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HomeMy WebLinkAbout2026-06-09 Policy & Services Committee AgendaPOLICY AND SERVICES COMMITTEE Regular Meeting Tuesday, June 09, 2026 Council Chambers & Hybrid 6:00 PM Amended Agenda Amended Agenda Items Appear Below in RED   Policy and Services Committee meetings will be held as “hybrid” meetings with the option to attend by teleconference/video conference or in person. Information on how the public may observe and participate in the meeting is located at the end of the agenda. The meeting will be broadcast on Cable TV Channel 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/94618744621) Meeting ID: 946 1874 4621 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 types of handle objects are strictly prohibited; (2) the items do not create a facility, fire, or safety hazard; and (3) persons with such items remain seated when displaying them and must not raise the items above shoulder level, obstruct the view or passage of other attendees, or otherwise disturb the business of the meeting.    1 June 09, 2026 Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. CALL TO ORDER PUBLIC COMMENT Members of the public may speak in-person ONLY to any item NOT on the agenda. 1-3 minutes depending on number of speakers. Public Comment is limited to 30 minutes. Additional public comments, if any, will be heard at the end of the agenda. ACTION ITEMS 1. Nonprofit Partnership Workplan: Follow-up Recommendation on Lease- Lawn Bowls Club lease extension. CEQA Status - Exempt under CEQA Guidelines section 15301. 2. Recommendation to the City Council Regarding Adoption of an Ordinance Adding New Chapter 9.75 (Fair Chance in Housing) to Title 9 (Public Peace, Morals, and Safety) of the Palo Alto Municipal Code to Limit the Use of Criminal History Information in Rental Housing Decisions. CEQA Status: Exempt Under CEQA Guidelines Section 15061(b)(3). 3. Recommend Approval of the Office of the City Auditor Annual Risk Assessment and FY 2027 Audit Plan and Corresponding Task Orders. CEQA Status: Not a Project Title Updated, Late Packet Report Added FUTURE MEETINGS AND AGENDAS Members of the public may not speak to the item(s) ADJOURNMENT 2 June 09, 2026 Materials related to an item on this agenda submitted to the Board 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: 946-1874-4621 Phone: 1-669-900-6833 Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329-2550 (voice) or by emailing ada@PaloAlto.gov. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service.  3 June 09, 2026 Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. California Government Code §84308, commonly referred to as the "Levine Act," prohibits an elected official of a local government agency from participating in a proceeding involving a license, permit, or other entitlement for use if the official received a campaign contribution exceeding $500 from a party or participant, including their agents, to the proceeding within the last 12 months. A “license, permit, or other entitlement for use” includes most land use and planning approvals and the approval of contracts that are not subject to lowest responsible bid procedures and have a value over $50,000. A “party” is a person who files an application for, or is the subject of, a proceeding involving a license, permit, or other entitlement for use. A “participant” is a person who actively supports or opposes a particular decision in a proceeding involving a license, permit, or other entitlement for use, and has a financial interest in the decision. The Levine Act incorporates the definition of “financial interest” in the Political Reform Act, which encompasses interests in business entities, real property, sources of income, sources of gifts, and personal finances that may be affected by the Council’s actions. If you qualify as a “party” or “participant” to a proceeding, and you have made a campaign contribution to a Council Member exceeding $500 made within the last 12 months, you must disclose the campaign contribution before making your comments.  4 June 09, 2026 Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. Policy & Services Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: City Manager Meeting Date: June 9, 2026 Report #:2604-6287 TITLE Nonprofit Partnership Workplan: Follow-up Recommendation on Lease- Lawn Bowls Club lease extension. CEQA Status - Exempt under CEQA Guidelines section 15301. RECOMMENDATION Staff recommends that the Policy & Services Committee continue discussion of the Nonprofit Partnership Workplan on long-term lease framework and recommend Council extend the Palo Alto Lawn Bowls lease. EXECUTIVE SUMMARY The Nonprofit Partnership Workplan (NPW) Phase II includes a review of the City's long-term nonprofit lease agreements to ensure they align with community benefit, fiscal stewardship, and partnership sustainability objectives. At its November 19, 2025, meeting, the Policy & Services Committee reviewed a proposed framework for evaluating nonprofit leases and recommended lease renewals for Gamble Garden and Winter Lodge, while requesting additional information regarding public access and affordability associated with the Palo Alto Lawn Bowls Club (PALBC). This report provides the requested information and evaluates PALBC's lease within the established framework. PALBC has served the community since 1964 by providing affordable recreational opportunities, social engagement, and intergenerational programming on City- owned property. In response to Committee feedback, PALBC expanded public access by making free lessons available during all operating hours rather than limiting them to Sundays. Based on the organization's demonstrated public benefit, affordable pricing structure, long- standing partnership with the City, and enhanced public access commitments, staff recommends that the Policy & Services Committee recommend City Council approval of a lease extension for the Palo Alto Lawn Bowls Club consistent with the City's real estate policies and the nonprofit lease evaluation framework. Item 1 Item 1 Staff Report Item 1: Staff Report Pg. 1 Packet Pg. 5 of 95  BACKGROUND NPW Phase I Funding Requests Nonprofit Lease Agreements Nonprofit Multi-year Service Agreements Comprehensive review of all grant programs including Human Services Resource Allocation Process (HSRAP) and Community Development Block Grants (CDBG) 1 the Policy & Services Committee discussed NPW Phase II, beginning with upcoming lease extensions with Gamble Garden, Winter Lodge, and the Palo Alto Lawn Bowls Club. The report outlined a framework for considering nonprofit leases based on public benefit, financial relationship and partnership sustainability, consistent with the guiding principles and recommendations in the 2022 City Auditor’s report on Nonprofit Management. The intent was not to evaluate lease term details but rather establish a framework by which long-term lease partnerships are evaluated and aligned with existing real estate policy. The three nonprofit leases were used as leading examples as their leases would soon expire, though all have holdover clauses to continue on a month-to-month basis. ANALYSIS 1 November 19, 2025 Policy & Services Committee Meeting: https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=9499&meetingTemplateType=2&comp iledMeetingDocumentId=17629 Item 1 Item 1 Staff Report        Item 1: Staff Report Pg. 2  Packet Pg. 6 of 95  clearly articulated by ensuring public access and favorable pricing for Palo Alto residents. Since Gamble Garden is a publicly available resource and free to the public, the Committee felt it was a good candidate to move forward for Council review and approval. However, both Winter Lodge Tennis and Lawn Bowls Club have restricted facility use and lessons at cost to the public. The Policy & Services Committee discussed the Winter Lodge Tennis lease at its March 10 meeting. Public Benefit Partnerships should provide a clear and measurable community benefit, advance City priorities, address community needs, and ensure public access to facilities and services. Financial Relationship The financial structure should balance monetary and non-monetary contributions while promoting transparency, accountability, equity, and appropriate performance expectations when reduced rent is provided. Partnership Stability Long-term agreements can preserve valued community resources, provide operational certainty, and support continued service delivery. Lease terms should balance financial considerations with the public value generated through the partnership. Item 1 Item 1 Staff Report        Item 1: Staff Report Pg. 3  Packet Pg. 7 of 95  Under the current lease, PALBC is required to offer membership and lessons to the public. The City retains control of clubhouse reservations when the facility is not being used for club activities and receives associated rental revenue. PALBC pays annual rent of approximately $16,000 with 2% annual increases. The City is responsible for maintenance and repair of the lawn green and clubhouse located on the premises, as it relates to the structure and main support systems not exclusively serving the premises, as well as water costs. PALBC is responsible for all other maintenance related to the clubhouse, operating expenses, including taxes, utilities (except for water), and insurance.3 Membership dues are a key source of revenue used by PALBC to pay rent and support facility operations. The Club maintains an accessible fee structure through a variety of membership options, including associate (non-bowling) memberships, student memberships, and regular memberships. Annual dues range from $30 to $180, helping ensure affordable participation while supporting the Club's financial obligations and community programming. Facility hours vary depending on the season and remain closed during non-operating hours to prevent damage to the specialized playing surface and ensure its long-term preservation. In response to Committee feedback regarding public access, PALBC expanded its public lesson opportunities from Sundays only to all operating hours. This change significantly increases community access and strengthens the public benefit provided through the lease arrangement. Winter Hours Tuesday, Thursday, Saturday, 1:00 pm - 4:00 pm Sunday, 1:30 pm - 4:30pm Summer Hours Tuesday, Thursday, Saturday, 10:00 am - 1:00 pm Sunday, 1:30 pm - 4:30 pm Wednesday Evening Bowls 5:30 pm - 7:00 pm Consistent with the framework’s emphasis on partnership stability and the preservation of valued community resources, staff recommends establishing a periodic review process to ensure continued public benefit and community use. The review process would allow the City to evaluate the lease arrangement if the facility is no longer reasonably accessible to the public during established operating hours or is no longer functioning as a community-serving recreational asset. Staff recommends incorporating annual performance measures related to both member and public use of the lawn bowl green and facility, along with a five-year trend 3 Palo Alto Lawn Bowls existing lease: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=79073&dbid=0&repo=PaloAlto&searchid=e3778a55 -5ed3-4ad9-a68b-26aaaf8c0af5&cr=1 Item 1 Item 1 Staff Report        Item 1: Staff Report Pg. 4  Packet Pg. 8 of 95  analysis and evaluation. This review mechanism would help ensure that the public benefit supporting the long-term lease remains active throughout the lease term and that the partnership continues to advance the community objectives upon which the lease extension is based. FISCAL/RESOURCE IMPACT st. Extending the lease under the same terms would increase monthly rent to $1,337.87 or $16,054.44 per year on July 1, 2026. The Community Services Department has a five-year landscape maintenance contract, which includes two yearly turf renovations. The current year four cost is $53,238 and will increase to $55,101 in the final year. Irrigation costs are estimated at $3,000. Public Works Facilities maintenance on this property has been historically minimal. STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW APPROVED BY: Item 1 Item 1 Staff Report        Item 1: Staff Report Pg. 5  Packet Pg. 9 of 95  Item 1 Item 1 Staff Report        Item 1: Staff Report Pg. 6  Packet Pg. 10 of 95  9 5 4 2 POLICY & SERVICES COMMITTEE Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Planning and Development Services Meeting Date: June 9, 2026 Report #: 2603-6079 TITLE Recommendation to the City Council Regarding Adoption of an Ordinance Adding New Chapter 9.75 (Fair Chance in Housing) to Title 9 (Public Peace, Morals, and Safety) of the Palo Alto Municipal Code to Limit the Use of Criminal History Information in Rental Housing Decisions. CEQA Status: Exempt Under CEQA Guidelines Section 15061(b)(3). RECOMMENDATION Staff recommends that the Policy & Services Committee: 1) Provide feedback on a revised Fair Chance in Housing Ordinance based on prior City Council feedback and staff analysis; and 2) Recommend City Council adopt the ordinance (Attachment A) for first reading, to be placed on the consent calendar if unanimously recommended by the Committee. EXECUTIVE SUMMARY Fair Chance Housing policies offer some protections from potential housing discrimination to renters with criminal history by limiting the use of criminal history information in rental housing decisions. Fair Chance Housing policies could also benefit other renters that have inaccurate information in commercial criminal history databases. On April 14, 2025, the City Council considered adoption of a draft Fair Chance in Housing Ordinance. The City Council requested additional staff analysis on certain topics and referred the ordinance to the Policy and Services Committee (P&S) for further refinement. Attachment A includes a revised draft Fair Chance in Housing Ordinance for P&S consideration. BACKGROUND On November 29, 2021, City Council provided direction to staff to study or implement a package of rental protection policies to add more certainty, stability, and fairness in the rental market for both renters and landlords. Staff researched and presented draft Fair Chance Housing policies to the City Council Housing Ad Hoc Committee in August 2024 and to the Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 1  Packet Pg. 11 of 95  9 5 4 2 Human Relations Commission (HRC) on October 10, 2024.1 Upon recommendation by the HRC, staff presented a draft Fair Chance in Housing Ordinance for a first reading by City Council on April 14, 2025.2 City Council provided feedback and referred the item to P&S for further refinement.3 This staff report incorporates the prior staff reports and discussions on Fair Chance in Housing policy by reference. ANALYSIS Lookback period4 policy development, including: o Possible “anchor dates” of any lookback period; o Establishing different lookback periods based on the relative severity of a renter’s conviction; and o Lookback period length; Clarification on permissible use of the registry of California sex offenders, Clarification on hate incidents and hate crimes, Ordinance applicability exemptions for single family residences; and Reducing the likelihood of ordinance circumvention. 5 If that anchor date fell outside the lookback period, the conviction could not be considered in an adverse housing decision. This is 1 HRC Meeting Minutes, October 10, 2024: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=39927&dbid=0&repo=PaloAlto. 2 City Council Agenda Packet, April 14, 2025, Agenda Item 13, Staff Report on Packet Pages 298-332: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=6009&dbid=0&repo=PaloAlto&searchid=99c15d7e-6969-4f35- 931d-e8c8c5894aee. 3 City Council Action Minutes, April 14, 2025: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=43259&dbid=0&repo=PaloAlto. City Council Summary Minutes, April 14, 2025: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=43261&dbid=0&repo=PaloAlto. 4 A lookback period is the time period, running back from the date of the inquiry, that may be considered when assessing a renter’s criminal history. 5 The previous draft ordinance used “date of sentencing,” while the current one uses “date of disposition,” which more commonly appears on background checks. In cases when the two dates are not the same, they are usually fairly close in time. Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 2  Packet Pg. 12 of 95  9 5 4 2 consistent with the practice in other Bay Area cities like San Francisco11 and Richmond12. Councilmembers questioned whether the lookback period should instead be anchored to the date of release from incarceration or another post-conviction date. Councilmembers expressed concern that a renter who was incarcerated for all of a lookback period would be able to seek housing without their criminal history being considered, even though they had not demonstrated a track record of lawful behavior post-release. The date of disposition and/or the date of sentencing are the most reliably reported and available data points in criminal history databases for convictions. Commercial criminal history databases do not reliably report dates of release from incarceration or date of sentence completion. Furthermore, many people with a conviction are not incarcerated. Additionally, even the date of disposition or the date of sentencing is not always reliably reported: a recent survey of state criminal history information systems found that 69% of arrests and 72% of felony charges in those state databases have final disposition data.13 While renters who serve longer terms of incarceration might receive some immediate protection after release by a lookback period that is anchored to the date of disposition or sentencing, that outcome furthers the policy aim of a Fair Chance ordinance by promoting housing stability at a renter’s most vulnerable time (immediately upon reentry), thereby reducing a risk factor associated with recidivism (see discussion on recidivism data below). A combination of anchor dates, such as release from incarceration where applicable and sentencing where no incarceration was imposed; or Any post-conviction anchor date (although, as noted, other dates, such as end of probation, are less reliably reported). 11 San Francisco Police Code § 4906(a)(5). 12 Richmond Municipal Code § 7.110.050(a)(5). 13 Congressional Research Service, In Focus, Access to Criminal History Record Information for Non-criminal Justice Purposes, April 22, 2024, Accessed March 5, 2026: https://www.congress.gov/crs_external_products/IF/PDF/IF12643/IF12643.3.pdf. Note: this source did not specify the percentage of reporting for misdemeanors. Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 3  Packet Pg. 13 of 95  9 5 4 2 default but allow the renter an opportunity to show that the relevant anchor date fell outside the lookback period and the conviction should therefore not be considered. 17 For example, theft crimes may be charged as either a misdemeanor or a felony depending on the value of the stolen items. In California, the threshold is $950;18 while in Texas, it is $250019. However, classification of crimes into felony versus misdemeanor is the most reliable proxy for the relative seriousness of an offense. It is a distinction used across jurisdictions and is most reliably reported in criminal history databases. 20 for misdemeanor convictions, felony convictions, and for “violent felonies” or “serious felonies” as 17 Similarly, even within the same jurisdiction, some offenses (for example, forgery under CPC 470) are ”wobblers” that a prosecutor may decide to charge either as a misdemeanor or a felony depending on the circumstances. 18 California Penal Code § 487. 19 Texas Penal Code § 31.03. 20 Staff would implement this by adding the following language (or similar) as PAMC 9.75.060(g): A landlord may not base an adverse action “On a Conviction for a Serious Felony as defined in California Penal Code Section 1192.7(c) or 1192.8, or a Violent Felony as defined in California Penal Code Section 667.5(c), or the out-of-state analogue for such an offense, that is more than seven years old calculated from the date of disposition. If there is insufficient information to determine whether a Conviction is for a Serious or Violent Felony or its out-of-state analogue, it is subject to the five-year lookback period described in Subsection (f) of this Section. If the date of disposition is not available, the Landlord may consider a Serious or Violent Felony Conviction unless the Renter produces mitigating information showing that the disposition date was outside the seven-year lookback period.” Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 4  Packet Pg. 14 of 95  9 5 4 2 defined in the California Penal Code.25 This approach is not recommended due to the additional difficulty of determining whether a conviction on a renter’s criminal history report corresponds to one on California’s “violent” or “serious” lists, which use both general categories of offenses (e.g., kidnapping) and citations to specific sections of the California Penal Code. It may be impractical to ask landlords and renters to do that analysis without input from a legal advisor. ”26 and “serious felonies”27 are used in California, but are not used consistently across states. Analogizing an out-of-state conviction to California’s list of “violent” or “serious” crimes could be difficult, especially with limited information about the underlying facts of a conviction. 28 However, including this provision would introduce significant enforcement concerns, making it much more difficult for renters with out-of-state felony convictions to prevail in court. A landlord must treat an out-of-state felony conviction as a misdemeanor if the renter can show that it would have been classified as a misdemeanor in California, and If the Committee recommends a three-tier system, the ordinance would specify that a landlord may treat an out-of-state felony conviction as a “serious“ or “violent“ felony only if the landlord can show that it would have been classified as such in California. 25 “Serious felonies” are defined in California Penal Code Section 1192.7(c) and 1192.8, and “violent felonies” are defined in California Penal Code Section 667.5(c). Almost all “violent felonies” are also “serious,” but the reverse is not true. 26 California Department of Corrections and Rehabilitation, Definition of Serious Felony Offenses As specified in Penal Code (PC) Section 1192.7(c) and PC Section 1192.8, Accessed May 26, 2026: https://www.cdcr.ca.gov/parole/violent-offenses-defined/. 27 California Department of Corrections and Rehabilitation, Violent Offenses Defined, Accessed May 26, 2026: https://www.cdcr.ca.gov/parole/serious-offenses-defined/. 28 Sample safe harbor ordinance language could be: ”Affirmative Defense: A Landlord who erroneously treats an out-of-state Felony Conviction as a Serious or Violent Felony Conviction shall not be liable for a violation of this Chapter if the Landlord can demonstrate that they acted on a good-faith, reasonable belief that that the out-of-state Felony Conviction corresponds to Serious or Violent Felony under California law.” Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 5  Packet Pg. 15 of 95  9 5 4 2 The revised ordinance now also includes explicit exceptions for certain types of convictions, such as convictions under federal law or another state’s law for conduct related to seeking or providing reproductive or gender affirming care that is lawful in California. 