 of 320  line between the project and single-family residential uses shall be planted at a minimum height of 8 feet and maintained as a landscape screen for the life of the project in accordance with the code requirements for objective standards. 6. NOISE THRESHOLDS ON RESIDENTIAL PROPERTY. In accordance with PAMC Section 9.10.030, No person shall produce, suffer or allow to be produced by any machine, animal or device, or any combination of same, on residential property, a noise level more than six dB above the local ambient at any point outside of the property plane. 7. OPEN AIR LOUDSPEAKERS (AMPLIFIED MUSIC). In accordance with PAMC Section 9.12, no amplified music shall be used for producing sound in or upon any open area, to which the public has access, between the hours of 11:00pm and one hour after sunrise. 8. NOISE REPORT AT BUILDING STAGE. An analysis of the proposed project’s compliance with the City’s noise requirements for the proposed HVAC was prepared as part of the documentation to support a Class 32 categorical exemption. At the time of building permit issuance for new construction or for installation of any such mechanical equipment, if the proposed equipment exceeds the anticipated noise level that was analyzed or is proposed in a location that is closer to the property line, the applicant shall submit an acoustical analysis by an acoustical engineer demonstrating projected compliance with the Noise Ordinance. The analysis shall be based on acoustical readings, equipment specifications and any proposed sound reduction measures, such as equipment enclosures or insulation, which demonstrate a sufficient degree of sound attenuation to assure that the prescribed noise levels will not be exceeded. 9. VALLEY WATER ENCROACHMENT PERMIT. An encroachment permit is required prior to any temporary work or permanent improvements within Valley Water’s easement. The project shall comply with any and all requirements of the encroachment permit. 10. PUBLIC ACCESS EASEMENT. A public access easement shall be required for the proposed sidewalk on private property. This may be dedicated through sep arate instrument and documented on the tentative map and final map or it may be recorded through the subdivision map process. 11. SIGN APPROVAL NEEDED. No signs are approved at this time. All signs, if proposed, shall conform to the requirements of Title 16.20 of the Palo Alto Municipal Code (Sign Code) and shall be subject to approval by the Director of Planning. 12. STANDARD REQUIREMENTS FOR UNANTICIPATED DISCOVERY OF BURIED ARCHEOLOGICAL RESOURCES. No known archeological resources are present on or within the immediate vicinity of the site. However, as noted in the project description and per the City’s standard conditions, in the unlikely event that an archeological resource is unearthed during ground disturbing activities, work in the immediate area should be halted and an archaeologist meeting the Secretary of the Interior’s Professional Qualifications Standards for archeology Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 11  Packet Pg. 185 of 320  (National Park Service 1983) shall be contacted immediately to evaluate the find. If the find is Native American in origin, then a Native American representative should also be contacted to participate in the evaluation of the find. The qualified archaeologist, and, if applicable, the Native American representative, shall examine the find and make recommendations regarding additional work necessary to evaluate the significance of the find and the appropriate treatment of the resource. Recommendations could include, but are not limited to, invasive or non-invasive testing, sampling, laboratory analysis, preservation in place, or data recovery. A report of findings documenting any data recovered during monitoring shall be prepared by a qualified archaeologist and submitted to the Director of Planning. 13. STANDARD REQUIREMENTS FOR THE PROTECTION OF NESTING BIRDS. As detailed in the project description and per the City’s standard conditions, vegetation or tree removal shall be prohibited during the general avian nesting season (February 1 – August 31), if feasible. If nesting season avoidance is not feasible, the applicant shall retain a qualified biologist, as approved by the City of Palo Alto, to conduct a preconstruction nesting bird survey to determine the presence/absence, location, and activity status of any active nests on or adjacent to the project site no more than 14 days prior to scheduled vegetation clearance and/or demolition activities. If nesting birds are found to be present, a suitable buffer (typically a minimum buffer of 50 feet for passerines and a minimum buffer of 250 feet for raptors) as determined appropriate by the biologist, shall be established around such active nests and no construction shall be allowed within the buffer areas until a qualified biologist has determined that the nest is no longer active (i.e., the nestlings have fledged and are no longer reliant on the nest). 14. STANDARD REQUIREMENTS FOR PM10 AND PM2.5 EMISSIONS. The following conditions shall be implemented during all phases of construction to control dust and exhaust at the project site in compliance with the Comprehensive Plan Policy N-5.5: • Water all exposed surfaces (e.g., parking areas, staging areas, soil piles, graded areas, and unpaved access roads) two times per day. • Cover all haul trucks transporting soil, sand, and other loose material off -site. • Remove all visible mud or dirt track out onto adjacent public roads at least once per day using wet power vacuum street sweepers. The use of dry power sweeping is prohibited. • Limit all vehicle speeds on unpaved roads to 15 miles per hour. • Pave all new roadways, driveways, and sidewalks as soon as possible. • Lay building pads as soon as possible after grading unless seeding or soil binders are used. • Suspend all excavation, grading, and/or demolition activities when average wind speeds exceed 20 miles per hour. Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 12  Packet Pg. 186 of 320  • Wash off all trucks and equipment, including their tires, prior to leaving the site. • Post a publicly visible sign with the name and phone number of an on-site construction coordinator to contact regarding dust complaints. The on-site construction coordinator shall respond and take corrective action within 48 hours. The sign shall also provide the City’s Code Enforcement Complaints email and number and the Air District’s General Air Pollution Complaints number to ensure compliance with applicable regulations. 15. CONSTRUCTION EQUIPMENT. All construction equipment larger than 25 horsepower used at the site for more than two continuous days or 20 hours total shall meet U.S. EPA Tier 4 Final emission standards for particulate matter (PM10 and PM2.5), if feasible. If Tier 4 Final equipment is not available for a particular piece of equipment, then use equipment that meets U.S. EPA emission standards for Tier 3 engines and include PM emissions control equivalent to CARB Level 3 verifiable diesel emission control devices that altogether achieve an 80 percent reduction in PM exhaust in comparison to uncontrolled equipment. 16. VIBRATION ANALYSIS. Prior to issuance of a demolition permit, a list of all heavy construction equipment to be used for this project known to produce high vibration levels (e.g., tracked vehicles, vibratory compaction, jackhammers, hoe rams, clam shovel drop, and vibratory roller, etc.) shall be submitted to the City by the contractor. This list shall be used to identify equipment and activities that would potentially generate substantial vibration and to define the level of effort for reducing vibration levels below the thresholds. • Smaller equipment (less than 18,000 pounds) shall be used near the property lines adjacent to sensitive buildings to minimize vibration levels to 0.3 in/sec PPV or less. For example, a smaller vibratory roller similar to a Caterpillar model CP433E vibratory compactor could be used when compacting materials within 20 feet of the adjacent conventional building. The smaller equipment intended to implement this requirement shall be individually identified among the list of equipment required under the above condition as the subset of equipment allowed for use at the property lines. • Select demolition methods that do not involve large impact tools such as hoe - rams within 20 feet of the adjacent conventional building. Portable jackhammers, saws, or grinders shall be used to minimize impacts to the ground. • Avoid dropping heavy equipment and use alternative methods for breaking up existing pavement, such as a pavement grinder, instead of dropping heavy objects, within 20 feet of the adjacent conventional building. • Designate a Disturbance Coordinator responsible for registering and investigating claims of excessive vibration. The contact information for the responsible party shall be clearly posted on the construction site. 17. TREE CANOPY REPLACEMENT. Replacement of the tree canopy for the 44 trees proposed Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 13  Packet Pg. 187 of 320  to be removed is required in accordance with Chapter 8 of the municipal code and the City’s Tree Technical Manual. 18. REFUSE. All trash areas shall be covered and maintained in an orderly state within the proposed covered areas to prevent water from entering into the garbage container. No outdoor storage is allowed/permitted except when brought out to the street for pickup as shown in the plan set. Trash areas shall be maintained in a manner to discourage illegal dumping. 19. REVISED REGULATORY AGREEMENT. The property is currently subject to a tri-party regulatory agreement among the City of Palo Alto, County of Santa Clara, and Santa Clara County Housing Authority that requires maintenance of at least 100 residential units or mobilehome spaces on the property. This regulatory agreement will need to be revised or replaced in order to permit construction and operation of the project. 20. BELOW MARKET RATE (BMR) HOUSING. This project is proposed as a state density bonus project and will be subject to a revised tri-party regulatory agreement between the City of Palo Alto, County of Santa Clara, and Santa Clara County Housing Authority. The project shall conform to the revsed regulatory agreement, which shall be approved and recorded prior to issuance of building permit or final map, whichever occurs first. All BMR units constructed under this condition shall be in conformance with the City’s BMR Program rules and regulations. Failure to comply with the timing of this condition and any adopted BMR Program rules and regulations shall not waive its later enforcement. 21. RENTER PROTECTIONS. The project is subject to the renter protection requirements set forth in PAMC Section 9.68.050. The applicant shall implement the relocation for existing residents in accordance with the proposed relocation plan as guaranteed in Section 5 of the revised regulatory agreement, which meets or exceeds these City requirements. 22. ESTIMATED IMPACT FEE. Because the housing is a 100% affordable housing project, development impact fees, citywide transportation impacts fees, and public art in private development fees, do not apply. 23. ENTITLEMENT EXPIRATION. The project approval shall be valid for a period of two years from the date of issuance of the entitlement. If within such two-year period, the proposed use of the site or the construction of buildings has not commenced, the Planning entitlement shall expire. Application for a one-year extension of this entitlement may be made prior to expiration. 24. FINAL INSPECTION. A Planning Division Final inspection will be required to determine substantial compliance with the approved plans prior to the scheduling of a Building Division final. Any revisions during the building process must be approved by Planning, including but not limited to; materials, landscaping and hard surface locations. Contact your Project Planner, Claire Raybould at Claire.Raybould@cityofpaloalto.org to schedule Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 14  Packet Pg. 188 of 320  this inspection. 25. INDEMNITY. To the extent permitted by law, the Applicant shall indemnify and hold harmless the City, its City Council, its officers, employees and agents (the “indemnified parties”) from and against any claim, action, or proceeding brought b y a third party against the indemnified parties and the applicant to attack, set aside or void, any permit or approval authorized hereby for the Project, including (without limitation) reimbursing the City for its actual attorneys’ fees and costs incurred in defense of the litigation. The City may, in its sole discretion, elect to defend any such action with attorneys of its own choice. PUBLIC WORKS ENGINEERING 26. PUBLIC WORKS APPLICATIONS, FORMS, AND DOCUMENTS. Applicant shall be advised that most forms, applications, and informational documents related to Public Works Engineering conditions can be found at the following link: https://www.cityofpaloalto.org/Departments/Public-Works/Engineering-Services/Forms- and-Permits 27. MAP THIRD-PARTY REVIEW. The City contracts with a third-party surveyor that will review and provide approval of the map’s technical correctness as the City Surveyor, as permitted by the Subdivision Map Act. The Public Works Department will forward a Scope & Fee Letter from the third-party surveyor and the applicant will be responsible for payment of the fee’s indicated therein, which is based on the complexity of the map. 28. STREETWORK PERMIT. The applicant shall obtain a Streetwork Permit from the Department of Public Works for all public improvements. 29. GRADING AND EXCAVATION PERMIT. A Grading Permit is required per PAMC Chapter 16.28. The permit application and all applicable documents (see Section H of application) shall be submitted to Public Works Engineering. Add the following note or similar: “THIS GRADING PERMIT WILL ONLY AUTHORIZE GENERAL GRADING AND INSTALLATION OF THE STORM DRAIN SYSTEM. OTHER BUILDING AND UTILITY IMPROVEMENTS ARE SHOWN FOR REFERENCE INFORMATION ONLY AND ARE SUBJECT TO SEPARATE BUILDING PERMIT APPROVAL.” 30. ROUGH GRADING. provide a Rough Grading Plan for the work proposed as part of the Grading and Excavation Permit application. The Rough Grading Plans shall including the following: pad elevation, elevator pit elevation, ground monitoring wells, limits of over excavation, stockpile area of material, overall earthwork volumes (cut and fill), temporary shoring for any existing facilities, ramps for access, crane locations (if any), tree protection measures, etc. 31. CIVIL ENGINEER CERTIFICATION. Upon completion of the rough grading work and at the final completion of the work, applicant shall provide an as-graded grading plan prepared by Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 15  Packet Pg. 189 of 320  the civil engineer that includes original ground surface elevations, as-graded ground surface elevations, lot drainage patterns and locations and elevations of all surface and subsurface drainage facilities. The civil engineer shall certify that the work was done in accordance with the final approved grading plan. 32. SOILS ENGINEER CERTIFICATION. Upon completion of the rough grading work and at the final completion of the work, applicant shall provide a soil grading report prepared by the soils engineer, including locations and elevation of field density tests, summaries of field and laboratory tests and other substantiating data, and comments on any changes made during grading and their effect on the recommendations made in the soils engineering investigation report. The soils engineer shall certify as to the adequacy of the site for the intended use. 33. GEOTECHNICAL ENGINEER STATEMENT. The grading plans shall include the following statement signed and sealed by the Geotechnical Engineer of Record: “THIS PLAN HAS BEEN REVIEWED AND FOUND TO BE IN GENERAL CONFORMANCE WITH THE INTENT AND PURPOSE OF THE GEOTECHNICAL REPORT”. 34. SWPPP. This proposed development will disturb more than one acre of land. Accordingly, the applicant shall apply for coverage under the State Water Resources Control Board’s (SWRCB) NPDES general permit for storm water discharge associated with construction activity. A Notice of Intent (NOI) shall be filed for this project with the SWRCB in order to obtain coverage under the permit. The General Permit requires the applicant to prepare and implement a Storm Water Pollution Prevention Plan (SWPPP). The applicant is required to submit two copies of the NOI and the draft SWPPP to the Public Works Department for review and approval prior to issuance of the building permit. The SWPPP should include both permanent, post-development project design features and temporary measures employed during construction. 35. ENCROACHMENT PERMIT. Prior to any work in the public right-of-way, the applicant shall obtain an encroachment permit from the Public Works Department for any work that encroaches onto the City right-of-way. 36. LOGISTICS PLAN. A construction logistics plan shall be provided addressing all impacts to the public including, at a minimum: work hours, noticing of affected businesses, bus stop relocations, construction signage, dust control, noise control, storm water pollution prevention, job trailer, contractors’ parking, truck routes, staging, concrete pours, crane lifts, scaffolding, materials storage, pedestrian safety, and traffic control. All truck routes shall conform to the City of Palo Alto’s Trucks and Truck Route Ordinance, Chapter 10.48, and the route map. NOTE: Some items/tasks on the logistics plan may require an encroachment permit. 37. STORMWATER POLLUTION PREVENTION. All improvement plan sets shall include the “Pollution Prevention – It’s Part of the Plan” sheet. Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 16  Packet Pg. 190 of 320  38. C.3 THIRD-PARTY CERTIFICATION. Applicant shall provide certification from a qualified third- party reviewer that the proposed permanent storm water pollution prevention measures comply with the requirements of Provision C.3 and Palo Alto Municipal Code Chapter 16.11. 39. SUBMIT THE FOLLOWING: a. Stamped and signed C.3 data form (April 2023 version) from SCVURPPP. https://scvurppp.org/wp-content/uploads/2023/04/SCVURPPP-C.3-Data-Form-_- updated__4-12-2023_clean_fillable.pdf b. Final stamped and signed letter confirming which documents were reviewed and that the project complies with Provision C.3 and PAMC 16.11. 40. C.3 STORMWATER AGREEMENT. The applicant shall enter into a Stormwater Maintenance Agreement with the City to guarantee the ongoing maintenance of the permanent storm water pollution prevention measures. The City will inspect the treatment measures yearly and charge an inspection fee. The agreement shall be executed by the applicant team prior to building permit final. 41. C.3 FINAL THIRD-PARTY CERTIFICATION PRIOR TO OCCUPANCY. Within 45 days of the installation of the required storm water treatment measures and prior to the issuance of an occupancy permit for the building, the third-party reviewer shall submit to the City a certification verifying that all the permanent storm water pollution prevention measures were installed in accordance with the approved plans.16. 42. EXISTING EASEMENTS: Provide documentation showing approval from the entities affected by the onsite easements to verify that the work within said easements is permitted. 43. PRIOR TO PUBLIC WORKS FINAL/ACCEPTANCE (STORM DRAIN LOGO): The applicant is required to paint “No Dumping/Flows to Barron Creek” in blue on a white background adjacent to all onsite storm drain inlets. The name of the creek to which the proposed development drains can be obtained from Public Works Engineering. Stencils of the logo are available from the Public Works Environmental Compliance Division, which may be contacted at (650) 329-2598. Include the instruction to paint the logos on the construction grading and drainage plan. WASTE-GAS-WATER UTILITIES The following comments are required to be addressed prior to any future related permit application such as a Building Permit, Excavation and Grading Permit, Certificate of Compliance, Street Work Permit, or Encroachment Permit: 44. The applicant must pothole and submit profiles of the water & fire services and wastewater lateral installations crossing the existing 66” storm line meeting the California Plumbing Code, CPAU WGW design standards, and Santa Clara Valley Water District (SCVWD) design Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 17  Packet Pg. 191 of 320  standards to SCVWD for review and approval. SCVWD approved design must be provided to CPAU WGW Engineering prior to submittal for any building, grading, or street permits (except permits for exploratory potholing). Design changes to the proposed city water/fire/irrigation services and/or sewer laterals and/or the onsite water and sewer system and/or off-site/on-site grading may be required based on the in-field, as built conditions of Valley Water infrastructure. PRIOR TO ISSUANCE OF DEMOLITION PERMIT (if required) 45. The applicant shall submit a request to disconnect utility services and remove meters. The utilities demo to be processed within 10 working days after receipt of request. The demolition permit will be issued by the building inspection division after all utility services and/or meters have been disconnected and removed. The existing water meter boxes and boxes for city clean-outs must be protected in place until the services are disconnected at the mains during the new service installations. FOR BUILDING PERMIT 46. The applicant shall submit a completed water-gas-wastewater service connection application - load sheet for City of Palo Alto Utilities. The applicant must provide all the information requested for utility service demands (water in fixture unit s/g.p.m., gas in b.t.u.h, and sewer in fixture units/g.p.d.). The applicant shall provide the existing (prior) loads, the new loads, and the combined/total loads (the new loads plus any existing loads to remain). 47. The applicant shall submit improvement plans for utility construction. The plans must show the size and location of all underground utilities within the development and the public right of way including meters, backflow preventers, fire service requirements, sewer mains, sewer cleanouts, sewer lift stations and any other required utilities. Plans for new wastewater laterals and mains need to include new wastewater pipe profiles showing existing potentially conflicting utilities especially storm drain pipes, electric and communication duct banks. Existing duct banks need to be daylighted by potholing to the bottom of the ductbank to verify cross section prior to plan approval and starting lateral installation. Plans for new storm drain mains and laterals need to include profiles showing existing pot ential conflicts with sewer, water and gas. 48. The applicant must show on the site plan the existence of any auxiliary water supply, (i.e. water well, gray water, recycled water, rain catchment, water storage tank, etc). 49. The applicant shall be responsible for installing and upgrading the existing utility mains and/or services, laterals as necessary to handle anticipated peak loads. This responsibility includes all costs associated with the design and construction for the installation/upgrade of the utility mains and/or services/laterals 50. An approved reduced pressure principle assembly (RPPA backflow preventer device) is required for all existing and new water connections from Palo Alto Utilities to comply with Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 18  Packet Pg. 192 of 320  requirements of California administrative code, title 17, sections 7583 through 7605 inclusive. The RPPA shall be installed on the owner's property and directly behind the water meter within 5 feet of the property line. RPPA’s for domestic service shall be lead free. Show the location of the RPPA on the plans. 51. An approved reduced pressure detector assembly (RPDA backflow preventer device, STD. WD-12A or STD. WD-12B) is required for all existing and new fire water connections from Palo Alto Utilities to comply with requirements of California administrative code, title 17, sections 7583 through 7605 inclusive. The RPDA shall be installed on the owner's property and directly behind the City owned meter, within 5’ (feet) of the property line or City Right of Way. 52. All backflow preventer devices shall be approved by the WGW engineering division. Inspection by the city inspector is required for the supply pipe between the meter and the assembly. 53. The applicant shall pay the capacity fees and connection fees associated with new utility service/s or added demand on existing services. The approved relocation of services, meters, hydrants, or other facilities will be performed at the cost of the person/entity requesting the relocation. 54. All existing water, gas. and wastewater services/laterals that will not be reused shall be abandoned at the main per the latest WGW utilities standards. 55. Utility vaults, transformers, utility cabinets, concrete bases, or other structures cannot be placed over existing water, gas, or wastewater mains/services. Maintain 1’ horizontal clear separation from the vault/cabinet/concrete base to existing utilities as found in the field. If there is a conflict with existing utilities, Cabinets/vaults/bases shall be relocated from the plan location as needed to meet field conditions. Trees may not be planted within 10 feet of existing water, gas, and wastewater mains/laterals/water services/or meters. New water or wastewater services/laterals/meters may not be installed within 10’ of existing trees unless otherwise approved by waste-gas-water utilities and urban forestry. Maintain 10’ between new trees and new water and wastewater services/laterals/meters unless otherwise approved by waste-gas-water utilities and urban forestry. 56. The applicant shall provide to the WGW Utility Engineering department a copy of the plans for fire system including all fire department's requirements prior to the actual service installation. 57. All utility installations shall be in accordance with the City of Palo Alto utility standards for water, gas, & wastewater. PUBLIC WORKS ELECTRIC UTILITIES Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 19  Packet Pg. 193 of 320  58. UTILITY EASEMENT REQUIRED. Prior to energization, a public utility easement is required to provide access to the proposed transformers. This can either be provided through separate instrument and documented on the tentative and final map or dedicated through the tentative and final map process. 59. UTILITIES APPLICATION. Changes to existing electric utilities equipment on site, such as the transformer, will require a utilities application. Submit a utilities application and obtain City of Palo Alto Utilities Electrical Engineering approval for the modifications to the electrical system. 60. UTILITY DISCONNECT. The applicant shall submit a request to disconnect all existing utility services proposed for removal, including a signed affidavit of vacancy, on the form provided by the Building Inspection Division. Utilities will be disconnected or removed within 10 working days after receipt of request. The demolition permit will be issued after all utility services and/or meters have been disconnected and, as applicable, removed. 61. UTILITIES SHOWN ON LANDSCAPE PLANS. All utility meters, lines, transformers, backflow preventers, and any other required equipment shall be shown on the landscape and irrigation plans and shall show that no conflict will occur between the utilities and landscape materials. In addition, all aboveground equipment shall be screened in a manner that is consistent with the building design and setback requirements. 62. PERMIT. Contractors and developers shall obtain permit from the Department of Public Works before digging in the street right-of-way. This includes sidewalks, driveways and planter strips. 63. UNDERGROUND SERVICES ALERT. At least 48 hours prior to starting any excavation, the customer must call Underground Service Alert (USA) at 1-800-227-2600 to have existing underground utilities located and marked. The areas to be checked for underground faci lity marking shall be delineated with white paint. All USA markings shall be removed by the customer or contractor when construction is complete. 64. CITY STANDARDS. All new underground conduits and substructures shall be installed per City standards and shall be inspected by the Electrical Underground Inspector before backfilling. PUBLIC WORKS ZERO WASTE 65. REQUIRED DECONSTRUCTION. In conformance with PAMC 5.24, deconstruction and source separation are required for all residential and commercial projects whe re structures (other than a garage or ADU) are being completely removed, demolition is no longer allowed. Deconstruction takes longer than traditional demolition, it is important to plan ahead. For more information, visit www.cityofpaloalto.org/deconstruction. Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 20  Packet Pg. 194 of 320  66. SALVAGE SURVEY FOR REUSE. A Salvage Survey is required for deconstruction permit applications. The survey shall be conducted by a City approved reuse vendor. The survey submittal shall include an itemized list of materials that are salvageable for reuse from the project. The applicant shall source separate and deliver materials for reuse. Certification is required indicating that all materials identified in the survey are properly salvaged. Contact The ReUse People to schedule this FREE survey by phone (888) 588 -9490 or e-mail info@thereusepeople.org. More information can be found at www.TheReusePeople.org. Please upload a completed copy to the deconstruction permit. 67. SOURCE SEPARATION FOR RECYCLING. The applicant shall source separate deconstruction materials into specific categories for recycling. Additional staging areas for source separated materials will need to be considered. All materials shall be delivered to one of the City approved materials recovery facilities listed in Green Halo, all records shall be uploaded to www.greenhalosystems.com. For more information, refer to www.cityofpaloalto.org/deconstruction. PUBLIC WORKS WATER QUALITY 68. Stormwater Best Management Practices (BMPs) associated with refuse management (including actions related to refuse pick-up and the enclosure itself) shall be followed to ensure pollution prevention and preventing potential discharges to the City’s storm drain system. Stormwater BMPS include, but are not limited to, power washing the pavement on both the private property and in the right-of-way and sidewalk a minimum of once per year before the wet season begins on October 1st; utilizing a power washing contractor that is a Recognized Surface Cleaner by the Bay Area Stormwater Management Agencies Association (BASMAA); disposing of wash water according to the Recognized Surface Cleaner certification requirements; and removing any potential trash build-up on a regular basis. PUBLIC WORKS URBAN FORESTRY 69. PLAN SET REQUIREMENTS. The final Plans submitted for building permit shall be revised to reflect the following: a. Include quantities of each tree species in the planting schedule with a corresponding abbreviation of the species which can be found on the planting plan. 70. MWELO COMPLIANCE. As part of the building permit, provide the proposed square footage of the rehabilitated landscape to determine if the project requires a MWELO compliance review. Please see the document titled “Model Water Efficient Landscape Ordinance (MWELO) Compliance Submittals and Guidelines” (https://cityofpaloalto.org/civicax/filebank/documents/76159) to determine if the project Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 21  Packet Pg. 195 of 320  qualifies for MWELO Review. If a MWELO review is required, please follow the instructions in the above document when submitting your permit application and plan set. DURING CONSTRUCTION 63. EXCAVATION RESTRICTIONS APPLY (TTM, Sec. 2.20 C & D). Any approved grading, digging or trenching beneath a tree canopy shall be performed using ‘air -spade’ method as a preference, with manual hand shovel as a backup. For utility trenching, including sewer line, roots exposed with diameter of 1.5 inches and greater shall remain intact and not be damaged. If directional boring method is used to tunnel beneath roots, then Table 2 -1, Trenching and Tunneling Distance, shall be printed on the final plans to be i mplemented by Contractor. 64. TREE PROTECTION COMPLIANCE. The owner and contractor shall implement all protection and inspection schedule measures, design recommendations and construction scheduling as stated in the TPR & Sheet T-1, and is subject to code compliance action pursuant to PAMC 8.10.080. The required protective fencing shall remain in place until final landscaping and inspection of the project. Project arborist approval must be obtained and documented in the monthly activity report sent to the City. The mandatory Contractor and Arborist Monthly Tree Activity Report shall be sent monthly to the City (pwps@cityofpaloalto.org) beginning with the initial verification approval, using the template in the Tree Technical Manual, Addendum 11. 