33 This approach would not capture all hate-motivated crimes, however, as many hate-motivated offenses are not charged under a hate crime statute. For example, a hate-motivated assault may be charged as a simple assault, and a criminal history check would not give any indication of the underlying conduct. Non-criminal hate incidents are not generally reported in criminal history background checks and would not be affected by this ordinance. Recidivism data is often measured from the date of release rather than the date of disposition or date of sentencing; Although recidivism risk declines over time, available research does not necessarily show convergence with the general population within two or three years; and Recidivism data does not capture all criminal activity. Rates of recidivism decline over time. A February 2024 report by the California Department of Corrections and Rehabilitation (CDCR) (for Californians released from incarceration in fiscal year 2018-19) showed that a majority of the cohort (58.1%) had no convictions within three years of their release from prison and that most convictions 33 Staff would implement this recommendation by revising PAMC 9.75.060(f) to say that landlords may not base an adverse action “On a Felony Conviction, or a Misdemeanor Conviction for a hate crime under California Penal Code section 422.6 or that carries a hate crime enhancement under California Penal Code section 422.7, that is more than five years old calculated from the date of disposition. If the date of disposition is not available, the Landlord may consider a Felony Conviction unless the Renter produces mitigating information showing that the disposition date was outside the five-year lookback period” or similar. Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 6  Packet Pg. 16 of 95  9 5 4 2 occurred during the first and second year of the three-year follow-up period.35 An April 2025 report issued by the CDCR (for Californians released from incarceration in fiscal year 2019-20) had similar results, with a majority of the cohort (60.9%) with no convictions within three years of release from incarceration.36 CDCR notes that fluctuations are expected with future release cohorts.37 At the April 2025 meeting, a comment was made regarding an apparent inconsistency between the ordinance's finding that most reconvictions occur in the first two or three years after release and data suggesting the absolute number of cases of recidivism rises over time. These findings are not contradictory: the first measures how quickly individuals within a cohort reoffend, while the second reflects cumulative convictions over time. Both support the idea that rates of recidivism decline over time. Criminal history alone appears to have limited predictive value for tenancy outcomes, particularly without an individualized context, as demonstrated by studies of participants in supportive housing programs.38, 39 Further, not all new offenses that show up in the recidivism data would necessarily bear on an individual’s fitness as a renter. Housing instability is associated with an increased risk of recidivism for people with criminal history.40, 41 Supporting fair access to stable housing is part of the purpose of the ordinance. The ability to compete fairly for access to housing may support reintegration into the community and improve access to employment, housing stability and services, and may reduce the incidence of homelessness for people with a criminal 35 California Department of Corrections and Rehabilitation, Division of Correctional Policy Research and Internal Oversight, Office of Research, Recidivism Report for Individuals Released from the California Department of Corrections and Rehabilitation in Fiscal Year 2018-19, February 2024, Accessed March 10, 2025: https://www.cdcr.ca.gov/research/wp- content/uploads/sites/174/2024/02/Statewide-Recidivism-Report-for-Individuals-Released-in-Fiscal-Year-2018-19.pdf. 36 California Department of Corrections and Rehabilitation, Division of Correctional Policy Research and Internal Oversight, Office of Research, Statewide Recidivism Report for Individuals Released from the California Department of Corrections and Rehabilitation in Fiscal Year 2019-20, April 2025, Accessed February 26, 2026: https://www.cdcr.ca.gov/research/wp- content/uploads/sites/174/2025/04/Statewide-Recidivism-Report-for-Individuals-Released-in-Fiscal-Year-2019-20.pdf. 37 California Department of Corrections and Rehabilitation, Division of Correctional Policy Research and Internal Oversight, Office of Research, Statewide Recidivism Report for Individuals Released from the California Department of Corrections and Rehabilitation in Fiscal Year 2019-20, April 2025, Accessed February 26, 2026: https://www.cdcr.ca.gov/research/wp- content/uploads/sites/174/2025/04/Statewide-Recidivism-Report-for-Individuals-Released-in-Fiscal-Year-2019-20.pdf. 38 Ehman and Reosti, “Tenant Screening in an Era of Mass Incarceration: A Criminal Record is No Crystal Ball", N. Y. U. Journal of Legislation and Public Policy Quorum, 19, March 2015, Accessed March 19, 2025: https://nyujlpp.org/wp- content/uploads/2013/03/Ehman-Reosti-2015-nyujlpp-quorum-1.pdf. 39 Malone, Psychiatric Services, Assessing Criminal History as a Predictor of Future Housing Success for Homeless Adults with Behavioral Health Disorders, 2009 Feb;60(2):224-30. 40 Jacobs LA, Gottlieb A. THE EFFECT OF HOUSING CIRCUMSTANCES ON RECIDIVISM: Evidence from a Sample of People on Probation in San Francisco. Crim Justice Behav. 2020 Sep;47(9):1097-1115. doi: 10.1177/0093854820942285. Epub 2020 Aug 6. PMID: 34629568; PMCID: PMC8496894.Published Online August 6, 2020, Accessed March 12, 2025: https://pmc.ncbi.nlm.nih.gov/articles/PMC8496894/. 41 Ehman and Reosti, supra note 21. Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 7  Packet Pg. 17 of 95  9 5 4 2 history. Additionally, various state and federal requirements limit the reporting and/or use of criminal history records in renter screening contexts — for example, state law prohibits consumer reporting agencies from reporting records that predate the report by more than seven years “from the date of disposition, release, or parole,”49 and state regulations prohibit landlords from considering criminal records other than convictions (e.g., arrests that did not result in conviction).50 A local fair chance ordinance adds value by requiring procedural steps (like making a conditional offer before running a criminal history check and requiring an individualized assessment) that are merely encouraged under state law. Another key protection that a local fair chance ordinance may provide is a lookback period shorter than the seven-year reporting cutoff. Based on the above, staff have revised the draft ordinance to propose lookback periods of three years for misdemeanors and five years for felonies, though the Committee may recommend alternate lengths. Reducing or Preventing Circumvention A Council member asked whether the draft ordinance could be edited to reduce circumvention. Staff’s approach to reduce circumvention has two parts: (1) make the required procedures and documentation as clear as possible and (2) provide City implementation guidance, Both parts are already in the draft ordinance. The draft ordinance also aims to balance landlords’ interest in using some criminal history information with renter protections by establishing an anti-discrimination process, clarifying expectations, and providing remedies if discrimination occurs. While the City cannot prevent noncompliant background checks, the ordinance increases transparency (including addressing potentially inaccurate or incomplete information) and is intended to help landlords avoid some inadvertent discrimination, including when artificial intelligence-based screening tools might be used. Staff did not add any anti- circumvention edits to the revised ordinance, but welcomes further suggestions from P&S and the community. Additional Changes to the Draft Ordinance in Response to Council Feedback In response to Council feedback at the April 2025 City Council meeting, staff implemented several additional revisions to the draft ordinance. These include: Applicability Exemptions for Single-Family Residences (Section 9.75.030 Applicability). Consistent with other cities’ fair chance ordinances, the original draft ordinance exempted single-family residences, including those with accessory dwelling units and 49 CA Civil Code §§ 1786.18, 1785.13. 50 2 CCR § 12269. Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 8  Packet Pg. 18 of 95  9 5 4 2 junior accessory dwelling units, where the landlord occupies either the main unit or an accessory unit as their primary residence. However, in response to Councilmember concerns that this approach could result in landlords removing their single-family homes from the rental market, staff revised the draft ordinance to exempt all single-family homes regardless of whether the landlord is in residence. This revision was a deliberate balancing decision rather than an evidence-based necessity. Sex Offender Registration (Section 9.75.080 Exceptions to Prohibition). Each state maintains a list of registered sex offenders. As of 2022 in California, not all sex offenses require those convicted to permanently stay on the registry; for some offenses, an individual can petition to be removed after a certain number of years. Based on Council feedback, staff revised the draft ordinance to clarify that landlords may consider whether a prospective renter is listed on the registry at the time of the criminal history background check, regardless of whether their conviction is one that requires them to remain on the registry permanently. Additionally, staff updated the draft ordinance to: Make additional minor text clarifications throughout; Update the findings and declarations to include additional information and discussion from public hearings; Clarify that this ordinance does not prohibit landlords from using other lawful renter screening tools, such as employment verification; Add definitions of misdemeanor and felony as defined by the jurisdiction in which the crime occurred, with exceptions for offenses that would be more leniently classified in California (Section 9.75.020 Definitions) and for offenses related to reproductive or gender affirming care that would be legal in California (Section 9.75.060 Basis for Adverse Action); Add longer and different lookback periods for misdemeanors (3 years) and felonies (5 years) (Section 9.75.060(e) and (f)). Staff did not update the draft ordinance to include: Explicit distinctions for drug offenses, hate crimes, or other specific types of crimes (including serious or violent crimes); or Additional remedies or other text to reduce the likelihood of circumvention of the ordinance; or Safe harbor provisions. FISCAL/RESOURCE IMPACT The policy recommendation in this report does not have a significant fiscal or budgetary impact. Implementation of the draft ordinance would primarily occur through private action, with limited staff time associated with staff development of any ordinance implementation guidance and any City processing of any request for a waiver or adjustments to the requirements of the ordinance under the provisions in draft ordinance Section 9.75.140. However, if the Policy & Services Committee recommends that City Council take one or more alternative actions other Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 9  Packet Pg. 19 of 95  9 5 4 2 than the recommended action, staff would need to evaluate the potential fiscal and resource impacts. STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 10  Packet Pg. 20 of 95  *NOT YET APPROVED* 1 0290194_20260423_ms29 Ordinance No. _____ Ordinance of the Council of the City of Palo Alto Adopting Chapter 9.75 (Fair Chance in Housing) to Limit the Use of Criminal History Information in Rental Housing Decisions 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. The City of Palo Alto is making significant efforts to address homelessness and promote fair access to housing. B. On November 29, 2021, City Council directed staff to study or implement a package of rental protection policies to add more certainty, stability, and fairness in the Palo Alto rental market for both renters and landlords. This direction included the evaluation of a potential Fair Chance Housing Ordinance including any consequences, both intended and unintended. C. On April 15, 2024, City Council adopted the City’s 2023-2031 Housing Element, including Program 6.6: Fair Housing. Program 6.6 directs the pursuit of renter protections, including a proposed Fair Chance Housing Ordinance.1 D. On October 10, 2024, the Human Relations Commission held a public hearing on Fair Chance Housing policy considerations, components, and approach options regarding the use of criminal history information in rental housing decisions and recommended support of City Council consideration of a draft Ordinance for Palo Alto. E. On April 14, 2025, City Council held a public hearing on a draft Fair Chance in Housing Ordinance, received public comments, posed topics for additional staff research, and referred the ordinance to the Policy & Services Committee. F. State law currently includes some restrictions on the use of criminal history in decisions about rental housing. However, local jurisdictions may adopt Fair Chance Housing policies that are more protective than existing State requirements, including by further restricting the criminal history information a landlord and/or housing provider may consider, as long as these local regulations do not conflict with State or Federal law.2 G. According to the Santa Clara County Point in Time Count from 2025, 10,711 people were unhoused in Santa Clara County, including 418 people in Palo Alto.3 1 City of Palo Alto 2023-2031 Housing Element, Accessed March 18, 2025: https://www.paloalto.gov/files/assets/public/v/1/planning-amp-development-services/housing-element/housing- element_2023_2031/palo-alto-housing-element.pdf. 2 See 2 CCR § 12271. 3 Santa Clara County 2025 PIT Report, Accessed February 26, 2026: https://files.santaclaracounty.gov/exjcpb1571/2025-09/santa-clara-county-point-in-time-count-2025-final- report.pdf?VersionId=Rl1.G6aaDKy9frtsmdKUrEepVwgOmZQ3. Item 2 Attachment A - Draft Fair Chance Housing Ordinance (May 2026)        Item 2: Staff Report Pg. 11  Packet Pg. 21 of 95  *NOT YET APPROVED* 2 0290194_20260423_ms29 H. As of 2018, an estimated eight million Californians, or nearly one in five Californians, were living with a past criminal conviction.4 I. People with a criminal history face barriers to securing stable housing. People with criminal history are significantly more likely to be unhoused than the general public.5 6 7 J. Commercially available criminal history databases used for renter screening often include inaccurate or incomplete information.8 K. Research has shown that the risk of recidivism tends to decline over time.9 Recent reports from the California Department of Corrections and Rehabilitation show that a majority of the Californians released from prison had no convictions within three years of their release from incarceration, and that most convictions occurred during the first and second year of the three-year follow-up period.10, 11 4 Californians for Safety and Justice, Repairing the Road to Redemption in California, May 2018, Accessed March 17, 2025: https://www.ilrc.org/sites/default/files/resources/repair_road_to_redempt_ca-20180928.pdf. 5 Center for American Progress, Strengthening Access to Housing for People With Criminal Records Is Key to Successful Reentry, April 17, 2024, Accessed March 12, 2025: https://www.americanprogress.org/article/strengthening-access-to-housing-for-people-with-criminal-records-is- key-to-successful-reentry/. 6 California Health Policy Strategies, LLC, Criminal Justice System Involvement and Mental Illness among Unsheltered Homeless in California, November 2018, Accessed March 12, 2025: https://calhps.com/wp- content/uploads/2023/03/policy-brief-unsheltered-homelessness-11.20.2018.pdf. 7 Prison Policy Initiative, Nowhere to Go: Homelessness among formerly incarcerated people; August 2018, Accessed March 12, 2025: https://www.prisonpolicy.org/reports/housing.html. 8 Sarah Lageson and Robert Stewart, Criminology, The Problem with Criminal Records: Discrepancies between State Reports and Private-Sector Background Checks, February 11, 2024, Accessed March 18, 2025: https://onlinelibrary.wiley.com/doi/10.1111/1745- 9125.12359; https://nij.ojp.gov/library/publications/problem-criminal-records-discrepancies-between-state- reports-and-private . Funding was provided by the U.S. Department of Justice, Office of Justice Programs, National Institute of Justice, under Award 2017-IJ-CX-0036. 9 Federal Register, Reducing Barriers to HUD-Assisted Housing A Proposed Rule by the Housing and Urban Development Department, April 10, 2023, Accessed March 11, 2025: https://www.federalregister.gov/documents/2024/04/10/2024-06218/reducing-barriers-to-hud-assisted-housing . 10 California Department of Corrections and Rehabilitation, Division of Correctional Policy Research and Internal Oversight, Office of Research, Recidivism Report for Individuals Released from the California Department of Corrections and Rehabilitation in Fiscal Year 2018-19, February 2024, Accessed March 10, 2025: https://www.cdcr.ca.gov/research/wp-content/uploads/sites/174/2024/02/Statewide-Recidivism-Report-for- Individuals-Released-in-Fiscal-Year-2018-19.pdf. 11 California Department of Corrections and Rehabilitation, Division of Correctional Policy Research and Internal Oversight, Office of Research, Statewide Recidivism Report for Individuals Released from the California Department of Corrections and Rehabilitation in Fiscal Year 2019-20, April 2025, Accessed February 26, 2026: https://www.cdcr.ca.gov/research/wp-content/uploads/sites/174/2025/04/Statewide-Recidivism-Report-for- Individuals-Released-in-Fiscal-Year-2019-20.pdf. Item 2 Attachment A - Draft Fair Chance Housing Ordinance (May 2026)        Item 2: Staff Report Pg. 12  Packet Pg. 22 of 95  *NOT YET APPROVED* 3 0290194_20260423_ms29 L. Studies of participants in supportive housing programs suggest that criminal history is not predictive of problematic tenancy.12, 13 Conversely, housing stability is associated with a reduced risk of recidivism for people with criminal history.14 M. Structural barriers to accessing stable housing for people with a history of criminal convictions are detrimental to the health, welfare, and public safety of the City’s residents. N. Limiting the use of criminal history information in rental housing decisions will give previously incarcerated people and other people with a history of criminal convictions a fair opportunity to compete for rental housing, thus putting them in a better position to reintegrate into the community, obtain gainful employment, and access health and other services.15 SECTION 2. Chapter 9.75 (Fair Chance in Housing) of Title 9 (Public Peace, Morals and Safety) is hereby adopted to read as follows: 9.75.010 Purpose. The purpose of this Chapter is to reduce the potential for discrimination on the basis of criminal history in rental housing decisions. The City desires to limit the use of criminal history information in decisions regarding rental housing in order to give previously incarcerated people or other people with criminal convictions a fair opportunity to compete for rental housing, thus putting them in a better position to reintegrate into the community, obtain gainful employment, and access health and other services. Such housing opportunities should also reduce the incidence of homelessness for people with a criminal history and reduce the risk of recidivism through housing stability. Further, the findings and declarations set forth in the adopted form of this Ordinance are incorporated into this Chapter as if fully set forth herein. This Ordinance does not require landlords to perform criminal history checks; it applies when landlords choose to do so. It does not prohibit landlords from using other lawful renter screening tools, such as employment verification. This Ordinance is intended to be at least as protective as state law, as amended from time to time. Where this Ordinance differs 12 Ehman and Reosti,"Tenant Screening in an Era of Mass Incarceration: A Criminal Record is No Crystal Ball", N. Y. U. Journal of Legislation and Public Policy Quorum, 19, March 2015, Accessed March 19, 2025: https://nyujlpp.org/wp-content/uploads/2013/03/Ehman-Reosti-2015-nyujlpp-quorum-1.pdf. 13 Malone, Psychiatric Services, Assessing Criminal History as a Predictor of Future Housing Success for Homeless Adults With Behavioral Health Disorders, 2009 Feb;60(2):224-30. doi: 10.1176/ps.2009.60.2.224, Accessed March 19, 2025: https://psychiatryonline.org/doi/epdf/10.1176/ps.2009.60.2.224. 14 Jacobs LA, Gottlieb A. THE EFFECT OF HOUSING CIRCUMSTANCES ON RECIDIVISM: Evidence From a Sample of People on Probation in San Francisco. Crim Justice Behav. 2020 Sep;47(9):1097-1115. doi: 10.1177/0093854820942285. Epub 2020 Aug 6. PMID: 34629568; PMCID: PMC8496894.Published Online August 6, 2020, Accessed March 12, 2025: https://pmc.ncbi.nlm.nih.gov/articles/PMC8496894/. 15 Center for American Progress, Strengthening Access to Housing for People With Criminal Records Is Key to Successful Reentry, April 17, 2023, Accessed March 12, 2025: https://www.americanprogress.org/article/strengthening-access-to-housing-for-people-with-criminal-records-is- key-to-successful-reentry/. Item 2 Attachment A - Draft Fair Chance Housing Ordinance (May 2026)        Item 2: Staff Report Pg. 13  Packet Pg. 23 of 95  *NOT YET APPROVED* 4 0290194_20260423_ms29 from state law, the provision more protective of renter rights shall prevail to the extent allowed by law. 9.75.020 Definitions. For the purpose of this chapter only, the following terms are defined as follows: (a) "Adverse Action" means an action related to the rental of a Residential Rental Unit that has negative effect, including but not limited to the following actions: (1) Failing or refusing to rent or lease housing to a person; (2) Failing or refusing to continue to rent or lease housing to a person; (3) Reducing the amount or term of any person’s subsidy for housing; (4) Treating an Applicant or Renter differently from other Applicants or Renters, including but not limited to requiring higher security deposit or rent, or not accepting certain sources of income or rent payment, such as vouchers or third- party checks; (5) Treating a person as ineligible for a renter-based rental assistance program; or (6) Failing to permit a Renter’s Close Family Member to occupy a rental unit while the occupying Renter remains in occupancy. (b) "Aggrieved Person" means any person who believes they have been injured by a housing practice prohibited under this Chapter. This definition could include, but is not limited to, an Applicant or Renter who believes they were subject to an Adverse Action based on their own Criminal History; or a Renter who seeks to have another person reside in the renter’s Residential Rental Unit (to replace an existing Renter, to add a new Renter, or sublet to a subtenant) when the Landlord takes Adverse Action based on the prospective new Renter’s Criminal History. (c) "Applicant" means a person who seeks information about, visits, or applies to rent or lease a Residential Rental Unit; who applies for a renter-based rental assistance program; who seeks to be added as a household member to an existing lease for a Residential Rental Unit; or, with respect to any Criminal History that occurred prior to the beginning of the person’s tenancy, who currently rents or has a lease for a Residential Rental Unit. (d) "Arrest" means a record from any jurisdiction that does not result in a Conviction and includes information indicating that a person has been questioned, apprehended, taken into custody or detained, or held for investigation by a law enforcement, police, or prosecutorial agency and/or charged with, indicted, or tried and acquitted for any felony, misdemeanor, or other criminal offense. (e) "Background Check Report" means any report regarding an Applicant’s Criminal History, including but not limited to those produced by the California Department of Justice, the Item 2 Attachment A - Draft Fair Chance Housing Ordinance (May 2026)        Item 2: Staff Report Pg. 14  Packet Pg. 24 of 95  *NOT YET APPROVED* 5 0290194_20260423_ms29 Federal Bureau of Investigation, other law enforcement agencies, courts, or any consumer reporting or Renter screening agency. (f) "Close Family Member" means a spouse, registered domestic partner, child, sibling, parent, grandparent, or grandchild. (g) "Conviction" means a record from any jurisdiction that includes information indicating that a person has been convicted of a felony or misdemeanor or other criminal offense and for which the person was placed on probation, fined, imprisoned, and/or paroled. (h) "Criminal History" means information transmitted orally or in writing or by any other means, and obtained from any source, including but not limited to the person to whom the information pertains, a government agency, or a Background Check Report, regarding one or more Convictions or Arrests. (i) “Directly Related Conviction” means a criminal conviction whose underlying conduct has a direct and specific negative bearing on a substantial, legitimate, and nondiscriminatory purpose of the Landlord, such as protecting the safety of other residents, the Landlord’s employees, or the property. In determining whether a Conviction is directly related to the Landlord’s purpose, the Landlord shall consider whether the housing offers the opportunity for the same or similar offense to occur, whether circumstances leading to the conduct for which the person was convicted will recur in the housing, and whether supportive services that might reduce the likelihood of a recurrence of such conduct are available on-site. Those matters identified in section 9.75.060 may not qualify as Directly Related Convictions. (j) “Evidence of Rehabilitation or Other Mitigating Factors” means credible information about the individual that suggests that the individual is not likely to pose a demonstrable risk to the achievement of the Landlord’s identified interest. Credible information is information that a reasonable person would believe is true based on the source and content of the information. Mitigating information includes, but is not limited to: (1) Whether the individual was a minor or young adult at the time of the conduct upon which the criminal conviction is based; (2) The amount of time that has passed since the date of conviction; (3) Evidence that the individual has maintained a good tenant history before and/or after the conviction; (4) Evidence of rehabilitation efforts, including a person's satisfactory compliance with all terms and conditions of parole and/or probation; successful completion of parole, probation, mandatory supervision, or Post Release Community Supervision; a Certificate of Rehabilitation under Penal Code section 4852.01; or other conduct demonstrating rehabilitation, such as maintenance of steady employment; (5) Whether the conduct arose from the individual's status as a survivor of domestic violence, sexual assault, dating violence, stalking, or comparable offenses against the individual; Item 2 Attachment A - Draft Fair Chance Housing Ordinance (May 2026)        Item 2: Staff Report Pg. 15  Packet Pg. 25 of 95  *NOT YET APPROVED* 6 0290194_20260423_ms29 (6) Whether the conduct arose from untreated substance abuse or mental illness; (7) Whether the conduct arose from the individual's disability, or any risks related to such conduct, which could be sufficiently mitigated or eliminated by a reasonable accommodation; or (8) Other relevant facts or circumstances surrounding the criminal conduct and/or conduct after the conviction. (k) “Felony” is defined as in the jurisdiction where the Conviction occurred. However, if a Renter presents mitigating information showing that a Felony Conviction would have been treated as a Misdemeanor or less had it occurred in California, the California classification shall govern. (l) "Landlord" means the owner or property manager exercising effective control over the terms and conditions of the tenancy of a residential rental unit, including a person with such control delegated through a durable power of attorney. (m) “Misdemeanor” is defined as in the jurisdiction where the Conviction occurred. However, if a Renter presents mitigating information showing that a Felony Conviction would have been treated as an infraction or less had it occurred in California, the California classification shall govern. (n) “Inquire” means any direct or indirect conduct intended to gather information from or about an Applicant, or a potential Applicant or candidate, using any mode of communication, including, but not limited to, application forms, interviews, and Background Check Reports. (o) "Renter" means a person or entity entitled by written or oral agreement to occupy a residential rental unit to the exclusion of others. (p) “Residential Rental Unit” means any housing structure occupied as a dwelling or offered for rent or lease as a dwelling, whether attached, detached, single- or multiple-family. The term "Residential Rental Unit" shall not include an attached bedroom of a landlord- occupied dwelling where the landlord and renter(s) share living facilities. 9.75.030 Applicability. This Chapter applies to any Residential Rental Unit in the City of Palo Alto, except: (a) Single-family dwellings, including those with accessory dwelling units and junior accessory dwelling units; (b) Duplexes or triplexes where one of the units is occupied by one or more Landlords as their principal residence; and (c) Renter-occupied units where an occupying Renter seeks to replace an existing co- Renter, add an additional co-Renter, or sublet the unit, provided that the occupying Renter remains in occupancy. Item 2 Attachment A - Draft Fair Chance Housing Ordinance (May 2026)        Item 2: Staff Report Pg. 16  Packet Pg. 26 of 95  *NOT YET APPROVED* 7 0290194_20260423_ms29 9.75.040 Prohibition. A Landlord may not take adverse action against an Applicant or a Renter based on Criminal History except as allowed by this Chapter. 9.75.050 Conditional offer required. Except when State or Federal law requires otherwise, a Landlord shall not inquire about or require an Applicant to disclose any Criminal History until the Landlord: (a) Has determined the Applicant is qualified to rent the Residential Rental Unit under all of the Landlord's criteria not related to Criminal History; and (b) Has provided to the Applicant a conditional lease agreement that commits the unit to the Applicant as long as the Applicant passes the Criminal History review. 9.75.060 Basis for adverse action. Except as provided in section 9.75.080, a Landlord shall not take Adverse Action against an Applicant or a Renter based in whole or in part: (a) On any arrest that has not resulted in a criminal conviction, or based on information indicating that an individual has been questioned, apprehended, taken into custody or detained, or held for investigation by a law enforcement, police, military, or prosecutorial agency; (b) On referral to, participation in or completion of a diversion or a deferral of judgment program; (c) On a Conviction that has been sealed, dismissed, vacated, expunged, voided, invalidated, or otherwise rendered inoperative by judicial action or by statute (for example, under California Penal Code Sections 1203.1 or 1203.4) or by executive pardon, or for which a certificate of rehabilitation has been granted pursuant to Penal Code section 4852.01 et seq.; (d) On a Conviction or any other determination or adjudication in the juvenile justice system, or information regarding a matter considered in or processed through the juvenile justice system; (e) On a Misdemeanor Conviction that is more than three years old, calculated from the date of disposition. If the date of disposition is not available, the Landlord may consider a Misdemeanor Conviction unless the Renter produces mitigating information showing that the disposition date was outside the three-year lookback period; Item 2 Attachment A - Draft Fair Chance Housing Ordinance (May 2026)        Item 2: Staff Report Pg. 17  Packet Pg. 27 of 95  *NOT YET APPROVED* 8 0290194_20260423_ms29 (f) On a Felony Conviction that is more than five years old, calculated from the date of disposition. If the date of disposition is not available, the Landlord may consider a Felony Conviction unless the Renter produces mitigating information showing that the disposition date was outside the five-year lookback period; (g) On a Conviction under federal law or another state’s law for conduct related to seeking or providing reproductive or gender affirming care that is lawful in California; or (h) On information pertaining to an offense or violation other than a felony or misdemeanor, such as an infraction. 9.75.070 Procedures for use of criminal history information. (a) If a Landlord chooses to Inquire about or require Renters or Applicants to disclose Criminal History as part of a screening or other process relating to a Residential Rental Unit, the Landlord must first: (1) Inform the Applicant or a Renter in advance that the Landlord will check for certain types of Criminal History, and that the process is regulated by the City’s Fair Chance Ordinance; (2) Offer the Applicant or a Renter a reasonable opportunity to present evidence of inaccuracy or Evidence of Rehabilitation or Other Mitigating Factors; and (3) Request and obtain written consent to check their Criminal History, or if the Applicant or Renter objects, provides the Applicant the opportunity to withdraw their application. If an Applicant or a Renter does not object within three calendar days, the applicant will be deemed to have consented. (b) In reviewing an Applicant or Renter's Criminal History and making a decision related to eligible housing based on such history, a Landlord shall conduct an individualized assessment, considering only: (1) Directly Related Convictions, as defined in Section 9.75.020 of this Code; (2) Time that has elapsed since the Conviction; and (3) Any evidence of inaccuracy or Evidence of Rehabilitation or Other Mitigating Factors presented by the Applicant or Renter. (c) If a Landlord intends to base an Adverse Action related to eligible housing on an item or items in the Applicant or Renter’s Criminal History, prior to taking any Adverse Action the Landlord shall: (1) provide the Applicant or Renter with a copy of the Background Check Report, and (2) notify the Applicant or Renter in writing of the prospective Adverse Action, the specific items forming the basis for the prospective Adverse Action, the Item 2 Attachment A - Draft Fair Chance Housing Ordinance (May 2026)        Item 2: Staff Report Pg. 18  Packet Pg. 28 of 95  *NOT YET APPROVED* 9 0290194_20260423_ms29 Applicant or Renter’s right to present evidence of inaccuracy or Evidence of Rehabilitation or Other Mitigating Factors, and the timeframe for the Applicant or Renter response as outlined in Subsection (d) of this section. (d) If, within seven calendar days of the date that the notice described in Subsection (c) of this section is provided by the Landlord to the Applicant or Renter, the Applicant or Renter gives the Landlord notice in writing of: (1) Evidence of the inaccuracy of the item or items of Criminal History, (2) Evidence of Rehabilitation or Other Mitigating Factors set forth in this section, or (3) A request for additional time to respond, the Landlord shall delay any Adverse Action for a reasonable period of time that is not less than seven calendar days after receipt of the information. During that time the Landlord shall reconsider the prospective Adverse Action in light of the information provided by the Applicant or Renter. (e) If a Landlord takes any Adverse Action based in whole or in part on the Applicant or Renter's Criminal History, the Landlord shall within seven calendar days provide a written notice to the Applicant regarding the Adverse Action that includes, at a minimum: (1) A written statement of the reason(s) for such adverse action, specifically describing: a. How the individual’s Criminal History qualifies as a Directly Related Conviction; and b. How any Evidence of Rehabilitation or Other Mitigating Factors or other information submitted in support of such individual’s tenancy was taken into account. (2) A list of local legal services providers including contact information; and (3) A copy of any Criminal History, Background Check Report, or other information related to the Applicant's Criminal History that served as a basis for the Adverse Action. The Landlord shall not require reimbursement or payment from the Applicant or Renter for providing any Criminal History or criminal Background Check Report. 9.75.080 Exceptions to prohibition. (a) A just cause eviction pursuant to Palo Alto Municipal Code 9.68.020(a)(1)(F) shall not constitute a violation of this Chapter. (b) It shall not be a violation of this Chapter for a Landlord to comply with Federal or State laws that require the Landlord to automatically exclude Applicants or Renters based on certain types of Criminal History (e.g. Ineligibility of Dangerous Sex Offenders for Admission to Public Housing (42 U.S.C. Section 13663(a); Ineligibility of Individuals Item 2 Attachment A - Draft Fair Chance Housing Ordinance (May 2026)        Item 2: Staff Report Pg. 19  Packet Pg. 29 of 95  *NOT YET APPROVED* 10 0290194_20260423_ms29 Convicted for Manufacturing Methamphetamine on Premises of Federally Assisted Housing for Admission to Public Housing and Housing Choice Voucher Programs (24 C.F.R. Section 982.553)). However, if such a requirement applies, the Landlord shall not inquire about, require disclosure of, or, if such information is received, review an Applicant's criminal history until the Landlord first does the following: (1) informs the Applicant in advance that the Landlord will check for certain types of Criminal History; and (2) requests written consent, or if the Applicant objects within three days, provides the Applicant the opportunity to withdraw the rental application. If any Adverse Action is based in whole or in part on the Applicant's Criminal History, the Landlord shall provide a written notice to the Applicant regarding the Adverse Action that includes, at a minimum, the reason(s) for the Adverse Action; a copy of any Criminal History, Background Check Report, or other information related to the Applicant's Criminal History that served as a basis for the Adverse Action, and an opportunity to respond with rebutting or mitigating information prior to the denial of Applicant's housing application. (c) In compliance with California Penal Code Section 290.46(j)(1), in order to protect persons at risk, the Landlord may review the State registry of sex offenders operated by the State of California Department of Justice and may take an Adverse Action against an Applicant based on a Conviction that leads to the Applicant appearing on the registry provided the Landlord first: (1) Determines that the Applicant is qualified to rent the Residential Rental Unit under all of the Landlord criteria for assessing Applicants except for any criteria related to Criminal History; (2) Provides to the Applicant a conditional rental agreement that commits the Housing to the Applicant as long as the Applicant meets the Landlord’s Criminal History and other qualifying criteria; and (3) Informs the Applicant in advance that the Landlord will be checking the sex offender registry and requests the written consent of the Applicant to obtain such information or gives the Applicant the opportunity to withdraw the application. If an Applicant or a Renter does not object within three calendar days, the applicant will be deemed to have consented to the check. (d) If any Adverse Action is based in whole or in part on the Applicant's Criminal History, the landlord shall provide a written notice to the Applicant that includes, at a minimum, the reason(s) for the Adverse Action; a copy of any Criminal History, Background Check Report, or other information related to the Applicant's Criminal History that served as a basis for the Adverse Action, and an opportunity to respond with rebutting or mitigating information prior to the denial of Applicant's application. 9.75.090 Advertising and notice requirements for Landlords. (a) Advertising Item 2 Attachment A - Draft Fair Chance Housing Ordinance (May 2026)        Item 2: Staff Report Pg. 20  Packet Pg. 30 of 95  *NOT YET APPROVED* 11 0290194_20260423_ms29 (1) It shall be unlawful for any Landlord to engage in any communication, including the production or dissemination of advertisements, related to eligible housing, which expresses, directly or indirectly, that any person with an Arrest or Conviction record will not be considered for the rental or lease of real property or may not apply for the rental or lease of real property, except as required by local, State, or Federal law. For purposes of this subsection, engaging in a communication includes, but is not limited to, making a verbal statement or producing or disseminating any solicitation, advertisement, or signage. (b) Notice requirements (1) The City Manager shall publish and make available to Landlords, in English, Spanish, and all languages spoken by more than five percent (5%) of the City’s population, a notice that informs Applicants for housing of their rights under this Chapter. The notice shall contain the following information: a. A description of the restrictions and requirements of this Chapter; and b. Information about community resources available to assist an Applicant in connection with a violation of this Chapter. (2) Landlords subject to the requirements of this Chapter shall include the notice made available pursuant to this Section in their advertisements, application materials and leases. 9.75.100 Retaliation prohibited. It shall be a violation of this Chapter to interfere with, restrain, or deny the exercise of, or the attempt to exercise, any right protected under this Chapter, or to take any Adverse Action against any person because the person exercised or attempted in good faith to exercise any right protected under this Chapter. 9.75.110 Recordkeeping and confidentiality. Landlords shall maintain a record of any Criminal History obtained for any Applicant for housing for a period of at least three years from the date that the Criminal History Background Report was obtained. To the maximum extent permitted by law, any information obtained regarding an Applicant’s Criminal History shall remain confidential. 9.75.120 Landlord’s employees and agents. It is the responsibility of a Landlord to ensure that its employees and agents comply with this chapter. 9.75.130 Implementation. Item 2 Attachment A - Draft Fair Chance Housing Ordinance (May 2026)        Item 2: Staff Report Pg. 21  Packet Pg. 31 of 95  *NOT YET APPROVED* 12 0290194_20260423_ms29 The City Manager or their designee is authorized to take all necessary steps to implement this Chapter, including but not limited to the following: (a) Developing any notice required for purposes of implementing the requirements of this Chapter, and other implementation documents, including written materials for Landlords and potential Applicants; and (b) Adopting any regulations necessary to implement the requirements of this Chapter. 9.75.140 Request for waiver. A Landlord may request a waiver or adjustment of the requirements of this Chapter upon a showing that strict application of its requirements would effectuate an unconstitutional taking of property or otherwise have an unconstitutional application to the Landlord, or that a waiver is necessary to avoid a reasonably foreseeable harm to the Landlord, Landlord’s agents, or other Renters. Requests for waiver or adjustment must be submitted in writing to the Director of Planning and Development Services or their designee together with supporting documentation, and must include a citation to this Chapter. Requests shall be acted on by the Director of Planning and Development Services or their designee within 30 days . 9.75.150 Remedies. (a) Any Aggrieved Person who believes that the provisions of this Chapter have been violated shall have a private right of action for injunctive relief, and may institute a civil proceeding for injunctive relief, actual damages, and other relief deemed appropriate by the court. Nothing in this Chapter is intended to limit the damages recoverable by any party through a private action. In any action brought under this Chapter, the court may award reasonable attorneys’ fees and cost of action pursuant to Code of Civil Procedure Section 1021.5. (b) An attorney who represents an Applicant in litigation against a Landlord brought under this Chapter shall provide notice to the City within ten (10) days of filing court action against the Landlord, and inform the City of the outcome of the court action within ten days of any final judgment. 9.75.160 No conflict with state or federal law. This Chapter is not intended to conflict with state or federal law. If there is a conflict between the provisions of Federal or State law and this Article, federal or state law shall control. 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 Item 2 Attachment A - Draft Fair Chance Housing Ordinance (May 2026)        Item 2: Staff Report Pg. 22  Packet Pg. 32 of 95  *NOT YET APPROVED* 13 0290194_20260423_ms29 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 project is exempt from the provisions of the California Environmental Quality Act (“CEQA”), pursuant to Section 15061(b)(3) of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that the ordinance will have a significant effect on the environment. 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: ____________________________ ____________________________ City Attorney or Designee City Manager ____________________________ Director of Planning and Development Services Item 2 Attachment A - Draft Fair Chance Housing Ordinance (May 2026)        Item 2: Staff Report Pg. 23  Packet Pg. 33 of 95  CITY COUNCIL SUMMARY MINUTES Page 1 of 21 Regular Meeting April 14, 2025 The City Council of the City of Palo Alto met on this date in the Council Chambers and by virtual teleconference at 5:30 P.M. Present In Person: Burt, Lauing, Lu, Lythcott-Haims, Reckdahl, Stone, Veenker Present Remotely: None. Absent: None. Special Orders of the Day 1. Proclamation Honoring National Public Safety Telecommunicators Week April 13-19, 2025 NO ACTION Mayor Lauing read the proclamation aloud. James Reifschneider, Assistant Police Chief, spoke on behalf of Police Chief Andrew Binder and the Police Department to the proclamation describing the significance of the role of the Public Safety Telecommunicators. 2. Proclamation Honoring National Animal Control Officer Appreciation Week April 13-19, 2025 NO ACTION Councilmember Lythcott-Haims read the proclamation aloud. Assistant Police Chief Reifschneider spoke on behalf of Police Chief Andrew Binder and the Police Department to the proclamation acknowledging the work of the animal control officers. 3. Proclamation Celebrating César Chávez and Dolores Huerta NO ACTION Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 24  Packet Pg. 34 of 95  SUMMARY MINUTES Page 2 of 21 City Council Meeting Summary Minutes: 04/14/2025 Vice Mayor Veenker read the proclamation aloud. Agenda Changes, Additions and Deletions Ed Shikada, City Manager, reported there were no changes. Public Comment 1. Jill A., board member of the Palo Alto Art Center Foundation, provided a slide presentation celebrating Arts, Culture and Creativity Month and the Palo Alto Art Center’s contribution to the economic development of Palo Alto including the art center’s Holiday Studio Sale, facility rental and class programs, community events, 2025 ACGA Clay and Glass Festival on July 12-13 and the appreciation of the support of the City of Palo Alto. 2. Roger S., founder of Palo Alto Police Foundation and Friends of the Palo Alto Parks, described the Magical Bridge 10-year anniversary event coming up the next Saturday. He stated he would like to work together to get the bathrooms at the park up to standards. 