65. TREE DAMAGE. Tree Damage, Injury Mitigation and Inspections apply to Contractor. Reporting, injury mitigation measures and arborist inspection schedule (1-5) apply pursuant to TTM, Section 2.20-2.30. Contractor shall be responsible for the repair or replacement of any publicly owned or protected trees that are damaged during the course of construction, pursuant to Title 8 of the Palo Alto Municipal Code, and city Tree Technical Manual, Section 2.25. 66. GENERAL. The following general tree preservation measures apply to all trees to be retained: No storage of material, topsoil, vehicles or equipment shall be permitted within the tree enclosure area. The ground under and around the tree canopy area shall not be altered. Trees to be retained shall be irrigated, aerated and maintained as necessary to ensure survival. 67. NO NET LOSS OF CANOPY. In order to comply with the city’s no net loss of canopy pol icy (Urban Forest Master Plan: Goals 6.A, 6.B & 6.C & Comprehensive Plan Natural Environment Chapter: Goal N-2 and others) all trees 4” DBH and larger are subject to replacement to avoid a loss of canopy at the neighborhood level. Replacement ratios are determined by table 3-1 in the Tree Technical Manual (Section 3.20.C). New landscape tree plantings (24” box or larger) count towards the replacement total. Screening trees may also count toward the total depending on size and species selected. If unable to plant the required number of Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 22  Packet Pg. 196 of 320  trees on site (our preferred solution) there is the option of paying in-lieu fees of $650 per each 24” box tree into the forestry fund. POST CONSTRUCTION 68. MAINTENANCE. All landscape and trees shall be maintained, watered, fertilized, and pruned according to Best Management Practices-Pruning (ANSI A300-2008 or current version) and the City Tree Technical Manual, Section 5.00. Any vegetation that dies shall be replaced or failed automatic irrigation repaired by the current property owner within 30 days of discovery. SECTION 8. Conditions of Approval Vesting Tentative Map. PLANNING 1. PROJECT PLANS. The Vesting Tentative Map submitted for review and approval by the City Council shall be in substantial conformance with the Vesting Tentative Map titled “Vesting Tentative Map for a Two Lot Subdivision ”, prepared by Sandis Engineers and submitted July 1, 2024, except as modified to incorporate the conditions of this approval. 2. FINAL MAP COVER PAGE. At such time as the Final Map is filed, the cover page shall include the name and title of the Director of Planning and Development Services. 6. FINAL MAP EXPIRATION. A Final Map, in conformance with the approved Vesting Tentative Map, all requirements of the Subdivision Ordinance (PAMC Section 21.16), and to the satisfaction of the City of Palo Alto and its representatives, shall be filed with the Planning Division and the Public Works Engineering Division within two years of the Vesting Tentative Map approval date or this approval will expire. A one-year extension may be granted in accordance with the allowances set forth in the municipal code. 7. DEVELOPMENT IMPACT FEES. The Property Owner or their designee shall pay all applicable development impact fees associated with the proposed development and subdivision prior to issuance of the building permit(s), as detailed in the Streamlined Housing Development Review Approval. 8. INDEMNITY. To the extent permitted by law, the Applicant shall indemnify and hold harmless the City, its City Council, its officers, employees and agents (the “indemnified parties”) from and against any claim, action, or proceeding brought by a third party against the indemnified parties and the applicant to attack, set aside or void, any permit or approval authorized hereby for the Project, including (without limitation) reimbursing the City for its actual attorneys’ fees and costs incurred in defense of the litigation. The City may, in its sole discretion, elect to defend any such action with attorneys of its own choice. Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 23  Packet Pg. 197 of 320  PUBLIC WORKS ENGINEERING 9. PUBLIC WORKS APPLICATIONS, FORMS, AND DOCUMENTS. Applicant shall be advised that most forms, applications, and informational documents related to Public Works Engineering conditions can be found at the following link: https://www.cityofpaloalto.org/Departments/Public-Works/Engineering-Services/Forms- and-Permits 10. MAP THIRD-PARTY REVIEW. The City contracts with a third-party surveyor that will review and provide approval of the map’s technical correctness as the City Surveyor, as permitted by the Subdivision Map Act. The Public Works Department will forward a Scope & Fee Letter from the third-party surveyor and the applicant will be responsible for payment of the fee’s indicated therein, which is based on the complexity of the map. 11. STREETWORK PERMIT. The applicant shall obtain a Streetwork Permit from the Department of Public Works for all public improvements. 12. GRADING AND EXCAVATION PERMIT. A Grading Permit is required per PAMC Chapter 16.28. The permit application and all applicable documents (see Section H of application) shall be submitted to Public Works Engineering. Add the following note: “THIS GRADING PERMIT WILL ONLY AUTHORIZE GENERAL GRADING AND INSTALLATION OF THE STORM DRAIN SYSTEM. OTHER BUILDING AND UTILITY IMPROVEMENTS ARE SHOWN FOR REFERENCE INFORMATION ONLY AND ARE SUBJECT TO SEPARATE BUILDING PERMIT APPROVAL.” 13. GEOTECHNICAL ENGINEER STATEMENT. The grading plans shall include the following statement signed and sealed by the Geotechnical Engineer of Record: “THIS PLAN HAS BEEN REVIEWED AND FOUND TO BE IN GENERAL CONFORMANCE WITH THE INTENT AND PURPOSE OF THE GEOTECHNICAL REPORT”. 14. SWPPP. If the proposed development will disturb more than one acre of land. The applicant shall apply for coverage under the State Water Resources Control Board’s (SWRCB) NPDES general permit for storm water discharge associated with construction activity. A Notice of Intent (NOI) shall be filed for this project with the SWRCB in order to obtain coverage under the permit. The General Permit requires the applicant to prepare and implement a Storm Water Pollution Prevention Plan (SWPPP). The applicant is required to submit two copies of the NOI and the draft SWPPP to the Public Works Department for review and appro val prior to issuance of the building permit. The SWPPP should include both permanent, post - development project design features and temporary measures employed during construction. 15. ENCROACHMENT PERMIT. Prior to any work in the public right-of-way, the applicant shall obtain an encroachment permit from the Public Works Department for any work that encroaches onto the City right-of-way. Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 24  Packet Pg. 198 of 320  16. LOGISTICS PLAN. A construction logistics plan shall be provided addressing all impacts to the public including, at a minimum: work hours, noticing of affected businesses, bus stop relocations, construction signage, dust control, noise control, storm water pollution prevention, job trailer, contractors’ parking, truck routes, staging, concrete pours, crane lifts, scaffolding, materials storage, pedestrian safety, and traffic control. All truck routes shall conform to the City of Palo Alto’s Trucks and Truck Route Ordinance, Chapter 10.48, and the route map. NOTE: Some items/tasks on the logistics plan may require an encroachment permit. 17. STORMWATER POLLUTION PREVENTION. All improvement plan sets shall include the “Pollution Prevention – It’s Part of the Plan” sheet. 18. C.3 THIRD-PARTY CERTIFICATION. Applicant shall provide certification from a qualified third - party reviewer that the proposed permanent storm water pollution prevention measures comply with the requirements of Provision C.3 and Palo Alto Municipal Code Chapter 16.11. Submit the following: a. Stamped and signed C.3 data form (April 2023 version) from SCVURPPP. https://scvurppp.org/wp-content/uploads/2023/04/SCVURPPP-C.3-Data-Form- _-updated__4-12-2023_clean_fillable.pdf b. Final stamped and signed letter confirming which documents were reviewed and that the project complies with Provision C.3 and PAMC 16.11. 19. C.3 STORMWATER AGREEMENT. The applicant shall enter into a Stormwater Maintenance Agreement with the City to guarantee the ongoing maintenance of the permanent storm water pollution prevention measures. The City will inspect the treatment measures yearly and charge an inspection fee. The agreement shall be executed by the applicant team prior to building permit final. 20. C.3 FINAL THIRD-PARTY CERTIFICATION PRIOR TO OCCUPANCY. Within 45 days of the installation of the required storm water treatment measures and prior to the issuance of an occupancy permit for the building, the third-party reviewer shall submit to the City a certification verifying that all the permanent storm water pollution prevention measures were installed in accordance with the approved plans. 21. IMPERVIOUS SURFACE AREA. The project will be creating or replacing 500 square feet or more of impervious surface. Accordingly, the applicant shall provide calculations of the existing and proposed impervious surface areas with the building permit application. The Impervious Area Worksheet for Land Developments form and instructions are available at the Development Center or on our website. To determine the impervious surface area that is being disturbed, provide the quantity on the site plan. 22. EXISTING EASEMENTS. Provide documentation showing approval from the entities (such as Valley Water) affected by the onsite easements to verify that the work within said Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 25  Packet Pg. 199 of 320  easements is permitted. 23. PRIOR TO PUBLIC WORKS FINAL/ACCEPTANCE (STORM DRAIN LOGO). The applicant is required to paint “No Dumping/Flows _________Creek” in blue on a white background adjacent to all onsite storm drain inlets. The name of the creek to which the proposed development drains can be obtained from Public Works Engineering. Stencils of the logo are available from the Public Works Environmental Compliance Division, which may be contacted at (650) 329-2598. Include the instruction to paint the logos on the construction grading and drainage plan. 24. PRIOR TO PUBLIC WORKS FINAL/ACCEPTANCE (RECORD DRAWINGS). At the conclusion of the project applicant shall provide digital as-built/record drawings of all improvements constructed in the public right-of-way or easements in which the City owns an interest. // // // // // // // // // // // // // // // // // // // // // // // // // // // // // // Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 26  Packet Pg. 200 of 320  SECTION 9. Terms of Approval. 1. Streamlined Housing Development Review. In the event actual construction of the project is not commenced within two years of the date of council approval, the approval shall expire and be of no further force or effect. 2. Vesting Tentative Map. All conditions of approval of the Vesting Tentative Map shall be fulfilled prior to approval of a Final Map (PAMC Section 21.16.010[c]). Unless a Final Map is filed, and all conditions of approval are fulfilled within a two-year period from the date of Vesting Tentative Map approval, the Vesting Tentative Map shall expire and all proceedings shall terminate. An extension of time may be granted by the city council after recommendation of the planning commission, upon the written application of the subdivider, prior to the expiration of the Vesting Tentative Map approval, or any previous extension granted. Such extension(s) shall be subject to the maximum limitations set forth in the Subdivision Map Act. INTRODUCED: August 5, 2024 PASSED: August 12, 2024 AYES: Burt, Kou, Lauing, Lythcott-Haims, Stone, Tanaka, Veenker NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED: _________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED AS TO CONTENT: ___________________________ ___________________________ Assistant City Attorney City Manager ____________________________ Director of Planning and Development Services Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 27  Packet Pg. 201 of 320  PLANS AND DRAWINGS REFERENCED: Those plans prepared by Van Meter Williams Architects titled “Buena Vista Commons 3980 El Camino Real, Palo Alto, CA 94306” consisting of 94 pages, dated and submitted July 19, 2024. Those plans prepared by Sandis Engineers titled “Vesting Tentative Map for a Two Lot Subdivision” consisting of three pages, dated July 2024 and submitted July 1, 2024. Docusign Envelope ID: D23A29AF-406C-4115-A772-B183D5D611CC Item 12 Attachment A - Approved Record of Land Use Action for the Vesting Tentative Map        Item 12: Staff Report Pg. 28  Packet Pg. 202 of 320  Project Plans The Final Map is available to the public online. Hardcopies of the Final Map have been provided to Councilmembers. Directions to review project plans and environmental documents online: 1. Go to: bit.ly/PApendingprojects 2. Scroll down to find “3980 El Camino Real” and click the address link 3. On this project specific webpage you will find a link to the project plans and previously approved environmental documents Direct Link to Project Webpage: https://www.paloalto.gov/Departments/Planning-Development-Services/Current- Planning/Projects/3980-El-Camino-Real-Buena-Vista Item 12 Attachment B - Final Map        Item 12: Staff Report Pg. 29  Packet Pg. 203 of 320  8 8 5 8 City Council Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Utilities Meeting Date: June 8, 2026 Report #:2512-5656 TITLE PUBLIC HEARING: Adopt a Resolution Adopting the 2025 Urban Water Management Plan and a Resolution Adopting the 2025 Water Shortage Contingency Plan. CEQA Status: Exempt under Water Code Sec. 10652. RECOMMENDATION The Utilities Advisory Commission (UAC) and staff recommend the City Council adopt a resolution adopting the 2025 Urban Water Management Plan and a resolution adopting the 2025 Water Shortage Contingency Plan. The UAC recommends that the UAC submit Commissioner Gupta’s May 2, 2026 Companion Memo (Public Comment Letter submitted to the UAC, shown in Attachment C) to the City Council as additional information (passed 4-1-1-1 Croft no, Mauter abstain, Scharff absent). EXECUTIVE SUMMARY The Urban Water Management Planning Act (codified in the California Water Code (§10610- 10656 and §10608) requires urban water suppliers to submit an Urban Water Management Plan (UWMP), which includes a Water Shortage Contingency Plan (WSCP), every five years. UWMPs must include information about water demand, water supply, demand management activities, alternative water supplies, anticipated shortages during dry periods, and contingency plans for addressing those shortages. The actions recommended in this report satisfy a regulatory compliance activity, it can be amended at a later date and adoption is not a sign of endorsement of the assumptions used to complete the required regulation. The 2025 UWMP must be adopted by City Council and submitted to the Department of Water Resources (DWR) to meet the state-required deadline of July 1, 2026. The City’s demand for water is expected to decrease by about 5% over the next 25 years, inclusive of savings from passive and active conservation. Potable water supply from the City’s supplier, the San Francisco Public Utilities Commission (SFPUC), is projected to be adequate during normal years, but significant shortfalls are expected during droughts. Item 13 Item 13 Staff Report        Item 13: Staff Report Pg. 1  Packet Pg. 204 of 320  8 8 5 8 Palo Alto, in collaboration with its partners, continues to seek to maximize water conservation to reduce the impact of dry years. When water supply shortages do occur, Palo Alto’s WSCP provides for increasingly stringent steps to reduce water use including public outreach and education, rebate programs, water use restrictions, and water allocations. BACKGROUND 1 and made the following recommendations to the City Council: to recommend that the City Council adopt a resolution adopting the 2025 UWMP, a resolution adopting the 2025 WSCP, and an Ordinance Amending Municipal Code Chapter 12.32 (Water Use Regulations) and that the UAC submit Commissioner Gupta’s May 2, 2026 Companion Memo (Public Comment letter submitted to the UAC shown in Attachment C) to the City Council as additional information2 (passed 4-1-1-1 Croft no, Mauter abstain, Scharff absent).3 1 Agenda item #4: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=19031 2 On May 5, 2026, Commission Gupta submitted a memo to the UAC, proposing seven in-context edits for inclusion in the City’s 2025 UWMP. 3 Draft Action Minutes of May 6, 2026 Regular Meeting of the Utilities Advisory Commission. Item 13 Item 13 Staff Report        Item 13: Staff Report Pg. 2  Packet Pg. 205 of 320  8 8 5 8 implemented during a water shortage. These actions include enforcement of the City’s permanent water use restrictions, along with increasingly stringent water-use prohibitions for each shortage level. ANALYSIS 7. 7 2025 Regional Water Demand and Conservation Study: https://bawsca.org/water/use/2025_Demand_Study Item 13 Item 13 Staff Report        Item 13: Staff Report Pg. 3  Packet Pg. 206 of 320  8 8 5 8 Figure 1: Palo Alto’s Annual Purchases from SFPUC - Actual and Forecast Table 1 shows projected population in Palo Alto based on the population assumptions for the 2025 Demand Study. Consistent with the City’s 2023-2031 Housing Element, the projections use population data from the Association of Bay Area Governments (ABAG) Plan Bay Area 2040 projections, together with the assumption that the City will meet its RHNA targets by 2031. Under this assumption, all population growth occurs through 2031 as those units are added, and population levels remain flat after 2031. Water demand and population are described in “Section 4 – Water Demand” and “Section 2 – Service Area” of the UWMP. 2025 2030 2035 2040 2045 2050 Service Area Population 67,231 88,509 91,532 91,532 91,532 91,532 Item 13 Item 13 Staff Report        Item 13: Staff Report Pg. 4  Packet Pg. 207 of 320  8 8 5 8 2. Water Supply Adequacy Table 2: Palo Alto Potable Water Supply and Demand Balance - normal years 9 and Valley Water’s website10. Water conservation is described in “Section 5 – Demand Management Measures” of the UWMP. 9 City Website, Ways to Save https://www.paloalto.gov/Departments/Utilities/Ways-to-Save 10 Valley Water’s Website, Water Savings https://www.valleywater.org/watersavingsorg 2025 2030 2035 2040 2045 2050 Palo Alto Demand for SFPUC Water 10,431 9,783 9,677 9,634 9,635 9,680 Individual Supply Guarantee 18,579 18,579 18,579 18,579 18,579 18,579 Difference 8,148 8,796 8,902 8,945 8,944 8,899 Item 13 Item 13 Staff Report        Item 13: Staff Report Pg. 5  Packet Pg. 208 of 320  8 8 5 8 The City’s 2025 UWMP provides background on its recent efforts to evaluate alternative water supply options. The Northwest County Recycled Water Strategic Plan, completed in collaboration with Valley Water, identified and evaluated a number of potable and non-potable water reuse concept options using effluent from the RWQCP in Palo Alto. The City’s One Water Plan, completed in 2024, is a framework for evaluating water supply and water conservation alternative portfolios that may mitigate the impact of future water supply uncertainties such as severe multi-year drought, changes in climate, water demand, and regulations. The One Water Plan included concept options identified in the Northwest County Recycled Water Strategic Plan. Further project-specific studies and analyses will be required to assess the need for additional supplies or conservation, as well as to evaluate project feasibility, including detailed cost estimates and potential funding sources. This is described in “Section 3 – System Supplies” of the UWMP. 13. The amount of water available to San Francisco’s Retail Customers (the residential and commercial customers in the City of San Francisco) and Wholesale Customers (the 26 agencies, including Palo Alto, that purchase water from the SFPUC) will be impacted by the outcome of the Water Quality Control Plan for the San Francisco Bay/Sacramento-San Joaquin Delta Estuary (Bay-Delta Plan Amendment or Bay Delta Plan). This 2025 UWMP assumes implementation of the Bay Delta Plan and associated unimpaired flow requirements for the Tuolumne River. In August 2018, City Council voted to support the Bay Delta Plan14. 13 The Tier 2 Drought Response Implementation Plan, which allocates the collective wholesale customers’ share of available RWS supplies among each of the 26 wholesale customers during dry years, only applies during system- wide shortages of 20% or less. Because the projected wholesale cutbacks range from 31% to 48%, the Tier 2 Plan cannot be applied. Therefore, the 2025 UWMP cutback projections are assumed to apply to each wholesale customer equally. 14 See Council meeting minutes: https://www.cityofpaloalto.org/civicax/filebank/documents/66831 Item 13 Item 13 Staff Report        Item 13: Staff Report Pg. 6  Packet Pg. 209 of 320  8 8 5 8 Table 3: Projected RWS Supply Available to Palo Alto for 5-year Drought Assessment (AFY) The potable water supply shortfall for Palo Alto for multiple dry years is shown below in Table 4. The Multiple Dry Year projections assume implementation of the Bay Delta Plan in 2030. Under these conditions, Palo Altans will be asked to reduce water usage by up to 48%. See “Section 8 – Supply and Demand Comparison Provisions” in the UWMP for more details. Climate change was considered as part of SFPUC’s water supply reliability assessment, and as required by Water Code. The City’s 2025 UWMP includes a description of actions the SFPUC has taken to assess the effects of climate change, including its partnership with the Water Research Foundation to develop the Long-Term Vulnerability Assessment (LTVA) of the RWS17. See UWMP “Section 6 – Water Supply Reliability – SFPUC Climate Change Studies”. The 2025 UWMP also includes descriptions of regional efforts facilitated by BAWSCA to address water supply reliability, including the development of its Long-Term Reliable Water Supply Strategy 2050 (Strategy 2050), a regional assessment of Member Agencies’ water supply needs. See “Section 6 – Water Supply Reliability – Regional Plans to Ensure a Reliable Water Supply”. 6. Water Shortage Contingency Planning During the most recent drought, the City was able to reduce water use by 15% in response to voluntary reduction measures and during the 2015 drought the City reduced water use by 31%. The City’s proposed Water Shortage Contingency Plan (WSCP) includes actions to achieve water use reductions above 40% and above 50%, but the City does not have actual experience in implementing such drastic measures. With each progressive stage, enforcement, rate 17 Long Term Vulnerability Assessment: https://www.sfpuc.gov/about-us/reports/long-term-vulnerability- assessment 2030 2035 2040 2045 2050 First Year 31.1%33.0%35.2%36.8%38.4% Second Year 42.2%42.9%45.1%46.8%48.4% Third Year 42.2%42.9%45.1%46.8%48.4% Fourth Year 42.2%42.9%45.1%46.8%48.4% Fifth Year 42.2%42.9%45.1%46.8%48.4% Item 13 Item 13 Staff Report        Item 13: Staff Report Pg. 7  Packet Pg. 210 of 320  8 8 5 8 strategies, and water use restrictions will be increased while putting in place mitigation measures to maintain the health of the City’s tree canopy. Table 5: Summary of Proposed Water Shortage Contingency Plan Stage I Stage II Stage III Stage IV Stage V Stage VI Target Water Savings Up to 10%10% -20%20% -30%30% - 40%40%- 50%Above 50% Information Outreach and Audit Program Low level outreach Increase advertising, social media campaigns and direct communication with customers targeting highest users and increasing water use auditing Escalate outreach efforts and media campaign with focus on water use prioritization Highest outreach effort level with focus on health and safety Demand-Side Management Programs Continuation of existing programs, evaluation of new programs Augment programs and incentive levels as necessary to achieve reduction targets Rate Structures Standard rates already encourage conservation Drought rate structures may be implemented to secure needed revenue Water allocations or allotments may be implemented Water Use Restrictions Water use restrictions become more severe with each stage and enforcement is enacted more strongly with each stage. With each stage, efforts made to ensure tree canopy is protected as much as possible. Recycled Water Use Business as usual use Water use restrictions require use of recycled water for specific purposes, advertise availability of recycled water for trucked delivery, use recycled water for City facilities and street trees as much as possible. Item 13 Item 13 Staff Report        Item 13: Staff Report Pg. 8  Packet Pg. 211 of 320  8 8 5 8 Changes to the Draft 2025 UWMP since the May 6, 2026 UAC Meeting Since the May 6, 2026 UAC Meeting, Staff has made several formatting edits and minor revisions to the DRAFT 2025 UWMP, which include: Revision to Table 2: Coordination with Appropriate Agencies to reflect that the Draft 2025 UWMP was sent to other agencies. Update to the plan’s description of the City’s Green Building Ordinance. Revision to Table 21: WSCP Summary to reflect that implementation of progressive water restrictions begins in Stage 1 of a water shortage, rather than Stage 2 as reflected in Table 21 of the May 2026 UAC version. FISCAL/RESOURCE IMPACT Adoption of the 2025 UWMP and WSCP do not have an associated resource impact. Actions to execute this plan will require allocation of resources, especially should implementation of contingency planning be necessary. STAKEHOLDER ENGAGEMENT On March 31, 2026, staff presented key updates on the 2025 UWMP at the UAC meeting. During public comment, a speaker recommended that the City of Palo Alto use alternative water supply reliability projections rather than those provided by its supplier. In response, Commissioners asked whether that would be possible and about the significance of those projections in the UWMP. The City is required to use information provided by the SFPUC, though alternative projections could potentially be explored in the future if first vetted by staff and brought to SFPUC for consideration. Staff noted that such work would need to be presented in a separate document, could not be completed within the UWMP timeline, and would require additional funding and likely consultant support. Commissioners discussed whether the City should hire a consultant or rely on staff and existing resources to evaluate alternatives to SFPUC’s design drought. Two Commissioners asked staff to consider the SFPUC Long-Term Vulnerability Assessment and Adaptation Plan and explain its relevance to the UWMP, and one Commissioner supported approaching SFPUC with alternative projections. Commissioners also discussed several other issues related to the UWMP. Two Commissioners stated that the City’s demand forecast appears reasonable, while others asked why some agencies project increased demand and how factors such as temperature, snowmelt, and other assumptions are incorporated into forecasts. One Commissioner suggested revising the UWMP language to reflect the City’s view of SFPUC’s water supply reliability projections and design drought, while another noted that the staff report did not mention the City Council’s support Item 13 Item 13 Staff Report        Item 13: Staff Report Pg. 9  Packet Pg. 212 of 320  8 8 5 8 for the Bay Delta Plan19. A Commissioner also noted that UWMPs should be viewed not only as a regulatory requirement but also as an opportunity to improve processes and methodologies each cycle and to support regional coordination. 19 See Section 1, page 12 of the 2025 Urban Water Management Plan https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes-reports/agendas-minutes/city-council- agendas-minutes/2026/june/draft-city-of-palo-alto-urban-water-management-plan.pdf Item 13 Item 13 Staff Report        Item 13: Staff Report Pg. 10  Packet Pg. 213 of 320  8 8 5 8 companion memo (see Attachment C). The substitute motion failed on a 2-4-1 vote (Phillips, Croft, Mauter, Metz no, Scharff absent. One commissioner stated that they did not agree with each of the edits in the memo and that the UAC would need to discuss each proposed edit. Another commissioner noted that UWMP is a regulatory requirement and so it is not the appropriate place to address the UAC’s concerns. Another commissioner asked what document could be more important than the UWMP with respect to water supply and stated that they could not support the UWMP as recommended by staff. Commissioner Gupta then moved a substitute motion recommending that the City Council adopt the proposed resolutions and ordinance, and that the UAC submit Commissioner Gupta’s May 2, 2026 Companion Memo (Public Comment Letter submitted to the UAC) to the City Council as additional information. Commissioner Gupta said that he believes the memo reflects the UAC’s discussion and commentary on the topic and that it provides City Council with options for consideration. That motion passed on a 4-1-1-1 vote (Croft no, Mauter abstain, Scharff absent). The Chair clarified that under the motion the memo is not from the UAC to City Council but rather a memo from Commissioner Gupta to City Council for their consideration. The UAC appointed Commission Gupta to represent the views of the UAC at the June 8, 2026 City Council meeting. ENVIRONMENTAL REVIEW ATTACHMENTS/LINKS 21 APPROVED BY: 21 Draft 2025 Urban Water Management Plan and 2025 Water Shortage Contingency Plan https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes-reports/agendas-minutes/city-council- agendas-minutes/2026/june/draft-city-of-palo-alto-urban-water-management-plan.pdf Item 13 Item 13 Staff Report        Item 13: Staff Report Pg. 11  Packet Pg. 214 of 320  *NOT YET APPROVED* 1 6055503 Resolution No. XXXX Item 13 Attachment A - Resolution Adopting the 2025 Urban Water Management Plan        Item 13: Staff Report Pg. 12  Packet Pg. 215 of 320  *NOT YET APPROVED* 2 6055503 // Director of Administrative Services Item 13 Attachment A - Resolution Adopting the 2025 Urban Water Management Plan        Item 13: Staff Report Pg. 13  Packet Pg. 216 of 320  *NOT YET APPROVED* 1 6055504 Resolution No. XXXX Item 13 Attachment B - Resolution Adopting the 2025 Water Shortage Contingency Plan        Item 13: Staff Report Pg. 14  Packet Pg. 217 of 320  *NOT YET APPROVED* 2 6055504 SECTION 2. The Council finds and determines that, under the California Water Code Section 10652, the adoption of the Plan and the WSCP and this resolution does not constitute a project under the California Environmental Quality Act, and no environmental assessment is required. INTRODUCED AND PASSED:June X, 2026 AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk APPROVED AS TO FORM: Mayor APPROVED: City Attorney or designee City Manager Director of Utilities Director of Administrative Services Item 13 Attachment B - Resolution Adopting the 2025 Water Shortage Contingency Plan        Item 13: Staff Report Pg. 15  Packet Pg. 218 of 320  Proposed Edits to the Palo Alto UWMP Based on the YRA letter of April 30, 2026 Prepared for: Palo Alto Utilities Advisory Commission · Meeting of May 6, 2026 · Item 4 Utsav Gupta, Commissioner How to read this document Each section below reproduces the actual draft 2025 UWMP language verbatim and shows proposed edits inline. Color and formatting are used as follows: Marker Meaning black, plain Existing UWMP draft text — unchanged. blue, bold Proposed insertion (added language). red, strikethrough Proposed deletion (removed language). Scope and posture. This memo does not propose replacing SFPUC's water-supply reliability numbers with non-SFPUC numbers. Staff has stated that the City is required to use SFPUC's information in the UWMP itself (May 6 Item 4 staff report, p. 9). The edits below instead (i) clarify the provenance of those numbers (they are SFPUC modeling outputs, not Palo Alto-adopted planning standards), (ii) add a transparent sensitivity using SFPUC's own Finance Bureau projections, (iii) disclose the SFPUC's end-of-year storage levels under its Design Drought, (iv) add a 2021–2023 Water Shortage Emergency lookback to the financial-impact discussion, (v) record Palo Alto's reservation of contractual rights regarding >20% allocations, and (vi) note Palo Alto's potential cost exposure under the AWS Program. All proposed insertions are additive; no SFPUC figure is removed. ────────────────────────────────────────────────────────────────────────────────────────── Edit 1 — Section 1, Lay Description (p. 12) Subject: framing the 48% rationing figure as an SFPUC scenario, not a Palo Alto-adopted standard. Existing draft text (verbatim, UWMP p. 12): Given the City's forecasted water demand and projections of water supply availability provided by the SFPUC, the City anticipates the need to implement water use reductions of up to 48% in consecutive dry year scenarios post implementation of the Bay Delta Plan Amendment. During the drought that occurred in 2012– 2016 (2015 drought), the City was able to reduce water use by 31% by restricting landscape irrigation to two times per week as well as a number of other measures. This was followed by the drought that occurred in 2020–2023 (2021 drought) during which the City reduced water use by 15% in response to voluntary water reductions measures. Proposed revision (edits shown inline): Item 13 Attachment C - Commissioner Gupta’s Proposed Edits to the Palo Alto UWMP        Item 13: Staff Report Pg. 16  Packet Pg. 219 of 320  Given the City's forecasted water demand and projections of water supply availability provided by the SFPUC, the City anticipates the need to implement water use reductions of up to 48% in consecutive dry year scenarios post implementation of the Bay Delta Plan Amendment. , as projected by the SFPUC under its 8.5- year Design Drought planning model. The Design Drought is a hypothetical drought sequence developed by the SFPUC for system-modeling purposes; the SFPUC's own Long-Term Vulnerability Assessment, which incorporated 100 years of observed data, 1,100 years of tree-ring reconstructions, and 25,000 simulated runs, did not produce a drought of equivalent severity. Other large California water agencies, including Valley Water and EBMUD, plan against the drought of record (1987–1992); under that planning standard the City would not anticipate mandatory rationing in a five consecutive dry-year sequence. Staff presents the SFPUC figure for regulatory completeness and the comparative context for transparency. During the drought that occurred in 2012–2016 (2015 drought), the City was able to reduce water use by 31% by restricting landscape irrigation to two times per week as well as a number of other measures. This was followed by the drought that occurred in 2020–2023 (2021 drought) during which the City reduced water use by 15% in response to voluntary water reductions measures. Editor's note — The current paragraph presents "up to 48%" as a single planning figure without telling the reader that it derives from one SFPUC modeling scenario (the Design Drought). Staff itself has noted (Item 4 staff report, p. 6, fn. 7) that the projected 31–48% wholesale cutbacks exceed the 20% threshold under which the Tier 2 Drought Response Implementation Plan applies, so the Tier 2 Plan cannot govern allocation in the scenario the UWMP describes. Adding the proposed sentence keeps SFPUC's number in place while making clear it is one scenario among several. This also responds to the Commissioner request, recorded on p. 9 of the staff report, to alter the UWMP language to indicate the City's view of SFPUC's reliability projections and Design Drought. ────────────────────────────────────────────────────────────────────────────────────────── Edit 2 — Section 6, Table 20 (p. 93) Subject: add a Finance Bureau sensitivity row beneath the Water Enterprise (UWMP) projections. Existing draft text and table (verbatim, UWMP pp. 92–93): Table 20 (existing, unchanged in the proposal): RWS Supply Allocation 2030 2035 2040 2045 2050 Retail Customers (a)(b) Wholesale Customers (c)(d) Item 13 Attachment C - Commissioner Gupta’s Proposed Edits to the Palo Alto UWMP        Item 13: Staff Report Pg. 17  Packet Pg. 220 of 320  Total RWS Supplies 196.62 197.52 202.43 208.12 215.10 Proposed addition: insert the following sensitivity table immediately after Table 20, with new note (e): Sensitivity (proposed addition) 2030 2035 2040 2045 2050 Total RWS — SFPUC Finance Bureau (e) —182.1 185.2 190.2 193.9 Total RWS — Water Enterprise (Table 20) 196.62 197.52 202.43 208.12 215.10 Difference (mgd) —15.4 17.2 17.9 21.2 (e) The SFPUC publishes two sets of RWS demand/sales projections: the Water Enterprise projections, presented in the SFPUC's UWMP and reproduced in Table 20 above; and the Finance Bureau projections, prepared annually for budgeting and rate-setting and published in the SFPUC Water Enterprise Financial Plan. The SFPUC has stated that the Water Enterprise projections "represent an outside bound of whatever demand will occur" and "will likely always be greater than actual demands," while the Finance Bureau projections are "as close to actual as we can make them." Both are presented above so that the UWMP records both the SFPUC's regulatory-planning view (Water Enterprise) and its budgetary view (Finance Bureau), reflecting the ~21 mgd gap at the 2050 planning horizon. Editor's note — Adding a Finance Bureau row beneath Table 20 does not replace SFPUC's regulatory numbers; it discloses a second SFPUC-published number set that the SFPUC itself uses for budgeting. Both are SFPUC products, addressing staff's stated concern that the UWMP must rely on SFPUC information. A 21.2 mgd gap at 2050 is material to any downstream investment decision (AWS cost-share, rate setting, conservation budgets), and recording it in the UWMP itself prevents staff and Council from being asked to reconcile the two figures only later, in a separate document. ────────────────────────────────────────────────────────────────────────────────────────── Edit 3 — Section 6, Alternative Water Supply Program (p. 76) Subject: quantify Palo Alto's potential cost exposure and condition the City's support. Existing draft text (verbatim, UWMP p. 76, abridged at "…"): In 2019, the SFPUC established the Alternative Water Supply (AWS) Program to identify and plan water supply and storage projects and actions that increase the dry-year reliability of the RWS. Based on the 2045 planning horizon that the SFPUC applied in its February 2024 AWS Plan, the SFPUC anticipates a water supply gap will occur in future dry years. … Since the development of that plan, three projects have been deferred (Daly City Recycled Water Expansion, Alameda County Water District-Union Sanitary District Purified Water, Item 13 Attachment C - Commissioner Gupta’s Proposed Edits to the Palo Alto UWMP        Item 13: Staff Report Pg. 18  Packet Pg. 221 of 320  and Calaveras Reservoir Expansion) and one project has been canceled (Los Vaqueros Reservoir Expansion). The AWS Program is continuing to pursue the following two projects: PureWater Peninsula and South Bay Purified Water. Proposed addition: append the following paragraph to the AWS Program subsection. Cost exposure to Palo Alto and conditional position. PureWater Peninsula is currently budgeted at $747 million for 6 mgd of yield (SFPUC Water Enterprise FY 2027–2036 Ten-Year CIP, January 13, 2026, p. 94). Assuming a two-thirds BAWSCA cost share and Palo Alto's allocation share within BAWSCA of approximately 7%, Palo Alto's potential capital exposure is on the order of $35 million, plus operating costs. The City supports continued AWS planning, but conditions any cost-share commitment on the SFPUC and BAWSCA demonstrating a supply gap that persists under (i) Finance-Bureau-class demand projections (see Table 20 sensitivity, page 93) and (ii) a drought-of-record (1987–1992) planning methodology comparable to that used by Valley Water and EBMUD. The City notes that, since the February 2024 AWS Plan, three of six identified regional projects have been deferred and one has been canceled, indicating that the underlying supply-gap analysis remains unsettled. Editor's note — The current paragraph names the AWS projects but does not quantify what those projects could cost Palo Alto. Three of six projects deferred and one canceled within ~24 months is itself evidence that the supply-gap analysis is volatile. Recording Palo Alto's evaluative criteria in the UWMP — rather than only in correspondence — gives staff a principled basis on which to engage future BAWSCA cost-share votes. ────────────────────────────────────────────────────────────────────────────────────────── Edit 4 — Section 7, WSCP Financial Impacts (pp. 97 and 111) Subject: add a 2021–2023 Water Shortage Emergency lookback to the financial-impact discussion. Existing draft text — UWMP p. 97 (Palo Alto's Drought Experience): Existing draft text — UWMP pp. 111–112 (Revenue Reductions): Item 13 Attachment C - Commissioner Gupta’s Proposed Edits to the Palo Alto UWMP        Item 13: Staff Report Pg. 19  Packet Pg. 222 of 320  Stage 4: 30% – 40% target water savings results in $7.0 million shortfall Proposed addition: insert the following "Lookback" paragraph at the end of the Revenue Reductions subsection (after the stage list, before "Mitigation Actions"): Lookback — Financial Consequences of the 2021–2023 Water Shortage Emergency. In November 2021, the SFPUC declared a Water Shortage Emergency and called for system-wide voluntary water-use reductions. At the time of the declaration, SFPUC system storage was at approximately 4.5 years of supply; storage never fell below approximately 4 years of supply during the entire 2020–2023 drought. The City's response — the 15% voluntary reduction described on p. 97 — produced an estimated $2.5 million revenue shortfall for the City and contributed to a long-term ~10% per-account reduction in water use that persisted through FY 2025 (see p. 53). The SFPUC itself experienced an FY 2023–24 revenue shortfall of approximately $25 million in retail sales and $5 million in wholesale sales after declining to lift the drought surcharge until May 2023, despite SFPUC system storage reaching 92% of capacity by mid-January 2023. Going forward, the City should weigh these revenue and rate-stability consequences when responding to future voluntary or mandatory conservation calls and should request from the SFPUC the supply-storage data underlying any future Water Shortage Emergency declaration before the City implements corresponding WSCP stages. Editor's note — The current paragraph quantifies revenue shortfalls per WSCP stage but provides no historical context on whether the conditions that triggered prior shortages were warranted. The 2021–23 episode is the most relevant, recent case study and is directly responsive to the Water Code §10632(a)(8)(A) requirement to describe potential revenue reductions associated with shortage response actions. The lookback is factual, sourced to SFPUC's own drought- conditions updates and budget reports, and it provides Council and staff a basis for setting more deliberate triggers for future WSCP activations. ────────────────────────────────────────────────────────────────────────────────────────── Edit 5 — Section 8, Dry Year Scenarios (p. 116) Subject: add a one-sentence reservation of rights regarding >20% allocations. Existing draft text (verbatim, UWMP p. 116): Item 13 Attachment C - Commissioner Gupta’s Proposed Edits to the Palo Alto UWMP        Item 13: Staff Report Pg. 20  Packet Pg. 223 of 320  Proposed revision (edits shown inline): For water shortages up to 20%, the Tier One water shortage plan will be applied. The Tier One plan does not apply to system-wide shortages greater than 20%. Implementing water use reduction greater than 20% requires the SFPUC to meet and discuss with Wholesale Customers a strategy for meeting incremental reductions above the Tier One plan. The SFPUC has the authority to make final allocation decision for the portion above 20%, though the Wholesale Customers have the contractual right to challenge the proposed approach. The Tier 2 Drought Response Implementation Plan, which allocates the wholesale share during dry years, applies only to system-wide shortages of 20% or less; because the projected wholesale cutbacks in this UWMP range from 31% to 48%, the Tier 2 Plan cannot be applied. The City will exercise its contractual right to challenge any proposed allocation greater than 20% that is not supported by reservoir- storage and supply-availability data at the time the allocation is contemplated, and reserves all rights and remedies available under the Water Supply Agreement, Section 3.11(c)(3). This analysis assumes the relative split of available water between SFPUC Retail and Wholesale Customers will be the same for shortages greater than 20% as shortages of 20%. Editor's note — The Tier 2 acknowledgment is staff's own (Item 4 staff report p. 6, fn. 7); putting it in the UWMP body, rather than only in the staff report, makes the limitation visible to Council and to ratepayers. The reservation-of-rights sentence does not reject SFPUC's analysis; it records that any future >20% allocation will be evaluated against then- current physical supply, consistent with the WSA contractual right that the existing paragraph already references. This is the textual change a Commissioner suggested at the March 31, 2026 UAC meeting (per staff report, p. 9). ────────────────────────────────────────────────────────────────────────────────────────── Edit 6 — New Appendix: SFPUC End-of-Year Storage Under the Design Drought Subject: add an appendix table so readers can see SFPUC system storage at the end of each Design Drought year. There is no existing UWMP text to replace; this is a proposed new appendix entry, to be referenced from p. 92 (where the UWMP describes the Design Drought as an 8.5-year sequence) and from p. 116 (where the multiple-dry-year cutbacks are presented). Appendix [X]: SFPUC System Storage Under the Design Drought. The table below presents SFPUC end-of- year system storage under the SFPUC's 8.5-year Design Drought sequence, assuming the Bay Delta Plan is in effect and using SFPUC 2050 demand projections. The table is included for transparency: it shows that, even under the SFPUC's own most-severe planning scenario, system storage remains above 600 thousand acre-feet (TAF) at the end of year 5 and does not approach the RWS "dead pool" of approximately 96.8 TAF until the end of year 8. The cutback percentages presented in Table 27 (UWMP p. 117) are therefore a function of SFPUC storage-management rules under the Design Drought model, not a function of physical absence of water in the system. Proposed Appendix Table: Item 13 Attachment C - Commissioner Gupta’s Proposed Edits to the Palo Alto UWMP        Item 13: Staff Report Pg. 21  Packet Pg. 224 of 320  Design Drought Year 86–87 87–88 88–89 89–90 90–91 91–92 92–76 76–77 Annual storage impact (TAF) -469 -263 +41 -206 -14 -159 -208 -192 Total SFPUC end-of- year storage (TAF) 1,048 785 826 620 606 447 239 47 Source: derived from data provided by the SFPUC; presentation by Yosemite Rivers Alliance, Table YRA-1. Editor's note — The current UWMP describes the Design Drought as an 8.5-year sequence (p. 92) and presents the resulting cutback percentages (Table 27, p. 117), but does not show the intermediate storage values. Disclosing the storage trajectory in an appendix lets Council and ratepayers see that physical supply is not exhausted until very late in the modeled sequence — a fact that is material to evaluating the >20% rationing scenario discussed in Edit 5. ────────────────────────────────────────────────────────────────────────────────────────── Edit 7 — Section 6, Climate Change / SFPUC Climate Studies (pp. 78–80) Subject: respond to Commissioner request for an LTVA-applicability discussion in the UWMP. The May 6 Item 4 staff report (p. 9) records that two Commissioners requested staff "take into consideration the Long- Term Vulnerability Assessment (LTVA) and Adaptation Plan for the SFPUC and be prepared to explain how this work applies to the UWMP." The current UWMP refers to the LTVA but does not explain its relationship to the Design Drought figures used elsewhere in the document. Recommended addition: Proposed insertion in the SFPUC Climate Change Studies subsection (Section 6): Relationship of the LTVA to the Design Drought used in this UWMP. The SFPUC's Long-Term Vulnerability Assessment, completed in partnership with the Water Research Foundation, evaluated regional water- supply reliability using 100 years of observed hydrologic data, 1,100 years of tree-ring–based reconstructions, and approximately 25,000 simulated stochastic model runs. None of the stochastic runs produced a drought sequence as severe as the SFPUC's Design Drought (described on p. 92). The Design Drought, rather than the LTVA's stochastic ensemble, is the planning input for the multiple-dry-year cutback percentages presented in Table 27 (p. 117) and for the SFPUC's Alternative Water Supply Program. This UWMP presents the SFPUC-derived Design Drought figures for regulatory completeness; the LTVA is included to give Council and ratepayers a fuller picture of the range of plausible future hydrologic conditions. Editor's note — This edit responds directly to the Commissioner request recorded on p. 9 of the staff report. It does not modify any SFPUC figure; it explains the relationship between two SFPUC products (the LTVA and the Design Drought) so that the UWMP itself answers the question Commissioners raised at the March 31 meeting. Item 13 Attachment C - Commissioner Gupta’s Proposed Edits to the Palo Alto UWMP        Item 13: Staff Report Pg. 22  Packet Pg. 225 of 320  ────────────────────────────────────────────────────────────────────────────────────────── Suggested UAC Motion "The Utilities Advisory Commission recommends that staff incorporate, prior to City Council transmittal of the 2025 Urban Water Management Plan, the seven in-context edits set out in the May 2, 2026 companion memo: (1) the Section 1 framing edit at p. 12; (2) the Table 20 Finance Bureau sensitivity at p. 93 with new note (e); (3) the AWS Program cost-exposure and conditional-support paragraph at p. 76; (4) the 2021–2023 Water Shortage Emergency lookback at pp. 97 and 111; (5) the >20% allocation reservation-of-rights at p. 116; (6) a new appendix presenting SFPUC end-of-year system storage under the Design Drought; and (7) an LTVA-applicability paragraph in Section 6. None of these edits alters or replaces an SFPUC-provided number; all are additive and use only SFPUC-published or publicly-sourced data." Sources • Item 4 Staff Report, UAC packet, May 6, 2026, including Attachment A (Draft 2025 Palo Alto UWMP). • Yosemite Rivers Alliance letter to PAUAC dated April 30, 2026, with Attachments A–D. • SFPUC Water Enterprise Financial Plan Dashboard (Projected Wholesale Sales FYE 2036–2050). • SFPUC Water Enterprise FY 2027–2036 Ten-Year CIP, January 13, 2026, p. 94 (PureWater Peninsula). • SFPUC Drought Conditions Updates, December 2021 – January 2023; SFPUC FY 2023-24 4th Quarter Budget Report. • SFPUC Long-Term Vulnerability Assessment. Item 13 Attachment C - Commissioner Gupta’s Proposed Edits to the Palo Alto UWMP        Item 13: Staff Report Pg. 23  Packet Pg. 226 of 320  City Council Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Community Services Meeting Date: June 8, 2026 Report #:2603-6081 TITLE Adopt an Ordinance and Resolution Calling an Election and Placing a ½ Cent (0.5%) Transactions and Use Tax Measure on the November 3, 2026 Ballot; and a Resolution Adopting Advisory Spending Guidelines for the Use of the Proceeds if the Measure Passes to Support Improving the Cubberley Community Center; CEQA Status - Not a Project. RECOMMENDATION 1. As directed by the City Council on May 18, 2026, staff recommend the City Council adopt an ordinance and a companion resolution to place a ½ cent (0.5%) transactions and use tax measure on the November 3, 2026 ballot (Attachments A and B). The ordinance designates the members of the Cubberley Ad Hoc Committee (Councilmembers Burt, Lythcott-Haims, and Reckdahl) to author the argument in support of the measure. (2/3 vote required). 2. The Cubberley Ad Hoc Committee recommends the City Council adopt a resolution approving advisory spending guidelines in support of improving the Cubberley Community Center if the measure passes. (Attachment C, to be published in late packet on June 4, 2026). EXECUTIVE SUMMARY As directed by the City Council, the attached ordinance formally places a 0.5% transactions and use tax (commonly known as a sales tax) measure on the November 3, 2026 ballot. State law requires a 2/3 vote by the City Council to place this measure on the ballot and a simple majority of voters to pass in November.1 The ordinance sets the exact language of the ballot question and designates City Council members to author the argument in support of the measure. If passed, the revenue from the tax will go to the City’s general fund to be appropriated. A 1 Revenue and Taxation Code section 7285.9. Item 14 Item 14 Staff Report        Item 14: Staff Report Pg. 1  Packet Pg. 227 of 320  companion resolution makes required requests for the election to be consolidated with the statewide election and to request the County’s services to conduct the election.3 Within the state cap, the City has capacity for a ¼ cent (0.25%) voter approved local sales tax; staff is working on legislation that would increase the local sales tax cap by a ½ cent. In addition, the Cubberley Ad Hoc Committee recommends the adoption of a resolution approving advisory spending guidelines in support of improving Cubberley Community Center with the new revenue if the measure passes. BACKGROUND The City of Palo Alto (City) is advancing a plan to redevelop a 15-acre portion of Cubberley, building on previous community engagement and re-engaging residents to reimagine and prioritize community uses of the campus. The City and the Palo Alto Unified School District (PAUSD) have a memorandum of understanding that would enable the City to purchase seven acres to support a reimagined community center and fund school improvements. The City currently owns eight acres at Cubberley; acquiring an additional seven acres would create an opportunity to update the ageing facility for the benefit of the community. Funding the land purchase and site improvements could be made possible through different funding sources including a ballot measure, nonprofit partnerships, philanthropy, grants, and development fees. There has been extensive foundational work completed to support the advancement of the Cubberley Project, including several actions by the City Council. Attachment D shares a summary of actions to date and the history of the Cubberley site. ANALYSIS On May 18, 2026, the City Council directed staff to pursue a ballot measure for a ½ cent (0.5%) transactions and use tax (commonly known as a sales tax) in the November 2026 election. Within the state cap, the City current has capacity for a ¼ cent (0.25%) voter approved local sales tax. The City would need to obtain authorization from the State before implementing the ½ cent increase. The City and its legislative consultants, Towsend Public Affairs, are preparing legislation that would increase the local sales tax cap by ½ cent. Placement of a measure on the ballot requires Council action to adopt an ordinance and a companion resolution calling the election and specifying the ballot question. If approved by voters, the resulting revenue would accrue to the City’s General Fund and would be available to support general City services. This includes land acquisition and renovations at the Cubberley 3 An ordinance and a companion resolution to call the election for this ballot measure comes because of disparate state law requirements. State law specifies that certain election matters shall be approved by ordinance, and others can only be approved by resolution. Item 14 Item 14 Staff Report        Item 14: Staff Report Pg. 2  Packet Pg. 228 of 320  site as appropriated by the City Council. The Santa Clara County Registrar of Voters (ROV) requires that measures be submitted no later than August 7, 2026. Key provisions include: Summary of the Measure: If approved by a simple majority of voters, the ballot measure would create a ½ cent (0.5%) transactions and use tax (commonly known as a sales tax). Revenue generated by this increment will be deposited in the City’s General Fund and be appropriated by the City Council. Ballot Question: The exact ballot question is listed in the ordinance. The ballot question is informed by the four polls conducted by the City from September 2025 through March 2026 and refined by the Cubberley Ad Hoc Committee. Ballot Arguments: The Cubberley Ad Hoc Committee members are designated to provide the official ballot argument in favor of the measure. This argument will be published in the County’s voter guide. If formal opposition is submitted, the Ad Hoc Committee will also be responsible for authoring a rebuttal. Alternatively, a majority of the authors of the argument in favor may choose a new slate of authors to submit a rebuttal argument. The deadlines for the argument in favor of the measure, the argument against, and the rebuttal are established in this ordinance in coordination with the County’s deadlines. Election Consolidation: The City requests and permits the County to consolidate the election for this ballot measure with all the other races occurring on November 3, 2026, including the election of three City Councilmembers, as well as other regional, state, and federal races. Ordinance Implementing the Measure: The ordinance implementing the ½ cent (0.5%) tax is included as an attachment to the ordinance calling the election. The implementing ordinance is written to ensure that this tax is assessed and collected uniformly with the state sales tax. The California Department of Tax and Fee Administration will collect the amount on the City’s behalf and deposit the revenue with the City. The implementing ordinance will be published in the official voter guide for voter transparency. If approved, the ordinance will be codified into the Palo Alto Municipal Code. Item 14 Item 14 Staff Report        Item 14: Staff Report Pg. 3  Packet Pg. 229 of 320  such as the new Public Safety Building, Bike & Pedestrian Plan, and the new parking garage in the California Avenue district. Regarding the Business Tax, proceeds were intended and used for transportation and safe train crossings, housing affordability and services for the unhoused, and public safety.5 FISCAL/RESOURCE IMPACT The revenue generated by a ½ cent sales tax measure contained in the attached Ordinance is estimated to generate approximately $13-$15 million annually. This estimate can be impacted by a variety of factors, including composition of the local economy, economic cycles, one-time or other factors (i.e. sales volume, consumer behavior) The Santa Clara County Registrar of Voters (ROV) estimates that placing a measure on the November 2026 election ballot will cost $100,293. Funding for this expense will be provided by the Cubberley Community Center Redevelopment CIP Project (CB-26000). STAKEHOLDER ENGAGEMENT In parallel with the development of the Cubberley Conceptual Master Plan process, staff conducted four community polls between April 2025 and March 2026 to gauge community priorities and voter appetite for a potential ballot measure to support land acquisition and implementation costs associated with the Cubberley project. Polling results informed development of the proposed ballot question and funding strategy. Additional stakeholder engagement related to the proposed ballot measure and broader Cubberley planning effort included discussions with the City Council Cubberley Ad Hoc Committee, public City Council meetings, and presentations to the Parks and Recreation Commission, Planning and Transportation Commission, and Architectural Review Board. These discussions provided opportunities for public input, refinement of project priorities, and feedback on funding considerations associated with the long-term vision for the Cubberley campus. ENVIRONMENTAL REVIEW Adoption these pieces of legislation is not a project under CEQA because it involves the creation of government funding mechanisms or other government fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. CEQA regulation 15378(b)(4). 5 See Resolution 10068, “Adopting Advisory Spending Guidelines for Proceeds of a Business Tax to be Submitted to the Voters for Approval November 2022,” approved August 22, 2022, at https://www.paloalto.gov/files/assets/public/v/1/city-clerk/election-info/2022/measure-k/reso-10068.pdf Item 14 Item 14 Staff Report        Item 14: Staff Report Pg. 4  Packet Pg. 230 of 320  ATTACHMENTS (To be released late packet on June 4, 2026) APPROVED BY: Item 14 Item 14 Staff Report        Item 14: Staff Report Pg. 5  Packet Pg. 231 of 320  NOT YET APPROVED 158_20260527_ts24 1 Ordinance No. _____ Ordinance of the Council of the City of Palo Alto Calling an Election for November 3, 2026 for Submittal to the Qualified Electors of the City a Measure to Impose a Transactions and Use Tax at a Rate of 0.5% R E C I T A L S A. Section 2(b) of Article XIII C of the California Constitution states that “No local government may impose, extend, or increase any general tax unless and until that tax is submitted to the electorate and approved by a majority vote. A general tax shall not be deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved. The election required by this subdivision shall be consolidated with a regularly scheduled general election for members of the governing body of the local government, except in cases of emergency declared by a unanimous vote of the governing body.” B. Revenue and Taxation Code section 7285.9 states that “The governing body of any city may levy, increase, or extend a transactions and use tax for general purposes at a rate of 0.125 percent or a multiple thereof, if the ordinance proposing that tax is approved by a two- thirds vote of all members of that governing body and the tax is approved by a majority vote of the qualified voters of the city voting in an election on the issue. The governing body may levy, increase, or extend more than one transaction and use tax under this section, if the adoption of each tax is in the manner prescribed in this section. The transactions and use tax shall conform to Part 1.6 (commencing with Section 7251).” C. The City Council desires to call and fix an election to submit to the city electors the question of imposing a general transactions and use tax at a rate of 0.5%. D. A proposed ordinance attached hereto and incorporated herein by reference as Attachment “A” (the “Ordinance”) would amend the Palo Alto Municipal Code to add a 0.5% transactions and use tax imposed in the City. This tax would be a “general tax” as defined in Article XIII C of the California Constitution. E. By its Resolution No. _____ as adopted on June 1, 2026, the City Council called a general municipal election for November 3, 2026 (“Election”). F. Pursuant to Elections Code Sections 9222 and 10403, Government Code Section 53724, and Charter of the City of Palo Alto Article VI., Section 2, the City Council hereby submits the Ordinance to the voters of the City. The City Council of the City of Palo Alto ORDAINS as follows: SECTION 1. Findings. The City Council finds and determines that each of the findings set forth above are true and correct. SECTION 2. Election. The City Council proposes to impose a transactions and use tax at a rate of 0.5% as set forth in the Ordinance and to present this Ordinance to the voters on November 3, 2026. SECTION 3. Measure. The City Council hereby submits a measure for the enactment of the Ordinance to the voters at the Election and orders the following question to be submitted to the voters at the Election: Item 14 Attachment A - Ordinance Calling an Election for November 3, 2026 for Submittal to the Qualified Electors of the City a Measure to Impose a Transactions and Use Tax at a Rate of 0.5%        Item 14: Staff Report Pg. 6  Packet Pg. 232 of 320  2 provide general city services including repairing Cubberley Community Center for current safety, earthquake, accessibility standards; upgrading deteriorating electrical systems, wiring, plumbing; acquiring outdoor space/sites; maintaining streets, safe, clean downtown/commercial cores; preparing for natural disasters; repairing deteriorating community spaces, libraries, shall City of Palo Alto’s measure enacting a 0.5% (1/2¢) sales tax, providing approximately $15,600,000 annually until ended by voters, with published financial audits, all funds used YES NO This question requires the approval of a majority of those casting votes. SECTION 4. Adoption of Measure. The measure to be submitted to the voters is attached to this ordinance as Attachment A and incorporated herein by this reference. The City requests that the full text of the measure be printed in the County’s Voter Information Guide. SECTION 5. Notice of Election. Notice of the time and place of holding the Election is hereby given, and the City Clerk is authorized, instructed and directed to give further or additional notice of the Election, in time, form and manner as required by law. SECTION 6. Impartial Analysis. Pursuant to Elections Code Section 9280, the City Council hereby directs the City Clerk to transmit a copy of the measure to the City Attorney. The City Attorney shall prepare an impartial analysis of the measure, not to exceed 500 words in length, showing the effect of the measure on the existing law and the operation of the measure, and transmit such impartial analysis to the City Clerk on or before August 18, 2026 at 4:00 p.m. SECTION 7. Ballot Arguments. Pursuant to Elections Code Section 9286 et. seq., August 11, 2026 at 4:00 p.m. shall be the deadline for submission of arguments in favor of, and arguments against, any local measures on the ballot. If more than one argument for and/or against is received, the priorities established by Elections Code Section 9287 shall control. SECTION 8. Rebuttal Arguments. The provisions of Elections Code Section 9285 shall control the submission of any rebuttal arguments. The deadline for filing rebuttal arguments shall be August 18, 2026 at 4:00 p.m. SECTION 9. Authorization to File Arguments. Pursuant to Elections Code Section 9282(b), the City Council hereby authorizes the following Councilmembers to jointly author and file a written argument in favor of this measure: (1) Councilmember Julie Lythcott-Haims, (2) Councilmember Keith Reckdahl, and (3) Councilmember Pat Burt. These three Councilmembers may alternatively join any grouping authorized by Elections Code 9282(b) to author an argument in favor of this measure. Item 14 Attachment A - Ordinance Calling an Election for November 3, 2026 for Submittal to the Qualified Electors of the City a Measure to Impose a Transactions and Use Tax at a Rate of 0.5%        Item 14: Staff Report Pg. 7  Packet Pg. 233 of 320  3 SECTION 10. Consolidation Request (Elections Code § 10403). The Council of the City of Palo Alto requests that the Board of Supervisors of the County of Santa Clara permit the Registrar of Voters to completely consolidate the City’s Municipal Elections for November 3, 2026 and the City Council consents to such consolidation. The Council requests the Board of Supervisors of Santa Clara County to include on the ballots and sample ballots, all qualified measures submitted by the City Council to be considered by the qualified electors of the City of Palo Alto. The Council acknowledges that the Election will be held and conducted according to procedures in the Elections Code, including Section 10418. SECTION 11. Request for County Services (Elections Code § 10002 and 10400 et seq.). Pursuant to Section 10002 of the Elections Code, the Council of the City of Palo Alto hereby requests the Board of Supervisors of Santa Clara County to permit the Registrar of Voters to render services to the City of Palo Alto relating to the conduct of Palo Alto’s Municipal Elections which are called to be held on November 3, 2026, and shall reimburse the county for the costs incurred by the County of Santa Clara Registrar of Voters in conducting the election for the City of Palo Alto. The services shall be of the type normally performed by the Registrar of Voters in assisting the clerks of municipalities in the conduct of elections including, but not limited to, checking registrations, mailing ballots, hiring election officers and arranging for polling places, receiving absentee voter ballot applications, mailing and receiving absent voter ballots and opening and counting same, providing and distributing election supplies, and furnishing voting machines, the canvassing of the returns of the election, the furnishing of the results of such canvassing to the City Clerk, and, the performance of other election services as may be requested by the City Clerk. The City requests the County of Santa Clara Board of Supervisors permit the County of Santa Clara Registrar of Voters to prepare the City’s election materials. SECTION 12. Transmittal of Ordinance. The City Clerk is hereby directed to submit forthwith a certified copy of this ordinance to the Santa Clara County Board of Supervisors and to the Registrar of Voters. SECTION 13. Environmental Review. The Ordinance in Attachment A is not a project under CEQA regulation 15378(b)(4) because it creates a government funding mechanism which does not involve a commitment to any specific project which may result in a potentially significant physical impact on the environment. // // // // Item 14 Attachment A - Ordinance Calling an Election for November 3, 2026 for Submittal to the Qualified Electors of the City a Measure to Impose a Transactions and Use Tax at a Rate of 0.5%        Item 14: Staff Report Pg. 8  Packet Pg. 234 of 320  4 SECTION 14. Effective Date. This ordinance shall take effect upon adoption pursuant to PAMC section 2.04.330(a)(1) as an ordinance calling or otherwise relating to an election. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Assistant City Attorney City Manager ____________________________ Chief Financial Officer Item 14 Attachment A - Ordinance Calling an Election for November 3, 2026 for Submittal to the Qualified Electors of the City a Measure to Impose a Transactions and Use Tax at a Rate of 0.5%        Item 14: Staff Report Pg. 9  Packet Pg. 235 of 320  5 Attachment A ** START HERE ** ORDINANCE NO._________ AN ORDINANCE OF THE CITY OF PALO ALTO IMPOSING A TRANSACTIONS AND USE TAX TO BE ADMINISTERED BY THE CALIFORNIA DEPARTMENT OF TAX AND FEE ADMINISTRATION THE PEOPLE OF THE CITY OF PALO ALTO DO ORDAIN AS FOLLOWS, which shall be codified as Palo Alto Municipal Code Chapter 2.38: Section 1. 2.38.010 TITLE. This chapter shall be known as the 2026 Transactions and Use Tax Ordinance. The City of Palo Alto hereinafter shall be called “City.” This Chapter shall be applicable in the incorporated territory of the City. Section 2. 2.38.020 OPERATIVE DATE. “Operative Date” means the first day of the first calendar quarter commencing more than 110 days after the adoption of this ordinance. For purposes of Revenue and Taxation Code section 7265, this Chapter shall be considered adopted on the date of the election in which it is approved by the qualified voters of the City. Section 3. 2.38.030 PURPOSE. This Chapter is adopted to achieve the following, among other purposes, and directs that the provisions hereof be interpreted in order to accomplish those purposes: A. To impose a retail transactions and use tax in accordance with the provisions of Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code and Section 7285.9 of Part 1.7 of Division 2 which authorizes the City to adopt this tax ordinance which shall be operative if a majority of the electors voting on the measure vote to approve the imposition of the tax at an election called for that purpose. B. To adopt a retail transactions and use tax ordinance that incorporates provisions identical to those of the Sales and Use Tax Law of the State of California insofar as those provisions are not inconsistent with the requirements and limitations contained in Part 1.6 of Division 2 of the Revenue and Taxation Code. C. To adopt a retail transactions and use tax ordinance that imposes a tax and provides a measure therefore that can be administered and collected by the California Department of Tax and Fee Administration in a manner that adapts itself as fully as practicable to, and requires the least possible deviation from, the existing statutory and administrative procedures followed by the California Department of Tax and Fee Administration in administering and collecting the California State Sales and Use Taxes. D. To adopt a retail transactions and use tax ordinance that can be administered in a manner that will be, to the greatest degree possible, consistent with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, minimize the cost of collecting the transactions and use taxes, and at the same time, minimize the burden of record keeping upon persons subject to taxation under the provisions of this ordinance. Item 14 Attachment A - Ordinance Calling an Election for November 3, 2026 for Submittal to the Qualified Electors of the City a Measure to Impose a Transactions and Use Tax at a Rate of 0.5%        Item 14: Staff Report Pg. 10  Packet Pg. 236 of 320  6 Section 4. 2.38.040 CONTRACT WITH STATE. Prior to the operative date, the City shall contract with the California Department of Tax and Fee Administration to perform all functions incident to the administration and operation of this Chapter; provided, that if the City shall not have contracted with the California Department of Tax and Fee Administration prior to the operative date, it shall nevertheless so contract and in such a case the operative date shall be the first day of the first calendar quarter following the execution of such a contract. Section 5. 2.38.050 TRANSACTIONS TAX RATE. For the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers in the incorporated territory of the City at the rate of 0.5% of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in said territory on and after the operative date of this Chapter. If imposition of this tax at a rate of 0.5% of gross receipts would cause the limit established in section 7251.1 of the Revenue and Taxation Code to be exceeded, then the tax shall be applied at the maximum rate possible to comply with the limit established in section 7251.1 of the Revenue and Taxation Code until such time that the tax can be applied at a rate of 0.5% of gross receipts and comply with the limit established in section 7251.1 of the Revenue and Taxation Code. Section 6. 2.38.060 PLACE OF SALE. For the purposes of this Chapter, all retail sales are consummated at the place of business of the retailer unless the tangible personal property sold is delivered by the retailer or his agent to an out-of-state destination or to a common carrier for delivery to an out-of-state destination. The gross receipts from such sales shall include delivery charges, when such charges are subject to the state sales and use tax, regardless of the place to which delivery is made. In the event a retailer has no permanent place of business in the State or has more than one place of business, the place or places at which the retail sales are consummated shall be determined under rules and regulations to be prescribed and adopted by the California Department of Tax and Fee Administration. Section 7. 2.38.070 USE TAX RATE. An excise tax is hereby imposed on the storage, use or other consumption in the City of tangible personal property purchased from any retailer on and after the operative date of this Chapter for storage, use or other consumption in said territory at the rate of 0.5% of the sales price of the property. The sales price shall include delivery charges when such charges are subject to state sales or use tax regardless of the place to which delivery is made. If imposition of this tax at a rate of 0.5% of the sales price of property would cause the limit established in section 7251.1 of the Revenue and Taxation Code to be exceeded, then the tax shall be applied at the maximum rate possible to comply with the limit established in section 7251.1 of the Revenue and Taxation Code until such time that the tax can be applied at a rate of 0.5% of the sales price of property and comply with the limit established in section 7251.1 of the Revenue and Taxation Code. Section 8. 2.38.080 ADOPTION OF PROVISIONS OF STATE LAW. Except as otherwise provided in this Chapter and except insofar as they are inconsistent with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, all of the provisions of Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code are hereby adopted and made a part of this Chapter as though fully set forth herein. Section 9. 2.38.090 LIMITATIONS ON ADOPTION OF STATE LAW AND COLLECTION OF USE TAXES. In adopting the provisions of Part 1 of Division 2 of the Item 14 Attachment A - Ordinance Calling an Election for November 3, 2026 for Submittal to the Qualified Electors of the City a Measure to Impose a Transactions and Use Tax at a Rate of 0.5%        Item 14: Staff Report Pg. 11  Packet Pg. 237 of 320  7 Revenue and Taxation Code: A. Wherever the State of California is named or referred to as the taxing agency, the name of this City shall be substituted therefor. However, the substitution shall not be made when: 1. The word “State” is used as a part of the title of the State Controller, State Treasurer, State Treasury, or the Constitution of the State of California; 2. The result of that substitution would require action to be taken by or against this City or any agency, officer, or employee thereof rather than by or against the California Department of Tax and Fee Administration, in performing the functions incident to the administration or operation of this Chapter. 3. In those sections, including, but not necessarily limited to sections referring to the exterior boundaries of the State of California, where the result of the substitution would be to: a. Provide an exemption from this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not otherwise be exempt from this tax while such sales, storage, use or other consumption remain subject to tax by the State under the provisions of Part 1 of Division 2 of the Revenue and Taxation Code, or; b. Impose this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not be subject to tax by the state under the said provision of that code. 4. In Sections 6701, 6702 (except in the last sentence thereof), 6711, 6715, 6737, 6797 or 6828 of the Revenue and Taxation Code. B. The word “City” shall be substituted for the word “State” in the phrase “retailer engaged in business in this State” in Section 6203 and in the definition of that phrase in Section 6203. 1. “A retailer engaged in business in the District” shall also include any retailer that, in the preceding calendar year or the current calendar year, has total combined sales of tangible personal property in this state or for delivery in the State by the retailer and all persons related to the retailer that exceeds five hundred thousand dollars ($500,000). For purposes of this section, a person is related to another person if both persons are related to each other pursuant to Section 267(b) of Title 26 of the United States Code and the regulations thereunder. Section 10. 2.38.100 PERMIT NOT REQUIRED. If a seller’s permit has been issued to a retailer under Section 6067 of the Revenue and Taxation Code, an additional transactor’s permit shall not be required by this Chapter. Section 11. 2.38.110 EXEMPTIONS AND EXCLUSIONS. A. There shall be excluded from the measure of the transactions tax and the use tax the amount of any sales tax or use tax imposed by the State of California or by any city, city and Item 14 Attachment A - Ordinance Calling an Election for November 3, 2026 for Submittal to the Qualified Electors of the City a Measure to Impose a Transactions and Use Tax at a Rate of 0.5%        Item 14: Staff Report Pg. 12  Packet Pg. 238 of 320  8 county, or county pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law or the amount of any state-administered transactions or use tax. B. There are exempted from the computation of the amount of transactions tax the gross receipts from: 1. Sales of tangible personal property, other than fuel or petroleum products, to operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of such aircraft as common carriers of persons or property under the authority of the laws of this State, the United States, or any foreign government. 2. Sales of property to be used outside the City which is shipped to a point outside the City, pursuant to the contract of sale, by delivery to such point by the retailer or his agent, or by delivery by the retailer to a carrier for shipment to a consignee at such point. For the purposes of this paragraph, delivery to a point outside the City shall be satisfied: a. With respect to vehicles (other than commercial vehicles) subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, and undocumented vessels registered under Division 3.5 (commencing with Section 9840) of the Vehicle Code by registration to an out-of-City address and by a declaration under penalty of perjury, signed by the buyer, stating that such address is, in fact, his or her principal place of residence; and b. With respect to commercial vehicles, by registration to a place of business out-of-City and declaration under penalty of perjury, signed by the buyer, that the vehicle will be operated from that address. 3. The sale of tangible personal property if the seller is obligated to furnish the property for a fixed price pursuant to a contract entered into prior to the operative date of this Chapter. 4. A lease of tangible personal property which is a continuing sale of such property, for any period of time for which the lessor is obligated to lease the property for an amount fixed by the lease prior to the operative date of this Chapter. 5. For the purposes of subparagraphs (3) and (4) of this section, the sale or lease of tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right is exercised. C. There are exempted from the use tax imposed by this Chapter, the storage, use or other consumption in this City of tangible personal property: 1. The gross receipts from the sale of which have been subject to a transactions tax under any state-administered transactions and use tax ordinance. 2. Other than fuel or petroleum products purchased by operators of aircraft and Item 14 Attachment A - Ordinance Calling an Election for November 3, 2026 for Submittal to the Qualified Electors of the City a Measure to Impose a Transactions and Use Tax at a Rate of 0.5%        Item 14: Staff Report Pg. 13  Packet Pg. 239 of 320  9 used or consumed by such operators directly and exclusively in the use of such aircraft as common carriers of persons or property for hire or compensation under a certificate of public convenience and necessity issued pursuant to the laws of this State, the United States, or any foreign government. This exemption is in addition to the exemptions provided in Sections 6366 and 6366.1 of the Revenue and Taxation Code of the State of California. 3. If the purchaser is obligated to purchase the property for a fixed price pursuant to a contract entered into prior to the operative date of this Chapter. 4. If the possession of, or the exercise of any right or power over, the tangible personal property arises under a lease which is a continuing purchase of such property for any period of time for which the lessee is obligated to lease the property for an amount fixed by a lease prior to the operative date of this Chapter. 5. For the purposes of subparagraphs (3) and (4) of this section, storage, use, or other consumption, or possession of, or exercise of any right or power over, tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right is exercised. 6. Except as provided in subparagraph (7), a retailer engaged in business in the City shall not be required to collect use tax from the purchaser of tangible personal property, unless the retailer ships or delivers the property into the City or participates within the City in making the sale of the property, including, but not limited to, soliciting or receiving the order, either directly or indirectly, at a place of business of the retailer in the City or through any representative, agent, canvasser, solicitor, subsidiary, or person in the City under the authority of the retailer. 7. “A retailer engaged in business in the City” shall also include any retailer of any of the following: vehicles subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, or undocumented vessels registered under Division 3.5 (commencing with Section 9840) of the Vehicle Code. That retailer shall be required to collect use tax from any purchaser who registers or licenses the vehicle, vessel, or aircraft at an address in the City. D. Any person subject to use tax under this Chapter may credit against that tax any transactions tax or reimbursement for transactions tax paid to a district imposing, or retailer liable for a transactions tax pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code with respect to the sale to the person of the property the storage, use or other consumption of which is subject to the use tax. Section 12. 2.38.120 AMENDMENTS. All amendments subsequent to the effective date of this Chapter to Part 1 of Division 2 of the Revenue and Taxation Code relating to sales and use taxes and which are not inconsistent with Part 1.6 and Part 1.7 of Division 2 of the Revenue and Taxation Code, and all amendments to Part 1.6 and Part 1.7 of Division 2 of the Revenue and Taxation Code, shall automatically become a part of this Chapter, provided however, that no such amendment shall operate so as to affect the rate of tax imposed by this Chapter. Item 14 Attachment A - Ordinance Calling an Election for November 3, 2026 for Submittal to the Qualified Electors of the City a Measure to Impose a Transactions and Use Tax at a Rate of 0.5%        Item 14: Staff Report Pg. 14  Packet Pg. 240 of 320  10 Section 13. 2.38.130 ENJOINING COLLECTION FORBIDDEN. No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action or proceeding in any court against the State or the City, or against any officer of the State or the City, to prevent or enjoin the collection under this Chapter, or Part 1.6 of Division 2 of the Revenue and Taxation Code, of any tax or any amount of tax required to be collected. Section 14. 2.38.140 SEVERABILITY. If any provision of this Chapter or the application thereof to any person or circumstance is held invalid, the remainder of the Chapter and the application of such provision to other persons or circumstances shall not be affected thereby. Section 15. 2.38.150 EFFECTIVE DATE. This Chapter relates to the levying and collecting of the City transactions and use taxes and shall take effect immediately. Section 16. 2.38.160 TERMINATION DATE. The authority to levy the tax imposed by this Chapter shall expire when repealed by the voters of the City of Palo Alto. Section 17 (to be uncodified). EXECUTION. The City Clerk and the Mayor are hereby authorized to attest to the adoption of this Ordinance by the voters of the City by signing where indicated below. I hereby certify that the foregoing Ordinance was APPROVED by the People of the City of Palo Alto voting in the election on November 3, 2026. ATTEST: __________________________ ___________________________ City Clerk Mayor APPROVED AS TO FORM: ___________________________ ___________________________ City Attorney or designee City Manager ** END HERE ** Item 14 Attachment A - Ordinance Calling an Election for November 3, 2026 for Submittal to the Qualified Electors of the City a Measure to Impose a Transactions and Use Tax at a Rate of 0.5%        Item 14: Staff Report Pg. 15  Packet Pg. 241 of 320  NOT YET APPROVED 159_20250527_ts24 1 Resolution No. _____ Resolution of the Council of the City of Palo Alto Requesting Election Consolidation and Election Services for a Ballot Measure to Impose a Local Transactions and Use Tax at a Rate of 0.5% R E C I T A L S A.The City Council, by Ordinance No. ______, adopted at the same time as this companion resolution, formally called an election for the submission of a ballot measure to the voters of Palo Alto to impose a transactions and use tax at a rate of 0.5% for the November 3, 2026 election. B.To the extent a resolution is required by Elections Code sections 10002 and 10403, the City Council hereby requests consolidation of the ballot measure described above with the statewide election on November 3, 2026 and related elections services from the County of Santa Clara. The City Council of the City of Palo Alto resolves as follows: SECTION 1. Findings. The City Council adopts each of the findings set forth above. SECTION 2. Measure. The exact form of the question shall be as follows: provide general city services including repairing Cubberley Community Center for current safety, earthquake, accessibility standards; upgrading deteriorating electrical systems, wiring, plumbing; acquiring outdoor space/sites; maintaining streets, safe, clean downtown/commercial cores; preparing for natural disasters; repairing deteriorating community spaces, libraries, shall City of Palo Alto’s measure enacting a 0.5% (1/2¢) sales tax, providing approximately $15,600,000 annually until ended by voters, with published financial audits, all funds used YES NO This question requires the approval of a majority of those casting votes. SECTION 3. Consolidation Request (Elections Code § 10403). The Council of the City of Palo Alto requests that the Board of Supervisors of the County of Santa Clara permit the Registrar of Voters to completely consolidate the City’s Municipal Elections for November 3, 2026 and the City Council consents to such consolidation. The Council requests the Board of Supervisors of Santa Clara County to include on the ballots and sample ballots, all qualified measures submitted by the City Council to be considered by the qualified electors of the City of Palo Alto. The Council acknowledges that the Election will be held and conducted according to Item 14 Attachment B - Companion Resolution Requesting Election Consolidation and Related Election Services        Item 14: Staff Report Pg. 16  Packet Pg. 242 of 320  2 procedures in the Elections Code, including Section 10418. SECTION 4. Request for County Services (Elections Code § 10002 and 10400 et seq.). Pursuant to Section 10002 of the Elections Code, the Council of the City of Palo Alto hereby requests the Board of Supervisors of Santa Clara County to permit the Registrar of Voters to render services to the City of Palo Alto relating to the conduct of Palo Alto’s Municipal Elections which are called to be held on November 3, 2026, and shall reimburse the county for the costs incurred by the County of Santa Clara Registrar of Voters in conducting the election for the City of Palo Alto. The services shall be of the type normally performed by the Registrar of Voters in assisting the clerks of municipalities in the conduct of elections including, but not limited to, checking registrations, mailing ballots, hiring election officers and arranging for polling places, receiving absentee voter ballot applications, mailing and receiving absent voter ballots and opening and counting same, providing and distributing election supplies, and furnishing voting machines, the canvassing of the returns of the election, the furnishing of the results of such canvassing to the City Clerk, and, the performance of other election services as may be requested by the City Clerk. The City requests the County of Santa Clara Board of Supervisors permit the County of Santa Clara Registrar of Voters to prepare the City’s election materials. SECTION 5. Environmental Review. This ballot measure is not a project under CEQA regulation 15378(b)(4) because it creates a government funding mechanism which does not involve a commitment to any specific project which may result in a potentially significant physical impact on the environment. SECTION 6. No Conflicting Interpretations. This Resolution is intended to be a companion to Ordinance No. _______ to fulfill any legal requirement that the requests for consolidation, for election services, and the ballot question be contained in a resolution. This Resolution shall not be interpreted to conflict with Ordinance No. ______. // // // // // // Item 14 Attachment B - Companion Resolution Requesting Election Consolidation and Related Election Services        Item 14: Staff Report Pg. 17  Packet Pg. 243 of 320  3 SECTION 7. Effective Date. This resolution shall take effect upon adoption. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSENTIONS: ATTEST: __________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: __________________________ _____________________________ Assistant City Attorney City Manager Item 14 Attachment B - Companion Resolution Requesting Election Consolidation and Related Election Services        Item 14: Staff Report Pg. 18  Packet Pg. 244 of 320  Attachment D The Cubberley Site 1 2 3 Memorandum of Understanding with PAUSD 4 both the City Council and Palo Alto Unified School District (PAUSD or District) Board of Education approved a Memorandum of Understanding (MOU) related to the future of the Cubberley site. The MOU outlines key terms and conditions for the purchase and future planning of Cubberley. The land purchase, which would transfer ownership of seven acres from PAUSD to the City, is contingent on voter approval of a bond measure in November 2026. This condensed timeframe requires development of a master plan for the site by March 2026, conduct stakeholder and community engagement and outreach, polling, financial analysis, CEQA analysis, and other critical tasks. The addition of the seven acres, plus the eight acres already owned by the City of 1 City Council, December 2, 2024: https://portal.laserfiche.com/Portal/DocView.aspx?id=112707&repo=r- 704298fc&searchid=c3e3ed6f-6cda-4dd3-ba35-5d8d4be5579e 2 https://www.cityofpaloalto.org/files/assets/public/v/1/city-manager/communications-office/cubberley- community-center_mappdf.pdf 3 Cubberley Concept Plan 2019: https://www.pausd.org/about-us/committees-task-forces/archived- committees/cubberley-master-plan 4 City Council, October 7, 2024; Agenda Item AA1; SR #2409-3500, https://portal.laserfiche.com/Portal/DocView.aspx?id=98415&repo=r-704298fc&searchid=e199f724-22ab- 472b8ad8-ca162c4dcf8a Item 14 Attachment D - Summary of Actions to Date and the History of the Cubberley site​        Item 14: Staff Report Pg. 19  Packet Pg. 245 of 320  Attachment D Palo Alto provides an opportunity to develop a new community center and other improvements on a combined 15 acres at the Cubberley site to provide a range of City programs, including health, wellness, and recreational opportunities for residents. Master Plan Update and Pursuit of a Local Ballot Measure 9 related to the future of the Cubberley site. These actions included approval of a contract with Concordia, LLC, and associated budget actions for development of a revised Master Plan for the Cubberley Community Center site, building on the previous master plan completed in 2019 by Concordia and guided by significant community input. Additionally, the Council approved a Letter of Intent with the Friends of the Palo Alto Recreation Wellness Center for the purpose of fundraising for a recreation wellness center (gymnasium) at the Cubberley site, and a workplan for pursuit of a November 2026 local ballot measure to fund the purchase of land and development of a new community center at the Cubberley site. 10 to continue the current use of the property, including playing fields, approval of a professional services agreement with Rincon for CEQA analysis,11 and approval of professional service agreements with Lew Edwards Group and Fairbank, Maslin, Metz & Associates12 for ballot measure strategy advisement and community polling. Cubberley Ad Hoc Committee 9 City Council, December 2, 2024; Agenda Item 18, SR #2410-3634, https://portal.laserfiche.com/Portal/DocView.aspx?id=112713&repo=r-704298fc 10 City Council, December 2, 2024; Agenda Item 12; SR #2410-3651, https://portal.laserfiche.com/Portal/DocView.aspx?id=112707&repo=r-704298fc 11 City Council, December 16, 2024; Agenda Item 12; SR #2411-3813, https://portal.laserfiche.com/Portal/DocView.aspx?id=117742&repo=r-704298fc&searchid=96e9506b- f1bd-485e-a4cb-fc804b5893d1 12 City Council, February 24, 2025; Agenda Item 4; SR #2501-4039, https://portal.laserfiche.com/Portal/DocView.aspx?id=143364&repo=r-704298fc&searchid=fef509a6- 4d34-4060-bc7a-6ab87db7a0ae Item 14 Attachment D - Summary of Actions to Date and the History of the Cubberley site​        Item 14: Staff Report Pg. 20  Packet Pg. 246 of 320  Attachment D operating and financial models, and decisions on what should be placed on the November 2026 ballot. April 21, 2025 City Council Meeting 17 City Council meeting, staff presented outcomes from the first community meeting held on March 19, an update on the Cubberley Master Plan Project workplan and sought Council authorization to initiate the first community poll. 18 . 17 City Council, April 21, 2025; Agenda Item 11; SR #2503-4310, https://portal.laserfiche.com/Portal/DocView.aspx?id=166428&repo=r-704298fc 18 Staff Presentation, April 21, 2025; https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=71ade3d7-a57a-4195-a59b- c410d90832ea Item 14 Attachment D - Summary of Actions to Date and the History of the Cubberley site​        Item 14: Staff Report Pg. 21  Packet Pg. 247 of 320  Attachment D Theater/Performance Space, Greenspace, Makerspace, and Senior/Multigenerational Programs. 