3. Roberta A. pointed out that over the last 20-30 years, no low-income rental housing had been built in Palo Alto, a group of people had attempted over the last seven years to get the City to address the Convention on the Elimination of All Forms of Discrimination against Women to no avail and the homelessness issue in the City wanted to see more shelters in the downtown area. 4. Anika D., Palo Alto Youth Council, shared the month’s progress of the PAYC including their issue census which revealed teens were most concerned with bike safety. In response, the posted about the City’s plans of bike safety on their social media account. On May 2, they would be hosting a music festival called Palopalooza in collaboration with the Teen Advisory Board. She stated they were making a song about what the Palo Alto City Council had been up to. Council Member Questions, Comments and Announcements Vice Mayor Veenker shared that she had the pleasure of talking about the City’s Climate and Sustainability programs alongside the CEO of the Greater Washington, D.C. region Clean Cities Coalition and a council member from Leeds in the U.K. on an EarthDay.org panel comparing the progress each had made and plans to make more. She was happy to report their relationship with their sibling city in Bloomington, Indiana was strong. She described a podcast in which she Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 25  Packet Pg. 35 of 95  SUMMARY MINUTES Page 3 of 21 City Council Meeting Summary Minutes: 04/14/2025 was interviewed about their City Council and stated it could be accessed. She shared items from the prior week’s Policy and Services Committee meeting. First, there was a city auditor presentation of the Emergency Preparedness and Wildfire Audit Report. Second, they had an update from Townsend and recommendations regarding state and federal legislation, executive orders and other regulatory and funding circumstances. She described 3 2024 grants from the past year for which disbursement had become somewhat uncertain. Finally, she reported they discussed City Council’s interview selection process for boards, commissions and committees and a recommendation would be coming to the Council so they could have a standing policy. Councilmember Burt described developments relating to MTC, VTA and Caltrain which was consideration of a regional tax measure for support of transit agency operations throughout the Bay Area. VTA originally opted not to participate but was reconsidering after some positive developments. Mayor Lauing talked about a discussion he had the prior week at the Chamber of Commerce. He mentioned the upcoming Mayor’s Press and Community Briefing at the library on Thursday the 24th at 4 o’clock. The theme would be housing. Councilmember Lythcott-Haims recognized members of the Palo Alto Youth Council were present in the audience. As the Parks and Recreation liaison, she reported that Commission had a retreat the previous Friday at Foothills Park covering work they had done. There was also a focus on advancing equity, access and inclusion for programs, parks, and open space and enhancing biodiversity, environmental sustainability and climate change resilience. She explained much of their work is done through ad hoc committees. She was impressed by the breadth and depth of their conversations and looked forward to what would come from the PRC in the coming year. She pointed out that the Tall Tree Award sponsored by the Palo Alto Chamber of Commerce and Palo Alto Weekly would be happening on the 17th at the JCC starting at 5:30 as a networking reception and the awards presentation would begin at 7. Councilmember Reckdahl pointed out a Quiet Zone meeting in front of City Hall on Wednesday the 16th at 6 PM for anyone interested in omitting train horns. Councilmember Stone announced Third Thursday coming up from 6 to 9 PM on Cal Ave. Consent Calendar MOTION: Councilmember Lythcott-Haims moved, seconded by Councilmember Reckdahl to approve Agenda Item Numbers 4-10. MOTION PASSED: 7-0 Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 26  Packet Pg. 36 of 95  SUMMARY MINUTES Page 4 of 21 City Council Meeting Summary Minutes: 04/14/2025 4. Approval of Professional Services Contract Number C25193356 with Martina Entriken in the Amount Not to Exceed $658,390 for a Preschool and Toddler Program for a Period of Five Years. CEQA Status - Not a Project. 5. Approval of Amendment No. 2 via Change Order No. 2 to Contract Number C22183580 with MP Nexlevel of California, Inc. in the Amount of $4,000,000 for a Total Not-to- Exceed Amount of $15,347,390, and Extending the Three-Year Term of the Contract for an Additional Four Months Through August 31, 2025 to Provide Substructure and Utility Trenching Construction Services for the Foothills Rebuild Wildfire Mitigation and Grid Modernization for Electrification Projects; CEQA Status: the Foothills Rebuild and Grid Modernization Project are Exempt Under CEQA Guidelines Sections 15302, 15303 and 15183 6. Approval of Contract Amendment Number 1 to Contract Number S22183286 with The Permanente Medical Group Inc in an Amount Not to Exceed $100,000 for Pre- employment and Other Occupation-Related Medical Services; CEQA Status – Not a Project. 7. Approval of Professional Services Contract No. C25191690 with InfoSend in an Amount Not to Exceed $2,344,573 to Provide Utilities Bill Print and Mailing Services for a Term of Five Years; CEQA Status - Not a Project. 8. Approval of Professional Services Contract Number C25191738 with Sedgwick Claims Management Services in an Amount Not to Exceed $612,840 for Administration of Workers Compensation Benefits through June 30, 2025; CEQA Status – Not a Project. 9. FIRST READING: AdOption of an Ordinance Setting the Regular Meeting Time of the Finance and Policy & Services Committees by Resolution or Ordinance (Palo Alto Municipal Code §§ 2.04.190 and 200); and AdOption of a Resolution Setting the Regular Meeting Times at 5:30 pm for Finance and 6:00 pm for Policy & Services; CEQA status – not a project. 10. SECOND READING: Ordinance of the Council of the City of Palo Alto Amending Chapter 2.32 (Sales and Use Tax) and Chapter 4.10 (Solicitors, Peddlers, Pawnbrokers, Secondhand Dealers, and Other Businesses Regulated by Police) of the Municipal Code to Delete Obsolete References to the California Board of Equalization and Replace Them with References to the California Department of Tax and Fee Administration (FIRST READING: March 24, 2025; PASSED: 6-0-1, Veenker absent) City Manager Comments City Manager Shikada provided a slide presentation including updates on Ramos and Boulware Parks and the Magical Bridge Playground 10th Anniversary celebration, invitation for community Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 27  Packet Pg. 37 of 95  SUMMARY MINUTES Page 5 of 21 City Council Meeting Summary Minutes: 04/14/2025 feedback for the City’s emergency and wildfire response plans, Architectural Review Board recruitment and notable tentative upcoming Council items. Action Items 11. Review and Provide Direction on a Preferred Option for a New Parking Structure and Reserved Space for Future Affordable Housing at 375 Hamilton Avenue and Direct Staff to Pursue Preliminary Design and Environmental Review for the New Downtown Parking Garage Capital Project (PE-15007) for the Preferred Option; CEQA Status - Not a Project Holly Boyd, Assistant Public Works Director, provided a slide presentation on the Downtown Parking Garage including purpose/overview of Council item and prior Council actions for the project. Ken Hayes, Hayes Group Architects Founder & Principal, joined the presentation discussing an aerial view of the project site on Lot D; Option 1 – Waverley residential; Option 2 – no residential; Option 3 – dogleg residential; Option 1A – Waverley, separate pedestrian circulation ground floor and upper floors; Option 1B - Waverley, shared pedestrian circulation ground floor and upper floors; Option 1C – Waverley, with podium ground floor and upper floors; Option 2 – no residential; Option 3A – dogleg, separate pedestrian circulation ground floor and upper floors; Option 3B – dogleg, shared pedestrian circulation ground floor and upper floors; Option 3C – dogleg, with podium ground floor and upper floors; and their recommendation of Option 1A along with its benefits and drawbacks. Assistant Director Boyd ended the presentation with Staff’s recommendation. Mayor Lauing inquired if there was a choice B. Assistant Director Boyd replied Staff and Alta Housing felt strongly that Option 1A would best balance the housing and parking needs but they were willing to proceed with whatever Council decided. Councilmember Lythcott-Haims asked questions about the podium option. She asked Staff to walk them through how they came to consult Alta Housing. Mr. Hayes responded from the ground, there would probably not be a big impact because the first floor would be 11 ½ or 12 feet in the air. They would build the entire garage, including the ground floor of the garage where the housing would go eventually. There would not be a visual issue but a weatherproofing issue that would incur additional costs to waterproof the podium. Assistant Director Boyd explained Staff contacted Alta Housing because Council had previously selected them as the preferred developer on Lot T. City Manager Shikada elaborated that was with no expectation that they would be the preferred developer at Lot D. It was simply to get feedback from an affordable housing developer to understand how they would look at this as a potential development site. Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 28  Packet Pg. 38 of 95  SUMMARY MINUTES Page 6 of 21 City Council Meeting Summary Minutes: 04/14/2025 Councilmember Lu queried if there were any notable cost differences that could be predicted at the outset for the different options. He asked about the second staircase in Option 1B. He wanted to know why 1A would have more housing square footage than 1B. He asked for elaboration about having street frontage on the ground floor and what major constraints might incur in terms of things like costs or building codes. Mr. Hayes remarked Watry Design had put together some cost summaries in the packet just for the garage portion of the project. No numbers had been put together for the housing portion of the project. He observed the podium option would be more expensive. He stated that because of the height and number of units, they needed two stairs for the residential component so 1B had a shared stair and elevator for the whole building that would need to be built with the garage to get in and out. The housing would have the stair by the paseo and would be the second means of egress for the housing component. He explained because of how the elevator and stair encroach in on 1A, they would be able to wrap the housing around the corner some picking up 500 square feet per floor. He thought it was a good idea to have ground floor active frontage if it was not going to just be a parking garage. The parking garage originally had some active street frontage along Waverley to hide the parking, provide pedestrian interest and continue that ribbon along Waverly Street. He proposed putting amenity spaces on the ground floor if it was all housing. He did not yet know what constraints might occur in terms of cost. Councilmember Burt questioned if the cost per stall was the cost for all stalls constructed or the net. He mentioned the statement of goals for the project and asked if they were the goals Staff was operating under. On Option 2, he asked if the retail or service space would be shallow spaces to minimize parking stall loss or if there was concept on the size or depth of that. He queried how many dollars were set aside in the parking in-lieu fund and what the anticipation was of how they would fund the balance of the options that ranged from $20 to $24 million. He asked about a design to budget option. Gordon Knowles, Watry Design architect, believed the cost per stall was for all the stalls. He explained the cost worked on efficiency. If they were building efficient floors, there would be a straightforward calculation. Depending on number of floors, there would be certain code requirements on emergency power, structural issues with the sheer wall proportion and structural development. Assistant Director Boyd confirmed those were the goals Staff was operating under. She believed there was about $15 million in the parking in-lieu fund earlier in the year. Funding the balance would be to be determined pending Finance Committee budget discussions and other meetings. Mr. Hayes said they could probably get 25 to 30 feet depth on the retail or service space on Option 2. Brad Eggleston, Public Works Director, wanted to make sure it was clear to Council that the construction cost figures in the report were early rough order of magnitude for the direct Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 29  Packet Pg. 39 of 95  SUMMARY MINUTES Page 7 of 21 City Council Meeting Summary Minutes: 04/14/2025 construction costs only. He did not want Council to think they were the potential costs for the garages. The numbers would like change and there were a lot of construction-related costs not in them. They were provided for comparative purposes between the options. Councilmember Lythcott-Haims asked if anyone was prepared to give a sense of the estimated full scope of the project cost wise. Assistant Director Boyd replied they had not calculated the full project cost. Director Eggleston confirmed they were not prepared to give a full project cost but with the previous iteration of the garage with an underground level introducing other costs, he recalled that at the time the project was paused five years ago, they were looking at a total project cost on the order of $31 to $32 million. Councilmember Reckdahl inquired if it would be possible to finance the difference between what was in the in-lieu fund and the cost. He wondered if they would have to sell COPs if some of the parking was used for affordable housing. City Manager Shikada confirmed that would be conceivably a part of their infrastructure planning using available capital funds and how this project would be prioritized against other needs throughout the City. He stated any funding needed for affordable housing would be separate from the funds needed for the garage. He added there were a variety of financing mechanisms for a public structure. They would need to look at whether issuing tax-free debt versus assumption of any private activity associated with the garage made more sense. Regarding affordable housing, the same issues would apply in terms of what the funding source would be and what method of financing might be needed similar to the conversation related to Lot T. Subject to Council’s decisions on priority, he was confident they would be able to finance a parking structure. He thought it was more complicated as it related to allocation or assignment of any of the new parking spaces to a specific development and was not prepared to give an opinion on that but thought it was something to have Staff look at. Mayor Lauing wanted to know if the timing of housing versus the parking lots was relatively arbitrary other than getting in the way of each other on construction and they could be sourcing a developer for that at the same time they were developing a garage. City Manager Shikada thought the expectation was that they would be ready to go with the garage quicky. Understanding the nature of affordable housing development and the complex financing structures, both in terms of selecting a partner as well as their need to develop a good financing plan, he assumed that that would take longer than the garage would. Public Comment: 1. Mark M. claimed it was not good to add more parking spaces to a city and that it was better for new housing to be under parked and the goal they should be looking for was a Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 30  Packet Pg. 40 of 95  SUMMARY MINUTES Page 8 of 21 City Council Meeting Summary Minutes: 04/14/2025 reduction of aggregate parking spaces. He advised the best use of the in-lieu fees would be to put forward to the demolition of existing parking garages. 2. Aram J. (Zoom) wanted to forget about the parking aspect of the project and make it all affordable housing with a top priority for the police officers in the City of Palo Alto. He was distressed to know the police chief lived an hour away. Councilmember Reckdahl’s first inclination was to support one of the Waverley projects but having stairs and ramps in structures created lost overhead so they would be much more expensive per spot than the parking only. From a financial standpoint, he thought it made more sense to build on economies of scale and maximize the parking spots they missed allowing them their next housing opportunity to maximize the scale of housing. He supported the only parking option. Councilmember Stone strongly preferred Option 1A. He thought it provided a balanced approach looking at future needs of affordable housing and parking demand in the downtown area. Councilmember Burt observed that the goal of this lot was to offset the parking lots at different other locations to balance out the parking through these projects so there was not a net loss as a result of the several affordable projects being worked on. He thought Option 2 was the most cost effective to get the most affordable housing with the least amount of additional subsidy. Vice Mayor Veenker remarked she preferred Option 1A since this was primarily a parking project and would provide 3 to 6 times more net new parking stalls with only slightly greater costs in order to get additional affordable housing downtown. She added she greatly preferred Option 2 to Option 3. Councilmember Lythcott-Haims agreed that 1A was the preferred option. She agreed that the location was part of a whole package of projects in the downtown and this location would become the offset for the parking they would take away as they built more affordable housing on city-owned surface parking lots. She supported spending a little more to tuck some affordable housing in. Councilmember Lu echoed Councilmembers Stone and Lythcott-Haims and Vice Mayor Veenker’s comments. He thought the urban design and block-by-block variability of having chunked out space that was initially green space and future housing had intangible value. He was happy to advance 1A but was more open to Option 1B than the others. Mayor Lauing found it a little frustrating they were talking about only 15 homes. He did not think going to zero fit with their vision. He agreed with Councilmember Stone’s comment about the balance being appropriate. He concurred with Councilmember Burt’s comments about a package of projects. He opined if there was any way to work in more housing without outrageous costs they should look at that. He thought the issue of financing this was important Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 31  Packet Pg. 41 of 95  SUMMARY MINUTES Page 9 of 21 City Council Meeting Summary Minutes: 04/14/2025 but would require a long-term, strategic approach. He reluctantly supported 1A because it would provide some affordable housing. Councilmember Burt wanted to argue that supporting the recommendation because it has more affordable housing worked against the economics of more affordable housing downtown. Making that decision in the isolation of this lot did not optimize their package of projects. He did not think it was a bad option, just not the best option. Councilmember Reckdahl agreed it was not a bad option but not the best option. He did not believe this to be the most cost-effective way of providing housing and parking. MOTION: Vice Mayor Veenker moved, seconded by Councilmember Stone to direct staff to proceed with preliminary design and environmental review for Option 1a, a new 274-space parking garage, featuring six levels of above-ground parking with a reserved area to allow for future construction of affordable housing on the site with separate access on Waverley Street. MOTION PASSED: 5-2, Burt, Reckdahl no 12. PUBLIC HEARING/QUASI-JUDICIAL: 70 Encina Avenue [24PLN-00095]: Adopt an Ordinance Rezoning the Subject Property and an Adjacent Vacant Parcel to Planned Community/Planned Home Zoning and Adopt the Record of Land Use Action to Demolish a Surface Parking lot and to Construct a New Three-Story, 19,035 Square Foot Building with 10 Residential Condominium Units. CEQA Status- Streamlined Review in Accordance with CEQA Guidelines Section 15183 (Comprehensive Plan Consistency). Zone District: CC (Community Commercial). Emily Kallas, Senior Planner, provided a slide presentation for the Planned Home Zoning public hearing for 70 Encina including project location, project overview, background/process, Council prescreening – September 2022, ARB and PTC recommendations – February 2025, key considerations for Council to consider, public benefits of the proposed project, CEQA status – streamlined review, public comments and recommendation for Council. Jeff Galbraith, Hayes Group Architects Principal, provided a slide presentation about the 70 Encina project including site context – aerial photo, original concept – September 12, 2022, PHZ prescreening comments from September 12, 2022, Ellis Partner concerns September 12, 2022, original concept diagram – 4 stories over a ground floor podium, PHZ prescreening concept September 12, 2022, stepped massing diagram – reduced unit count, reduced program – 2 or 3 stories over podium, solution that resolved economics and T&C concerns, conceptual site and unit layout diagram, design precedent photos, proposed plan – ground floor, proposed plans – Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 32  Packet Pg. 42 of 95  SUMMARY MINUTES Page 10 of 21 City Council Meeting Summary Minutes: 04/14/2025 second and third floors, proposed design – seen from the rear entry into T&C, visibility from Town & Country, Town & Country – context diagram, proposed design – view from Encina Ave, proposed design – northeast corner, proposed design – sideyards for maintenance and fire access, proposed design – courtyard view looking south, proposed design – front façade on Encina Ave and recent changes in Ellis Partners concerns at February 26 hearing. Ed Storm, Applicant, explained the property came on the market three years prior. He was contacted by the family that owned it asking what he thought it should be. He proposed it was an ideal residential location. He met with Town & Country initially who did not think it was possible. They continued doing what was necessary to get it approved. He felt they had done everything asked of them. He observed there was now another bigger project that may come forward and he was not sure how to respond to that. He indicated approval of their project did not preclude the possibility of a much larger project. He opined a positive vote would tell people this was a place where residential can be build and they ought to pursue it. He hoped Council would take the opportunity to light a spark that would make the whole area become a great place for people to live. He stated they would continue to work with any of their neighbors who thought they could make a better project out of this. Councilmember Burt disclosed he met with both the applicant and the Town & Country Ellis Properties and did not receive information that had not been disclosed in their comments, written and oral. Councilmember Lu disclosed he also met with both the applicant and Ellis Partners. Ellis Partners showed a very blocky rendering of what a five story or so development could look like across the entire parking lot area. That was the only notable thing he had seen that was not on the public record. Vice Mayor Veenker disclosed she met by Zoom with both the applicant and his architect with Ellis Partners and associate. She did not receive any additional information. She thought she had seen the blocky drawing. Mayor Lauing disclosed he similarly met with both the developer and Ellis Partners and got up to date. The goal was just to spend a little more time looking at the drawings and understanding the concepts but no additional information that was not disclosed to the public. Councilmember Reckdahl disclosed he met with Ellis partners and the applicant. He had nothing to report. Councilmember Lythcott-Haims disclosed she met by Zoom with Ellis partners as well as with the applicant, Stormland and the Hayes group. She did not see anything that had not been presented in the documents presented to them. Councilmember Stone disclosed he met with the applicant and Ellis partners. To the best of his knowledge, he did not receive anything outside of the public record. Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 33  Packet Pg. 43 of 95  SUMMARY MINUTES Page 11 of 21 City Council Meeting Summary Minutes: 04/14/2025 Public Comment: 1. David H., spoke individually and not as an ARB member. He was opposed to moving ahead with the 70 Encina part of the project but he was delighted that the whole site had been redesigned PHZ. He was not opposed to the design of the project presented by Hayes Group. He advised it would interfere with the possibility of this being a really significant more than one acre site. He pointed out that the reason the ARB had a coordinated area plan was for this kind of a site and it would be a much more effective project if it were developed as a single unit for the entire site. He described reasons he suggested that this particular project be deferred until the entire site could be analyzed and presented to the Board. 2. Justine B. supported rezoning Encina Avenue. She referred Council to the 2016 Transportation Demand Management Plan that Town & Country did if there were concerns about the site losing surface parking. 3. Dean R., director of development for Ellis Partners, indicated their team saw the opportunity to reimagine Town & Country as a well-planned mixed use retail, office and housing project for the City. He alleged that the 70 Encina project did not comply with the intent or letter of the PHZ Ordinance. He advised the project could comply with the Comp Plan if it were scaled down to a more typical density. It was their opinion the project would set a bad precedent for future residential developments. 4. B. Taylor spoke on behalf of himself and the family that owned the land. He advocated for developing it as a residential property. He thought it was notable that the owners of Town & Country were not there to advocate their desire to build X number of units and there was no objection from them for the proposed development. He advised it checked all the boxes for what the City was looking for regarding affordable housing. 5. Alex A., officer and board member of Williams Charitable Foundation, stated his organization was supportive of exploring a housing project adjacent to Town & Country. They preferred to see a project built with more than 100 units and a parking structure. Ideally, they would like this area developed in conjunction with 70 Encina. They were committed to continuing to work with Ellis Partners and the City to find a more aligned with the goals and requirements of the Council as established for PHZ projects. 6. Amie A., executive director of Palo Alto Forward, spoke about her support of the project and urged Council to approve it and provide guidance in support of long-term master planning. 7. Herb B. said the site was not replacing a primary parking use but a parking use that was part of Town & Country’s development. He suggested Ellis and Hayes were working together to get a bigger development. He thought a clear statement was needed as to the property owner was and who was the true applicant. He recalled a section of the zoning code included in the administrative record that no part of Town & Country would Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 34  Packet Pg. 44 of 95  SUMMARY MINUTES Page 12 of 21 City Council Meeting Summary Minutes: 04/14/2025 be replaced by residential. He mentioned having sent letters he assumed Council never received. 8. Randy P. (Zoom), architect, indicated he was a strong supporter of housing in Palo Alto and wanted to housing built here but was not in support of this project. He agreed with the PTC that it remained too dense and could not satisfy the required findings for compatibility due to inadequate setbacks. He explained how the facts of this project's design were incompatible with the Comp Plan policies related to urban greening and preservation of scale and architectural compatibility. He asked Council to consider the decision in the context of decades and make the best choice for how it would impact all of Palo Alto. Mr. Storm rebutted that this was urban living and that there were people who wanted to live in that environment. He was surprised the Ellis’ did not thank him for opening the door to build residential on their parking lot as it would be a great economic opportunity. He stated a big project could be done on this property. They were 16% of the land. They could also create a smaller project in front of a much bigger project. He opined that people only wanted to talk about the negatives and that was a reason things did not get done in the City. He indicated they were ready to build it, they believed in it and they were going to put their own money up to make it happen. He hoped Council could see the path forward to approve the project and hoped bigger projects would come forward. Councilmember Reckdahl wanted to hear how the setback would affect what Ellis did with their property, particularly the 7-inch setback in the back. He mentioned downtown buildings with zero setbacks and assumed Ellis could use the same technique to build right up to the property line. Senior Planner Kallas replied the 7-inch setback was not an issue in terms of fire access to the site, which would be provided through the courtyard as well as through the 5-foot side setbacks. She confirmed things like fire rated walls and fire sprinklers contribute to being able to construct a building at the property line. Councilmember Burt had trouble justifying a reversal to scaling down now that they had a bigger project potentially on the horizon on the other parking areas, Town & Country or some of the other parking. He wondered whether there had been any consideration of utilizing the rooftop space as either a private or a common among the tenants open space with some limited landscaping. He was interested in his colleague’s thoughts on the issue. He asked if there was some access issue at the end of Encina up against the bike path next to the Caltrain tracks that would require improvement. Mr. Galbraith replied having a rooftop garden required a stairwell. It could also impacted placement of HVAC equipment and access to firefighters. It would also offset a lot of the ability to have photovoltaic arrays or they would get pushed up creating a higher project. He indicated it was possible to consider a rooftop garden. They would have to overcome the cost of getting Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 35  Packet Pg. 45 of 95  SUMMARY MINUTES Page 13 of 21 City Council Meeting Summary Minutes: 04/14/2025 up to the roof and the fact that the units were condominiums making it a common roof access would make it more complicated. Senior Planner Kallas remarked one of the Planning Commissioners noted there was a portion of Encina Avenue between the project site and the entry to the bike trail where there was not a sidewalk. They did not consider that to have a nexus to this project in terms of site improvements. Mayor Lauing summarized that the impetus in 2020 for Council to create this was to try something radical to jumpstart a lot of new projects at scale that would get permitted in 2022 and prepare for the 2023 t 2030 RHNA cycle. The original intent of the emergency motion was the scale of 70 Encina caused him pause. He discussed the history of the project from the beginning up to the current proposal. He acknowledged that the applicant did what was asked and scaled the project down. He was not sure if they did a prescreening at that time that they would not go in the opposite direction and ask for more height and density and more than 20 units. Circumstances had radically changed because the RHNA numbers were exponentially higher than in 2020. Vice Mayor Veenker expressed interest in the rooftop garden or adding trees if it were possible. She wanted to know if the parcel that cut through the parking lot going to the Medical Foundation would have to stay if the rest of the parking lot was developed by the Ellises. She appreciated that both BMR units were at 80% AMI. Senior Planner Kallas replied that because they did not have a formal or preliminary application from Ellis Partners at the time, they had not been able to evaluate what the fire access requirements for the shopping center would be. Councilmember Lythcott-Haims asked if she was right that the PHZ must demonstrate compatibility with existing or potential uses on adjoining sites. She struggled with the obligation about finding compatibility with existing and potential uses. She was looking to Staff for guidance about making a decision about a potential impact on a potential future use or lack of compatibility with it if that potential future use is hypothetical until it becomes you know a project that's proposed and entitled and permitted and so on. She asked how they assess the extent to which this project asked them to compromise on some of the expectations they might have knowing that additional housing might go in around it and would be impacted by the fact that this project had pushed to the edges of its limitations and they had given some concessions. Senior Planner Kallas presented a slide showing the three findings for planned community application. She indicated Staff looked at it as the use would refer to the land use and not the density. They would look at housing as being compatible next to future housing. In the case of Town and Country, housing was also appropriate next to the community commercial land use. When talking about land use for the purpose of the finding, they were thinking land use equals housing commercial, they were not thinking 150 units. She commented that they believed this Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 36  Packet Pg. 46 of 95  SUMMARY MINUTES Page 14 of 21 City Council Meeting Summary Minutes: 04/14/2025 project was sufficient within its boundaries in the same way a potential future project on adjoining sites would also need to be sufficient and meet fire and building code within the parameters of their property lines. Councilmember Lu queried if there was any precedent for prioritizing the tree in-lieu fee to apply to the adjacent parts of El Camino, Encina and the Embarcadero Bike Path such that the trees in-lieu for this project attempt to offset some of the heat island impacts from this project. He was curious if that had ever happened before. He thought it would be useful to consider or take a second look at any tree planting opportunities in the public right-of-way in the adjacent area. He suggested considering if that would appreciably tackle some of those concerns. He thought this was a good project and was appropriate for an urban setting. He opined a small setback was okay for a service alley or passageway. He would prefer an expanded, thought-out, planned project across that strip of parking lots. He would support projects at least as dense with similar setbacks and rules for the adjacent sites. He hoped negotiations would continue and they could get another proposal before this one was constructed. He did not want to block this project due to the speculative future project. Jonathan Lait, Planning & Development Services Director, did not remember a specific case but thought there was an opportunity for a conversation on where to direct those in lieu funds in areas of the City. He believed the Urban Forestry Department knew where they wanted to increase the canopy in the City. To the extent that their mapping and analysis would include this area, they could have a conversation about how they might be able to direct those funds in that area. Vice Mayor Veenker inquired about the standard of review. She queried if it was dispositive or a necessary predicate. She observed if the project were approved, a comprehensive set of housing projects could continue to be developed and they might end up amending the application which she would encourage. Because they did not have an application in front of them for the larger project, she felt they should rule on this one on its own merits. Albert Yang, Assistant City Attorney, explained the normal standard of review for a land-use decision was substantial evidence where the Council would need to show the link between the facts in the record, the findings that need to be made and the ultimate decision yes or no. Because this is a rezoning legislative item, the Council would likely receive a little more deference than the usual substantial evidence review standard but substantial evidence would still be the basic framework they were working within. He recommended basing the yes or no decision on the ability to make findings or not. He suggested that the findings were fairly broad and hopefully any factors entering into Council's considerations could be tied to those findings in some way to inform whether or not they could be made. Councilmember Reckdahl agreed if they were prescreening this at the time, they would kick it back saying it was not dense enough. He thought they had to appreciate they lead them down a path and they followed that path. He tended to support the project. He had concern about the greenery. He asked about the in lieu fees for trees. He asked if they were still following the Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 37  Packet Pg. 47 of 95  SUMMARY MINUTES Page 15 of 21 City Council Meeting Summary Minutes: 04/14/2025 Comp Plan if they planted in the neighborhood of Town & Country. He asked how narrow they had to follow the findings as they were losing trees. Senior Planner Kallas replied the in lieu tree fees would depend on the project but they were very common. She commented Policy L-2.11 encouraged projects to incorporate greenery and natural features and L-4.13 encouraged a vibrant retail environment and urban greening in Town & Country Village. Director Lait remarked the Comp Plan was a high-level document that set forth their aspirations for what they wanted to accomplish in different parts of the City. It talks about the environment and how the City will change or evolve over time. It relies on the zoning code to implement those visions and that that policy into either objective or subjective standards set forth in the municipal code. Included in the municipal code are opportunities to address when trees do need to be removed as part of a development and procedures for in lieu payment are included. Any project will find areas of general consistency and other areas where it may not be as consistent. They tend to speak about a project's conformance with the general plan on balance that the project is more compliant or not compliant. These would be the factors Council would weigh in its decision. Staff did its analysis and fell on a set of findings they believed could support the project. Mayor Lauing asked the applicant if there was a willingness to reduce the size of the space of one or two of the units to accommodate open space greenery so they could get around that problem for any future developer that would have to deal with the setbacks or having to add greenery. He asked if they looked at projects beyond condos. Mr. Galbraith explained the CC District required zero setback and they were pulled back five feet on both sides. The only place they were down to 7 inches was on the rear lot line and on about 12 or 13 feet about the side lot lines for just the lower story toward the rear garages. Part of the reason for that was the one-story bump outs were where the fire department needed to get up onto in order to get access to the roof so they were serving a couple of possibilities. If they pulled the sides in from the seven inches to the five feet like the rest of the of the project, it would cause problems for the fire access to the roof. On the rear setback, they were facing up against Town & Country and their back of house. If they pulled back two, three, four or five feet, they would create dead space on the lot that could be planted potentially but would have to be maintained somehow. It would basically green the edge of the service alley. That underlied a zone that the fire department was relying on for half of the building. Hypothetically, they could shrink the garages on the ground floor, pull the back facade in and create a dead space back there on one half of the project but the other half needed the fire access to the roof. In terms of greenery, it was a question of finding space. They were relying on the trees in the central courtyard which was the space that would get used by occupants the most. They started the side yards out as more green garden spaces. The fire department needed both of those to fight fires so they had to give that space up. Creating more green space that was not vertical planting on walls would require either something on a rooftop or finding other horizontal space and would be tough. There was about an 18-inch setback on the side Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 38  Packet Pg. 48 of 95  SUMMARY MINUTES Page 16 of 21 City Council Meeting Summary Minutes: 04/14/2025 yards past the 5 foot that created space for low planting on. He agreed deleting two condos would leave space for greenery but he did not think the project would work at that point. He stated they did look at rentals. He explained they would commonly develop a project and do cost analysis on the rental side and the condo side. They had to weigh the BMR impacts and the rentals did not work. Councilmember Stone’s concerns were the setback, greenery and the density. He appreciated the applicant working with Town & Country. He opted to vote in favor for a housing project than deny it in hopes for a future larger housing project and this would not preclude a future larger housing project. He encouraged the applicant to continue to engage with Ellis Partners to see what could be possible there. He noted there were still concerns raised by PTC and ARB that had not been addressed. He appreciated the two BMR units at 80% AMI. Mayor Lauing commented that in a future agenda, they would have to get back to making some adjustments to the PHZ. He reiterated the applicant did what they were asked and he could not see penalizing them for it going down. He thought the two discounted homes was the only benefit. MOTION: Councilmember Lu moved, seconded by Councilmember Lythcott-Haims to: 1. Consider the CEQA Guidelines section 15183 checklist analyzing the project’s consistency with the Comprehensive Plan 2030 Environmental Impact Report (SCH#2014052101); 2. Approve an Ordinance (Attachment B) rezoning the subject site from Community Commercial to Planned Community/Planned Home Zoning; and 3. Approve the Record of Land Use Action (Attachment C) approving the proposed project, based on findings and subject to conditions of approval to the City Council. MOTION PASSED: 7-0 13. FIRST READING: Adoption of an Ordinance Adding New Chapter 9.75 (Fair Chance in Housing) to Title 9 (Public Peace, Morals, and Safety) of the Palo Alto Municipal Code to Limit the Use of Criminal History Information in Rental Housing Decisions. CEQA Status - Exempt Under CEQA Guidelines Section 15061(b)(3). Rebecca Atkinson, Planner, provided a slide presentation about the Fair Chance Housing Policy and Draft Ordinance including the meeting purpose, Fair Chance Housing past policy discussions and motions, Fair Chance Housing Ordinance overview, Fair Chance Housing policy comparison, Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 39  Packet Pg. 49 of 95  SUMMARY MINUTES Page 17 of 21 City Council Meeting Summary Minutes: 04/14/2025 Fair Chance Housing Ordinance: procedures, potential alternative policy considerations, a proposed timeline and the staff recommendation. Councilmember Reckdahl queried when the lookback period started. Planner Atkinson answered the lookback period was from the date of application for the type of decision being made. The date of the record would be the date of sentencing. She stated the procedure set up the ways in which a landlord could look at criminal history information. State law already required looking at only directly related convictions. Madeleine Salah, Deputy City Attorney, clarified if the sentencing occurred beyond more than two years prior to the date of the application, the landlord would not be able to consider that conviction regardless of whether or not it was a directly related conviction. Councilmember Stone wanted to understand why Staff was proposing the lookback period be the time from conviction rather than from the date of release from custody and why reports were cited that seemed to be using date of release rather than date of sentencing. He thought it would be relevant for a landlord to be able to see if a person had been able to stay out of trouble and not cause issues of concern for a perspective landlord after being released from prison. He wanted to know the landlord would receive only the two-year window if there was a two-year lookback or the entire criminal history report. He asked if this ordinance as proposed would apply to a single-family home assuming the property owner was not living there. Planner Atkinson thought that in general when people were released it was considered that they served their time. It was her understanding that all records would be coming depending on the different types of databases being used. She stated the definition of landlord in the ordinance was similar to other definitions of landlord elsewhere in the municipal code and property owner or property manager were in the definition of landlord so it could be both. Director Lait asked if it followed state law. Deputy City Attorney Salah explained state law did not have a lookback period. She thought the data Staff cited in the report varied in terms of whether or not it analyzes from date of release, conviction or sentencing. She stated it was standard in many of the other ordinances that Staff based their proposed ordinance on to consider date of sentencing and the point about the policy rationale being that once somebody is released from incarceration they were generally considered to be rehabilitated. Another important policy piece of feedback that Staff received was that the time immediately succeeding release from incarceration was a particularly vulnerable time for people who have experienced incarceration. Vice Mayor Veenker was under the impression that it may not be very easy to get dates of incarceration from some of the databases. Her worry was that they may be disadvantaging those who commit less egregious crimes and advantaging those who commit more egregious crimes. She wondered if that was part of why the legislature did not do a lookback. She thought it looked like some other jurisdictions may do a proxy-type thing and asked if there was any Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 40  Packet Pg. 50 of 95  SUMMARY MINUTES Page 18 of 21 City Council Meeting Summary Minutes: 04/14/2025 look at that to try to deal with the logic problem with a flat lookback. She thought what they were aware of would be uneven having a cutoff for the lookback. Planner Atkinson explained in general what was considered a felony and misdemeanor could differ across different jurisdictions. The HRC recommendation was to include a two-year lookback period for both misdemeanors and felonies. Given the differences in how offences could show up in criminal history databases, that was one consideration to have a single lookback period. Given that it was an individualized assessment and would be on the obligation of the landlord to identify directly related convictions was another reason to have a lookback period and have the landlords make their decisions and do that process rather than specifying what types of offenses would be something to consider or not right rather than the local organization doing it. Councilmember Burt agreed the lookback seemed problematic. He wanted to know why they were focusing on a two-year versus a stepped one or other alternatives. Planner Atkinson remarked in general as policymaking in the Fair Chance space had recently produced a proposed rule where anything longer than three years for misdemeanors and felonies was considered presumptively unreasonable based on the various points of reference they included in the proposed rule for consideration including the how the risk of recidivism was reduced over time. Director Lait added it had been a few years since the City Council gave Staff direction to study this issue and report back on the implications of a Fair Chance Policy. They had reached out to the Human Relations Commissions and had a number of community engagement opportunities but they had not had a chance to check in with City Council on how they wanted this policy to develop. The intent for that night was to frame it as a discussion to share what they learned and to get feedback. They included an ordinance as a starting place for Council to begin to look at it and find areas where they were supportive and other areas they thought needed further refinement. They heard the lookback provision might be one of those areas. From a Staff perspective, they wanted to make sure Council would have options to take action if they so wanted but if there were policy items they had not had a chance to dive into, they would like to hear that feedback and get that direction and they could make refinements to the ordinance. Councilmember Lu queried if consideration had been made for the workability of an exception for serious crimes having a longer lookback window. He inquired if it would be viable for a landlord to request to know the locations of where the individual last lived and a reference from their last landlord. That would effectively exclude people recently released. He asked how possible ways to circumvent this had been considered or discussed. Deputy City Attorney Salah answered that proposal had not been considered and Staff did not put forth a perspective definition of serious crimes. There would be implementation challenges defining what a serious crime might be. Even if they were to call out certain types of offenses, not every offense is classified in a one-to-one way in different jurisdictions. Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 41  Packet Pg. 51 of 95  SUMMARY MINUTES Page 19 of 21 City Council Meeting Summary Minutes: 04/14/2025 Planner Atkinson observed that the staff report mentioned that it is not possible to prevent someone from running a criminal history check without consent but the procedures offered in the code offered some protections. This was one means by which to address it. It was not necessarily a problem with the ordinance itself but a situation where it was one way to be able to address some of the circumstances with the problems with criminal history databases and providing renters with a fair opportunity to compete. Councilmember Lythcott-Haims underscored that they all appreciated the illogic of a lookback period that started with sentencing. Public Comment: 1. Emily R. spoke on behalf of SV@H expressing their support for the proposed Fair Chance Housing Ordinance and to urge Council to commit Staff time and resource to ensure effective enforcement for the full suite of tenant protections they adopted in recent years. 2. Anil B. (Zoom), California Apartment Association, expressed why he had concern about the duplicative nature of this ordinance. He commended Planner Atkinson for her diligent outreach to all parties involved. 3. Mary Kate S. (Zoom), chair of Human Relations Commission, addressed Councilmember Lu’s question about loopholes by saying they set up the procedure where a tenant would have to give their consent to having their background checked and it would be more clear when that background check uncovered something informing the landlord’s decision. She remarked they talked about the lookback period but the nuance around when it would begin was not something they turned onto and she thought it was worthy of more discussion. She mentioned other issues brought up by the HRC that were listed on page 309 of the packet. Vice Mayor Veenker appreciated the work that had gone into the proposal and understood the link between being unhoused and recidivism. She supported the consistency with the state law prohibiting consideration of anything but directly related convictions and the procedural steps suggested by the HRC that a landlord must take before rejecting somebody based on criminal history such as making a condition offer before doing a background check. She wondered if a little more work could be done finding out if they could get incarceration and release data and if not figure out what would be the best proxy. She remarked the criminal justice system takes a variety of factors into account in setting the length of a sentence. They had to figure out a way around the issue of the longer a sentence is, the less likely it will be found out. She was not inclined to pass the ordinance at that time but wanted to continue to pursue it as a City. She hoped the things she mentioned would be looked at and they could see it again. Mayor Lauing concurred with looking at calculating the lookback by the release date. He asked if comparing to other jurisdictions meant other states or other cities within the state and if they Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 42  Packet Pg. 52 of 95  SUMMARY MINUTES Page 20 of 21 City Council Meeting Summary Minutes: 04/14/2025 would be able to apply the California standards. He commented that criminals get past the system and they could not ignore the threat to tenants and landlords was real. Deputy City Attorney Salah stated it was a comparison between states. She stated it might not be easy to understand what the relevant California standards would be because the categories of crimes in different jurisdictions were different. Councilmember Stone was confused by the recidivism rates shown on the graph on page 3 of the Department of Corrections report and asked if Staff could clarify where in the report it showed most convictions occur during years 1 and 2 and falls off in year 3. He asked if there was a way hate incident would show up on a criminal background check or if it could be incorporated as something a landlord could consider. He wanted to know if a landlord who found out that someone went off on a racist rant would have a basis to deny an applicant based on that. He inquired if an applicant wanted to dispute any of the findings of a criminal background if there was a requirement that the landlord would have to consider that evidence or if it was at the discretion of the landlord and if the prospective tenant was still unhappy if they would have the right to pursue legal litigation. He wanted to see the lookback window changed. He wanted to ensure they were using data that was informing their decision and finding a balance. He thought separating serious crimes would be an important piece to this. He was more comfortable with a three-year lookback window for less serious crimes. He thought more serious crimes should require a 10-year lookback window. He suggested looking closer into exempting single-family home rentals even if the property owner was not living there. Planner Atkinson stated she would be happy to take another look at that and write up the response. Molly Stump, City Attorney indicated that Staff would have to follow up about hate incidents. Deputy City Attorney Salah did not think this ordinance would prohibit that because if it did not show up in the criminal history, it would not be taking action based on something in the criminal history and did not change the landlord’s ability to not rent to someone who engaged in that type of behavior. She explained a landlord would be required to consider mitigating information or evidence of inaccuracy in the criminal history report they receive. If they ultimately decide to take adverse action based on the applicant’s criminal history information, they have to include in the written statement of reasons how they took that information into account and that becomes a documented paper trail for the applicant whose next step would be to bring a lawsuit. Planner Atkinson added the actual information the landlord needed to provide could be found in draft ordinance 9.75.070E1b. Councilmember Burt wanted to talk about distinguishing between serious and less serious crimes. He did not think the fact that they could not have perfection in how they establish the standards should not mean they abandon certain principles of distinguished distinction. He opined they knew the difference between a serious violent crime and trespassing. He recognized it would not be simple to reconcile that but did not accept that they could not make Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 43  Packet Pg. 53 of 95  SUMMARY MINUTES Page 21 of 21 City Council Meeting Summary Minutes: 04/14/2025 those distinctions because of state-to-state differences. He discussed his understanding of the Statewide Recidivism Rates. He observed that they had to figure out how to strike the right balance in the Fair Chance Housing Ordinance. Mayor Lauing asked Director Lait if their comments would be enough to bring back another draft or if it should go to a subcommittee. Director Lait replied they were open to any path forward. He felt they had information they could react to. Options to consider would be to engage with the Policy and Services Committee to work through the process to refine the ordinance or go back and work with the HRC. City Manager Shikada offered that they could bring it back to Council after conferring with the city attorney’s office to see what would be the most defensible approach to extending the lookback period to a level reflective of the seriousness of the crime. Vice Mayor Veenker wanted to bear in mind that part of the purpose of the Fair Chance Ordinance was to help reduce recidivism rates by giving people stable environments and having them be housed. She wanted to make Staff aware of the tiers of sex crimes moving forward to the next step. She was fine for it to go to P&S. She wanted to see the Planning Department and the city attorney’s office work on this. Councilmember Reckdahl commented they had to balance their good intentions with the good intentions for the landlords and other tenants and could not close their eyes that other tenants were impacted by this. He thought Policy and Services was the right way to go. He did not think the lookback window made sense to start at sentencing and it had to be from release and they also needed to separate minor crimes from violent crimes. MOTION: Councilmember Burt moved, seconded by Councilmember Reckdahl to refer this item to the Policy and Services Committee. MOTION PASSED: 7-0 Adjournment: The meeting was adjourned at 10:18 P.M. Item 2 Attachment B - April 14, 2025 City Council Meeting Summary Minutes        Item 2: Staff Report Pg. 44  Packet Pg. 54 of 95  Policy & Services Committee Staff Report Report Type: ACTION ITEMS Lead Department: City Clerk Meeting Date: June 9, 2026 Report #:2605-6422 TITLE Recommend Approval of the Office of the City Auditor Annual Risk Assessment and FY 2027 Audit Plan and Corresponding Task Orders This will be a late packet report published on June 4, 2026. Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 1  Packet Pg. 55 of 95  9 3 8 0 Policy & Services Committee From: City Manager Report Type: ACTION ITEMS Lead Department: City Auditor Meeting Date: June 9, 2026 Report #:2602-5967 TITLE Recommend Approval of the Office of the City Auditor Annual Risk Assessment and FY 2027 Audit Plan and Corresponding Task Orders. CEQA Status: Not a Project RECOMMENDATION The City Auditor recommends that the Policy and Services Committee recommend the City Council approve the Citywide Annual Risk Assessment and FY 2027 Audit Plan. BACKGROUND The Palo Alto Municipal Code (Section 2.08.1301) requires the City auditor prepare and submit an annual audit plan to the City Council for review and approval. In its capacity serving as the City Auditor function, and in accordance with Baker Tilly’s agreement with the City, Baker Tilly performed a citywide risk assessment (Task 1 of the agreement2). The purpose of the assessment was to identify and prioritize risks to develop the annual audit plan (Task 2). During the risk assessment, Baker Tilly assessed a wide range of risk areas, including strategic, financial, technological, human capitol, operational, reputational, economic, and including compliance risk categories. ANALYSIS Baker Tilly, serving as the City Auditor, surveyed and interviewed City Council members and executive leadership across all departments within the City regarding risks to the City and individual departments. As part of this process, Baker Tilly also piloted a new risk assessment tool that enabled participants to engage in discussion around key risks to the City. Baker Tilly analyzed the results of all these inputs and other City documents, news articles, as well as information gathered from industry associations and publications. Identified risks were scored 1 https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-60361 2 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=80939&dbid=0&repo=PaloAlto Item 3 Item 3 Late Packet Report        Item 3: Staff Report Pg. 2  Packet Pg. 56 of 95  9 3 8 0 on their potential impact to the City and the likelihood that they might occur. The FY2027 Audit Plan was prepared based on the results of the FY2026 risk assessment. FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 3 Item 3 Late Packet Report        Item 3: Staff Report Pg. 3  Packet Pg. 57 of 95  May 29, 2026 City of Palo Alto Office of the City Auditor Citywide Annual Risk Assessment and FY 2027 Audit Plan Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 4  Packet Pg. 58 of 95  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. INTRODUCTION ............................................................................................................... 1 RISK ASSESSMENT APPROACH .................................................................................. 4 RISK ASSESSMENT RESULTS ...................................................................................... 5 PROPOSED AUDIT PLAN FOR FY 2027 ........................................................................ 9 APPENDICES ................................................................................................................. 10 Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 5  Packet Pg. 59 of 95  Introduction Overview According to the Palo Alto Municipal Code (Section 2.08.130) the mission of the Office of the City Auditor (OCA) is to promote honest, efficient, effective, economical, accountable, and transparent city government. To support this mission, the OCA conducts performance audits and financial and operational analyses of City departments, programs, services, and activities, and is responsible for preparing an annual audit plan for City Council approval. As the City’s outsourced Office of the City Auditor, Baker Tilly Advisory Group, LP (Baker Tilly) conducted the Fiscal Year (FY) 2026 citywide risk assessment in accordance with Baker Tilly’s agreement with the City. The purpose of the risk assessment was to develop the FY 2027 Annual Audit Plan by identifying and prioritizing areas of greatest risk and opportunity across the City. The resulting audit plan is designed to direct limited audit resources toward activities that provide the greatest value to the City and support effective stewardship of financial, physical, and informational resources. The City Auditor has the following responsibilities related to the planning and scope of internal audit activities: Palo Alto City Charter Article IV Sec. 12 requires the City Auditor to perform the following: • Conduct audits in accordance with a schedule approved by the City Council and may conduct unscheduled audits from time to time. • Conducts internal audits of all the fiscal transactions of the City. Title 2 Administrative Code Section 2.08.130 requires the City Auditor to perform the following: • Prepare an annual audit plan for City Council approval. • Identify the preliminary objectives of each audit to be performed, reflecting the purpose of the engagement and a preliminary description of the areas that may be addressed. • Conduct performance audits and perform non-audit services of any City department, program, service, or activity as approved by the City Council. California Government Code Section 1236 requires cities that conduct audit activities to perform their work in accordance with the standards prescribed by the Institute of Internal Auditors (IIA) or the Government Auditing Standards (GAO), as appropriate. Consistent with IIA Standard 2010, which requires the chief audit executive to establish a risk-based plan aligned with organizational objectives and informed by senior management and governing board input, Baker Tilly conducted a comprehensive assessment of the City’s audit universe, including departments, functions, processes, programs, and activities that may be subject to audit. Risk Assessment Process Considerations The annual risk assessment serves as the foundation for developing a risk-based internal audit plan. While risk assessment is a core component of the internal audit process, its scope and complexity vary based on factors such as the maturity of the internal audit function, the organization's risk management practices, coordination with other oversight functions, and stakeholder expectations. Because organizational risks and priorities Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 6  Packet Pg. 60 of 95  INTRODUCTION continue to evolve, the results of the annual risk assessment reflect conditions and information available at the time of the assessment. The risk assessment process involved identifying, evaluating, and prioritizing risks that could affect the City's ability to achieve its strategic and operational objectives. To gather input, the Office of the City Auditor (OCA) surveyed members of the City Council, the Executive Leadership Team, and key management personnel across the organization. Responses were received from 15 departments and were supplemented by interviews, document reviews, and professional judgment. The results of this process were used to identify areas of elevated risk and develop the proposed FY 2027 Annual Audit Plan. Consistent with Institute of Internal Auditors (IIA) Standards, the annual risk assessment represents a high-level evaluation of risk across the City's audit universe. In addition, before the commencement of each audit included in the approved audit plan, the internal audit function will perform an engagement-level risk assessment to further define the audit objectives, scope, timing, and resource requirements. This process helps ensure that each engagement addresses the most relevant risks and remains aligned with the City's priorities and operating environment. Throughout the assessment, several organizational strengths were consistently observed, including: • A strong commitment to public service demonstrated by a dedicated and highly professional management team • A culture that values efficient and effective government operations • A focus on strategic planning and execution • Continued investment in innovation and sustainability initiatives • A commitment to continuous improvement and organizational excellence This report summarizes the risk assessment methodology, analysis, and results and presents the proposed FY 2027 Annual Audit Plan developed from those results. Audit Planning Considerations While maintaining its independence and objectivity in accordance with standards, the City Auditor considers a variety of matters when developing the Annual Audit Plan, including but not limited to: • Risk Assessment – the OCA performed a risk assessment and summarized the results in a separate report (Task #1). Generally speaking, audit activities target high(er) risk areas. The results are shown on the following page. • Ability to Add Value – audit and advisory projects seek to add value through independent and objective analysis. • City Council – the City Auditor reports to the City Council and seeks input on audit priorities. • Coverage and Prior Audits – the City Auditor considers prior audits conducted by the OCA, the financial audit, and other audit and consulting reports recently issued. • “Ripeness” and On-Going Initiatives – certain risk areas may be addressed through operational activities, which could mean they are not ripe for audit to add value. • Scheduling – the City Auditor takes into consideration the timing of an audit and other on-going initiatives that directly relate. Putting an undue burden on City staff may exacerbate the risk at hand or other interrelated risks. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 7  Packet Pg. 61 of 95  INTRODUCTION Audit Activity Type The OCA will conduct performance audits and perform financial/operational analyses of any City department, program, service, or activity as approved by the City Council in accordance with the Baker Tilly agreement. Performance Audits According to the Government Auditing Standards (GAO-24-206786) Section 1.21 and 1.22, page 11-12), performance audits provide objective analysis, findings, and conclusions to assist management and those charged with governance and oversight with, among other things, improving program performance and operations, reducing costs, facilitating decision making by parties responsible for overseeing or initiating corrective action, and contributing to public accountability. Performance audits may include the following four (4) audit objectives: • Program effectiveness and results • Internal control design and effectiveness • Compliance with laws, regulations, and policies • Prospective analysis Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 8  Packet Pg. 62 of 95  Risk Assessment Approach Baker Tilly’s risk assessment approach this year focused on gathering information from the following inputs: • Surveying and/or interviewing City Council, Executive Leadership Team members and other key management staff • Analyzing key documents such as City Council Priorities, budget documents, the annual comprehensive financial report, news articles, and other relevant documents • Updating the risk assessment matrix with the gathered information • Scoring the auditable units (listed in Appendix A) in the risk assessment matrix based on the likelihood and impact of potential adverse events • Identifying potential internal audit topics for the auditable units with high-risk scores • Summarizing the approach and results for presentation At the start of our contract with the City, Baker Tilly conducted an initial comprehensive risk assessment in FY 2021 by interviewing all Council Members and Executive Leadership Team (ELT) members to create a risk assessment matrix. Each year, this matrix is updated to redevelop a comprehensive picture of the risk landscape which is continuously changing. For FY 2026, ELT members were asked to evaluate the functions under departments and identify any changes. Members then assessed these functional areas for key risks that could impact operations. While the risk assessment primarily measures inherent risk (the risk without mitigating controls/factors) for each risk factor, it also considers specific risks based on the above information and the City’s processes, controls, and other factors surfaced through internal audit activities. Using the information gathered, OCA identified risks and determined the likelihood and impact of those risks. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 9  Packet Pg. 63 of 95  Risk Assessment Results Department Descriptions and Key Risk Areas When identifying risk areas throughout the City, Baker Tilly worked with City management to identify each department’s key functions and potential risk areas. Based on this input, Baker Tilly identified the auditable risk areas for each department. Below is an overview of the City’s departments and their key risk areas. Administrative Services The Administrative Services Department provides financial and analytical support to the City. Departmental functions include finance and accounting, purchasing, administration, budget, real estate, and others. Key Risk Areas ­ Financial Management & Reporting ­ Procurement & Purchasing Controls ­ Asset & Property Management ­ Contract, Grants, & Consultant Oversight ­ Governance, Compliance & Operational Oversight City Attorney’s Office The City Attorney’s Office provides legal services to the City, including providing legal advice and training to City leaders, negotiating on behalf of the City, drafting contracts and other legal documents, investigating claims, and defending the City in litigation Key Risk Areas ­ Identification of Legal Risks ­ Contracts & Legal Documents oversight & Advisory City Clerk’s Office The City Clerk serves as a liaison between the public and City Council. Office functions include Public Records Act requests, public hearings, local elections, board and commission recruitments, record management, and others. Key Risk Areas ­ Election Administration ­ Record Retention & Management ­ Council Meeting Management ­ Board and Commission Recruitment ­ Public Records Request City Manager’s Office The City Manager’s Office provides leadership to the City departments and is responsible for facilitating City Council legislative actions, managing special interdepartmental projects, and more. The Communications Office is housed under the City Manager’s Office and is the primary correspondent between the City and the public. Key Risk Areas ­ Citywide Risk Management ­ Government Efficiency ­ Community & Economic Initiatives ­ Strategic Planning & Governance Office of Transportation The Office of Transportation works to enhance quality of life and improve the safety of the users of all modes of transportation. The Office is responsible for sustainable transportation systems, managing parking, and oversees the City’s traffic and transportation capital improvement projects. Key Risk Areas ­ Transportation Safety Improvements ­ Parking Management ­ Operations & Capital Project Oversight ­ Signals & Traffic Engineering Community Services Department The Community Services Departments offers a variety of services administered through the following three divisions and the Office of Human Services: Arts and Sciences; Open Spaces, Parks, and Golf; and Recreation. Key Risk Areas ­ Parks, Facilities & Asset Management ­ Recreation & Community Programming ­ Arts, Culture & Education Programs ­ Contract & Vendor Compliance Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 10  Packet Pg. 64 of 95  RISK ASSESSMENT RESULTS Fire The Fire Department oversees emergency response such as ambulance transports and fire response/rescue, emergency protection services such as fire prevention, and hazardous materials planning. The department highlights safeguarding the community and compassionate care. Key Risk Areas ­ Emergency Response & Fire Operations ­ Fire Prevention & Hazardous Materials Management ­ Emergency Preparedness Human Resources The Human Resources (HR) Department is responsible for recruiting, developing, and retaining a well-qualified and professional workforce. The Department ensures compliance with relevant labor laws, adheres to record keeping practices, and serves as a strategic partner for executive decision making. Key Risk Areas ­ Talent Acquisition & Workforce Planning ­ Compensation, Benefits & Employee Support ­ HR Compliance, Safety & Risk Management ­ Human Resource Information System Information Technology The Information Technology Department's provides innovative technology solutions that support City departments. The department oversees IT project management, operations, enterprise systems, and security services. Key Risk Areas ­ IT Governance, Strategy & Project Management ­ Enterprise Systems & Technology Operations ­ Cybersecurity & Regulatory Compliance ­ Infrastructure & Network Services ­ Geographic Information System (GIS) Library The Library Department operates five libraries throughout the City, each offering unique resources. The Library provides educational programming, multi-cultural events, and large and diverse book, information and technology resources. Key Risk Areas ­ Library Operations & Resource Management ­ Community Programs, Events & Cultural Services ­ Volunteer & Public Engagement Office of Emergency Services The Office of Emergency Services is designed to prevent, prepare for, and recover from various hazards. The Office is responsible for overseeing various risk management programs. Key Risk Areas ­ Emergency Preparedness, Continuity & Risk Management ­ Educational Programming ­ Training & Compliance Administration ­ Intergovernmental & Interlocal Coordination Planning and Development Services The Planning Department supports the City in land use development, planning, transportation, housing and environmental policies, and plans and programs that “maintain and enhance the City as a safe, vital, and attractive community”. Key Risk Areas ­ Planning, Development & Land Use Services ­ Building Review, Inspection & Code Enforcement ­ Long-Range Planning & Housing Compliance ­ Development Services Administration Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 11  Packet Pg. 65 of 95  RISK ASSESSMENT RESULTS Overall Risk Scoring Distribution Baker Tilly structured the audit universe based on the department/division/program from the budget document and management’s feedback, which resulted in 108 auditable units (Appendix A). We scored them based on the information gathered for each risk factor related to the likelihood, impact, or fraud. Appendix B lists the risk factors, definitions, and scoring method. The maximum score for an auditable unit is 20. The following chart shows the distribution of overall risk scoring. The Police Department oversees technical services such as dispatch and record management, field services such as patrol and emergency response, and animal control. The Police Department also places a high value on community relations. Key Risk Areas ­ Police Operations & Emergency Response ­ Investigations, Crime Reduction & Specialized Response Programs ­ Communications, Records & Dispatch Services ­ Traffic, Animal Control & Community Safety ­ Public Works The Public Works Department is broken into four divisions: Engineering, Airport, Public Services, and Environmental Services. The Divisions are responsible for a variety of tasks including design and implementation of capital projects, maintenance of City-owned and leased structures, and management of the solid waste programs. Key Risk Areas ­ Engineering, Infrastructure & Capital Project Management ­ Airport Operations & Transportation Services ­ Environmental Services, Sustainability & Climate Action ­ Public Services, Facilities & Infrastructure Maintenance ­ Fleet Operations, Regulatory Compliance & Accessibility Programs Utilities The Utilities Department owns and operates electric, gas, water, wastewater and fiber optic services to the City. The City purchases all their power from external sources. The mission of the Department is to “provide safe, reliable, environmentally sustainable and cost-effective services.” Key Risk Areas ­ Water, Wastewater & Utility Operations ­ Gas Utility Operations ­ Financial Management, Rates & Reserves ­ Billing & Customer Account Services ­ Infrastructure & Asset Management ­ Workforce Planning & Staffing Management Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 12  Packet Pg. 66 of 95  Baker Tilly rated the auditable units as follows: • High Risk – Scores 16 and above • Moderate Risk – Scores from 11 to 15 • Low Risk – Scores 10 and below Appendix C of this report lists the risk rated auditable units with a score of 12 or over (out of 20) based on our scoring. The list includes 36 functions rated as High risk (with a score between 16 and 20) and 58 functions rated as Moderate risk (with a score between 11 and 15). In determining the audit activities to be performed in FY 2027, we further evaluated specific risks and functional areas and considered risk-based priorities as well as other factors such as requirements by law or regulation, timing of activities, special projects, and requests from City Council and management. The proposed audit plan for FY 2027 is on the following page. 0 10 20 30 40 50 60 70 2 to 10 (LOW)11 to 15 (MEDIUM)16 to 20 (HIGH) Risk Scoring Distribution Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 13  Packet Pg. 67 of 95  PROPOSED AUDIT PLAN FOR FY 2027 Proposed Audit Plan for FY 2027 The proposed audits and special advisory projects for FY 2027 are listed in the table below. These projects were selected from the auditable units assessed as having High or Moderate risk based on the results of the citywide risk assessment. As mentioned in the previous section, in addition to risk ratings, project selection considered factors such as the significance and pervasiveness of underlying processes and controls, prior audit coverage, the timing of related initiatives or non-audit activities, and the potential for the engagement to provide meaningful value to the City through enhanced risk management, accountability, operational efficiency, and effectiveness. Preliminary objectives have been developed for each proposed project; however, the final scope and objectives will be refined through an engagement-level risk assessment conducted at the outset of each project. The annual audit plan is intended to remain flexible and may be modified during FY 2027 to address changes in the City's operating environment, organizational structure, strategic priorities, risks, systems, or control processes. Consistent with the City Auditor's established process, task orders will be submitted to the City Council for approval before each project begins. To facilitate timely execution of the FY 2027 audit plan, six task orders have been prepared and are included in Appendix D. The Office of the City Auditor is requesting City Council approval to initiate all six projects during the first half of FY 2027, with work commencing as resources and scheduling permit. Proposed FY 2027 Audit Plan Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 14  Packet Pg. 68 of 95  Appendix A: Resumes Appendices Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 15  Packet Pg. 69 of 95  Appendix A: Audit Universe City Attorney’s Office Contracts & Legal Documents Legal Risk & Identification City Clerk’s Office Board & Commission Recruitment Council Meeting Management Election Administration Public Records Requests City Manager’s Office Citywide Communications & Community Engagement Citywide Risk Management Consultant Management Coordination of Citywide Housing and Homelessness Efforts Economic Development Ensures Execution of Council Priorities Government Efficiency Human Services Administrative Services Department Accounting Budgeting Contract and Consultant Oversight Grant Management Long-Range Financial Planning Procurement Property Management Purchasing Cards Community Services Department Arts Children’s Theater Community Centers Equipment & Materials Management Golf Junior Museum & Zoo Parks Fire Department Emergency Response Emergency Medical Services (EMS) Fire Prevention Fire Response/Rescue Fire Suppression Human Resources Department Compliance with Labor Laws Employee Benefits & Workers Compensation Employee Retention Human Resources Information System (HRIS) Professional Development Recruitment Succession Planning Information Technology Department Adoption & Integration of New Technology Enterprise Systems Geographic Information Systems (GIS) Fiber Internet Services IT Project Management Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 16  Packet Pg. 70 of 95  Library Department Collection Education Programming Library Branch Operations Information Resources Multi-Cultural Events Office of Emergency Services Continuity of Operations Plans Disaster & Emergency Preparedness Disaster Mitigation Planning Education Programming Interlocal Agreements Risk Management Office of Transportation Parking Management Safe Routes to School Signals & Traffic Engineering Transportation Capital Projects Transportation Contracts, Grants & Administration Planning and Development Services Department Code Enforcement Current Planning Development Center Long Range Planning Inspection Services Plan Review Services Police Department Animal Control Dispatch Emergency Response Investigations Patrol Public Safety Records Management Department of Public Works Airport Design & Implementation of Capital Projects Engineering Environmental Services Fleet Operations Infrastructure Maintenance Public Services Stormwater Utilities Department Billing Electric Fiber Gas Power Purchase Agreements Rate Setting & Adjustments Utility Asset Management Utility Reserves Wastewater Water Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 17  Packet Pg. 71 of 95  Appendix B: Risk Factor Definitions Impact Score Description & Operational Resource Impact Reputational Legal, Regulatory & Political Impact 1 - Negligible No discernible impact or very minor, easily absorbed. Minor inconvenience; no disruption to core services. Minimal financial waste (e.g., < $10,000); no impact on budget. No public notice; minimal internal concern. No breach of law/policy; minor administrative error. 2 - Low Minor impact, manageable with existing resources, minimal disruption. Minor disruption to non-critical services; easily rectified. Low financial impact (e.g., $10,000 - $100,000); minor budget reallocation. Limited negative perception internally or among immediate stakeholders. Minor non- compliance with internal policies or less significant regulations. 3 - Medium Moderate impact, requiring additional resources to manage, some disruption. Moderate disruption to some core services; short-term delays or reduced quality. Moderate financial impact (e.g., $100,001 - $1,000,000); potential for budget shortfall requiring minor adjustments. Potential for negative local media attention or stakeholder concern; moderate erosion of trust. Non-compliance with significant policies or minor statutory requirements; potential for low- level public inquiry. 4 - High Significant impact, major disruption, significant resources required to manage. Significant disruption or failure of critical services; inability to meet key mandates. High financial impact (e.g., $1,000,001 - $10,000,000); significant budget deficit, requiring major financial intervention. Widespread negative media attention; significant loss of public trust; political scrutiny. Breach of significant laws, regulations, or constitutional mandates; potential for large fines, sanctions, or widespread public outcry. 5 - Critical Catastrophic impact, existential threat to an agency/program, severe and long- lasting consequences. Complete failure or sustained inability to deliver essential services; poses a threat to public safety or welfare. Catastrophic financial impact (e.g., > $10,000,000); severe budget crisis, jeopardizing long-term financial stability. Widespread public outrage, severe reputational damage, potential for loss of mandates, political fallout, loss of public confidence in government function. Major legal action, criminal charges, legislative intervention, loss of delegated authority, impeachment proceedings. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 18  Packet Pg. 72 of 95  Likelihood Score Description Probability/Frequency (Public Sector Context) 1 - Rare May occur only in exceptional circumstances. < 5% Has never happened in this or similar public entities; highly unlikely given current environment. 2 - Unlikely Could occur at some time. 5% - 20% sector entities, or there are very limited indicators it could happen here. 3 - Possible Might occur or is likely to occur at some time. 21% - 50% within this entity, or there are known, albeit manageable, conditions that could lead to it (e.g., pending legislative changes). 4 - Likely Will probably occur in most circumstances. 51% - 80% within this entity or sector; strong indicators or trends suggest it will occur (e.g., identified recurring audit findings, persistent capacity issues). 5 - Almost Certain Is expected to occur in most circumstances. > 80% Is a recurring event or a known systemic issue within the entity; current conditions make it highly probable or inevitable (e.g., critical staffing shortages, outdated systems, consistent public complaints). Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 19  Packet Pg. 73 of 95  Appendix C: Possible Risks Rated1 1 Only risks rated 12 or higher are included in this report. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 20  Packet Pg. 74 of 95  Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 21  Packet Pg. 75 of 95  Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 22  Packet Pg. 76 of 95  Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 23  Packet Pg. 77 of 95  19 Appendix D: Audit Plan Task Orders PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY27-4.42 City’s Capital Improvement Project (CIP) Management 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 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.42 2.CONSULTANT NAME: Baker Tilly Advisory Group, LP 3.PERIOD OF PERFORMANCE: START: September 1, 2026 COMPLETION: May 31, 2027 4.TOTAL TASK ORDER PRICE: $98,160 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5.BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6.CITY PROJECT MANAGER’S NAME & DEPARTMENT: Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee 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): N/A 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: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report Item 3: Staff Report Pg. 24 Packet Pg. 78 of 95  Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • 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) Services & Deliverables Baker Tilly’s approach to conducting an internal audit of the City’s Capital Improvement Project (CIP) Management involves three (3) primary steps: • Step 1: Audit Planning • Step 2: Fieldwork and Testing • Step 3: Reporting Step 1 – Audit Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include: • Gather information to understand the environment under review o Understand the environment under assessment o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable o Assess additional documentation and conduct interviews as necessary • Assess the audit risk • Prepare an audit planning memo and audit program o Refine audit objectives and scope o Identify the audit procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the audit and kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing The step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine (1) if the City’s Capital Improvement Project management provides adequate oversight to support the timely, coordinated, and cost-effective delivery of capital projects, and (2) determining whether projects are delivered operationally ready. Finally, the audit will evaluate the administration of CIP projects for adequate internal controls to safeguard the City from fraud, waste, and abuse. Procedures include, but are not limited to: • Obtain and review CIP policies, procedures, governance structures, project management standards, and reporting protocols. • Assess whether roles, responsibilities, approval authorities, and accountability mechanisms are clearly defined. • Select a risk-based sample of completed and active CIP projects. • Compare planned versus actual schedules, budgets, scope, and deliverables to evaluate whether projects were completed timely and cost-effectively. • Review project status reports, budget tracking tools, change orders, risk logs, and escalation procedures. • Determine whether management receives accurate, timely, and sufficient information to monitor project performance and address issues. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 25  Packet Pg. 79 of 95  • Examine whether projects included operational readiness activities such as staff training, testing/commissioning, documentation handoff, maintenance planning, and stakeholder acceptance prior to project closeout. • Verify whether completed projects were fully functional and capable of achieving intended operational objectives Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include: • Developing findings, conclusions, and recommendations based on the supporting evidence gathered • Validating findings with appropriate individuals and discuss the root cause of the identified findings • Complete supervisory review of working papers and a draft audit report • Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, findings, conclusions, and recommendations o Discuss management responses • Obtain written management responses and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverables will be prepared as part of this engagement: • Audit Report • Policy & Services Committee Audit Report Presentation Schedule of Performance Anticipated Start Date: September 1, 2026 Anticipated End Date: May 31, 2026 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $98,160. The not- to-exceed budget is based on an estimate of 500 total project hours, of which a minimum of 50 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete all work remote including all interviews and documentation review. However, during the planning and fieldwork phases of this audit, the City and Baker Tilly may mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur expenses for this Task. The not-to-exceed maximum for reimbursable expenses for this Task is $6,500. The following summarizes anticipated reimbursable expenses: • Round-trip Airfare – $2,000 (1 round trip flight x 2 auditors) • Ground transportation – $800 (car rental or Uber/taxi) • Hotel accommodation – $3,000 (2 rooms x 4 nights) • Food & Incidentals – $2,100 Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 26  Packet Pg. 80 of 95  25 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY27-4.43 City and Departmental Performance Measures 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 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.43 2.CONSULTANT NAME: Baker Tilly Advisory Group, LP 3.PERIOD OF PERFORMANCE: START: August 1, 2026 COMPLETION: February 28, 2027 4.TOTAL TASK ORDER PRICE: $85,755 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5.BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6.CITY PROJECT MANAGER’S NAME & DEPARTMENT: Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee 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): N/A 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: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report Item 3: Staff Report Pg. 27 Packet Pg. 81 of 95  Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • 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) Services & Deliverables Baker Tilly’s approach to conducting an internal audit of the City and Departmental Performance Measures involves three (3) primary steps: • Step 1: Audit Planning • Step 2: Fieldwork and Testing • Step 3: Reporting Step 1 – Audit Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include: • Gather information to understand the environment under review o Understand the environment under assessment o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable o Assess additional documentation and conduct interviews as necessary • Assess the audit risk • Prepare an audit planning memo and audit program o Refine audit objectives and scope o Identify the audit procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the audit and kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing The step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine if the City tracks meaningful performance measures to ensure efficiency of operations and that processes are actively monitored and managed. Procedures include, but are not limited to: • Obtain and review policies, strategic plans, dashboards, and departmental performance management practices. • Assess whether performance measures are clearly defined, aligned with organizational objectives, and focused on operational efficiency and effectiveness. • Analyze a sample of departmental performance metrics to determine whether measures are meaningful, measurable, reliable, and outcome-oriented. • Assess whether management uses appropriate benchmarks, targets, and trend analysis to evaluate performance. • Review processes for collecting, validating, and reporting performance data. • Test a sample of reported metrics for accuracy, completeness, consistency, and supporting documentation. • Review management reports, dashboards, meeting minutes, and corrective action processes to determine whether performance information is routinely monitored and discussed. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 28  Packet Pg. 82 of 95  • Assess whether management takes timely action to address underperformance or operational inefficiencies. • Interview department leadership and staff to determine how performance results are used in decision- making, resource allocation, operational planning, and process improvement initiatives. • Assess whether departments establish accountability for achieving performance targets and implementing corrective actions. • Compare the City’s performance management processes and metrics to industry standards, peer municipalities, or recognized best practices. • Identify opportunities to improve operational efficiency, reporting transparency, and management oversight. Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include: • Developing findings, conclusions, and recommendations based on the supporting evidence gathered • Validating findings with appropriate individuals and discuss the root cause of the identified findings • Complete supervisory review of working papers and a draft audit report • Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, findings, conclusions, and recommendations o Discuss management responses • Obtain written management responses and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverables will be prepared as part of this engagement: • Audit Report • Policy & Services Committee Audit Report Presentation Schedule of Performance Anticipated Start Date: August 1, 2026 Anticipated End Date: April 30, 2027 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $85,755. The not- to-exceed budget is based on an estimate of 445 total project hours, of which a minimum of 50 are estimated to be completed by the City Auditor. We don’t plan to complete any on-site work for this engagement. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 29  Packet Pg. 83 of 95  22 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY27-4.44 Models/Approaches for Improving Outcomes for Individuals and Families Experiencing Homelessness 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 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.44 2.CONSULTANT NAME: Baker Tilly Advisory Group, LP 3.PERIOD OF PERFORMANCE: START: September 1, 2026 COMPLETION: May 31, 2027 4.TOTAL TASK ORDER PRICE: $60,455 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5.BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6.CITY PROJECT MANAGER’S NAME & DEPARTMENT: Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee 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): N/A 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: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report Item 3: Staff Report Pg. 30 Packet Pg. 84 of 95  23 Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: •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) Services & Deliverables Baker Tilly’s approach to conducting an assessment of Models/Approaches for Improving Outcomes for Individuals and Families Experiencing Homelessness involves three (3) primary steps: •Step 1: Assessment Planning •Step 2: Fieldwork and Testing •Step 3: Reporting Step 1 – Assessment Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall assessment objective and to solidify mutual understanding of the assessment scope, objectives, process, and timing between stakeholders and auditors. Tasks include: •Gather information to understand the environment under review o Understand the environment under assessment o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable o Assess additional documentation and conduct interviews as necessary •Prepare an assessment program o Refine assessment objectives and scope o Identify the procedures to be performed and the evidence to be obtained and examined •Announce the initiation of the assessment and kick-off meeting with key stakeholders o Discuss assessment objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the assessment Step 2 – Fieldwork and Testing The step involves executing the procedures in the assessment program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the assessment objectives. The preliminary objective for this advisory project is to assess what models in smaller cities have been most successful and sustainable in supporting and improving outcomes for individuals experiencing homelessness. Steps may include: •Obtain and review homelessness response plans, strategic initiatives, program documentation, and performance reports from selected smaller cities. •Identify and document homelessness intervention models implemented in comparable cities, including program design, target populations, governance structures, and service delivery approaches. •Collect and analyze outcome data, such as housing placement rates, housing retention, reductions in unsheltered homelessness, returns to homelessness, and other relevant performance measures. •Review funding sources, program costs, staffing requirements, and partnership structures to assess the financial and operational sustainability of selected models. •Conduct interviews with local officials, service providers, community organizations, and individuals with lived experience to identify perceived strengths, challenges, and lessons learned. •Compare models across selected cities and evaluate which approaches have demonstrated the most effective and sustainable outcomes, as well as the factors contributing to their success. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report Item 3: Staff Report Pg. 31 Packet Pg. 85 of 95  24 Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize assessment working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include: •Developing findings, conclusions, and recommendations based on the supporting evidence gathered •Validating findings with appropriate individuals and discuss the root cause of the identified findings •Complete supervisory review of working papers and a draft assessment report •Distribute a draft assessment report and conduct a closing meeting with key stakeholders o Discuss the assessment results, findings, conclusions, and recommendations o Discuss management responses •Obtain written management responses and finalize a report •Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverables will be prepared as part of this engagement: •Assessment Report •Policy & Services Committee Assessment Report Presentation Schedule of Performance Anticipated Start Date: September 1, 2025 Anticipated End Date: May 31, 2027 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $60,455. The not- to-exceed budget is based on an estimate of 300 total project hours, of which a minimum of 50 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete some fieldwork steps for this audit on-site if the City and Baker Tilly mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur expenses for this Task. The not-to-exceed maximum for reimbursable expenses for this Task is $6,500. The following summarizes anticipated reimbursable expenses: •Round-trip Airfare – $2,000 (1 round trip flight x 2 auditors) •Ground transportation – $800 (car rental or Uber/taxi) •Hotel accommodation – $3,000 (2 rooms x 4 nights) •Food & Incidentals – $2,100 Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report Item 3: Staff Report Pg. 32 Packet Pg. 86 of 95  28 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY27-4.45 Council Meeting Management 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 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.45 2.CONSULTANT NAME: Baker Tilly Advisory Group, LP 3.PERIOD OF PERFORMANCE: START: October 1, 2026 COMPLETION: March 31, 2027 4.TOTAL TASK ORDER PRICE: $53,885 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5.BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6.CITY PROJECT MANAGER’S NAME & DEPARTMENT: Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee 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): N/A 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: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report Item 3: Staff Report Pg. 33 Packet Pg. 87 of 95  Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • 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) Services & Deliverables Baker Tilly’s approach to conducting an assessment of the City’s Council Meeting Management Processes includes three (3) primary steps: • Step 1: Assessment Planning • Step 2: Fieldwork and Testing • Step 3: Reporting Step 1 – Assessment Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall assessment objective and to solidify mutual understanding of the assessment scope, objectives, process, and timing between stakeholders and auditors. Tasks include: • Gather information to understand the environment under review o Understand the environment under assessment o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable o Assess additional documentation and conduct interviews as necessary • Prepare an assessment program o Refine assessment objectives and scope o Identify the procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the assessment and kick-off meeting with key stakeholders o Discuss assessment objectives, scope, assessment process, timing, resources, and expectations o Discuss documentation and interview requests for the assessment Step 2 – Fieldwork and Testing The step involves executing the procedures in the assessment program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the assessment objectives. The preliminary objective for this advisory project is to assess what council meeting planning and agenda management processes best support efficient and timely execution of council business and policy direction. Steps include: • Review and map the City’s council meeting planning and agenda development processes, including roles, timelines, approvals, and coordination workflows. • Interview council members, City staff, and other stakeholders to identify challenges affecting meeting efficiency, agenda management, and execution of council priorities. • Analyze historical agendas, meeting schedules, deferred items, and supporting materials to evaluate the efficiency and effectiveness of current practices. • Assess interdepartmental coordination, communication processes, and agenda preparation procedures to determine whether they support timely and accurate council decision-making. • Benchmark the City’s council meeting and agenda management practices against peer municipalities and governance best practices to identify improvement opportunities. • Evaluate the effectiveness of agenda management tools and develop recommendations to improve meeting efficiency, transparency, prioritization, and execution of council business. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 34  Packet Pg. 88 of 95  Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize assessment working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include: • Developing observations and recommendations based on the supporting evidence gathered • Validating observations with appropriate individuals • Complete supervisory review of working papers and a draft assessment report • Distribute a draft assessment report and conduct a closing meeting with key stakeholders o Discuss the observations and recommendations o Discuss management responses • Obtain written management responses if appropriate and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverables will be prepared as part of this engagement: • Assessment Report • Policy & Services Committee Assessment Report Presentation Schedule of Performance Anticipated Start Date: July 1, 2026 Anticipated End Date: January 31, 2027 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $53,885. The not- to-exceed budget is based on an estimate of 280 total project hours, of which a minimum of 35 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete all work remotely including all interviews and documentation review. However, during the planning and fieldwork phases of this assessment, the City and Baker Tilly may mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur expenses for this Task. The not-to-exceed maximum for reimbursable expenses for this Task is $6,500. The following summarizes anticipated reimbursable expenses: • Round-trip Airfare – $2,000 (1 round trip flight x 2 auditors) • Ground transportation – $800 (car rental or Uber/taxi) • Hotel accommodation – $3,000 (2 rooms x 4 nights) • Food & Incidentals – $2,100 Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 35  Packet Pg. 89 of 95  31 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY27-4.46 AI Governance & Usage Best Practices & Pit Falls 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 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.46 2.CONSULTANT NAME: Baker Tilly Advisory Group, LP 3.PERIOD OF PERFORMANCE: START: August 1, 2026 COMPLETION: January 31, 2027 4.TOTAL TASK ORDER PRICE: $63,815 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5.BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6.CITY PROJECT MANAGER’S NAME & DEPARTMENT: Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee 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): N/A 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: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report Item 3: Staff Report Pg. 36 Packet Pg. 90 of 95  32 Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: •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) Services & Deliverables Baker Tilly’s approach to conducting an assessment of the AI Governance & Usage Best Practices & Pit Falls includes three (3) primary steps: •Step 1: Assessment Planning •Step 2: Fieldwork and Testing •Step 3: Reporting Step 1 – Assessment Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall assessment objective and to solidify mutual understanding of the assessment scope, objectives, process, and timing between stakeholders and auditors. Tasks include: •Gather information to understand the environment under review o Understand the environment under assessment o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable o Assess additional documentation and conduct interviews as necessary •Prepare an assessment program o Refine assessment objectives and scope o Identify the procedures to be performed and the evidence to be obtained and examined •Announce the initiation of the assessment and kick-off meeting with key stakeholders o Discuss assessment objectives, scope, assessment process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Step 2 – Fieldwork and Testing The step involves executing the procedures in the assessment program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the assessment objectives. The preliminary objective is to determine what AI governance, usage, and training policies and practices should the City adopt to best leverage AI and what are the biggest risks the City should be aware of. Steps include •Review existing City policies, procedures, and governance structures related to AI, data management, cybersecurity, privacy, procurement, and technology oversight. •Interview City leadership, IT staff, legal counsel, department representatives, and other stakeholders to understand current and planned AI usage, operational needs, and governance concerns. •Assess how AI technologies are currently being used or evaluated across departments, including controls related to data privacy, security, transparency, accuracy, and human oversight. •Evaluate employee training, awareness, and acceptable use practices to determine whether staff are adequately prepared to responsibly and effectively use AI tools. •Benchmark the City’s AI governance, risk management, and training practices against peer municipalities, industry standards, and emerging regulatory guidance to identify leading practices and gaps. •Identify key risks associated with AI adoption—including cybersecurity, data privacy, bias, legal liability, misinformation, and operational dependency—and develop recommendations to support responsible AI governance and implementation. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report Item 3: Staff Report Pg. 37 Packet Pg. 91 of 95  Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize assessment working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include: • Developing observations and recommendations based on the supporting evidence gathered • Validating observations with appropriate individuals • Complete supervisory review of working papers and a draft assessment report • Distribute a draft assessment report and conduct a closing meeting with key stakeholders o Discuss the observations and recommendations o Discuss management responses • Obtain written management responses if appropriate and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverables will be prepared as part of this engagement: • Assessment Report • Policy & Services Committee Assessment Report Presentation Schedule of Performance Anticipated Start Date: August 1, 2026 Anticipated End Date: January 31, 2027 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $63,815. The not- to-exceed budget is based on an estimate of 315 total project hours, of which a minimum of 35 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete all work remote including all interviews and documentation review. However, during the planning and fieldwork phases of this assessment, the City and Baker Tilly may mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur expenses for this Task. The not-to-exceed maximum for reimbursable expenses for this Task is $6,500. The following summarizes anticipated reimbursable expenses: • Round-trip Airfare – $2,000 (1 round trip flight x 2 auditors) • Ground transportation – $800 (car rental or Uber/taxi) • Hotel accommodation – $3,000 (2 rooms x 4 nights) • Food & Incidentals – $2,100 Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report        Item 3: Staff Report Pg. 38  Packet Pg. 92 of 95  34 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY27-4.47 Employee Mental Health & Wellness 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 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK ORDER NO.: FY27-4.47 2.CONSULTANT NAME: Baker Tilly Advisory Group, LP 3.PERIOD OF PERFORMANCE: START: October 1, 2026 COMPLETION: May 31, 2027 4.TOTAL TASK ORDER PRICE: $60,455 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5.BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6.CITY PROJECT MANAGER’S NAME & DEPARTMENT: Julie Lythcott-Haims, Chair of the City Council’s Policy and Services Committee 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): N/A 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: Baker Tilly Advisory Group, LP BY:____________________________________ Name __________________________________ Title___________________________________ Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report Item 3: Staff Report Pg. 39 Packet Pg. 93 of 95  35 Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: •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) Services & Deliverables Baker Tilly’s approach to conducting an assessment of the Employee Mental Health & Wellness includes three (3) primary steps: •Step 1: Assessment Planning •Step 2: Fieldwork and Testing •Step 3: Reporting Step 1 – Assessment Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall assessment objective and to solidify mutual understanding of the assessment scope, objectives, process, and timing between stakeholders and auditors. Tasks include: •Gather information to understand the environment under review o Understand the environment under assessment o Assess the City code, regulations, and other standards and expectations o Assess prior audit results, as applicable o Assess additional documentation and conduct interviews as necessary •Prepare an assessment program o Refine assessment objectives and scope o Identify the procedures to be performed and the evidence to be obtained and examined •Announce the initiation of the assessment and kick-off meeting with key stakeholders o Discuss assessment objectives, scope, assessment process, timing, resources, and expectations o Discuss documentation and interview requests for the assessment Step 2 – Fieldwork and Testing The step involves executing the procedures in the assessment program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the assessment objectives. The preliminary objective is to determine what are the most effective processes and programs to support employee mental health, wellness, and resilience in high-stress work environments. Steps include •Review existing City policies, programs, and resources related to employee mental health, wellness, resilience, critical incident support, and workplace safety. •Interview employees, supervisors, Human Resources staff, union representatives, and department leadership to identify workforce stressors, program needs, utilization barriers, and organizational culture concerns. •Assess the availability, accessibility, and effectiveness of wellness resources such as employee assistance programs, peer support, counseling services, wellness training, and stress management initiatives. •Evaluate how the City supports employees in high-stress work environments through workload management, supervisor training, incident response protocols, leave practices, and return-to-work processes. •Benchmark the City’s employee wellness and resilience practices against peer municipalities, public safety organizations, and industry best practices to identify effective strategies and program gaps. •Identify opportunities to improve employee mental health support, reduce burnout and turnover risks, strengthen organizational resilience, and promote a healthy and sustainable work environment. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report Item 3: Staff Report Pg. 40 Packet Pg. 94 of 95  36 Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize assessment working papers, prepare and review a draft report with stakeholders, and submit a final report for management response. Tasks include: •Developing observations and recommendations based on the supporting evidence gathered •Validating observations with appropriate individuals •Complete supervisory review of working papers and a draft assessment report •Distribute a draft assessment report and conduct a closing meeting with key stakeholders o Discuss the observations and recommendations o Discuss management responses •Obtain written management responses if appropriate and finalize a report •Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverables will be prepared as part of this engagement: •Assessment Report •Policy & Services Committee Assessment Report Presentation Schedule of Performance Anticipated Start Date: October 1, 2026 Anticipated End Date: May 31, 2027 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $60,455. The not- to-exceed budget is based on an estimate of 300 total project hours, of which a minimum of 40 are estimated to be completed by the City Auditor. Item 3 Attachment A - Citywide Annual Risk Assessment and FY 2027 Audit Plan Report Item 3: Staff Report Pg. 41 Packet Pg. 95 of 95