21. The poll themes and questions were developed with input from the Cubberley Ad Hoc Committee and will inform critical upcoming milestones in the project. The Council did not take an action but supported proceeding with the poll. April 22,2025 Parks & Recreation Commission Meeting 22 staff presented an informational update to the Parks and Recreation Commission, offering a comprehensive overview of the project's overall workplan and timeline. The presentation included a detailed summary of Community Meeting #1, highlighting key themes and priorities that emerged from the community’s feedback. Staff also introduced Poll #1, which was launched at the end of April, and encouraged Commissioners to help promote the survey to ensure broad community participation. In addition, the presentation outlined several ways the Commission can remain engaged and support the project, including serving as ambassadors within the community, helping to share information, and providing feedback. The creation of a PRC Cubberley ad-hoc committee was discussed and it was decided that this topic will be further considered during the upcoming workplan revisions scheduled for the coming months. June 9, 2025 City Council Meeting 23 staff presented to City Council the results of the first community poll, community engagement milestones coming up and updates to the workplan. The focus of the first poll was to survey voter input on the goals and future of the community center and possible support for a tax or bond measure. Staff also shared community engagement. Overall, the poll found broad majority support for improvement at the Cubberley site. Surveyed voters place highest priority on bringing the facility up to modern standards for electrical, plumbing, safety, and accessibility early childhood 21 FM3 Presentation, April 21, 2025; https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=83ec6422-b6e4-4e83-9ca3- ca746a5971a0 22 Staff Presentation, April 22, 2025; https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=dae0543c-e007-4fc1-9a69- fd08b156ee94 23 City Council, June 9, 2025, Agenda Item 2; SR#2503-4313, https://portal.laserfiche.com/Portal/DocView.aspx?id=182790&repo=r-704298fc&searchid=57dac2b5- 5c42-4ef0-978a-be940766f395 Item 14 Attachment D - Summary of Actions to Date and the History of the Cubberley site​        Item 14: Staff Report Pg. 22  Packet Pg. 248 of 320  Attachment D education; affordability and efficient use of taxpayer dollars; and overall repairs for the facility. Lastly, staff shared with the City Council the community revised Vision Statement for the future of the Community Center. June 12, 2025 Second Cubberley Master Plan Community Meeting A vibrant, beloved, and adaptable destination that promotes learning, connections, joy, and wellbeing where all cultures and generations belong. Following this, staff provided an overview presentation to orient attendees to the three 3-D concept plans being presented. Each conceptual design includes an A, B, and C variations exploring different configurations of building placement, new construction vs renovation, green space, bike and pedestrian circulation, and parking—both above and below ground. 27. 27 Community Meeting #2 Summary, www.paloalto.gov/files/4280f185-ca1d-4965-940f-1e4fcaf6cb11/M2- Summary-Report-Final.pdf Item 14 Attachment D - Summary of Actions to Date and the History of the Cubberley site​        Item 14: Staff Report Pg. 23  Packet Pg. 249 of 320  Attachment D June 19, 2025 Public Art Commission Meeting On June 19, 2025,29 City staff presented to the Public Art Commission and discussed potential opportunities to support the City’s Strategic Activation Plan for the Cubberley site, which was developed by staff in coordination with the City Council’s Cubberley Ad Hoc Committee. The plan outlined phased enhancements and activations aligned with the broader master planning process, community engagement efforts, and the anticipated November 2026 ballot initiative. As part of the discussion, Commissioners explored how the ArtLift grant program—previously identified at their January retreat as a potential tool—could be leveraged to support temporary public art installations at Cubberley and other key locations. Ideas included murals, ground art, freestanding sculptures, and performance-based activations to help generate community excitement and reinforce the role of the arts in creating vibrant, inclusive public spaces. June 24, 2025 Parks & Recreation Commission Meeting On June 24, 2025,30 City staff provided the Parks and Recreation Commission with an informational update on the Cubberley Community Center Master Plan. The presentation included a recap of the second community meeting held on June 12, where Concordia unveiled three concept designs for the site and invited community feedback. Staff also presented the results of the first community poll, released in late April, and shared a list of proposed near-term activation ideas for the Cubberley site, inviting the Commission’s input. In addition, staff sought feedback from the Commission on the three concept designs. The newly formed PRC Cubberley Ad Hoc Committee will continue to refine the activation plans in July. July 9, 2025 Planning and Transportation Commission Meeting On July 9, 2025,31 the Planning and Transportation Commission (PTC) received an update on the Cubberley Master Plan and was asked to provide input to help inform the next phase of the planning process. Staff requested feedback on several key aspects recently reviewed by the community, including arrival and parking, pedestrian circulation, building scale and space organization, greenspace layout, the balance of 29 Staff Presentation, June 19, 2025; https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=a036e199-31cd-4d94-8214- 7fb0170e39ac 30 Staff Presentation, June 24, 2025; https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=ac29aa36-1b3a-4403-b8b2- cc403685865d 31 Staff Presentation, June 9, 2025; https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=49fc32cf-caa1-4dd9-97f9- 5d5d02150256 Item 14 Attachment D - Summary of Actions to Date and the History of the Cubberley site​        Item 14: Staff Report Pg. 24  Packet Pg. 250 of 320  Attachment D built and open space, and how the site can be a good neighbor. Additional PTC feedback emphasized the importance of clear cost comparisons between renovation and new construction, interest in public-private funding models, and support for a future bond measure and donor engagement. Commissioners favored partial underground parking and better integration with transit and surrounding neighborhoods. There was broad interest in maintaining flexible green space for events, ensuring safe and separate bike/pedestrian circulation, and preserving multigenerational, inclusive programming. Suggestions also included clearer diagrams, more tangible use examples, and consideration of impacts from surrounding development. July 17, 2025 Architectural Review Board Meeting 35, the Architectural Review Board (ARB) received a presentation on the Cubberley Master Plan and provided early feedback to help shape the next phase of planning. The Board expressed strong support for phased development and emphasized minimizing disruption to existing tenants and programs. Members praised pedestrian and bike circulation, supported the proposed balance of buildings and green space, and encouraged improvements to vehicle access and mobility hubs. There was general support for new construction over renovation and interest in enhancing the site's identity through public art and flexible community spaces. The ARB also encouraged a welcoming design that reflects Cubberley’s civic and cultural significance while being a good neighbor to the surrounding community. September 17, 2025 Third Cubberley Master Plan Community Meeting 35 Staff Presentation, July 17, 2025; https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=2a9a7988-768f-465b-bcf9- 68166ff9af6f Item 14 Attachment D - Summary of Actions to Date and the History of the Cubberley site​        Item 14: Staff Report Pg. 25  Packet Pg. 251 of 320  Attachment D Phase 1 consists of two parts: a Recreation Wellness Center and a Performing Arts Center. Phase 1 also includes renovation of remaining buildings so the full site continues to be operational until phases 2 and 3 can be completed. Community members were invited to assess the Phase 1 concept designs for the recreation wellness and performing arts area and were asked to reflect on three key questions: 37. September 23, 2025 Parks and Recreation Commission Meeting 38, the Parks and Recreation Commission (PRC) received a presentation on the refined Cubberley Community Center Master Plan concept following the third and final community meeting held on September 17, 2025. Commissioners reviewed updates on program placement, phasing, and site circulation, and were asked 37 Community Meeting #3 Summary; www.paloalto.gov/files/assets/public/v/1/community- services/cubberley-project/2025.11.11_m3-summary.pdf 38 Staff Presentation, September 23, 2025; https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=efbb1418-4bbe-49b2-b786- 165e29017ca3 Item 14 Attachment D - Summary of Actions to Date and the History of the Cubberley site​        Item 14: Staff Report Pg. 26  Packet Pg. 252 of 320  Attachment D to provide input on the same questions posed to the community: what is working well, what could be improved, and what creative ideas could enhance the campus experience. October 20, 2025 City Council Meeting 41 with an emphasis on the first phase of site development showing a combination of renovated and new building construction. The focus on the first phase recognizes that funding will likely be a limiting factor in full site redevelopment. At this meeting, staff shared objectives and themes for the second community poll to determine voter support for a bond or tax measure to finance the land purchase, and the extent of how much voters are willing to pay annually. Following the October 20 meeting the second poll was conducted. December 15, 2025 City Council Meeting 42, including results from the second community poll and discussed next steps. Council discussed key findings from Poll #2, which indicate broad voter support for the City acquiring the Cubberley property and willingness to invest in limited funding focused on basic repairs, safety upgrades, and accessibility improvements. Results showed relatively higher support for parcel tax and sales tax funding mechanisms, with a $250 average annual parcel tax testing above 50% support and a 0.5% sales tax increase capable of supporting significantly greater capital financing, pending state authorization. 41 City Council, October 20,2025; Agenda Item #1; SR #2503-4353, https://portal.laserfiche.com/Portal/DocView.aspx?id=231071&repo=r-704298fc 42 City Council, December 15, 2025; Agenda Item #3; SR #2503-4355, https://portal.laserfiche.com/Portal/DocView.aspx?id=246305&repo=r-704298fc Item 14 Attachment D - Summary of Actions to Date and the History of the Cubberley site​        Item 14: Staff Report Pg. 27  Packet Pg. 253 of 320  Attachment D Council expressed alignment with staff and the Ad Hoc Committee’s recommendation to continue refining ballot measure options and to launch a third poll in January 2026 to further test potential parcel tax and sales tax scenarios. February 9, 2026 City Council Meeting 45, including results from the third community poll and progress on public-private partnerships to advance key components of the project. Staff shared that, in anticipation of possible Council consideration of a November 2026 ballot measure to fund the purchase of seven acres from PAUSD and advance all or portions of the project, three of four planned community polls have been completed. Results show both parcel tax and sales tax funding options testing at approximately 48% support—an improvement from the prior poll, though still below the thresholds required for approval (two-thirds for a parcel tax and a simple majority for a general-purpose sales tax). Despite these challenges, Councilmembers remained optimistic, noting that support levels are approaching viability, particularly for a sales tax option, and that emerging public-private partnerships could strengthen the overall funding strategy. 45 City Council, February 9, 2026; Agenda Item #11; SR#2512-5774, https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=fd6f9939-83a3-4ea7-817a- e7719c9194a4 Item 14 Attachment D - Summary of Actions to Date and the History of the Cubberley site​        Item 14: Staff Report Pg. 28  Packet Pg. 254 of 320  Attachment D expressed interest in exploring partnership opportunities with the City at the Cubberley site. March 11, 2026 Planning and Transportation Commission and Architectural Review Board Special Joint Meeting 47 on the proposed Cubberley Conceptual Master Plan and the Draft Initial Study/Mitigated Negative Declaration (IS/MND) prepared under the California Environmental Quality Act (CEQA). Staff presented the City’s long-term vision to redevelop approximately 15 acres of the Cubberley campus, including the potential purchase of seven acres from the Palo Alto Unified School District (PAUSD) for $65.5 million. Staff noted that the purchase and implementation of the plan will depend on identifying funding sources, which may include a potential sales tax ballot measure in November 2026, development impact fees, grants, philanthropic contributions, and public-private partnerships. 47 Staff Presentation, March 11, 2026; https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=c9289f37-122b-455b-959c- febb294cc3c1 Item 14 Attachment D - Summary of Actions to Date and the History of the Cubberley site​        Item 14: Staff Report Pg. 29  Packet Pg. 255 of 320  Attachment D and staff to evaluate as the project moves forward into future phases of planning and design. Below are the approved motions: Item 14 Attachment D - Summary of Actions to Date and the History of the Cubberley site​        Item 14: Staff Report Pg. 30  Packet Pg. 256 of 320  Attachment D March 24, 2026 Parks and Recreation Commission Meeting The Parks and Recreation Commission received a presentation from staff49 on the proposed Cubberley Conceptual Master Plan and the Draft Initial Study/Mitigated Negative Declaration (IS/MND) prepared under the California Environmental Quality Act (CEQA), and results of the second and third community polls. Staff presented the City’s long-term vision to redevelop approximately 15 acres of the Cubberley campus, including the potential purchase of seven acres from the Palo Alto Unified School District (PAUSD) for $65.5 million. Staff noted that the purchase and implementation of the plan will depend on identifying funding sources, which may include a potential parcel or sales tax ballot measure in November 2026, development impact fees, grants, philanthropic contributions, and public-private partnerships. Staff requested that the commission review and consider the Draft IS/MND and provide a recommendation to the City Council regarding adoption of the Conceptual Master Plan. City Council is scheduled to consider adoption of the plan in April 2026, while staff continue advancing environmental review, partnership discussions, and funding and financing strategies. Commissioners expressed strong appreciation for the work completed to date and shared overall excitement about the vision and direction of the project. Discussion included the use of a Mitigated Negative Declaration under CEQA and the level of detail at the conceptual stage, particularly related to architectural and landscape design, including tree preservation and future planting strategies. The Commission also considered key program elements such as recreation amenities and amphitheater capacity, as well as project phasing, funding flexibility, and timelines tied to land acquisition and partnership opportunities. Commissioners also discussed construction impacts on existing operations and opportunities to support the project through grants, partnerships, and continued community engagement and activation efforts. Following discussion and public comment, Commissioner Smith made a motion to recommend the City Council adopt the Cubberley Conceptual Master Plan, it was seconded by Vice Chair Wei, and the vote passed (5–0) with 1 commissioner choosing to abstain. Staff presented the Draft Conceptual Master Plan, Mitigated Negative Declaration, and results of the fourth community poll to the City Council. Staff’s recommendation to 49 Staff Presentation, March 24, 2026; https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=247caade-d1e4-47ca-b8e1- bc3f8694739e Item 14 Attachment D - Summary of Actions to Date and the History of the Cubberley site​        Item 14: Staff Report Pg. 31  Packet Pg. 257 of 320  Attachment D adopt a Resolution adopting the Mitigated Negative Declaration and the Cubberley Conceptual Master Plan was approved by Council unanimously. Staff also recommended the Council provide direction on next steps to advance the project. Following a presentation on the fourth-round polling results, the Council directed staff to pursue a ½ cent sales tax measure on the November 2026 ballot. Item 14 Attachment D - Summary of Actions to Date and the History of the Cubberley site​        Item 14: Staff Report Pg. 32  Packet Pg. 258 of 320  CITY COUNCIL Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Planning and Development Services Meeting Date: June 8, 2026 Report #: 2603-6116 TITLE San Antonio Road Area Plan Core Scenario and Transportation Analysis Work Plan. CEQA Status: Exempt under CEQA Guidelines Section 15262. RECOMMENDATION Staff recommends that the City Council: 1. Endorse the core scenario for the San Antonio Road Area Plan as the basis for Phase 3 analysis, modified as needed to reflect Council priorities; and 2. Authorize the transportation analysis described in Attachment A, to be completed and presented to Council in Q4 2026 alongside a recommended land use and transportation plan. EXECUTIVE SUMMARY The San Antonio Road Area Plan is a City-led initiative to develop an integrated land use and transportation vision for the 275.3-acre corridor along San Antonio Road, with goals of increasing housing production, improving multimodal mobility, creating new outdoor spaces, and supporting commercial vitality. Based on feedback received at the April 6, 2026 study session, staff has developed a core scenario -- a defined set of land use and mobility assumptions -- to serve as the foundation for Phase 3 analysis. Council is asked to endorse the core scenario and authorize the transportation analysis that will evaluate its implications. Endorsing the core scenario today is not a final land use decision. It is the step that allows staff to focus analytical resources on a well-grounded set of assumptions so that a rigorous transportation analysis can be conducted. That analysis will validate, refine, or adjust the core scenario as needed, and will be presented to Council in Q4 2026 alongside a recommended plan for a decision on the preferred alternative to carry into environmental review. If, after reviewing the Q4 analysis, Council wishes to pursue a different direction, the project team will adjust accordingly. Item 15 Item 15 Staff Report        Item 15: Staff Report Pg. 1  Packet Pg. 259 of 320  The core scenario and the transportation analysis work plan are described in Attachment A. A summary is provided in the Analysis section of this report. BACKGROUND The vision for San Antonio Road is of a vibrant mixed-use corridor connecting pedestrian-oriented neighborhoods where people of all incomes can live, work, and thrive; where safe streets, transit, and green infrastructure can support shorter commutes, reliable transit, and climate resilience; and where a dynamic economy attracts new businesses while sustaining local shops and services that define the community. 1 The session marked a pivotal milestone in Phase 2 of the planning 1 April 6, 2026, City Council Meeting: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=87034&dbid=0&repo=PaloAlto Item 15 Item 15 Staff Report        Item 15: Staff Report Pg. 2  Packet Pg. 260 of 320  process, with staff presenting alternatives that explored meaningful tradeoffs across building heights and residential densities, the role of office development in the CTI (Commercial Street, Transport Street, and Industrial Avenue) sub-area, bicycle and pedestrian facility design, and the distribution of parks and ground-floor retail across four primary sub-areas: Central San Antonio, South Fabian, North Fabian, and CTI. Financial analysis presented at the session identified the 90-foot mid-rise building type as the most financially feasible near-term option for apartment housing production with townhome development being the most feasible overall. Office development in the CTI sub-area was identified as a potential mechanism to improve project feasibility and fund public benefits such as parks and infrastructure. Item 15 Item 15 Staff Report        Item 15: Staff Report Pg. 3  Packet Pg. 261 of 320  ANALYSIS Core Scenario Overview The core scenario covers land use, outdoor space, and mobility. Its purpose is not to finalize a plan but to establish a defined starting point that focuses the transportation analysis and subsequent policy development. Attachment A provides full detail, including the alternative concepts that will be examined alongside the core scenario. Attachment B provides background on how land use and transportation planning are integrated in the Area Plan framework, including the tradeoffs between office, residential, and mixed-use development types. The following summarizes the key elements for Council's consideration. Building Heights and Density The core scenario establishes 90 feet (8 stories) as the height standard across all primary sub- areas – CTI, North Fabian, South Fabian, and Central San Antonio – reflecting the most financially feasible building type under current market conditions for near-term apartment housing production, which is consistent with development applications already in the pipeline. Where primary sub-areas abut lower-density residential neighborhoods, a 60-foot maximum applies as a transition, with setbacks and step-downs as additional tools. Secondary sub-areas and areas of stability maintain existing height limits. To provide a meaningful basis for comparison, the transportation analysis will evaluate the core scenario against a current-zoning baseline – not simply existing conditions, but the development that could reasonably be expected to occur under current zoning. This comparison isolates the transportation effects attributable to the higher household densities the core scenario enables, which is the primary driver of changes in travel demand. Under current zoning, the plan area could yield up to approximately 5,700 residential units. The core scenario – by increasing allowed heights and densities in key areas – could yield up to approximately 6,700 units, roughly 1,000 more. Office and Retail New office and R&D is limited to the CTI sub-area, focused on conversion of existing older commercial and industrial space to Class A office at a scale intended to maintain employment levels while reducing the City's jobs-housing imbalance. Retaining a meaningful commercial component in the plan area also supports the City's long-term fiscal health. Higher-density residential development advances important housing and State policy goals but tends to generate a more modest return to the City's General Fund relative to commercial uses; without some equivalent growth in commercial activity, per-capita General Fund revenue can decline over time, placing pressure on the City's ability to maintain service levels. Preserving office development in the plan area helps balance this fiscal equation as the corridor grows. The core scenario includes 750,000 square feet of office and R&D space in the CTI sub-area (gross, not net new), with an overall net reduction in commercial square footage across the plan area. Neighborhood-serving retail is required at key nodes -- within CTI, within North Fabian, and at Item 15 Item 15 Staff Report        Item 15: Staff Report Pg. 4  Packet Pg. 262 of 320  the San Antonio Road/Middlefield Road intersection -- and is designed to be co-located with outdoor space to support walkable, community-oriented neighborhoods. Where retail is not required, expanded ground-floor use allowances encourage active frontages without mandating retail. Item 15 Item 15 Staff Report        Item 15: Staff Report Pg. 5  Packet Pg. 263 of 320  decision on the preferred alternative to carry into the administrative draft of the Area Plan and environmental review. NEXT STEPS POLICY IMPLICATIONS Item 15 Item 15 Staff Report        Item 15: Staff Report Pg. 6  Packet Pg. 264 of 320  public spaces. Program L2.4.1 required the City to amend the Housing Element to increase housing sites along San Antonio Road between Middlefield Road and East Charleston Road. FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT Item 15 Item 15 Staff Report        Item 15: Staff Report Pg. 7  Packet Pg. 265 of 320  • Pedestrian and Bicycle Advisory Committee -- March 3, 2026 • Human Relations Commission -- March 17, 2026 • Architectural Review Board -- March 19, 2026 • Parks and Recreation Commission -- March 24, 2026 • Planning and Transportation Commission -- March 25, 2026 • City/School Transportation Safety Committee -- March 26, 2026 • Youth Council -- March 31, 2026 ENVIRONMENTAL REVIEW The actions recommended in this report are exempt from review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15262: a project involving only feasibility or planning studies for possible future actions that has not been approved, adopted, or funded would not have significant impact on the environment. The City will prepare an environmental analysis for the San Antonio Road Area Plan when more project specifics have been identified. ATTACHMENTS Attachment A: San Antonio Road Area Plan Core Scenario Attachment B: San Antonio Road Area Plan Integrated Land Use and Mobility Approach APPROVED BY: Jonathan Lait, Planning and Development Services Director Item 15 Item 15 Staff Report        Item 15: Staff Report Pg. 8  Packet Pg. 266 of 320  1 San Antonio Road Area Plan Core Scenario The following topics are addressed in this attachment: Overview ....................................................................................................................................... 1 Land Use ....................................................................................................................................... 2 Growth Projections ....................................................................................................................... 5 Outdoor Space ............................................................................................................................ 11 Mobility ....................................................................................................................................... 14 Core Scenario and Work Plan Summary ...................................................................................... 21 Overview The proposed work plan for phase three of the project, described in this attachment, focuses on a single core scenario (a high-level set of standards and development concepts) based on feedback received from the City Council, advisory bodies, and the public. For portions of the Area Plan for which there was no consensus, or for which Council members requested additional information, staff will also analyze additional concepts that the project team will explore. The Area Plan will create a 20-year vision for the San Antonio Road corridor, with a focus on four main goals: • Create a more livable community: Encourage residential and mixed-use development, with housing at all income levels, and access to well-designed public spaces and neighborhood services and retail. • Improve mobility and safety: Enhance streets, sidewalks, bike lanes, and transit connections for easier and safer travel for all users. • Support sustainability: Promote development with fewer, shorter commutes, integrate green infrastructure, increase tree canopy, and build resilience to climate change. • Enhance economic vitality: Attract new businesses, strengthen Palo Alto’s economy, and preserve valued local businesses. To achieve these goals, staff recommends an approach which divides the plan area into sub areas and then separates these into areas of change and areas of stability. Land use priorities are proposed for the areas of change, while mobility priorities apply to the entire plan area. Combined, staff refers to the policy recommendations for land use and mobility provided in this report as the core scenario. The core scenario includes how to develop new neighborhoods in the Commercial Street, Transport Street, and Industrial Avenue (CTI) area and along Fabian Way, as well as new development along San Antonio Road itself. There will be a focus on how Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 9  Packet Pg. 267 of 320  2 to create new outdoor and community spaces, integrate local-serving retail and employment, create connections to existing and new transit, and improve bike and pedestrian safety and connectivity. Land Use The core scenario divides the plan area into Primary Sub-Areas, Secondary Sub-Areas, and Areas of Stability (refer to Figure A). The Primary Sub Areas include the CTI (Commercial Street, Transport Street, Industrial Avenue) area, North Fabian, South Fabian, and Central San Antonio. These areas have the greatest potential for redevelopment and can contribute to creating new neighborhood-serving amenities like outdoor space and retail. The Secondary Sub-Areas include East and West Bayshore, and Alma Street. These areas have limited redevelopment potential in the near term. Areas of Stability include Greenhouse, Green Meadow, and South San Antonio; areas that are 100% built-out with low redevelopment potential. While Green Meadow is not part of the plan area, parts of Green Meadow and South San Antonio are within the impact area of Senate Bill 79 (2025, SB 79), which allows higher density for projects meeting specific criteria. Utilization of SB 79 in these neighborhoods, however, is likely very low due to existing conditions in these areas. The land use direction for the Plan Area is summarized below, addressing identified issues and opportunities in the Plan Area: • Create new neighborhoods in the CTI and North Fabian sub-areas, focusing on appropriate land use mixes to encourage housing diversity, while encouraging infill residential development in the Central San Antonio and South Fabian sub-areas. • Focus outdoor space, neighborhood-serving retail, services, and amenities in new neighborhoods, to create spaces for community interaction and to promote walkability. • Create smaller, walkable blocks where possible. • Infill San Antonio Road with residential uses, supported by pedestrian-focused public realm improvements such as separated bike lanes (also known as cycle tracks), shade trees and vegetation, etc. Figure A. Sub-Areas for Alternatives Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 10  Packet Pg. 268 of 320  3 Housing Reflecting feedback received from the Council study session and given high housing demand and developer interest in the plan area, the core scenario will examine increasing allowed maximum building heights to 90 feet in a way that allows for a height transition to low-density residential neighborhoods. Under the core scenario, new development south of San Antonio Road (including the CTI neighborhood) as well as areas between Fabian Way and San Antonio Road would allow buildings up to 90 feet in height, with remaining areas remaining at a maximum of 60 feet in height (refer to Figure B). Increasing allowed heights to 90 feet allows maximizing midrise buildings, the most typical feasible building type under current market conditions, and consistent with development applications received for the south side of San Antonio Road. This will encourage redevelopment and could deliver new housing and amenities sooner. However, the Area Plan will also include policies or regulations to minimize abrupt height transitions to adjacent, lower- density residential neighborhoods through a 60-foot maximum height in some areas, and possible setbacks and step-downs as additional tools. Based on comments heard at the April 6, 2026, study session with Council, the project team will evaluate this core scenario against an alternative where the zoning does not change and the entire area remains at a maximum of 60 feet in height in order to understand the transportation-related effects between the two scenarios (refer to the Mobility section for more information). The work plan will also include an exploration of potential effects if limited commercial development is allowed to exceed 90 feet in the CTI neighborhood, which could increase project profitability and could provide for additional community benefits (such as public outdoor space and affordable housing), as well as the potential increasing minimum densities in North Fabian sub area (Maxar site) to incentivize greater housing variety and affordability. Commercial Development – Office and Research & Development (R&D) The core scenario will include development of parameters for office/R&D space in the CTI neighborhood. The City has long been an employment center, which has benefited the City financially but has also resulted in a jobs/housing imbalance. In order to maintain the economic health of the plan area, the core scenario will support the conversion of existing commercial (office, R&D, light industrial, and manufacturing space) to class A office/R&D space. This will provide the benefit of refreshing the City’s commercial building stock, allowing it to remain competitive when attracting employers, while also leveraging developer benefits for the City. The level of office space proposed in the core scenario, when combined with the housing units allowed, will reduce the City’s jobs/housing imbalance. The project team will develop a methodology to calculate the amount of new office/R&D space that will maintain employment levels, explore mechanisms for regulating office/R&D space, develop a methodology to assess community benefits from commercial development, and determine if office/R&D space should be restricted to specific parcels of the CTI sub-area. Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 11  Packet Pg. 269 of 320  4 Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 12  Packet Pg. 270 of 320  5 Commercial Development – Retail The core scenario will include requirements related to local-serving retail within the plan area. The City has, and is adjacent to, several regional retail draws such as the Stanford Shopping Center, El Camino Real corridor, and shopping centers in Mountain View and East Palo Alto. The Area Plan will therefore not propose another regional drawing retail center, but instead encourage local-serving retail to support the existing and future neighborhoods within and nearby the plan area. The core scenario will explore the creation of retail nodes that concentrate these uses where they are most needed, the CTI and North Fabian sub-areas and the intersection of San Antonio Road and Middlefield Road, while allowing (but not requiring) retail in other locations in the Area Plan. Neighborhood-serving retail will be needed to aid in reducing reliance on personal vehicles by providing daily necessities close to new housing. This retail design will work in conjunction with the outdoor space design to create walkable, mixed- use, community-oriented neighborhoods by encouraging “third places” for community gathering by clustering outdoor spaces, retail, and other amenities. Size standards will ensure that new outdoor spaces are well-designed, usable, and accessible for all (refer to the section on outdoor space). The project team will also explore allowing expanded commercial uses for the ground floor in buildings where neighborhood-serving retail is not required. Retail is most successful in locations with specific characteristics, and requiring retail as ground floor use in all new projects could be a barrier for redevelopment or result in a retail vacancy problem. To promote active ground floors in areas where retail is not critically needed, the range of allowed uses can be expanded to provide developers with more flexibility. Overall, the project team will analyze and confirm key locations for required retail, including the minimum amount of retail needed to support existing and future residents, and assess the location and amount of (new and existing) retail recommended for the Area Plan to support more ped/bike trips and reduce vehicle travel. Growth Projections Feedback provided in the Council study session on April 6, 2026, included concern from both residents and Councilmembers about the projected growth represented in the materials presented. This has led the project team to conduct additional analysis related to both current zoning and the proposed core scenario. This analysis included some additional assumptions, described below: • To simplify the comparison of the no plan/current zoning and core scenarios, the analysis looks at a 100% build-out of the sites identified for potential redevelopment Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 13  Packet Pg. 271 of 320  6 in all the sub-areas except for CTI, which has smaller parcel sizes. The build-out for CTI is assumed to be 50% of the sub-area for residential uses.1 1 Note on Buildout Assumptions: Tables A and B reflect 100% buildout of all sub-areas. In practice, buildout rates vary by scenario and sub-area. Under current zoning (Table A), an estimated 60% buildout across much of the plan area can be expected, due to existing parcel configurations, market conditions and various redevelopment incentives. North Fabian is an exception – the planned loss of Maxar's office and R&D operations make full – or nearly full – conversion to housing likely under either scenario. CTI is expected to reach approximately 50% of capacity under current zoning, meaning fewer residential units and more retained commercial space than Table A reflects. Under the core scenario (Table B), overall buildout is expected to increase to approximately 75% across much of the plan area, with North Fabian performing similarly to Table A and CTI seeing meaningfully greater redevelopment activity due to anticipated lot consolidation and development incentive structures. This higher level of redevelopment is also expected to generate increased access to open space and community gathering places, additional affordable housing, greater capacity to help fund corridor mobility improvements, and increased likelihood of successful neighborhood-serving retail and amenities that will support creating a walkable district and reduce vehicle trips. Staff will be prepared to discuss these assumptions in greater detail at the June 8 hearing. Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 14  Packet Pg. 272 of 320  7 Figure C. Potential "change parcels" in Plan Area Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 15  Packet Pg. 273 of 320  8 • The analysis assumes maximum allowed densities for calculating potential yield. For the Maxar site, the minimum gross density is analyzed based on the existing market demand for lower-density for-sale residential development. • The analysis assumes that some existing commercial/industrial uses may be lost as part of the redevelopment. While not shown in the build-out calculations, the plan will require a certain amount of neighborhood-serving retail and services (the amount is to be determined after further analysis). • The analysis has refined the list of potential redevelopment sites and updated the yield of pipeline projects as per new application submittals received by May 1, 2026. Combining both residential and commercial development in the core scenario, and other factors such as current use and ownership, the project team has created a map of which parcels are most likely to redevelop over the next 25 years (Figure C). This analysis, combined with proposed standards under the core scenario and existing pipeline development applications, results in some assumptions about the maximum potential build out under both current zoning (60 feet/five stories) and the core scenario (increase to 90 feet/eight stories in some areas). For purposes of this analysis, the current baseline reflects the development that could reasonably be anticipated under existing conditions, not simply existing conditions, but the redevelopment likely to occur given current zoning, market demand and demonstrated developer interest. As these parcels are under private ownership, there is no guarantee that these parcels will be fully built out during the Area Plan time frame. Contributing factors to potential development include: • Palo Alto’s Housing Element (2023-2031) has identified 53 opportunity sites and allocates 1,559 new housing units to the Plan Area, representing 26% of the citywide housing allocation. • The GM and ROLM zoned parcels within the Area Plan are designated as Focus Area, allowing for more housing production within the Area Plan. Currently, GM and ROLM allow commercial development but very limited office development. • The City’s HIP also applies to a portion of the Area Plan, substantially increasing the development capacity along the San Antonio Road. Maximum development under current zoning (60-foot building height, 90 dwelling units per acre (du/ac) density) yields a total of 5,700 residential units, and a loss of up to 1,484,000 sq ft of existing commercial and industrial uses. Table A below shows the development capacity possible under current zoning for each sub-area. For simplicity, the table does not include potential ground floor uses and potential minimum retail requirements in the CTI and Maxar redevelopment areas. Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 16  Packet Pg. 274 of 320  9 Table A. Current Zoning Potential Development Sub-Areas Existing Commercial Area Existing Residential Units Existing Zoning* Commercial Net Change Residential Net Change (units) CTI Neighborhood 528,800 sf 0 -499,000 sf 1,200 North Fabian 683,000 sf 0 -599,000 sf 1,500 South Fabian 177,000 sf 384 -177,000 sf 800 Central San Antonio 449,000 sf 0 -209,000 sf 1,900 East Bayshore 414,000 sf 0 No change No change West Bayshore 35,000 sf 0 No change 200 Greenhouse 0 sf 228 No change No change South San Antonio 99,000 sf 125 No change No change Alma Street 13,600 sf 65 No change 100 Total 2,399,400 sf 802 units -1,370,000 sf 5,700 units The core scenario includes similar heights and residential densities as the current zoning in some areas, while increasing building heights to 90 feet and 135 du/ac in some areas, while also including 750,000 square feet of new office/R&D space in the CTI neighborhood (gross, not net new). This scenario could yield up to a maximum of 6,700 residential units, an increase of 1,000 units over what current zoning allows, and 750,000 square feet of new office/R&D space with a net loss of 734,000 square feet of existing commercial uses. Table B below shows the development capacity for this alternative for each sub-area. For simplicity, the table does not include potential ground floor uses and potential minimum retail requirements in the CTI and Maxar redevelopment areas. Table B. Core Scenario Potential Development Sub-Areas Existing Commercial Area Existing Residential Units Core Scenario* Commercial Net Change Residential Net Change (units) CTI Neighborhood 528,800 sf 0 251,000 sf 1,800 North Fabian 683,000 sf 0 -599,000 sf 1,500 South Fabian 177,000 sf 384 -177,000 sf 800 Central San Antonio 449,000 sf 0 -209,000 sf 2,300 East Bayshore 414,000 sf 0 No change No change West Bayshore 35,000 sf 0 No change 200 Greenhouse 0 sf 228 No change No change South San Antonio 99,000 sf 125 No change No change Alma Street 13,600 sf 65 No change 100 Total 2,399,400 sf 802 units -734,000 sf 6,700 units Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 17  Packet Pg. 275 of 320  10 Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 18  Packet Pg. 276 of 320  11 Outdoor Space The core scenario seeks to ensure that all residents within the plan area are no more than a 10- minute walk from a City park, nature reserve, or privately owned/publicly accessible outdoor space. As the Area Plan sub-areas become more residential and their populations grow, the need for outdoor space (parks, plazas, playgrounds, parklets, etc.) becomes a critical design consideration. Phase One analysis identified gaps in access to outdoor space (refer to Figure D), where much of the Plan Area lacks a park or public outdoor space within a ten-minute walk. These gaps overlap with the CTI and North Fabian sub-areas, where most future development is expected. This will be achieved through improving bike and pedestrian connections to existing outdoor spaces, as well as creating policies that will lead to the creation of new outdoor spaces in the portions of the plan between E. Charleston Road and U.S. 101 (the CTI area and along Fabian Way). In addition, the core scenario will seek to collocate retail and services alongside outdoor space to increase their activation. Based on the feedback received so far, the core scenario (refer to Figure E) will seek to create the largest parks possible supplemented by smaller outdoor spaces. This could include a 3- to 3.5-acre park in the Fabian Way area should the Maxar site redevelop, while an outdoor space larger than 1.5 acre is less likely in the CTI area, due to the small lots found there. These parks would be complemented by paseos and other bike/ped connection improvements (see Mobility section below), including increasing the tree canopy along areas people walk and bike. It is important to note that the City currently owns no parcels within these areas and will need to work with property owners and developers to create new outdoor spaces. The core scenario will set minimum size and location criteria for new outdoor spaces and set minimum requirements for providing these on-site (compared to in-lieu fee). The standards created may differ from those currently applied to low- to mid-density residential developments. Additionally, the project team will coordinate with connectivity and mobility improvements to ensure low-stress and direct pedestrian and bike access to existing and new outdoor spaces. Key street improvements related to outdoor space include: • San Antonio Road is envisioned as a key east-west ped/bike connection with continuous tree canopy to create a pleasant experience connecting new residential areas to amenities and transit. • E. Charleston Road is envisioned as a key north-south ped/bike connection, linking schools and other destinations across San Antonio Road and to Mountain View. • Fabian Way becomes a key bike connection to the Baylands, utilizing the ped/bike bridge over U.S. 101. Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 19  Packet Pg. 277 of 320  12 Table C. Summary of Core Scenario by Sub-Area Primary Sub-Areas CTI Neighborhood Land use: Residential mixed-use, with neighborhood retail required in key location(s). Study the effects of office/research & development space which keep employment in the plan area stable. Height: 90 feet maximum (8 stories). Concepts to explore: Evaluate the comparative effects of 60-foot maximum and 90-foot maximum. Evaluate the effects of allowing Provide new outdoor space in North Fabian sub-area, co-located with neighborhood-serving retail, amenities Provide new outdoor space in interior of CTI sub-area, co-located with neighborhood- serving retail, amenities Proposed new outdoor space in Mountain View project Coordinate with planned US-101 interchange ped- bike improvements Coordinate outdoor spaces with bike-ped improvements on major streets and intersections for enhanced connectivity Figure E. Outdoor space and connectivity strategies for the CTI and North Fabian sub-areas Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 20  Packet Pg. 278 of 320  13 buildings to exceed 90 feet. Evaluate the effects of a reduced office/research & development allowance. North Fabian Land use: Residential mixed-use, with neighborhood retail required in key location(s). Height: 90 feet maximum (8 stories), height transitions required when adjacent to existing low-density residential neighborhoods (60 feet maximum). Concepts to explore: Explore setting minimum density to encourage midrise residential and minimize townhomes. Evaluate the comparative effects of 60 feet maximum and 90 feet maximum. South Fabian Land use: Residential mixed-use, neighborhood retail allowed but not required. Study expanded list of allowed uses for active ground floors. Height: 90 feet maximum (8 stories), height transitions required when adjacent to existing low-density residential neighborhoods (60 feet maximum). Concepts to explore: Evaluate the comparative effects of 60 feet maximum and 90 feet maximum. Central San Antonio Land use: Residential mixed-use, with neighborhood retail required in key location(s). Height: 90 feet maximum (8 stories), height transitions required when adjacent to existing low-density residential neighborhoods (60 feet maximum). Concepts to explore: Evaluate the comparative effects of 60 feet maximum and 90 feet maximum. Other Sub-Areas (Maintain Existing Zoning and Development Standards) East Bayshore Land use: Low-density commercial (maintain existing development standards including heights). West Bayshore Land use: Low-density commercial with residential uses allowed (maintain existing development standards including heights). Greenhouse Land use: Low-density residential (maintain existing development standards including heights). South San Antonio Land use: Low to medium-density residential (maintain existing development standards including heights). Alma Street Land use: Low to medium-density residential with institutional/civic uses (maintain existing development standards). Note that SB 79 will allow higher-density residential for qualifying projects, and two sites are both Housing Opportunity Sites and subject to Senate Bill 4 (2023), the Affordable Housing on Faith Lands Act, which allow for greater development if certain conditions are met. This will be studied by the City as part of separate initiatives. Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 21  Packet Pg. 279 of 320  14 Mobility The Area Plan will reimagine the San Antonio Road corridor as a multimodal spine that balances mobility with placemaking. Any approach needs to incorporate existing users, including those who live in or adjacent to the plan area, those who travel to jobs, retail, and services in and around the plan area and in neighboring communities, and trucks which rely on this route to connect from U.S. 101 to Alma Street and beyond into Mountain View, Los Altos, and Los Altos Hills. The project team’s approach to mobility recognizes that land use and transportation are interdependent and must be planned as a single, integrated system. Travel demand and mode choice are shaped by where homes, jobs, services, and public spaces are located; and mobility strategies are most effective when they reinforce compact, mixed-use, and pedestrian-oriented land use patterns. By aligning transportation investments with planned growth areas and community-serving destinations, the approach focuses on reducing the need for vehicle- dependent trips while expanding the ability of current and future residents, workers and visitors to walk, bike, and take transit to their destinations. To that end, the project team will perform analysis to understand the transportation benefits and considerations of the proposed land use in the core scenario within and through the Area Plan. When staff returns to Council in Q4 2026, it will provide a qualitative and quantitative assessment for the core scenario and defined alternatives under consideration. This will include an understanding of how the proposed land use is expected to affect single-occupancy driving and vehicle miles traveled (VMT), and whether the core scenario gets the City closer to achieving its greenhouse gas (GHG)/air quality, congestion, mode shift, public health, and safety goals. VMT is a useful proxy for evaluating land use options because it shows how location and urban form affect how much people need to drive. VMT can be used as an indicator of land use efficiency, transportation emissions, and system performance and is also correlated with accessibility, safety, and traffic congestion. In practice, lower per-capita VMT generally points to less auto dependence, more efficient land use, and stronger support for walking, biking, and transit. The project team will: • Use transportation-related metrics (such as proximity to similar land use types and effects on VMT) for all of the land use-related options to help inform the decision- making process; • Develop a methodology to evaluate the number and/or proportion of residents within a 10-minute walk or 10-minute low-stress bike ride of key destinations, such as retail, employment, transit stops, schools/child care, grocery stores, and medical/dental facilities, as well as the effects of the proposed mobility interventions (new/enhanced bike facilities, improved transit, etc.); and Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 22  Packet Pg. 280 of 320  15 • Develop a methodology that highlights the different transportation-related benefits and considerations of the current zoning compared to the Core Scenario using proximity to similar land use types and effects on VMT, for Council’s consideration in Q4 of 2026. Mobility strategies emphasize place-based solutions that respond to existing and planned land uses. Street design, transit service, curb and parking policies, and other strategies are used proactively to support desired land use outcomes, such as vibrant commercial corridors, equitable access to jobs and services, and sustainable growth, rather than reacting to congestion after it occurs. By reinforcing the land use-mobility nexus, this approach advances multiple goals simultaneously: improving accessibility, reducing greenhouse gas emissions, enhancing safety, and supporting livable, economically resilient neighborhoods. Key strategies include: • Pedestrian-first design which prioritizes comfortable, accessible, and inviting streets that encourages walking and biking (while recognizing San Antonio as a regional corridor and truck route). • Low-stress bike routes which provide high quality bikeways that meet the needs of people of all ages and abilities. • First/last mile connections which integrate walking, biking, shuttles, and shared mobility to create a seamless journey from doorstep to destination, as well as creating one or more mobility hubs. • Parking and demand management which apply strategies to reduce travel demand and organize allocation of curb space to improve access and efficiency. • Smart corridor technology which uses real-time data, adaptive signals, and digital tools to optimize traffic flow and enhance multimodal safety. The Area Plan will: • Build on and coordinate with prior and current planning and design efforts, including the 2026 Bicycle and Pedestrian Transportation Plan (currently scheduled for final adoption in June 2026), South Palo Alto Bike/Ped Connectivity Project, US-101 Interchange Project, and Fabian Way South Palo Alto Bikeways Demonstration Project. • Prioritize safer connections to schools, parks, retail, and transit, and improved crossings of San Antonio Road at Nita Avenue, Middlefield Road, and Charleston Road. • Enhance connections to San Antonio Caltrain Station and create additional transit options for the area. • Create a comfortable walking and biking experience along and across San Antonio Road, providing separated bikeways or multi-use paths. • Consider an increase in vehicle and truck traffic related to new development in Mountain View and Palo Alto. Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 23  Packet Pg. 281 of 320  16 Figure F. Overall Mobility Direction Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 24  Packet Pg. 282 of 320  17 In the core scenario, primary interventions will focus on the major street corridors: San Antonio Road, East Charleston Road, Middlefield Road, and Alma Street. Where possible, new connections will be made to increase walkability, bikability, and transit accessibility. Connections to Caltrain will be improved, and policies to provide additional transit and create pedestrian-friendly neighborhoods in the CTI area and the Fabian neighborhoods will be included. Bike/ped routes through residential neighborhoods and anti-traffic intrusion measures into residential neighborhoods will also be examined (refer to Figure F). Bike/Ped Infrastructure The Area Plan aims to create a fully connected, accessible, and prioritized network of sidewalks and low-stress bikeways which promote walkability, bicycling, safety, and connection to destinations. Establishing publicly accessible private paths and paseos to bridge existing gaps and shorten walking/biking distances will further ensure a comfortable and convenient pedestrian and bicycle network within the Area Plan, and connect seamlessly into the City’s existing network. The proposed bike network incorporates separated bikeways for busier streets, well-designed intersections connecting to traffic-calmed bike boulevards, wayfinding signage, and ample bike parking to encourage travel by bike throughout the Area Plan. The Area Plan also seeks to improve connections into Mountain View. Because San Antonio Road is the only east-west truck route in the City and services the cities of Mountain View and Los Altos and the Town of Los Altos Hills, extra care needs to be taken to ensure cyclist and pedestrian comfort and safety. The project team will incorporate standards from the City’s complete streets policy as well as the 2024 American Association of State Highway and Transportation Officials (AASHTO) guidance on complete streets for truck routes and other design standards. The core scenario will examine improvements that can be implemented with relatively low cost and high speed in the short term while leaving options open for more advanced improvements to follow. These short-term improvements would include projects such as removing parking on San Antonio Road to create street-level separated bike-lanes and other restriping projects. More advanced options could include sidewalk-level separated bike lanes or multi-use paths (which would require the City to acquire land or easements to expand the existing right-of- way), or moving curbs inward to create room for side-walk level facilities (which would require reconstruction of parking lanes and potentially replanting of street trees and movement of utilities and stormwater infrastructure). Transit The mobility framework focuses on designing intuitive, accessible, and safe routes to local and regional transit through priority pedestrian and bike streets, wayfinding signage to navigate to Caltrain, enhanced bus stop amenities for passengers, and mobility hubs within the plan area. This plan sets the stage for expanded transit services, coordinating with Valley Transportation Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 25  Packet Pg. 283 of 320  18 Authority (VTA) or other partners, to strengthen San Antonio Road as a multimodal corridor, supporting planned land uses and providing access to Caltrain and other destinations. Transportation Demand Management (TDM) TDM strategies will be applied to make sure that new development is designed to make it easier for tenants, residents, and employees to get around using sustainable modes. A focus will be put on managing demand through programs, incentives, and policies that make walking, biking, transit, and shared travel more convenient and cost-effective. Key TDM strategies include creating a supportive mix of land use; streetscape improvements that make it easy and comfortable to walk and bike; providing designated secure areas for bike parking and bike maintenance and repair; providing car-share parking and bike fleets on-site and offering subsidized memberships; and integrating real-time transit information and wayfinding. Early implementation with new development will ensure programs are in place at occupancy and adjusted over time as travel patterns evolve. The standards, guidelines, programs, and policies in this Area Plan will be informed and in conformance with foundational City plans and policies including the 2030 Comprehensive Plan, 2026 Bicycle and Pedestrian Transportation Plan (scheduled to be finalized in June 2026), Parks, Trails, Natural Open Space, and Recreational Master Plan, Green Stormwater Infrastructure Plan, and Public Art Master Plan. This plan would implement design guidance and projects identified by the City and implement policies, programs, and practices to support and achieve these mobility goals. Mobility hubs are a key component to developing TDM. They are places where multiple transportation modes are cohesively and conveniently located to provide an integrated suite of mobility services and amenities. They may feature a transit stop, enhanced crossings, bike racks and secure bike parking, shared micromobility services, real-time transit information, car share parking, passenger loading zones, electric vehicle parking, and vehicle parking. Potential locations within the plan area include at San Antonio Road/Charleston Road, San Antonio Road/Middlefield Road, and near the San Antonio Caltrain Station. Vehicle Circulation Vehicle circulation strategies are aimed to prioritize local circulation and access, prevent auto intrusion into neighborhoods, encourage low speeds, and reduce potential for conflicts with other modes. This is especially critical as San Antonio Road, E. Charleston Road, Middlefield Road, and Alma Street all play critical roles in connecting Palo Alto to neighboring communities, and San Antonio Road is the City’s only east-west truck route. These strategies are not focused solely on maximizing vehicle throughput and reducing vehicle delay. The strategies prioritize the following: • Maintaining reliable access to residences and businesses; • Reducing cut-through traffic and managing traffic through operations and designs: o Intersection reconfigurations Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 26  Packet Pg. 284 of 320  19 o Signal timing modifications, and o Modal filters to restrict or discourage through movements; and • Maintaining local vehicle access for residents, deliveries, and emergency services. Parking and Curb Management The parking and curb management strategy establishes a coordinated approach to using limited street- and curb-space more efficiently. Rather than prioritizing long-term vehicle storage, the strategy treats parking and curb areas as flexible assets that must balance loading and deliveries, short-term parking, transit operations, active transportation, and public realm needs. This approach aligns curb and parking policies with surrounding land uses, travel demand, and peak activity periods to reduce conflicts, improve turnover, and support local businesses and residents. Overall, the strategy emphasizes managing demand over increasing supply by right- sizing parking, improving pricing and time limits where appropriate, and reallocating curb space to higher-value uses as needs evolve. Street, Sidewalk, and Bikeway Improvements The core scenario will provide a framework for the creation of a safe and low-stress bike facility on San Antonio Road connecting from the proposed US-101 interchange to Caltrain, as well as improving facilities on San Antonio Avenue, Fabian Way, E. Charleston Road, Middlefield Road, and Alma Street (including intersection improvement options described below). An alternative will also seek to acquire access across private property through acquisition of easements or purchasing land to connect Sutherland Drive and Wyandotte Street to San Antonio Road. San Antonio Road and San Antonio Avenue are divided into three sections: (1) east of E. Charleston Road, (2) west of E. Charleston Road and east of Middlefield Road, and (3) west of Middlefield Road. The core scenario will create the framework for the creation of: • A two-way, separated bikeway on the north side of San Antonio Road connecting E. Charleston Road to the planned U.S.-101/San Antonio Road interchange improvements; • A near-term, street-level separated bikeway on both sides of San Antonio Road which leaves open the possibility of future development; and • A two-way, separated bikeway on the north side of San Antonio Road to San Antonio Avenue and across Alma Street to the Caltrain station. As part of this workplan, the project team will examine the comparative costs associated with two potential future facilities along the central portion of San Antiono Road. One is a sidewalk- level, two-way either cycle track or mixed used path only on the north side of San Antonio Road, which would require the acquisition of land or easements to build. The second is a sidewalk-level facility on one or both sides of San Antonio Road which would require the existing curbs to be moved, as well as street trees and utilities. The project team will explore the feasibility and potential costs of these options. Key improvements are detailed in Figure G. Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 27  Packet Pg. 285 of 320  20 Figure G. Key San Antonio Road Improvements Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 28  Packet Pg. 286 of 320  21 Additional improvements to bike/ped facilities on E. Charleston Road, Fabian Way, and Alma Street, including new separated bikeways, will be explored in this work plan. The focus will be on improving connections, safety, and comfort into adjacent neighborhoods in Palo Alto and the City of Mountain View. The project team will explore improving a bike route parallel to Alma Street instead of, or in addition to, creating a new bikeway along it. Intersection Improvements The core scenario will seek to create a grade-separated connection between the CTI and North Fabian sub areas, as well as improve existing intersections. Improvements could include creating protected intersections,2 creating pedestrian zones, providing median refuges at longer crossings, consolidating existing driveway access, extending existing bike lanes through the intersections, and enhancing connections to bike boulevards. Core Scenario and Work Plan Summary The below table provides a summary of the work described above, broken down by topic area, for ease of understanding what Staff is proposing as part of the core scenario and the limited alternatives. More detailed description of this can be found in Attachment A. Table D. Summary of Work Plan Topic Area Core Scenario Concepts to Explore Building Heights Increase to 90 feet in CTI, between Fabian Way and San Antonio Road, and south of San Antonio Road; remain at 60 feet elsewhere Limited development taller than 90 feet in CTI sub-area Minimum Residential Density Determine the appropriate minimum density Office and R&D Space Allow sufficient office/R&D space within the CTI sub-area to keep employment steady, and reduce jobs/housing imbalance through the creation of new residential units 2 A protected intersection (or “Dutch-style intersection”) is an at-grade road design that uses physical separation, such as raised curbs, bollards, or corner islands, to separate cyclists and pedestrians from motor vehicles. Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 29  Packet Pg. 287 of 320  22 Topic Area Core Scenario Concepts to Explore Retail Require neighborhood-serving retail at specific nodes (within CTI and North Fabian, at intersection of San Antonio Road and Middlefield Road); Expand allowed uses for ground floor commercial spaces where neighborhood- serving retail is not required Outdoor Space Require new outdoor spaces as part of future development in the CTI and North Fabian sub-areas Require outdoor spaces to be co- located/clustered with neighborhood- serving retail and amenities Transportation Network Priorities Prioritize improving the pedestrian realm, bike network, transit, vehicle circulation, freight circulation, and parking and curb management Transit Develop a microtransit strategy to enhance existing and future resident and employee access to the Caltrain station and other key destinations, while continuing to work with VTA to expand bus service on San Antonio Road in Palo Alto San Antonio Road Create framework for a Class IV separated bikeway along San Antonio Road and Avenue, from the Baylands to the Caltrain station, with a near-term, cost- efficient design that leaves open the ability to improve to a side- walk-level bike facility in the future Explore sidewalk-level bike facility on both sides of San Antonio Road from Nita Avenue to E. Charleston Street Explore sidewalk level two-way multi- use path or separated bikeway (cycle track) on north side of San Antonio Road Cross Streets Create framework for improved ped/bike facilities on roads running perpendicular to San Antonio Road Explore acquisition of easements or purchasing land to connect Sutherland Drive and Wyandotte Street to San Antonio Road for bike/pedestrian use Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 30  Packet Pg. 288 of 320  23 Topic Area Core Scenario Concepts to Explore Improve Intersections Identify best-practice design strategies for key intersections along San Antonio Road (E. Charleston Road, Middlefield Road, Nita Avenue/McKay Drive, Alma Street), San Antonio Avenue and Briarwood Way, and at Fabian Way and E. Charleston Road to enhance safety, reduce cut- through traffic, and manage vehicle flow Enhance Access to Caltrain Create framework for improving ped/bike access to the San Antonio Caltrain Station in Mountain View via enhanced crossing of Alma Street at San Antonio Avenue Explore possibility of acquiring legal access through Google X campus from San Antonio Avenue and Nita Avenue parallel to San Antonio Road on-ramp to existing signalized crossing at Mayfield Avenue and Central Expressway in coordination with Mountain View Alma Street Create framework for improved ped/bike facilities on the east side of Alma Street from San Antonio Avenue to E. Meadow Drive and create high visibility ped/bike crossing markings at intersections Improve interior neighborhood routes including better wayfinding on ped/bike routes parallel to Alma Street Item 15 Attachment A - San Antonio Road Area Plan Core Scenario        Item 15: Staff Report Pg. 31  Packet Pg. 289 of 320  1 San Antonio Road Area Plan Integrated Land Use and Mobility Approach The following topics are addressed in this attachment: Overview ......................................................................................................................................... 1 Integrating Land Use and Mobility ................................................................................................. 1 Diversity of Land Uses ..................................................................................................................... 3 Overview The San Antonio Road Area Plan (Area Plan) seeks to create the capacity to meet not only the requirements assigned to the City through the Regional Housing Needs Allocation (RHNA) tied to the sixth cycle of the Housing Element, but also additional housing needs beyond 2031 (the end of the sixth cycle). It also seeks improvements in transportation conditions for all roadway users and encourages more neighborhood amenities, such as parks and local-serving retail. Integrating Land Use and Mobility In Palo Alto, a lower-traffic land use mix is not simply “commercial plus residential.” It is a pattern that allows people to live near work, meet daily needs locally, access schools, parks, and civic uses, and reach local and regional transit by a comfortable walk or bike trip. In land use and transportation planning, the “6 Ds” framework (density, diversity, design, destination accessibility, distance, and demand management) describes how the built environment influences travel behavior and urban form. Each of the 6 Ds is described below: 1. Density refers to the intensity of development, including housing and employment concentration. Higher density can support transit, place more destinations within walking distance, and reduce per-capita vehicle travel when paired with supportive land use and design. On its own, however, density does not guarantee reduced driving. Key Takeaway: More housing/jobs in accessible infill areas can support lower vehicle trips. 2. Diversity refers to the mix of housing, jobs, services, schools, parks, civic uses, and neighborhood-serving commercial uses. Mixed-use environments can shorten trips and increase the share of trips made by walking, bicycling, or transit. The key issue is not simply allowing multiple uses, but whether they are close enough to function together in daily life. Key Takeaway: Mixed-use environments can shorten trips and increase internal trip capture. Item 15 Attachment B - San Antonio Road Area Plan Integrated Land Use and Mobility Approach        Item 15: Staff Report Pg. 32  Packet Pg. 290 of 320  2 3. Design refers to the layout and quality of the transportation network and public realm, including street connectivity, sidewalks, bike facilities, crossings, frontage design, and parking placement. Good design makes non-auto travel safer, more comfortable, and more direct. Key Takeaway: Connected, pedestrian-, and bicycle-friendly design can shift short trips away from driving. 4. Destination accessibility refers to how easily people can reach important local and regional destinations such as jobs, schools, retail, civic uses, parks, and transit hubs. A place may be walkable locally but still generate high vehicle travel if major destinations are far away or poorly connected. Key Takeaway: Sites with better access to jobs, services, and transit tend to generate lower trips than peripheral locations. 5. Distance refers to the need to keep trips short if people are to realistically be expected to mode shift away from automobiles. This includes collocating housing with jobs, neighborhood serving retail, and other services and amenities. Key Takeaway: Keep as many trips as short as possible to encourage people to walk, bike, or use transit. 6. Demand management, or transportation demand management (TDM) refers to strategies, programs, services, and physical improvements intended to reduce single- occupancy vehicle travel and peak-period vehicle trips and to encourage travel by transit, walking, bicycling, carpooling, vanpooling, telecommuting, and other alternatives. Key Takeaway: Create policies/programs that encourage walking, biking, transit use, vanpooling, telecommuting, etc., such as transit pass subsidies, bike parking and showers, and unbundled parking. The 6 D’s work best in combination. Higher density with poor design may still produce auto dependence, while good design in a low-density area may improve walkability but not support frequent transit. Together, all six create the strongest conditions for reducing vehicle dependence. For the Area Plan, the goal is to support enough people and jobs to sustain activity (density), enough land use mix to enable short local trips (diversity), enough connectivity and safety to make those trips practical without driving (design), and enough regional access to connect local places to the broader area (destination accessibility) while creating destinations that residents need to travel to in close proximity to housing (distance) and implementing strong policies to encourage mode shift for some trips (demand management). Item 15 Attachment B - San Antonio Road Area Plan Integrated Land Use and Mobility Approach        Item 15: Staff Report Pg. 33  Packet Pg. 291 of 320  3 Diversity of Land Uses At a high level, office development tends to generate the strongest near-term municipal revenue per square foot; higher-density housing tends to produce broader community and State-policy benefits but can create nearer-term service and infrastructure costs; and mixed- use development often offers the best balanced outcome by diversifying the tax base, supporting walkability, and reducing some transportation externalities (although it is usually more complex to deliver). Table A below summarizes the costs and benefits of these development types specific to the Area Plan. Table A: Development Type Analysis Development Type Residential Neighborhoods High assessed value, jobs, daytime spending, supports economic base supports RHNA and fair housing, can reduce regional walkability, better jobs- housing balance, corridor activation Main Costs/Risks Traffic, jobs-housing imbalance, housing pressure, infrastructure infrastructure needs, possible weaker fiscal to deliver, retail risk High-Level Fiscal Effect to City Often strongest positive near-term fiscal return fiscally on a standalone basis depending on program mix High-Level Policy Effect Can undermine housing/climate goals if not paired with State housing and sustainability goals well located and designed If Palo Alto allows more office, the City may see strong municipal fiscal upside, but potentially significant indirect social and transportation costs unless office growth is paired with housing production, TDM requirements, and infrastructure investment. Higher-density residential may produce the strongest policy and community-wide benefit, especially on housing affordability VMT reduction, and sustainability, but may present a more challenging municipal fiscal equation unless supported by impact fees, infrastructure financing, and careful unit mix/location strategy. Mixed-use development is often the best compromise strategy for Palo Alto since it can capture part of the fiscal upside of commercial uses while also advancing housing, walkability, and climate goals. The main challenge is ensuring the form, location, and economics are realistic. Item 15 Attachment B - San Antonio Road Area Plan Integrated Land Use and Mobility Approach        Item 15: Staff Report Pg. 34  Packet Pg. 292 of 320  CITY COUNCIL Staff Report From: City Manager Report Type: INFORMATION REPORTS Lead Department: Planning and Development Services Meeting Date: June 8, 2026 Report #: 2604-6308 TITLE 439 Lincoln Avenue [26BLD-00812]: Notice of Demolition Application for a Significant Building within the Professorville Historic District RECOMMENDATION This report is provided for informational purposes only and does not require Council action. BACKGROUND The property located at 439 Lincoln Avenue is situated within the Professorville Historic District, one of the City’s oldest historic districts and one of its earliest residential neighborhoods. The residence at 439 Lincoln Avenue, along with its detached garage, was constructed in 1923, during the district’s period of significance. The design and architecture of the property reflect this early development period, and the property remains largely intact, retaining its early 1920s construction and character. The City-retained historic consultant, Page & Turnbull, concluded that while the property at 439 Lincoln Avenue does not appear to be individually eligible for listing in the California Register under any criterion, it is considered a historic resource as a contributing property within the locally designated Professorville Historic District (Attachment B). The owners of 439 Lincoln Avenue submitted a demolition permit application for the detached garage on March 27, 2026. The main residence is not proposed to be demolished. However, there is an associated development application for a new JADU, detached ADU, and attached garage. ANALYSIS The City’s Historic Preservation Ordinance, Palo Alto Municipal Code (PAMC) Section 16.49.070 states that any person wishing to demolish a significant building,1 other than in the downtown area, shall file an application for a demolition permit in accordance with the procedures 1 "Significant building" means any building, group of buildings, or site categorized on the historic inventory as number one or number two and all structures within historic districts. Item A Item A Staff Report        Item A: Staff Report Pg. 1  Packet Pg. 293 of 320  established by PAMC Chapter 16.04 and said application and documentation of the structure shall be forwarded to the City Council as an information item. FISCAL/RESOURCE IMPACT All associated staff costs associated with processing this application are recovered through applicant-paid fees established in the Fiscal Year 2026 Adopted Municipal Fee Schedule. STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW This informational report is not a project under the California Environmental Quality Act (CEQA) and does not require environmental review. The proposed demolition application of the one- story detached garage involves the issuance of a building permit, which is exempt from CEQA pursuant to CEQA Guidelines Section 15268 (Ministerial Projects). Section 15268 provides that the determination of whether a project is “ministerial” is made by the public agency based on its analysis of its own laws and regulations. In the absence of discretionary provisions governing the application, the issuance of building permits is presumed to be ministerial. Because the proposed project involves only a building permit, a ministerial approval, no environmental review under CEQA is required. ATTACHMENTS APPROVED BY: Item A Item A Staff Report        Item A: Staff Report Pg. 2  Packet Pg. 294 of 320  Item A Attachment A - Demolition Application [26BLD-00812]        Item A: Staff Report Pg. 3  Packet Pg. 295 of 320  Item A Attachment A - Demolition Application [26BLD-00812]        Item A: Staff Report Pg. 4  Packet Pg. 296 of 320  Item A Attachment B - Documentation of Structure Proposed for Demolition        Item A: Staff Report Pg. 5  Packet Pg. 297 of 320  DPR 523A (9/2013) *Required information State of California ⎯ The Resources Agency Primary #______________________________________________ DEPARTMENT OF PARKS AND RECREATION HRI #__________________________________________________ PRIMARY RECORD Trinomial______________________________________________ NRHP Status Code Other Listings_____________________________________________________________________ Review Code________ Reviewer________________________ Date_______________ Page 1 of 13 Resource name(s) or number (assigned by recorder) 439 Lincoln Avenue P1. Other Identifier: *P2. Location: Not for Publication Unrestricted *a. County Santa Clara *b. USGS 7.5’ Quad Palo Alto, CA Date 2021 *c. Address 439 Lincoln Avenue City Palo Alto Zip 94301 d. UTM: (Give more than one for large and/or linear resources) Zone , mE/ mN *e. Other Locational Data: Assessor’s Parcel Number 120-18-022 *P3a. Description: (Describe resource and its major elements. Include design, materials, condition, alterations, size, setting, and boundaries.) 439 Lincoln Avenue (APN 120-18-022) is a two-story, single-family residence that was designed and built in 1923 in the French Eclectic style by civil engineer Robert Duryea who was the building’s first owner-occupant along with his wife, Dorothy. At the time of the building’s construction until approximately 1925, its address was 441 Lincoln Avenue. 439 Lincoln Avenue is located on an approximately 20,000 square-foot rectangular parcel within the Professorville neighborhood of Palo Alto, and is located within the boundaries of the locally listed Professorville Historic District. It is situated along the west side of Lincoln Avenue between Waverley and Cowper streets. The parcel contains a residence, a detached garage, a pool, several mature trees, and a large lawn at the rear (Figure 1). The residence is irregular in plan and is set back from the street behind a curved, asphalt driveway. The residence at 439 Lincoln Avenue is a wood-framed building clad in stucco and is largely L-shaped in plan. The curving hipped roof is clad in steam bent asphalt shingles simulating a thatched roof, and has closed eaves with a stucco-clad soffit and metal gutters. A stucco clad interior chimney is located near the center of the north roof slope. The residence features a variety of window types, including multi-lite fixed and double-hung wood sash. All double-hung windows feature ogee lugs. One-over-one hung and single-lite fixed vinyl windows are limited to the northwest façade additions. (Refer to Continuation Sheet, page 2) *P3b. Resource Attributes: HP2: Single-Family Residence *P4. Resources Present: Building Structure Object Site District Element of District Other P5b. Photo: (view and date) Primary façade, looking northeast, May 22, 2024. *P6. Date Constructed/Age and Sources: Historic Prehistoric Both 1923. The Peninsula Times Tribune, Building Permit Index at Palo Alto Historical Association. *P7. Owner and Address: Vidhya Thyagarajan – 439 Lincoln Ave, Palo Alto, CA 94301 *P8. Recorded by: Page & Turnbull, Inc. 170 Maiden Lane, 5th Floor San Francisco, CA 94108 *P9. Date Recorded: June 17, 2024 *P10. Survey Type: Intensive *P11. Report Citation: None *Attachments: None Location Map Sketch Map Continuation Sheet Building, Structure, and Object Record Archaeological Record District Record Linear Feature Record Milling Station Record Rock Art Record Artifact Record Photograph Record  Other (list) P5a. Photo Item A Attachment B - Documentation of Structure Proposed for Demolition        Item A: Staff Report Pg. 6  Packet Pg. 298 of 320  State of California ⎯ The Resources Agency Primary # __________________________________________________ DEPARTMENT OF PARKS AND RECREATION HRI # _____________________________________________________ CONTINUATION SHEET Trinomial __________________________________________________ Page 2 of 13 Resource Name or # (Assigned by recorder) 439 Lincoln Avenue *Recorded by Page & Turnbull, Inc. *Date June 17, 2024  Continuation  Update DPR 523L *P3a. Description (Continued) Figure 1: Subject property at 439 Lincoln Avenue. Approximate boundary of the subject parcel shown with a dashed yellow line. Source: Google Maps, 2024. Edited by Page & Turnbull. Figure 2. Primary (southeast) façade, looking northwest. Item A Attachment B - Documentation of Structure Proposed for Demolition        Item A: Staff Report Pg. 7  Packet Pg. 299 of 320  State of California ⎯ The Resources Agency Primary # __________________________________________________ DEPARTMENT OF PARKS AND RECREATION HRI # _____________________________________________________ CONTINUATION SHEET Trinomial __________________________________________________ Page 3 of 13 Resource Name or # (Assigned by recorder) 439 Lincoln Avenue *Recorded by Page & Turnbull, Inc. *Date June 17, 2024  Continuation  Update DPR 523L *P3a. Description (Continued): The primary (southeast) façade includes two wings that form the building’s overall L-shaped plan. At the interior of the el is a curved bay that contains the primary entrance to the residence and is capped by a projecting eyebrow roof (Figure 2). An elevated entrance porch lines the interior of the el and features brick steps, a low stucco side wall with brick coping, and a tiled floor. The primary entrance at the center of façade contains a wood entrance door under a small gabled roof with asphalt shingles simulating thatch at the first story, and a five-over-over double-hung wood window is located at the second story (Figure 3). To the left of the primary entrance, the first story of the south (left) side of the primary façade has a partially glazed, wood-frame secondary entrance door and a wood tripartite window with a central fixed window featuring an upper row of muntin flanked by two-over-one double- hung windows (Figure 4). The second story has a set of three, three-over-one double-hung wood windows. The southwest façade of the primary façade, located to the right of the primary entrance, mirrors the south wing of the primary façade with a tripartite window, partially glazed secondary entrance door, and three-over-one double-hung windows (Figure 5). The portion of the primary façade that is closest to and faces Lincoln Avenue repeats the tripartite window arrangement on the first story and has two three- over-one double-hung wood windows on the second story (Figure 6). Figure 3. Primary entrance door at center of el, looking north. Figure 4. South (left) side of primary (southeast) façade, looking north. Figure 5. Interior of L-shape plan, looking northeast. Figure 6. North (right) side of primary (southeast) façade, looking northwest. Item A Attachment B - Documentation of Structure Proposed for Demolition        Item A: Staff Report Pg. 8  Packet Pg. 300 of 320  State of California ⎯ The Resources Agency Primary # __________________________________________________ DEPARTMENT OF PARKS AND RECREATION HRI # _____________________________________________________ CONTINUATION SHEET Trinomial __________________________________________________ Page 4 of 13 Resource Name or # (Assigned by recorder) 439 Lincoln Avenue *Recorded by Page & Turnbull, Inc. *Date June 17, 2024  Continuation  Update DPR 523L *P3a. Description: (continued) The northeast façade faces the driveway and has a projecting section at the west (right) end (Figure 7). The east (left) end of the façade has a larger three-over-one double-hung wood window and two smaller three-over-one double-hung wood windows on the first story. The second story has a set of two-over-one double-hung wood windows and a single three-over-one double-hung wood window, all in varying sizes. The projecting section at the west end of the façade features a secondary entrance with a partially glazed wood-frame door beneath a multi-lite transom. To the right of the door is a large multi-lite awning sash window and a two- over-one double-hung wood window located on a one-story bump out (Figure 8). The second story of the projecting section has two three-over-one double-hung wood windows. Figure 7. Overview of the northeast façade, looking west. Figure 8. Secondary entry off the northeast façade, looking southwest. The rear (northwest) façade faces a large rectangular rear yard and has two projecting one-story sections that lead to an elevated rear deck (Figure 9). The north (left) projecting section has a one-over-one hung vinyl window on its northwest-facing wall with a fully glazed rear entry door and a single-lite vinyl window on the southwest-facing wall (Figure 10). The main two-story portion of the rear (northwest) façade has a set of three-over-one double-hung wood windows on the first story and two sets of three-over- one double-hung wood windows on the north (left) and south (right) ends of the second story (Figure 11). Two two-over-one double-hung wood windows are centered on the second story and the eaves and roofline are cut around them to accommodate their higher placement on the wall. The south (right) projecting section has three single-lite wood windows on its northeast-facing and southwest-facing walls, while the northwest-facing wall has paired fully glazed doors flanked by single-lite wood windows. Figure 9. Rear (northwest) façade, looking southeast. Item A Attachment B - Documentation of Structure Proposed for Demolition        Item A: Staff Report Pg. 9  Packet Pg. 301 of 320  State of California ⎯ The Resources Agency Primary # __________________________________________________ DEPARTMENT OF PARKS AND RECREATION HRI # _____________________________________________________ CONTINUATION SHEET Trinomial __________________________________________________ Page 5 of 13 Resource Name or # (Assigned by recorder) 439 Lincoln Avenue *Recorded by Page & Turnbull, Inc. *Date June 17, 2024  Continuation  Update DPR 523L *P3a. Description: (continued) Figure 10. North projecting section of the rear façade, looking east. Figure 11. Main two-story portion of the rear facade flanked by the two one-story additions, looking southeast. The southwest façade faces a side setback and features a wood gate, which extends from the southwest wall of the residence to the wood fence at the southwest property line (Figure 12). This façade has a set of three pairs of two-over-one wood casement windows on the first and second stories (Figure 13). Figure 12. Southwest façade with wood gate, looking east. Figure 13. View of wood casement windows, looking northeast. Item A Attachment B - Documentation of Structure Proposed for Demolition        Item A: Staff Report Pg. 10  Packet Pg. 302 of 320  State of California ⎯ The Resources Agency Primary # __________________________________________________ DEPARTMENT OF PARKS AND RECREATION HRI # _____________________________________________________ CONTINUATION SHEET Trinomial __________________________________________________ Page 6 of 13 Resource Name or # (Assigned by recorder) 439 Lincoln Avenue *Recorded by Page & Turnbull, Inc. *Date June 17, 2024  Continuation  Update DPR 523L *P3a. Description: (continued) The back yard includes several mature trees, a central pool surrounded by concrete, and a wooden fence that encloses the property to the northeast, northwest, and southwest (Figure 14). A large section of lawn is located in the northwest corner of the parcel, northeast of the pool. A stucco clad, one-story garage building has a flat roof with sliding wood garage doors. There are no other openings on the garage building. An adjacent wood gate provides access the northwest façade and backyard (Figure 15). Figure 14. Overview of backyard with pool, looking north. Residence is located to the right of the frame. Figure 15. Detached garage, looking west. The surrounding neighborhood is residential with one- and two-story free-standing single-family homes. Professorville was primarily developed in the first two decades of the twentieth century, and the surrounding buildings are generally representative of the early twentieth-century revival styles that were popular during this period of development. The single-family residences immediately surrounding the subject properties include Craftsman, Mediterranean Revival, Tudor Revival, and Colonial Revival residence, as well as residences that have been modified with large additions or renovated to reflect contemporary architectural styles. Detached garages are common within Professorville (Figure 16 - Figure 19). Item A Attachment B - Documentation of Structure Proposed for Demolition        Item A: Staff Report Pg. 11  Packet Pg. 303 of 320  State of California ⎯ The Resources Agency Primary # __________________________________________________ DEPARTMENT OF PARKS AND RECREATION HRI # _____________________________________________________ CONTINUATION SHEET Trinomial __________________________________________________ Page 7 of 13 Resource Name or # (Assigned by recorder) 439 Lincoln Avenue *Recorded by Page & Turnbull, Inc. *Date June 17, 2024  Continuation  Update DPR 523L Figure 16. 467 Lincoln Avenue, built in 1926, in the Tudor Revival style. Figure 17. 427 Lincoln Avenue, built in 1926, in the Mediterranean Revival style. Figure 18. 405 Lincoln Avenue, built in 2013. Figure 19. First Presbyterian Church Palo Alto, built ca. 1950. Item A Attachment B - Documentation of Structure Proposed for Demolition        Item A: Staff Report Pg. 12  Packet Pg. 304 of 320  DPR 523B (9/2013) *Required information State of California ⎯ The Resources Agency Primary #__________________________________________ DEPARTMENT OF PARKS AND RECREATION HRI#______________________________________________ BUILDING, STRUCTURE, AND OBJECT RECORD Page 8 of 13 *NRHP Status Code______5D1______________ *Resource Name or # 439 Lincoln Avenue B1. Historic name: 439 Lincoln Avenue B2. Common name: 439 Lincoln Avenue B3. Original Use: Single-Family Residence B4. Present use: Single-Family Residence *B5. Architectural Style: French Eclectic *B6. Construction History: (Construction date, alterations, and date of alterations) As recorded in the Historic Inventory Database from the Palo Alto Historical Association, 439 Lincoln Avenue was originally designed and built by Robert Duryea in March and April of 1923 as his personal residence for himself and his wife, Dorothy. The building permit issued for Duryea is also recorded in the March 29, 1923 “News Brief” section of The Peninsula Times Tribune.1 (Refer to Continuation Sheet, page 9) *B7. Moved? No Yes Unknown Date: Original Location: ____________________________ *B8. Related Features: Detached garage and pool B9a. Architect: b. Builder: Robert Duryea *B10. Significance: Theme Residential Development Area Professorville Period of Significance N/A Property Type Single-Family Residential Applicable Criteria N/A Historic Context: History of the Professorville Neighborhood 439 Lincoln Avenue is located in Palo Alto’s Professorville neighborhood. The following historic context for the Professorville neighborhood is excerpted from the Professorville Historic District Design Guidelines.2 Professorville belongs to the historic core of Palo Alto. Neither the neighborhood nor the city at large existed prior to the opening of Stanford University, which Leland and Jane Stanford established on land belonging to their large horse farm in northwestern Santa Clara County. By the time Stanford University opened its doors in 1891, over 700 acres of land east of the new campus had been set aside for a townsite that could house those affiliated with the university. A number of freshly arrived faculty members wished to purchase land and build homes for their families in this new college town, known as Palo Alto. They chose the fledgling neighborhood that lay near the eastern boundary of the campus, across the Southern Pacific rail line. For its early academic residents, the neighborhood received the name Professorville. Its large lots and close proximity to the university were attractive features for early residents, and homes were steadily built there during the 1890s and first decades of the twentieth century. (Refer to continuation sheet, page 10) B11. Additional Resource Attributes: N/A *B12. References: Refer to footnotes B13. Remarks: N/A *B14. Evaluator: Amanda Commins, Page & Turnbull, Inc. *Date of Evaluation: June 17, 2024 1 “News Brief,” The Peninsula Times Tribune, March 29, 1923. 2 Page & Turnbull, Professorville Historic District Design Guidelines, (Palo Alto, CA: April 2016). Source: City of Palo Alto, Online Parcel Reports, 2024. (This space reserved for official comments.) Item A Attachment B - Documentation of Structure Proposed for Demolition        Item A: Staff Report Pg. 13  Packet Pg. 305 of 320  State of California ⎯ The Resources Agency Primary # _____________________________________________ DEPARTMENT OF PARKS AND RECREATION HRI # ________________________________________________ CONTINUATION SHEET Trinomial _____________________________________________ Page 9 of 13 Resource Name or # 439 Lincoln Avenue *Recorded by Page & Turnbull, Inc. *Date June 17, 2024  Continuation  Update DPR 523L *B6. Construction History (continued): Consistent with the 1923 year of construction and the construction of the detached garage in 1924, the residence at 439 Lincoln Avenue appears on the Sanborn Map Company’s 1924 fire insurance map (Figure 20). This map depicts the residence as a two- story, wood-frame building with an irregular footprint and a detached garage. The footprint and design of the residence appear unchanged in the 1956 Sanborn Map Company map, however there was a permit for a 1953 addition that does not appear on the 1956 map (Figure 21).3 Figure 20. 1924 Sanborn Map Co., Sheet 15. The subject property is indicated by a red outline. Source: San Francisco Public Library. Edited by Page & Turnbull. Figure 21. 1956 Sanborn Map Co., Sheet 15. The subject property is indicated by a red outline. Source: San Francisco Public Library. Edited by Page & Turnbull. 3 City of Palo Alto, Historic Inventory Database, “439 Lincoln Avenue,” Palo Alto Historical Association. Item A Attachment B - Documentation of Structure Proposed for Demolition        Item A: Staff Report Pg. 14  Packet Pg. 306 of 320  State of California ⎯ The Resources Agency Primary # _____________________________________________ DEPARTMENT OF PARKS AND RECREATION HRI # ________________________________________________ CONTINUATION SHEET Trinomial _____________________________________________ Page 10 of 13 Resource Name or # 439 Lincoln Avenue *Recorded by Page & Turnbull, Inc. *Date June 17, 2024  Continuation  Update DPR 523L *B6. Construction History (continued): Table 1, below, lists all known permit activity that is on file at Palo Alto Development Services and other sources including information from the Historic Inventory Database provided by the Palo Alto Historical Association. The only visible alteration to the exterior of the residence appears to be the rear additions, the pool, and the possible replacement of the roof material despite not having a permit on file. The south projecting addition was completed in 1953, however the north projecting addition does not have a permit on file and does not appear on an aerial until 1998.4 Additionally, no changes to the detached garage were noted during the site visit and no available permits indicate that alterations were undertaken. The residence at 439 Lincoln Avenue, and its ancillary structure, remain largely unchanged from their early 1920s construction. *B10. Significance: Historic Context (continued) History of the Professorville Neighborhood (continued) Professorville’s academic atmosphere fostered an appreciation for fashionable architectural styles. When faculty residents arrived in California, they imported elements of residential architecture from the areas where they had previously lived: the Eastern and Midwestern United States. Many new residences showed the influence of the Shingle, Arts and Crafts, and Colonial Revival styles, reflecting a San Francisco Bay Area regional interpretation known as the First Bay Tradition. These residences frequently were clad in wood shingles and had asymmetric façades, which created a naturalistic impression throughout the neighborhood. Bernard Maybeck, one of the pioneers of the First Bay Tradition at the turn of the twentieth century, was commissioned to build a home for Emma Kellogg at the corner of Lincoln Avenue and Bryant Street. After this house burned, Maybeck designed its distinctive replacement, now commonly known as the Sunbonnet House. Other newly built residences in the early twentieth century showed the influence of Revival styles, such as Tudor and Spanish Colonial. Yet all exhibited a high quality of craftsmanship and design—truly notable for the somewhat isolated outpost of Palo Alto at this time. [….] By the 1920s, much of Professorville had been largely built out with single-family homes. Most had detached automobile garages by this time, which were typically placed at the rear of the lot. The development pattern of the neighborhood, particularly in its western half, was characterized by a regular rhythm of handsome residences, each surrounded by a well-appointed lawn. The eastern half of the neighborhood, on the other hand, retained grander homes on expansive lots that resembled small estates. One element that linked both halves of Professorville was an impressive tree canopy, created in part by the immense redwood and live oak trees that predated the development of Palo Alto and were left standing in private yards as well as in public roadways. Over time, several of Professorville’s larger lots were subdivided, and any parcels that remained empty were filled in the postwar period. [….] Professorville’s residents also shifted away from the faculty who had originally built homes there, as many of the large residences were converted to student housing by mid-century. In the 1970s and 1980s interest in historic preservation increased, and over time many of the homes in the neighborhood were rehabilitated and returned to single-family residential use.5 Professorville was designated as a National Register historic district in 1979. The nomination recognized “the unique background of the area’s origins and its early ties to the founding of both the University and Palo Alto itself. As such, the Professorville Historic District creates a strong sense of place and time expressive of Palo Alto’s intrinsic character and heritage.”6 The City of Palo Alto adopted the Professorville Historic District to the City’s Historic Inventory in 1979. The city’s historic district features an enlarged boundary as compared to the National Register district (Figure 22). Properties that are considered contributing to the historic 4 “Historic Aerials,” NETRonline: Historic Aerials, accessed May 30, 2024, https://www.historicaerials.com/viewer. 5 Page & Turnbull, Professorville Historic District Design Guidelines, (Palo Alto, CA: April 2016). 6 National Register of Historic Places, Professorville Historic District, Palo Alto, Santa Clara, California, National Register #80000861, 8-2. Table 1. Permit History for 439 Lincoln Avenue Permit # Date Owner Architect/Contractor Description N/A 03/29/1923 Robert F Duryea Owner Construction of dwelling. Cost of work $10,000. N/A 09/24/1924 John Dudfield N/A Construction of garage. Cost of work $500 10269 07/06/1953 James Anderson Alfred Johnson Rear addition. Cost of work $3,300. 28317 04/21/1969 James Anderson Val’s Pools Construction of rear swimming pool. 30209 09/15/1971 Helen Anderson Sentinel Termite Control Repair termite damage. 06-0927 04/17/2006 John Letts Scott Littlefield Replace water heater, same location. Item A Attachment B - Documentation of Structure Proposed for Demolition        Item A: Staff Report Pg. 15  Packet Pg. 307 of 320  State of California ⎯ The Resources Agency Primary # _____________________________________________ DEPARTMENT OF PARKS AND RECREATION HRI # ________________________________________________ CONTINUATION SHEET Trinomial _____________________________________________ Page 11 of 13 Resource Name or # 439 Lincoln Avenue *Recorded by Page & Turnbull, Inc. *Date June 17, 2024  Continuation  Update DPR 523L district, either to the National Register Historic District and/or to the local historic district, are those that were generally constructed between the 1890s and 1930s and retained historic integrity at the time of the listing of the historic district. Figure 22. Professorville Boundaries. Source: Page & Turnbull, Professorville Historic District Design Guidelines, (Palo Alto, CA: October 2016), 35-38. Edited by Page & Turnbull with orange arrow to indicate location of subject lot. 439 Lincoln Avenue – Ownership & Occupancy History The following table outlines the ownership history of 439 Lincoln Avenue, compiled from Palo Alto City Directories, Santa Clara Assessor records, building permit applications, newspaper articles, and public records available through Ancestry.com: Robert and Dorothy Duryea were the first owner-occupants of the subject building; however, they sold the property in 1924. Following the Duryeas, the property changed ownership frequently with various occupants until 1946 when James and Helen Anderson purchased the property from Lorene Sales who had been renting the property to tenants for many years. James Table 2: Known Owners and Occupants of 439 Lincoln Avenue Years of Occupancy Known Owners and Occupants (known owners in bold) Occupation 1923 – 1924 Robert Duryea Dorothy Duryea Construction engineer - 1924 – 1925 John Dudfield Lillian Dudfield Lumber merchant - 1925 – 1927 Mrs. Arthur A Hughes Donald Hughes - - 1927 – 1934 Reno Sale Lorene Sales Mining engineer - 1934 – 1946 Lorene Sales (non-occupant 1937-1946) - 1937 – 1939 Rex Harlow Ruby Harlow Stanford University Professor - 1939 – 1946 Bernhard Jakobsen Leona Jakobsen Engineer for the United States Army - 1946 – 1968 James Anderson Helen Anderson Pilot for Pan American Airways - 1968 – 1972 Helen Anderson - 1972 – 2017 John Letts Ruth Letts Physician - 2017 – 2024 Ruth Letts - 2024 – present Vidhya Thyagarajan - Item A Attachment B - Documentation of Structure Proposed for Demolition        Item A: Staff Report Pg. 16  Packet Pg. 308 of 320  State of California ⎯ The Resources Agency Primary # _____________________________________________ DEPARTMENT OF PARKS AND RECREATION HRI # ________________________________________________ CONTINUATION SHEET Trinomial _____________________________________________ Page 12 of 13 Resource Name or # 439 Lincoln Avenue *Recorded by Page & Turnbull, Inc. *Date June 17, 2024  Continuation  Update DPR 523L Anderson was a commercial pilot for Pan American Airways. In 1959, Anderson notably captained eastbound and westbound jet airline flights over the North Pole from San Francisco to London.7 However, his professional achievements do not appear to have been significantly associated with his home at 439 Lincoln Avenue. Following his death in 1968, Helen lived in the subject property until she sold it in 1972 to John and Ruth Letts. Robert Duryea, Builder Robert Duryea (1889-1973) was born in New York and married Dorothy Stillman (1888-1972), who was from Massachusetts. Duryea designed and constructed the subject property in 1923 and he and his wife were the first owners and occupants of the residence for a year. Robert and Dorothy were graduates of Stanford University with Robert receiving a degree in engineering in 1913. Robert Duryea designed and built the subject property, as well as residences at 405 and 415 Lincoln Avenues. 405 Lincoln Avenue served as the personal residence of the Duryeas from ca. 1935 to the end of their lives. Following graduation from Stanford University, Duryea worked for construction firms that built the Moffett Naval Air Station hangars and the Kaiser Permanente Cement Plant west of Cupertino.8 Prior to his retirement, Duryea worked for the City of Palo Alto engineering department for 18 years. Duryea is not known to have designed or contributed to any other buildings in Palo Alto. French Eclectic Architectural Style The subject property at 439 Lincoln Avenue was developed in 1923 in the French Eclectic style, which emerged in the early twentieth century as a popular residential building style. According to A Field Guide to American Houses by Virginia Savage McAlester, the French Eclectic style was rarely built before World War I and became fashionable in the early 1920s with about five percent of the new homes built in the “French” style according to a study of houses published in architectural journals in 1925.9 The interest in French styles was due to many Americans having served in France during World War I, and much press and public interest was given to the reconstruction of France’s historic villages after their destruction during World War I. High style examples of the French Eclectic style can include masonry, steeply pitched hipped roofs, dormers, and towers with conical roofs. 439 Lincoln Avenue is modest in its decoration, and features that demonstrate the style are limited to the building’s L-shaped plan with the primary entrance within a curved element at the interior of the el, the use of stucco cladding and a roof design that simulates the effect of thatch. Statement of Significance: In order for a property to be considered eligible for the California Register of Historical Resources (California Register), the property must possess significance and retain integrity to convey that significance. The criteria for significance are: Criterion 1 (Events): Associated with events that have made a significant contribution to the broad patterns of local or regional history or the cultural heritage of California or the United States. 439 Lincoln Avenue does not appear to be individually eligible for listing in the California Register under Criterion 1 (Events) for its association with any events that have made a significant contribution to the broad patterns of local or regional history, or the cultural heritage of California or the United States. The residence was not among the earliest homes constructed in the Professorville neighborhood and does not individually represent that neighborhood’s pattern of development which began in the 1890s and was largely complete by the 1930s. No significant events are known to have occurred at the subject property. Therefore, 439 Lincoln Avenue does not rise to a level of significance to be individually eligible under Criterion 1. Criterion 2 (Persons): Associated with the lives of persons important to local, California or national history. 439 Lincoln Avenue does not appear to be individually eligible for listing in the California Register under Criterion 2 (Persons) as a property associated with the life of a person important to local, state, or national history. The original owner, Robert Duryea, was a civil engineer who designed, built, and resided at 439 Lincoln Avenue from 1923 to 1924 with his wife, Dorothy. Duryea designed and built two other residences on Lincoln Avenue and worked at construction firms and the City of Palo Alto, however he does not appear to have made significant contributions or innovations to local, state, or national history. Following the Duryeas, the property had many owners and occupants who only inhabited the residence for a few years at a time. It was not until 1946 that James Anderson, a pilot for Pan American Airways, and his wife Helen purchased the property. They owned the property for 22 years. Anderson flew the first polar jet flights for Pan Am in 1959, however, he was not the first pilot to fly commercially over the North Pole. The longest owner-occupants, John and Ruth Letts, were associated with the subject property within the last 50 years and while archival research did not establish a strong connection between their professional or personal accomplishments and the subject property, not enough historical distance has passed to assess their contributions. As such, 439 Lincoln Avenue does not appear to be individually eligible for the California Register under Criterion 2 (Persons). 7 “Polar Pilot,” The Peninsula Times Tribune, August 31, 1959. 8 “Palo Altan Robert Duryea dies,” Palo Alto Times, February 2, 1972. 9 Virginia McAlester, “Field Guide to American Houses,” Alfred A. Knopf (New York City, NY: 2013), 485-494. Item A Attachment B - Documentation of Structure Proposed for Demolition        Item A: Staff Report Pg. 17  Packet Pg. 309 of 320  State of California ⎯ The Resources Agency Primary # _____________________________________________ DEPARTMENT OF PARKS AND RECREATION HRI # ________________________________________________ CONTINUATION SHEET Trinomial _____________________________________________ Page 13 of 13 Resource Name or # 439 Lincoln Avenue *Recorded by Page & Turnbull, Inc. *Date June 17, 2024  Continuation  Update DPR 523L Criterion 3 (Architecture): Embodies the distinctive characteristics of a type, period, region or method of construction or represents the work of a master or possesses high artistic values. 439 Lincoln Avenue does not appear to be individually eligible for listing in the California Register under Criterion 3 (Architecture) as a building that embodies the distinctive characteristics of a type, period, or method of construction. The residence is a simple, two-story building that features modest elements of the French Eclectic style. The property lacks the more elaborate examples of craftsmanship and detailing that are associated with the best examples of the French Eclectic style. The residence does not stand out as a distinctive example of this style amongst examples of the style in California and nationally. The residence was originally built by Palo Alto-based civil engineer Robert Duryea, who primarily worked on commercial and industrial sites, and was known to have built three residences on Lincoln Avenue. Duryea has not previously been identified as a master builder and does not appear to exhibit the level of influence or craftsmanship that would justify this distinction. The building does not possess high artistic value and is not uniquely representative of Duryea’s work. Therefore, 439 Lincoln Avenue does not appear to rise to a level of individual significance under Criterion 3. Criterion 4 (Information Potential): Has yielded, or has the potential to yield, information important to the prehistory or history of the local area, California or the nation. The property at 439 Lincoln Avenue does not appear to be individually eligible for listing in the California Register under Criterion 4 (Informational Potential) as a building or property that has the potential to provide information important to the prehistory or history of the City of Palo Alto, state, or nation. The "potential to yield information important to the prehistory or history of California" typically relates to archeological resources, rather than built resources. When Criterion 4 does relate to built resources, it is relevant for cases when the building itself is the principal source of important construction- related information. The subject property does not feature construction or material types, or embody engineering practices that would, with additional study, provide important information. Evaluation of this property was limited to age-eligible resources above ground and did not involve survey or evaluation of the subject property for the purposes of archaeological information. Conclusion The property at 439 Lincoln Avenue does not appear to be individually eligible for listing in the California Register under any criteria, however, the property is a historic resource due to its status as a contributing property to the locally listed Professorville Historic District. The property was constructed in 1923, which is within the period of significant development of the historic district, and the building’s design and architecture reflects the primary period of development of the district. The Professorville Design Guidelines list the significant characteristics of the Professorville Historic District, including the overall lot layout and pattern, the massing and form of buildings and structures, the material palette, architectural styles and character-defining features, and the existing landscape and streetscape elements.10 These elements of the property at 439 Lincoln Avenue would be considered features which contribute to the overall feeling and historic character of the district. As such, California Historical Resource Status Code (CHRSC) of “5D1” has been assigned to the property, meaning that it “Is a contributor to a fully documented district that is designated or eligible for designation as a local historic district, overlay zone, or preservation area under an existing ordinance or procedure.” 10 Page & Turnbull, Professorville Historic District Design Guidelines, (April 2016), 13. Item A Attachment B - Documentation of Structure Proposed for Demolition        Item A: Staff Report Pg. 18  Packet Pg. 310 of 320  City Council Staff Report Report Type: INFORMATION REPORTS Lead Department: Administrative Services Meeting Date: June 8, 2026 Report #:2601-5822 TITLE Monthly Investment Report - April 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 – April 2026 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/1/administrative-services/investment-policies/1-39-asd- investment-policy.pdf Item B Item B Staff Report        Item B: Staff Report Pg. 1  Packet Pg. 311 of 320  Buy Maturity Summary CUSIP Security Description Security Type Transaction Type Settlement Date Quantity Price Acq/Disp Yield Amount Purchased/Sold Interest Total Amount 89240QAD7 TAOT 2026-B A3 4.13 12/16/2030 ABS Buy 04/21/2026 1,920,000.00 99.979 4.266 -1,919,595.07 0.00 -1,919,595.07 448972AD1 HALST 26B A3 4.21 04/16/2029 ABS Buy 04/22/2026 1,620,000.00 99.985 4.215 -1,619,763.80 0.00 -1,619,763.80 448972AD1 HALST 26B A3 4.21 04/16/2029 ABS Buy 04/29/2026 2,795,000.00 99.988 4.214 -2,794,672.45 2,288.02 -2,796,960.47 05594YAD8 BMWLT 2026-1 A3 4.15 05/25/2029 ABS Buy 04/22/2026 2,370,000.00 99.989 4.855 -2,369,738.12 0.00 -2,369,738.12 ------ABS Buy 04/24/2026 8,705,000.00 ---4.400 -8,703,769.44 2,288.02 -8,706,057.46 CUSIP Security Description Security Type Transaction Type Settlement Date Quantity Price Acq/Disp Yield Amount Purchased/Sold Interest Total Amount 97412MAG4 Wings Financial Credit Union 4.0 04/10/2026 CD Maturity 04/10/2026 -250,000.00 100.000 4.000 250,000.00 0.00 250,000.00 912797SM0 UNITED STATES TREASURY 04/23/2026 T-BILL Maturity 04/23/2026 -5,000,000.00 100.000 3.704 5,000,000.00 0.00 5,000,000.00 89388CJK5 Transportation Alliance Bank, Inc. 3.7 04/13/2026 CD Maturity 04/13/2026 -250,000.00 100.000 3.700 250,000.00 0.00 250,000.00 797400MR6 SAN DIEGO CNTY CALIF REGL TRANSN COMMN SALES TAX R 1.036 04/01/2026 MUNI Maturity 04/01/2026 -200,000.00 100.000 1.310 200,000.00 0.00 200,000.00 4581X0DV7 INTER-AMERICAN DEVELOPMENT BANK 0.875 04/20/2026 SUPRANATIONAL Maturity 04/20/2026 -2,000,000.00 100.000 0.923 2,000,000.00 0.00 2,000,000.00 31364CCC0 FEDERAL NATIONAL MORTGAGE ASSOCIATION 7.125 04/30/2026 AGCY BOND Maturity 04/30/2026 -500,000.00 100.000 2.399 500,000.00 0.00 500,000.00 072024XC1 BAY AREA TOLL AUTHORITY 1.079 04/01/2026 MUNI Maturity 04/01/2026 -1,750,000.00 100.000 0.750 1,750,000.00 0.00 1,750,000.00 ---------Maturity 04/18/2026 -9,950,000.00 100.000 2.519 9,950,000.00 0.00 9,950,000.00 CUSIP Security Description Security Type Transaction Type Settlement Date Quantity Price Acq/Disp Yield Amount Purchased/Sold Interest Total Amount ------------04/21/2026 -1,245,000.00 ---3.397 1,246,230.56 2,288.02 1,243,942.54 Palo Alto Monthly Transactions 04/01/2026 - 04/30/2026 1 ATTACHMENT A Item BAttachment A - InvestmentPortfolio TransactionLedger - April 2026       Item B: Staff Report Pg. 2  Packet Pg. 312 of 320  City Council Staff Report From: City Manager Report Type: INFORMATION REPORTS Lead Department: City Manager Meeting Date: June 8, 2026 Report #:2603-6171 TITLE Status Report from the Oversized Vehicles (OSV) Ad Hoc Committee; CEQA Status - Not a Project. RECOMMENDATION Staff recommends that the City Council receive this informational report from staff with an update on progress related to oversized vehicles and the work of the Oversized Vehicles (OSV) Ad Hoc Committee. The Committee will verbally provide an update during City Council comments at the June 8 meeting as well. EXECUTIVE SUMMARY Phase I of the Oversized Vehicles work has been successful in reducing impacts, improving compliance, and providing insight for Phase II which is focused on longer term solutions. Implementation required significant staff overtime to address initial backlogs of ordinance violations. Conditions improved over time as compliance increased and the demand for towing due to noncompliance decreased. “Point-in-time checks” by the Police Department1 showed an overall decline in OSVs across monitored locations between January and May, though in some areas numbers remained consistent. In terms of resources and staff effort involved, Public Works deployed existing resources on overtime to support Phase I initiatives, including deep cleaning support, storm drain flushing, tree pruning, and signage and striping work. The Office of Transportation also supported in engineering support for signage. The work from Phase I helped identify key issues to be addressed in Phase II, including the need for consistent signage, management of OSV movement between zones, and continued 1 This is not related to the official Santa Clara County bi-annual Point-in-Time (PIT) count. Information about the Santa Clara County PIT can be found on the County’s website: https://osh.santaclaracounty.gov/data-and- reports/point-time-count. The Police Department point-in-time checks are a visual assessment of the number of OSVs on Palo Alto streets as a snapshot in time. Item C Item C Staff Report        Item C: Staff Report Pg. 1  Packet Pg. 313 of 320  attention to staffing and operational capacity. Between October 2025-March 2026, the Homeless Outreach Team provided case management and delivered basic-needs services, while also gathering feedback from OSV-dwelling residents about barriers to transitioning out of their vehicles and into housing. That feedback led staff to explore options such as OSV buyback and storage programs, though funding and placement challenges remain. BACKGROUND 3 when City Council approved a set of initial measures to address the growing numbers of oversized vehicles and resulting community impacts, as well as the needs of OSV dwellers. ANALYSIS 3 City Council, October 20, 2025, https://www.paloalto.gov/files/assets/public/v/1/city-manager/housing-amp- homelessness/october-2025-city-council-oversized-vehicles-staff-report.pdf Item C Item C Staff Report        Item C: Staff Report Pg. 2  Packet Pg. 314 of 320  From January to September 2025, there were 73 tows, of which 15 were OSVs. From October to December 2025, there were a total of 50 tows, of which were 31 OSVs. From January to April 2025, there were a total of 94 tows, of which 46 were OSVs. This shows that since October 2025, the rate of towing has increased to address noncompliant vehicles. The Police Department has paid $91,600 for OSV towing services. Item C Item C Staff Report        Item C: Staff Report Pg. 3  Packet Pg. 315 of 320  OSVs, making it challenging to leave their OSV behind. With this feedback, city staff explored the opportunities of creating an OSV buyback program and a storage program. FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT Item C Item C Staff Report        Item C: Staff Report Pg. 4  Packet Pg. 316 of 320  community concerns, service impacts and emerging themes, and allows for responsive coordination as the project moves forward. Staff have also met with local businesses and joined calls with the Chamber of Commerce to hear and address concerns. Staff has also met with individuals and groups who have requested a meeting to discuss this topic. ENVIRONMENTAL REVIEW APPROVED BY: Item C Item C Staff Report        Item C: Staff Report Pg. 5  Packet Pg. 317 of 320  1 0 1 3 4 City Council Staff Report Report Type: ACTION ITEMS Lead Department: Community Services Meeting Date: June 8, 2026 Report #:2606-6447 TITLE Adopt an Ordinance and Resolution Calling an Election and Placing a ½ Cent (0.5%) Transactions and Use Tax Measure on the November 3, 2026 Ballot; and a Resolution Adopting Advisory Spending Guidelines for the Use of the Proceeds if the Measure Passes to Support Improving the Cubberley Community Center; CEQA Status - Not a Project. BACKGROUND As indicated in Staff Report #2603-6081, Attachment C of Item #8 is being published as a late packet report on June 4, 2026. ATTACHMENTS Attachment C: Resolution Adopting Advisory Spending Guidelines for Proceeds of a Transactions and Use Tax to be Submitted to the Voters for Approval in November 2026 APPROVED BY: Mahealani Ah Yun, City Clerk Item 14 Item 14 Late Packet Report        Item 14: Staff Report Pg. 1  Packet Pg. 318 of 320  *NOT YET APPROVED* 1 161_20260603_ts24 Resolution No. _____ Resolution of the Council of the City of Palo Alto Adopting Advisory Spending Guidelines for Proceeds of a Transactions and Use Tax to be Submitted to the Voters for Approval in November 2026 R E C I T A L S A. The City owns eight acres of the 35-acre Cubberley site, located at 4000 Middlefield Road, and currently operates the areas it controls as a community center, using some of the spaces for classes and activities in arts and culture, athletics, and leases additional space to various non-profit and community serving groups. PAUSD owns the remaining 27 acres, most of which are leased to the City. The areas that remain under PAUSD ownership and that are not leased to the City are used for PAUSD’s education purposes, staff offices, or third-party tenants. B. On October 7, 2024 the City Council and Palo Alto Unified School District (PAUSD or District) Board of Education approved a Memorandum of Understanding (MOU) outlining key terms and conditions for the City’s purchase of seven additional acres of land from PAUSD, contingent on voter approval of a bond measure in November 2026. The addition of the seven acres, plus the eight acres already owned by the City of Palo Alto provides an opportunity to develop a new community center and other improvements on a combined 15 acres at the Cubberley site to provide a range of programs, including health, wellness, and recreational opportunities for residents. C. On May 18, 2026, the City Council approved the Cubberley Conceptual Master Plan. This plan guides the next generation of development and use of the Cubberley site. The Conceptual Master Plan assumes the City’s purchase of the seven acres contemplated to be purchased by the City from PAUSD. The City Council also approved a mitigated negative declaration under CEQA. D. On May 18, 2026, the City Council directed City staff to return with legislation to place a ballot measure proposing a local ½-cent (0.5%) transactions and use tax (commonly known as a sales tax) before the voters on the November 3, 2026 election. E. If approved by voters, proceeds from the transactions and use tax will be placed in the City’s general fund for use on general government services. The City Council will determine the uses of those proceeds that best serve the public interest. F. With this Resolution, the City Council informs voters of its intentions regarding the uses that would be supported by these proceeds. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALO ALTO RESOLVES AS FOLLOWS: SECTION 1. The Council hereby adopts the above Recitals as findings of the Council. Item 14 Late Packet Attachment C - Resolution Adopting Advisory Spending Guidelines for Proceeds of a Transactions and Use Tax to be Submitted to the Voters for Approval in November 2026        Item 14: Staff Report Pg. 2  Packet Pg. 319 of 320  *NOT YET APPROVED* 2 161_20260603_ts24 SECTION 2. It is the City Council’s intention to use the proceeds of the transactions and use tax – a general tax for general government uses – to invest in the community’s vision to create a vibrant, beloved, and adaptable destination that promotes learning, interconnectivity, joy and wellbeing where all cultures and generations belong. To that end, the City of Palo Alto is ready to revitalize the Cubberley Community Center, beginning with the purchase of the seven acres of real property currently owned by PAUSD. With ownership of the developed area under the full control of the City, the City would be able to begin implementing the community’s vision for the site detailed in the Cubberley Conceptual Master Plan. The Council plans to allocate the proceeds from the transactions and use tax to purchase the seven acres and implement part of Phase 1 of the Cubberley Conceptual Master Plan to modernize the aging buildings, grow the amount of green space for outdoor enjoyment, invest in local public spaces that provide recreation and culture, and prevent Cubberley from becoming even further obsolete. The City plans to also use other funding sources, including investments from community partnerships and fees from new development, to leverage this new revenue. The Cubberley Community Center will realize its potential as space that serves the entire City in conjunction with the City’s constellation of other community spaces at Mitchell Park, Lucie Stern, and the Bryant Street Community Center. SECTION 3. The Council finds that adoption of this Resolution is not a project under CEQA, and therefore no environmental impact assessment is necessary. INTRODUCED: PASSED:    AYES:  NOES:    ABSTENTIONS:    ABSENT:    ATTEST: __________________________ __________________________  City Clerk Mayor    APPROVED AS TO FORM: APPROVED:      __________________________ __________________________ City Attorney City Manager Item 14 Late Packet Attachment C - Resolution Adopting Advisory Spending Guidelines for Proceeds of a Transactions and Use Tax to be Submitted to the Voters for Approval in November 2026        Item 14: Staff Report Pg. 3  Packet Pg. 320 of 320